-----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, Qtl8J+M182Zt34I/PntN4Siw9vHvvAGDUugk84/mzM5DVfAfPhsMKQyE64U8G3tD XJlt6/rRL27O6ecKAw9njQ== 0001047469-98-035278.txt : 19980925 0001047469-98-035278.hdr.sgml : 19980925 ACCESSION NUMBER: 0001047469-98-035278 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 15 FILED AS OF DATE: 19980924 SROS: NYSE SROS: PCX 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-4 SEC ACT: SEC FILE NUMBER: 333-64157 FILM NUMBER: 98713997 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-4 1 S-4 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 24, 1998 REGISTRATION NO. 333- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------------- FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -------------------------- TENET HEALTHCARE CORPORATION (Exact name of registrant as specified in its charter) NEVADA 8062 95-2257091 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.)
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 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) -------------------------- COPIES OF ALL COMMUNICATIONS TO: BRIAN J. MCCARTHY, ESQ. Skadden, Arps, Slate, Meagher & Flom LLP 300 South Grand Avenue, Suite 3400 Los Angeles, California 90071 (213) 687-5000 -------------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE. -------------------------- If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. / / If this form is filed to register additional securities for an offering pursuant to Rule 462(b) 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 this form is a post-effective amendment filed pursuant to Rule 462(d) 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. / / -------------------------- 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(2) 7 5/8% Series B Senior Notes due 2008...... $350,000,000 100% $350,000,000 $70,000 8 1/8% Series B Senior Subordinated Notes due 2008................................. $1,005,000,000 100% $1,005,000,000 $201,000
(1) Estimated solely for purposes of calculating the registration fee. (2) The aggregate registration fee of $271,000 for the securities registered hereby was wire transferred on September 23, 1998 to the account of the Securities and Exchange Commission at Mellon Bank. -------------------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PROSPECTUS , 1998 OFFER TO EXCHANGE TENET HEALTHCARE CORPORATION 7 5/8% SENIOR NOTES DUE 2008 AND 8 1/8% SENIOR SUBORDINATED NOTES DUE 2008 FOR 7 5/8% SERIES B SENIOR NOTES DUE 2008 AND 8 1/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2008 WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED Tenet Healthcare Corporation is offering to exchange an aggregate principal amount of up to $350,000,000 of its new 7 5/8% Series B Senior Notes due 2008 and $1,005,000,000 of its new 8 1/8% Series B Senior Subordinated Notes due 2008, which have been registered under the Securities Act of 1933, as amended (the "Securities Act") for its existing ("old") 7 5/8% Senior Notes due 2008 and its existing ("old") 8 1/8% Senior Subordinated Notes due 2008, respectively. The terms of the new notes are identical in all material respects to the terms of the old notes, except that the new notes have been registered under the Securities Act, and certain transfer restrictions and registration rights relating to the old notes do not apply to the new notes. We currently intend to apply to list the new notes on the New York Stock Exchange. SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY HOLDERS PRIOR TO TENDERING THEIR OLD NOTES. NEITHER THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE DATE OF THIS PROSPECTUS IS , 1998. AVAILABLE INFORMATION We file reports, proxy statements, registration statements and other information with the Commission. Our reports, proxy statements, registration statements and other information filed with the Commission may be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the Commission's Regional Offices at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and Seven World Trade Center, 13th Floor, New York, New York 10048. Copies may be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains a web site at http://www.sec.gov which contains our reports, proxy and information statements and other information. Our common stock is listed on the New York Stock Exchange and the Pacific Exchange under the symbol "THC." You also may inspect our reports, proxy statements and other information at the offices of the New York Stock Exchange at 20 Broad Street, New York, New York 10005 and at the offices of the Pacific Exchange at 618 South Spring Street, Los Angeles, California 90014 and 301 Pine Street, San Francisco, California 94104. We have filed with the Commission a registration statement on Form S-4 (together with all amendments and exhibits, the "Registration Statement") under the Securities Act with respect to our offering of new notes. This Prospectus does not contain all of the information in the Registration Statement. You will find additional information about us and the new notes in the Registration Statement. Any statements made in this Prospectus concerning the provisions of legal documents are not necessarily complete and you should read the documents which are filed as exhibits to the Registration Statement or otherwise filed with the Commission. In the event that we are not required to comply with the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), we will be required under the indentures for the new notes to continue to file with the Commission, and to furnish the holders of the new notes with, the information, documents and other reports specified in Sections 13 and 15(d) of the Exchange Act. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1998, filed with the Commission on August 28, 1998 (File No. 1-7293), is incorporated in this Prospectus by reference and is a part of this Prospectus. All documents that we file with the Commission, pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, after the date of this Prospectus and before the termination of the offering of the new notes will be incorporated by reference in this Prospectus and will be a part of this Prospectus from the day we file such documents. Any statement in this Prospectus or in a document incorporated or deemed to be incorporated in this Prospectus by reference will be modified or superseded for purposes of this Prospectus if a statement contained in this Prospectus or in any other document we file after this Prospectus that also is incorporated or deemed to be incorporated by reference in this Prospectus modifies or supersedes such statement. Only the modified or superseded statement will be a part of this Prospectus. This Prospectus incorporates documents by reference that are not part of this Prospectus or delivered with this Prospectus. We will provide without charge, if requested, a copy of any or all of the documents incorporated by reference, other than exhibits to such documents (unless such exhibits are specifically incorporated by reference in such documents). Please direct your requests to Tenet Healthcare Corporation, 3820 State Street, Santa Barbara, California 93105, Attention: Scott M. Brown, Esq., Senior Vice President, Secretary and General Counsel (telephone number (805) 563-7000). Please make your request by October [ ], 1998 to insure a timely delivery of the documents. ii PROSPECTUS SUMMARY THIS SECTION SUMMARIZES THE MORE DETAILED INFORMATION IN THIS PROSPECTUS OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND YOU SHOULD READ ALL OF SUCH INFORMATION CAREFULLY AND IN ITS ENTIRETY. THE COMPANY Tenet Healthcare Corporation is the second largest investor-owned healthcare services company in the United States. At May 31, 1998, our subsidiaries owned or operated 122 general hospitals with 27,867 licensed beds and related healthcare facilities serving urban and rural communities in 18 states and held investments in other healthcare companies. Our subsidiaries also own or operate a small number of rehabilitation hospitals, specialty hospitals, long-term care facilities and psychiatric facilities and many medical office buildings located at or near its general hospitals. Our subsidiaries also own or operate ancillary healthcare businesses, including outpatient surgery centers, home healthcare agencies, occupational and rural healthcare clinics, health maintenance organizations, a preferred provider organization, a managed care insurance company and physician practices. We intend to continue our strategic acquisitions of and partnerships or affiliations with additional general hospitals and related healthcare businesses to expand and enhance our integrated healthcare delivery systems. Our integrated healthcare delivery systems offer a broad range of healthcare services throughout a given geographic area. Our principal executive offices are located at 3820 State Street, Santa Barbara, California 93105, and our telephone number is (805) 563-7000. We employ approximately 116,800 people nationwide. We provide central support services to our hospitals from an operations center based in Dallas, Texas. THE EXCHANGE OFFER Securities Offered................ We are offering up to $350,000,000 principal amount of new 7 5/8% Series B Senior Notes due 2008, and $1,005,000,000 principal amount of new 8 1/8% Series B Senior Subordinated Notes due 2008, which have been registered under the Securities Act. The Exchange Offer................ We are offering to issue the new notes in exchange for a like principal amount of your old notes. We are offering to issue the new notes to satisfy our obligations contained in the registration rights agreement entered into when the old notes were sold in transactions pursuant to Rule 144A and Regulation S under the Securities Act and therefore not registered with the Commission. For procedures for tendering, see "The Exchange Offer." Tenders, Expiration Date; Withdrawal...................... The Exchange Offer will expire at 5:00 p.m. New York City time on October [ ], 1998 unless it is extended. If you decide to exchange your old notes for new notes, you must acknowledge that you are not engaging in, and do not intend to engage in, a distribution of the new notes. If you decide to tender your old notes pursuant to the Exchange Offer, you may withdraw them at any time prior to October [ ], 1998. If we decide for any reason not to accept any old note for exchange, it will be returned to you without expense to you promptly after the expiration or termination of the Exchange Offer.
1 Listing........................... We will apply to have the new notes listed on the New York Stock Exchange. Federal Income Tax Consequences... Your exchange of old notes for new notes pursuant to the Exchange Offer will not result in any income, gain or loss to you for Federal income tax purposes. See "Certain United States federal Income Tax Consequences." Exchange Agent.................... The Bank of New York is the exchange agent for the Exchange Offer.
CONSEQUENCES OF NOT EXCHANGING OLD NOTES If you do not exchange your old notes in the Exchange Offer, your old notes will continue to be subject to the restrictions on transfer set forth in the legend on the certificate for your old notes. In general, you may offer or sell your old notes only if they are registered under, offered or sold pursuant to an exemption from, or offered or sold in a transaction not subject to, the Securities Act and applicable state securities laws. We do not currently intend to register the old notes under the Securities Act. Under certain circumstances, however, certain holders of old notes (including holders who are not permitted to participate in the Exchange Offer or who may not freely resell new notes received in the Exchange Offer) may require us to file and cause to become effective, a shelf registration statement which would cover resales of old notes by such holders. See "Description of Notes--Exchange Offer; Registration Rights." SUMMARY DESCRIPTION OF THE NEW NOTES The terms of the new notes and the old notes are identical in all material respects, except that the new notes have been registered under the Securities Act, and certain transfer restrictions and registration rights relating to old notes do not apply to the new notes. Maturity Dates.................... June 1, 2008 for the 7 5/8% new notes and December 1, 2008 for the 8 1/8% new notes. Interest Payment Dates............ June 1 and December 1, beginning December 1, 1998. Mandatory Redemption.............. None. Optional Redemption............... The 7 5/8% old notes are and the 7 5/8% new notes will be redeemable, in whole, at any time, or in part, from time to time, at our option at a redemption price equal to the Make-Whole Price. See "Description of Notes--Optional Redemption." The 8 1/8% old notes are and the 8 1/8% new notes will be redeemable at our option in whole or in part on or after June 1, 2003, at the redemption prices set forth on page [ ], plus accrued and unpaid interest to the date of redemption. See "Description of Notes--Optional Redemption." Our existing bank credit facility and the 7 5/8% notes indenture and our other debt obligations limit our ability to redeem or otherwise repurchase the 8 1/8% notes prior to the stated maturity thereof, other than in connection with certain refinancing transactions. Change of Control................. Upon a Change of Control Triggering Event, each holder of old notes and new notes may require us to repurchase their notes at 101% of the principal amount thereof, plus accrued and unpaid interest to the date of repurchase. The terms of the existing bank
2 credit facility prohibit us from repurchasing the 8 1/8% old and new notes upon the occurrence of a Change of Control Triggering Event. The indentures relating to the 7 5/8% old and new notes and certain of our other debt obligations also may restrict our ability to purchase the 8 1/8% old and new notes upon the occurrence of a Change of Control Triggering Event. See "Risk Factors--Possible Inability to Repurchase Notes Upon a Change of Control" and "Description of Notes--Repurchase at the Option of Holders Upon a Change of Control." Ranking........................... The 7 5/8% old notes were, and the 7 5/8% new notes will be, general unsecured obligations ranking senior to our subordinated indebtedness, including the 8 1/8% old and new notes, and PARI PASSU in right of payment with all of our other existing and future unsubordinated indebtedness. The 8 1/8% old notes were, and the 8 1/8% new notes will be, our general unsecured obligations subordinated to all of our existing and future senior debt. See "Capitalization," "Description of Notes--General" and "Description of Notes--Subordination of 8 1/8% Notes." Certain Covenants................. The indenture governing the 7 5/8% old and new notes and the indenture governing the 8 1/8% old and new notes contain certain covenants limiting or prohibiting: (i) our ability and our subsidiaries ability to incur additional indebtedness; (ii) our ability to pay dividends on, and the redemption of, capital stock; (iii) our ability to create liens securing indebtedness; (iv) our subsidiaries ability to pay dividends; (v) transactions with affiliates; and (vi) our ability to consolidate or merge with or into, or to transfer all or substantially all of our assets to, another person. See "Description of Notes--Certain Covenants."
RISK FACTORS You should consider carefully all of the information set forth or incorporated by reference in this Prospectus and, in particular, the specific risk factors, beginning at page 6, before deciding to tender your old notes in the Exchange Offer. 3 SUMMARY FINANCIAL INFORMATION Certain summary financial information for fiscal years ended May 31, 1997 and 1998 follows. The information for each fiscal year is from our consolidated financial statements, which have been audited by KPMG Peat Marwick LLP, our independent auditors, and from our underlying accounting records. We exclude from our operating results for all periods presented the discontinued psychiatric operations of certain of our subsidiaries and extraordinary charges from the early extinguishment of debt. You also should read "Management's Discussion and Analysis of Financial Condition and Results of Operations," the consolidated financial statements and related notes and the report of our independent auditors included in our Annual Report on Form 10-K for the fiscal year ended May 31, 1998, incorporated in this Prospectus by reference.
YEAR ENDED MAY 31, -------------------- 1997 1998 --------- --------- (DOLLARS IN MILLIONS) STATEMENT OF OPERATIONS DATA: Net operating revenues................................................................... $ 8,691 $ 9,895 Operating expenses: Salaries and benefits.................................................................. 3,574 4,052 Supplies............................................................................... 1,197 1,375 Provision for doubtful accounts........................................................ 494 588 Other operating expenses............................................................... 1,829 2,071 Depreciation........................................................................... 335 347 Amortization........................................................................... 108 113 Merger, facility consolidation and impairment charges(1)............................... 740 221 --------- --------- Operating income......................................................................... 414 1,128 Interest expense, net of capitalized portion............................................. (417) (464) Investment earnings...................................................................... 26 22 Equity in earnings of unconsolidated affiliates.......................................... 1 -- Minority interests....................................................................... (27) (22) Net losses on disposals of facilities and long-term investments.......................... (18) (17) --------- --------- Income (loss) from continuing operations before income taxes............................. (21) 647 Taxes on income.......................................................................... (52) (269) --------- --------- Income (loss) from continuing operations................................................. $ (73) $ 378 --------- --------- --------- --------- Ratio of earnings to fixed charges(2).................................................... 1.0x 2.1x
4
YEAR ENDED MAY 31, -------------------- 1997 1998 --------- --------- (DOLLARS IN MILLIONS) OTHER OPERATING INFORMATION: Net cash provided by operating activities................................................ $ 404 $ 403 Net cash provided by financing activities................................................ 653 668 Net cash used in investing activities.................................................... (1,125) (1,083) EBITDA(3)................................................................................ 1,597 1,809 EBITDA margin(4)......................................................................... 18.4% 18.3% Ratio of EBITDA to net interest expense(5)............................................... 4.1x 4.1x Ratio of total debt to EBITDA............................................................ -- 3.2x Capital expenditures..................................................................... $ (406) $ (534)
AS OF MAY 31, -------------------- 1997 1998 --------- --------- BALANCE SHEET DATA: Working capital.......................................................................... $ 522 $ 1,123 Total assets............................................................................. 11,705 12,833 Long-term debt, excluding current portion................................................ 5,022 5,829 Shareholders' equity..................................................................... 3,224 3,558
- ------------------------ (1) In the year ended May 31, 1997, we recorded merger, facility consolidation and impairment charges totaling $740 million, primarily in connection with the acquisition of OrNda HealthCorp, ("OrNda"), which was accounted for as a pooling-of-interests (the "OrNda Merger"). In the fourth quarter of the year ended May 31, 1998, we recorded charges of $221 million relating to: (1) the planned closure or sale of five hospitals and several home health agencies; (2) write-offs of goodwill and other assets; and (3) write-downs of carrying values of long lived assets. (2) We calculate our ratio of earnings to fixed charges by dividing income or loss from continuing operations before income taxes plus fixed charges by fixed charges. Fixed charges consist of interest expense, including amortization of financing costs, and that portion of rental expense representing the interest component of rental expense. (3) We define EBITDA as operating income before depreciation, amortization and merger, facility consolidation and impairment charges. EBITDA is not a substitute for operating income or a better indicator of liquidity than cash flows from operating activities. Cash flows from operating, investing and financing activities are required disclosures under generally accepted accounting principles. EBITDA is included herein to provide additional information with respect to our ability to meet our future debt service, capital expenditure and working capital requirements. EBITDA is not necessarily a measure of our ability to fund our cash needs. See the Consolidated Statements of Cash Flows and the related notes thereto included in our Annual Report on Form 10-K for the fiscal year ended May 31, 1998, incorporated by reference herein. We disclose EBITDA because the investment community finds it to be a useful tool for measuring our ability to service debt. (4) EBITDA margin is EBITDA divided by net operating revenues. (5) The ratio of EBITDA to net interest expense is calculated by dividing EBITDA by interest expense, net of investment earnings and the capitalized portion of interest expense. 5 RISK FACTORS YOU SHOULD CONSIDER CAREFULLY THE FOLLOWING FACTORS, AS WELL AS THE OTHER INFORMATION SET FORTH OR INCORPORATED BY REFERENCE IN THE PROSPECTUS, BEFORE TENDERING YOUR OLD NOTES IN THE EXCHANGE OFFER. WHEN WE USE THE TERM "NOTES" IN THIS PROSPECTUS, THE TERM INCLUDES THE 7 5/8% OLD NOTES, THE 7 5/8% NEW NOTES, THE 8 1/8% OLD NOTES AND THE 8 1/8% NEW NOTES. CONSEQUENCES OF NOT EXCHANGING NOTES If you do not exchange your old notes in the Exchange Offer, your old notes will continue to be subject to the restrictions on transfer described in the legend on the certificate for the old notes. In general, you may offer or sell the old notes only if they are registered under, offered or sold pursuant to an exemption from, or offered or sold in a transaction not subject to, the Securities Act and applicable state securities laws. We believe that new notes issued in exchange for old notes pursuant to the Exchange Offer may be offered for resale, resold or otherwise transferred by you without registering the new notes under the Securities Act or delivering a prospectus so long as you (1) are not one of our "affiliates", which is defined in Rule 405 of the Securities Act, and (2) acquire the new notes in the ordinary course of your business and, unless you are a broker dealer, you do not have any arrangement with any person to participate in the distribution of such new notes. Our belief is based on interpretations by the Commission's staff in no- action letters issued to third parties. Please note that the Commission has not considered our Exchange Offer in the context of a no-action letter and we cannot assure you that the Commission's staff would make a similar determination with respect to our Exchange Offer. Unless you are a broker-dealer, you must acknowledge that you are not engaged in, and do not intend to engage in, a distribution of the new notes and that you have no arrangement or understanding to participate in a distribution of the new notes. If you are an affiliate of the Company, or you are engaged in, intend to engage in or have any arrangement or understanding with respect to, the distribution of new notes acquired in the Exchange Offer, you (1) should not rely on our interpretations of the position of the Commission's staff and (2) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. If you are a broker-dealer and receive new notes for your own account pursuant to the Exchange Offer, you must acknowledge that you will deliver a prospectus in connection with any resale of such new notes. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, you will not be deemed to admit that you are an "underwriter" within the meaning of the Securities Act. If you are a broker-dealer, you may use this Prospectus, as it may be amended or supplemented from time to time, in connection with the resale of new notes received in exchange for old notes acquired by you as a result of market-making or other trading activities. For a period of 90 days after the expiration of the Exchange Offer, we will make this Prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution." In addition, you may offer or sell the new notes in certain jurisdictions only if they have been registered or qualified for sale there, or an exemption from registration or qualification is available and is complied with. Subject to the limitations specified in the registration rights agreement, we will register or qualify the new notes for offer or sale under the securities laws of any jurisdictions that you reasonably request in writing. Unless you request that the sale of the new notes be registered or qualified in a jurisdiction, we currently do not intend to register or qualify the sale of the new notes in any jurisdiction. CERTAIN FINANCING CONSIDERATIONS; LEVERAGE AMOUNT OF LEVERAGE As of May 31, 1998, we had approximately $5.8 billion of outstanding indebtedness, including short-term borrowings and notes and the current portion of long-term debt, and approximately $3.6 billion of shareholders' equity. Outstanding indebtedness was approximately 62.2% of our total capitalization, which was approximately $9.4 billion. See "Capitalization". 6 RESTRICTIVE COVENANTS Our bank credit facility contains various covenants that limit our ability to engage in certain transactions. Those covenants: - limit our and our subsidiaries' ability to borrow and to place liens on our assets; - limit our investments and the sale of all or substantially all of our assets; - limit our prepayment of subordinated debt including the 8 1/8% notes; - prohibit us from purchasing our stock or paying dividends unless our senior long-term unsecured debt securities are rated BBB- or higher by Standard and Poors' Rating Services and Baa3 or higher by Moody's Investors Service, Inc.; - require us to maintain a minimum consolidated net worth; and - require us to comply with coverage ratio tests. Indentures governing our debt securities, including the notes, include some covenants of a similar nature. Although the old notes do not, and the new notes will not, contain any requirement that we maintain minimum consolidated net worth or other ratios, our failure to comply with any of these covenants could result in an event of default under our indebtedness, including the notes. That in turn could cause an event of default to occur under all or substantially all of our other then outstanding indebtedness. See "Description of Notes--Certain Covenants." AFFECT ON ABILITY TO FINANCE FUTURE OPERATIONS Our level of indebtedness relative to our total capitalization and the covenants described above may adversely affect our ability to finance our future operations. Those factors also could limit our ability to pursue business opportunities that may be in our interests. In particular, changes in medical technology, existing, proposed and future legislation, regulations and the interpretation thereof, and the increasing importance of entering into contracts with health maintenance organizations ("HMO's") and other managed care companies and being part of or creating integrated healthcare delivery systems may require significant investments in facilities, equipment, personnel and services. Although we believe that cash generated from operations, amounts available under our bank credit facility and our ability to access capital markets will be sufficient to allow us to make such investments, we cannot assure you that we 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 us, providing those competitors with a potential competitive advantage in making such investments. ACQUISITION STRATEGY OUR STRATEGY An important part of our business strategy is expanding and enhancing our integrated healthcare delivery systems and services through the acquisition of, and partnerships and affiliations with, hospitals, groups of hospitals, other healthcare businesses, ancillary healthcare providers, physician practices and physician practice assets. Although, we believe that this strategy will enable us to better compete for managed care contracts, there can be no assurance that this will be a successful strategy. 7 INDUSTRY-RELATED CONSIDERATIONS Several factors have caused our pace for acquisitions of, and partnerships and affiliations with, general hospitals to slow. First, many states have enacted, and other states are considering enacting, legislation that requires public hearings about or state approval of conversions of not-for-profit hospitals to for-profit status and acquisitions of not-for-profit hospitals by for-profit companies. These reviews and hearings have resulted in it taking longer to acquire not-for-profit hospitals. Second, not-for-profit boards have become more deliberative in the process of selling their hospitals and increasingly are engaging investment bankers or other third parties to assist with the sale process. Third, start-up companies and financially strong not- for-profit bidders--alone or in consortiums--continue to compete with us for acquisitions. As a result, we did not acquire as many hospitals as we otherwise might have in fiscal 1998. Finally, a recent revenue ruling by the Internal Revenue Service has had a chilling effect on the formation of certain joint ventures between not-for-profit and for-profit corporations. In the past, relationships established through joint ventures have led to acquisition opportunities. AFFECT ON ABILITY TO CONSUMMATE AND INTEGRATE ADDITIONAL ACQUISITIONS, PARTNERSHIPS OR AFFILIATIONS We cannot assure you that suitable acquisitions, partnerships and/or affiliations can be consummated on terms favorable to us or that we can obtain financing for such acquisitions, if necessary. See "--Certain Financing Considerations; Leverage." Furthermore, we cannot assure you that even if we continue to acquire and/or enter into partnerships or affiliations with additional facilities and related healthcare service providers in the geographic areas in which we currently operate, federal and state regulatory agencies will not constrain our ability to grow. Finally, we cannot assure you that we will be able to operate profitably, or effectively integrate the operations of or otherwise achieve the intended benefits from, any hospitals, facilities, businesses or other assets we may acquire or with which we may enter into partnerships or affiliations. COMPETITION The healthcare industry, including our company, in recent years has had to contend with increased competition for patients and staff physicians, excess capacity at general hospitals, a shift from inpatient to outpatient treatment settings and increased consolidation. The increased competition as well as the factors described below have led to increased emphasis on the use of alternative healthcare delivery systems (such as home health services, outpatient surgery and emergency and diagnostic centers). That in turn has resulted in certain conditions being treated and certain procedures being performed outside of general hospitals, which has reduced the number and the length of general hospital stays and has led to a higher acuity level for patients who are admitted to general hospitals. The principal factors contributing to these trends are advances in medical technology and pharmaceuticals, cost-containment efforts by managed care payors, employers and traditional healthcare insurers, changes in regulations and reimbursement policies, increases in the number and type of competing healthcare providers and changes in physician practice patterns. We expect these trends and factors to continue to adversely impact our general hospitals. The revenues and operating results of most of our hospitals are significantly affected by the hospitals' ability to negotiate favorable contracts with HMO's and other managed care payors. Our future success will depend, in part, on our hospitals' ability to continue to attract and retain staff physicians, to enter into managed care contracts and to organize and structure integrated healthcare delivery systems. We cannot assure you that our hospitals will continue to be able to, on terms favorable to us, 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, including some with greater financial resources or a wider range of services, may be competing. We expect pressures imposed by government and private payors and the increasing percentage of business negotiated with purchasers of group healthcare services to continue to affect our per-patient revenues adversely. 8 LIMITS ON PAYMENTS GOVERNMENT PROGRAMS Payments from government programs, such as Medicare and Medicaid, account for approximately 42% of our net operating revenues. Recent legislative changes, including the Balanced Budget Act of 1997 (the "1997 Act"), have resulted in limitations on and, in some cases, reductions in levels of payments to, healthcare providers under government programs. The 1997 Act is being phased in over a period of five years beginning October 1, 1997. The 1997 Act significantly changes the method of paying us under the Medicare and Medicaid programs. These changes have resulted, and we expect will continue to result, in significant reductions in payments to us for our inpatient, outpatient, home health, capital and skilled nursing facilities costs. We do not expect the aggregate effect of the reduced payments, however, to have a material adverse effect on our business, financial condition or results of operations. PRIVATE PAYOR FEE STRUCTURES AND PROCEDURES 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. With capitated contracts, we receive specific fixed periodic payments from an HMO, preferred provider organization, or employer, based on the number of members of such organization we service. In return, we agree to provide healthcare services to such members regardless of the actual costs incurred and services provided. The profitability of such contracts depends upon our ability to negotiate payments per patient that, in the aggregate, are adequate to cover the cost of meeting the healthcare needs of the covered persons. We cannot assure you that we will be able to enter into any such contracts or that, if we do, the payments received will be adequate to cover the cost of meeting the healthcare needs of the covered persons. 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. Efforts to impose reduced allowances, greater discounts and more stringent cost controls by government and other payors also are expected to continue. Although we are unable to predict the effect these changes will have on our operations, significant limits on the scope of services reimbursed and on reimbursement rates and fees could have a material adverse effect on our business, financial condition or results of operations. UTILIZATION REVIEW Controls imposed by government and private payors designed to reduce admissions and lengths of stay have affected and are expected to continue to affect our facilities. For example, certain treatments and procedures are performed less often due to such controls, including what is commonly referred to as "utilization review." Utilization review entails the review of the admission and course of treatment of a patient by a third party. Utilization review by third-party peer review organizations ("PROs") is required in connection with providing care paid for by Medicare and Medicaid. Utilization review by third parties also is a requirement of many managed care arrangements. 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 and 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 payable under the Medicare, Medicaid and other government programs, including the payment or receipt of remuneration 9 for the referral of patients whose care will be paid for by such 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. In addition, Section 1877 of the Social Security Act (commonly referred to as the "Stark" laws) restricts referrals by physicians of Medicare, Medicaid 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. 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. Our participation in and development of joint ventures and other financial relationships with physicians could be adversely affected by these amendments and similar state enactments. The federal government has issued regulations that describe some of the conduct and business relationships that are permissible under the Antikickback Amendments ("Safe Harbors"). The fact that certain conduct or a given business arrangement does not fall within a Safe Harbor does not render the conduct or business arrangement per se illegal under the Antikickback Amendments. Such conduct and business arrangements, however, do risk increased scrutiny by government enforcement authorities. We may be less willing than some of our competitors to enter into conduct or business arrangements that do not clearly satisfy the Safe Harbors. Declining opportunities in which our competitors are willing to engage may put us at a competitive disadvantage. 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 add monetary penalties and include all health plans, whether or not they are reimbursed as a federal program. Both federal and state government agencies are continuing heightened and coordinated civil and criminal enforcement efforts. As part of an announced work plan, the government has begun to scrutinize, among other things, the terms of acquisitions of physician practices by companies that own hospitals. We have received a subpoena from The Department of Health and Human Services requesting information concerning the purchase of certain physician practices, primarily by a company that we acquired after the purchase of such physician practices. We are cooperating with the investigation and we do not believe it will have a material adverse affect on our business, financial condition or results of operations. We believe that the healthcare industry will continue to be subject to increased government scrutiny and investigations such as this. Another trend impacting the healthcare industry today is the increased use of the False Claims Act by individuals. Such QUI TAM or "whistleblower" actions allow private individuals to bring actions on behalf of the government alleging that the defendant has defrauded the federal government. If the government intervenes in the action and prevails, the party filing the initial complaint may share in any settlement or judgment. If the government does not intervene in the action, the QUI TAM plaintiff may pursue the action independently. From time to time companies in the healthcare industry, including ours, may be subject to QUI TAM actions but, we are unable to predict the impact of such actions. 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 sometimes 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 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 May 31, 1998, we operated hospitals in 12 states with Certificate of Need requirements. We are unable to predict whether we will be able to obtain any required Certificates of Need for future hospitals. 10 We are 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 our business, financial condition or results of operations. HEALTHCARE REFORM LEGISLATION The healthcare industry, one of the largest in the United States, attracts much legislative interest and public attention. Changes in the Medicare, Medicaid and other programs, hospital cost-containment initiatives by public and private payors, proposals to limit payments and healthcare spending and industry-wide 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 there is little history of regulatory or judicial interpretation to rely on. Although we believe that we are in compliance in all material respects with such laws, rules and regulations, if a determination were made that we were in material violation of such laws, rules or regulations, it could have a material adverse effect on our business, financial condition or results of operations. As discussed under "--Risk Factors--Limits on Payment," the 1997 Act has the effect of reducing payments to hospitals and other healthcare providers under the Medicare program. This has had, and we expect it to continue to have, a significant but not material impact on our revenues under the Medicare program. In addition, there continue to be federal and state proposals that would, and actions that do, impose more limitations on payments to providers like ourselves and proposals to increase co-payments and deductibles from patients. Many states have enacted or are considering enacting measures that are designed to reduce their Medicaid expenditures and to change 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 was granted a waiver and has implemented a managed care program for some of its Medicaid participants. Texas was denied a waiver under Section 1115 of the 1997 Act but is in the process of implementing regional managed care programs under a more limited waiver. Texas also plans to apply for federal funds for children's health programs under the 1997 Act. Louisiana is considering wider use of managed care for its Medicaid population. 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 has enacted a program creating a system of local purchasing cooperatives and has proposed other changes that have not yet been enacted. Florida also has adopted, and other states are considering adopting, legislation imposing a tax on net revenues of hospitals to help finance or expand their 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 include coverage for some people who are currently uninsured. We are unable to predict the future course of federal, state or local healthcare legislation. Further changes in the law or regulatory framework that reduce our revenues or increase our costs could have a material adverse effect on our business, financial condition or results of operations. CERTAIN LEGAL PROCEEDINGS We have been involved in significant legal proceedings of an unusual nature related principally to our discontinued psychiatric business. In prior years, we recorded provisions to estimate the cost of the ultimate disposition of these proceedings, including estimated legal fees. We have settled the most significant of these matters. The remaining reserves are for unusual litigation costs that relate to matters that were not settled as of May 31, 1998, and an estimate of the legal fees to be incurred subsequent to May 31, 1998. These reserves represent management's estimate of the remaining net costs of the ultimate 11 disposition of these matters. We cannot assure you, however, that the ultimate liability will not exceed such estimates. Based upon information currently available to it, management believes that the amount of damages, if any, in excess of its reserves for unusual litigation costs that may be awarded in any unresolved legal proceedings cannot reasonably be estimated; however it does not believe it is likely that any such damages will have a material adverse effect on our business, financial condition or results of operations. We continue to defend a greater-than-normal level of civil litigation relating to certain subsidiaries' discontinued psychiatric operations. The majority of such lawsuits allege medical malpractice, fraud and conspiracy by us and certain of our subsidiaries and former employees and numerous doctors and other healthcare professionals. Many of the cases alleging fraud and conspiracy by us and certain of our subsidiaries have been resolved. We believe that this litigation has arisen primarily from advertisements by lawyers seeking former psychiatric patients in order to file claims against us and certain of our subsidiaries. The advertisements focus, in many instances, on the settlement of past disputes involving the operations of the subsidiaries' discontinued psychiatric business. The number of advertisements has increased and we expect that additional lawsuits with similar allegations will be filed. We believe we have a number of defenses to each of these actions and will defend these and any additional lawsuits vigorously. Until the lawsuits are resolved, however, we will continue to incur substantial legal expenses. In the normal course of business we are also subject to claims and lawsuits relating to injuries arising from patient treatment. We believe that our liability for damages resulting from such claims and lawsuits in the normal course of business is adequately covered by insurance or is adequately provided for in our consolidated financial statements. POSSIBLE INABILITY TO PURCHASE NOTES UPON A CHANGE OF CONTROL Upon the occurrence of a Change of Control Triggering Event (defined on page [ ] below), you may require us to purchase your notes at 101% of their principal, plus accrued and unpaid interest to the date of purchase. Please note, however, that the terms of our bank credit facility limit our ability to purchase your 8 1/8% new notes and the 8 1/8% old notes (together, the "8 1/8% notes") upon the occurrence of a Change of Control Triggering Event. Any of our future credit agreements or other agreements relating to indebtedness may contain similar restrictions and provisions. The Indentures relating to the 7 5/8% new notes and the 7 5/8% old notes (together, the "7 5/8% notes") and our other debt obligations also may restrict our ability to purchase your 8 1/8% notes upon a Change of Control Triggering Event. Accordingly, we may not be able to satisfy our obligations to purchase your 8 1/8% notes unless we are able to refinance or obtain waivers with respect to our existing bank credit facility and certain other indebtedness. We cannot assure that we will have the financial resources to purchase your notes in the event of a Change of Control Triggering Event, particularly if such Change of Control Triggering Event requires us to refinance, or results in the acceleration of, other indebtedness. SUBORDINATION SUBSIDIARY OPERATIONS Our operations are and will be conducted by our subsidiaries. Similarly, substantially all of our assets are and will be owned by our subsidiaries. Accordingly, your new notes and your old notes will be effectively subordinated to all existing and future obligations and other liabilities (including trade payables) of our subsidiaries. Any right we have to the assets of each of our subsidiaries upon the liquidation, reorganization or insolvency of such subsidiary (and consequently your right as a holder of notes to participate in those assets) will be effectively subordinated to the claims of the creditors (including trade creditors) and preferred stockholders, if any, of such subsidiary, except to the extent we have a claim against such subsidiary as a creditor of such subsidiary. 12 If any claims we may have as a creditor of a subsidiary are recognized, such claims would be subordinate to any security interest in the assets of such subsidiary and any indebtedness of such subsidiary senior to that held by us. NOTES ARE NOT GUARANTEED BY SUBSIDIARIES Our ability to make required principal and interest payments on our indebtedness, including the notes, depends on the earnings of our subsidiaries and on our ability to receive dividends or other payments from such subsidiaries. Please note that the notes are our obligations only. Our subsidiaries are not obligated or required to pay any amounts due pursuant to the notes or to make dividends or advances to us. 8 1/8% NOTES ARE SUBORDINATED Further, the 8 1/8% old notes are, and the 8 1/8% new notes will be, subordinated to our other debt. The indentures provide that we may not pay (other than certain payments in the form of subordinated securities or from a defeasance trust) any principal of, premium, if any, or interest on the 8 1/8% notes during the continuance of a payment default with respect to any designated senior debt. The indentures also provide that we may not defease, repurchase, redeem or otherwise acquire or retire the 8 1/8% notes (other than certain payments in the form of subordinated securities or from a defeasance trust) during the continuance of a payment default with respect to any designated senior debt. Designated senior debt includes all borrowings under our bank credit facility and, after the repayment of the bank credit facility, any other senior debt permitted under the 8 1/8% indenture, the principal amount of which is $100 million or more and that we designated as "designated senior debt." In addition, if any non-payment default occurs that would permit acceleration of any designated senior debt, the holders of such designated senior debt may prohibit us from making any payment upon or in respect of the 8 1/8% notes for a period of up to 179 days. Upon any liquidation or dissolution of our Company or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to our Company, holders of senior debt will be entitled to receive payment in full prior to your receiving any payment with respect to your 8 1/8% notes (other than certain payments in the form of subordinated securities or from a defeasance trust). See "Description of Notes--Subordination of 8 1/8% notes." FORWARD-LOOKING STATEMENTS Certain statements contained in this Prospectus, including, without limitation, statements containing the words "believes, anticipates, expects, intends, will, may, and might" and words of similar import and statements regarding our business strategy and plans, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on management's current expectations and involve known and unknown risks, uncertainties and other factors, many of which we are unable to predict or control, that may cause our actual results, performance or achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions, both nationally and regionally; industry capacity; demographic changes; existing laws and government regulations and changes in, or the failure to comply with, laws and governmental regulations; legislative proposals for healthcare reform; the ability to enter into managed care provider arrangements on acceptable terms; shifts from fee- for-service payment to capitated and other risk-based payment systems; changes in Medicare and Medicaid reimbursement levels; liability and other claims asserted against us; competition; the loss of any significant customers; technological and pharmaceutical improvements that increase the cost of providing, or reduce the demand for, healthcare; changes in business strategy or development plans; the ability to attract and retain qualified personnel, including physicians; our significant indebtedness; the availability of suitable acquisition opportunities and the length of time it takes to accomplish acquisitions; our ability to integrate 13 new businesses with our existing operations; the availability and terms of capital to fund the expansion of our business, including the acquisition of additional facilities; the impact of the computer problems with respect to two-digit codes not being able to properly recognize the year 2000 and related issues; and other factors referenced in this Prospectus and the documents incorporated herein by reference. Certain of these factors are discussed in more detail elsewhere in this Prospectus and the documents incorporated herein by reference. GIVEN THESE UNCERTAINTIES, PROSPECTIVE INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON SUCH FORWARD-LOOKING STATEMENTS. We disclaim any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments. ABSENCE OF PUBLIC MARKET; TRANSFER RESTRICTIONS We will apply to have the new notes listed on the New York Stock Exchange, however, there is no existing market for your new notes. We cannot assure you that any market for any of the new notes will develop or that any market that may develop will be liquid. The credit markets are volatile and unpredictable, which may have an adverse effect on the liquidity of and prices for the new notes. The new notes could trade at prices that may be lower than the initial offering price of the old notes as a result of many factors, including prevailing interest rates, our financial condition or results of operations and the markets for similar securities. EXCHANGE OFFER PROCEDURES Subject to the conditions set forth under "The Exchange Offer--Conditions to the Exchange Offer," delivery of new notes in exchange for old notes tendered and accepted for exchange pursuant to the Exchange Offer will be made only after timely receipt by the exchange agent of the following: (1) certificates for old notes or a book-entry confirmation of a book-entry transfer of old notes into the Exchange Agent's account at The Depository Trust Company, New York, New York as depository, including an Agent's Message (as defined) if the tendering holder does not deliver a Letter of Transmittal, (2) a completed and signed Letter of Transmittal (or facsimile thereof), with any required signature guarantees, or, in the case of a book-entry transfer, an Agent's Message in lieu of the Letter of Transmittal, and (3) any other documents required by the Letter of Transmittal. Therefore, holders of old notes who would like to tender old notes in exchange for new notes should be sure to allow enough time for the old notes to be delivered on time. We are not required to notify you of defects or irregularities in tenders of old notes for exchange. Old notes that are not tendered or that are tendered but we do not accept for exchange will, following consummation of the Exchange Offer, continue to be subject to the existing transfer restrictions under the Securities Act and, upon consummation of the Exchange Offer, certain registration and other rights under the registration rights agreement will terminate. See "The Exchange Offer--Procedures For Tendering Old Notes and--Consequences of Exchange and Old Notes." USE OF PROCEEDS We will not receive any proceeds from the Exchange Offer. 14 CAPITALIZATION The following table sets forth our capitalization as of May 31, 1998.
AS MAY 31, 1998 ------------------- (DOLLARS IN MILLIONS) Short-term borrowings and notes.............................................................. $ 4 Current portion of long-term debt............................................................ 10 ------ Total current debt....................................................................... 14 ------ Long-term debt, net of current portion: Loans payable to banks--unsecured.......................................................... 1,587 9 5/8% Senior Notes due 2002............................................................... 14 8 5/8% Senior Notes due 2003............................................................... 500 7 7/8% Senior Notes due 2003............................................................... 400 8% Senior Notes due 2005................................................................... 900 7 5/8% Senior Notes due 2008............................................................... 350 10 1/8% Senior Subordinated Notes due 2005................................................. 3 8 5/8% Senior Subordinated Notes due 2007.................................................. 700 8 1/8% Senior Subordinated Notes due 2008.................................................. 1,005 6% Exchangeable Subordinated Notes due 2005................................................ 320 Other debt(1).............................................................................. 50 ------ Total long-term debt, net of current portion............................................. 5,829 ------ Shareholders' equity: Common stock, par value $0.075, authorized 700,000,000 shares; issued 313,044,417 shares(2)................................................................................ 23 Other shareholders' equity................................................................. 3,605 Less treasury stock, at cost, 3,754,891 shares............................................. (70) ------ Total shareholders' equity............................................................... 3,558 ------ Total capitalization..................................................................... $ 9,401 ------ ------
- ------------------------ (1) Includes other notes payable, capitalized lease obligations and $92 million of unamortized debt discounts related to several issues of debt. (2) Does not include 42,123,917 shares of our common stock reserved for issuance upon exercise of options. 15 SELECTED FINANCIAL INFORMATION The following tables set forth our selected financial information for each of the fiscal years in the three-year period ended May 31, 1998. The selected financial information for each of the three fiscal years is from our consolidated financial statements, which have been audited by KPMG Peat Marwick LLP, our independent auditors, and from our underlying accounting records. Operating results for all periods presented exclude the discontinued psychiatric operations of certain of our subsidiaries and extraordinary charges from the early extinguishment of debt. All information included in the following tables should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," with the consolidated financial statements and related notes and the report of our independent auditors included in our Annual Report on Form 10-K for the fiscal year ended May 31, 1998, incorporated herein by reference.
YEAR ENDED MAY 31, ------------------------------- 1996 1997 1998 --------- --------- --------- (DOLLARS IN MILLIONS) STATEMENT OF OPERATIONS DATA:(1) Net operating revenues............................................................... $ 7,706 $ 8,691 $ 9,895 Operating expenses: Salaries and benefits.............................................................. 3,130 3,574 4,052 Supplies........................................................................... 1,056 1,197 1,375 Provision for doubtful accounts.................................................... 431 494 588 Other operating expenses........................................................... 1,646 1,829 2,071 Depreciation....................................................................... 319 335 347 Amortization....................................................................... 100 108 113 Merger, facility consolidation and impairment charges(2)........................... 86 740 221 --------- --------- --------- Operating income..................................................................... 938 414 1,128 Interest expense, net of capitalized portion......................................... (425) (417) (464) Investment earnings.................................................................. 27 26 22 Equity in earnings of unconsolidated affiliates...................................... 25 1 -- Minority interests................................................................... (30) (27) (22) Net gains (losses) on disposals of facilities and long-term investments.............. 346 (18) (17) --------- --------- --------- Income (loss) from continuing operations before income taxes......................... 881 (21) 647 Taxes on income...................................................................... (383) (52) (269) --------- --------- --------- Income (loss) from continuing operations............................................. $ 498 $ (73) $ 378 --------- --------- --------- --------- --------- --------- Ratio of earnings to fixed charges(3)................................................ 2.7x 1.0x 2.1x
16
AS OF MAY 31, ------------------------------- 1996 1997 1998 --------- --------- --------- (DOLLARS IN MILLIONS) BALANCE SHEET DATA:(1) Working capital.................................................................. $ 499 $ 522 $ 1,123 Total assets..................................................................... 10,768 11,705 12,833 Long-term debt, excluding current portion........................................ 4,421 5,022 5,829 Shareholders' equity............................................................. 3,277 3,224 3,558
- ------------------------ (1) On January 30, 1997, we acquired OrNda by issuing 81.4 million shares of its common stock in the OrNda Merger. We have accounted for the transaction as a pooling-of-interests and, accordingly, the consolidated financial statements and all statistical data incorporated by reference herein with respect to periods prior to the combination were restated in fiscal 1997 to include the accounts and results of operations of OrNda for all periods presented. (2) In the year ended May 31, 1996, we recorded an impairment loss of $86 million. In the year ended May 31, 1997, we recorded merger, facility consolidation and impairment charges totaling $740 million, primarily in connection with the OrNda Merger. In the year ended May 31, 1998, we recorded charges of $221 million relating to: 1) the planned closure or sale of five hospitals and several home health agencies; 2) write-offs of goodwill and other assets; and 3) write-downs of carrying values of long-lived assets. (3) We calculate the ratio of earnings to fixed charges by dividing income or loss from continuing operations before income taxes plus fixed charges by fixed charges. Fixed charges consist of interest expense, including amortization of financing costs, and that portion of rental expense deemed to be representative of the interest component of rental expense. The ratio of earnings to fixed charges for the year ended May 31, 1998, on a pro forma basis assuming that the old notes had been issued as of June 1, 1997, would have been 2.2x. The ratio of earnings to fixed charges was 2.4x and 2.2x for the years ended May 31, 1994 and 1995, respectively. 17 DESCRIPTION OF NOTES GENERAL The 7 5/8% old notes were, and the 7 5/8% new notes will be, issued pursuant to the 7 5/8% indenture between the Company and The Bank of New York, as Trustee (the "7 5/8% Note Trustee"). The 8 1/8% old notes were, and the 8 1/8% new notes will be, issued pursuant to the 8 1/8% indenture between the Company and The Bank of New York, as Trustee (the "8 1/8% Note Trustee" and, together with the 7 5/8% Note Trustee, the "Trustees"). The terms of the new notes include those stated in the indentures and those made part of the indentures by reference to the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The notes are subject to all such terms, and holders of notes are referred to the indentures and the Trust Indenture Act for a statement thereof. Because this is a summary, it does not contain all the information that may be important to you. You should read the entire indentures, including the definitions therein of certain terms used below. For definitions of certain terms used in the following summary, see "--Certain Definitions." As used in this "Description of Notes," the term the "Company" refers to Tenet Healthcare Corporation and not to any of its Subsidiaries. The 7 5/8% old notes are, and the 7 5/8% new notes will be, general unsecured obligations of the Company, senior to all subordinated Indebtedness of the Company, including the 8 1/8% notes, and PARI PASSU in right of payment with all other existing and future unsubordinated Indebtedness of the Company, including the Company's 9 5/8% Notes, the Company's 8% Senior Notes due 2005 (the "8% Notes"), the Company's 7 7/8% Senior Notes due 2003 (the "7 7/8% Notes") and the Company's 8 5/8% Senior Notes due 2003 (the "8 5/8% Senior Notes" and, together with the untendered 9 5/8% Notes, the 8% Notes and the 7 7/8% Notes, the "Existing Senior Notes") and all Obligations under the Existing Credit Facility. As of July 31, 1998, approximately $2.0 billion in principal amount of outstanding indebtedness of the Company was, by its terms, subordinated to the 7 5/8% new notes. The 8 1/8% old notes are, and the 8 1/8% new notes will be, general unsecured obligations of the Company, subordinated in right of payment to all existing and future Senior Debt of the Company, including the 7 5/8% notes, the Existing Senior Notes and all Obligations under the Existing Credit Facility, and PARI PASSU in right of payment to the Company's 10 1/8% Notes and the 8 5/8% Senior Subordinated Notes due 2007 and senior to the 6% Exchangeable Subordinated Notes due 2005. As of July 31, 1998, Senior Debt of the Company would have been approximately $4.1 billion. See "Capitalization" and "--Subordination of 8 1/8% Notes." The operations of the Company are conducted through its Subsidiaries and, therefore, the Company is dependent upon the cash flow of its Subsidiaries to meet its obligations, including its obligations under the notes. The old notes are and the new notes will be effectively subordinated to all outstanding Indebtedness and other liabilities and commitments (including trade payables and lease obligations) of the Company's Subsidiaries. Any right of the Company to receive assets of any of its Subsidiaries upon the latter's liquidation or reorganization or insolvency (and the consequent right of the holders of notes to participate in those assets) will be effectively subordinated to the claims of that Subsidiary's creditors and preferred stockholders, except to the extent that the Company is itself recognized as a creditor of such Subsidiary, in which case the claims of the Company would still be subordinate to any security interest in the assets of such Subsidiary and any Indebtedness of such Subsidiary senior to that held by the Company. As of July 31, 1998, the outstanding debt of the Company's Subsidiaries was approximately $173 million (excluding trade payables of $510 million, intercompany debt and other obligations). See "Risk Factors-- Subsidiary Operations; Subordination." PRINCIPAL, MATURITY AND INTEREST The 7 5/8% old notes are, and the 7 5/8% new notes will be, unsecured, senior obligations of the Company limited in aggregate principal amount to $350.0 million and will mature on June 1, 2008. Interest on the 7 5/8% old notes accrues, and on the 7 5/8% new notes will accrue, at the rate of 7 5/8% per annum and 18 will be payable semi-annually in arrears on June 1 and December 1 of each year, commencing on December 1, 1998, to holders of record on the immediately preceding May 15 and November 15, respectively. Interest on the 7 5/8% old notes, accrues, and on the 7 5/8% new notes will accrue, from the most recent date to which interest has been paid. The 8 1/8% old notes are, and the 8 1/8% new notes will be, unsecured obligations of the Company limited in aggregate principal amount to $1.05 billion and will mature on December 1, 2008. Interest on the 8 1/8% old notes accrues, and on the 8 1/8% new notes will accrue, at the rate 8 1/8% per annum and will be payable semi-annually in arrears on June 1 and December 1 of each year, commencing on December 1, 1998, to holders of record on the immediately preceding May 15 and November 15, respectively. Interest on the 8 1/8% old notes accrues, and on the 8 1/8% new notes will accrue, from the most recent date to which interest has been paid. Old notes accepted for exchange will cease to accrue interest from and after the date of consummation of the Exchange Offer. Interest on the old notes is, and on the new notes will be, computed on the basis of a 360-day year comprised of twelve 30-day months. Principal, premium, if any, and interest on the new notes will be payable at the office or agency of the Company maintained for such purpose within The City and the State of New York or, at the option of the Company, payment of interest may be made by check mailed to the holders of the new notes at their respective addresses set forth in the register of holders of new notes; PROVIDED that all payments with respect to the new notes, the holders of which have given wire transfer instructions, on or prior to the relevant record date, to the paying agent, will be required to be made by wire transfer of immediately available funds to the accounts specified by such holders. Until otherwise designated by the Company, the Company's office or agency in New York will be the office of the applicable Trustee maintained for such purpose. The new notes will initially be issued in global form and, in the event they are subsequently certificated, in denominations of $1,000 and integral multiples thereof. OPTIONAL REDEMPTION 7 5/8% NOTES The 7 5/8% old notes are, and the 7 5/8% new notes will be, redeemable, in whole, at any time, or in part, from time to time, at the option of the Company upon not less than 30 nor more than 60 days' notice at a redemption price equal to the Make-Whole Price. "Make-Whole Price" means an amount equal to the greater of (i) 100% of the principal amount of the 7 5/8% new notes and (ii) as determined by an Independent Investment Banker (as defined), the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the date of redemption on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate (as defined), plus, in each case, accrued interest thereon to the date of redemption. "Adjusted Treasury Rate" means, with respect to any redemption date, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue (as defined), assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price (as defined) for such redemption date, plus 0.5%. "Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the 7 5/8% new notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the 7 5/8% new notes. "Comparable Treasury Price" means, with respect to any redemption date, (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third Business Day preceding such redemption date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated 19 "Composite 3:30 p.m. Quotations for U.S. Government Securities" or (ii) if such release (or any successor release) is not published or does not contain such prices on such Business Day, (A) the average of the Reference Treasury Dealer Quotations (as defined) for such redemption date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (B) if the 7 5/8% Note Trustee obtains fewer than three such Reference Treasury Dealer Quotations, the average of all such quotations. "Independent Investment Banker" means one of the Reference Treasury Dealers (as defined) appointed by the Company. "Reference Treasury Dealer" means DLJ and its successors; PROVIDED, HOWEVER, that if the foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a "Primary Treasury Dealer"), the Company shall substitute therefor another Primary Treasury Dealer. "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the 7 5/8% Note Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Treasury Reference Dealer at 5:00 p.m. on the third Business Day preceding such redemption date. 8 1/8% NOTES The 8 1/8% notes will not be redeemable at the option of the Company prior to June 1, 2003. Thereafter, the 8 1/8% notes will be subject to redemption at the option of the Company, in whole or from time to time in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on June 1 of the following years:
YEAR PERCENTAGE - ---------------------------------------------------------------------------------- ----------- 2003.............................................................................. 104.063% 2004.............................................................................. 102.708% 2005.............................................................................. 101.354% 2006 and thereafter............................................................... 100.000%
GENERAL If less than all of the notes are to be redeemed at any time, selection of notes for redemption will be made by the appropriate Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the notes to be redeemed are then listed, or, if the notes are not so listed, on a PRO RATA basis, by lot or by such method as such Trustee shall deem fair and appropriate; PROVIDED that notes with a principal amount of $1,000 shall not be redeemed in part. Notices of redemption shall be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each holder of notes to be redeemed at its registered address. If any notes are to be redeemed in part only, the notice of redemption that relates to such notes shall state the portion of the principal amount thereof to be redeemed. A revised note in principal amount equal to the unredeemed portion thereof will be issued in the name of the holder thereof upon cancellation of the original note. On and after the redemption date, interest will cease to accrue on notes or portions thereof called for redemption. The Existing Credit Facility limits the Company's ability to redeem or otherwise purchase the 8 1/8% notes prior to the stated maturity thereof. In addition, the terms of the indentures governing the 7 5/8% notes and the Existing Senior Notes limit the Company's ability to redeem or otherwise purchase the 8 1/8% notes prior to the stated maturity thereof. 20 SUBORDINATION OF 8 1/8% NOTES The payment of principal of, premium, if any, and interest on the 8 1/8% old notes is, and on the 8 1/8% new notes will be, subordinated in right of payment, as set forth in the 8 1/8% indenture, to the prior payment in full of all Senior Debt, whether outstanding on the date of the 8 1/8% indenture or thereafter incurred. Upon any distribution to creditors of the Company in a liquidation or dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property, an assignment for the benefit of creditors or any marshalling of the Company's assets and liabilities, the holders of Senior Debt will be entitled to receive payment in full of all Obligations due in respect of such Senior Debt (including interest accruing after the commencement of any such proceeding at the rate specified in the applicable Senior Debt, whether or not allowed or allowable as a claim in such proceeding) before the holders of 8 1/8% notes will be entitled to receive any payment with respect to the 8 1/8% notes, and until all Obligations with respect to Senior Debt are paid in full, any distribution to which the holders of 8 1/8% notes would be entitled shall be made to the holders of Senior Debt (except (a) that holders of 8 1/8% notes may receive securities that (i) are subordinated at least to the same extent as the 8 1/8% notes to Senior Debt and any securities issued in exchange for Senior Debt, (ii) are unsecured (except to the extent the 8 1/8% notes are secured), (iii) are not Guaranteed by any Subsidiary of the Company (except to the extent the 8 1/8% notes are so Guaranteed), and (iv) have a Weighted Average Life to Maturity and final maturity that are not shorter than the Weighted Average Life to Maturity of the 8 1/8% notes or any securities issued to holders of Senior Debt under the Existing Credit Facility pursuant to a plan of reorganization or readjustment, and (b) payments made from the trust described under "--Legal Defeasance and Covenant Defeasance." The Company also may not make any payment upon or in respect of the 8 1/8% notes (except in such subordinated securities or from the trust described under "--Legal Defeasance and Covenant Defeasance" if (i) a default in the payment of the principal of, premium, if any, or interest on Designated Senior Debt occurs and is continuing beyond any applicable period of grace or (ii) any other default occurs and is continuing with respect to Designated Senior Debt that permits holders of the Designated Senior Debt as to which such default relates to accelerate its maturity and the 8 1/8% Note Trustee receives a notice of such default (a "Payment Blockage Notice"), for so long as any Obligations are outstanding under the Existing Credit Facility, from the Representative thereunder and, thereafter, from the holders or Representative of any Designated Senior Debt. Payments on the 8 1/8% notes may and shall be resumed (a) in the case of a payment default, upon the date on which such default is cured or waived and (b) in the case of a nonpayment default, the earlier of the date on which such nonpayment default is cured or waived or 179 days after the date on which the applicable Payment Blockage Notice is received, unless the maturity of any Designated Senior Debt has been accelerated. No new period of payment blockage may be commenced within 360 days after the receipt by the 8 1/8% Note Trustee of any prior Payment Blockage Notice. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the 8 1/8% Note Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice. The 8 1/8% indenture further requires that the Company promptly notify holders of Senior Debt if payment of the 8 1/8% notes is accelerated because of an Event of Default. As a result of the subordination provisions described above, in the event of a liquidation or insolvency, holders of 8 1/8% notes may recover less ratably than creditors of the Company who are holders of Senior Debt. As of July 31, 1998, Senior Debt of the Company would have been approximately $4.1 billion. The 8 1/8% indenture limits, subject to certain financial tests, the amount of additional Indebtedness, including Senior Debt, that the Company and its Subsidiaries can incur. See "--Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock." 21 PURCHASE AT THE OPTION OF HOLDERS UPON A CHANGE OF CONTROL Upon the occurrence of a Change of Control Triggering Event, each holder of notes will have the right to require the Company to purchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's notes pursuant to the offer described below (the "Change of Control Offer") at an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, thereon to the date of purchase (the "Change of Control Payment") on a date that is not more than 90 days after the occurrence of such Change of Control Triggering Event (the "Change of Control Payment Date"). Within 30 days following any Change of Control Triggering Event, the Company will mail, or at the Company's request the applicable Trustee will mail, a notice to each holder offering to purchase the notes held by such holder pursuant to the procedures specified in such notice. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the purchase of the notes as a result of a Change of Control Triggering Event. On the Change of Control Payment Date, the Company will, to the extent lawful, (1) accept for payment all notes or portions thereof properly tendered and not withdrawn pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all notes or portions thereof so tendered and (3) deliver or cause to be delivered to the applicable Trustee the notes so accepted together with an Officers' Certificate stating the aggregate principal amount of notes or portions thereof being purchased by the Company. The Paying Agent will promptly mail to each holder of notes so tendered the Change of Control Payment for such notes, and the applicable Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each holder a note equal in principal amount to any unpurchased portion of the notes surrendered, if any; PROVIDED that each such note will be in a principal amount of $1,000 or an integral multiple thereof. The 8 1/8% indenture will provide that, prior to complying with the provisions of this covenant, but in any event within 90 days following a Change of Control Triggering Event, the Company will either repay all outstanding Senior Debt or obtain the requisite consents, if any, under all agreements governing outstanding Senior Debt to permit the purchase of 8 1/8% notes required by this covenant. The Company will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. A failure by the Company to comply with the provisions of the two preceding paragraphs will constitute an Event of Default under the applicable indenture. Except as described above with respect to a Change of Control, the indentures will not contain provisions that permit the holders of the notes to require that the Company purchase or redeem the notes in the event of a takeover, recapitalization or similar transaction. See "--Events of Default and Remedies." The Existing Credit Facility limits the ability of the Company to redeem or otherwise repurchase the 8 1/8% notes prior to the stated maturity thereof, and also provides that certain change of control events with respect to the Company will constitute a default thereunder. Any future credit agreements or other agreements relating to Senior Debt to which the Company becomes a party may contain similar restrictions and provisions. The indenture relating to the 7 5/8% notes also restricts the Company's ability to purchase the 8 1/8% notes upon a Change of Control Triggering Event. In the event a Change of Control occurs at a time when the Company is prohibited from purchasing the 8 1/8% notes, the Company could seek the consent of its lenders or noteholders to purchase the 8 1/8% notes or could attempt to refinance the Indebtedness that contains such prohibition. If the Company does not obtain such a consent or repay such Indebtedness, the Company's ability to purchase the 8 1/8% notes will remain limited. In such case, the Company's failure to purchase tendered 8 1/8% notes would constitute an Event of Default under the 8 1/8% indenture which could, in turn, constitute a default under all or substantially all of the Company's other outstanding Indebtedness. In such circumstances, the subordination provisions in the 8 1/8% indenture would likely restrict payments to the holders of 8 1/8% notes. See "Risk Factors--Possible Inability to Purchase Notes Upon a Change of Control" and "Risk Factors--Subsidiary Operations; Subordination." 22 CERTAIN COVENANTS RESTRICTED PAYMENTS The indentures provide that the Company will not, and will not permit any of its Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any distribution on account of the Company's or any of its Subsidiaries' Equity Interests (other than (w) Physician Joint Venture Distributions, (x) dividends or distributions payable in Qualified Equity Interests of the Company, (y) dividends or distributions payable to the Company or any Subsidiary of the Company, and (z) dividends or distributions by any Subsidiary of the Company payable to all holders of a class of Equity Interests of such Subsidiary on a PRO RATA basis); (ii) purchase, redeem or otherwise acquire or retire for value any Equity Interests of the Company; or (iii) make any principal payment on, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness that is subordinated to the notes issued under such indenture, except at the original final maturity date thereof or pursuant to a Specified Exchange (all such payments and other actions set forth in clauses (i) through (iii) above being collectively referred to as "Restricted Payments"), unless, at the time of and after giving effect to such Restricted Payment (the amount of any such Restricted Payment, if other than cash, shall be the fair market value (as conclusively evidenced by a resolution of the Board of Directors set forth in an Officers' Certificate delivered to the Trustees within 60 days prior to the date of such Restricted Payment) of the asset(s) proposed to be transferred by the Company or such Subsidiary, as the case may be, pursuant to such Restricted Payment): (a) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; and (b) the Company would, at the time of such Restricted Payment and after giving PRO FORMA effect thereto as if such Restricted Payment had been made at the beginning of the most recently ended four full fiscal quarter period for which internal financial statements are available immediately preceding the date of such Restricted Payment, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant in the indentures described below under the caption "--Incurrence of Indebtedness and Issuance of Preferred Stock"; and (c) such Restricted Payment, together with the aggregate of all other Restricted Payments made by the Company and its Subsidiaries after March 1, 1995 (excluding Restricted Payments permitted by clauses (v), (w) and (x) of the next succeeding paragraph), is less than the sum of (i) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after March 1, 1995, to the end of the Company's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), PLUS (ii) 100% of the aggregate net cash proceeds received by the Company from the issue or sale (other than to a Subsidiary of the Company) since March 1, 1995 of Qualified Equity Interests of the Company or of debt securities of the Company or any of its Subsidiaries that have been converted into or exchanged for such Qualified Equity Interests of the Company, plus (iii) $50.0 million. If no Default or Event of Default has occurred and is continuing, or would occur as a consequence thereof, the foregoing provisions will not prohibit the following Restricted Payments: (u) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of the indentures; (v) the payment of cash dividends on any series of Disqualified Stock issued after the date of the indentures in an aggregate amount not to exceed the cash received by the Company since the date of the indentures upon issuance of such Disqualified Stock; (w) the redemption, repurchase, retirement or other acquisition of any Equity Interests of the Company or any Subsidiary in exchange for, or out of the net cash proceeds of, the substantially 23 concurrent sale (other than to a Subsidiary of the Company) of Qualified Equity Interests of the Company; PROVIDED, that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement or other acquisition shall be excluded from clause (c)(ii) of the preceding paragraph; (x) the defeasance, redemption or repurchase of subordinated Indebtedness with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness or in exchange for or out of the net cash proceeds from the substantially concurrent sale (other than to a Subsidiary of the Company) of Qualified Equity Interests of the Company; PROVIDED that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement or other acquisition shall be excluded from clause (c)(ii) of the preceding paragraph; (y) the repurchase, redemption or other acquisition or retirement for value of (i) any Equity Interests of the Company or any Subsidiary of the Company held by any member of the Company's (or any of its Subsidiaries') management pursuant to any management equity subscription agreement or stock option agreement or (ii) any Equity Interests of the Company which are or are intended to be used to satisfy issuances of Equity Interests upon exercise of employee stock options or upon exercise or satisfaction of other similar instruments outstanding under employee benefit plans of the Company or any subsidiary of the Company; PROVIDED that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $25.0 million in any twelve-month period; and (z) the making and consummation of a Change of Control Offer with respect to the 8 1/8% notes in accordance with the provisions of the 8 1/8% indenture or a change of control offer with respect to the untendered 10 1/8% Notes, the 8 5/8% Subordinated Notes or the 6% Exchangeable Subordinated Notes in accordance with the provisions of the indentures relating thereto. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by the covenant described under the caption "--Restricted Payments" were computed. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK The indentures provide that the Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, create, incur, issue, assume, Guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") after the date of the indentures any Indebtedness (including Acquired Debt) and that the Company will not issue any Disqualified Stock and will not permit any of its Subsidiaries to issue any shares of preferred stock; PROVIDED, HOWEVER, that the Company may incur Indebtedness (including Acquired Debt) and the Company may issue shares of Disqualified Stock if the Fixed Charge Coverage Ratio for the Company's most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock is issued would have been at least 2.5 to 1, determined on a PRO FORMA basis (including a PRO FORMA application of the net proceeds therefrom), as if the additional Indebtedness had been incurred, or the Disqualified Stock had been issued, as the case may be, at the beginning of such four-quarter period. Indebtedness consisting of reimbursement obligations in respect of a letter of credit will be deemed to be incurred when the letter of credit is first issued. The foregoing provisions do not apply to: (i) the incurrence by the Company of Indebtedness pursuant to the Existing Credit Facility in an aggregate principal amount at any time outstanding not to exceed an amount equal to $2.8 billion less the aggregate amount of all mandatory repayments applied to permanently reduce the commitments with respect to such Indebtedness; (ii) the incurrence by the Company of Indebtedness represented by the notes; (iii) the incurrence by the Company and its Subsidiaries of the Existing Indebtedness; 24 (iv) the incurrence by the Company or any of its Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund, Indebtedness that was permitted by the indentures to be incurred (including, without limitation, Existing Indebtedness); (v) the incurrence by the Company or any of its Subsidiaries of intercompany Indebtedness between or among the Company and any of its Subsidiaries; (vi) the incurrence by the Company of Hedging Obligations that are incurred for the purpose of fixing or hedging interest rate or currency risk with respect to any fixed or floating rate Indebtedness that is permitted by the indentures to be outstanding or any receivable or liability the payment of which is determined by reference to a foreign currency; PROVIDED that the notional principal amount of any such Hedging Obligation does not exceed the principal amount of the Indebtedness to which such Hedging Obligation relates; (vii) the incurrence by the Company or any of its Subsidiaries of Physician Support Obligations; (viii) the incurrence by the Company or any of its Subsidiaries of Indebtedness represented by tender, bid, performance, government contract, surety or appeal bonds, standby letters of credit or warranty or contractual service obligations of like nature, in each case to the extent incurred in the ordinary course of business of the Company or such Subsidiary; (ix) the incurrence by any Subsidiary of the Company of Indebtedness, the aggregate principal amount of which, together with all other Indebtedness of the Company's Subsidiaries at the time outstanding (excluding the Existing Indebtedness until repaid or refinanced and excluding Physician Support Obligations), does not exceed the greater of (1) 10% of the Company's Stockholders' Equity as of the date of incurrence or (2) $10.0 million; PROVIDED that, in the case of clause (1) only, the Fixed Charge Coverage Ratio for the Company's most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such Indebtedness is incurred would have been at least 2.5 to 1, determined on a PRO FORMA basis (including a PRO FORMA application of the net proceeds therefrom), as if such Indebtedness had been incurred at the beginning of such four-quarter period; and (x) the incurrence by the Company of Indebtedness (in addition to Indebtedness permitted by any other clause of this covenant) in an aggregate principal amount at any time outstanding not to exceed $400.0 million. LIENS The 7 5/8% indenture provides that the Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien (except Permitted Liens) on any asset now owned or hereafter acquired, or any income or profits therefrom or assign or convey any right to receive income therefrom unless all payments due under the 7 5/8% indenture and the 7 5/8% notes are secured on an equal and ratable basis with the Obligations so secured until such time as such Obligations are no longer secured by a Lien. The 8 1/8% indenture provides that the Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien to secure Indebtedness that is PARI PASSU with or subordinated in right of payment to the 8 1/8% notes (except Permitted Liens) on any asset now owned or hereafter acquired, or any income or profits therefrom or assign or convey any right to receive income therefrom unless all payments due under the 8 1/8% indenture and the 8 1/8% notes are secured on an equal and ratable basis with the Obligations so secured until such time as such Obligations are no longer secured by a Lien. 25 DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES The indentures provide that the Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Subsidiary to (i)(a) pay dividends or make any other distributions to the Company or any of its Subsidiaries (1) on its Capital Stock or (2) with respect to any other interest or participation in, or measured by, its profits, or (b) pay any Indebtedness owed to the Company or any of its Subsidiaries, (ii) make loans or advances to the Company or any of its Subsidiaries or (iii) transfer any of its properties or assets to the Company or any of its Subsidiaries, except for such encumbrances or restrictions existing under or by reason of (a) Existing Indebtedness as in effect on the date of the indentures, (b) the indentures, (c) applicable law, (d) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition, unless such Indebtedness was incurred in connection with or in contemplation of such acquisition for the purpose of refinancing Indebtedness which was tax-exempt, or in violation of the covenant described above under the caption "--Incurrence of Indebtedness and Issuance of Preferred Stock"), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, PROVIDED that the Consolidated Cash Flow of such Person is not taken into account in determining whether such acquisition was permitted by the terms of the indentures except to the extent that such Consolidated Cash Flow would be permitted to be dividends to the Company without the prior consent or approval of any third party, (e) customary non-assignment provisions in leases entered into in the ordinary course of business, (f) purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the nature described in clause (iii) above on the property so acquired, (g) Permitted Refinancing Indebtedness, PROVIDED that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more restrictive than those contained in the agreements governing the Indebtedness being refinanced, or (h) the Existing Credit Facility and related documentation as the same is in effect on the date of the indentures and as amended, modified, extended, renewed, refunded, refinanced, restated or replaced from time to time, provided that no such amendment or replacement is more restrictive as to the matters enumerated above than the Existing Credit Facility and related documentation as in effect on the date of the indentures. LINE OF BUSINESS The indentures provide that the Company will not, and will not permit any of its Subsidiaries to, engage in any material extent in any business other than the ownership, operation and management of Hospitals and Related Businesses. MERGER, CONSOLIDATION OR SALE OF ASSETS The indentures provide that the Company may not consolidate or merge with or into (whether or not the Company is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to another corporation, Person or entity unless: (i) the Company is the surviving corporation or the entity or the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia; (ii) the entity or Person formed by or surviving any such consolidation or merger (if other than the Company) or the entity or Person to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made assumes all the Obligations of the Company under the Notes and the indentures pursuant to supplemental indentures in forms reasonably satisfactory to the applicable Trustee; (iii) immediately after such transaction no Default or Event of Default exists; and (iv) the Company or the 26 entity or Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made (A) will have a Consolidated Net Worth immediately after the transaction equal to or greater than the Consolidated Net Worth of the Company immediately preceding the transaction and (B) will, at the time of such transaction and after giving PRO FORMA effect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant in the applicable indenture described above under the caption "--Incurrence of Indebtedness and Issuance of Preferred Stock." TRANSACTIONS WITH AFFILIATES The indentures provide that the Company will not, and will not permit any of its Subsidiaries to, sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make any contract, agreement, understanding, loan, advance or Guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (i) such Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Subsidiary than those that could have been obtained in a comparable transaction by the Company or such Subsidiary with an unrelated Person and (ii) the Company delivers to the applicable Trustee (a) with respect to any Affiliate Transaction involving aggregate consideration in excess of $5.0 million, a resolution of the Board of Directors set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with clause (i) above and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors and (b) with respect to any Affiliate Transaction involving aggregate consideration in excess of $15.0 million, an opinion as to the fairness to the Company or such Subsidiary of such Affiliate Transaction from a financial point of view issued by an investment banking firm of national standing; PROVIDED that (x) transactions or payments pursuant to any employment arrangements or employee or director benefit plans entered into by the Company or any of its Subsidiaries in the ordinary course of business and consistent with the past practice of the Company or such Subsidiary, (y) transactions between or among the Company and/or its Subsidiaries and (z) transactions permitted by the provisions of the indentures described under the caption "Limitations on Restricted Payments", in each case, shall not be deemed to be Affiliate Transactions. LIMITATIONS ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS BY SUBSIDIARIES The 7 5/8% indenture provides that the Company will not permit any Subsidiary, directly or indirectly, to Guarantee or secure the payment of any other Indebtedness of the Company or any of its Subsidiaries (except Indebtedness of a Subsidiary of such Subsidiary or Physician Support Obligations) unless such Subsidiary simultaneously executes and delivers a supplemental indenture to the 7 5/8% indenture providing for the Guarantee of the payment of the 7 5/8% notes by such Subsidiary, which Guarantee shall be senior to or PARI PASSU with such Subsidiary's Guarantee of or pledge to secure such other Indebtedness. The 8 1/8% indenture provides that the Company will not permit any Subsidiary, directly or indirectly, to Guarantee or secure the payment of any other Indebtedness of the Company or any of its Subsidiaries (except Indebtedness of a Subsidiary of such Subsidiary or Physician Support Obligations) unless such Subsidiary simultaneously executes and delivers a supplemental indenture to the 8 1/8% indenture providing for the Guarantee of the payment of the 8 1/8% notes by such Subsidiary, which Guarantee shall be subordinated to such Subsidiary's Guarantee of or pledge to secure such other Indebtedness to the same extent as the 8 1/8% notes are subordinated to such other Indebtedness under the 8 1/8% indenture. Notwithstanding the foregoing, any such Guarantee by a Subsidiary of the notes shall provide by its terms that it shall be automatically and unconditionally released and discharged upon the sale or other disposition, by way of merger or otherwise, to any Person not an Affiliate of the Company, of all of the 27 Company's stock in, or all or substantially all the assets of, such Subsidiary. The forms of such supplemental indentures will be attached as exhibits to the indentures. The foregoing provisions will not be applicable to any one or more Guarantees that otherwise would be prohibited of up to $25.0 million in aggregate principal amount of Indebtedness of the Company or its Subsidiaries at any time outstanding. NO AMENDMENT TO SUBORDINATION PROVISIONS The 7 5/8% indenture provides that the Company will not amend, modify or alter the 8 1/8% indenture or the indentures relating to the untendered 10 1/8% Notes, the 8 5/8% Subordinated Notes or the 6% Exchangeable Subordinated Notes in any way that would (i) increase the principal of, advance the final maturity date of or shorten the Weighted Average Life to Maturity of (a) any untendered 10 1/8% Notes, 8 5/8% Senior Subordinated Notes or 6% Exchangeable Subordinated Notes or (b) any 8 1/8% notes such that the final maturity date of the 8 1/8% notes is earlier than the 91st day following the final maturity date of the 7 5/8% notes or (ii) amend the provisions of Article 10 of the 8 1/8% indenture (which relates to subordination) or the subordination provisions of the indentures relating to the untendered 10 1/8% Notes, the 8 5/8% Senior Subordinated Notes or the 6% Exchangeable Subordinated Notes or any of the defined terms used therein in a manner that would be adverse to the holders of the 7 5/8% notes. NO SENIOR SUBORDINATED DEBT The 8 1/8% indenture provides that the Company will not incur any Indebtedness that is subordinate or junior in right of payment to any Senior Debt and senior in any respect in right of payment to the 8 1/8% notes. REPORTS The indentures provide that, whether or not required by the rules and regulations of the Commission, so long as any notes are outstanding, the Company will furnish to the holders of notes (i) all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the Company were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and, with respect to the annual information only, a report thereon by the Company's certified independent accountants and (ii) all current reports that would be required to be filed with the Commission on Form 8-K if the Company were required to file such reports. In addition, whether or not required by the rules and regulations of the Commission, the Company will file a copy of all such information and reports with the Commission for public availability and make such information available to securities analysts and prospective investors upon request. EVENTS OF DEFAULT AND REMEDIES The indentures provide that each of the following constitutes an Event of Default: (i) default for 30 days in the payment when due of interest on the notes (whether or not prohibited by the subordination provisions of the 8 1/8% indenture); (ii) default in payment when due of the principal of or premium, if any, on the notes, at maturity or otherwise (whether or not prohibited by the subordination provisions of the 8 1/8% indenture); (iii) failure by the Company to comply with the provisions described under the captions "--Purchase at the Option of holders Upon a Change of Control," "--Certain Covenants--Restricted Payments" or "--Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock;" (iv) failure by the Company for 60 days after notice to comply with any of its other agreements in the indentures or the notes; (v) in the case of the 7 5/8% indenture only, any default occurs under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Significant Subsidiaries (or the payment of which is Guaranteed by the Company or any of its Significant Subsidiaries), whether such Indebtedness or Guarantee exists on the date of the 7 5/8% indenture or is thereafter created, which default 28 (a) constitutes a Payment Default or (b) results in the acceleration of such Indebtedness prior to its expressed maturity and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or that has been so accelerated, aggregates $25.0 million or more; (vi) in the case of the 8 1/8% indenture only, any default occurs under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Significant Subsidiaries (or the payment of which is Guaranteed by the Company or any of its Significant Subsidiaries), whether such Indebtedness or Guarantee exists on the date of the 8 1/8% indenture or is thereafter created, which default (a) constitutes a failure to pay principal at final maturity or (b) results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness that has not been paid at final maturity or that has been so accelerated, aggregates $25.0 million or more; (vii) failure by the Company or any of its Significant Subsidiaries to pay a final judgment or final judgments aggregating in excess of $25.0 million, which judgment or judgments are not paid, discharged or stayed for a period of 60 days; and (viii) certain events of bankruptcy or insolvency with respect to the Company or any of its Significant Subsidiaries. If any Event of Default occurs and is continuing, the appropriate Trustee or the holders of at least 25% in principal amount of the then outstanding notes, as the case may be, by written notice to the Company and the appropriate Trustee may declare all the notes, as the case may be, to be due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency with respect to the Company or any of its Significant Subsidiaries, all outstanding notes will become due and payable without further action or notice. holders of the notes may not enforce the indentures or the notes except as provided in the indentures. Subject to certain limitations, holders of a majority in principal amount of the then outstanding notes may direct the applicable Trustee in its exercise of any trust or power. Either Trustee may withhold from holders of the notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. In the case of any Event of Default occurring by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the notes pursuant to the optional redemption provisions of the indentures, an equivalent premium shall also become and be immediately due and payable to the extent permitted by law upon the acceleration of the notes. If an Event of Default occurs under the 8 1/8% indenture prior to June 1, 2003 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding the prohibition on redemption of the 8 1/8% notes prior to such date, then the premium specified in the 8 1/8% indenture shall also become immediately due and payable to the extent permitted by law upon the acceleration of the 8 1/8% notes. The holders of not less than a majority in aggregate principal amount of the notes, as the case may be, then outstanding by written notice to the applicable Trustee on behalf of the holders of all of the 7 5/8% notes or 8 1/8% notes, as the case may be, may waive any existing Default or Event of Default and its consequences under the applicable indenture except a continuing Default or Event of Default in the payment of the principal of, premium, if any, or interest on any of the notes, as the case may be. The Company is required to deliver to each Trustee annually a statement regarding compliance with the respective indentures, and the Company is required upon becoming aware of any Default or Event of Default, to deliver to the Trustees a statement specifying such Default or Event of Default. 29 NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND SHAREHOLDERS No director, officer, employee, incorporator or shareholder of the Company, as such, shall have any liability for any obligations of the Company under the notes, the indentures or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each holder of notes by accepting a new note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. LEGAL DEFEASANCE AND COVENANT DEFEASANCE The Company may, at its option and at any time, elect to have all of its obligations discharged with respect to the outstanding notes ("Legal Defeasance") except for (i) the rights of holders of outstanding notes to receive payments in respect of the principal of, premium, if any, and interest on such notes when such payments are due from the trust referred to below, (ii) the Company's obligations with respect to the notes concerning issuing temporary notes, registration of notes, mutilated, destroyed, lost or stolen notes and the maintenance of an office or agency for payment and money for security payments held in trust, (iii) the rights, powers, trusts, duties and immunities of the applicable Trustee, and the Company's obligations in connection therewith and (iv) the Legal Defeasance provisions of the applicable indenture. In addition, the Company may, at its option and at any time, elect to have the obligations of the Company released with respect to certain covenants that are described in the applicable indenture ("Covenant Defeasance") and thereafter any failure to comply with such obligations shall not constitute a Default or Event of Default with respect to the applicable notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, rehabilitation and insolvency events) described under "--Events of Default and Remedies" will no longer constitute an Event of Default with respect to the applicable notes. The Company may exercise a Legal or Covenant Defeasance by making an irrevocable deposit with the Trustee (a "Company Deposit"), in trust, for the benefit of the holders of the notes, consisting of cash in United States currency, non-callable Government Securities, or a combination thereof in amounts that will be sufficient, in the opinion of a nationally-recognized firm of independent public accountants, to pay the principal of and premium (if any), interest, and liquidated damages (if any) on the outstanding notes at maturity or on the applicable redemption date, as the case may be. An entity other than the Company (a "New Lender") may also make such a deposit (a "New Lender Deposit" and, together with the Company Deposit, the "Deposits"). Simultaneously with any Deposit, the Company must deliver to the Trustee (i) a notice specifying whether the Company is exercising Legal or Covenant Defeasance (or both) and whether the notes are being defeased to maturity or to a particular redemption date; (ii) an opinion of counsel, reasonably acceptable to the Trustee, confirming that: (a) the holders of outstanding notes will not recognize income, gain, or loss for federal income tax purposes as a result of the proposed defeasance and will be subject to federal income tax on the same amounts, in the same manner, and at the same times as would have been the case if the defeasance had not occurred, except that, in the case of Legal Defeasance, the opinion of counsel must recite that it is based upon a ruling to that effect received by the Company from or published by the Internal Revenue Service, or upon a change in applicable federal income tax law; (b) on and after the date of the New Lender Deposit, or after the 90th day after the Company Deposit, as the case may be, the cash or securities so deposited will not be subject to avoidance and repayment under Sections 547 and 550 of the United States Bankruptcy Code (the "Bankruptcy Code"); and (c) all conditions precedent to the defeasance set forth in the indenture have been satisfied; and (iii) an Officer's Certificate to the effect that (a) the Deposit was not made with actual intent to hinder, delay, or defraud the Company's creditors, (b) all conditions precedent to the defeasance set forth in the indenture have been satisfied, and (c) in the case of a New Lender Deposit, (i) the New Lender made the New Lender Deposit under an agreement (the "New Loan Agreement") with the Company; (ii) under the New Loan Agreement, the New Lender 30 Deposit constitutes an unsecured loan (the "New Loan) by the New Lender to the Company; (iii) the maturity date of the New Loan is later than the 90th date after the date of the New Lender Deposit; and (iv) the New Loan Agreement prohibits prepayment of the New Loan on or before the 90th day after the date of the New Lender Deposit, except in the event of a default thereunder, and the remaining terms of the New Loan Agreement (including the interest rate on the New Loan) are consistent with ordinary business practice. The Legal or Covenant Defeasance will occur on the date of a New Lender Deposit or on the 91st day after the date of a Company Deposit, as the case may be, unless in either case (i) on and as of the date of the Deposit, a Default or Event of Default has occurred and is continuing (other than one resulting from the borrowing of funds used to make the Deposit); (ii) the defeasance will result in or constitute a breach or default under any material agreement or indenture to which the Company or any of its Subsidiaries is bound; or (iii) in the case of a Company Deposit, an Event of Default relating to bankruptcy occurs within 90 days after the date of the Deposit. TRANSFER AND EXCHANGE A holder may transfer or exchange notes in accordance with the indentures. The Registrar and the Trustees may require a holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a holder to pay any taxes and fees required by law or permitted by the indentures. The Company is not required to transfer or exchange any 8 1/8% note selected for redemption. Also, the Company is not required to transfer or exchange any 8 1/8% note for a period of 15 days before the mailing of a notice of redemption of 8 1/8% new notes. The registered holder of a note will be treated as the owner of it for all purposes. GLOBAL NOTES The old notes were and the new notes will be issued in the form of one or more registered notes in book-entry form (each, a "Global Note") that will be deposited with, or on behalf of, The Depository Trust Company ("DTC") and registered in the name of DTC's nominee. Except as set forth below, a Global Note may not be transferred except as a whole by DTC to a nominee of DTC or any such nominee to a successor of DTC or a nominee of such successor. So long as DTC or its nominee is the registered holder of a Global Note, DTC or its nominee, as the case may be, will be treated as the sole owner of it for all purposes under the indenture and the beneficial owners of notes will be entitled only to those rights and benefits afforded to them in accordance with DTC's regular operating procedures. Upon specified written instructions of a Participant (defined below), DTC will have its nominee assist Participants in the exercise of certain holders' rights, such as a demand for acceleration or an instruction to the applicable Trustee. Except as provided below, owners of beneficial interests in a Global Note will not be entitled to have notes represented by a Global Note registered in their names, will not receive or be entitled to receive physical delivery of notes in certificated form and will not be considered the registered holders thereof under the indenture. If (i) DTC is at any time unwilling or unable to continue as depository or if at any time DTC ceases to be a clearing agency registered under the Exchange Act, and a successor depository is not appointed by the Company within 90 days, (ii) an Event of Default under the applicable indenture with respect to the notes has occurred and is continuing and the beneficial owners representing a majority in principal amount of the notes advise DTC to cease acting as depository or (iii) the Company, in its sole discretion, determines at any time that the Notes shall no longer be represented by a Global Note, the Company will issue individual notes of the applicable amount and in certificated form in exchange for a Global Note. In any such instance, an owner of a beneficial interest in the Global Note will be entitled to physical delivery of individual notes in certificated form of like tenor, equal in principal amount to such beneficial interest and to have such notes in certificated form registered in its name. 31 DTC has advised the Company that it is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds certificates that its participants ("Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for the physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations ("Direct Participants"). DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The rules applicable to DTC and its Participants are on file with the Commission. None of the Company, the Trustees or the Exchange Agent will have any responsibility for any aspect of the records relating to or payments made on account of beneficial interests in a Global Note, or for maintaining, supervising or reviewing any records relating to such beneficial interests. EXCHANGE OFFER; REGISTRATION RIGHTS The Company and the initial purchasers entered into a registration rights agreement on May 21, 1998. Pursuant to the registration rights agreement, the Company agreed to file an exchange offer registration statement (the "Exchange Offer Registration Statement") with the Commission within 30 days of filing its 1998 Form 10-K on the appropriate form under the Securities Act with respect to an offer to exchange each of the old notes for the new notes. Pursuant to the Exchange Offer, upon the effectiveness of the Exchange Offer Registration Statement, the Company will offer to the holders of the Transfer Restricted Securities (as defined), who are able to make certain representations, the opportunity to exchange their Transfer Restricted Securities for new notes. If (i) the Exchange Offer is not permitted by applicable law or Commission policy or (ii) any holder of notes which are Transfer Restricted Securities notifies the Company prior to the twentieth business day following the consummation of the Exchange Offer that (a) it is prohibited by law or Commission policy from participating in the Exchange Offer, or (b) it may not resell the new notes acquired by it in the Exchange Offer to the public without delivering a prospectus, and the prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by it, or (c) it is a broker-dealer and owns old notes acquired directly from the Company or any of the Company's affiliates, the Company will file with the Commission a shelf registration statement (the "Shelf Registration Statement") to register for public resale the Transfer Restricted Securities held by any such holder who provides the Company with certain information for inclusion in the Shelf Registration Statement. The Company will use its commercially reasonable efforts to cause the Exchange Offer Registration Statement to be effective continuously, and shall keep the Exchange Offer open for a period of not less than twenty business days. For the purposes of the foregoing, "Transfer Restricted Securities" means each old note until the earliest of the date on which (i) such old note has been exchanged in the Exchange Offer by a person other than a broker-dealer for a New note, (ii) such old note has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement, (iii) following the exchange by a broker-dealer in the Exchange Offer of an old note for a new note, such new note is sold to a purchaser who receives from such broker-dealer on or prior to the date of such sale a copy of the prospects contained in the Exchange Offer Registration Statement, or (iv) such old note is distributed to the public pursuant to Rule 144(k) under the Securities Act. The registration rights agreement provides that (i) if the Company fails to file an Exchange Offer Registration Statement with the Commission on or prior to the thirtieth day after the Filing Date, (ii) if the 32 Company fails to use its commercially reasonable efforts to have the Exchange Offer Registration Statement declared effective by the Commission on or prior to ninety days after the Filing Date, (iii) if the Company fails to use its commercially reasonable efforts to have the Exchange Offer consummated on or before the thirtieth business day after the Exchange Offer Registration Statement is declared effective, (iv) if obligated to file the Shelf Registration Statement and the Company fails to file the Shelf Registration Statement with the Commission on or prior to thirty days after such filing obligation arises and fails to cause the Shelf Registration Statement to be declared effective on or prior to sixty days after the obligation to file arises, or (vi) if the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, is declared effective but thereafter ceases to be effective or useable in connection with resales of the Transfer Restricted Securities during the periods specified in the Registration Rights Agreement, (each such event referred to in clauses (i) through (vi) above a "Registration Default"), then the Company will pay to each holder of Transfer Restricted Securities affected thereby liquidated damages ("Liquidated Damages") in an amount equal to $0.05 per week per $1,000 in principal amount of Transfer Restricted Securities held by such holder for each week or portion thereof that the Registration Default continues for the first 90-day period immediately following the occurrence of such Registration Default. The amount of the Liquidated Damages shall increase by an additional $0.05 per week per $1,000 in principal amount of Transfer Restricted Securities with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of Liquidated Damages of $0.35 per week per $1,000 in principal amount of Transfer Restricted Securities. The Company shall not be required to pay Liquidated Damages for more than one Registration Default at any given time. Following the cure of all Registration Defaults, the accrual of Liquidated Damages will cease. All accrued Liquidated Damages shall be paid by the Company to holders entitled thereto by wire transfer to the accounts specified by them or by mailing checks to their registered address if no such accounts have been specified. AMENDMENT, SUPPLEMENT AND WAIVER Except as provided in the next two succeeding paragraphs, the indentures or the notes may be amended or supplemented with the consent of the holders of at least a majority in principal amount of the applicable notes then outstanding (including consents obtained in connection with a tender offer or Exchange Offer for such notes), and any existing default or compliance with any provision of the indentures or the notes may be waived with the consent of the holders of a majority in principal amount of the then outstanding applicable notes (including consents obtained in connection with a tender offer or Exchange Offer for such notes). Without the consent of each holder affected, an amendment or waiver may not (with respect to any notes held by a non-consenting holder): (i) reduce the principal amount of notes whose holders must consent to an amendment, supplement or waiver, (ii) reduce the principal of or change the fixed maturity of any note or, in the case of the 8 1/8% indenture, alter the provisions with respect to the redemption of the 8 1/8% notes (other than provisions relating to the covenants described under the caption "--Repurchase at the Option of holders Upon a Change of Control"); (iii) reduce the rate of or change the time for payment of interest on any note; (iv) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the notes (except a rescission of acceleration of the applicable notes by the holders of at least a majority in aggregate principal amount thereof and a waiver of the payment default that resulted from such acceleration); (v) make any note payable in money other than that stated in the notes; (vi) make any change in the provisions of the indentures relating to waivers of past Defaults or the rights of holders of notes to receive payments of principal of or premium, if any, or interest on the notes; (vii) in the case of the 8 1/8% indenture, waive a redemption payment with respect to any 8 1/8% note (other than a payment required by one of the covenants described under the caption "--Repurchase at the Option of holders Upon a Change of Control"); or (viii) make any change in the foregoing amendment and waiver provisions. Notwithstanding the foregoing, any amendment to the provisions of Article 10 of the 8 1/8% 33 indenture (which relate to subordination) will require the consent of the holders of at least 75% in aggregate principal amount of the 8 1/8% notes then outstanding if such amendment would adversely affect the rights of holders of 8 1/8% notes. Notwithstanding the foregoing, without the consent of any holder of notes, the Company and the appropriate Trustee may amend or supplement the indentures or the notes to cure any ambiguity, defect or inconsistency, to provide for uncertificated notes in addition to or in place of certificated notes, to provide for any supplemental indenture described under the caption "--Certain Covenants--Limitation on Issuances of Guarantees of Indebtedness by Subsidiaries," to provide for the assumption of the Company's obligations to holders of notes in the case of a merger, consolidation or sale of assets pursuant to the covenant described under the caption "--Certain Covenants--Merger, Consolidation or Sale of Assets" to make any change that would provide any additional rights or benefits to the holders of notes or that does not adversely affect the legal rights under the indentures of any such holder, or to comply with requirements of the Commission in order to effect or maintain the qualification of the indentures under the Trust Indenture Act. CONCERNING THE TRUSTEE The indentures will contain certain limitations on the rights of the Trustees, should either Trustee become a creditor of the Company, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Trustees will be permitted to engage in other transactions; however, if either Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the Commission for permission to continue or resign. The holders of a majority in principal amount of the then outstanding notes, as the case may be, will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the applicable Trustee, subject to certain exceptions. The indentures provide that in case an Event of Default shall occur (which shall not be cured), the Trustees will be required, in the exercise of their power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, neither Trustee will be under any obligation to exercise any of its rights or powers under the indentures at the request of any holder of notes, unless such holder shall have offered to the appropriate Trustee security and indemnity satisfactory to it against any loss, liability or expense. CERTAIN DEFINITIONS Set forth below are certain defined terms used in the indentures. Reference is made to the indentures for a full disclosure of all such terms, as well as any other capitalized terms used herein for which no definition is provided. "ACQUIRED DEBT" means, with respect to any specified Person, (i) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, including, without limitation, Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "AFFILIATE" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided that beneficial ownership of 10% or more of the voting securities of a Person shall be deemed to be control. 34 "ASSET SALE" means (i) the sale, lease, conveyance or other disposition of any assets (including, without limitation, by way of a sale and leaseback) other than in the ordinary course of business consistent with past practices and (ii) the issuance or sale by the Company or any of its Subsidiaries of Equity Interests of any of the Company's Subsidiaries, in the case of either clause (i) or (ii), whether in a single transaction or a series of related transactions (a) that have a fair market value in excess of $25.0 million or (b) for net proceeds in excess of $25.0 million. Notwithstanding the foregoing: (a) a transfer of assets by the Company to a Subsidiary or by a Subsidiary to the Company or to another Subsidiary, (b) an issuance of Equity Interests by a Subsidiary to the Company or to another Subsidiary, (c) a Restricted Payment that is permitted by the covenant described under the caption "--Certain Covenants--Restricted Payments" and (d) a Hospital Swap will not be deemed to be an Asset Sale. "CAPITAL LEASE OBLIGATION" means, at the time any determination thereof is to be made, the amount of the liability in respect of a Capital Lease that would at such time be required to be capitalized on a balance sheet in accordance with GAAP. "CAPITAL STOCK" means (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership, partnership interests (whether general or limited) and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. "CHANGE OF CONTROL" means the occurrence of any of the following: (i) the sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries taken as a whole to any Person or group (as such term is used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) other than to a Person or group who, prior to such transaction, held a majority of the voting power of the voting stock of the Company, (ii) the acquisition by any Person or group (as defined above) of a direct or indirect interest in more than 50% of the voting power of the voting stock of the Company, by way of merger or consolidation or otherwise, or (iii) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors. The phrase "all or substantially all" of the assets of the Company will likely be interpreted under applicable state law and will be dependent upon particular facts and circumstances. As a result, there may be a degree of uncertainty in ascertaining whether a sale or transfer of "all or substantially all" of the assets of the Company has occurred, in which case a holder's ability to obtain the benefit of a Change of Control Offer may be impaired. In addition, no assurances can be given that the Company will be able to acquire notes tendered upon the occurrence of a Change of Control Triggering Event. "CHANGE OF CONTROL TRIGGERING EVENT" means the occurrence of both a Change of Control and a Rating Decline. "CONSOLIDATED CASH FLOW" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period PLUS in each case, without duplication (i) an amount equal to any extraordinary loss plus any net loss realized in connection with an Asset Sale (to the extent such losses were deducted in computing such Consolidated Net Income), (ii) provision for taxes based on income or profits of such Person and its Subsidiaries for such period, to the extent that such provision for taxes was included in computing such Consolidated Net Income, (iii) the Fixed Charges of such Person and its Subsidiaries for such period, to the extent that such Fixed Charges were deducted in computing such Consolidated Net Income, (iv) depreciation and amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) of such Person and its Subsidiaries for such period to the extent that such depreciation and amortization were deducted in computing such Consolidated Net Income, in each case, on a consolidated basis and determined in accordance with GAAP, (v) the amount of any restructuring charges deducted in such period 35 in computing Consolidated Net Income for such period, (vi) the amount of all losses related to discontinued operations deducted in such period in computing Consolidated Net Income for such period, (vii) the amount of all non-recurring charges and expenses related to acquisitions and mergers deducted in such period in computing Consolidated Net Income for such period and (viii) any non-cash charges reducing Consolidated Net Income for such period (excluding any portion of such charge requiring an accrual of a cash reserve for anticipated cash charges for any future period). Notwithstanding the foregoing, the provision for taxes on the income or profits of, and the depreciation and amortization of, a Subsidiary of the referent Person shall be added to Consolidated Net Income to compute Consolidated Cash Flow only to the extent (and in same proportion) that the Net Income of such Subsidiary was included in calculating the Consolidated Net Income of such Person and only if a corresponding amount would be permitted at the date of determination to be dividended to the Company by such Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Subsidiary or its stockholders. "CONSOLIDATED NET INCOME" means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; PROVIDED that (i) the Net Income of any Person that is not a Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the referent Person or a Wholly Owned Subsidiary thereof, (ii) the Net Income of any Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary or its stockholders, (iii) the Net Income of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition shall be excluded and (iv) the cumulative effect of a change in accounting principles shall be excluded. "CONSOLIDATED NET WORTH" means, with respect to any Person as of any date, the sum of (i) the consolidated equity of the common stockholders of such Person and its consolidated Subsidiaries as of such date plus (ii) the respective amounts reported on such Person's balance sheet as of such date with respect to any series of preferred stock (other than Disqualified Stock), less all write-ups (other than write-ups resulting from foreign currency translations and write-ups of tangible assets of a going concern business made in accordance with GAAP as a result of the acquisition of such business) subsequent to the date of the indentures in the book value of any asset owned by such Person or a consolidated Subsidiary of such Person, and excluding the cumulative effect of a change in accounting principles, all as determined in accordance with GAAP. "CONTINUING DIRECTORS" means, as of any date of determination, any member of the Board of Directors of the Company who (i) was a member of such Board of Directors on the date of the indentures or (ii) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election. "DEFAULT" means any event that is or with the passage of time or the giving of notice or both would be an Event of Default. "DESIGNATED SENIOR DEBT" means (i) so long as any Obligations are outstanding under the Existing Credit Facility, such Obligations and (ii) thereafter, any other Senior Debt permitted under the 8 1/8% indenture the principal amount of which is $100.0 million or more and that has been designated by the Company as "Designated Senior Debt." 36 "DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date on which the applicable new notes mature. "EQUITY INTERESTS" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "EXISTING CREDIT FACILITY" means that certain Credit Agreement by and among the Company and Morgan Guaranty Trust Company of New York and the other banks that are party thereto, providing for $2.8 billion in aggregate principal amount of Indebtedness, including any related notes, instruments, and agreements executed in connection therewith, as amended, modified, extended, renewed, refunded, replaced or refinanced, in whole or in part, from time to time. "EXISTING INDEBTEDNESS" means Indebtedness of the Company and its Subsidiaries (other than Indebtedness under the Company's Existing Credit Facility) in existence on the date of the indentures, until such amounts are repaid, including all reimbursement obligations with respect to letters of credit outstanding as of the date of the indentures. "FIXED CHARGE COVERAGE RATIO" means with respect to any Person for any period, the ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such Person for such period. In the event that the Company or any of its Subsidiaries incurs, assumes, Guarantees or redeems any Indebtedness (other than revolving credit borrowings) or issues preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated giving PRO FORMA effect to such incurrence, assumption, Guarantee or redemption of Indebtedness, or such issuance or redemption of preferred stock, as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of making the computation referred to above, (i) acquisitions that have been made by the Company or any of its Subsidiaries, including through mergers or consolidations and including any related financing transactions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be deemed to have occurred on the first day of the four-quarter reference period, and (ii) the Consolidated Cash Flow and Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded. "FIXED CHARGES" means, with respect to any Person for any period, the sum of (i) the consolidated interest expense of such Person and its Subsidiaries for such period, whether paid or accrued (including, without limitation, amortization of original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letters of credit or bankers' acceptance financings, and net payments or receipts (if any) pursuant to Hedging Obligations) and (ii) the consolidated interest expense of such Person and its Subsidiaries that was capitalized during such period, and (iii) any interest expense on Indebtedness of another Person that is Guaranteed by such Person or one of its Subsidiaries or secured by a Lien on assets of such Person or one of its Subsidiaries (whether or not such Guarantee or Lien is called upon) and (iv) the product of (a) all cash dividend payments (and non-cash dividend payments in the case of a Person that is a Subsidiary) on any series of preferred stock of such Person, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP. 37 "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, as in effect from time to time. "GUARANTEE" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness. "HEDGING OBLIGATIONS" means, with respect to any Person, the obligations of such Person under (i) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements, (ii) forward foreign exchange contracts or currency swap agreements and (iii) other agreements or arrangements designed to protect such Person against fluctuations in interest rates or currency values. "HOSPITAL" means a hospital, outpatient clinic, long-term care facility or other facility or business that is used or useful in or related to the provision of healthcare services. "HOSPITAL SWAP" means an exchange of assets by the Company or a Subsidiary of the Company for one or more Hospitals and/or one or more Related Businesses or for the Capital Stock of any Person owning one or more Hospitals and/or one or more Related Businesses. "INDEBTEDNESS" means, with respect to any Person, any indebtedness of such Person, whether or not contingent, in respect of borrowed money or evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof) or banker's acceptances or representing Capital Lease Obligations or the balance deferred and unpaid of the purchase price of any property or representing any Hedging Obligations, except any such balance that constitutes an accrued expense or trade payable, if and to the extent any of the foregoing indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, as well as all indebtedness of others secured by a Lien on any asset of such Person (whether or not such indebtedness is assumed by such Person) and, to the extent not otherwise included, the Guarantee by such Person of any indebtedness of any other Person. "INVESTMENT GRADE" means a rating of BBB- or higher by S&P or Baa3 or higher by Moody's or the equivalent of such ratings by S&P or Moody's. In the event that the Company shall select any other Rating Agency, the equivalent of such ratings by such Rating Agency shall be used. "LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset given to secure Indebtedness, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction with respect to any such lien, pledge, charge or security interest). "MOODY'S" means Moody's Investors Service, Inc. and its successors. "NET INCOME" means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however, (i) any gain (but not loss), together with any related provision for taxes on such gain (but not loss), realized in connection with (a) any Asset Sale (including, without limitation, dispositions pursuant to sale and leaseback transactions) or (b) the disposition of any securities by such Person or any of its Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Subsidiaries and (ii) any extraordinary or nonrecurring gain (but not loss), together with any related provision for taxes on such extraordinary or nonrecurring gain (but not loss). 38 "OBLIGATIONS" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "PAYMENT DEFAULT" means, for purposes of the 7 5/8% indenture, any failure to pay any scheduled installment of interest or principal on any Indebtedness within the grace period provided for such payment in the documentation governing such Indebtedness. "PERMITTED LIENS" means (i) Liens in favor of the Company; (ii) Liens on property of a Person existing at the time such Person is merged into or consolidated with the Company or any Subsidiary of the Company or becomes a Subsidiary of the Company; PROVIDED that such Liens were in existence prior to the contemplation of such merger, consolidation or acquisition (unless such Liens secure Indebtedness that was incurred in connection with or in contemplation of such acquisition and is used to refinance tax-exempt Indebtedness) and do not extend to any assets or the Company or its Subsidiaries other than those of the Person merged into or consolidated with the Company or that becomes a Subsidiary of the Company; (iii) Liens on property existing at the time of acquisition thereof by the Company or any Subsidiary of the Company; PROVIDED that such Liens were in existence prior to the contemplation of such acquisition (unless such Liens secure Indebtedness that was incurred in connection with or in contemplation of such acquisition and is used to refinance tax-exempt Indebtedness); (iv) Liens to secure the performance of statutory obligations, tender, bid, performance, government contract, surety or appeal bonds or other obligations of a like nature incurred in the ordinary course of business; (v) Liens existing on the date of the indentures; (vi) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded; PROVIDED that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor; (vii) other Liens on assets of the Company or any Subsidiary of the Company securing Indebtedness that is permitted by the terms of the indentures to be outstanding having an aggregate principal amount at any one time outstanding not to exceed 10% of the Stockholders' Equity of the Company; and (viii) Liens to secure Permitted Refinancing Indebtedness incurred to refinance Indebtedness that was secured by a Lien permitted under the indentures and that was incurred in accordance with the provisions of the indentures; PROVIDED that such Liens do not extend to or cover any property or assets of the Company or any Subsidiary other than assets or property securing the Indebtedness so refinanced. "PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of the Company or any of its Subsidiaries issued in exchange for, or the net proceeds of which are used solely to extend, refinance, renew, replace, defease or refund, other Indebtedness of the Company or any of its Subsidiaries; PROVIDED that, except in the case of Indebtedness of the Company issued in exchange for, or the net proceeds of which are used solely to extend, refinance, renew, replace, defease or refund, Indebtedness of a Subsidiary of the Company: (i) the principal amount of such Permitted Refinancing Indebtedness (or if such Permitted Refinancing Indebtedness is issued at a discount, the initial issuance price of such Permitted Refinancing Indebtedness) does not exceed the principal amount of the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of any premiums paid and reasonable expenses incurred in connection therewith); (ii) such Permitted Refinancing Indebtedness has a Stated Maturity date later than the Stated Maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the 7 5/8% new notes, such Permitted Refinancing Indebtedness has a Stated Maturity date later than the Stated Maturity date of, and is subordinated in right of payment to, the 7 5/8% new notes on subordination terms at least as favorable to the holders of 7 5/8% new notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (iv) such Indebtedness is incurred by the Company if the Company is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (v) such Indebtedness is incurred by the Company or a Subsidiary if a 39 Subsidiary is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "PHYSICIAN JOINT VENTURE DISTRIBUTIONS" means distributions made by the Company or any of its Subsidiaries to any physician, pharmacist or other allied healthcare professional in connection with the unwinding, liquidation or other termination of any joint venture or similar arrangement between any such Person and the Company or any of its Subsidiaries. "PHYSICIAN SUPPORT OBLIGATIONS" means any obligation or Guarantee incurred in the ordinary course of business by the Company or a Subsidiary of the Company in connection with any advance, loan or payment to, or on behalf of or for the benefit of any physician, pharmacist or other allied healthcare professional for the purpose of recruiting, redirecting or retaining the physician, pharmacist or other allied healthcare professional to provide service to patients in the service area of any Hospital or Related Business owned or operated by the Company or any of its Subsidiaries; excluding, however, compensation for services provided by physicians, pharmacists or other allied healthcare professionals to any Hospital or Related Business owned or operated by the Company or any of its Subsidiaries. "QUALIFIED EQUITY INTERESTS" shall mean all Equity Interests of the Company other than Disqualified Stock of the Company. "RATING AGENCIES" means (i) S&P and (ii) Moody's or (iii) if neither S&P nor Moody's shall make a rating of the 7 5/8% new notes or the 8 1/8% new notes, as the case may be, publicly available, a nationally recognized securities rating agency or agencies, as the case may be, selected by the Company, which shall be substituted for S&P or Moody's or both, as the case may be. "RATING CATEGORY" means (i) with respect to S&P, any of the following categories: BB, B, CCC, CC, C and D (or equivalent successor categories); (ii) with respect to Moody's, any of the following categories: Ba, B, Caa, Ca, C and D (or equivalent successor categories); and (iii) the equivalent of any such category of S&P or Moody's used by another Rating Agency. In determining whether the rating of the new notes has decreased by one or more gradations, gradations within Rating Categories (+ and - for S&P; 1, 2 and 3 for Moody's; or the equivalent gradations for another Rating Agency) shall be taken into account (e.g., with respect to S&P, a decline in a rating from BB+ to BB, as well as from BB- to B+, will constitute a decrease of one gradation). "RATING DATE" means the date which is 90 days prior to the earlier of (i) a Change of Control and (ii) the first public notice of the occurrence of a Change of Control or of the intention by the Company to effect a Change of Control. "RATING DECLINE" means the occurrence on or within 90 days after the date of the first public notice of the occurrence of a Change of Control or of the intention by the Company to effect a Change of Control (which period shall be extended so long as the rating of the new notes is under publicly announced consideration for possible downgrade by any of the Rating Agencies) of: (a) in the event the new notes are rated by either Moody's or S&P on the Rating Date as Investment Grade, a decrease in the rating of the new notes by both Rating Agencies to a rating that is below Investment Grade, or (b) in the event the new notes are rated below Investment Grade by both Rating Agencies on the Rating Date, a decrease in the rating of the new notes by either Rating Agency by one or more gradations (including gradations within Rating Categories as well as between Rating Categories). "RELATED BUSINESS" means a healthcare business affiliated or associated with a Hospital or any business related or ancillary to the provision of healthcare services or information or the investment in, management, leasing or operation of a Hospital. "SENIOR DEBT" means (i) Indebtedness under the Existing Credit Facility, (ii) the 7 5/8% new notes and the 7 5/8% old notes, the Existing Senior Notes and any other Indebtedness permitted to be incurred by the 40 Company under the terms of the 8 1/8% indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is on a parity with or subordinated in right of payment to the 8 1/8% new notes and (iii) all Obligations with respect to any of the foregoing. Notwithstanding anything to the contrary in the foregoing, Senior Debt will not include (v) the 8 1/8% new notes, the Company's untendered 10 1/8% Notes, the Company's 8 5/8% Subordinated Notes and the 6% Exchangeable Subordinated Notes, (w) any liability for federal, state, local or other taxes owed or owing by the Company, (x) any Indebtedness of the Company to any of its Subsidiaries or other Affiliates, (y) any trade payables or (z) any Indebtedness that is incurred in violation of the 8 1/8% indenture. "SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Act, as such Regulation is in effect on the date of the indentures. "S&P" means Standard & Poor's Corporation and its successors. "SPECIFIED EXCHANGE" means any retirement of Indebtedness upon the exercise by a holder of such Indebtedness, pursuant to the terms thereof, of any right to exchange such Indebtedness for shares of common stock of Vencor, Inc. or any successor thereto or any other equity securities, other than Equity Interests of a Subsidiary, owned by the Company as of October 11, 1995, or for any securities or other property received with respect to such common stock or equity securities or cash in lieu thereof, whether or not such right is subject to the Company's ability to pay an amount in cash in lieu thereof. "STOCKHOLDERS' EQUITY" means, with respect to any Person as of any date, the stockholders' equity of such Person determined in accordance with GAAP as of the date of the most recent available internal financial statements of such Person, and calculated on a PRO FORMA basis to give effect to any acquisition or disposition by such Person consummated or to be consummated since the date of such financial statements and on or prior to the date of such calculation. "SUBSIDIARY" means, with respect to any Person, (i) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof) and (ii) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or of one or more Subsidiaries of such Person (or any combination thereof). "WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (ii) the then outstanding principal amount of such Indebtedness. "WHOLLY OWNED SUBSIDIARY" of any Person means a Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries of such Person or by such Person and one or more Wholly Owned Subsidiaries of such Person. 41 THE EXCHANGE OFFER TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD NOTES Upon the terms and conditions set forth in this Prospectus and in the accompanying Letter of Transmittal, we will accept for exchange old notes which are properly tendered on or prior to the Expiration Date and not withdrawn as permitted below. As used herein, the term "Expiration Date" means 5:00 p.m., New York City time, on October [ ], 1998; PROVIDED, HOWEVER, that if we, in our sole discretion, have extended the period of time during which the Exchange Offer is open, the term "Expiration Date" means the latest time and date to which the Exchange Offer is extended. As of the date of this Prospectus, $350,000,000 principal amount of 7 5/8% old notes and $1,005,000,000 principal amount of 8 1/8% old notes are outstanding. This Prospectus, together with the Letter of Transmittal, is first being sent on or about the date hereof, to all holders of old notes known to us. Our obligation to accept old notes for exchange pursuant to the Exchange Offer is subject to certain obligations as set forth under "--Certain Conditions to the Exchange Offer." We expressly reserve the right, at any time or from time to time, to extend the period of time during which the Exchange Offer is open, and thereby delay acceptance for exchange of any old notes, by giving oral or written notice of such extension to the holders thereof as described below. During any such extension, all old notes previously tendered will remain subject to the Exchange Offer and may be accepted for exchange by us. Any old notes not accepted for exchange for any reason will be returned without expense to the tendering holder thereof as promptly as practicable after the expiration or termination of the Exchange Offer. Old notes tendered in the Exchange Offer must be in denominations of principal amount of $1,000 and any integral multiple thereof. We expressly reserves the right to amend or terminate the Exchange Offer, and not to accept for exchange any old notes not theretofore accepted for exchange, upon the occurrence of any of the conditions of the Exchange Offer specified under "--Certain Conditions to the Exchange Offer." We will give oral or written notice, of any extension, amendment, non-acceptance or termination to the holders of the old notes as promptly as practicable. Such notice, in the case of any extension, to be issued by means of a press release or other public announcement no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. PROCEDURES FOR TENDERING OLD NOTES The tender to us of old notes by a holder as set forth below and our acceptance of the old notes will constitute a binding agreement between us and the tendering holder upon the terms and subject to the conditions set forth in this Prospectus and in the accompanying Letter of Transmittal. Except as set forth below, a holder who wishes to tender old notes for exchange pursuant to the Exchange Offer must transmit a properly completed and duly executed Letter of Transmittal, including all other documents required by such Letter of Transmittal or in the case of a book-entry transfer, an Agent's Message in lieu of such Letter of Transmittal, to The Bank of New York (the "Exchange Agent") at the address set forth below under "Exchange Agent" on or prior to the Expiration Date. In addition, either (i) certificates for such old notes must be received by the Exchange Agent along with the Letter of Transmittal, or (ii) a timely confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such old notes, if such procedure is available, into the Exchange Agent's account at DTC pursuant to the procedure for book-entry transfer described on page [ ] must be received by the Exchange Agent, prior to the Expiration Date, with the Letter of Transmittal or an Agent's Message in lieu of such Letter of Transmittal, or (iii) the holder must comply with the guaranteed delivery procedures described below. The term "Agent's Message" means a message, transmitted by DTC to and received by the Exchange Agent and forming a part of a Book-Entry Confirmation, which states that DTC has received an express acknowledgment from the tendering 42 participant, which acknowledgment states that such participant has received and agrees to be bound the Letter of Transmittal and that we may enforce such Letter of Transmittal against such participant. The method of delivery of old notes, letters of transmittal and all other required documents is at the election and risk of the holders. If such delivery is by mail, it is recommended that registered mail, properly insured, with return receipt requested, be used. In all cases, sufficient time should be allowed to assure timely delivery. No letter of transmittal or old notes should be sent to us. Signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, must be guaranteed unless the old notes surrendered for exchange pursuant thereto are tendered (i) by a holder of the old notes who has not completed the box entitled "Special Issuance Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the account of an Eligible Institution (as defined). In the event that signatures on a Letter of Transmittal or a notice of withdrawal are required to be guaranteed, such guarantees must be by a firm which is a member of the Securities Transfer Agent Medallion Program, the Stock Exchanges Medallion Program or the New York Stock Exchange Medallion Program (each such entity being hereinafter referred to as an "Eligible Institution"). If old notes are registered in the name of a person other than the signer of the Letter of Transmittal, the old notes surrendered for exchange must be endorsed by, or be accompanied by a written instrument or instruments of transfer or exchange, in satisfactory form as we determine (which decision we may delegate to the Exchange Agent) in our sole discretion, duly executed by the registered holders with the signature thereon guaranteed by an Eligible Institution. We shall make a final and binding determination on all questions as to the validity, form, eligibility (including time of receipt) and acceptance of old notes tendered for exchange (which decision we may delegate to the Exchange Agent) in our sole discretion. We reserve the absolute right to reject any and all tenders of any particular old note not properly tendered or to not accept any particular old note which acceptance might, in our judgment or our counsel's, be unlawful. We also reserve the absolute right to waive any defects or irregularities or conditions of the Exchange Offer as to any particular old note either before or after the Expiration Date (including the right to waive the ineligibility of any holder who seeks to tender old notes in the Exchange Offer). Our interpretation of the terms and conditions of the Exchange Offer as to any particular old note either before or after the Expiration Date (including the Letter of Transmittal and the instructions thereto) (which power we may delegate to the Exchange Agent) shall be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of old notes for exchange must be cured within such reasonable period of time as we shall determine. We are not, nor is the Exchange Agent or any other person under any duty to give notification of any defect or irregularity with respect to any tender of old notes for exchange, and shall not incur any liability for failure to give such notification. If the Letter of Transmittal is signed by a person or persons other than the registered holder or holders of old notes, such old notes must be endorsed or accompanied by powers of attorney, in either case signed exactly as the name or names of the registered holder or holders that appear on the old notes. If the Letter of Transmittal or any old notes or powers of attorneys are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived us (which power may be delegated to the Exchange Agent), proper evidence satisfactory to us of their authority to so act must be submitted with the Letter of Transmittal. Any holder that tenders old notes to us represents that the new notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of business of the person receiving such new notes, whether or not such person is the holder and that neither the holder nor such other person has any arrangement or understanding with any person, to participate in the distribution of the new notes. If any holder who is our "affiliate" as defined under Rule 405 promulgated under the Securities Act, engages in or intends to engage in or has an arrangement or understanding with any person to participate in a 43 distribution of such new notes to be acquired pursuant to the Exchange Offer, such holder or any such other person (i) could not rely on the applicable interpretations of the staff of the Commission and (ii) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. Each broker-dealer that receives new notes for its own account in exchange for old notes, where such old notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such new notes. See "Plan of Distribution." The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES Upon satisfaction or waiver of all of the conditions to the Exchange Offer, we will accept, promptly after the Expiration Date, all old notes properly tendered and will issue the new notes promptly after acceptance of the old notes. See "--Certain Conditions to the Exchange Offer." For purposes of the Exchange Offer, we shall be deemed to have accepted properly tendered old notes for exchange when, and if we give oral (confirmed in writing) or written notice thereof to the Exchange Agent. The holder of each old note accepted for exchange will receive a new note in the amount equal to the surrendered old note. Accordingly, registered holders of new notes on the relevant record date for the first interest payment date following the consummation of the Exchange Offer will receive interest accruing from the most recent date to which interest has been paid on the old notes. Holders of old notes whose old notes are accepted for exchange will not receive any payment in respect of accrued interest on such old notes otherwise payable on any interest payment date the record date for which occurs on or after the consummation of the Exchange Offer. In all cases, issuance of new notes for old notes that are accepted for exchange pursuant to the Exchange Offer will be made only after timely receipt by the Exchange Agent of (i) certificates for such old notes or a timely Book-Entry Confirmation of such old notes into the Exchange Agent's account at DTC, (ii) a properly completed and duly executed Letter of Transmittal or an Agent's Message in lieu thereof and (iii) all other required documents. lf any tendered old notes are not accepted for any reason set forth in the terms and conditions of the Exchange Offer or if old notes are submitted for a greater principal amount than the holder desires to exchange, such unaccepted or non-exchanged old notes will be returned without expense to the tendering holder thereof (or, in the case of old notes tendered by book-entry transfer into the Exchange Agent's account at DTC pursuant to the book-entry procedures described below, such non-exchanged old notes will be credited to an account maintained with DTC) as promptly as practicable after the expiration or termination of the Exchange Offer. BOOK-ENTRY TRANSFERS The Exchange Agent will make a request to establish an account with respect to the old notes at DTC for purposes of the Exchange Offer within two business days after the date of this Prospectus, unless the Exchange Agent already has established an account with DTC suitable for the Exchange Offer, and any financial institution that is a participant in DTC may make book-entry delivery of old notes by causing DTC to transfer such old notes into the Exchange Agent's account at DTC in accordance with DTC's procedures for transfer. However, although delivery of old notes may be effected through book-entry transfer at DTC, the Letter of Transmittal or facsimile thereof or an Agent's Message in lieu thereof, with any required signature guarantees and any other required documents, must, in any case, be transmitted to and received by the Exchange Agent at the address set forth under "--Exchange Agent" on or prior to the Expiration Date or the guaranteed delivery procedures described below must be complied with. 44 GUARANTEED DELIVERY PROCEDURES If a holder of the old notes desires to tender such old notes and the old notes are not immediately available, or time will not permit such holder's old notes or other required documents to reach the Exchange Agent before the Expiration Date, a tender may be effected if (i) the tender is made through an Eligible Institution, (ii) prior to the Expiration Date, the Exchange Agent received from such Eligible Institution a Notice of Guaranteed Delivery, substantially in the form we provide (by telegram, telex, facsimile transmission, mail or hand delivery), setting forth the name and address of the holder of the old notes and the amount of old notes tendered, stating that the tender is being made thereby and guaranteeing that within three New York Stock Exchange ("NYSE") trading days after the date of execution of the Notice of Guaranteed Delivery, the certificates for all physically tendered old notes, in proper form for transfer, or a book-entry confirmation, as the case may be, together with a properly completed and duly executed appropriate Letter of Transmittal or facsimile thereof or Agent's Message in lieu thereof, with any required signature guarantees and any other documents required by the Letter of Transmittal will be deposited by such Eligible Institution with the Exchange Agent, and (iii) the certificates for all physically tendered old notes, in proper form for transfer, or a book-entry confirmation, as the case may be, together with a properly completed and duly executed appropriate Letter of Transmittal or facsimile thereof or Agent's Message in lieu thereof, with any required signature guarantees and all other documents required by the Letter of Transmittal, are received by the Exchange Agent within three NYSE trading days after the date of execution the Notice of Guaranteed Delivery. WITHDRAWAL RIGHTS Tenders of old notes may be withdrawn at any time prior to the Expiration Date. For a withdrawal to be effective, a written notice of withdrawal must be received by the Exchange Agent at one of the addresses set forth under "--Exchange Agent." Any such notice of withdrawal must (i) specify the name of the person having tendered the old notes to be withdrawn, (ii) the old notes to be withdrawn (including the principal amount of such old notes), and (iii) (where certificates for old notes have been transmitted) specify the name in which such old notes are registered, if different from that of the withdrawing holder. If certificates for old notes have been delivered or otherwise identified to the Exchange Agent, then, prior to the release of such certificates the withdrawing holder must also submit the serial numbers of the particular certificates to be withdrawn and a signed notice of withdrawal with signatures guaranteed by an Eligible Institution unless such holder is an Eligible Institution. If old notes have been tendered pursuant to the procedure for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn old notes and otherwise comply with the procedures of DTC. We shall make a final and binding determination on all questions as to the validity, form and eligibility (including time of receipt) of such notices (or delegate our power to the Exchange Agent). Any old notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Exchange Offer. Any old notes which have been tendered for exchange but which are not exchanged for any reason will be returned to the holder thereof without cost to such holder (or, in the case of old notes tendered by book-entry transfer into the Exchange Agent's account at DTC pursuant to the book-entry transfer procedures described above, such old notes will be credited to an account maintained with DTC for the old notes) as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn old notes may be retendered by following one of the procedures described under "--Procedures for Tendering old notes" above at any time on or prior to the Expiration Date. 45 CERTAIN CONDITIONS TO THE EXCHANGE OFFER Notwithstanding any other provision of the Exchange Offer, we shall not be required to accept for exchange, or to issue new notes in exchange for, any old notes and may terminate or amend the Exchange Offer, if at any time before the acceptance of such old notes, any of the following events shall occur: (a) there shall be threatened, instituted or pending any action or proceeding before, or any injunction, order or decree shall have been issued by, any court or governmental agency or other governmental regulatory or administrative agency or commission, (i) seeking to restrain or prohibit the making or consummation of the Exchange Offer or any other transaction contemplated by the Exchange Offer, or assessing or seeking any damages as a result thereof, or (ii) resulting in a material delay in our ability to accept for exchange or exchange some or all of the old notes pursuant to the Exchange Offer; or any statute, rule, regulation, order or injunction shall be sought, proposed, introduced, enacted, promulgated or deemed applicable to the Exchange Offer or any of the transactions contemplated by the Exchange Offer by any government or governmental authority, domestic or foreign, or any action shall have been taken, proposed or threatened, by any government, governmental authority, agency or court, domestic or foreign, that in the sole judgment might, directly or indirectly, result in any of the consequences referred to in clauses (i) or (ii) above or, in our reasonable judgment, might result in the holders of new notes having obligations with respect to resales and transfers of new notes which are greater than those described in the interpretation of the Commission referred to on the cover page of this Prospectus, or would otherwise make it inadvisable to proceed with the Exchange Offer; or (b) there shall have occurred (i) any general suspension of or general limitation on prices for, or trading in, securities on any national securities exchange or in the over-the-counter market, (ii) any limitation by an governmental agency or authority which may adversely affect our ability to complete the transactions contemplated by the Exchange Offer, (iii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States or any limitation by any governmental agency or authority which adversely affects the extension of credit or (iv) a commencement of a war, armed hostilities or other similar international calamity directly or indirectly involving the United States, or, in the case of any of the foregoing existing at the time of the commencement of the Exchange Offer, a material acceleration or worsening thereof; or (c) any change (or any development involving a prospective change) shall have occurred or be threatened in our business, properties, assets, liabilities, financial condition, operations, results of operations or prospects and our subsidiaries taken as a whole that, in our reasonable judgment, is or may be adverse to us, or we have become aware of facts that, in our reasonable judgment, have or may have adverse significance with respect to the value of the old notes or the new notes; which in our reasonable judgment in any case, and regardless of the circumstances (including any action by the Company) giving rise to any such condition, makes it inadvisable to proceed with the Exchange Offer and/or with such acceptance for exchange or with such exchange. The foregoing conditions are for our sole benefit and may be asserted by us regardless of the circumstances giving rise to any such condition or may be waived by us in whole or in part at any time and from time to time in our reasonable discretion. Our failure at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. In addition, we will not accept for exchange any old notes tendered, and no new notes will be issued in exchange for any such old notes, if at such time any stop order shall be threatened or in effect with respect to the Registration Statement, of which this Prospectus constitutes a part, or the qualification of the indenture under the Trust Indenture Act. 46 EXCHANGE AGENT The Bank of New York has been appointed as the Exchange Agent for the Exchange Offer. All executed Letters of Transmittal should be directed to the Exchange Agent at the address set forth below. Questions and requests for assistance, requests for additional copies of this Prospectus or of the Letter of Transmittal and requests for Notices of Guaranteed Delivery should be directed to the Exchange Agent addressed as follows: Main Delivery to: The Bank of New York AS EXCHANGE AGENT BY MAIL, BY HAND AND OVERNIGHT COURIER: BY FACSIMILE: The Bank of New York (212) 815-6339 101 Barclay Street, 21 West CONFIRM BY TELEPHONE: New York, New York 10286 (212) 815-3502 Attention: Millicent Burnett
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF SUCH LETTER OF TRANSMITTAL VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF LETTER OF TRANSMITTAL. FEES AND EXPENSES We will not make any payment to brokers, dealers, or others soliciting acceptances of the Exchange Offer, except for reimbursement of mailing expenses. We will pay the estimated cash expenses to be incurred in connection with the Exchange Offer, which are estimated to be $250,000. TRANSFER TAXES Holders who tender their old notes for exchange will not be obligated to pay any transfer taxes in connection therewith, except that holders who instruct us to register new notes in the name of, or request that old notes not tendered or not accepted in the Exchange Offer be returned to, a person other that the registered tendering holder will be responsible for the payment of any applicable transfer tax thereon. CONSEQUENCES OF EXCHANGING OLD NOTES Holders of old notes who do not exchange their old notes for new notes pursuant to the Exchange Offer will continue to be subject to the provisions in the indentures regarding transfer and exchange of the old notes and the restrictions on transfer of such old notes as set forth in the legend thereon as a consequence of the issuance of the old notes pursuant to exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws. In general, the old notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. Under certain circumstances, certain holders of old notes (including holders who are not permitted to participate in the Exchange Offer or who may not freely resale new notes received in the Exchange Offer, may require us to file and cause to become effective, a shelf registration statement which would cover resales of old notes by such holders. We do not currently anticipate that we will register old notes under the Securities Act. However, subject to limitations specified in the registration rights agreement, we will register or qualify the new notes for offer or sale under the securities laws of any jurisdictions that you reasonably request in writing. See "--Description of the Notes--Exchange Offer; Registration Rights." Based on interpretations by the staff of the Commission, as set forth in no-action letters issued to third parties, the Company believes that new notes issued pursuant to the Exchange Offer in exchange for old 47 notes may be offered for resale, resold or otherwise transferred by holders thereof (other than any such holder which is our "affiliate" within the meaning of Rule 405 promulgated under the Securities Act) without compliance with the registration and prospectus delivery requirements of the Securities Act; PROVIDED that such new notes are acquired in the ordinary course of such holder's business and such holder has no arrangement or understanding with any person to participate in the distribution of such new notes. However, the Commission has not considered the Exchange Offer in the context of a no-action letter and there can be no assurance that the staff of the Commission would make a similar determination with respect to the Exchange Offer as in such other circumstances. Each holder, other than a broker-dealer, must acknowledge that it is not engaged in, and does not intend to engage in, a distribution of such new notes and has no arrangement or understanding to participate in a distribution of new notes. If any holder who is our affiliate engages in or intends to engage in or has any arrangement or understanding with respect to the distribution of new notes to be acquired pursuant to the Exchange Offer, such holder (i) could not rely on the applicable interpretations of the staff of the Commission and (ii) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. Each broker-dealer that receives new notes for its own account in exchange for old notes must acknowledge that such old notes were acquired by such broker-dealer as a result of market-making activities or other trading activities and that it will deliver a prospectus in connection with any resale of such new notes. See "Plan of Distribution." In addition, to comply with the securities laws of certain jurisdictions, if applicable, the new notes may not be offered or sold unless they have been registered or qualified for sale in such jurisdiction or an exemption from registration or qualification is available and is complied with. We have agreed, pursuant to the registration rights agreement, subject to certain limitations specified therein, to register or qualify the new notes for offer or sale under the securities laws of such jurisdictions as any holder reasonably requests in writing. Unless a holder so requests, we do not intend to register or qualify the sale of the new notes in any such jurisdictions. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES The following is a summary of certain United States federal income tax consequences associated with the exchange of the old notes for new notes, and the disposition of the new notes. This summary is based upon existing United States federal income tax law, which is subject to change, possibly retroactively. This summary does not discuss all aspects of United States federal income taxation which may be important to particular holders in light of their individual investment circumstances, such as new notes held by investors subject to special tax rules (e.g., financial institutions, insurance companies, broker-dealers, and tax-exempt organizations, or, except to the extent described below, Non-U.S. holders (as defined below)) or to persons that hold the old notes or will hold the new notes as a part of a straddle, hedge, or synthetic security transaction for United States federal income tax purposes or that have a functional currency other than the United States dollar, all of whom may be subject to tax rules that differ significantly from those summarized below. In addition, this summary does not discuss any foreign, state, or local tax considerations. This summary addresses tax consequences only to current holders of notes and assumes that such holders hold their new notes as "capital assets" (generally, property held for investment) under the United States Internal Revenue Code of 1986, as amended (the "Code"). holders are urged to consult their tax advisors regarding the United States federal, state, local, and foreign income and other tax considerations associated with the exchange of old notes for new notes and the disposition of the new notes. For purposes of this summary, a "U.S. Holder" is (i) an individual who is a citizen or resident of the United States, (ii) a corporation, partnership, or other entity created or organized under the laws of the United States or any state or political subdivision thereof, (iii) an estate that is subject to United States federal income taxation without regard to the source of its income, or (iv) a trust whose administration is subject to the primary supervision of a United States court and which has one or more United States persons who have the authority to control all substantial decisions of the trust. A "Non-U.S. Holder" is a beneficial owner of an old note or new note who is not a U.S. Holder. 48 U.S. HOLDERS AND NON-U.S. HOLDERS There will be no United States federal income tax consequences to a U.S. Holder or Non-U.S. Holder exchanging an old note for a new note pursuant to the Exchange Offer and such holder will have the same adjusted basis and holding period in the new note as it had in the old note immediately before the exchange. U.S. HOLDERS DISPOSITION OF NEW NOTES. In general, subject to the market discount rules discussed below, a U.S. Holder of a new note will recognize capital gain or loss upon the sale, redemption, retirement or other disposition of the new note in an amount equal to the difference between the amount realized (except to the extent attributable to accrued but unpaid interest), in such disposition and the holder's adjusted tax basis in the new note. Under the recently enacted Internal Revenue Service Restructuring and Reform Act of 1998, net capital gain (ie. generally, capital gain in excess of capital loss) recognized by an individual holder upon the disposition of a new note that has been held for more than 12 months will generally be subject to tax at a rate not to exceed 20%, or, in the case of a new note that has been held for 12 months or less will be subject to tax at ordinary income tax rates. In addition, capital gain recognized by a corporate holder will be subject to tax at the ordinary income tax rates applicable to corporations. MARKET DISCOUNT. Holders, other than original purchasers of old notes in the original offering, should be aware that the resale of the new notes may be affected by the market discount provisions of the Code. These rules generally provide that if a holder of a note purchases such note, subsequent to the original offering, at a market discount in excess of a statutorily defined DE MINIMUS amount, and thereafter recognizes gain upon a disposition (including a partial redemption) of the new note received in exchange for such old note, the lesser of such gain or the portion of the market discount that accrued while the old note and the new note were held by such holder will be treated as ordinary interest income at the time of the disposition. The rules also provide that a holder who acquires a note at a market discount may be required to defer a portion of any interest expense that may otherwise be deductible on any indebtedness incurred or maintained to purchase or carry such note until the holder disposes of such note in a taxable transaction. If a holder of such a note elects to include market discount in income currently, both of the foregoing rules would not apply. NON-U.S. HOLDERS PAYMENTS OF INTEREST. Interest paid by the Company to Non-U.S. Holders will not be subject to United States federal income or withholding tax provided that (i) such holder does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of the Company entitled to vote, (ii) such holder is not a controlled foreign corporation related to the Company through stock ownership, a foreign tax-exempt organization or foreign private foundation for United States federal income tax purposes, and (iii) the requirements of section 871(h) or 881(c) of the Code are satisfied as described below under the heading "Owner's Statement Requirement." Notwithstanding the above, unless the holder qualifies for an exemption from such tax or a lower tax rate under an applicable treaty, a Non-U.S. Holder that is engaged in the conduct of a United States trade or business will be subject to (i) United States federal income tax on interest that is effectively connected with the conduct of such trade or business and (ii) if the Non-U.S. Holder is a corporation, a United States branch profits tax equal to 30% of its "effectively connected earnings and profits" as adjusted for the taxable year. GAIN ON DISPOSITION. A Non-U.S. Holder will generally not be subject to United States federal income tax on gain recognized on a sale, redemption, or other disposition of a new note unless (i) the gain is effectively connected with the conduct of a trade or business within the United States by the Non-U.S. Holder or (ii) in the case of a Non-U.S. Holder who is a nonresident alien individual, such holder is present in the United States for 183 or more days during the taxable year and certain other requirements are met. Any such gain that is effectively connected with the conduct of a United States trade or business by a Non-U.S. Holder will be subject to United States federal income tax on a net income basis in the same 49 manner as if such holder were a United States person and, if such Non-U.S. Holder is a corporation, such gain may also be subject to the 30% United States branch profits tax described above. FEDERAL ESTATE TAXES. A new note held by an individual who at the time of death is not a citizen or resident of the United States will not be subject to United States federal estate tax as a result of such individual's death, PROVIDED that (i) the individual does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of the Company entitled to vote and (ii) the interest accrued on the new note was not effectively connected with a United States trade or business of the individual at the individual's death. OWNER'S STATEMENT REQUIREMENT. Sections 871(h) and 881(c) of the Code require that either the beneficial owner of the new note or a securities clearing organization, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business (a "Financial Institution") and that holds the new note on behalf of such owner file a statement with the Company or its agent to the effect that the beneficial owner is not a United States person in order to avoid withholding of United States federal income tax. Under current regulations, this requirement will be satisfied if the Company or its agent receives (i) a statement (an "Owner's Statement") from the beneficial owner of a new note certifying under penalties of perjury that such owner is not a United States person and that provides such owner's name and address or (ii) a statement from the Financial Institution holding the new note on behalf of the beneficial owner in which the Financial Institution certifies, under penalties of perjury, that it has received the Owner's Statement together with a copy of the Owner's Statement. The beneficial owner must inform the Company or its agent (or, in the case of a statement described in clause (ii) of the immediately preceding sentence, the Financial Institution) within 30 days of any change in information on the Owner's Statement. BACKUP WITHHOLDING AND INFORMATION REPORTING. Current United States federal income tax law provides that in the case of payments of interest to Non-U.S. holders, the 31% backup withholding tax will not apply to payments made outside the United States by the Company or a paying agent on a new note if an Owner's Statement is received or an exemption has otherwise been established; PROVIDED in each case that the Company or the paying agent, as the case may be, does not have actual knowledge that the payee is a United States person. Under current Treasury Regulations, payments of the proceeds of the sale of a new note to or through a foreign office of a "broker" will not be subject to backup withholding but will be subject to information reporting if the broker is a United States person, a controlled foreign corporation for United States federal income tax purposes, a foreign person 50% or more of whose gross income is from a United States trade or business for a specific three-year period, or, with respect to payments made after December 31, 1999, a foreign partnership, if at any time during its tax year, one or more of its partners are U.S. persons (as defined in United States Treasury regulations) who, in the aggregate, hold more than 50% of the income or capital interest in the partnership or if, at any time during its tax year, such foreign partnership is engaged in a United States trade or business unless the broker has in its records documentary evidence that the holder is not a United States person and certain conditions are met or the holder otherwise establishes an exemption. Payment of the proceeds of a sale to or through the United States office of a broker is subject to backup withholding and information reporting unless the holder certifies its non-United States status under penalties of perjury or otherwise establishes an exemption. Recently, the Treasury Department has promulgated final regulations (the "Final Regulations") regarding the withholding and information reporting rules discussed above. In general, the Final Regulations do not significantly alter the substantive withholding and information reporting requirements but unify current certification procedures and forms and clarify reliance standards. Under the Final Regulations, special rules apply which permit the shifting of primary responsibility for withholding to certain financial intermediaries acting on behalf of beneficial owners and would alter the rules applicable to certain partnerships by requiring partners, rather than the partnership, to provide the Owner's Statement. The Final Regulations are generally effective for payments made after December 31, 1999, subject to certain transition rules. 50 PLAN OF DISTRIBUTION Each broker-dealer that receives new notes for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such new notes. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of new notes received in exchange for old notes where such old notes were acquired as a result of market-making activities or other trading activities. We have agreed that, for a period of ninety days after the Expiration Date, we will make this Prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until , 1999, all dealers effecting transactions in the new notes may be required to deliver a prospectus. We will not receive any proceeds form any sale of new notes by broker-dealers. New notes received by broker-dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market or, in negotiated transactions, or a combination of such methods of resale, at market prices or negotiated prices. Any such resale may be made directly to the purchaser or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such new notes. Any broker-dealer that resells new notes that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such new notes may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of new notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For a period of ninety days after the Expiration Date, we will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker-dealer that requests such documents in the Letter of Transmittal. We have agreed to pay all expenses incident to the Exchange Offer (including the expenses of one counsel for the holders of the new notes) other than commissions or concessions of any brokers or dealers and will indemnify the holders of the new notes (including any broker-dealer) against certain liabilities, including liabilities under the Securities Act. LEGAL MATTERS Certain legal matters as to the validity of the new notes offered hereby will be passed upon for us by Scott M. Brown, our Senior Vice President and General Counsel. EXPERTS Our consolidated financial statements and schedule as of May 31, 1997 and 1998, and for each of the years in the three-year period ended May 31, 1998, 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. 51 YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS IS NOT AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY OF THE NOTES TO ANY PERSON OR BY ANYONE IN ANY JURISDICTION WHERE IT IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE USING THE PROSPECTUS SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT WE HAVE REFERRED YOU TO IS CORRECT AFTER THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN OUR AFFAIRS SINCE THE DATE HEREOF. TABLE OF CONTENTS
PAGE ----- Available Information...................................................................................... ii Incorporation of Certain Documents by Reference............................................................ ii Prospectus Summary......................................................................................... 1 Risk Factors............................................................................................... 6 Use of Proceeds............................................................................................ 14 Capitalization............................................................................................. 15 Selected Financial Information............................................................................. 16 Description of Notes....................................................................................... 18 The Exchange Offer......................................................................................... 42 Certain United States Federal Income Tax Consequences...................................................... 48 Plan of Distribution....................................................................................... 51 Legal Matters.............................................................................................. 51 Experts.................................................................................................... 51
52 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 78.751 of the Nevada Revised Statutes Annotated ("Nevada RSA") 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 of the Nevada RSA further provides that, in connection with the defense or settlement of any action by or in the right of a Nevada 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 of the Nevada RSA further permits a Nevada corporation to grant its directors and officers additional rights of indemnification through by-law provisions and otherwise. Article IX of the Company's Restated By-Laws, as amended, provides that the Company shall indemnify its directors and officers to the fullest extent permitted by Nevada law. The Company 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 or the Company's Restated Articles of Incorporation, as amended (the "Articles"). Such agreements are intended to be in furtherance, and not in limitation of, the general right to indemnification provided in the Articles. Section 78.037 of the Nevada RSA provides that the articles of incorporation of a Nevada corporation may 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 provisions 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 RSA (relating to liability for unauthorized acquisitions or redemptions of, or dividends on, capital stock). Article X of the Articles contains a provision eliminating the liability of directors and officers to the extent permitted under Section 78.037 of the Nevada RSA. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. II-1 ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) Exhibits *1.1 Purchase Agreement, dated May 8, 1998, between Tenet Healthcare Corporation (the "Company") and Donaldson, Luftkin & Jenrette Securities Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc., Morgan Stanley & Co Incorporated, Salomon Brothers Inc, Deutsche Morgan Grenfell Inc. and BancAmerica Robertson Stephens (collectively the "Initial Purchasers"). 3.1 Restated Articles of Incorporation of the Company, as amended to date (Incorporated by reference to Exhibit 3(a) to Company's Annual Report on Form 10K, dated August 25, 1995, for the fiscal year ended May 31, 1995). 3.2 Restated By-Laws of the Company, as amended October 16, 1996 (Incorporated by reference to Exhibit 3 to Company's Quarterly Report on Form 10-Q dated January 14, 1998, for the fiscal quarter ended November 30, 1997). 4.1 Indenture, dated May 21, 1998, between the Company and the Bank of New York as Trustee, relating to 7 5/8% Senior Notes due 2008 of the Company (the "7 5/8% New Notes") (Incorporated by reference to Exhibit 4(o) to the Company's Annual Report on Form 10-K, dated August 27, 1998, for fiscal year ended May 31, 1998). 4.2 Form of 7 5/8% New Note (included in Exhibit 4.1). 4.3 Indenture, dated May 21, 1998, between the Company and the Bank of New York as Trustee, relating to 8 1/8% Senior Subordinated Notes due 2008 (the 8 1/8% New Notes) (Incorporated by reference to Exhibit 4(p) to the Company's Annual Report on Form 10-K, dated August 27, 1998, for fiscal year ended May 31, 1998). 4.4 Form of 8 1/8% New Note (included in Exhibit 4.3). *4.5 Registration Rights Agreement, dated as of May 21, 1998, by and among the Company and the Initial Purchasers. 4.6 Indenture, dated as of March 1, 1995, between the Company and The Bank of New York, as Trustee, relating to 9 5/8% Senior Notes due 2002 (Incorporated by reference to Exhibit 4(a) to the Company's Quarterly Report on Form 10-Q dated April 14, 1995, for the fiscal quarter ended February 28, 1995). 4.7 First Supplemental Indenture, dated as of October 30, 1995, between the Company and The Bank of New York, as Trustee, relating to 9 5/8% Senior Notes due 2002 (Incorporated by reference to Exhibit 4(c) to the Company's Annual Report on Form 10-K, dated August 27, 1997, for the fiscal year ended May 31, 1997). 4.8 Second Supplemental Indenture, dated as of August 21, 1997, between the Company and The Bank of New York, as Trustee, relating to 9 5/8% Senior Notes due 2002 (Incorporated by reference to Exhibit 4(d) to the Company's Annual Report on Form 10-K, dated August 27, 1997, for the fiscal year ended May 31, 1997). *4.9 Third Supplemental Indenture, dated as of May 7, 1998, between the Company and The Bank of New York, as Trustee, relating to 9 5/8% Senior Notes due 2002. 4.10 Indenture, dated as of March 1, 1995, between the Company and The Bank of New York, as Trustee, relating to 10 1/8% Senior Subordinated Notes due 2005 (Incorporated by reference to Exhibit 4(b) to the Company's Quarterly Report on Form 10-Q dated April 14, 1995, for the fiscal quarter ended February 28, 1995).
II-2 4.11 First Supplemental Indenture, dated as of October 27, 1995, between the Company and The Bank of New York, as Trustee, relating to 10 1/8% Senior Subordinated Notes due 2005 (Incorporated by reference to Exhibit 4(f) to the Company's Annual Report on Form 10-K, dated August 27, 1997, for the fiscal year ended May 31, 1997). 4.12 Second Supplemental Indenture, dated as of August 21, 1997, between the Company and The Bank of New York, as Trustee, relating to 10 1/8% Senior Subordinated Notes due 2005 (Incorporated by reference to Exhibit 4(g) to the Company's Annual Report on Form 10-K, dated August 27, 1997, for the fiscal year ended May 31, 1997). *4.13 Third Supplemental Indenture, dated as of May 7, 1998, between the Company and The Bank of New York, as Trustee, relating to 10 1/8% Senior Subordinated Notes due 2005. 4.14 Indenture, dated as of October 16, 1995, between the Company and the Bank of New York, as Trustee, relating to 8 5/8% Senior Notes due 2003 (Incorporated by reference to Exhibit 4(d) to the Company's Annual Report on Form 10-K dated August 26, 1996, for the fiscal year ended May 31, 1996). 4.15 First Supplemental Indenture, dated as of October 30, 1995, between the Company and The Bank of New York, as Trustee, relating to 8 5/8% Senior Notes due 2003 (Incorporated by reference to Exhibit 4(i) to the Company's Annual Report on Form 10-K, dated August 27, 1997 for the fiscal year ended May 31, 1997). 4.16 Second Supplemental Indenture, dated as of August 21, 1997, between the Company and The Bank of New York, as Trustee, relating to 8 5/8% Senior Notes due 2003 (Incorporated by reference to Exhibit 4(j) to the Company's Annual Report on Form 10-K, dated August 27, 1997 for the fiscal year ended May 31, 1997). 4.17 Indenture, dated as of January 10, 1996, between the Company and The Bank of New York, as Trustee, relating to 6% Exchangeable Subordinated Notes due 2005 (Incorporated by reference to Exhibit 4(a) to the Company's Quarterly Report on Form 10-Q dated January 15, 1996, for the fiscal quarter ended November 30, 1995). 4.18 Indenture, dated January 15, 1997, between the Company and The Bank of New York, as Trustee, relating to 7 7/8% Senior Notes due 2003 (Incorporated by reference to Exhibit 4(m) to the Company's Annual Report on Form 10-K, dated August 27, 1997 for the fiscal year ended May 31, 1997). 4.19 Indenture, dated January 15, 1997, between the Company and The Bank of New York, as Trustee, relating to 8% Senior Notes due 2005 (Incorporated by reference to Exhibit 4(n) to the Company's Annual Report on Form 10-K, dated August 27, 1997 for the fiscal year ended May 31, 1997). 4.20 Indenture, dated January 15, 1997, between the Company and The Bank of New York, as Trustee, relating to 8 5/8 Senior Subordinated Notes due 2007 (Incorporated by reference to Exhibit 4(o) to the Company's Annual Report on Form 10-K, dated August 27, 1997 for the fiscal year ended May 31, 1997). *5.1 Form of Opinion of Scott M. Brown, Esq., Senior Vice President, General Counsel and Secretary of the Company. 10.1 $2,800,000,000 Credit Agreement, dated as of January 30, 1997, among Tenet, as Borrower, the Lenders, Managing Agents and Co-Agents party thereto, the Swingline Bank party thereto, The Bank of New York and the Bank of Nova Scotia, as Documentation Agents, Bank of America National Trust and Savings Association, as Syndication Agent, and Morgan Guaranty Trust Company of New York, as Administration Agent (Incorporated by reference to Exhibit 10(a) to the Company's Quarterly Report on Form 10-Q, dated as of April 14, 1997, for the fiscal quarter ended February 28, 1997).
II-3 10.2 Amendment, dated as of July 25, 1997, to the Credit Agreement, dated as of January 30, 1997, among the Company the Lenders, Managing Agents and Co-Agents party thereto, the Swingline Bank party thereto, The Bank of New York and The Bank of Nova Scotia, as Documentation Agents, Bank of America National Trust and Savings Association, as Syndication Agent, and Morgan Guaranty Trust Company of New York, as Administrative Agent (Incorporated by reference to Exhibit 10(f) to the Company's Annual Report on Form 10-K, dated August 27, 1997 for the fiscal year ended May 31, 1997.) 10.3 Escrow Agreement, dated as of January 10, 1996, among the Company, NME Properties, Inc., NME Property Holding Co., Inc. and The Bank of New York, as Escrow Agent (Incorporated by reference to Exhibit 4(b) to the Company's Quarterly Report on Form 10-Q, dated as of January 15, 1996, for the fiscal quarter ended November 30, 1995). *12.1 Statement regarding the computation of ratio of earnings to fixed charges for the Company. *23.1 Consent of KPMG Peat Marwick LLP. *23.2 Consent of Scott M. Brown (included in Exhibit 5.1). *24.1 Power of Attorney (included on the signature page). *25.1 Statement of Eligibility on Form T-1 of The Bank of New York, as the Trustees under the 7 5/8% and 8 1/8% Indentures relating to the new notes. *99.1 Form of Letter of Transmittal. *99.2 Form of Notice of Guaranteed Delivery. *99.3 Form of Letter of Brokers, Dealers, Commercial Banks, Trust Companies and other Nominees. *99.4 Form of Letter to Clients. *99.5 Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. *99.6 Form of Exchange Agent Agreement.
- ------------------------ * Filed herewith ITEM 22. UNDERTAKINGS. (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act as amended (the "Securities Act"); (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. 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) (Section230.424(b) of this chapter) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective Registration Statement. II-4 (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; (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial BONA FIDE offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (a) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. (b) The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the Prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form S-4, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the Registration Statement through the date of responding to the request. (c) The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the Registration Statement when it became effective. II-5 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Santa Barbara, State of California on September 23, 1998. TENET HEALTHCARE CORPORATION By: /s/ SCOTT M. BROWN ----------------------------------------- Name: Scott M. Brown Title: SENIOR VICE PRESIDENT POWER OF ATTORNEY KNOW ALL THOSE BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Jeffrey C. Barbakow, Trevor Fetter, Raymond L. Mathiasen and Scott M. Brown and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign and file any and all amendments (including post-effective amendments) to this Registration Statement, with all exhibits thereto, and other documents in connection therewith, with the Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitutes or substitute, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities indicated on September 23, 1998:
SIGNATURE TITLE - ------------------------------------------------------ ---------------------------------------------------------- /s/ JEFFREY C. BARBAKOW ------------------------------------------ Chairman, Chief Executive Officer and Director Jeffrey C. Barbakow (Principal Executive Officer) /s/ MICHAEL H. FOCHT, SR. ------------------------------------------ President, Chief Operating Officer and Director Michael H. Focht, Sr. /s/ TREVOR FETTER ------------------------------------------ Executive Vice President and Chief Financial Officer Trevor Fetter (Principal Financial Officer) /s/ RAYMOND L. MATHIASEN ------------------------------------------ Senior Vice President and Chief Accounting Officer Raymond L. Mathiasen (Principal Accounting Officer) /s/ LAWRENCE BIONDI ------------------------------------------ Director Lawrence Biondi /s/ BERNICE BRATTER ------------------------------------------ Director Bernice Bratter
II-6
SIGNATURE TITLE - ------------------------------------------------------ ---------------------------------------------------------- /s/ SANFORD CLOUD, JR. ------------------------------------------ Director Sanford Cloud, Jr. /s/ MAURICE J. DEWALD ------------------------------------------ Director Maurice J. DeWald /s/ EDWARD EGBERT, M.D. ------------------------------------------ Director Edward Egbert, M.D. /s/ RAYMOND A. HAY ------------------------------------------ Director Raymond A. Hay /s/ LESTER B. KORN ------------------------------------------ Director Lester B. Korn /s/ RICHARD S. SCHWEIKER ------------------------------------------ Director Richard S. Schweiker
II-7 INDEX TO EXHIBITS
EXHIBITS - ----------- *1.1 Purchase Agreement, dated May 8, 1998, between Tenet Healthcare Corporation (the "Company") and Donaldson, Luftkin & Jenrette Securities Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc., Morgan Stanley & Co Incorporated, Salomon Brothers Inc, Deutsche Morgan Grenfell Inc. and BancAmerica Robertson Stephens (collectively the "Initial Purchasers"). 3.1 Restated Articles of Incorporation of the Company, as amended to date (Incorporated by reference to Exhibit 3(a) to Company's Annual Report on Form 10K, dated August 25, 1995, for the fiscal year ended May 31, 1995). 3.2 Restated By-Laws of the Company, as amended October 16, 1996 (Incorporated by reference to Exhibit 3 to Company's Quarterly Report on Form 10-Q dated January 14, 1998, for the fiscal quarter ended November 30, 1997). 4.1 Indenture, dated May 21, 1998, between the Company and the Bank of New York as Trustee, relating to 7 5/8% Senior Notes due 2008 of the Company (the "7 5/8% New Notes") (Incorporated by reference to Exhibit 4(o) to the Company's Annual Report on Form 10-K, dated August 27, 1998, for fiscal year ended May 31, 1998). 4.2 Form of 7 5/8% New Note (included in Exhibit 4.1). 4.3 Indenture, dated May 21, 1998, between the Company and the Bank of New York as Trustee, relating to 8 1/8% Senior Subordinated Notes due 2008 (the 8 1/8% New Notes) (Incorporated by reference to Exhibit 4(p) to the Company's Annual Report on Form 10-K, dated August 27, 1998, for fiscal year ended May 31, 1998). 4.4 Form of 8 1/8% New Note (included in Exhibit 4.3). *4.5 Registration Rights Agreement, dated as of May 21, 1998, by and among the Company and the Initial Purchasers. 4.6 Indenture, dated as of March 1, 1995, between the Company and The Bank of New York, as Trustee, relating to 9 5/8% Senior Notes due 2002 (Incorporated by reference to Exhibit 4(a) to the Company's Quarterly Report on Form 10-Q dated April 14, 1995, for the fiscal quarter ended February 28, 1995). 4.7 First Supplemental Indenture, dated as of October 30, 1995, between the Company and The Bank of New York, as Trustee, relating to 9 5/8% Senior Notes due 2002 (Incorporated by reference to Exhibit 4(c) to the Company's Annual Report on Form 10-K, dated August 27, 1997, for the fiscal year ended May 31, 1997). 4.8 Second Supplemental Indenture, dated as of August 21, 1997, between the Company and The Bank of New York, as Trustee, relating to 9 5/8% Senior Notes due 2002 (Incorporated by reference to Exhibit 4(d) to the Company's Annual Report on Form 10-K, dated August 27, 1997, for the fiscal year ended May 31, 1997). *4.9 Third Supplemental Indenture, dated as of May 7, 1998, between the Company and The Bank of New York, as Trustee, relating to 9 5/8% Senior Notes due 2002. 4.10 Indenture, dated as of March 1, 1995, between the Company and The Bank of New York, as Trustee, relating to 10 1/8% Senior Subordinated Notes due 2005 (Incorporated by reference to Exhibit 4(b) to the Company's Quarterly Report on Form 10-Q dated April 14, 1995, for the fiscal quarter ended February 28, 1995). 4.11 First Supplemental Indenture, dated as of October 27, 1995, between the Company and The Bank of New York, as Trustee, relating to 10 1/8% Senior Subordinated Notes due 2005 (Incorporated by reference to Exhibit 4(f) to the Company's Annual Report on Form 10-K, dated August 27, 1997, for the fiscal year ended May 31, 1997).
EXHIBITS - ----------- 4.12 Second Supplemental Indenture, dated as of August 21, 1997, between the Company and The Bank of New York, as Trustee, relating to 10 1/8% Senior Subordinated Notes due 2005 (Incorporated by reference to Exhibit 4(g) to the Company's Annual Report on Form 10-K, dated August 27, 1997, for the fiscal year ended May 31, 1997). *4.13 Third Supplemental Indenture, dated as of May 7, 1998, between the Company and The Bank of New York, as Trustee, relating to 10 1/8% Senior Subordinated Notes due 2005. 4.14 Indenture, dated as of October 16, 1995, between the Company and the Bank of New York, as Trustee, relating to 8 5/8% Senior Notes due 2003 (Incorporated by reference to Exhibit 4(d) to the Company's Annual Report on Form 10-K dated August 26, 1996, for the fiscal year ended May 31, 1996). 4.15 First Supplemental Indenture, dated as of October 30, 1995, between the Company and The Bank of New York, as Trustee, relating to 8 5/8% Senior Notes due 2003 (Incorporated by reference to Exhibit 4(i) to the Company's Annual Report on Form 10-K, dated August 27, 1997 for the fiscal year ended May 31, 1997). 4.16 Second Supplemental Indenture, dated as of August 21, 1997, between the Company and The Bank of New York, as Trustee, relating to 8 5/8% Senior Notes due 2003 (Incorporated by reference to Exhibit 4(j) to the Company's Annual Report on Form 10-K, dated August 27, 1997 for the fiscal year ended May 31, 1997). 4.17 Indenture, dated as of January 10, 1996, between the Company and The Bank of New York, as Trustee, relating to 6% Exchangeable Subordinated Notes due 2005 (Incorporated by reference to Exhibit 4(a) to the Company's Quarterly Report on Form 10-Q dated January 15, 1996, for the fiscal quarter ended November 30, 1995). 4.18 Indenture, dated January 15, 1997, between the Company and The Bank of New York, as Trustee, relating to 7 7/8% Senior Notes due 2003 (Incorporated by reference to Exhibit 4(m) to the Company's Annual Report on Form 10-K, dated August 27, 1997 for the fiscal year ended May 31, 1997). 4.19 Indenture, dated January 15, 1997, between the Company and The Bank of New York, as Trustee, relating to 8% Senior Notes due 2005 (Incorporated by reference to Exhibit 4(n) to the Company's Annual Report on Form 10-K, dated August 27, 1997 for the fiscal year ended May 31, 1997). 4.20 Indenture, dated January 15, 1997, between the Company and The Bank of New York, as Trustee, relating to 8 5/8 Senior Subordinated Notes due 2007 (Incorporated by reference to Exhibit 4(o) to the Company's Annual Report on Form 10-K, dated August 27, 1997 for the fiscal year ended May 31, 1997). *5.1 Form of Opinion of Scott M. Brown, Esq., Senior Vice President, General Counsel and Secretary of the Company. 10.1 $2,800,000,000 Credit Agreement, dated as of January 30, 1997, among Tenet, as Borrower, the Lenders, Managing Agents and Co-Agents party thereto, the Swingline Bank party thereto, The Bank of New York and the Bank of Nova Scotia, as Documentation Agents, Bank of America National Trust and Savings Association, as Syndication Agent, and Morgan Guaranty Trust Company of New York, as Administration Agent (Incorporated by reference to Exhibit 10(a) to the Company's Quarterly Report on Form 10-Q, dated as of April 14, 1997, for the fiscal quarter ended February 28, 1997).
EXHIBITS - ----------- 10.2 Amendment, dated as of July 25, 1997, to the Credit Agreement, dated as of January 30, 1997, among the Company the Lenders, Managing Agents and Co-Agents party thereto, the Swingline Bank party thereto, The Bank of New York and The Bank of Nova Scotia, as Documentation Agents, Bank of America National Trust and Savings Association, as Syndication Agent, and Morgan Guaranty Trust Company of New York, as Administrative Agent (Incorporated by reference to Exhibit 10(f) to the Company's Annual Report on Form 10-K, dated August 27, 1997 for the fiscal year ended May 31, 1997.) 10.3 Escrow Agreement, dated as of January 10, 1996, among the Company, NME Properties, Inc., NME Property Holding Co., Inc. and The Bank of New York, as Escrow Agent (Incorporated by reference to Exhibit 4(b) to the Company's Quarterly Report on Form 10-Q, dated as of January 15, 1996, for the fiscal quarter ended November 30, 1995). *12.1 Statement regarding the computation of ratio of earnings to fixed charges for the Company. *23.1 Consent of KPMG Peat Marwick LLP. *23.2 Consent of Scott M. Brown (included in Exhibit 5.1). *24.1 Power of Attorney (included on the signature page). *25.1 Statement of Eligibility on Form T-1 of The Bank of New York, as the Trustees under the 7 5/8% and 8 1/8% Indentures relating to the new notes. *99.1 Form of Letter of Transmittal. *99.2 Form of Notice of Guaranteed Delivery. *99.3 Form of Letter of Brokers, Dealers, Commercial Banks, Trust Companies and other Nominees. *99.4 Form of Letter to Clients. *99.5 Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. *99.6 Form of Exchange Agent Agreement.
- ------------------------ * Filed herewith EX-1.1 2 EXHIBIT 1.1 TENET HEALTHCARE CORPORATION and DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED J.P. MORGAN SECURITIES INC. MORGAN STANLEY & CO. INCORPORATED SALOMON BROTHERS INC DEUTSCHE MORGAN GRENFELL INC. and BANCAMERICA ROBERTSON STEPHENS ------------------------------------ PURCHASE AGREEMENT ------------------------------------ Dated as of May 8, 1998 TENET HEALTHCARE CORPORATION 7 5/8% SENIOR NOTES DUE 2008 8 1/8% SENIOR SUBORDINATED NOTES DUE 2008 PURCHASE AGREEMENT May 8, 1998 DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED J.P. MORGAN SECURITIES INC. MORGAN STANLEY & CO. INCORPORATED SALOMON BROTHERS INC DEUTSCHE MORGAN GRENFELL INC. BANCAMERICA ROBERTSON STEPHENS c/o Donaldson, Lufkin & Jenrette Securities Corporation 277 Park Avenue New York, New York 10172 Ladies and Gentlemen: Subject to the terms and conditions herein contained, Tenet Healthcare Corporation, a Nevada corporation (the "Company"), proposes to issue and sell to Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") and Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc., Morgan Stanley & Co. Incorporated, Salomon Brothers Inc, Deutsche Morgan Grenfell Inc. and BancAmerica Robertson Stephens (together with DLJ, the "Initial Purchasers") an aggregate of $350.0 million principal amount of its 7 5/8% Senior Notes due 2008 (the "Senior Notes") and an aggregate of $1.0 billion principal amount of its 8 1/8% Senior Subordinated Notes due 2008 ( the "Senior Subordinated Notes" and, together with the Senior Notes, the "Securities"). The Senior Notes are to be issued pursuant to the provisions of an Indenture (the "Senior Note Indenture") to be dated as of May 21, 1998, by and between the Company and The Bank of New York, as Trustee (the "Senior Note Trustee"). The Senior Subordinated Notes are to be issued pursuant to the provisions of an Indenture (the "Senior Subordinated Note Indenture" and, together with the Senior Note Indenture, the "Indentures") to be dated as of May 21, 1998 by and between the Company and The Bank of New York, as Trustee (the "Senior Subordinated Note Trustee" and, together with the Senior Note Trustee, the "Trustees"). 1. OFFERING MEMORANDUM. The Securities will be offered and sold to the Initial Purchasers pursuant to one or more exemptions from the registration requirements under the Securities Act of 1933, as amended, including the rules and regulations thereunder (collectively, the "Act"). The Company has prepared a preliminary offering memorandum, dated May 1, 1998 (including the documents incorporated by reference therein, the "Preliminary Offering Memorandum"), and a final offering memorandum, dated May 8, 1998 (including the documents incorporated by reference therein, the "Offering Memorandum"), relating to the Securities. Upon original issuance thereof, and until such time as the same is no longer required pursuant to the Indentures, the Securities (and all securities issued in exchange therefor, in substitution thereof or upon conversion thereof) shall bear the following legend: "THIS NOTE (OR ITS PREDECESSORS) HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR A BENEFICIAL INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), OR (B) IT IS NOT A U.S. PERSON, IS NOT ACQUIRING THIS NOTE FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATIONS UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO UNDER RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE) UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS NOTE, RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A PERSON WHOM THE HOLDER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 903 OR RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) AND, IN EACH CASE, IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REUSE TO REGISTER ANY TRANSFER IF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS." 2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the representations and warranties contained in this Agreement, and subject to its terms and conditions, the Company agrees to issue and sell to the Initial Purchasers, and the Initial Purchasers agree, severally and not jointly, to purchase from the Company (i) the Senior Notes in the respective principal amounts set forth opposite their names on Schedule I hereto, plus such amount as they may individually become obligated to purchase pursuant to Section 9 hereof, at a purchase price equal to 98.588% of the principal amount of the Senior Notes, together with accrued interest, if any, to the Closing Date (the "Senior Note - 2 - Purchase Price") and (ii) the Senior Subordinated Notes in the respective principal amounts set forth opposite their names on Schedule II hereto, plus such amount as they may individually become obligated to purchase pursuant to Section 9 hereof, at a purchase price equal to 97.869% of the principal amount of the Senior Subordinated Notes, together with accrued interest, if any, to the Closing Date (the "Senior Subordinated Note Purchase Price" and, together with the Senior Note Purchase Price, the "Purchase Price"). The Initial Purchasers will offer the Senior Notes to Eligible Purchasers initially at a price equal to 99.962% of the principal amount thereof. The Initial Purchasers will offer the Senior Subordinated Notes to Eligible Purchasers initially at a price equal to 99.612% of the principal amount thereof. Such prices may be changed at any time without notice. The Initial Purchasers have advised the Company that the Initial Purchasers will make offers (the "Exempt Resales") of the Securities purchased hereunder on the terms set forth in the Offering Memorandum, as amended or supplemented, solely to (i) persons whom the Initial Purchaser reasonably believe to be "qualified institutional buyers" as defined in Rule 144A under the Act ("QIBs") and (ii) to persons permitted to purchase the Securities in offshore transactions in reliance upon Regulation S under the Act (each, a "Regulation S Purchaser") (such persons specified in clauses (i) and (ii) being referred to herein as the "Eligible Purchasers"). Holders (including subsequent transferees) of the Securities will have the registration rights set forth in the registration rights agreement (the "Registration Rights Agreement"), to be dated the Closing Date, in substantially the form of Exhibit A hereto, for so long as such Securities constitute "Transfer Restricted Securities" (as defined in the Registration Rights Agreement). Pursuant to the Registration Rights Agreement, the Company will agree to file with the Securities and Exchange Commission (the "Commission") under the circumstances set forth therein, a registration statement (the "Registration Statement") relating to the Securities and to use its commercially reasonable efforts to cause such Registration Statements to be declared and remain effective and usable for the periods specified in the Registration Rights Agreement. This Agreement, the Indenture, the Securities, and the Registration Rights Agreement are hereinafter sometimes referred to collectively as the "Operative Documents." 3. DELIVERY AND PAYMENT. Delivery to you of and payment for the Securities shall be made at 9:00 A.M., New York City time, on May 21, 1998 (such time and date being referred to as the "Closing Date"), at the offices of DLJ at 277 Park Avenue, New York, New York 10172, or such other place as you shall reasonably designate. The Securities in definitive form shall be registered in such names and issued in such denominations as you shall request in writing not later than two full business days prior to the Closing Date, and shall be made available to you at the offices of DLJ (or at such other place as shall be acceptable to you) for inspection not later than 10:00 A.M., New York City time, on the business day next preceding the Closing Date. The Securities shall be delivered to you on the Closing Date with any transfer taxes payable upon initial issuance thereof duly paid by the Company, for your respective accounts against payment of the appropriate Purchase Price by wire transfer of immediately available funds to an account designated by the Company. The Closing Date and the location of delivery of, and the form of payment for, the Securities may be varied by agreement between DLJ and the Company. 4. AGREEMENTS OF THE COMPANY. The Company agrees with each of you that: -3- (a) It will advise DLJ promptly and, if requested by DLJ, confirm such advice in writing, (i) of the issuance by any state securities commission of any stop order suspending the qualification or exemption from qualification of any Securities for offering or sale in any jurisdiction designated by the Initial Purchasers pursuant to Section 4(f), or the initiation of any proceeding by any state securities commission or any other federal or state regulatory authority for such purpose and (ii) of the happening of any event during the period referred to in Section 4(e), which makes any statement of a material fact made in the Preliminary Offering Memorandum or the Offering Memorandum untrue or which requires the making of any additions to or changes in the Preliminary Offering Memorandum or the Offering Memorandum in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Company shall use its best efforts to prevent the issuance of any stop order or order suspending the qualification or exemption of the Securities under any Federal or state securities or Blue Sky laws, and, if at any time any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption of the Securities under any state securities or Blue Sky laws, the Company shall use every reasonable effort to obtain the withdrawal or lifting of such order at the earliest possible time. (b) It will furnish the Initial Purchasers and those persons identified by the Initial Purchasers to the Company, without charge, as many copies of the Preliminary Offering Memorandum and the Offering Memorandum, including all documents incorporated by reference therein, and any amendments or supplements thereto, as the Initial Purchasers may reasonably request for the time period referred to in Section 4(e). Subject to the Initial Purchasers' compliance with its representations and warranties and agreements set forth in Section 6 hereof, the Company consents to the use of the Preliminary Offering Memorandum and the Offering Memorandum, including all documents incorporated by reference therein, and any amendments and supplements thereto required pursuant hereto, by the Initial Purchasers in connection with Exempt Resales. (c) If, during the period referred to in Section 4(e), any event shall occur as a result of which it becomes necessary to amend or supplement the Offering Memorandum in order to make the statements therein, in the light of the circumstances when such Offering Memorandum is delivered to an Eligible Purchaser, not misleading, or if it is necessary to amend or supplement the Offering Memorandum to comply with any law, it will promptly prepare an appropriate amendment or supplement to the Offering Memorandum so that the statements in the Offering Memorandum, as so amended or supplemented, will not, in the light of the circumstances existing as of the date the Offering Memorandum is so delivered, be misleading, and will comply with applicable law, and will promptly notify you of such event and amendment or supplement and furnish to you without charge such number of copies thereof as you may reasonably request. (d) Whether or not the transactions contemplated hereby are consummated or this Agreement is terminated, it will pay and be responsible for all reasonable costs, charges, expenses, fees and taxes incurred in connection with or incident to (i) the preparation, printing, filing, distribution and delivery of the Offering Memorandum, the Preliminary Offering Memorandum and all amendments and supplements thereto, (ii) the issuance and delivery of the Securities, (iii) the printing and delivery of this Agreement, the Indentures and all other agreements, memoranda, reports, correspondence and other documents printed, distributed and delivered in connection with the offering of the Securities, (iv) the registration or qualification of the Securities for offer and sale under the securities or Blue Sky laws of the jurisdictions referred to in paragraph (f) below (including, in each case, the reasonable fees and disbursements of counsel relating to such registration or qualification and memoranda relating thereto and any filing fees in connection therewith), (v) furnishing such copies of the Offering Memorandum, the Preliminary Offering Memorandum, and all amendments and supplements to any of them, including any document incorporated by reference therein, as may be reasonably requested by the Initial Purchasers or by dealers to whom Securities may be sold, (vi) any filing with the National Association of Securities Dealers, Inc. (the "NASD") in connection with the offering of the Securities (including, without limitation, any filing fees in connection therewith but excluding the fees of Sullivan & Cromwell, legal counsel to the Underwriters ("Initial Purchasers' Counsel")), (vii) the application for quotation of the Securities in the National Association of Securities Dealers, Inc. ("NASD") - 4 - Automated Quotation System - PORTAL ("PORTAL"), (viii) the rating of the Securities by investment rating agencies, (ix) any "qualified independent underwriter" as required by Rule 2720 of the NASD (including fees and disbursements of counsel for such qualified independent underwriter) and (x) the performance by the Company of its other obligations under this Agreement, including (without limitation) the fees of the Trustees, the cost of their respective personnel and other internal costs, the cost of printing and engraving the certificates representing the Securities, and all expenses incident to the sale and delivery of the Securities to the Initial Purchasers. (e) During such period as in the reasonable judgment of the Initial Purchasers an Offering Memorandum is required (or would be required if the sales were registered under the Securities Act) to be delivered in connection with Exempt Resales by the Initial Purchasers, it will not make any amendment or supplement to the Offering Memorandum (other than any document required to be filed under the Securities Exchange Act of 1934, as amended, including the rules and regulations thereunder (collectively, the "Exchange Act") that upon filing is deemed to be incorporated by reference therein) of which the Initial Purchasers shall not previously have been advised and provided a copy prior to the filing thereof or to which the Initial Purchasers shall reasonably object unless in the opinion of legal counsel to the Company such amendment or supplement is required by law to be filed; it will furnish to you at or prior to the filing thereof a copy of any document that upon filing is deemed to be incorporated by reference in the Offering Memorandum; and it will prepare, promptly upon the Initial Purchasers' reasonable request, any amendment or supplement to the Offering Memorandum which may be necessary or advisable in connection with such Exempt Resales and to which the Company shall not reasonably object. (f) Prior to the sale of all Securities pursuant to Exempt Resales as contemplated hereby, it will cooperate with the Initial Purchasers and counsel to the Initial Purchasers in connection with the registration or qualification of the Securities for offer and sale to the Initial Purchasers and pursuant to Exempt Resales under the securities or Blue Sky laws of such United States jurisdictions as the Initial Purchasers may request. The Company will continue such qualification in effect so long as required by law for Exempt Resales and will file such consents to service of process or other documents as may be necessary in order to effect such registration or qualification (PROVIDED, that the Company shall not be obligated to qualify as a foreign corporation in any jurisdiction in which it is not so qualified nor to take any action that would subject it to general consent to service of process in any jurisdiction in which it is not now so subject). (g) So long as any of the Securities remain outstanding and during any period in which the Company is not subject to Section 13 or 15(d) of the Exchange Act, it will make available to any holder of Securities in connection with any sale thereof and any prospective purchaser of such Securities from such holder, the information ("Rule 144A Information") required by Rule 144A(d)(4) under the Act. (h) It will file timely all reports and any definitive proxy or information statement required to be filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act and it will use its best efforts to effect the inclusion of the Securities in PORTAL and to maintain the listing of the Securities on PORTAL for so long as the Securities are outstanding. (i) To the extent permitted by law, it will not voluntarily claim, and will actively resist any attempts to claim, the benefit of any usury laws against the holders of the Securities. (j) It will use the proceeds from the sale of the Securities in the manner described in the Offering Memorandum under the caption "Use of Proceeds." (k) During the period beginning on the date of this Agreement and continuing to and including the Closing Date, it will not offer, sell, contract to sell or otherwise dispose of any debt securities of the Company or warrants, rights, or options to purchase debt securities of the Company (other than (i) the Securities, (ii) up - 5 - to an additional $10 million principal amount of 8__% Senior Subordinated Notes due 2008 and (iii) commercial paper issued in the ordinary course of business), without your prior written consent. (l) It will use its best efforts to do and perform all things required to be done and performed under this Agreement by it prior to or after the Closing Date and will use its reasonable best efforts to satisfy all conditions precedent on its part to be satisfied prior to the delivery of the Securities. 5. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to each Initial Purchaser that: (a) The Preliminary Offering Memorandum and the Offering Memorandum do not, and any supplement or amendment to them will not, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties contained in this paragraph (a) shall not apply to statements in or omissions from the Preliminary Offering Memorandum or the Offering Memorandum (or any supplement or amendment thereto) based upon information relating to the Initial Purchasers furnished to the Company in writing by the Initial Purchasers expressly for use therein. No stop order preventing the use of the Preliminary Offering Memorandum or the Offering Memorandum, or any amendment or supplement thereto, or any order asserting that any of the transactions contemplated by this Agreement are subject to the registration requirements of the Act, has been issued. (b) The documents incorporated by reference in the Offering Memorandum, the Preliminary Offering Memorandum or any amendment or supplement thereto, when they were or are filed with the Commission under the Exchange Act, as the case may be, conformed or will conform in all material respects with the requirements of the Exchange Act. (c) No action has been taken and no statute, rule, regulation or order has been enacted, adopted or issued by any United States Federal or state governmental body, agency or official which prevents the issuance of the Securities, prevents or suspends the use of any Preliminary Offering Memorandum or Offering Memorandum or suspends the sale of the Securities in any jurisdiction referred to in Section 4(f) hereof; no injunction, restraining order, or order of any nature by any Federal or state court has been issued with respect to the Company or any of its subsidiaries which would prevent the issuance or sale of the Securities, or prevent or suspend the use of any Preliminary Offering Memorandum or Offering Memorandum in any jurisdiction referred to in Section 4(f) hereof. (d) The capitalization table set forth in the Offering Memorandum under the caption "Capitalization" identifies in reasonable detail all outstanding short-term and long-term indebtedness and shareholders' equity of the Company and its subsidiaries, prior to and after giving PRO FORMA effect to the consummation of the offering of the Securities and the application of the net proceeds therefrom on the terms described in the Offering Memorandum. (e) The Indentures have been duly authorized by the Company and, when duly executed and delivered in accordance with their terms, will be valid and legally binding agreements of the Company, enforceable against the Company in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws affecting creditors' rights and remedies generally and to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity) and except to the extent that a waiver of rights under any usury laws may be unenforceable. On the Closing Date, the Indentures will conform in all material respects to the requirements of the Trust Indenture Act of 1939, as amended (the "TIA" or "Trust Indenture Act"), and the rules and regulations of the Commission applicable to an indenture that is qualified thereunder. - 6 - (f) The Securities have been duly authorized by the Company and, when executed and delivered by the Company and authenticated by the applicable Trustee in accordance with the applicable Indenture and paid for in accordance with the terms of this Agreement, will constitute legal, valid and binding obligations of the Company, enforceable against the Company according to their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws affecting creditors' rights and remedies generally and to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity) and except to the extent that a waiver of rights under any usury laws may be unenforceable, will be entitled to the benefits of the applicable Indenture and will conform in all material respects to the description thereof in the Offering Memorandum. (g) This Agreement has been duly authorized and validly executed and delivered by the Company and constitutes a valid and legally binding agreement of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws affecting creditors' rights and remedies generally and to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity) and except to the extent that rights to indemnification and contribution with respect to liability in connection with Federal or state securities laws may be unenforceable under such laws or the policies underlying such laws and except to the extent that a waiver of rights under any usury laws may be unenforceable. (h) The Registration Rights Agreement has been duly authorized by the Company and, on the Closing Date, will have been duly executed and delivered by the Company. When the Registration Rights Agreement has been duly executed and delivered, the Registration Rights Agreement will be a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms except as (i) the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and (ii) rights of acceleration and the availability of equitable remedies may be limited by equitable principles of general applicability. On the Closing Date, the Registration Rights Agreement will conform in all material respects to the description thereof in the Offering Memorandum. (i) The execution and delivery of this Agreement and the Indentures and issuance and sale of the Securities by the Company, the execution and delivery of each of the other Operative Documents by the Company, the performance by the Company of this Agreement, the Indentures and the other Operative Documents and the consummation of the transactions contemplated by this Agreement and the other Operative Documents will not conflict with or result in a breach or violation of any of the respective charters or bylaws of the Company or any of its 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 of the Operative Documents or any other 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"). - 7 - (j) No authorization, approval, consent or order of, or filing with, any court or governmental body, agency or official is necessary in connection with the transactions contemplated by this Agreement, except such as may be required by the NASD or have been obtained and made under the Act, the Exchange Act, the TIA, state securities or Blue Sky laws or regulations. (k) 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 authorize the offering of the Securities, to execute, deliver and perform this Agreement and to issue, sell and deliver the Securities, 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 of the Company that (i) directly or indirectly owns or leases any interest in any Hospital (as defined in the Offering Memorandum) or (ii) is 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 have such power and authority or to be so qualified or in good standing would have a Material Adverse Effect. (l) Except as otherwise disclosed in the Offering Memorandum, all of the issued and outstanding shares of capital stock of, or other ownership interests in, each of the Significant Subsidiaries that are owned directly or indirectly by the Company, have been duly authorized and validly issued, and, except as otherwise disclosed in the Offering Memorandum, all of the shares of capital stock of, or other ownership interests in, each of the Significant Subsidiaries 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 Initial Purchasers, 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. (m) Neither the Company nor the Significant Subsidiaries is in violation of its respective charter or bylaws and neither the Company nor 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 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. (n) Except as disclosed in the Offering Memorandum, 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 Offering Memorandum, 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 its Subsidiaries' performance of its obligations, as applicable, pursuant to this Agreement (including, without limitation, the issuance of the Securities), the Operative Documents or the transactions contemplated hereby and thereby, and to the best of the Company's knowledge, after due inquiry, no such action, suit, or proceeding is contemplated or threatened. - 8 - Except as disclosed in the Offering Memorandum, neither the Company nor 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. (o) 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 incorporated by reference in the Preliminary Offering Memorandum and the Offering Memorandum are, to the best of the Company's knowledge, independent public accountants with respect to the Company and its Subsidiaries, as required by the Act. The consolidated financial statements, together with related schedules and notes, set forth or incorporated by reference in the Preliminary Offering Memorandum and the Offering Memorandum, 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 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 Company's ratio of earnings to fixed charges (actual and PRO FORMA) included in the Offering Memorandum under the relevant captions "Prospectus Summary--Summary Financial Information" have been calculated in compliance with Item 503(d) of the Commission's Regulation S-K. The other financial and statistical information and data of the Company included or incorporated by reference in the Preliminary Offering Memorandum and the Offering Memorandum are in all material respects accurately presented and prepared on a basis consistent with the books and records of the Company. (p) Except as contemplated by the Offering Memorandum, subsequent to the respective dates as of which information is presented in the Offering Memorandum and up to the Closing Date (i) neither the Company nor 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 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 the Subsidiaries, taken as a whole (any of the items set forth in clauses (i), (ii), (iii) or (iv) above, a "Material Adverse Change"). (q) (i) Except as described in the Offering Memorandum 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 Offering Memorandum, (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. (r) None of the Company or any agent acting on its behalf has taken or will take any action that is reasonably likely to cause the issuance or sale of the Securities to violate Regulation T, U, or X of the Board of Governors of the Federal Reserve System, in each case as in effect, on the date hereof. - 9 - (s) None of the Company or any of the Significant Subsidiaries is (i) an "investment company" or a company "controlled" by an investment company within the meaning of the Investment Company Act of 1940, as amended, or (ii) a "holding company" or a "subsidiary company" of a holding company, or an "affiliate" thereof within the meaning of the Public Utility Holding Company Act of 1935, as amended. (t) Each certificate signed by any officer of the Company and delivered to the Initial Purchasers or the Initial Purchasers' Counsel shall be deemed to be a representation and warranty by the Company to each Initial Purchaser as to the matters covered thereby. (u) The Company has delivered to the Initial Purchasers a true and correct copy of each of the Operative Documents that have been executed and delivered prior to the date of this Agreement and each other Operative Document in the form substantially as it will be executed and delivered on or prior to the Closing Date, together with all related agreements and all schedules and exhibits thereto, and there have been no amendments, alterations, modifications or waivers of any of the provisions of any of the Operative Documents since their date of execution or from the form in which it has been delivered to the Initial Purchasers; there exists as of the date hereof (after giving effect to the transactions contemplated by the Operative Documents) no event or condition that would constitute a default or an event of default (in each case as defined in each of the Operative Documents) under any of the Operative Documents which would reasonably be expected to result in a Material Adverse Effect. (v) Each of the Preliminary Offering Memorandum and the Offering Memorandum, as of its date, contains all the information specified in, and meeting the requirements of, Rule 144A(d)(4) under the Act. (w) When the Securities are issued and delivered pursuant to this Agreement, the Securities will not be of the same class (within the meaning of Rule 144A under the Act) as any security of the Company that is listed on a national securities exchange registered under Section 6 of the Exchange Act or that is quoted in the United States automated inter-dealer quotation system. (x) No form of general solicitation or general advertising (as defined in Regulation D under the Act) was used by the Company, or any of its representatives (other than the Initial Purchasers, as to whom the Company makes no representation) in connection with the offer and sale of the Securities contemplated hereby, including, but not limited to, articles, notices or other communications published in any newspaper, magazine, or similar medium or broadcast over television or radio, or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising. No securities of the same class as the Securities have been issued and sold by the Company within the six-month period immediately prior to the date hereof. (y) Prior to the effectiveness of any Registration Statement, the Indentures are not required to be qualified under the TIA. (z) Neither the Company, nor any of its respective affiliates or any person acting on its or their behalf (other than the Initial Purchasers, as to whom the Company makes no representation) has engaged or will engage in any directed selling efforts within the meaning of Regulation S under the Act ("Regulation S") with respect to the Securities. (aa) The Securities offered and sold in reliance of Regulation S have been and will be offered and sold only in offshore transactions, assuming the accuracy of the Initial Purchasers' representations and warranties and agreements set forth in Section 6 hereof. (bb) The sale of the Securities pursuant to Regulation S is not part of a plan or scheme to evade the registration provisions of the Act. - 10 - (cc) No registration of the Securities under the Act is required for the sale of the Securities to the Initial Purchasers as contemplated hereby or for the Exempt Resales assuming the accuracy of the Initial Purchasers' representations and warranties and agreements set forth in Section 6 hereof. 6. INITIAL PURCHASERS' REPRESENTATIONS AND WARRANTIES. Each Initial Purchaser, severally and not jointly, represents and warrants to, and agrees with, the Company: (a) Such Initial Purchaser is a QIB with such knowledge and experience in financial and business matters as is necessary in order to evaluate the merits and risks of an investment in the Securities. (b) Such Initial Purchaser (A) is not acquiring the Securities with a view to any distribution thereof or with any present intention of offering or selling any of the Securities in a transaction that would violate the Act or the securities laws of any state of the United States or any other applicable jurisdiction and (B) will be reoffering and reselling the Securities only to (x) QIBs in reliance on the exemption from the registration requirements of the Act provided by Rule 144A and (y) in offshore transactions in reliance upon Regulation S. (c) Such Initial Purchaser agrees that no form of general solicitation or general advertising (within the meaning of Regulation D under the Act) has been or will be used by such Initial Purchaser or any of its representatives in connection with the offer and sale of the Securities pursuant hereto, including, but not limited to, articles, notices or other communications published in any newspaper, magazine or similar medium or broadcast over television or radio, or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising. (d) Such Initial Purchaser agrees that, in connection with Exempt Resales, such Initial Purchaser will solicit offers to buy the Securities only from, and will offer to sell the Securities only to, Eligible Purchasers. Each Initial Purchaser further agrees that it will offer to sell the Securities only to, and will solicit offers to buy the Securities only from (A) Eligible Purchasers that such Initial Purchaser reasonably believes are QIBs and (B) Regulation S Purchasers, in each case, that agree that (x) the Securities purchased by them may be resold, pledged, or otherwise transferred within the time period referred to under Rule 144(k) (taking into account the provisions of Rule 144(d) under the Act, if applicable) under the Act, as in effect on the date of the transfer of such Securities, only (I) to the Company or any of its subsidiaries, (II) to a person whom the seller reasonably believes is a QIB purchasing for its own account or for the account of a QIB in a transaction meeting the requirements of Rule 144A under the Act, (III) in an offshore transaction (as defined in Rule 902 under the Act) meeting the requirements of Rule 903 and Rule 904 of the Act, (IV) in a transaction meeting the requirements of Rule 144 under the Act, (V) in accordance with another exemption from the registration requirements of the Act (and based upon an opinion of counsel acceptable to the Company) or (VI) pursuant to an effective registration statement and, in each case, in accordance with the applicable securities laws of any state of the United States or any other applicable jurisdiction and (y) they will deliver to each person to whom such Securities or an interest therein is transferred a notice substantially to the effect of the foregoing. (e) Such Initial Purchaser and its affiliates or any person acting on its behalf have not engaged and will not engage in any directed selling efforts within the meaning of Regulation S with respect to the Securities. (f) The Securities offered and sold by such Initial Purchaser pursuant hereto in reliance on Regulation S have been and will be offered and sold only in offshore transactions. (g) The sale of the Securities offered and sold by such Initial Purchaser pursuant hereto in reliance on Regulation S is not part of a plan or scheme to evade the registration provisions of the Act. - 11 - (h) Such Initial Purchaser further represents and agrees that (i) it has not offered or sold and will not offer or sell any Securities to persons in the United Kingdom prior to the expiration of the period of six months from the issue date of the Securities, except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances that have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995, (ii) it has complied and will comply with all applicable provisions of the Financial Services Act 1986 with respect to anything done by it in relation to the Securities in, from or otherwise involving the United Kingdom and (iii) it has only issued or passed on and will only issue or pass on in the United Kingdom any document received by it in connection with the issuance of the Securities to a person who is of a kind described in Article 11(3) of the Financial Services Act of 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a person to whom the document may otherwise lawfully be issued or passed on. (i) Such Initial Purchaser agrees that it will not offer, sell or deliver any of the Securities in any jurisdiction outside the United States except under circumstances that will result in compliance with the applicable laws thereof, and that it will take at its own expense whatever action is required to permit its purchase and resale of the Securities in such jurisdictions. Such Initial Purchaser understands that no action has been taken to permit a public offering in any jurisdiction outside the United States where action would be required for such purpose. Each Initial Purchaser acknowledges that the Company, for purposes of the opinions to be delivered to each Initial Purchaser pursuant to Section 8 hereof, counsel to the Company and counsel to the Initial Purchasers will rely upon the accuracy and truth of the foregoing representations and each Initial Purchaser hereby consents to such reliance. 7. INDEMNIFICATION. (a) The Company agrees to indemnify and hold harmless (i) each of the Initial Purchasers and their respective affiliates, (ii) each person, if any, who controls (within the meaning of Section 15 of the Act or Section 20 of the Exchange Act) any of the Initial Purchasers or any of their respective affiliates (any of the persons referred to in this clause (ii) being hereinafter referred to as a "Controlling Person"), and (iii) each of the respective officers, directors, partners, employees, representatives and agents of any of the Initial Purchasers or any Controlling Person, and each of their respective officers, directors, partners, employees, representatives and agents (any person referred to in clause (i), (ii) or (iii) of this Section 7(a) may hereinafter be referred to as an "Indemnified Person") to the fullest extent lawful, from and against any and all losses, claims, damages, judgments, actions, costs, assessments, expenses and other liabilities (collectively, "Liabilities"), including without limitation and as incurred, reimbursement of all reasonable costs of investigating, preparing, pursuing or defending any claim or action, or any investigation or proceeding by any foreign, Federal, state or local authority, regulatory body, administrative agency, court or other governmental or quasi-governmental body, commenced or threatened, including the reasonable fees and expenses of counsel to any Indemnified Person, to the extent such Liabilities are directly or indirectly caused by, related to, based upon or arising out of, or in connection with, any untrue statement or alleged untrue statement of a material fact contained in the Offering Memorandum (or any supplement or amendment thereto), the Preliminary Offering Memorandum or any Rule 144A Information provided by the Company to any holder or prospective purchaser of Securities pursuant to Section 4(i), or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such Liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission that is (x) made in reliance upon and in conformity with information relating to any of the Initial Purchasers furnished in writing to the Company by or on behalf of an Initial Purchaser through DLJ expressly for use in the Offering Memorandum (or any amendment or supplement thereto), the Preliminary Offering Memorandum or any Rule 144A Information provided by the Company to any holder or prospective purchaser of Securities pursuant to Section 4(g), or (y) with respect to the Initial Purchaser from whom the person asserting the Liabilities purchased Securities, made in any Preliminary Offering Memorandum if a copy of the Offering Memorandum - 12 - (as amended or supplemented, if the Company shall have furnished the Initial Purchasers with such amendments or supplements thereto on a timely basis) was not delivered by or on behalf of such Initial Purchaser to the person asserting the Liabilities, if required by law to have been so delivered by the Initial Purchaser seeking indemnification, at or prior to the written confirmation of the sale of the Securities, and it shall be determined by a court of competent jurisdiction or binding mediation or arbitration tribunal, in a judgment or determination not subject to appeal or review, that the Offering Memorandum (as so amended or supplemented) would have corrected such untrue statement or omission in all material respects. The foregoing indemnity shall be in addition to any liability that the Company might otherwise have to any of the Initial Purchasers and such other Indemnified Persons. The Company shall notify you promptly after becoming aware of the institution, threat or assertion of any claim, proceeding (including any governmental investigation) or litigation in connection with the matters addressed by this Agreement which involves the Company or an Indemnified Person. (b) In case any action or proceeding (for all purposes of this Section 7, including any governmental or quasi-governmental investigation) shall be brought or asserted against any of the Indemnified Persons with respect to which indemnity under this Section 7 may be sought against the Company, such Indemnified Person promptly shall notify the Company in writing and the Company shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Person and payment of all reasonable fees and expenses; PROVIDED, that the delay or failure to give such notice shall not relieve the Company from any liability that it may have on account of the indemnity under this Section 7, except to the extent that such delay or omission materially adversely affects the ability of the Company to defend or assume the defense of such action or proceeding. Upon receiving such notice, the Company shall be entitled to participate in any such action or proceeding and/or to assume, at its sole expense, the defense thereof, with counsel reasonably satisfactory to such Indemnified Person (who shall not, except with the consent of the Indemnified Person to be represented, be counsel to the Company or any of the Subsidiaries) and, after written notice from the Company to such Indemnified Person of its election so to assume the defense thereof promptly after receipt of the notice from the Indemnified Person of such action or proceeding, the Company shall not be liable to such Indemnified Person hereunder for legal expenses of other counsel subsequently incurred by such Indemnified Person in connection with the defense thereof, other than reasonable costs of investigation, unless (i) the Company agrees in writing to pay such fees and expenses, or (ii) the Company fails promptly to assume such defense or fails to employ counsel reasonably satisfactory to such Indemnified Person, or (iii) the named parties to any such action or proceeding (including any impleaded parties) include both such Indemnified Person and the Company or an affiliate of the Company, and that Indemnified Person shall have been advised in writing by counsel, with a copy of such writing to the Company, that either (x) there may be one or more legal defenses available to such Indemnified Person that are different from or additional to those available to the Company or such affiliate or (y) a conflict may exist between such Indemnified Person and the Company or such affiliate. In the event of any of clause (i), (ii) and (iii) of the immediately preceding sentence, the Company shall not have the right to assume the defense thereof on behalf of the Indemnified Person and such Indemnified Person shall have the right to employ its own counsel (who shall be reasonably acceptable to the Company and shall not, except with the Company's consent, be counsel to the Company) in any such action and the reasonable fees and expenses of such counsel shall be paid, as incurred, by the Company, subject to repayment to the Company if it is ultimately determined that an Indemnified Person is not entitled to indemnification hereunder, it being understood, however, that the Company shall not, in connection with any one such action or proceeding or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all of the Indemnified Persons, which firm shall be designated in writing by DLJ. The Company shall not be liable for any settlement of any such action or proceeding effected without the Company's written consent, which consent may not be unreasonably withheld, but if settled with the written consent of the Company, the Company agrees to indemnify and hold harmless any Indemnified Person from and against any loss or liability incurred in such settlement. The Company shall not, without the prior written consent of each Indemnified Person, which consent shall not be unreasonably withheld settle, compromise or consent to the entry of any judgment in or otherwise seek to terminate any pending or threatened action, claim, suit, investigation or other proceeding in respect of which any Indemnified Person is or could have been a party and indemnification or contribution could have been sought hereunder - 13 - by such Indemnified Person, unless such settlement, compromise, consent or termination includes an unconditional release of each Indemnified Person from all liability on claims that are the subject matter of such proceeding. (c) Each of the Initial Purchasers agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, its officers, and any person controlling (within the meaning of Section 15 of the Act or Section 20 of the Exchange Act) the Company, to the same extent as the foregoing indemnity from the Company to each of the Indemnified Persons, but only with respect to claims and actions based on information relating to such Initial Purchaser furnished in writing by or on behalf of such Initial Purchaser through DLJ expressly for use in the Offering Memorandum, the Preliminary Offering Memorandum or any Rule 144A Information provided by the Company to any holder or prospective purchaser of Securities pursuant to Section 4(g), as applicable. In case any action shall be brought against the Company, any of its directors, any such officer, or any such controlling person based on the Offering Memorandum, the Preliminary Offering Memorandum or any Rule 144A Information provided by the Company to any holder or prospective purchaser of Securities pursuant to Section 4(g) in respect of which indemnity is sought against any Initial Purchaser pursuant to the foregoing sentence, the Initial Purchaser shall have the rights and duties given to the Company (except that if an Initial Purchaser shall have assumed the defense thereof, the Company shall not be required to do so, but may employ separate counsel therein and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the Company), and the Company, its directors, any such officers, and each such controlling person shall have the rights and duties given to the Indemnified Person by Section 7(b) above. (d) If the indemnification provided for in this Section 7 is finally determined by a court of competent jurisdiction to be unavailable to an Indemnified Person in respect of any Liabilities referred to herein, then the Company, in lieu of indemnifying such Indemnified Person, shall contribute to the amount paid or payable by such Indemnified Person as a result of such Liabilities: (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Indemnified Person on the other hand from the offering of the Securities, or (ii) if the allocation provided by clause (i), above, 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 Indemnified Person in connection with the actions, statements or omissions that resulted in such Liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and any of the Initial Purchasers (and its related Indemnified Persons), on the other hand, shall be deemed to be in the same proportion as the total proceeds from the offering (net of Initial Purchaser's discounts and commissions but before deducting expenses) received by the Company bear to the total Initial Purchaser's discounts and commissions received by such Initial Purchaser, in each case as set forth in the Offering Memorandum. The relative fault of the Company and the Initial Purchaser shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact related to information supplied by the Company or the Initial Purchaser and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The indemnity and contribution obligations of the Company set forth herein shall be in addition to any liability or obligation the Company may otherwise have to any Indemnified Person. The Company and the Initial Purchasers agree that it would not be just and equitable if contribution pursuant to this Section 7(d) were determined by PRO RATA allocation (even if the Initial Purchasers were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an Indemnified Party as a result of the Liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any reasonable legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 7, none of the Initial Purchasers (or any of their related Indemnified Persons referred to in Section 7 above) shall be required to contribute, in the aggregate, any amount in excess of the amount by which the total underwriting discount applicable to the Securities purchased by such underwriter exceeds the amount of any damages or liabilities which such Initial Purchaser (and its related Indemnified Persons referred to in Section 7 above) has otherwise been required to pay or incur by reason of such untrue or alleged untrue statement or omission or alleged omission or other indemnified action - 14 - or proceeding. Notwithstanding anything to the contrary contained herein, no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Initial Purchasers' obligations to contribute pursuant to this Section 7(d) are several in proportion to the respective aggregate principal amount of Securities purchased by each of the underwriters hereunder and not joint. 8. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS. The respective obligations of the several Initial Purchasers to purchase any Securities under this Agreement are subject to the satisfaction or waiver by the several underwriters of each of the following conditions on the Closing Date: (a) All the representations and warranties of the Company contained or incorporated by reference in this Agreement shall be true and correct on the Closing Date after giving effect to the transactions contemplated by the Operative Documents, with the same force and effect as if made on and as of the Closing Date, unless another date is specified therein. The Company and its Subsidiaries shall have performed or complied with all of their obligations and agreements herein contained and required to be performed or complied with by them at or prior to the Closing Date. (b) No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any governmental agency, body or official which would, as of the Closing Date, prevent the issuance of the Securities; and no injunction, restraining order or order of any nature by any Federal or state court shall have been issued as of the Closing Date which would prevent the issuance of the Securities. Subsequent to the execution and delivery of this Agreement and prior to the Closing Date, there shall not have been any downgrading, nor shall any notice have been given of any intended or potential downgrading or of any review for a possible change that does not indicate the direction of the possible change, in the rating accorded any of the Company's securities by any "nationally recognized statistical rating organization," as such term is defined for purposes of Rule 436(g)(2) of the Act. (c) (i) Since the earlier of the date hereof or the dates as of which information is given in the Offering Memorandum, there shall not have been any Material Adverse Change, (ii) since the date of the latest balance sheet included in the Offering Memorandum, there shall not have been any material adverse change, or development involving a prospective material adverse change, in the capital stock or debt, of the Company and the Subsidiaries, taken as a whole, and (iii) none of the Company or any of the Subsidiaries shall have any liability or obligation, direct or contingent, that is material to the Company and the Subsidiaries, taken as a whole, and which is not disclosed in the Offering Memorandum as of the date hereof. (d) You shall have received a certificate of the Company, dated the Closing Date, executed on behalf of the Company, by an executive officer and a financial officer of the Company satisfactory to you confirming, as of the Closing Date, the matters set forth in paragraphs (a), (b), (c) and (j) of this Section 8. (e) On the Closing Date, you shall have received: (l) an opinion (reasonably satisfactory to you and your counsel), dated the Closing Date, of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Company ("Skadden, Arps"), to the effect that: (i) each document filed pursuant to the Exchange Act and incorporated by reference in the Offering Memorandum, at the time it was filed or last amended, complied as to form in all material respects to the applicable requirements of the Exchange Act (except for financial statements, the notes thereto and related schedules and other financial data included or incorporated by reference therein or omitted therefrom, as to which no opinion need be expressed); - 15 - (ii) the Securities have been duly authorized and executed by the Company and, when authenticated in accordance with the terms of the Indentures and delivered to and paid for by the Initial Purchasers in accordance with the terms of this Agreement, will be valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms and entitled to the benefits of the respective Indenture under which they are being issued, except to the extent that the enforceability thereof may be limited by (a) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws in effect as of the date of the opinion or thereafter relating to or affecting creditors' rights generally and (b) general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity) and except that such counsel need express no opinion as to the enforceability or effect of the waiver of rights under any usury laws pursuant to each of the Indentures; (iii) each of the Indentures has been duly authorized, executed and delivered by the Company and, assuming due authorization, execution and delivery thereof by the applicable Trustee, is a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except to the extent that the enforceability thereof may be limited by (a) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws in effect as of the date of the opinion or thereafter relating to or affecting creditors' rights generally and (b) general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity) and except that such counsel need express no opinion as to the enforceability or effect of the waiver of rights under any usury laws pursuant to each of the Indentures; (iv) the Securities and the Indentures conform in all material respects to the descriptions thereof contained in the Offering Memorandum; (v) the Company is a corporation existing and in good standing under the laws of its jurisdiction of organization; (vi) the Company is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended; (vii) no consent, approval, authorization or other order of, or filing with, any Federal or New York executive, legislative, judicial, administrative or regulatory body, including, without limitation, the Commission (each, a "Governmental Authority"), is legally required under any laws, rules and regulations of the State of New York and the United States of America that, in the experience of such counsel, are normally applicable to transactions of the type contemplated by this Agreement and the Indentures (provided that no opinion need be expressed as to the "blue sky" or state securities laws of any jurisdiction) (collectively, the "Applicable Laws") for the issuance or sale to the Initial Purchasers of the Securities as contemplated by this Agreement; (viii) the execution and delivery by the Company of this Agreement and the Indentures and the issuance and sale of the Securities to you as contemplated thereby and the performance of its obligations pursuant to this Agreement and the Indentures (a) will not conflict with or result in a breach of violation of any of the terms or provisions of, or constitute a default under the charter or bylaws of the Company; and (b) will not conflict with or violate any Applicable Law or any order or decree of any Governmental Authorities by which the Company or any of its Subsidiaries is bound, the existence of which is actually -16- known to such counsel or has been specifically disclosed to such counsel in writing by the Company; (ix) the Registration Rights Agreement has been duly authorized, executed and delivered by the Company and is a valid and binding agreement of the Company enforceable against the Company in accordance with its terms, except as (x) the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and (y) rights of acceleration and the availability of equitable remedies may be limited by equitable principles of general applicability; (x) the Indentures comply as to form in all material respects with the requirements of the TIA, and the rules and regulations of the Commission applicable to an indenture that is qualified thereunder. It is not necessary in connection with the offer, sale and delivery of the Securities to the Initial Purchasers in the manner contemplated by this Agreement or in connection with the Exempt Resales to qualify the Indentures under the TIA; (xi) no registration under the Act of the Securities is required for the sale of the Securities to the Initial Purchasers as contemplated by this Agreement or for the Exempt Resales assuming that (i) each Initial Purchaser is a QIB or a Regulation S Purchaser, (ii) the accuracy of, and compliance with, the Initial Purchasers' representations and agreements contained in Section 6 of this Agreement and (iii) the accuracy of the representations of the Company set forth in Sections 4(h) and 5(y), (aa) and (bb) of this Agreement. (2) In giving their opinion required by subsection (e)(l) of this Section 8, such counsel may state that such opinions are limited to matters governed by the Federal laws of the United States of America and the laws of the State of New York. In addition, such counsel shall state that such counsel has participated in conferences with officers and other representatives of the Company, representatives of the independent public accountants for the Company, your representatives and your counsel at which the contents of the Offering Memorandum and related matters were discussed and, although such counsel is not passing upon, and does not assume any responsibility for, the accuracy, completeness or fairness of the statements contained in the Offering Memorandum, on the basis of the foregoing, no fact has come to the attention of such counsel that leads it to believe that, as of the date of the Offering Memorandum or as of the Closing Date, the Offering Memorandum contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, except that such counsel need not express any opinion or belief with respect to the financial statements, schedules and other financial data included or incorporated by reference in or excluded from the Offering Memorandum. In rendering the foregoing opinions, Skadden, Arps may rely as to matters of Nevada law on the opinion of Woodburn and Wedge, Nevada counsel to the Company, or such other counsel as is reasonably satisfactory to the Initial Purchasers' Counsel. (3) an opinion (satisfactory to you and Initial Purchasers' Counsel), dated the Closing Date, of Scott M. Brown, Esq., Senior Vice President and General Counsel of the Company, or Richard B. Silver, Vice President and Associate General Counsel of the Company, to the effect that: (i) the descriptions in the Offering Memorandum of statutes, legal and governmental proceedings, contracts and other documents and regulatory matters, including, without limitation, those described in the Offering Memorandum under the captions "Risk - 17 - Factors--Limits on Reimbursement," "--Extensive Regulation," "--Health care Reform Legislation" and in the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1997 (the "Form 10-K") under the captions "Medicare, Medicaid and Other Revenues" and "Healthcare Reform, Regulation and Licensing" and in the Company's Form 10-K and Quarterly Report on Form 10-Q for the quarter ended February 28, 1997 under the caption "Legal Proceedings" insofar as such statements constitute summaries of legal matters, documents or proceedings referred to therein are accurate in all material respects and such counsel does not know of any contracts or documents of a character required to be described in the Offering Memorandum and not described therein; it being understood that such counsel need express no opinion as to the financial statements, notes or schedules or other financial data included or incorporated by reference therein; (ii) each of the Company and its Significant Subsidiaries has such Authorizations from all regulatory or governmental officials, bodies and tribunals as are necessary to own, lease and operate its respective properties and to conduct its business in the manner described in the Offering Memorandum, except as could not reasonably be expected to have, singly or in the aggregate, a material adverse effect on the business, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole; (iii) to the best of such counsel's knowledge, there is no current, pending or threatened action, suit or proceeding before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its Subsidiaries or to which any of their respective property is subject of a character required to be disclosed in the Offering Memorandum which is not adequately disclosed in the Offering Memorandum; (iv) except as otherwise disclosed in the Offering Memorandum, all of the issued and outstanding shares of capital stock of, or other ownership interests in, each Significant Subsidiary of the Company that is owned directly or indirectly by the Company have been duly and validly authorized and issued, and, except as otherwise described in the Offering Memorandum, the shares of capital stock of, or other ownership interests in, each of its Significant Subsidiaries are owned of record, directly or through subsidiaries, by the Company, are fully paid and nonassessable, and to the best knowledge of such counsel are owned free and clear of any material, consensual Lien; (v) the Company and each of its Significant Subsidiaries is a duly organized corporation, has the requisite corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Offering Memorandum, and, to the extent each is a party thereto, to execute, deliver and perform its obligations pursuant to the Indentures and this Agreement, and is duly qualified as a foreign corporation and in good standing in each jurisdiction where the ownership, leasing or operation of property or the conduct of its business requires such qualification, except where the failure so to be qualified could not reasonably be expected to have, singly or in the aggregate, a Material Adverse Effect; and (vi) the execution and delivery by the Company of this Agreement and the Indentures and the issuance and sale of the Securities to you as contemplated thereby and the performance of its obligations pursuant to this Agreement and the Indentures will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default (with the passage of time or otherwise) under, or result in the imposition of a Lien on any properties of the Company or any of its Subsidiaries or an acceleration of indebtedness pursuant to any of the agreements listed on a schedule attached to such - 18 - counsel's opinion, where, in any such instance, such breach, default, Lien, acceleration of indebtedness or conflict could have, singly or in the aggregate, a material adverse effect or a prospective material adverse effect on the business, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole. (4) In giving their opinion required by subsection (e)(3) of this Section 8, such counsel shall state that no fact has come to the attention of such counsel that leads it to believe that the descriptions of statutes, legal and governmental proceedings, contracts and other documents and regulatory matters described in the Offering Memorandum under the captions set forth in subsection (e)(3)(i) of this Section 8 contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (5) an opinion (satisfactory to you and Initial Purchasers' Counsel), dated the Closing Date, of Woodburn and Wedge, special Nevada counsel to the Company, to the effect that: (i) the Company has the corporate power and authority to execute, deliver and perform this Agreement and the Company has the corporate power and authority to authorize, issue and sell the Securities as contemplated by this Agreement; (ii) this Agreement has been duly authorized, executed and delivered by the Company, and the Securities and the Indentures have been duly authorized, executed and delivered by the Company; (iii) the Company is a duly organized and validly existing corporation in good standing under the laws of the State of Nevada and has the requisite corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Offering Memorandum, and to execute and deliver, and perform its obligations pursuant to, the Indentures, the Securities and this Agreement; (iv) no consent, approval, authorization, or order of any Nevada governmental agency or body is required, for the consummation by the Company of the transactions contemplated by this Agreement in connection with the issuance and sale of the Securities; (v) the execution and delivery by the Company of this Agreement and the Indentures, the issuance and sale of the Securities to you as contemplated by this Agreement and the performance of its obligations pursuant to this Agreement, the Securities and the Indentures will not conflict with or result in a breach or violation of any of the terms or provision of, or constitute a default under, (a) any of the charter or bylaws of the Company, or (b) any existing applicable statute, rule or regulation or any order of any Nevada court or governmental agency or body having jurisdiction over the Company or any of its properties; provided that the opinion expressed in clause (b) is limited to those statutes, rules or regulations which, in the experience of such counsel, are normally applicable to transactions of the type contemplated by this Agreement in connection with the issuance and sale of the Securities; and (vi) in any action or proceeding arising out of or relating to this Agreement or the Indentures in any court of the State of Nevada or in any federal court sitting in the state of Nevada, such court would recognize and give effect to the provisions of Section 11 of this Agreement and Section 9.10 of the Indentures wherein the parties thereto agreed, to the - 19 - extent therein stated, that each such document shall be governed by and construed in accordance with the internal laws of the State of New York. (f) You shall have received an opinion, dated the Closing Date, of Sullivan & Cromwell, counsel for the Initial Purchasers, in form and substance reasonably satisfactory to you. (g) You shall have received complete sets of all closing documents, including without limitation all opinions, required to be delivered under any of the other Operative Documents. (h) You shall have received letters on and as of the date hereof as well as on and as of the Closing Date, in the latter case constituting an affirmation of the statements set forth in the earlier letters, in form and substance satisfactory to you, from KPMG Peat Marwick LLP, independent public accountants to the Company, with respect to the financial statements and certain financial information contained or incorporated by reference in the Offering Memorandum as you shall reasonably require. (i) All corporate proceedings and other legal matters incident to the authorization, form and validity of this Agreement and the Offering Memorandum and all other legal matters relating to this Agreement and the transactions contemplated hereby shall be reasonably satisfactory to Sullivan & Cromwell. (j) There shall have been no amendments, alterations, modifications, or waivers of any provisions of the Operative Documents since the date of the execution and delivery thereof by the parties thereto other than those which are disclosed in the Offering Memorandum or any supplement thereto or which under the Act are not required to be disclosed in the Offering Memorandum or any supplement thereto and which have been disclosed to the Initial Purchasers prior to the date hereof. (k) On or before the Closing Date, the Initial Purchasers and Sullivan & Cromwell, counsel for the Initial Purchasers, shall have received such further documents, opinions, certificates and schedules or instruments relating to the business, corporate, legal and financial affairs of the Company and the Subsidiaries as they shall have reasonably requested prior to the date of this Agreement. 9. EFFECTIVE DATE OF AGREEMENT, DEFAULT AND TERMINATION. This Agreement shall become effective upon the execution and delivery of this Agreement by the parties hereto. This Agreement may be terminated at any time on or prior to the Closing Date by you by notice to the Company if any of the following has occurred: (i) subsequent to the date of this Agreement, any Material Adverse Change which, in your judgment, impairs the investment quality of the Securities, (ii) any outbreak or escalation of hostilities or other national or international calamity or crisis or material adverse change in the financial markets of the United States or elsewhere, or any other substantial national or international calamity or emergency if the effect of such outbreak, escalation, calamity, crisis or emergency would, in your judgment make it impracticable or inadvisable to market the Securities or to enforce contracts for the sale of the Securities, (iii) any suspension or limitation of trading generally in securities, or in any securities of the Company on the New York or American Stock Exchanges, or the National Association of Securities Dealers Automated Quotation National Market, or the over-the-counter markets or any setting of minimum prices for trading on such exchanges or markets, (iv) any declaration of a general banking moratorium by either Federal or New York authorities, (v) the taking of any action by any Federal or state government or agency in respect of its monetary or fiscal affairs that in your judgment has a material adverse effect on the financial markets in the United States, and would, in your judgment, make it impracticable or inadvisable to market the Securities or to enforce contracts for the sale of the Securities, (vi) 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 change that does not indicate the direction of the possible change by any "nationally recognized statistical rating organization," as such term is defined for purposes of Rule 436(g)(2) of the Act, or (vii) the enactment, publication, decree or other - 20 - promulgation of any Federal or state statute, regulation, or rule or order of any court or other governmental authority which in your judgment could reasonably be expected to have a Material Adverse Effect. If this Agreement shall be terminated by you pursuant to clause (i), (vi) or, in the case of a statute, regulation, rule or order specifically addressing the Company, and not affecting the general hospital industry generally, (vii) of the second paragraph of this Section 9 or because of the failure or refusal on the part of the Company to comply with the terms or to fulfill any of the conditions of this Agreement, the Company agrees to reimburse you for all reasonable out-of-pocket expenses (including the reasonable fees and disbursements of counsel) incurred by you. Notwithstanding any termination of this Agreement, the Company shall be liable for all expenses which it has agreed to pay pursuant to Section 4(d) hereof. If this Agreement is terminated pursuant to this Section 9, such termination shall be without liability of any Initial Purchaser to the Company or any of its Subsidiaries. If on the Closing Date any Initial Purchaser shall fail or refuse to purchase the securities which it has agreed to purchase hereunder on such date, and the aggregate principal amount of such Securities that such defaulting Initial Purchaser or Initial Purchasers, as the case may be, agreed but failed or refused to purchase does not exceed 20% of the total principal amount of such Securities to be purchased on such date by all Initial Purchasers, each non-defaulting Initial Purchaser shall be obligated severally, in the proportion which the amount of Securities set forth opposite its name in Schedule I and Schedule II, respectively, hereto bears to the aggregate principal amount of Securities which all the non-defaulting Initial Purchasers, as the case may be, have agreed to purchase, or in such other proportion as you (at your option) may specify, to purchase the Securities that such defaulting Initial Purchaser or Initial Purchasers, as the case may be, agreed but failed or refused to purchase on such date; PROVIDED that in no event shall the aggregate principal amount of Securities that any Initial Purchaser has agreed to purchase pursuant to Section 2 hereof be increased pursuant to this Section 9 by an amount in excess of one-ninth of such principal amount of Securities without the written consent of such Initial Purchaser. If, on the Closing Date any of the Initial Purchasers shall fail or refuse to purchase the Securities, as the case may be, and the total principal amount of Securities with respect to which such default occurs exceeds 20% of the total amount of Securities to be purchased on such date by all Initial Purchasers and arrangements satisfactory to you and the Company for the purchase of such Securities are not made within 48 hours after such default, this Agreement shall terminate without liability on the part of the non-defaulting Initial Purchaser and the Company, except as otherwise provided in this Section 9. In any such case that does not result in termination of this Agreement, either the non-defaulting Initial Purchaser or the Company may postpone the Closing Date for not longer than seven (7) days, in order that the required changes, if any, in the Offering Memorandum or any other documents or arrangements may be effected. Any action taken under this paragraph shall not relieve a defaulting Initial Purchaser from liability in respect of any default of any such Initial Purchaser under this Agreement. 10. NOTICES. Notices given pursuant to any provision of this Agreement shall be addressed as follows: (a) if to the Company, to it at 3820 State Street, Santa Barbara, California 93105, Attention: Chief Financial Officer, with copies to Attention: General Counsel and to Skadden, Arps, Slate, Meagher & Flom, 300 South Grand Avenue, Suite 3400, Los Angeles, California 90071, Attention: Thomas C. Janson, Jr. and (b) if to any Initial Purchaser, to Donaldson, Lufkin & Jenrette Securities Corporation, 277 Park Avenue, New York, New York 10172, Attention: Syndicate Department, and, in each case, with a copy to Sullivan & Cromwell, 444 South Flower Street, Suite 1200, Los Angeles, California 90071, Attention: Alison S. Ressler, or in any case to such other address as the person to be notified may have required in writing. 11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK AS APPLIED TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL AND NEW YORK STATE COURTS LOCATED IN THE CITY OF NEW YORK IN CONNECTION WITH ANY SUIT, ACTION OR PROCEEDING RELATED TO THIS AGREEMENT OR ANY OF THE MATTERS CONTEMPLATED HEREBY, IRREVOCABLY WAIVES ANY DEFENSE OF LACK OF PERSONAL JURISDICTION AND IRREVOCABLY AGREES THAT ALL CLAIMS IN - 21 - RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. 12. SEVERABILITY. Any determination that any provision of this Agreement may be, or is, unenforceable shall not affect the enforceability of the remainder of this Agreement. 13. SUCCESSORS. Except as otherwise provided, this Agreement has been and is made solely for the benefit of and shall be binding upon the Company, the Initial Purchasers, any Indemnified Person referred to herein and their respective successors and assigns, all as and to the extent provided in this Agreement, and no other person shall acquire or have any right under or by virtue of this Agreement. The terms "successors and assigns" shall not include a purchaser of any of the Securities from any of the Initial Purchasers merely because of such purchase. 14. CERTAIN DEFINITIONS. For purposes of this Agreement, (a) "business day" means any day on which the NYSE is open for trading and (b) "subsidiary" has the meaning set forth in Rule 405 under the Act. 15. COUNTERPARTS. This Agreement may be executed in one or more counterparts and, if executed in one or more counterparts, the executed counterparts shall each be deemed to be an original, not all such counterparts shall together constitute one and the same instrument. 16. HEADINGS. The headings herein are inserted for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement. 17. SURVIVAL. The indemnities and contribution provisions and the other agreements, representations and warranties of the Company, its officers and directors and of the Initial Purchasers set forth in or made pursuant to this Agreement shall remain operative and in full force and effect, and will survive delivery of and payment for the Securities, regardless of (i) any investigation, or statement as to the results thereof, made by or on behalf of any of the Initial Purchasers or by or on behalf of the Company, the officers or directors of the Company or any controlling person of the Company, (ii) acceptance of the Securities and payment for them hereunder and (iii) termination of this Agreement. - 22 - This Agreement may be signed in various counterparts which together shall constitute one and the same instrument. Please confirm that the foregoing correctly sets forth the agreement among the Company and you. Very truly yours, TENET HEALTHCARE CORPORATION By: /s/ STEPHEN D. FARBER --------------------------------- Name: Stephen D. Farber Title: Vice President The foregoing Purchase Agreement is hereby confirmed and accepted as of the date first above written. DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION By: /s/ DAVID L. DENNIS ------------------------------------- Name: David L. Dennis Title: Managing Director MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: /s/ JAMES F. FLAHERTY III ------------------------------------- Name: James F. Flaherty III Title: Managing Director Investment Banking - 23 - J.P. MORGAN SECURITIES INC. By: /s/ DAVID H. DEMING -------------------------------------- Name: David H. Deming Title: Managing Director MORGAN STANLEY & CO. INCORPORATED By: /s/ CHARLES DITLOFF --------------------------------------- Name: Charles Ditloff Title: Principal SALOMON BROTHERS INC By: /s/ GRAEME A. GILFILLAN --------------------------------------- Name: Graeme A. Gilfillan Title: Managing Director DEUTSCHE MORGAN GRENFELL INC. By: /s/ STEVE WARDEN --------------------------------------- Name: Steve Warden Title: Managing Director By: /s/ LAIN STEWART --------------------------------------- Name: Lain Stewart Title: Vice President - 24 - BANCAMERICA ROBERTSON STEPHENS By: /s/ JOHN MULRY --------------------------------------- Name: John Mulry Title: Managing Director - 25 - SCHEDULE I
PRINCIPAL PERCENTAGE INITIAL PURCHASER AMOUNT OF TOTAL Donaldson, Lufkin & Jenrette Securities Corporation ................... $175,000,000 50.0% Merrill Lynch, Pierce, Fenner & Smith Incorporated..................... $ 52,500,000 15.0% J.P. Morgan Securities Inc............................................. $ 35,000,000 10.0% Morgan Stanley & Co. Incorporated...................................... $ 26,250,000 7.5% Salomon Brothers Inc .................................................. $ 26,250,000 7.5% Deutsche Morgan Grenfell Inc........................................... $ 17,500,000 5.0% BancAmerica Robertson Stephens......................................... $ 17,500,000 5.0% ------------------ ------------------ Total................................................ $300,000,000 100.0% ================== ==================
I-1 SCHEDULE II
PRINCIPAL PERCENTAGE INITIAL PURCHASER AMOUNT OF TOTAL Donaldson, Lufkin & Jenrette Securities Corporation.................... $500,000,000 50.0% Merrill Lynch, Pierce, Fenner & Smith Incorporated..................... $150,000,000 15.0% J.P. Morgan Securities Inc............................................. $100,000,000 10.0% Morgan Stanley & Co. Incorporated...................................... $100,000,000 10.0% Salomon Brothers Inc................................................... $100,000,000 10.0% Deutsche Morgan Grenfell Inc........................................... $ 50,000,000 5.0% ------------------ ------------------ Total............................................... $1,000,000,000 100.0% ================== ==================
III-1 EXHIBIT A FORM OF REGISTRATION RIGHTS AGREEMENT III-2 EX-4.5 3 EXHIBIT 4.5 EXHIBIT 4.5 A/B EXCHANGE REGISTRATION RIGHTS AGREEMENT Dated as of May 21, 1998 by and among Tenet Healthcare Corporation and Donaldson, Lufkin & Jenrette Securities Corporation Merrill Lynch, Pierce, Fenner & Smith Incorporated J.P. Morgan Securities Inc. Morgan Stanley & Co. Incorporated Salomon Brothers Inc Deutsche Morgan Grenfell Inc. and BancAmerica Robertson Stephens - ------------------------------------------------------------------------------- This Registration Rights Agreement (this "AGREEMENT") is made and entered into as of May 21, 1998, by and among Tenet Healthcare Corporation, a Nevada corporation (the "COMPANY"), and Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc., Morgan Stanley & Co. Incorporated, Salomon Brothers Inc, Deutsche Morgan Grenfell Inc. (collectively, the "SENIOR INITIAL PURCHASERS") and BancAmerica Robertson Stephens (collectively, with the Senior Initial Purchasers the "INITIAL PURCHASERS"). Each of the Senior Initial Purchasers has agreed to purchase the Company's 7-5/8% Senior Notes due 2008 and each of the Initial Purchasers has agreed to purchase the Company's 8-1/8% Senior Subordinated Notes due 2008 (together with the 7-5/8% Senior Notes due 2008, the "SERIES A NOTES") pursuant to the Purchase Agreement (as defined below). This Agreement is made pursuant to the Purchase Agreement, dated May 8, 1998, and the letter agreement, dated May 21, 1998 (together, the "PURCHASE AGREEMENT"), by and among the Company and the Initial Purchasers. In order to induce the Initial Purchasers to purchase the Series A Notes, the Company has agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the obligations of the Initial Purchasers set forth in Section 2 of the Purchase Agreement. Capitalized terms used herein and not otherwise defined shall have the meaning assigned to them in the Senior Note Indenture, dated as of May 21, 1998, between the Company and the Bank of New York, as Trustee, and the Senior Subordinated Note Indenture, dated as of May 21, 1998, between the Company and The Bank of New York, as Trustee (the "INDENTURES"), relating to the Series A Notes and the Series B Notes (as defined below). The parties hereby agree as follows: SECTION 1. DEFINITIONS As used in this Agreement, the following capitalized terms shall have the following meanings: ACT: The Securities Act of 1933, as amended. AFFILIATE: As defined in Rule 144 of the Act. BROKER-DEALER: Any broker or dealer registered under the Exchange Act. CLOSING DATE: The date hereof. COMMISSION: The Securities and Exchange Commission. CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for purposes of this Agreement upon the occurrence of (a) the filing and effectiveness under the Act of the Exchange Offer Registration Statement relating to the Series B Notes to be issued in the Exchange Offer, (b) the maintenance of such Exchange Offer Registration Statement continuously effective and the keeping of the Exchange Offer open for a period not less than the period required pursuant to Section 3(b) hereof and (c) the delivery by the Company to the Registrar under the Indentures of Series B Notes in the same aggregate principal amount as the aggregate principal amount of Series A Notes tendered by Holders thereof pursuant to the Exchange Offer. CONSUMMATION DEADLINE: As defined in Section 3(b) hereof. CONTROLLING PERSON: As defined in Section 8(a) hereof. EFFECTIVENESS DEADLINE: As defined in Section 3(a) and 4(a) hereof. EXCHANGE ACT: The Securities Exchange Act of 1934, as amended. EXCHANGE OFFER: The exchange and issuance by the Company of a principal amount of Series B Notes (which shall be registered pursuant to the Exchange Offer Registration Statement) equal to the outstanding principal amount of Series A Notes that are tendered by Holders in connection with such exchange and issuance. EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement relating to the Exchange Offer, including the related Prospectus. EXEMPT RESALES: The transactions in which the Initial Purchasers propose to sell the Series A Notes to certain "qualified institutional buyers," as such term is defined in Rule 144A under the Act, and pursuant to Regulation S under the Act. FILING DATE: As defined in Section 3(a) hereof. FILING DEADLINE: As defined in Sections 3(a) and 4(a) hereof. HOLDERS: As defined in Section 2 hereof. INDEMNIFIED PERSON: As defined in Section 8(a) hereof. LIABILITIES: As defined in Section 8(a) hereof. OFFERING MEMORANDUM: As defined in Section 8(a) hereof. PRELIMINARY OFFERING MEMORANDUM: As defined in Section 8(a) hereof. PROSPECTUS: The prospectus included in a Registration Statement at the time such Registration Statement is declared effective, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such Prospectus. RECOMMENCEMENT DATE: As defined in Section 6(d) hereof. REGISTRATION DEFAULT: As defined in Section 5 hereof. -2- REGISTRATION STATEMENT: Any registration statement of the Company relating to (a) an offering of Series B Notes pursuant to an Exchange Offer or (b) the registration for resale of Transfer Restricted Securities pursuant to the Shelf Registration Statement, in each case, (i) that is filed pursuant to the provisions of this Agreement and (ii) including the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein. REGULATION S: Regulation S promulgated under the Act. RULE 144: Rule 144 promulgated under the Act. SERIES B NOTES: The Company's 7-5/8% Senior Notes due 2008 and 8-1/8% Senior Subordinated Notes due 2008 to be issued pursuant to the Indentures: (i) in the Exchange Offer or (ii) as contemplated by Section 4 hereof. SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof. SUSPENSION NOTICE: As defined in Section 6(d) hereof. TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as in effect on the date of the Indentures. TRANSFER RESTRICTED SECURITIES: Each Series A Note, until the earliest to occur of (a) the date on which such Series A Note is exchanged in the Exchange Offer for a Series B Note which is entitled to be resold to the public by the Holder thereof without complying with the prospectus delivery requirements of the Act, (b) the date on which such Series A Note has been disposed of in accordance with a Shelf Registration Statement (and the purchasers thereof have been issued Series B Notes), or (c) the date on which such Series A Note may be resold to the public pursuant to Rule 144 (k) under the Act and each Series B Note until the date on which such Series B Note is disposed of by a Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the Exchange Offer Registration Statement (including the delivery of the Prospectus contained therein). SECTION 2. HOLDERS A Person is deemed to be a holder of Transfer Restricted Securities (each, a "HOLDER") whenever such Person owns Transfer Restricted Securities. SECTION 3. REGISTERED EXCHANGE OFFER (a) Unless the Exchange Offer shall not be permitted by applicable federal law (after the procedures set forth in Section 6(a)(i) below have been complied with), the Company shall (i) cause the Exchange Offer Registration Statement to be filed with the Commission as soon as practicable after the date of the filing (the "FILING DATE") of the Company's Annual Report on Form 10-K for the year ending May 31, 1998, but in no event later than 30 days after the Filing Date (such 30th day being the "FILING DEADLINE"), (ii) use its commercially reasonable efforts to cause such Exchange Offer Registration Statement to become effective at the earliest possible time, but in no -3- event later than 90 days after the Filing Date (such 90th day being the "EFFECTIVENESS DEADLINE"), (iii) in connection with the foregoing, (A) file all pre-effective amendments to such Exchange Offer Registration Statement as may be necessary in order to cause it to become effective and (B) cause all necessary filings, if any, in connection with the registration and qualification of the Series B Notes to be made under the Blue Sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer, and (iv) upon the effectiveness of such Exchange Offer Registration Statement, use its commercially reasonable efforts to commence and Consummate the Exchange Offer. The Exchange Offer shall be on the appropriate form permitting (i) registration of the Series B Notes to be offered in exchange for the Series A Notes that are Transfer Restricted Securities and (ii) resales of Series B Notes by Broker-Dealers that tendered into the Exchange Offer Series A Notes that such Broker-Dealer acquired for its own account as a result of market making activities or other trading activities (other than Series A Notes acquired directly from the Company or any of its Affiliates) as contemplated by Section 3(c) below. (b) The Company shall use its commercially reasonable efforts to cause the Exchange Offer Registration Statement to be effective continuously, and shall keep the Exchange Offer open for a period of not less than the minimum period required under applicable federal and state securities laws to Consummate the Exchange Offer; PROVIDED, HOWEVER, that in no event shall such period be less than 20 Business Days. The Company shall cause the Exchange Offer to comply with all applicable federal and state securities laws. No securities other than the Series B Notes shall be included in the Exchange Offer Registration Statement. The Company shall use its commercially reasonable efforts to cause the Exchange Offer to be Consummated on the earliest practicable date after the Exchange Offer Registration Statement has become effective, but in no event later than 30 business days thereafter (such 30th day being the "CONSUMMATION DEADLINE"). (c) The Company shall include a "Plan of Distribution" section in the Prospectus contained in the Exchange Offer Registration Statement and indicate therein that any Broker-Dealer who holds Transfer Restricted Securities that were acquired for the account of such Broker-Dealer as a result of market-making activities or other trading activities (other than Series A Notes acquired directly from the Company or any Affiliate of the Company), may exchange such Transfer Restricted Securities pursuant to the Exchange Offer. Such "Plan of Distribution" section shall also contain all other information with respect to such sales by such Broker-Dealers that the Commission may require in order to permit such sales pursuant thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer or disclose the amount of Transfer Restricted Securities held by any such Broker-Dealer, except to the extent required by the Commission as a result of a change in policy, rules or regulations after the date of this Agreement. Because such Broker-Dealer may be deemed to be an "underwriter" within the meaning of the Act and must, therefore, deliver a prospectus meeting the requirements of the Act in connection with its initial sale of any Series B Notes received by such Broker-Dealer in the Exchange Offer, the Company shall permit the use of the Prospectus contained in the Exchange Offer Registration Statement by such Broker-Dealer to satisfy such prospectus delivery requirement. To the extent necessary to ensure that the Prospectus contained in the Exchange Offer Registration Statement is available for sales of Series B Notes by Broker-Dealers, the Company agrees to use its commercially reasonable efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented, amended and current as required by and subject to the provisions of Section 6(a) and -4- (c) hereof and in conformity with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of 180 days from the Consummation Deadline or such shorter period as will terminate when all Transfer Restricted Securities covered by such Registration Statement have been sold pursuant thereto. The Company shall provide sufficient copies of the latest version of such Prospectus to such Broker-Dealers, promptly upon request, and in no event later than one business day after such request, at any time during such period. SECTION 4. SHELF REGISTRATION (a) SHELF REGISTRATION. If (i) the Exchange Offer is not permitted by applicable law (after the Company has complied with the procedures set forth in Section 6(a)(i) below) or (ii) if any Holder of Transfer Restricted Securities shall notify the Company within 20 Business Days following the Consummation Deadline that (A) such Holder was prohibited by law or Commission policy from participating in the Exchange Offer or (B) such Holder may not resell the Series B Notes acquired by it in the Exchange Offer to the public without delivering a prospectus and the Prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by such Holder or (C) such Holder is a Broker-Dealer and holds Series A Notes acquired directly from the Company or any of its Affiliates, then the Company shall: (x) cause to be filed, on or prior to 30 days after the earlier of (i) the date on which the Company determines that the Exchange Offer Registration Statement cannot be filed as a result of clause (a)(i) above and (ii) the date on which the Company receives the notice specified in clause (a)(ii) above, (such earlier date, the "FILING DEADLINE"), a shelf registration statement pursuant to Rule 415 under the Act (which may be an amendment to the Exchange Offer Registration Statement (the "SHELF REGISTRATION STATEMENT")), relating to all Transfer Restricted Securities, and (y) shall use its commercially reasonable efforts to cause such Shelf Registration Statement to become effective on or prior to 60 days after the Filing Deadline for the Shelf Registration Statement (such 60th day, the "EFFECTIVENESS DEADLINE"). If, after the Company has filed an Exchange Offer Registration Statement that satisfies the requirements of Section 3(a) above, the Company is required to file and make effective a Shelf Registration Statement solely because the Exchange Offer is not permitted under applicable federal law (i.e., clause (a)(i) above), then the filing of the Exchange Offer Registration Statement shall be deemed to satisfy the requirements of clause (x) above; PROVIDED that, in such event, the Company shall remain obligated to meet the Effectiveness Deadline set forth in clause (y). To the extent necessary to ensure that the Shelf Registration Statement is available for sales of Transfer Restricted Securities by the Holders thereof entitled to the benefit of this Section 4(a) and the other securities required to be registered therein pursuant to Section 6(b)(ii) hereof, the Company shall use its commercially reasonable efforts to keep any Shelf Registration Statement required by this Section 4(a) continuously effective, supplemented, amended and current as required by and subject to the provisions of Sections 6(b) and (c) hereof and in conformity with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from -5- time to time, for a period of at least two years (as extended pursuant to Section 6(c)(i)) following the Closing Date, or such shorter period as will terminate when all Transfer Restricted Securities covered by such Shelf Registration Statement have been sold pursuant thereto. (b) PROVISION BY HOLDERS OF CERTAIN INFORMATION IN CONNECTION WITH THE SHELF REGISTRATION STATEMENT. No Holder of Transfer Restricted Securities may include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Company in writing, within 20 days after receipt of a request therefor, the information specified in Item 507 or 508 of Regulation S-K, as applicable, of the Act for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein and such other information as the Company may reasonably request. No Holder of Transfer Restricted Securities shall be entitled to liquidated damages pursuant to Section 5 hereof unless and until such Holder shall have provided all such information. Each selling Holder agrees to promptly furnish additional information required to be disclosed in order to make the information previously furnished to the Company by such Holder not materially misleading. SECTION 5. LIQUIDATED DAMAGES If (i) any Registration Statement required by this Agreement is not filed with the Commission on or prior to the applicable Filing Deadline, (ii) any such Registration Statement has not been declared effective by the Commission on or prior to the applicable Effectiveness Deadline, (iii) the Exchange Offer has not been Consummated on or prior to the Consummation Deadline or (iv) any Registration Statement required by this Agreement is filed and declared effective but shall thereafter cease to be effective or fail to be usable for its intended purpose without being succeeded by a post-effective amendment or a Prospectus supplement to such Registration Statement that cures such failure and that is itself declared effective promptly (each such event referred to in clauses (i) through (iv), a "REGISTRATION DEFAULT"), then the Company hereby agrees to pay to each Holder of Transfer Restricted Securities affected thereby liquidated damages in an amount equal to $.05 per week per $1,000 in principal amount of Transfer Restricted Securities held by such Holder for each week or portion thereof that the Registration Default continues for the first 90-day period immediately following the occurrence of such Registration Default. The amount of the liquidated damages shall increase by an additional $.05 per week per $1,000 in principal amount of Transfer Restricted Securities with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of liquidated damages of $.35 per week per $1,000 in principal amount of Transfer Restricted Securities; PROVIDED that the Company shall in no event be required to pay liquidated damages for more than one Registration Default at any given time. Notwithstanding anything to the contrary set forth herein, (1) upon filing of the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement), in the case of (i) above, (2) upon the effectiveness of the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement), in the case of (ii) above, (3) upon Consummation of the Exchange Offer, in the case of (iii) above, or (4) upon the filing of a post-effective amendment to the Registration Statement or an additional Registration Statement that causes the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement) to again be declared effective or made usable in the case of (iv) above, the liquidated damages payable with respect to the Transfer Restricted Securities as a result of such clause (i), (ii), (iii) or (iv), as applicable, shall cease. -6- All accrued liquidated damages shall be paid to the Holders entitled thereto, in the manner provided for the payment of interest in the Indenture, on each Interest Payment Date, as more fully set forth in the Indentures and the Series A Notes. Notwithstanding the fact that any securities for which liquidated damages are due cease to be Transfer Restricted Securities, all obligations of the Company to pay liquidated damages with respect to such securities shall survive until such time as such obligations with respect to such securities shall have been satisfied in full. SECTION 6. REGISTRATION PROCEDURES (a) EXCHANGE OFFER REGISTRATION STATEMENT. In connection with the Exchange Offer, the Company shall (x) comply with all applicable provisions of Section 6(c) below, (y) use its commercially reasonable efforts to effect such exchange and to permit the resale of Series B Notes by Broker-Dealers that tendered, in the Exchange Offer, Series A Notes that such Broker-Dealer acquired for its own account as a result of its market making activities or other trading activities (other than Series A Notes acquired directly from the Company or any of its Affiliates) being sold in accordance with the intended method or methods of distribution thereof, and (z) comply with all of the following provisions: (i) If, following the date hereof there has been announced a change in Commission policy with respect to exchange offers such as the Exchange Offer, that in the reasonable opinion of counsel to the Company raises a substantial question as to whether the Exchange Offer is permitted by applicable federal law, the Company hereby agrees to seek a no-action letter or other favorable decision from the Commission allowing the Company to Consummate an Exchange Offer for such Transfer Restricted Securities. In connection with the foregoing, the Company hereby agrees, if commercially reasonable, to take all such other actions as may be requested by the Commission or otherwise required in connection with the issuance of such decision, including without limitation (A) participating in telephonic conferences with the Commission, (B) delivering to the Commission staff an analysis prepared by counsel to the Company setting forth the legal bases, if any, upon which such counsel has concluded that such an Exchange Offer should be permitted and (C) diligently pursuing a resolution (which need not be favorable) by the Commission staff. (ii) As a condition to its participation in the Exchange Offer, each Holder of Transfer Restricted Securities (including, without limitation, any Holder who is a Broker Dealer) shall furnish, upon the request of the Company, prior to the Consummation of the Exchange Offer, a written representation to the Company (which may be contained in the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (A) it is not an Affiliate of the Company, (B) it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any person to participate in, a distribution of the Series B Notes to be issued in the Exchange Offer and (C) it is acquiring the Series B Notes in its ordinary course of business. Each Holder using the Exchange Offer to participate in a distribution of the Series B Notes hereby acknowledges and agrees that, if the resales are of Series B Notes obtained by such Holder in exchange for Series A Notes acquired directly from the Company or an Affiliate thereof, it (1) could not, under Commission policy as in effect on the date of this Agreement, rely on the position of the Commission enunciated in MORGAN STANLEY AND CO. INC. (available June 5, 1991) and -7- EXXON CAPITAL HOLDINGS CORPORATION (available May 13, 1988), as interpreted in the Commission's letter to SHEARMAN & STERLING dated July 2, 1993, and similar no-action letters (including, if applicable, any no-action letter obtained pursuant to clause (i) above), and (2) must comply with the registration and prospectus delivery requirements of the Act in connection with a secondary resale transaction and that such a secondary resale transaction must be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K. (iii) Prior to effectiveness of the Exchange Offer Registration Statement, the Company shall provide a supplemental letter to the Commission (A) stating that the Company is registering the Exchange Offer in reliance on the position of the Commission enunciated in EXXON CAPITAL HOLDINGS CORPORATION (available May 13, 1988), MORGAN STANLEY AND CO. Inc. (available June 5, 1991) as interpreted in the Commission's letter to SHEARMAN & STERLING dated July 2, 1993, and, if applicable, any no-action letter obtained pursuant to clause (i) above, (B) including a representation that the Company has not entered into any arrangement or understanding with any Person to distribute the Series B Notes to be received in the Exchange Offer and that, to the best of the Company's information and belief, each Holder participating in the Exchange Offer is acquiring the Series B Notes in its ordinary course of business and has no arrangement or understanding with any Person to participate in the distribution of the Series B Notes received in the Exchange Offer and (C) any other undertaking or representation required by the Commission as set forth in any no-action letter obtained pursuant to clause (i) above, if applicable. (b) SHELF REGISTRATION STATEMENT. In connection with the Shelf Registration Statement, if any, the Company shall (i) (x) comply with all the provisions of Section 6(c) below and (y) use its commercially reasonable efforts to effect such registration to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof (as indicated in the information furnished to the Company pursuant to Section 4(b) hereof), and pursuant thereto the Company will prepare and file with the Commission a Registration Statement relating to the registration on any appropriate form under the Act, which form shall be available for the sale of the Transfer Restricted Securities in accordance with the intended method or methods of distribution thereof within the time periods and otherwise in accordance with the provisions hereof; and (ii) issue, subject to compliance with the applicable Indenture, upon the request of any Holder or purchaser of Series A Notes covered by any Shelf Registration Statement contemplated by this Agreement, Series B Notes having an aggregate principal amount equal to the aggregate principal amount of Series A Notes sold pursuant to the Shelf Registration Statement and surrendered to the Company for cancellation; the Company shall register Series B Notes on the Shelf Registration Statement for this purpose and issue the Series B Notes to the purchaser(s) of securities subject to the Shelf Registration Statement in the names as such purchaser(s) shall designate; PROVIDED, that the Holder shall pay any transfer taxes or other fees charged in connection with such registration of Series B Notes. (c) GENERAL PROVISIONS. In connection with any Registration Statement and any related Prospectus required by this Agreement, the Company shall: -8- (i) use its commercially reasonable efforts to keep such Registration Statement continuously effective and provide all requisite financial statements for the period specified in Section 3 or 4 of this Agreement, as applicable. Upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to contain an untrue statement of material fact or omit to state any material fact necessary to make the statements therein not misleading or (B) not to be effective and usable for resale of Transfer Restricted Securities during the period required by this Agreement, the Company shall use its commercially reasonable efforts to file promptly an appropriate amendment or Prospectus supplement to such Registration Statement curing such defect, and, if Commission review is required, use its commercially reasonable efforts to cause such amendment to be declared effective as soon as practicable; (ii) use its commercially reasonable efforts to prepare and file with the Commission such amendments and post-effective amendments to the applicable Registration Statement as may be necessary to keep such Registration Statement effective for the applicable period set forth in Section 3 or 4 hereof, as the case may be; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Act, and to comply fully with Rules 424, 430A and 462, as applicable, under the Act in a timely manner; and comply with the provisions of the Act in connection with the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus; (iii) advise each Holder promptly and, if requested by such Holder, confirm such advice in writing, (A) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to any applicable Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, (D) of the existence of any fact or the happening of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement thereto or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in the Registration Statement in order to make the statements therein not misleading, or that requires the making of any additions to or changes in the Prospectus in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities -9- or Blue Sky laws, the Company shall use its commercially reasonable efforts to obtain the withdrawal or lifting of such order at the earliest possible time; (iv) subject to Section 6(c)(i), if any fact or event contemplated by Section 6(c)(iii)(D) above shall exist or have occurred, use commercially reasonable efforts to prepare a supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (v) furnish to each Holder in connection with such exchange or sale, if any, before filing with the Commission, copies of any Registration Statement or any Prospectus included therein or any amendments or supplements to any such Registration Statement or Prospectus (including all documents incorporated by reference after the initial filing of such Registration Statement), which documents will be subject to the review and comment of such Holders in connection with such sale, if any, for a period of at least five Business Days if practicable, or such shorter time period as is practicable, and the Company will not file any such Registration Statement or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus (including all such documents incorporated by reference) to which such Holders shall reasonably object within five Business Days after the receipt thereof. A Holder shall be deemed to have reasonably objected to such filing only if such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains an untrue statement of a material fact or omits to state any material fact necessary to make the statements therein not misleading or fails to comply with the applicable requirements of the Act; (vi) make available, at reasonable times, for inspection by one Holder designated by a majority of the Holders and any attorney or accountant retained by such Holders, all financial and other records, pertinent corporate documents of the Company and cause the Company's officers, directors and employees to supply all information reasonably requested by any such Holder, attorney or accountant in connection with such Registration Statement or any post-effective amendment thereto subsequent to the filing thereof and prior to its effectiveness; (vii) if requested by any Holders in connection with such exchange or sale, promptly include in any Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as such Holders may reasonably request to have included therein, including, without limitation, information relating to the "Plan of Distribution" of the Transfer Restricted Securities; PROVIDED, that the Company shall not be required to participate in a distribution of any derivative security by or on behalf of any Holder; and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after the Company is notified of the matters to be included in such Prospectus supplement or post-effective amendment; -10- (viii) deliver to each Holder without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons reasonably may request; the Company hereby consents to the use (in accordance with law) of the Prospectus and any amendment or supplement thereto by each selling Holder in connection with the offering and the sale of the Transfer Restricted Securities covered by the Prospectus or any amendment or supplement thereto; (ix) upon the request of any Holder, enter into such commercially reasonable agreements (including underwriting agreements) and make such customary representations and warranties and take all such other commercially reasonable actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities pursuant to any applicable Registration Statement contemplated by this Agreement as may be reasonably requested by any Holder in connection with any sale or resale pursuant to any applicable Registration Statement. In such connection, the Company shall: (A) upon request of any Holder or underwriter of a resale of Series A Notes or Series B Notes, furnish (or in the case of paragraphs (2) and (3), use its commercially reasonable efforts to cause to be furnished) to each such Holder or underwriter upon the effectiveness of the Shelf Registration Statement: (1) a certificate, dated such date, signed on behalf of the Company by (x) the President or any Vice President and (y) a principal financial or accounting officer of the Company, confirming, as of the date thereof, the matters set forth in Sections 8(a), 8(b) and 8(c) of the Purchase Agreement and such other similar matters as such Holders may reasonably request; (2) an opinion, dated the date of Consummation of the Exchange Offer or the date of effectiveness of the Shelf Registration Statement, as the case may be, of counsel for the Company covering matters similar to those set forth in paragraph (e) of Section 8 of the Purchase Agreement and such other matters as such Holder may reasonably request, and in any event including a statement to the effect that such counsel has participated in conferences with officers and other representatives of the Company, representatives of the independent public accountants for the Company and have considered the matters required to be stated therein and the statements contained therein, although such counsel has not independently verified the exhibits to the Registration Statement or the accuracy, completeness or fairness of such statements; and that such counsel advises that, on the basis of the foregoing, no facts came to such counsel's attention that caused such counsel to believe that the applicable Registration Statement, at the time such Registration Statement or any post-effective amendment thereto became effective and, in the case of the Exchange Offer Registration Statement, as of the date of Consummation of the -11- Exchange Offer, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus contained in such Registration Statement as of its date and, in the case of the opinion dated the date of Consummation of the Exchange Offer, as of the date of Consummation, contained an untrue statement of a material fact or omitted 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. Without limiting the foregoing, such counsel may state further that such counsel assumes no responsibility for, and has not independently verified, the exhibits to the Registration Statement or the accuracy, completeness or fairness of the financial statements, notes and schedules and other financial data included in any Registration Statement contemplated by this Agreement or the related Prospectus; and (3) a customary comfort letter, dated the date of Consummation of the Exchange Offer, or as of the date of effectiveness of the Shelf Registration Statement, as the case may be, from the Company's independent accountants, in the customary form and covering matters of the type customarily covered in comfort letters to underwriters in connection with underwritten offerings, and affirming the matters set forth in the comfort letters delivered pursuant to Section 8(h) of the Purchase Agreement; and (B) deliver such other documents and certificates as may be reasonably requested by the selling Holders to evidence compliance with the matters covered in clause (A) above and with any customary conditions contained in the any agreement entered into by the Company pursuant to this clause (ix); (x) prior to any public offering of Transfer Restricted Securities, cooperate with the selling Holders and their counsel in connection with the registration and qualification of the Transfer Restricted Securities under the securities or Blue Sky laws of such jurisdictions as the selling Holders may request and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the applicable Registration Statement; PROVIDED, HOWEVER, that the Company shall not be required to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would subject it to the service of process in suits or to taxation, other than as to matters and transactions relating to the Registration Statement, in any jurisdiction where it is not now so subject; (xi) in connection with any sale of Transfer Restricted Securities that will result in such securities no longer being Transfer Restricted Securities, cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and to register such Transfer Restricted Securities in such denominations and such names as the selling Holders may request at least two Business Days prior to such sale of Transfer Restricted Securities; (xii) use its commercially reasonable efforts to cause the disposition of the Transfer Restricted Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof to consummate the disposition of such Transfer Restricted Securities, subject to the proviso contained in clause (x) above; -12- (xiii) provide a CUSIP number for all Transfer Restricted Securities not later than the effective date of a Registration Statement covering such Transfer Restricted Securities and provide the Trustee under the Indenture with typed certificates for the Transfer Restricted Securities which are in a form eligible for deposit with a custodian for the Depository Trust Company; (xiv) otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its security holders with regard to any applicable Registration Statement, as soon as practicable, a consolidated earning statement meeting the requirements of Rule 158 (which need not be audited) covering a twelve-month period beginning after the effective date of the Registration Statement (as such term is defined in paragraph (c) of Rule 158 under the Act); and (xv) cause the Indentures to be qualified under the TIA not later than the effective date of the first Registration Statement required by this Agreement and, in connection therewith, cooperate with the Trustee and the Holders to effect such changes to the Indentures as may be required for such Indentures to be so qualified in accordance with the terms of the TIA; and execute and use its commercially reasonable efforts to cause the Trustee to execute, all documents that may be required to effect such changes and all other forms and documents required to be filed with the Commission to enable such Indentures to be so qualified in a timely manner. (d) RESTRICTIONS ON HOLDERS. Each Holder agrees by acquisition of a Transfer Restricted Security that, upon receipt of the notice referred to in Section 6(c)(iii)(C) or any notice from the Company of the existence of any fact of the kind described in Section 6(c)(iii)(D) hereof (in each case, a "SUSPENSION NOTICE"), such Holder will forthwith discontinue disposition of Transfer Restricted Securities pursuant to the applicable Registration Statement until (i) such Holder has received copies of the supplemented or amended Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Holder is advised in writing by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus (in each case, the "RECOMMENCEMENT DATE"). Each Holder receiving a Suspension Notice hereby agrees that it will either (i) destroy any Prospectuses, other than permanent file copies, then in such Holder's possession which have been replaced by the Company with more recently dated Prospectuses or (ii) deliver to the Company (at the Company's expense) all copies, other than permanent file copies, then in such Holder's possession of the Prospectus covering such Transfer Restricted Securities that was current at the time of receipt of the Suspension Notice. The time period regarding the effectiveness of such Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended by a number of days equal to the number of days in the period from and including the date of delivery of the Suspension Notice to the date of delivery of the Recommencement Date. SECTION 7. REGISTRATION EXPENSES (a) All expenses incident to the Company's performance of or compliance with this Agreement will be borne by the Company, regardless of whether a Registration Statement becomes -13- effective, including without limitation: (i) all registration and filing fees and expenses; (ii) all fees and expenses of compliance with federal securities and state Blue Sky or securities laws; (iii) all expenses of printing (including printing certificates for the Series B Notes to be issued in the Exchange Offer and printing of Prospectuses, messenger and delivery services and telephone; (iv) all reasonable fees and disbursements of counsel for the Company and the Holders of Transfer Restricted Securities; and (v) all fees and disbursements of independent certified public accountants of the Company (including the expenses of any special audit and comfort letters required by or incident to such performance). The Company will, in any event, bear its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by the Company. (b) In connection with any Shelf Registration Statement required by this Agreement, the Company will reimburse the Holders of Transfer Restricted Securities who are selling or reselling Series A Notes or Series B Notes pursuant to the "Plan of Distribution" contained in the Shelf Registration Statement for the reasonable fees and disbursements of not more than one counsel, who shall be Sullivan & Cromwell, unless another firm shall be chosen by the Holders of a majority in principal amount of the Transfer Restricted Securities for whose benefit such Shelf Registration Statement is being prepared. SECTION 8. INDEMNIFICATION (1) The Company agrees to indemnify and hold harmless (i) each of the Holders and their respective affiliates, (ii) each person, if any, who controls (within the meaning of Section 15 of the Act or Section 20 of the Exchange Act) any of the Holders or any of their respective affiliates (any of the persons referred to in this clause (ii) being hereinafter referred to as a "Controlling Person"), and (iii) each of the respective officers, directors, partners, employees, representatives and agents of any of the Holders or any Controlling Person, and each of their respective officers, directors, partners, employees, representatives and agents (any person referred to in clause (i), (ii) or (iii) of this Section 8(a) may hereinafter be referred to as an "Indemnified Person") to the fullest extent lawful, from and against any and all losses, claims, damages, judgments, actions, costs, assessments, expenses and other liabilities (collectively, "Liabilities"), including without limitation and as incurred, reimbursement of all reasonable costs of investigating, preparing, pursuing or defending any claim or action, or any investigation or proceeding by any foreign, Federal, state or local authority, regulatory body, administrative agency, court or other governmental or quasi-governmental body, commenced or threatened, including the reasonable fees and expenses of counsel to any Indemnified Person, to the extent such Liabilities are directly or indirectly caused by, related to, based upon or arising out of, or in connection with, any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, preliminary prospectus or Prospectus (or any supplement or amendment thereto) provided by the Company to any Holder or prospective purchaser of Series B Notes or registered Series A Notes, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such Liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission that is (x) made -14- in reliance upon and in conformity with information relating to any of the Holders furnished in writing to the Company by or on behalf of a Holder expressly for use therein, or (y) with respect to the Holder from whom the person asserting the Liabilities purchased Transfer Restricted Securities, made in any Preliminary Prospectus if a copy of the Prospectus (as amended or supplemented, if the Company shall have furnished the Holders with such amendments or supplements thereto on a timely basis) was not delivered by or on behalf of such Holder to the person asserting the Liabilities, if required by law to have been so delivered by the Holder seeking indemnification, at or prior to the written confirmation of the sale of the Transfer Restricted Securities, and it shall be determined by a court of competent jurisdiction or binding mediation or arbitration tribunal, in a judgment or determination not subject to appeal or review, that the Prospectus (as so amended or supplemented) would have completely corrected such untrue statement or omission in all material respects. The foregoing indemnity shall be in addition to any liability that the Company might otherwise have to any of the Holders and such other Indemnified Persons. The Company shall notify you promptly after becoming aware of the institution, threat or assertion of any claim, proceeding (including any governmental investigation) or litigation in connection with the matters addressed by this Agreement which involves the Company or an Indemnified Person. (2) In case any action or proceeding (for all purposes of this Section 8, including any governmental or quasi-governmental investigation) shall be brought or asserted against any of the Indemnified Persons with respect to which indemnity under this Section 8 may be sought against the Company, such Indemnified Person promptly shall notify the Company in writing and the Company shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Person and payment of all reasonable fees and expenses; PROVIDED, that the delay or failure to give such notice shall not relieve the Company from any liability that it may have on account of the indemnity under this Section 8, except to the extent that such delay or omission materially adversely affects the ability of the Company to defend or assume the defense of such action or proceeding. Upon receiving such notice, the Company shall be entitled to participate in any such action or proceeding and/or to assume, at its sole expense, the defense thereof, with counsel reasonably satisfactory to such Indemnified Person (who shall not, except with the consent of the Indemnified Person to be represented, be counsel to the Company or any of the Subsidiaries) and, after written notice from the Company to such Indemnified Person of its election so to assume the defense thereof promptly after receipt of the notice from the Indemnified Person of such action or proceeding, the Company shall not be liable to such Indemnified Person hereunder for legal expenses of other counsel subsequently incurred by such Indemnified Person in connection with the defense thereof, other than reasonable costs of investigation, unless (i) the Company agrees in writing to pay such fees and expenses, or (ii) the Company fails promptly to assume such defense or fails to employ counsel reasonably satisfactory to such Indemnified Person, or (iii) the named parties to any such action or proceeding (including any impleaded parties) include both such Indemnified Person and the Company or an affiliate of the Company, and that Indemnified Person shall have been advised in writing by counsel, with a copy of such writing to the Company, that either (x) there may be one or more legal defenses available to such Indemnified Person that are different from or additional to those available to the Company or such affiliate or (y) a conflict may exist between such Indemnified Person and the Company or such affiliate. In the event of any of clause (i), (ii) and (iii) of the immediately preceding sentence, the Company shall not have the right to assume the defense thereof on behalf of the Indemnified Person and such Indemnified Person shall have the right to employ its own counsel (who shall be reasonably acceptable to the Company and shall not, except with the -15- Company's consent, be counsel to the Company) in any such action and the reasonable fees and expenses of such counsel shall be paid, as incurred, by the Company, subject to repayment to the Company if it is ultimately determined that an Indemnified Person is not entitled to indemnification hereunder, it being understood, however, that the Company shall not, in connection with any one such action or proceeding or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all of the Indemnified Persons, which firm shall be designated in writing by a majority of the Holders. The Company shall not be liable for any settlement of any such action or proceeding effected without the Company's written consent, which consent may not be unreasonably withheld, but if settled with the written consent of the Company, the Company agrees to indemnify and hold harmless any Indemnified Person from and against any loss or liability incurred in such settlement. The Company shall not, without the prior written consent of each Indemnified Person, which consent shall not be unreasonably withheld, settle, compromise or consent to the entry of any judgment in or otherwise seek to terminate any pending or threatened action, claim, suit, investigation or other proceeding in respect of which any Indemnified Person is or could have been a party and indemnification or contribution could have been sought hereunder by such Indemnified Person, unless such settlement, compromise, consent or termination includes an unconditional release of each Indemnified Person from all liability on claims that are the subject matter of such proceeding. (3) Each of the Holders agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, its officers, and any person controlling (within the meaning of Section 15 of the Act or Section 20 of the Exchange Act) the Company, to the same extent as the foregoing indemnity from the Company to each of the Indemnified Persons, but only with respect to claims and actions based on information relating to such Holder furnished in writing by or on behalf of such Holder expressly for use in any Registration Statement. In case any action shall be brought against the Company, any of its directors, any such officer, or any such controlling person in respect of which indemnity is sought against any Holder pursuant to the foregoing sentence, the Holder shall have the rights and duties given to the Company (except that if a Holder shall have assumed the defense thereof, the Company shall not be required to do so, but may employ separate counsel therein and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the Company), and the Company, its directors, any such officers, and each such controlling person shall have the rights and duties given to the Indemnified Person by Section 7(b) above. In no event shall any Holder, its directors, officers or any Person who controls such Holder be liable or responsible for any amount in excess of the amount by which the total amount received by such Holder with respect to its sale of Transfer Restricted Securities pursuant to a Registration Statement exceeds (i) the amount paid by such Holder for such Transfer Restricted Securities and (ii) the amount of any damages that such Holder, its directors, officers or any Person who controls such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. (4) If the indemnification provided for in this Section 8 is finally determined by a court of competent jurisdiction to be unavailable to an Indemnified Person in respect of any Liabilities referred to herein, then the Company, in lieu of indemnifying such Indemnified Person, shall contribute to the amount paid or payable by such Indemnified Person as a result of such Liabilities: (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on -16- the one hand and the Indemnified Person on the other hand from the sale of the Transfer Restricted Securities, or (ii) if the allocation provided by clause (i), above, 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 Indemnified Person in connection with the actions, statements or omissions that resulted in such Liabilities, as well as any other relevant equitable considerations. The relative fault of the Company and the Holder shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact related to information supplied by the Company or the Holder and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The indemnity and contribution obligations of the Company set forth herein shall be in addition to any liability or obligation the Company may otherwise have to any Indemnified Person. The Company and the Holders agree that it would not be just and equitable if contribution pursuant to this Section 8(d) were determined by PRO RATA allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an Indemnified Party as a result of the Liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any reasonable legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 8, none of the Holders (or any of their related Indemnified Persons referred to in Section 8 above) shall be required to contribute, in the aggregate, any amount in excess of the amount by which the total received by such Holder with respect to the sale of Transfer Restricted Securities pursuant to a Registration Statement exceeds (i) the amount paid by such Holder for such Transfer Restricted Securities and (ii) the amount of any damages or liabilities which such Holder (and its related Indemnified Persons referred to in Section 8 above) has otherwise been required to pay or incur by reason of such untrue or alleged untrue statement or omission or alleged omission or other indemnified action or proceeding. Notwithstanding anything to the contrary contained herein, no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Holders' obligations to contribute pursuant to this Section 8(d) are several in proportion to the respective aggregate principal amount of Transfer Restricted Securities held by each of the Holders hereunder and not joint. SECTION 9. RULE 144A AND RULE 144 The Company agrees with each Holder, for so long as any Transfer Restricted Securities remain outstanding and during any period in which the Company (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make available, upon request of any Holder, to such Holder or beneficial owner of Transfer Restricted Securities in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities designated by such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A, and (ii) is subject to Section 13 or 15(d) of the Exchange Act, to use its commercially reasonable efforts to make all filings required thereby in a timely manner in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144. -17- SECTION 10. MISCELLANEOUS (a) NO INCONSISTENT AGREEMENTS. The Company will not, on or after the date of this Agreement, enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's securities under any agreement in effect on the date hereof. (b) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given unless (i) in the case of Section 5 hereof and this Section 10(b)(i), the Company has obtained the written consent of Holders of all outstanding Transfer Restricted Securities and (ii) in the case of all other provisions hereof, the Company has obtained the written consent of Holders of a majority of the outstanding principal amount of Transfer Restricted Securities (excluding Transfer Restricted Securities held by the Company or its Affiliates). Notwithstanding the foregoing, a waiver or consent to departure from the provisions hereof that relates exclusively to the rights of Holders whose Transfer Restricted Securities are being tendered pursuant to the Exchange Offer, and that does not affect directly or indirectly the rights of other Holders whose Transfer Restricted Securities are not being tendered pursuant to such Exchange Offer, may be given by the Holders of a majority of the outstanding principal amount of Transfer Restricted Securities subject to such Exchange Offer. (c) THIRD PARTY BENEFICIARY. The Holders shall be third party beneficiaries to the agreements made hereunder between the Company, on the one hand, and the Initial Purchasers, on the other hand, and shall have the right to enforce such agreements directly to the extent they may deem such enforcement necessary or advisable to protect its rights or the rights of Holders hereunder. (d) NOTICES. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), telex, telecopier, or air courier guaranteeing overnight delivery: (i) if to a Holder, at the address set forth on the records of the Registrar under the Indenture, with a copy to the Registrar under the Indenture; and (ii) if to the Company: Tenet Healthcare Corporation 3820 State Street Santa Barbara, California 93105 Telecopier No.: (805) 563-7070 Attention: General CounselWith a copy to: Skadden, Arps, Slate, Meagher & Flom LLP 300 South Grand Avenue, Suite 3400 Los Angeles, California 90071 Telecopier No.: (213) 687-5600 Attention: Thomas C. Janson, Jr. -18- All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and on the next business day, if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address specified in the Indenture. (e) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders; PROVIDED, that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Transfer Restricted Securities in violation of the terms hereof or of the Purchase Agreement or the Indenture. If any transferee of any Holder shall acquire Transfer Restricted Securities in any manner, whether by operation of law or otherwise, such Transfer Restricted Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Transfer Restricted Securities such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement, including the restrictions on resale set forth in this Agreement and, if applicable, the Purchase Agreement, and such Person shall be entitled to receive the benefits hereof. (f) COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (g) HEADINGS. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF. (i) SEVERABILITY. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (j) ENTIRE AGREEMENT. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. -19- IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. TENET HEALTHCARE CORPORATION By: /s/ STEPHEN D. FARBER ---------------------------- Name: Stephen D. Farber Title: Vice President DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION By: /s/ DAVID L. DENNIS ----------------------------- Name: David L. Dennis Title: Managing Director MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: /s/ TODD FRENCH ----------------------------- Name: Todd French Title: Vice President J.P. MORGAN SECURITIES INC. By: /s/ BRIAN J. VAN EISLANDER ----------------------------- Name: Brian J. Van Eislander Title: Vice President -20- MORGAN STANLEY & CO.INCORPORATED By: /s/ CHARLES DITLOFF ----------------------------- Name: Charles Ditloff Title: Principal SALOMON BROTHERS INC By: /s/ GRAEME A. GILFILLAN ----------------------------- Name: Graeme A. Gilfillan Title: Managing Director DEUTSCHE MORGAN GRENFELL INC. By: /s/ STEVE WARDEN ----------------------------- Name: Steve Warden Title: Managing Director By: /s/ LAIN STEWART ----------------------------- Name: Lain Stewart Title: Vice President BANCAMERICA ROBERTSON STEPHENS By: /s/ JOHN MULRY ----------------------------- Name: John Mulry Title: Managing Director -21- EXHIBIT A NOTICE OF FILING OF A/B EXCHANGE OFFER REGISTRATION STATEMENT To: Donaldson, Lufkin & Jenrette Securities Corporation277 Park Avenue New York, New York 10172Attention: Louise Guarneri (Compliance Department)Fax: (212) 892-7272 From: Tenet Healthcare Corporation7__% Senior Notes due 2008 8__% Senior Subordinated Notes due 2008 Date: _________, 1998 For your information only (NO ACTION REQUIRED): Today, __________, 1998, we filed [an A/B Exchange Registration Statement/a Shelf Registration Statement] with the Securities and Exchange Commission. We currently expect this registration statement to be declared effective within ___ business days of the date hereof. -22- EX-4.9 4 EXHIBIT 4.9 THIRD SUPPLEMENTAL INDENTURE TENET HEALTHCARE CORPORATION, as Issuer AND THE BANK OF NEW YORK, as Trustee Dated as of May 7, 1998 Supplemental to Indenture, dated as of March 1, 1995, relating to the Issuer's 9 5/8% Senior Notes Due 2002 TABLE OF CONTENTS PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION. . . . . . . . . . . . . . . . . . . . SECTION 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . SECTION 1.2 Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . SECTION 1.3 Successors and Assigns . . . . . . . . . . . . . . . . . . SECTION 1.4 Separability Clause. . . . . . . . . . . . . . . . . . . . SECTION 1.5 Benefits of Third Supplemental Indenture. . . . . . . . . . . . . . . . . . . . . . . . . SECTION 1.6 Governing Law. . . . . . . . . . . . . . . . . . . . . . . SECTION 1.7 Effectiveness. . . . . . . . . . . . . . . . . . . . . . . ARTICLE II THE AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . SECTION 2.1 Amendments to Section 1.01 . . . . . . . . . . . . . . . . SECTION 2.2 Amendment to Section 1.02. . . . . . . . . . . . . . . . . SECTION 2.3 Amendment to Section 3.04. . . . . . . . . . . . . . . . . SECTION 2.4 Amendment to Section 3.05. . . . . . . . . . . . . . . . . SECTION 2.5 Amendment to Section 3.07. . . . . . . . . . . . . . . . . SECTION 2.6 Amendment to Section 3.08. . . . . . . . . . . . . . . . .
i SECTION 2.7 Amendment to Section 3.09. . . . . . . . . . . . . . . . . SECTION 2.8 Amendment to Section 3.11. . . . . . . . . . . . . . . . . SECTION 2.9 Amendment to Section 3.12. . . . . . . . . . . . . . . . . SECTION 2.10 Amendment to Section 3.13. . . . . . . . . . . . . . . . . SECTION 2.11 Amendment to Section 3.14. . . . . . . . . . . . . . . . . SECTION 2.12 Amendment to Section 3.15. . . . . . . . . . . . . . . . . SECTION 2.13 Amendment to Section 3.16. . . . . . . . . . . . . . . . . SECTION 2.14 Amendment to Section 3.17. . . . . . . . . . . . . . . . . SECTION 2.15 Amendment to Section 4.01. . . . . . . . . . . . . . . . . ARTICLE III NOTICE, ENDORSEMENT AND CHANGE OF FORM OF SECURITIES. . . . . . . . . . . . . . . . . . . . . . . SECTION 3.1 Notice to Securityholders. . . . . . . . . . . . . . . . . SECTION 3.2 Notation on Securities . . . . . . . . . . . . . . . . . . SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ii THIRD SUPPLEMENTAL INDENTURE, dated as of May 7, 1998 (the "THIRD SUPPLEMENTAL INDENTURE"), between TENET HEALTHCARE CORPORATION, a Nevada corporation (hereinafter called the "COMPANY"), and THE BANK OF NEW YORK, as trustee (hereinafter called the "TRUSTEE"), under the Indenture (the "INDENTURE"), dated as of March 1, 1995, between the Company and the Trustee relating to the Company's 9 5/8% Senior Notes Due 2002 (the "SECURITIES"). RECITALS OF THE COMPANY WHEREAS, the Company proposes to amend (the "AMENDMENTS") the Indenture to delete substantially all of the restrictive covenants contained therein. WHEREAS, the Company has commenced an offer to purchase any and all of the Securities pursuant to its Offer to Purchase and Solicitation of Consents dated April 23, 1998 (the "TENDER OFFER"). WHEREAS, the Company has solicited consents to the Amendments from the holders of record of the Securities. WHEREAS, in accordance with Section 8.02 of the Indenture, the Holders of a majority of the principal amount of the Securities then outstanding (other than any Securities owned by the Company or any Affiliate of the Company) have consented to such Amendments. WHEREAS, the Board of Directors of the Company has duly authorized the execution and delivery of this Third Supplemental Indenture, the Company has delivered an Officers' Certificate and an Opinion of Counsel to the Trustee pursuant to Section 8.06 of the Indenture and the Company has done all other things necessary to make this Third Supplemental Indenture a valid agreement of the Company in accordance with the terms hereof and of the Indenture. NOW THEREFORE, the Company and Trustee agree as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Securities: ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION I.1 DEFINITIONS. For all purposes of the Indenture and this Third Supplemental Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) the words "herein," "hereof" and "hereunder" and other words of similar import refer to the Indenture and this Third Supplemental Indenture as a whole and not to any particular Article, Section or subdivision; and (2) certain capitalized terms used but not defined herein shall have the meanings assigned to them in the Indenture. SECTION I.2 EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and Section headings and the Table of Contents of this Third Supplemental Indenture are for convenience only and shall not affect the construction hereof. Except as otherwise specifically set forth herein, all references to Sections in the Indenture shall remain unchanged. SECTION I.3 SUCCESSORS AND ASSIGNS. All covenants and agreements in this Third Supplemental Indenture by the Company shall bind its successors and assigns, or any other obligor on the Securities, whether expressed or not. SECTION I.4 SEPARABILITY CLAUSE. In case any provision in this Third Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 2 SECTION I.5 BENEFITS OF THIRD SUPPLEMENTAL INDENTURE. Nothing in this Third Supplemental Indenture, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, any Paying Agent and the Holders, any benefit or any legal or equitable right, remedy or claim under this Third Supplemental Indenture. SECTION I.6 GOVERNING LAW. This Third Supplemental Indenture shall be governed by and construed in accordance with the laws of the State of New York and all rights and remedies shall be governed by such law without reference to its conflict of laws provision. SECTION I.7 EFFECTIVENESS. This Third Supplemental Indenture shall be effective on the date hereof; PROVIDED, that the Amendments in Article II of this Third Supplemental Indenture shall take effect on the date (the "EFFECTIVE DATE") that the Trustee shall have received an Officers' Certificate from the Company, dated the Effective Date, in accordance with Section 8.06 of the Indenture, stating that the Tender Offer has been consummated and that the Amendments in Article II of this Third Supplemental Indenture shall take effect on such date. ARTICLE II THE AMENDMENTS SECTION II.1 AMENDMENTS TO SECTION 1.01. The following definitions are hereby deleted from Section 1.01 of the Indenture: Acquired Debt, Asset Sale, Capital Lease, Capital Lease Obligation, Capital Stock, Change of Control, Change of Control Triggering Event, Consolidated Cash Flow, Consolidated Net Income, Consolidated Net Worth, Continuing Directors, Disqualified Stock, Equity Interests, Existing Indebtedness, Fixed Charge Coverage Ratio, Fixed Charges, Hedging Obligations, Hospital, Hospital Swap, Indebtedness, International Subsidiaries, Investment Grade, Investments, Lien, Metrocrest Letter of Credit Facility, Moody's, Net Income, Net Proceeds, Non-Cash Consideration, Non-Recourse Debt, Performance Investment Plan, Permitted Collateral, Permitted Liens, Permitted Refinancing Indebtedness, Physician Joint Venture Distributions, Physician Support 3 Obligations, Qualified Equity Interests, Rating Agencies, Rating Category, Rating Date, Rating Decline, Refinancing, Related Business, Restricted Investment, S&P, Senior Subordinated Notes, Senior Subordinated Note Indenture, Specified Assets, Specified Exchange, Stockholders Equity, Transfer Restriction, Wholly Owned Subsidiary. SECTION II.2 AMENDMENT TO SECTION 1.02. The following definitions are hereby deleted from Section 1.02 of the Indenture. Affiliate Transaction, Change of Control Offer, Change of Control Payment, Change of Control Payment Date, Purchase Date, Restricted Payments and Senior Asset Sale Offer. SECTION II.3 AMENDMENT TO SECTION 3.04. Clause (ii) of Section 3.04 of the Indenture is hereby amended to read in its entirety as follows: "(ii) [Intentionally Omitted]" SECTION II.4 AMENDMENT TO SECTION 3.05. Section 3.05 of the Indenture is hereby amended to read in its entirety as follows: "SECTION 3.05 TAXES. [Intentionally Omitted]" SECTION II.5 AMENDMENT TO SECTION 3.07. Section 3.07 of the Indenture is hereby amended to read in its entirety as follows: SECTION 3.07. LIMITATIONS ON RESTRICTED PAYMENTS. [Intentionally Omitted]" SECTION II.6 AMENDMENT TO SECTION 3.08. 4 Section 3.08 of the Indenture is hereby amended to read in its entirety as follows: "SECTION 3.08. LIMITATIONS ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES. [Intentionally Omitted]" SECTION II.7 AMENDMENT TO SECTION 3.09. Section 3.09 of the Indenture is hereby amended to read in its entirety as follows: "SECTION 3.09 LIMITATIONS ON INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK [Intentionally Omitted]" SECTION II.8 AMENDMENT TO SECTION 3.11. Section 3.11 of the Indenture is hereby amended to read in its entirety as follows: "SECTION 3.11 LIMITATIONS ON TRANSACTIONS WITH AFFILIATES. [Intentionally Omitted]" SECTION II.9 AMENDMENT TO SECTION 3.12. Section 3.12 of the Indenture is hereby amended to read in its entirety as follows: "SECTION 3.12 LIMITATIONS ON LIENS. [Intentionally Omitted]" SECTION II.10 AMENDMENT TO SECTION 3.13. 5 Section 3.13 of the Indenture is hereby amended to read in its entirety as follows: "SECTION 3.13 CHANGE OF CONTROL. [Intentionally Omitted]" SECTION II.11 AMENDMENT TO SECTION 3.14. Section 3.14 of the Indenture is hereby amended to read in its entirety as follows: "SECTION 3.14 CORPORATE EXISTENCE. [Intentionally Omitted]" SECTION II.12 AMENDMENT TO SECTION 3.15. Section 3.15 of the Indenture is hereby amended to read in its entirety as follows: "SECTION 3.15 LINES OF BUSINESS. [Intentionally Omitted]" SECTION II.13 AMENDMENT TO SECTION 3.16. Section 3.16 of the Indenture is hereby amended to read in its entirety as follows: "SECTION 3.16 LIMITATIONS ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS BY SUBSIDIARIES. [Intentionally Omitted]" SECTION II.14 AMENDMENT TO SECTION 3.17. Section 3.17 of the Indenture is hereby amended to read in its entirety as follows: 6 "SECTION 3.17 NO AMENDMENT TO SUBORDINATED PROVISIONS OF SENIOR SUBORDINATED NOTE INDENTURE. [Intentionally Omitted]" SECTION II.15 AMENDMENT TO SECTION 4.01. Section 4.01 of the Indenture is hereby amended to read in its entirety as follows: "SECTION 4.01 LIMITATIONS ON MERGERS, CONSOLIDATIONS OR SALES OF ASSETS. The Company may not consolidate or merge with or into (whether or not the Company is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions to another corporation, Person or entity unless: (i) the Company is the surviving corporation or the entity or the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District or Columbia; (ii) the entity or Person formed by or surviving any such consolidation or merger (if other than the Company) or the entity or Person to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made assumes all the Obligations of the Company under this Indenture and the Securities pursuant to a supplemental indenture in a form reasonably satisfactory to the Trustee; and (iii) immediately after such transaction no Default or Event of Default exists. The Company shall deliver to the Trustee prior to the consummation of the proposed transaction an Officers' Certificate to the foregoing effect and an Opinion of Counsel, covering clauses (i) through (iii) above, stating that the proposed 7 transaction and such supplemental indenture comply with this Indenture. The Trustee shall be entitled to conclusively rely upon such Officers' Certificate and Opinion of Counsel." ARTICLE III NOTICE, ENDORSEMENT AND CHANGE OF FORM OF SECURITIES SECTION III.1 NOTICE TO SECURITYHOLDERS. After the Effective Date, the Company shall mail to Securityholders a notice briefly describing the Amendments in accordance with Section 8.02 of the Indenture. SECTION III.2 NOTATION ON SECURITIES. Securities authenticated and delivered after the Effective Date shall, at the Company's expense, be affixed by the Trustee with the following notation: "The Company and the Trustee have entered into a Third Supplemental Indenture, dated as of May 7, 1998, which deleted substantially all of the restrictive covenants in the Securities. Reference is hereby made to such Third Supplemental Indenture, copies of which are on file with The Bank of New York, as Trustee." The Trustee may, but shall not be required to, require holders of Securities authenticated and delivered prior to the Effective Date to deliver such Securities to the Trustee so that the Trustee may affix them with the aforementioned notation. * * * * * This Third Supplemental Indenture may be executed in counterparts, each of which when so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. Dated as of May 7, 1998 TENET HEALTHCARE CORPORATION By: /s/ STEPHEN D. FARBER ---------------------------- Name: Stephen D. Farber Title: Vice President THE BANK OF NEW YORK, AS TRUSTEE By: /s/ MARY LA GUMINA ---------------------------- Name: Mary La Gumina Title: Assistant Vice President 8 EX-4.13 5 EXHIBIT 4.13 THIRD SUPPLEMENTAL INDENTURE TENET HEALTHCARE CORPORATION, as Issuer AND THE BANK OF NEW YORK, as Trustee Dated as of May 7, 1998 Supplemental to Indenture, dated as of March 1, 1995, relating to the Issuer's 10 1/8% Senior Subordinated Notes Due 2005 TABLE OF CONTENTS PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION. . . . . . . . . . . . . . . . . . SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . SECTION 1.2 Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . SECTION 1.3 Successors and Assigns. . . . . . . . . . . . . . . . . . SECTION 1.4 Separability Clause . . . . . . . . . . . . . . . . . . . SECTION 1.5 Benefits of Third Supplemental Indenture . . . . . . . . . . . . . . . . . . . . . . . . SECTION 1.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . SECTION 1.7 Effectiveness . . . . . . . . . . . . . . . . . . . . . . ARTICLE II THE AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . SECTION 2.1 Amendments to Section 1.01. . . . . . . . . . . . . . . . SECTION 2.2 Amendment to Section 1.02 . . . . . . . . . . . . . . . . SECTION 2.3 Amendment to Section 4.04 . . . . . . . . . . . . . . . . SECTION 2.4 Amendment to Section 4.05 . . . . . . . . . . . . . . . . SECTION 2.5 Amendment to Section 4.07 . . . . . . . . . . . . . . . . SECTION 2.6 Amendment to Section 4.08 . . . . . . . . . . . . . . . .
i SECTION 2.7 Amendment to Section 4.09. . . . . . . . . . . . . . . . . SECTION 2.8 Amendment to Section 4.11. . . . . . . . . . . . . . . . . SECTION 2.9 Amendment to Section 4.12. . . . . . . . . . . . . . . . . SECTION 2.10 Amendment to Section 4.13. . . . . . . . . . . . . . . . . SECTION 2.11 Amendment to Section 4.14. . . . . . . . . . . . . . . . . SECTION 2.12 Amendment to Section 4.15. . . . . . . . . . . . . . . . . SECTION 2.13 Amendment to Section 4.16. . . . . . . . . . . . . . . . . SECTION 2.14 Amendment to Section 4.17. . . . . . . . . . . . . . . . . SECTION 2.15 Amendment to Section 5.01. . . . . . . . . . . . . . . . . ARTICLE III NOTICE, ENDORSEMENT AND CHANGE OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . SECTION 3.1 Notice to Securityholders. . . . . . . . . . . . . . . . . SECTION 3.2 Notation on Securities . . . . . . . . . . . . . . . . . . SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ii THIRD SUPPLEMENTAL INDENTURE, dated as of May 7, 1998 (the "THIRD SUPPLEMENTAL INDENTURE"), between TENET HEALTHCARE CORPORATION, a Nevada corporation (hereinafter called the "COMPANY"), and THE BANK OF NEW YORK, as trustee (hereinafter called the "TRUSTEE"), under the Indenture (the "INDENTURE"), dated as of March 1, 1995, between the Company and the Trustee relating to the Company's 10 1/8% Senior Subordinated Notes Due 2005 (the "SECURITIES"). RECITALS OF THE COMPANY WHEREAS, the Company proposes to amend (the "AMENDMENTS") the Indenture to delete substantially all of the restrictive covenants contained therein. WHEREAS, the Company has commenced an offer to purchase any and all of the Securities pursuant to its Offer to Purchase and Solicitation of Consents dated April 23, 1998 (the "TENDER OFFER"). WHEREAS, the Company has solicited consents to the Amendments from the holders of record of the Securities. WHEREAS, in accordance with Section 9.02 of the Indenture, the Holders of a majority of the principal amount of the Securities then outstanding (other than any Securities owned by the Company or any Affiliate of the Company) have con sented to such Amendments. WHEREAS, the Board of Directors of the Company has duly authorized the execution and delivery of this Third Supplemental Indenture, the Company has delivered an Officers' Certificate and an Opinion of Counsel to the Trustee pursuant to Section 9.06 of the Indenture and the Company has done all other things necessary to make this Third Supplemental Indenture a valid agreement of the Company in accordance with the terms hereof and of the Indenture. NOW THEREFORE, the Company and Trustee agree as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Securities: ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION I.1 DEFINITIONS. For all purposes of the Indenture and this Third Supplemental Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) the words "herein," "hereof" and "hereunder" and other words of similar import refer to the Indenture and this Third Supplemental Indenture as a whole and not to any particular Article, Section or subdivision; and (2) certain capitalized terms used but not defined herein shall have the meanings assigned to them in the Indenture. SECTION I.2 EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and Section headings and the Table of Contents of this Third Supplemental Indenture are for convenience only and shall not affect the construction hereof. Except as otherwise specifically set forth herein, all references to Sections in the Indenture shall remain unchanged. SECTION I.3 SUCCESSORS AND ASSIGNS. All covenants and agreements in this Third Supplemental Indenture by the Company shall bind its successors and assigns, or any other obligor on the Securities, whether expressed or not. SECTION I.4 SEPARABILITY CLAUSE. In case any provision in this Third Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION I.5 BENEFITS OF THIRD SUPPLEMENTAL INDENTURE. Nothing in this Third Supplemental Indenture, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, any 2 Paying Agent and the Holders, any benefit or any legal or equitable right, remedy or claim under this Third Supplemental Indenture. SECTION I.6 GOVERNING LAW. This Third Supplemental Indenture shall be governed by and construed in accordance with the laws of the State of New York and all rights and remedies shall be governed by such law without reference to its conflict of laws provision. SECTION I.7 EFFECTIVENESS. This Third Supplemental Indenture shall be effective on the date hereof; PROVIDED, that the Amendments in Article II of this Third Supplemental Indenture shall take effect on the date (the "EFFECTIVE DATE") that the Trustee shall have received an Officers' Certificate from the Company, dated the Effective Date, in accordance with Section 8.06 of the Indenture, stating that the Tender Offer has been consummated and that the Amendments in Article II of this Third Supplemental Indenture shall take effect on such date. ARTICLE II THE AMENDMENTS SECTION II.1 AMENDMENTS TO SECTION 1.01. The following definitions are hereby deleted from Section 1.01 of the Indenture: Acquired Debt, Asset Sale, Capital Lease, Capital Lease Obligation, Capital Stock, Change of Control, Change of Control Triggering Event, Consolidated Cash Flow, Consolidated Net Income, Consolidated Net Worth, Continuing Directors, Disqualified Stock, Equity Interests, Existing Indebtedness, Fixed Charge Coverage Ratio, Fixed Charges, Hedging Obligations, Hospital, Hospital Swap, Indebtedness, International Subsidiaries, Investment Grade, Investments, Lien, Metrocrest Letter of Credit Facility, Moody's, Net Income, Net Proceeds, Non-Cash Consideration, Non-Recourse Debt, Performance Investment Plan, Permitted Collateral, Permitted Liens, Permitted Refinancing Indebtedness, Physician Joint Venture Distributions, Physician Support Obligations, Qualified Equity Interests, Rating Agencies, Rating Category, Rating Date, Rating Decline, Refinancing, Related Business, Restricted Investment, Senior Asset Sale Offer, S&P, Specified Assets, Stockholders Equity, Senior 3 Subordinated Notes, Senior Subordinated Note Indenture, Specified Exchange, 2005 Exchangeable Subordinated Notes, Senior Notes, Senior Note Indenture, Transfer Restriction and Wholly Owned Subsidiary. SECTION II.2 AMENDMENT TO SECTION 1.02. The following definitions are hereby deleted from Section 1.02 of the Indenture: Affiliate Transaction, Change of Control Offer, Change of Control Payment, Change of Control Payment Date, Purchase Date, Restricted Payments and Senior Subordinated Asset Sale Offer. SECTION II.3 AMENDMENT TO SECTION 4.04. Clause (ii) of Section 4.04 of the Indenture is hereby amended to read in its entirety as follows: "(ii) [Intentionally Omitted]" SECTION II.4 AMENDMENT TO SECTION 4.05. Section 4.05 of the Indenture is hereby amended to read in its entirety as follows: "SECTION 4.05 TAXES. [Intentionally Omitted]" SECTION II.5 AMENDMENT TO SECTION 4.07. Section 4.07 of the Indenture is hereby amended to read in its entirety as follows: "SECTION 4.07 LIMITATIONS ON RESTRICTED PAYMENTS. [Intentionally Omitted]" SECTION II.6 AMENDMENT TO SECTION 4.08. 4 Section 4.08 of the Indenture is hereby amended to read in its entirety as follows: "SECTION 4.08 LIMITATIONS ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES. [Intentionally Omitted]" SECTION II.7 AMENDMENT TO SECTION 4.09. Section 4.09 of the Indenture is hereby amended to read in its entirety as follows: "SECTION 4.09 LIMITATIONS ON INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK. [Intentionally Omitted]" SECTION II.8 AMENDMENT TO SECTION 4.11. Section 4.11 of the Indenture is hereby amended to read in its entirety as follows: "SECTION 4.11 LIMITATIONS ON TRANSACTIONS WITH AFFILIATES. [Intentionally Omitted]" SECTION II.9 AMENDMENT TO SECTION 4.12. Section 4.12 of the Indenture is hereby amended to read in its entirety as follows: "SECTION 4.12 LIMITATIONS ON LIENS. [Intentionally Omitted]" SECTION II.10 AMENDMENT TO SECTION 4.13. 5 Section 4.13 of the Indenture is hereby amended to read in its entirety as follows: "SECTION 4.13 CHANGE OF CONTROL. [Intentionally Omitted]" SECTION II.11 AMENDMENT TO SECTION 4.14. Section 4.14 of the Indenture is hereby amended to read in its entirety as follows: "SECTION 4.14 CORPORATE EXISTENCE. [Intentionally Omitted]" SECTION II.12 AMENDMENT TO SECTION 4.15. Section 4.15 of the Indenture is hereby amended to read in its entirety as follows: "SECTION 4.15 LINES OF BUSINESS. [Intentionally Omitted]" SECTION II.13 AMENDMENT TO SECTION 4.16. Section 4.16 of the Indenture is hereby amended to read in its entirety as follows: "SECTION 4.16 LIMITATIONS ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS BY SUBSIDIARIES. [Intentionally Omitted]" SECTION II.14 AMENDMENT TO SECTION 4.17. Section 4.17 of the Indenture is hereby amended to read in its entirety as follows: 6 "SECTION 4.17 NO SENIOR SUBORDINATED DEBT. [Intentionally Omitted]" SECTION II.15 AMENDMENT TO SECTION 5.01. Section 5.01 of the Indenture is hereby amended to read in its entirety as follows: "SECTION 5.01 LIMITATIONS ON MERGERS, CONSOLIDATIONS OR SALES OF ASSETS. The Company may not consolidate or merge with or into (whether or not the Company is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions to another corporation, Person or entity unless: (i) the Company is the surviving corporation or the entity or the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District or Columbia; (ii) the entity or Person formed by or surviving any such consolidation or merger (if other than the Company) or the entity or Person to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made assumes all the Obligations of the Company under this Indenture and the Securities pursuant to a supplemental indenture in a form reasonably satisfactory to the Trustee; and (iii) immediately after such transaction no Default or Event of Default exists. The Company shall deliver to the Trustee prior to the consummation of the proposed transaction an Officers' Certificate to the foregoing effect and an Opinion of Counsel, covering clauses (i) through (iii) above, stating that the proposed transaction and such supplemental indenture comply with this Indenture. The Trustee shall be entitled to conclusively rely upon such Officers' Certificate and Opinion of Counsel." 7 ARTICLE III NOTICE, ENDORSEMENT AND CHANGE OF FORM OF SECURITIES SECTION III.1 NOTICE TO SECURITYHOLDERS. After the Effective Date, the Company shall mail to Securityholders a notice briefly describing the Amendments in accordance with Section 8.02 of the Indenture. SECTION III.2 NOTATION ON SECURITIES. Securities authenticated and delivered after the Effective Date shall, at the Company's expense, be affixed by the Trustee with the following notation: "The Company and the Trustee have entered into a Third Supplemental Indenture, dated as of May 7, 1998, which deleted substantially all of the restrictive covenants in the Securities. Reference is hereby made to such Third Supplemental Indenture, copies of which are on file with The Bank of New York, as Trustee." The Trustee may, but shall not be required to, require holders of Securi ties authenticated and delivered prior to the Effective Date to deliver such Securities to the Trustee so that the Trustee may affix them with the aforementioned notation. * * * * * This Third Supplemental Indenture may be executed in counterparts, each of which when so executed shall be deemed to be an original, but all such counter parts shall together constitute but one and the same instrument. Dated as of May 7, 1998 TENET HEALTHCARE CORPORATION By: /s/ STEPHEN D. FARBER ---------------------------- Name: Stephen D. Farber Title: Vice President THE BANK OF NEW YORK, AS TRUSTEE By: /s/ MARY LA GUMINA ---------------------------- Name: Mary La Gumina Title: Assistant Vice President 8 EX-5.1 6 EXHIBIT 5.1 , 1998 Board of Directors Tenet Healthcare Corporation 3820 State Street Santa Barbara, CA 93105 Ladies and Gentlemen: I am the General Counsel of Tenet Healthcare Corporation, a Nevada corporation (the "Company"), and in such capacity I am charged with general supervisory responsibilities for the legal affairs of the Company and its subsidiaries. This opinion is being furnished in connection with the preparation of a Registration Statement on Form S-4 (the "Registration Statement") filed by the Company with the Securities and Exchange Commission (the "Commission") on September 24, 1998. The Registration Statement relates to the registration under the Securities Act of 1933, as amended (the "Securities Act"), of $350,000,000 aggregate principal amount of the Company's 75/8% Series B Senior Notes due 2008 (the "Senior Notes") and $1,005,000,000 aggregate principal amount of the Company's 81/8% Series B Senior Subordinated Notes due 2008 (the "Senior Subordinated Notes," and together with the Senior Notes, the "Notes"). The Notes are to be issued pursuant to an exchange offer (the "Exchange Offer") in exchange for a like principal amount of the issued and outstanding 75/8% Senior Notes due 2008 (the "Old Senior Notes") and 81/8% Senior Subordinated Notes due 2008 (the "Old Subordinated Notes," and together with the Old Senior Notes, the "Old Notes"), respectively. The Old Senior Notes and the Old Senior Subordinated Notes and the Senior Notes and the Senior Subordinated Notes will be governed by respective indentures (the "Senior Note Indenture" and the "Senior Subordinated Note Indenture," together the "Indentures"), dated as of May 21, 1998, between the Company and The Bank of New York, as trustee (the "Trustee"). Board of Directors Tenet Healthcare Corporation ______________1998 Page 2 This opinion is being furnished to you in connection with the requirements of Item 601(b)(5) of Regulation S-K under the Securities Act. In connection with this opinion, I have examined and am familiar with originals or copies, certified or otherwise identified to my satisfaction, of (i) the Registration Statement on Form S-4 (File No. 333-_____) relating to the Exchange Offer as filed with the Commission and the Prospectus forming a part thereof, (ii) the Restated Articles of Incorporation, as amended, of the Company, as presently in effect, (iii) the Restated Bylaws of the Company, as presently in effect, (iv) specimen copies of the Senior Notes, (v) specimen copies of the Senior Subordinated Notes, (vi) the Senior Note Indenture, (vii) the Senior Subordinated Note Indenture, (viii) certain resolutions of the Board of Directors of the Company (ix) certificates of officers of the Corporation and others, and (x) such other documents, instruments, agreements, certificates and records as I have deemed necessary or appropriate as a basis for the opinions set forth herein. In my examination, I have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to me as originals, the conformity to the original documents of all documents submitted to me as certified, conformed or photostatic copies and the authenticity of the originals of such copies. I am a member of the Bar in the States of New York and California and for purposes of this opinion do not express any opinion as to the laws of any jurisdiction other than the laws of the States of New York and California. Insofar as all matters set forth in this opinion are governed by or affected by the laws of the State of Nevada, I have relied, with your consent and without any independent investigation, on the opinion of Woodburn and Wedge, Special Nevada Counsel to the Company, a copy of which has been delivered to you. Based upon and subject to the limitations, qualifications, exceptions and assumptions set forth herein, I am of the opinion that the Notes have been duly authorized by the Company and when executed by an officer of the Company and authenticated in accordance with the terms of the Indentures and issued pursuant to the Exchange Offer as described in the Registration Statement, will be valid and binding Board of Directors Tenet Healthcare Corporation ______________1998 Page 3 obligations of the Company, enforceable against the Company in accordance with their respective terms and entitled to the benefits of the respective Indentures under which they are being issued, except that (i) enforcement thereof may be limited by (A) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws now or hereafter in effect relating to or affecting creditors' rights generally and (B) general principles of equity (regardless of whether enforcement is considered in a proceeding at law or in equity) and (ii) I express no opinion regarding the enforceability or effect of Section 4.06 of the Senior Note Indenture or Section 4.06 of the Senior Subordinated Note Indenture. This opinion is rendered to you solely for your benefit in connection with the filing of the Registration Statement and is not to be used, circulated, quoted or otherwise referred to for any other purpose without my express written permission. Notwithstanding the foregoing, I hereby consent to the filing of this Opinion with the Commission as Exhibit 5 to the Registration Statement and to the reference to my name under the caption "Legal Matters" in the Registration Statement. In giving such consent, I do not thereby admit that I came within the category of persons whose consent is required under Section 7 of the Securities Act, or the rules and regulations of the Commission thereunder. The Opinion expressed herein is as of the date hereof unless otherwise expressly stated, and I disclaim any undertaking to advise you of changes of the facts stated or assumed herein of any subsequent changes in applicable law. Very truly yours, ------------------- Scott M. Brown General Counsel EX-12.1 7 EXHIBIT 12.1 EXHIBIT 12.1 TENET HEALTHCARE CORPORATION STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (DOLLARS IN MILLIONS)
FOR THE YEAR ENDED MAY 31, ---------------------------------------- 1994 1995 1996 1997 1998 ---------------------------------------- Income (loss) from continuing operations before income taxes $314 $417 $ 881 $(21) $ 647 Less: Equity in earnings of unconsolidated affiliates 27 43 25 1 5 Add: Cash dividends received from unconsolidated affiliates 3 8 6 5 4 Portion of rents representative of interest 41 53 76 79 89 Interest, net of capitalized portion 157 251 425 417 464 Amortization of previously capitalized interest 4 4 4 4 5 ----------------------------------------- Income, as adjusted 492 690 1,367 483 1,204 ----------------------------------------- ----------------------------------------- Fixed charges: Interest, net of capitalized portion 157 251 425 417 464 Capitalized interest 5 8 11 12 16 Portion of rents representative of interest 41 53 76 79 89 ----------------------------------------- Total fixed charges $203 $312 $ 512 $508 $ 569 ----------------------------------------- ----------------------------------------- Ratio of earnings to fixed charges(1): 2.4X 2.2X 2.7X 1.0X 2.1X
(1) The ratio of earnings to fixed charges for the year ended May 31, 1998, on a pro forma basis, assuming that the 7-5/8% Senior Notes due 2008 and 8-1/8% Senior Subordinated Notes due 2008 had been issued as of June 1, 1997 and the proceeds applied to reduce indebtedness consistent with the historical refinancing which occurred in May 1998, is 2.2X. EX-23.1 8 EXHIBIT 23.1 EXHIBIT 23.1 AUDITORS' CONSENT The Board of Directors Tenet Healthcare Corporation We consent to the use of our reports dated July 24, 1998, incorporated by reference in the Registration Statement on Form S-4 of Tenet Healthcare Corporation, relating to the consolidated balance sheets of Tenet Healthcare Corporation and subsidiaries as of May 31, 1997 and 1998, and the related consolidated statements of operations, comprehensive income, changes in shareholders' equity and cash flows for each of the years in the three-year period ended May 31, 1998 and the related schedule, and to the reference to our firm under the headings "Summary Financial Information," "Selected Financial Information" and "Experts" in the prospectus. /s/ KPMG PEAT MARWICK LLP Los Angeles, California September 23, 1998 EX-25.1 9 EXHIBIT 25.1 =============================================================================== FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| ___________________ THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) One Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) ___________________ TENET HEALTHCARE CORPORATION (Exact name of obligor as specified in its charter) Nevada 95-2257091 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 3820 State Street Santa Barbara, California 93105 (Address of principal executive offices) (Zip code) ____________________ 7-5/8% Senior Subordinated Notes due 2008 (Title of the indenture securities) ================================================================================ 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. - -------------------------------------------------------------------------------- Name Address - -------------------------------------------------------------------------------- Superintendent of Banks of the State of 2 Rector Street, New York, New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005 (b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(d). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) -2- 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. -3- SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 18th day of September, 1998. THE BANK OF NEW YORK By: /s/ MARY JANE SCHMALZEL --------------------------- Name: Mary Jane Schmalzel Title: Vice President SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 18th day of September, 1998. THE BANK OF NEW YORK By: /s/ ROBERT A. MASSIMILLO --------------------------- Name: ROBERT A. MASSIMILLO Title: ASSISTANT VICE PRESIDENT EXHIBIT 7 - ------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business March 31, 1998, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
DOLLAR AMOUNTS IN THOUSANDS ASSETS Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin. . . . . . $ 6,397,993 Interest-bearing balances . . . . . . . . . . . . . . . . . . 1,138,362 Securities: Held-to-maturity securities . . . . . . . . . . . . . . . . . 1,062,074 Available-for-sale securities . . . . . . . . . . . . . . . . 4,167,240 Federal funds sold and Securities purchased under agreements to resell. . . . . . . . . . . . . . . . . . . . . . . . . . . 391,650 Loans and lease financing receivables: Loans and leases, net of unearned income. . . . . . . . . . . 36,538,242 LESS: Allowance for loan and lease losses . . . . . . . . . . 631,725 LESS: Allocated transfer risk reserve . . . . . . . . . . . . 0 Loans and leases, net of unearned income, allowance, and reserve. . . . . . . . . . . . . . . . . . . . . . . . . . . 35,906,517 Assets held in trading accounts . . . . . . . . . . . . . . . . 2,145,149 Premises and fixed assets (including capitalized leases). . . . 663,928 Other real estate owned . . . . . . . . . . . . . . . . . . . . 10,895 Investments in unconsolidated subsidiaries and associated companies. . . . . . . . . . . . . . . . . . . . . . . . . . . 237,991 Customers' liability to this bank on acceptances outstanding. . 992,747 Intangible assets . . . . . . . . . . . . . . . . . . . . . . . 1,072,517 Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . 1,643,173 ----------- Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . $55,830,236 ----------- ----------- LIABILITIES Deposits: In domestic offices . . . . . . . . . . . . . . . . . . . . . $24,849,054 Noninterest-bearing . . . . . . . . . . . . . . . . . . . . . 10,011,422 Interest-bearing. . . . . . . . . . . . . . . . . . . . . . . 14,837,632 In foreign offices, Edge and Agreement subsidiaries, and IBFs . . . . . . . . . . . . . . . . . . . . . . . . . . 15,319,002 Noninterest-bearing . . . . . . . . . . . . . . . . . . . . . 707,820 Interest-bearing. . . . . . . . . . . . . . . . . . . . . . . 14,611,182 Federal funds purchased and Securities sold under agreements to repurchase. . . . . . . . . . . . . . . . . . . . . . . . . 1,906,066 Demand notes issued to the U.S. Treasury. . . . . . . . . . . . 215,985 Trading liabilities . . . . . . . . . . . . . . . . . . . . . . 1,591,288 Other borrowed money: With remaining maturity of one year or less . . . . . . . . . 1,991,119 With remaining maturity of more than one year through three years. . . . . . . . . . . . . . . . . . . . . . . . . 0 With remaining maturity of more than three years. . . . . . . 25,574 Bank's liability on acceptances executed and outstanding. . . . 998,145 Subordinated notes and debentures . . . . . . . . . . . . . . . 1,314,000 Other liabilities . . . . . . . . . . . . . . . . . . . . . . . 2,421,281 ----------- Total liabilities . . . . . . . . . . . . . . . . . . . . . . . 50,631,514 ----------- EQUITY CAPITAL Common stock. . . . . . . . . . . . . . . . . . . . . . . . . . 1,135,284 Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . 731,319 Undivided profits and capital reserves. . . . . . . . . . . . . 3,328,050 Net unrealized holding gains (losses) on available-for-sale securities. . . . . . . . . . . . . . . . . . . . . . . . . . 40,198 Cumulative foreign currency translation adjustments . . . . . . (36,129) ----------- Total equity capital. . . . . . . . . . . . . . . . . . . . . . 5,198,722 ----------- Total liabilities and equity capital. . . . . . . . . . . . . . $55,830,236 ----------- -----------
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Robert E. Keilman We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. Thomas A. Renyi / Alan R. Griffith /Directors J. Carter Bacot / - ------------------------------------------------------------------------------- =============================================================================== FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| ___________________ THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) One Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) ___________________ TENET HEALTHCARE CORPORATION (Exact name of obligor as specified in its charter) Nevada 95-2257091 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 3820 State Street Santa Barbara, California 93105 (Address of principal executive offices) (Zip code) ____________________ 8-1/8% Senior Subordinated Notes due 2008 (Title of the indenture securities) ================================================================================ 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. - -------------------------------------------------------------------------------- Name Address - -------------------------------------------------------------------------------- Superintendent of Banks of the State of 2 Rector Street, New York, New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005 (b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(d). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) -2- 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. -3- SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 18th day of September, 1998. THE BANK OF NEW YORK By: /s/ MARY JANE SCHMALZEL --------------------------- Name: Mary Jane Schmalzel Title: Vice President SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 18th day of September, 1998. THE BANK OF NEW YORK By: /s/ ROBERT A. MASSIMILLO --------------------------- Name: ROBERT A. MASSIMILLO Title: ASSISTANT VICE PRESIDENT EXHIBIT 7 - ------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business March 31, 1998, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
DOLLAR AMOUNTS IN THOUSANDS ASSETS Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin. . . . . . $ 6,397,993 Interest-bearing balances . . . . . . . . . . . . . . . . . . 1,138,362 Securities: Held-to-maturity securities . . . . . . . . . . . . . . . . . 1,062,074 Available-for-sale securities . . . . . . . . . . . . . . . . 4,167,240 Federal funds sold and Securities purchased under agreements to resell. . . . . . . . . . . . . . . . . . . . . . . . . . . 391,650 Loans and lease financing receivables: Loans and leases, net of unearned income. . . . . . . . . . . 36,538,242 LESS: Allowance for loan and lease losses . . . . . . . . . . 631,725 LESS: Allocated transfer risk reserve . . . . . . . . . . . . 0 Loans and leases, net of unearned income, allowance, and reserve. . . . . . . . . . . . . . . . . . . . . . . . . . . 35,906,517 Assets held in trading accounts . . . . . . . . . . . . . . . . 2,145,149 Premises and fixed assets (including capitalized leases). . . . 663,928 Other real estate owned . . . . . . . . . . . . . . . . . . . . 10,895 Investments in unconsolidated subsidiaries and associated companies. . . . . . . . . . . . . . . . . . . . . . . . . . . 237,991 Customers' liability to this bank on acceptances outstanding. . 992,747 Intangible assets . . . . . . . . . . . . . . . . . . . . . . . 1,072,517 Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . 1,643,173 ----------- Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . $55,830,236 ----------- ----------- LIABILITIES Deposits: In domestic offices . . . . . . . . . . . . . . . . . . . . . $24,849,054 Noninterest-bearing . . . . . . . . . . . . . . . . . . . . . 10,011,422 Interest-bearing. . . . . . . . . . . . . . . . . . . . . . . 14,837,632 In foreign offices, Edge and Agreement subsidiaries, and IBFs . . . . . . . . . . . . . . . . . . . . . . . . . . 15,319,002 Noninterest-bearing . . . . . . . . . . . . . . . . . . . . . 707,820 Interest-bearing. . . . . . . . . . . . . . . . . . . . . . . 14,611,182 Federal funds purchased and Securities sold under agreements to repurchase. . . . . . . . . . . . . . . . . . . . . . . . . 1,906,066 Demand notes issued to the U.S. Treasury. . . . . . . . . . . . 215,985 Trading liabilities . . . . . . . . . . . . . . . . . . . . . . 1,591,288 Other borrowed money: With remaining maturity of one year or less . . . . . . . . . 1,991,119 With remaining maturity of more than one year through three years. . . . . . . . . . . . . . . . . . . . . . . . . 0 With remaining maturity of more than three years. . . . . . . 25,574 Bank's liability on acceptances executed and outstanding. . . . 998,145 Subordinated notes and debentures . . . . . . . . . . . . . . . 1,314,000 Other liabilities . . . . . . . . . . . . . . . . . . . . . . . 2,421,281 ----------- Total liabilities . . . . . . . . . . . . . . . . . . . . . . . 50,631,514 ----------- EQUITY CAPITAL Common stock. . . . . . . . . . . . . . . . . . . . . . . . . . 1,135,284 Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . 731,319 Undivided profits and capital reserves. . . . . . . . . . . . . 3,328,050 Net unrealized holding gains (losses) on available-for-sale securities. . . . . . . . . . . . . . . . . . . . . . . . . . 40,198 Cumulative foreign currency translation adjustments . . . . . . (36,129) ----------- Total equity capital. . . . . . . . . . . . . . . . . . . . . . 5,198,722 ----------- Total liabilities and equity capital. . . . . . . . . . . . . . $55,830,236 ----------- -----------
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Robert E. Keilman We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. Thomas A. Renyi / Alan R. Griffith /Directors J. Carter Bacot / - ------------------------------------------------------------------------------- EX-99.1 10 EXHIBIT 99.1 LETTER OF TRANSMITTAL TENET HEALTHCARE CORPORATION OFFER FOR ALL OUTSTANDING 7 5/8% SENIOR NOTES DUE 2008 AND 8 1/8% SENIOR SUBORDINATED NOTES DUE 2008 IN EXCHANGE FOR 7 5/8% SERIES B SENIOR NOTES DUE 2008 AND 8 1/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2008 WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, PURSUANT TO THE PROSPECTUS, DATED SEPTEMBER , 1998 THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON OCTOBER , 1998, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. DELIVERY TO: The Bank of New York AS EXCHANGE AGENT BY MAIL, OVERNIGHT COURIER OR HAND DELIVERY: The Bank of New York Attention: Millicent Burnett 101 Barclay Street 21 West New York, New York 10286 BY FACSIMILE TRANSMISSION: (FOR ELIGIBLE INSTITUTIONS ONLY) (212) 815-6339 Attention: Millicent Burnett CONFIRM BY TELEPHONE: (212) 815-3502 DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY OF THIS LETTER OF TRANSMITTAL. The undersigned acknowledges that he or she has received and reviewed the prospectus, dated September , 1998 (the "Prospectus"), of Tenet Healthcare Corporation, a Nevada corporation (the "Company"), and this Letter of Transmittal (the "Letter"), which together constitute the Company's offer (the "Exchange Offer"), to exchange an aggregate principal amount of up to $350,000,000 of the Company's 7 5/8% Series B Senior Notes due 2008 and up to $1,005,000,000 of the Company's 8 1/8% Series B Senior Subordinated Notes due 2008 (collectively, the "New Notes"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), for a like principal amount of the Company's issued and outstanding 7 5/8% Senior Notes due 2008 and 8 1/8% Senior Subordinated Notes due 2008 (the "Old Notes") from the registered holders thereof (the "Holders"). For each Old Note accepted for exchange, the Holder of such Old Note will receive a New Note having a principal amount equal to that of the surrendered Old Note. The New Notes will bear interest from the most recent date to which interest has been paid on the Old Notes. Accordingly, registered Holders of New Notes on the relevant record date for the first interest payment date following the consummation of the Exchange Offer will receive interest accruing from the most recent date to which interest has been paid on the Old Notes or if no interest has been paid on the Old Notes from May 8, 1998. Old Notes accepted for exchange will cease to accrue interest from and after the date of consummation of the Exchange Offer. Holders of Old Notes whose Old Notes are accepted for exchange will not receive any payment in respect of accrued interest on such Old Notes. This Letter is to be completed by a Holder of Old Notes either if certificates for such Old Notes are to be forwarded herewith or if a tender is to be made by book-entry transfer to the account maintained by the Exchange Agent at The Depository Trust Company ("DTC") pursuant to the procedures set forth in "The Exchange Offer-- Book-Entry Transfers" section of the Prospectus and an Agent's Message is not delivered. Tenders by book-entry transfer also may be made by delivering an Agent's Message in lieu of this Letter. The term "Agent's Message" means a message, transmitted by the DTC to and received by the Exchange Agent and forming a part of a Book-Entry Confirmation (as defined below), which states that the DTC has received an express acknowledgment from the tendering participant, which acknowledgment states that such participant has received and agrees to be bound by this Letter and that the Company may enforce this Letter against such participant. Holders of Old Notes whose certificates are not immediately available, or who are unable to deliver their certificates or confirmation of the book-entry tender of their Old Notes into the Exchange Agent's account at the DTC (a "Book-Entry Confirmation") and all other documents required by this Letter to the Exchange Agent on or prior to the Expiration Date, must tender their Old Notes according to the guaranteed delivery procedures set forth in "The Exchange Offer--Guaranteed Delivery Procedures" section of the Prospectus. See Instruction 1. Delivery of documents to the DTC does not constitute delivery to the Exchange Agent. THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT BY THE COMPANY. The undersigned has completed the appropriate boxes below and signed this Letter to indicate the action the undersigned desires to take with respect to the Exchange Offer. List below the Old Notes to which this Letter relates. If the space provided below is inadequate, the certificate numbers and principal amount of Old Notes should be listed on a separate signed schedule affixed hereto.
---------------------------------------------------------------------------------------------------- DESCRIPTION OF OLD NOTES ---------------------------------------------------------------------------------------------------- 1 2 3 AGGREGATE PRINCIPAL PRINCIPAL NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE AMOUNT OF AMOUNT (PLEASE FILL IN, IF BLANK) NUMBER(S)* OLD NOTE(S) TENDERED** - ------------------------------------------------------------------------------------------------------ ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- TOTAL - ------------------------------------------------------------------------------------------------------
* Need not be completed if Old Notes are being tendered by book-entry transfer. ** Unless otherwise indicated in this column, a holder will be deemed to have tendered ALL of the Old Notes represented by the Old Notes indicated in column 2. See Instruction 2. Old Notes tendered hereby must be in denominations of principal amount of $1,000 and any integral multiple thereof. See Instruction 1. / / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE DTC AND COMPLETE THE FOLLOWING: Name of Tendering Institution ______________________________________________ Account Number _____________________________________________________________ Transaction Code Number ____________________________________________________ By crediting the Old Notes to the Exchange Agent's account at the DTC using the Automated Tender Offer Program ("ATOP") and by complying with applicable ATOP procedures with respect to the Exchange Offer, including transmitting to the Exchange Agent an Agent's Message in which the holder of the Old Notes acknowledges and agrees to be bound by the terms of, and makes the representations and warranties contained in, this Letter, the participant in the DTC confirms on behalf of itself and the beneficial owners of such Old Notes all provisions of this Letter (including all representations and warranties) applicable to it and such beneficial owner as fully as if it had completed the information required herein and executed and transmitted this Letter to the Exchange Agent. 2 / / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING: Name(s) of Registered Holder(s) ____________________________________________ Window Ticket Number (if any) ______________________________________________ Date of Execution of Notice of Guaranteed Delivery _________________________ Name of Institution Which Guaranteed Delivery ______________________________ If Delivered by Book-Entry Transfer, Complete the Following: Account Number _____________________________________________________________ Transaction Code Number ____________________________________________________ Name of Tendering Institution ______________________________________________ / / CHECK HERE IF TENDERED OLD NOTES ARE ENCLOSED HEREWITH. / / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name: ______________________________________________________________________ Address: ___________________________________________________________________ ________________________________________ If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of New Notes. If the undersigned is a broker-dealer that will receive New Notes for its own account in exchange for Old Notes that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such New Notes; however, by so acknowledging and by delivering such a prospectus the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act of 1933, as amended (the "Securities Act"). If the undersigned is a broker-dealer that will receive New Notes, it represents that the Old Notes to be exchanged for the New Notes were acquired as a result of market-making activities or other trading activities. PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: Upon the terms and subject to the conditions of the Exchange Offer, the undersigned hereby tenders to the Company the aggregate principal amount of Old Notes indicated above. Subject to, and effective upon, the acceptance for exchange of the Old Notes tendered hereby, the undersigned hereby sells, assigns and transfers to, or upon the order of, the Company all right, title and interest in and to such Old Notes as are being tendered hereby. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent as the undersigned's true and lawful agent and attorney-in-fact with respect to such tendered Old Notes, with full power of substitution, among other things, to cause the Old Notes to be assigned, transferred and exchanged. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Old Notes, and to acquire Exchange Notes issuable upon the exchange of such tendered Old Notes, and that, when the same are accepted for exchange, the Company will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim when the same are accepted by the Company. The undersigned hereby further represents that any New Notes acquired in exchange for Old Notes tendered hereby will have been acquired in the ordinary course of business of the person receiving such New Notes, whether or not such person is the undersigned, that neither the Holder of such Old Notes nor any such other person is participating in, intends to participate in or has an arrangement or understanding with any person to participate in the distribution of such New Notes and that neither the Holder of such Old Notes nor any such other person is an "affiliate," as defined in Rule 405 under the Securities Act, of the Company. The undersigned hereby further represents and warrants that (i) the undersigned is the owner of the Old Notes; (ii) the undersigned has a net long position within the meaning of Rule 14e-4 ("Rule 14e-4") under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), equal to or greater than the principal amount of the Old Notes tendered hereby; and (iii) the tender of such Old Notes complies with Rule 14e-4 (to the extent that Rule 14e-4 is applicable to such exchange). 3 The undersigned acknowledges that this Exchange Offer is being made in reliance on interpretations by the staff of the Securities and Exchange Commission (the "SEC"), as set forth in no-action letters issued to third parties, that the New Notes issued pursuant to the Exchange Offer in exchange for the Old Notes may be offered for resale, resold and otherwise transferred by Holders thereof (other than any such Holder that is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act), without compliance with the registration and prospectus delivery provisions of the Securities Act, PROVIDED that such New Notes are acquired in the ordinary course of such Holders' business and such Holders have no arrangement with any person to participate in the distribution of such New Notes. However, the Company has not sought and does not intend to seek its own no-action letter, and accordingly, the SEC has not considered the Exchange Offer in the context of a no-action letter and there can be no assurance that the staff of the SEC would make a similar determination with respect to the Exchange Offer as in other circumstances. If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of New Notes and has no arrangement or understanding to participate in a distribution of New Notes. If any Holder is an affiliate of the Company, is engaged in or intends to engage in or has any arrangement or understanding with respect to the distribution of the New Notes to be acquired pursuant to the Exchange Offer, such Holder (i) could not rely on the applicable interpretations of the staff of the SEC and (ii) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. If the undersigned is a broker-dealer that will receive New Notes for its own account in exchange for Old Notes, it represents that the Old Notes to be exchanged for the New Notes were acquired by it as a result of market-making activities or other trading activities and acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such New Notes; however, by so acknowledging and by delivering a prospectus meeting the requirements of the Securities Act, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. By tendering, the undersigned further represents to the Company that (i) the undersigned and each beneficial owner acknowledge and agree that any person who is a broker-dealer registered under the Exchange Act or its participating in the Exchange Offer for the purpose of distributing the New Notes must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction of the New Notes acquired by such person and cannot rely on the position of the staff of the SEC set forth in certain no-action letters, and (ii) the undersigned and each beneficial owner understand that a secondary resale of the Old Notes acquired by the undersigned directly from the Company should be covered by an effective registration statement containing the selling securityholder information required by Item 507 or Item 508, as applicable, of Regulation S-K of the SEC. The undersigned acknowledges that the Company's acceptance of Old Notes validly rendered for exchange pursuant to any one of the procedures described in the section of the Prospectus entitled "the Exchange Offer" and in the instructions hereto will constitute a binding agreement between the undersigned and the Company upon the terms and subject to the conditions of the Exchange Offer. The undersigned will, upon request, execute and deliver any additional documents deemed by the Company to be necessary or desirable to complete the sale, assignment and transfer of the Old Notes tendered hereby. All authority conferred or agreed to be conferred in this Letter and every obligation of the undersigned hereunder shall be binding upon the successors, assigns, heirs, executors, administrators, trustees in bankruptcy and legal representatives of the undersigned and shall not be affected by, and shall survive, the death or incapacity of the undersigned. This tender may be withdrawn only in accordance with the procedures set forth in "The Exchange Offer--Withdrawal Rights" section of the Prospectus. Unless otherwise indicated herein in the box entitled "Special Issuance Instructions" below, please deliver the New Notes (and, if applicable, substitute certificates representing Old Notes for any Old Notes not exchanged) in the name of the undersigned or, in the case of a book-entry delivery of Old Notes, please credit the account indicated above maintained at the DTC. Similarly, unless otherwise indicated under the box entitled "Special Delivery Instructions" below, please send the New Notes (and, if applicable, substitute certificates representing Old Notes for any Old Notes not exchanged) to the undersigned at the address shown above in the box entitled "Description of Old Notes." THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD NOTES" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE OLD NOTES AS SET FORTH IN SUCH BOX ABOVE. 4 - --------------------------------------------- SPECIAL ISSUANCE INSTRUCTIONS (SEE INSTRUCTIONS 3 AND 4) To be completed ONLY if certificates for Old Notes not exchanged and/or New Notes are to be issued in the name of someone other than the person or persons whose signature(s) appear(s) on this Letter above, or if Old Notes delivered by book-entry transfer which are not accepted for exchange are to be returned by credit to an account maintained at the DTC other than the account indicated above. Issue to: New Notes and/or Old Notes to: Name(s)_____________________________________________________________________ (PLEASE TYPE OR PRINT) __________________________________________________________________________ (PLEASE TYPE OR PRINT) Address ____________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ (ZIP CODE) (COMPLETE SUBSTITUTE FORM W-9) Credit unexchanged Old Notes delivered by book-entry transfer to the Book-Entry Transfer Facility account set forth below. ____________________________________________________________________________ (BOOK-ENTRY TRANSFER FACILITY ACCOUNT NUMBER, IF APPLICABLE) - --------------------------------------------------------- - --------------------------------------------------------- SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 3 AND 4) To be completed ONLY if certificates for Old Notes not exchanged and/or New Notes are to be sent to someone other than the person or persons whose signa-ture(s) appear(s) on this Letter above or to such person or persons at an address other than shown in the box entitled "Description of Old Notes" on this Letter above. Mail: New Notes and/or Old Notes to: Name(s) ____________________________________________________________________ (PLEASE TYPE OR PRINT) __________________________________________________________________________ (PLEASE TYPE OR PRINT) Address ____________________________________________________________________ ____________________________________________________________________________ (ZIP CODE) - ----------------------------------------------------- IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF OR AN AGENT'S MESSAGE IN LIEU THEREOF (TOGETHER WITH THE CERTIFICATES FOR OLD NOTES OR A BOOK-ENTRY CONFIRMA-TION AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL CAREFULLY BEFORE COMPLETING ANY BOX ABOVE. IN ORDER TO VALIDLY TENDER OLD NOTES FOR EXCHANGE, HOLDERS OF OLD NOTES MUST COMPLETE, EXECUTE, AND DELIVER THIS LETTER OF TRANSMITTAL. Except as stated in the Prospectus, all authority herein conferred or agreed to be conferred shall survive the death, incapacity, or dissolution of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. See Instruction 10. 5 - -------------------------------------------------------------------------------- PLEASE SIGN HERE (TO BE COMPLETED BY ALL TENDERING HOLDERS) (COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9 ON REVERSE SIDE) x ____________________________________________________________________, 1998 x ____________________________________________________________________, 1998 SIGNATURE(S) OF OWNER DATE Area Code and Telephone Number _____________________________________________ This Letter must be signed by the registered holder(s) as the name(s) appear(s) on the certificate(s) for the Old Notes hereby tendered or on a security position, on listing or by any person(s) authorized to become registered holder(s) by endorsements and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, officer or other person acting in a fiduciary or representative capacity, please set forth full title. See Instruction 3. Name(s): ___________________________________________________________________ ____________________________________________________________________________ (PLEASE TYPE OR PRINT) Capacity: __________________________________________________________________ Address: ___________________________________________________________________ ____________________________________________________________________________ (INCLUDING ZIP CODE) Principal place of business (if different from address listed above): ____________________________________________________________________________ (INCLUDING ZIP CODE) Area Code and Telephone No.: ( )__________________________________________ Tax Identification or Social Security Nos.: ____________________________________________________________________________ SIGNATURE GUARANTEE (IF REQUIRED BY INSTRUCTION 3) Signature(s) Guaranteed by an Eligible Institution: ___________________________________________________ (AUTHORIZED SIGNATURE) __________________________________________________________________________ (TITLE) __________________________________________________________________________ (NAME AND FIRM) Dated: _______________________________________________________________, 1998 - -------------------------------------------------------------------------------- 6 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER FOR THE 7 5/8% SENIOR NOTES DUE 2008 AND 8 1/8% SENIOR SUBORDINATED NOTES DUE 2008 OF TENET HEALTHCARE CORPORATION IN EXCHANGE FOR THE 7 5/8% SERIES B SENIOR NOTES DUE 2008 AND 8 1/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2008 WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED 1. DELIVERY OF THIS LETTER AND NOTES; GUARANTEED DELIVERY PROCEDURES. This Transmittal Letter (this "Letter") is to be completed by holders of Old Notes either if certificates are to be forwarded herewith or if tenders are to be made pursuant to the procedures for delivery by book-entry transfer set forth in "The Exchange Offer--Book-Entry Transfers" section of the Prospectus and an Agent's Message is not delivered. Tenders by book-entry transfer also may be made by delivering an Agent's Message in lieu of this Letter. The term "Agent's Message" means a message, transmitted by the DTC to and received by the Exchange Agent and forming a part of a Book-Entry Confirmation, which states that the DTC has received an express acknowledgment from the tendering participant, which acknowledgment states that such participant has received and agrees to be bound by, and makes the representations and warranties contained in, the Letter and that the Company may enforce the Letter against such participant. Certificates for all physically tendered Old Notes, or Book-Entry Confirmation, as the case may be, as well as a properly completed and duly executed Letter (or manually signed facsimile hereof or Agent's Message in lieu thereof) and any other documents required by this Letter, must be received by the Exchange Agent at the address set forth herein prior to the Expiration Date, or the tendering holder must comply with the guaranteed delivery procedures set forth below. Old Notes tendered hereby must be in denominations of principal amount of $1,000 and any integral multiple thereof. Holders whose certificates for Old Notes are not immediately available or who cannot deliver their certificates and all other required documents to the Exchange Agent before the Expiration Date, or who cannot complete the procedure for book-entry transfer on a timely basis, may tender their Old Notes pursuant to the guaranteed delivery procedures set forth in "The Exchange Offer--Guaranteed Delivery Procedures" section of the Prospectus. Pursuant to such procedures, (i) such tender must be made through an Eligible Institution, (ii) prior to 5:00 p.m., New York City time, on the Expiration Date, the Exchange Agent must receive from such Eligible Institution a properly completed and duly executed Letter (or a facsimile thereof) and Notice of Guaranteed Delivery, substantially in the form provided by the Company (by telegram, telex, facsimile transmission, mail or hand delivery), setting forth the name and address of the holder of Old Notes and the amount of Old Notes tendered, stating that the tender is being made thereby and guaranteeing that within three New York Stock Exchange ("NYSE") trading days after the date of execution of the Notice of Guaranteed Delivery, the certificates for all physically tendered Old Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case may be, together with a properly completed and duly executed Letter (or facsimile thereof or Agent's Message in lieu thereof) with any required signature guarantees and any other documents required by this Letter will be deposited by the Eligible Institution with the Exchange Agent, and (iii) the certificates for all physically tendered Old Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case may be, together with a properly completed and duly executed Letter (or facsimile thereof or Agent's Message in lieu thereof) with any required signature guarantees and all other documents required by this Letter, are received by the Exchange Agent within three NYSE trading days after the Expiration Date. The method of delivery of this Letter, the Old Notes and all other required documents is at the election and risk of the tendering holders, but the delivery will be deemed made only when actually received or confirmed by the Exchange Agent. If Old Notes are sent by mail, it is suggested that the mailing be registered mail, properly insured, with return receipt requested, made sufficiently in advance of the Expiration Date to permit delivery to the Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date. See "The Exchange Offer" section of the Prospectus. 2. PARTIAL TENDERS (NOT APPLICABLE TO NOTEHOLDERS WHO TENDER BY BOOK-ENTRY TRANSFER). If less than all of the Old Notes evidenced by a submitted certificate are to be tendered, the tendering holder(s) should fill in the aggregate principal amount of Old Notes to be tendered in the box above entitled "Description of Old Notes--Principal Amount Tendered." A reissued certificate representing the balance of nontendered Old Notes will be sent to such tendering holder, unless otherwise provided in the appropriate box 7 on this Letter, promptly after the Expiration Date. ALL OF THE OLD NOTES DELIVERED TO THE EXCHANGE AGENT WILL BE DEEMED TO HAVE BEEN TENDERED UNLESS OTHERWISE INDICATED. 3. SIGNATURES ON THIS LETTER; BOND POWERS AND ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter is signed by the Holder of the Old Notes tendered hereby, the signature must correspond exactly with the name as written on the face of the certificates or on the DTC's security position listing as the holder of such Old Notes without any change whatsoever. If any tendered Old Notes are owned of record by two or more joint owners, all of such owners must sign this Letter. If any tendered Old Notes are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate copies of this Letter as there are different registrations of certificates. When this Letter is signed by the registered holder or holders of the Old Notes specified herein and tendered hereby, no endorsements of certificates or separate bond powers are required. If, however, the New Notes are to be issued, or any untendered Old Notes are to be reissued, to a person other than the registered holder, then endorsements of any certificates transmitted hereby or separate bond powers are required. Signatures on such certificate(s) must be guaranteed by a participant in a securities transfer association recognized signature program. If this Letter is signed by a person other than the registered holder or holders of any certificate(s) specified herein, such certificate(s) must be endorsed or accompanied by appropriate bond powers, in either case signed exactly as the name or names of the registered holder or holders appear(s) on the certificate(s) and signatures on such certificate(s) must be guaranteed by an Eligible Institution. If this Letter or any certificates or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Company, proper evidence satisfactory to the Company of their authority to so act must be submitted. ENDORSEMENTS ON CERTIFICATES FOR OLD NOTES OR SIGNATURES ON BOND POWERS REQUIRED BY THIS INSTRUCTION 3 MUST BE GUARANTEED BY A FIRM WHICH IS A FINANCIAL INSTITUTION (INCLUDING MOST BANKS, SAVINGS AND LOAN ASSOCIATIONS AND BROKERAGE HOUSES) THAT IS A PARTICIPANT IN THE SECURITIES TRANSFER AGENTS MEDALLION PROGRAM, THE NEW YORK STOCK EXCHANGE MEDALLION SIGNATURE PROGRAM OR THE STOCK EXCHANGES MEDALLION PROGRAM (EACH AN "ELIGIBLE INSTITUTION"). SIGNATURES ON THIS LETTER NEED NOT BE GUARANTEED BY AN ELIGIBLE INSTITUTION, PROVIDED THE OLD NOTES ARE TENDERED: (I) BY A REGISTERED HOLDER OF OLD NOTES (WHICH TERM, FOR PURPOSES OF THE EXCHANGE OFFER, INCLUDES ANY PARTICIPANT IN THE DTC SYSTEM WHOSE NAME APPEARS ON A SECURITY POSITION LISTING AS THE HOLDER OF SUCH OLD NOTES) WHO HAS NOT COMPLETED THE BOX ENTITLED "SPECIAL ISSUANCE INSTRUCTIONS" OR "SPECIAL DELIVERY INSTRUCTIONS" ON THIS LETTER, OR (II) FOR THE ACCOUNT OF AN ELIGIBLE INSTITUTION. 4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS Tendering holders of Old Notes should indicate in the applicable box the name and address to which New Notes issued pursuant to the Exchange Offer and or substitute certificates evidencing Old Notes not exchanged are to be issued or sent, if different from the name or address of the person signing this Letter. In the case of issuance in a different name, the employer identification or social security number of the person named also must be indicated. Noteholders tendering Old Notes by book-entry transfer may request that Old Notes not exchanged be credited to such account maintained at the DTC as such noteholder may designate hereon. If no such instructions are given, such Old Notes not exchanged will be returned to the name and address of the person signing this Letter. 5. TAXPAYER IDENTIFICATION NUMBER AND BACKUP WITHHOLDING Federal income tax law generally requires that a tendering Holder whose Old Notes are accepted for exchange must provide the Exchange Agent (as payor) with such Holder's correct Taxpayer Identification Number (a "TIN"), which, in the case of a Holder who is an individual, is such Holder's social security number. If the Exchange Agent is not provided with the correct TIN or an adequate basis for an exemption, such Holder may be subject to a $50 penalty imposed by the Internal Revenue Service and backup withholding in an amount equal to 31% of the amount of any reportable payments made after the exchange to such tendering Holder. If withholding results in an overpayment of taxes, a refund may be obtained. 8 To prevent backup withholding, each tendering Holder must provide such Holder's correct TIN by completing the "Substitute Form W-9" set forth herein, certifying that the TIN provided is correct (or that such Holder is awaiting a TIN) and that (i) the Holder is exempt from backup withholding, (ii) the Holder has not been notified by the Internal Revenue Service that such Holder is subject to backup withholding as a result of a failure to report all interest or dividends or (iii) the Internal Revenue Service has notified the Holder that such Holder is no longer subject to backup withholding. If the Holder does not have a TIN, such Holder should consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 (the "W-9 Guidelines") for instructions on applying for a TIN, write "Applied For" in the space for the TIN in Part 1 of the Substitute Form W-9, and sign and date the Substitute Form W-9 and the Certificate of Awaiting Taxpayer Identification Number set forth herein. If the Holder does not provide such Holder's TIN to the Exchange Agent within 60 days, backup withholding will begin and continue until such Holder furnishes such Holder's TIN to the Exchange Agent. NOTE: WRITING "APPLIED FOR" ON THE FORM MEANS THAT THE HOLDER HAS ALREADY APPLIED FOR A TIN OR THAT SUCH HOLDER INTENDS TO APPLY FOR ONE IN THE NEAR FUTURE. If the Old Notes are held in more than one name or are not in the name of the actual owner, consult the W-9 Guidelines for information on which TIN to report. Exempt Holders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. To prevent possible erroneous backup withholding, an exempt Holder should write "Exempt" in Part 2 of Substitute Form W-9. See the W-9 Guidelines for additional instructions. In order for a nonresident alien or foreign entity to qualify as exempt, such person must submit a completed Form W-8, "Certificate of Foreign Status," signed under penalty of perjury attesting to such exempt status. Such form may be obtained from the Exchange Agent. 6. TRANSFER TAXES The Company will pay all transfer taxes, if any, applicable to the transfer of Old Notes to it or its order pursuant to the Exchange Offer. If, however, New Notes and/or substitute Old Notes not exchanged are to be delivered to, or are to be registered or issued in the name of, any person other than the registered holder of the Old Notes tendered hereby, or if tendered Old Notes are registered in the name of any person other than the person signing this Letter, or if a transfer tax is imposed for any reason other than the transfer of Old Notes to the Company or its order pursuant to the Exchange Offer, the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted herewith, the amount of such transfer taxes will be billed directly to such tendering holder. EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR TRANSFER TAX STAMPS TO BE AFFIXED TO THE OLD NOTES SPECIFIED IN THIS LETTER. 7. WAIVER OF CONDITIONS. The Company reserves the right (in its reasonable discretion) to waive satisfaction of any or all conditions enumerated in the Prospectus. 8. NO CONDITIONAL TENDERS; DEFECTS. No alternative, conditional, irregular or contingent tenders will be accepted. All tendering holders of Old Notes, by execution of this Letter or an Agent's Message in lieu thereof, shall waive any right to receive notice of the acceptance of their Old Notes for exchange. Neither the Company, the Exchange Agent nor any other person is obligated to give notice of any defect or irregularity with respect to any tender of Old Notes nor shall any of them incur any liability for failure to give any such notice. 9. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES. Any holder whose Old Notes have been mutilated, lost, stolen or destroyed should contact the Exchange Agent at the address indicated above for further instructions. 9 10. WITHDRAWAL RIGHTS Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. For a withdrawal of a tender of Old Notes to be effective, a written notice of withdrawal must be received by the Exchange Agent at the address set forth above prior to 5:00 p.m., New York City time, on the Expiration Date. Any such notice of withdrawal must (i) specify the name of the person having tendered the Old Notes to be withdrawn (the "Depositor"), (ii) identify the Old Notes to be withdrawn (including certificate number or numbers and the principal amount of such Old Notes), (iii) contain a statement that such holder is withdrawing such holder's election to have such Old Notes exchanged, (iv) be signed by the holder in the same manner as the original signature on the Letter by which such Old Notes were tendered (including any required signature guarantees) or be accompanied by documents of transfer to have the Trustee with respect to the Old Notes register the transfer of such Old Notes in the name of the person withdrawing the tender and (v) specify the name in which such Old Notes are registered, if different from that of the Depositor. If Old Notes have been tendered pursuant to the procedure for book-entry transfer set forth in "The Exchange Offer--Book-Entry Transfers" section of the Prospectus, any notice of withdrawal must specify the name and number of the account at the DTC to be credited with the withdrawn Old Notes and otherwise comply with the procedures of such facility. All questions as to the validity, form and eligibility (including time of receipt) of such notices will be determined by the Company (which power may be delegated to the Exchange Agent), whose determination shall be final and binding on all parties. Any Old Notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Exchange Offer and no New Notes will be issued with respect thereto unless the Old Notes so withdrawn are validly retendered. Any Old Notes that have been tendered for exchange but which are not exchanged for any reason will be returned to the Holder thereof without cost to such Holder (or, in the case of Old Notes tendered by book-entry transfer into the Exchange Agent's account at the DTC pursuant to the book-entry transfer procedures set forth in "The Exchange Offer--Book-Entry Transfers" section of the Prospectus, such Old Notes will be credited to an account maintained with the DTC for the Old Notes) as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Old Notes may be retendered by following the procedures described above at any time prior to 5:00 p.m., New York City time, on the Expiration Date. 11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the procedure for tendering, as well as requests for additional copies of the Prospectus and this Letter, and requests for Notices of Guaranteed Delivery and other related documents may be directed to the Exchange Agent, at the address and telephone number indicated above. 10 TO BE COMPLETED BY ALL TENDERING HOLDERS OF SECURITIES PAYOR'S NAME: U.S. BANK TRUST NATIONAL ASSOCIATION - ---------------------------------------------------------------------------------------------- SUBSTITUTE Part 1 PLEASE PROVIDE TIN FORM W-9 YOUR TIN IN THE BOX AT (Social Security Number Department of the Treasury RIGHT AND CERTIFY BY or Employer Internal Revenue Service SIGNING AND DATING BELOW Identification Number) ------------------------------------------------------------ Payer's Request for Taxpayer Part 2 FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING (SEE Identification Number ("TIN") INSTRUCTIONS) and Certification ------------------------------------------------------------ Part 3 CERTIFICATION UNDER PENALTIES OF PERJURY, I CERTIFY THAT (1) The number shown on this form is my correct TIN (or I am waiting for a number to be issued to me), and (2) I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends or (c) the IRS has notified me that I am no longer subject to backup withholding. SIGNATURE DATE - ----------------------------------------------------------------------------------------------
You must cross out item (2) in Part 3 above if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting interest or dividends on your tax return. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN PART 1 OF THE SUBSTITUTE FORM W-9 - ------------------------------------------------------------ CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and that I mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office (or I intend to mail or deliver an application in the near future). I understand that if I do not provide a taxpayer identification number to the Payor within 60 days, the Payor is required to withhold 31 percent of all cash payments made to me thereafter until I provide a number. SIGNATURE DATE
-------------------------------------------------------------------------- NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF THIRTY-ONE PERCENT OF ANY CASH PAYMENTS. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. 11 EX-99.2 11 EXHIBIT 99.2 NOTICE OF GUARANTEED DELIVERY FOR TENET HEALTHCARE CORPORATION This form or one substantially equivalent hereto must be used to accept the Exchange Offer of Tenet Healthcare Corporation (the "Company") made pursuant to the prospectus, dated September , 1998 (the "Prospectus"), if certificates for the outstanding 7 5/8% Senior Notes due 2008 and 8 1/8% Senior Subordinated Notes due 2008 of the Company (the "Old Notes") are not immediately available or if the procedure for book-entry transfer cannot be completed on a timely basis or time will not permit all required documents to reach The Bank of New York, as exchange agent (the "Exchange Agent") prior to 5:00 p.m., New York City time, on the Expiration Date of the Exchange Offer. Such form may be delivered or transmitted by facsimile transmission, mail or hand delivery to the Exchange Agent as set forth below. In addition, in order to utilize the guaranteed delivery procedure to tender Old Notes pursuant to the Exchange Offer, a completed, signed and dated Letter of Transmittal (or facsimile thereof) must be received by the Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date. Capitalized terms not defined herein shall have the respective meanings ascribed to them in the Prospectus. DELIVERY TO: The Bank of New York, EXCHANGE AGENT BY MAIL, OVERNIGHT COURIER OR HAND DELIVERY: Attention: Millicent Burnett The Bank of New York 101 Barclay Street 21 West New York, New York 10286 BY FACSIMILE TRANSMISSION: (FOR ELIGIBLE INSTITUTIONS ONLY) (212) 815-6339 Attention: Millicent Burnett CONFIRM BY TELEPHONE: (212) 815-3502 DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSION OF THIS INSTRUMENT VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. Ladies and Gentlemen: Upon the terms and conditions set forth in the Prospectus, the undersigned hereby tenders to the Company the principal amount of Old Notes set forth below pursuant to the guaranteed delivery procedure described in "The Exchange Offer--Guaranteed Delivery Procedures" section of the Prospectus. Principal Amount of Old Notes Tendered:* $ Certificate Nos. (if available): If Old Notes will be delivered by book-entry transfer to The Depository Trust Company, provide account number. Total Principal Amount Represented by Old Notes Certificate(s): $ Account Number
*Must be in denominations of principal amount of $1,000 and any integral multiple thereof. ALL AUTHORITY HEREIN CONFERRED OR AGREED TO BE CONFERRED SHALL SURVIVE THE DEATH OR INCAPACITY OF THE UNDERSIGNED AND EVERY OBLIGATION OF THE UNDERSIGNED HEREUNDER SHALL BE BINDING UPON THE HEIRS, PERSONAL REPRESENTATIVES, SUCCESSORS AND ASSIGNS OF THE UNDERSIGNED. - -------------------------------------------------------------------------------- PLEASE SIGN HERE X X Signature(s) of Owner(s) Date or Authorized Signatory Area Code and Telephone Number:
Must be signed by the holder(s) of Old Notes as such holder(s) name(s) appear(s) on certificates for Old Notes or on a security position listing, or by person(s) authorized to become registered holder(s) by endorsement and documents transmitted with this Notice of Guaranteed Delivery. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, such person must set forth his or her full title below. PLEASE PRINT NAME(S) AND ADDRESS(ES) Name(s): Capacity: Address(es):
GUARANTEE (Not to be used for signature guarantee) The undersigned, a financial institution that is a participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Program or the Stock Exchanges Medallion Program, hereby guarantees that the certificates representing the principal amount of Old Notes tendered hereby in proper form for transfer, or timely confirmation of the book-entry transfer of such Old Notes into the Exchange Agent's account at The Depository Trust Company pursuant to the procedures set forth in "The Exchange Offer--Guaranteed Delivery Procedures" section of the Prospectus, together with one or more properly completed and duly executed Letters of Transmittal (or facsimile thereof or Agent's Message in lieu thereof) and any required signature guarantee and any other documents required by the Letter of Transmittal, will be received by the Exchange Agent at the address set forth above, no later than three New York Stock Exchange trading days after the date of execution of the Notice of Guaranteed Delivery. Name of Firm Authorized Signature Address Title Name: Zip Code (Please Type or Print) Area Code and Tel. No. Dated:
NOTE: DO NOT SEND CERTIFICATES FOR OLD NOTES WITH THIS FORM. CERTIFICATES FOR OLD NOTES SHOULD BE SENT ONLY WITH A COPY OF YOUR PREVIOUSLY EXECUTED LETTER OF TRANSMITTAL. EX-99.3 12 EXHIBIT 99.3 TENET HEALTHCARE CORPORATION OFFER FOR ALL OUTSTANDING 7 5/8% SERIES A SENIOR NOTES DUE 2008 AND 8 1/8% SERIES A SENIOR SUBORDINATED NOTES DUE 2008 IN EXCHANGE FOR 7 5/8% SERIES B SENIOR NOTES DUE 2008 8 1/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2008, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED To:BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES AND OTHER NOMINEES: Tenet Healthcare Corporation (the "Company") is offering, upon and subject to the terms and conditions set forth in the prospectus dated September , 1998 (the "Prospectus"), and the enclosed letter of transmittal (the "Letter of Transmittal"), to exchange (the "Exchange Offer") its 7 5/8% Series B Senior Notes due 2008 and its 8 1/8% Series B Senior Subordinated Notes due 2008, which have been registered under the Securities Act of 1933, as amended, for its outstanding 7 5/8% Senior Notes due 2008 and its 8 1/8% Senior Subordinated Notes due 2008 (the "Old Notes"). The Exchange Offer is being made in order to satisfy certain obligations of the Company contained in the registration rights agreement in respect of the Old Notes, dated May 21, 1998, by and among the Company and the initial purchasers referred to therein. We are requesting that you contact your clients for whom you hold Old Notes regarding the Exchange Offer. For your information and for forwarding to your clients for whom you hold Old Notes registered in your name or in the name of your nominee, or who hold Old Notes registered in their own names, we are enclosing the following documents: 1. Prospectus dated September , 1998; 2. The Letter of Transmittal for your use and for the information of your clients; 3. A Notice of Guaranteed Delivery to be used to accept the Exchange Offer if certificates for Old Notes are not immediately available or time will not permit all required documents to reach the Exchange Agent referred to below prior to the Expiration Date (as defined below) or if the procedure for book-entry transfer cannot be completed on a timely basis; 4. A form of letter which may be sent to your clients for whose account you hold Old Notes registered in your name or the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Exchange Offer; 5. Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9; and 6. Return envelopes addressed to The Bank of New York, the Exchange Agent for the Exchange Offer. YOUR PROMPT ACTION IS REQUESTED. THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON OCTOBER , 1998, UNLESS EXTENDED BY THE COMPANY (THE "EXPIRATION DATE"). OLD NOTES TENDERED PURSUANT TO THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME BEFORE THE EXPIRATION DATE. To participate in the Exchange Offer, a duly executed and properly completed Letter of Transmittal (or facsimile thereof or Agent's Message in lieu thereof), with any required signature guarantees and any other required documents, should be sent to the Exchange Agent and certificates representing the Old Notes, or a timely Book-Entry confirmation of such Old Notes into the Exchange Agent's account at The Depository Trust Company, should be delivered to the Exchange Agent, all in accordance with the instructions set forth in the Letter of Transmittal and the Prospectus. If a registered holder of Old Notes desires to tender, but such Old Notes are not immediately available, or time will not permit such holder's Old Notes or other required documents to reach the Exchange Agent before the Expiration Date, or the procedure for book-entry transfer cannot be completed on a timely basis, a tender may be effected by following the guaranteed delivery procedures described in the Prospectus under "The Exchange Offer--Guaranteed Delivery Procedures." The Company will, upon request, reimburse brokers, dealers, commercial banks and trust companies for reasonable and necessary costs and expenses incurred by them in forwarding the Prospectus and the related documents to the beneficial owners of Old Notes held by them as nominee or in a fiduciary capacity. The Company will pay or cause to be paid all stock transfer taxes applicable to the exchange of Old Notes pursuant to the Exchange Offer, except as set forth in Instruction 6 of the Letter of Transmittal. Any requests for additional copies of the enclosed materials, should be directed to The Bank of New York, the Exchange Agent for the Exchange Offer, at its address and telephone number set forth on the front of the Letter of Transmittal. Very truly yours, TENET HEALTHCARE CORPORATION NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS OR THE LETTER OF TRANSMITTAL. Enclosures 2 EX-99.4 13 EXHIBIT 99.4 TENET HEALTHCARE CORPORATION OFFER FOR ALL OUTSTANDING 7 5/8% SERIES A SENIOR NOTES DUE 2008 AND 8 1/8% SERIES A SENIOR SUBORDINATED NOTES DUE 2008 IN EXCHANGE FOR 7 5/8% SERIES B SENIOR NOTES DUE 2008 AND 8 1/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2008, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED TO OUR CLIENTS: Enclosed for your consideration is a prospectus, dated September , 1998 (the "Prospectus"), and the related letter of transmittal (the "Letter of Transmittal"), relating to the offer (the "Exchange Offer") of Tenet Healthcare Corporation (the "Company") to exchange its 7 5/8% Series B Senior Notes due 2008 and its 8 1/8% Series B Senior Subordinated Notes due 2008 (the "New Notes"), which have been registered under the Securities Act of 1933, as amended, for its outstanding 7 5/8% Senior Notes due 2008 and its 8 1/8% Senior Subordinated Notes due 2008 (the "Old Notes"), upon the terms and subject to the conditions described in the Prospectus and the Letter of Transmittal. The Exchange Offer is being made in order to satisfy certain obligations of the Company contained in the registration rights agreement, dated as of May 21, 1998, by and among the Company and the initial purchasers referred to therein. This material is being forwarded to you as the beneficial owner of the Old Notes held by us for your account but not registered in your name. A TENDER OF SUCH OLD NOTES MAY ONLY BE MADE BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. Accordingly, we request instructions as to whether you wish us to tender on your behalf the Old Notes held by us for your account, pursuant to the terms and conditions set forth in the enclosed Prospectus and Letter of Transmittal. Your instructions should be forwarded to us as promptly as possible in order to permit us to tender the Old Notes on your behalf in accordance with the provisions of the Exchange Offer. The Exchange Offer will expire at 5:00 p.m., New York City time, on October , 1998, unless extended by the Company. Any Old Notes tendered pursuant to the Exchange Offer may be withdrawn at any time before the Expiration Date. Your attention is directed to the following: 1. The Exchange Offer is for any and all Old Notes. 2. The Exchange Offer is subject to certain conditions set forth in the Prospectus in the section captioned "The Exchange Offer--Certain Conditions to the Exchange Offer." 3. Any transfer taxes incident to the transfer of Old Notes from the holder to the Company will be paid by the Company, except as otherwise provided in the Instructions in the Letter of Transmittal. 4. The Exchange Offer expires at 5:00 p.m., New York City time, on October , 1998, unless extended by the Company. If you wish to have us tender your Old Notes, please so instruct us by completing, executing and returning to us the instruction form on the back of this letter. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATION ONLY AND MAY NOT BE USED DIRECTLY BY YOU TO TENDER OLD NOTES. INSTRUCTIONS WITH RESPECT TO THE EXCHANGE OFFER The undersigned acknowledge(s) receipt of your letter and the enclosed material referred to therein relating to the Exchange Offer made by Tenet Healthcare Corporation with respect to its Old Notes. This will instruct you to tender the Old Notes held by you for the account of the undersigned, upon and subject to the terms and conditions set forth in the Prospectus and the related Letter of Transmittal. Please tender the Old Notes held by you for my account as indicated below:
AGGREGATE PRINCIPAL AMOUNT OF OLD NOTES - -------------------------------------------------------- - --------------------- 7 5/8% Senior Notes due 2008 - --------------------- 8 1/8% Senior Subordinated Notes due 2008 / / Please do not tender any Old Notes held SIGN HERE by you for my account. Dated: , 1998 -------------------------------------------- Signature(s) -------------------------------------------- Please print name(s) here -------------------------------------------- -------------------------------------------- Address(es) -------------------------------------------- Area Code and Telephone Number -------------------------------------------- Tax Identification or SocialSecurity No(s).
None of the Old Notes held by us for your account will be tendered unless we receive written instructions from you to do so. Unless a specific contrary instruction is given in the space provided, your signature(s) hereon shall constitute an instruction to us to tender all Old Notes held by us for your account. 2 EX-99.5 14 EXHIBIT 99.5 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYOR. -- Social Security numbers have nine digits separated by two hyphens: I.E., 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: I.E., 00-0000000. The table below will help determine the number to give the payor.
- ------------------------------------------------------- FOR THIS TYPE OF ACCOUNT: GIVE THE SOCIAL SECURITY NUMBER OF -- - ------------------------------------------------------- 1. An individual's account The individual 2. Two or more individuals The actual owner of the (joint account) account, or, if combined funds, the first individual on the account(1) 3. Husband and wife (joint The actual owner of the account) account or, if joint funds, either person(1) 4. Custodian account of a The minor(2) minor (Uniform Gift to Minors Act) 5. Adult and minor (joint The adult or, if the minor account) is the only contributor, the minor(1) 6. Account in the name of The ward, minor, or guardian or committee incompetent person(3) for a designated ward, minor, or incompetent person 7. a. The revocable savings The grantor-trustee(1) trust account (grantor is also trustee) b. Any "trust" account The actual owner(1) that is not a legal or valid trust under State law - ------------------------------------------------------- FOR THIS TYPE OF ACCOUNT: GIVE THE EMPLOYER IDENTIFICATION NUMBER OF-- - ------------------------------------------------------- 8. Sole proprietorship The owner(4) account 9. A valid trust, estate or The legal entity (Do not pension trust furnish the identifying number of the personal representative or the trustee unless the legal entity itself is not designated in the account title.)(5) 10. Corporate account The corporation 11. Religious, charitable, The organization or educational organization account 12. Partnership The partnership 13. Association, club, or The organization other tax-exempt organization 14. A broker or registered The broker or nominee nominee 15. Account with the The public entity Department of Agriculture in the name of a public entity (such as a State or local government, school district, or prison) that receives agricultural program payments
- ------------------------------------------- ------------------------------------------- (1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Circle the ward's, minor's or incompetent person's name and furnish such person's social security number. (4) Show the name of the owner. If the owner does not have an employer identification number, furnish the owner's social security number. (5) List first and circle the name of the legal trust, estate, or pension trust. NOTE: IF NO NAME IS CIRCLED WHEN THERE IS MORE THAN ONE NAME, THE NUMBER WILL BE CONSIDERED TO BE THAT OF THE FIRST NAME LISTED. GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 PAGE 2 OBTAINING A NUMBER If you do not have a taxpayer identification number or you do not know your number, obtain Form SS-5, Application for a Social Security Number Card (for resident individuals), Form SS-4, Application for Employer Identification Number (for businesses and all other entities), Form W-7 for International Taxpayer Identification Number (for alien individuals required to file U.S. tax returns), at an office of the Social Security Administration or the Internal Revenue Service. To complete the Substitute Form W-9, if you do not have a taxpayer identification number, write "Applied For" in the space for the taxpayer identification number in Part 1, sign and date the Form, and give it to the requester. Generally, you will then have 60 days to obtain a taxpayer identification number and furnish it to the requester. If the requester does not receive your taxpayer identification number within 60 days, backup withholding, if applicable, will begin and will continue until you furnish your taxpayer identification number to the requester. PAYEES EXEMPT FROM BACKUP WITHHOLDING PENALTIES Payees specifically exempted from backup withholding on ALL payments include the following:* - - A corporation. - - A financial institution. - - An organization exempt from tax under section 501(a), or an individual retirement plan, or a custodial account under section 403(b)(7). - - The United States or any agency or instrumentality thereof. - - A State, the District of Columbia, a possession of the United States, or any political subdivision or instrumentality thereof. - - A foreign government or a political subdivision, agency or instrumentality thereof. - - An international organization or any agency, or instrumentality thereof. - - A registered dealer in securities or commodities registered in the U.S. or a possession of the U.S. - - A real estate investment trust. - - A common trust fund operated by a bank under section 584(a). - - An entity registered at all times under the tax year under the Investment Company Act of 1940. - - A foreign central bank of issue. Payments of dividends and patronage dividends not generally subject to backup withholding include the following: - - Payments to nonresident aliens subject to withholding under section 1441. - - Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner. - ------------------------------ * Unless otherwise noted herein, all references below to section numbers or to regulations are references to the Internal Revenue Code and the regulations promulgated thereunder. - - Payments of patronage dividends where the amount received is not paid in money. - - Payments made by certain foreign organizations. - - Payments made to a nominee. Payments of interest not generally subject to backup withholding include the following: - - Payments of interest on obligations issued by individuals. NOTE: You may be subject to backup withholding if (i) this interest is $600 or more, (ii) the interest is paid in the course of the payor's trade or business and (iii) you have not provided your correct taxpayer identification number to the payor. - - Payments of tax-exempt interest (including exempt-interest dividends under section 852). - - Payments described in section 6049(b)(5) to nonresident aliens. - - Payments on tax-free covenant bonds under section 1451. - - Payments made by certain foreign organizations. - - Payments made to a nominee. EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE A SUBSTITUTE FORM W-9 TO AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYOR, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" IN PART 2, SIGN AND DATE THE FORM AND RETURN IT TO THE PAYOR. Certain payments other than interest, dividends, and patronage dividends that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under sections 6041, 6041A(a), 6045 and 6050A. PRIVACY ACT NOTICES. Section 6109 requires most recipients of dividends, interest, or other payments to give taxpayer identification numbers to payors who must report the payments to IRS. The IRS uses the numbers for identification purposes and to help verify the accuracy of your tax return. Payors must be given the numbers whether or not recipients are required to file tax returns. Payors must generally withhold 31% of taxable interest, dividends, and certain other payments to a payee who does not furnish a taxpayer identification number to a payor. Certain penalties may also apply. PENALTIES (1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER-- If you fail to furnish your taxpayer identification number to a payor, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) CIVIL PENALTY FOR FALSE STATEMENTS WITH RESPECT TO WITHHOLDING-- If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION--If you falsify certifications or affirmations, you are subject to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. EX-99.6 15 EXHIBIT 99.6 EXHIBIT 99.6 _______, 1998 EXCHANGE AGENT AGREEMENT The Bank of New York Corporate Trust Trustee Administration 101 Barclay Street - 21st Floor New York, New York 10286 Ladies and Gentlemen: Tenet Healthcare Corporation (the "Company") proposes to make an offer (the "Exchange Offer") to exchange $350,000,000 aggregate principal amount of its 7-5/8% Senior Notes due 2008 (the "Old Securities") for its 7-5/8% Series B Senior Notes due 2008 (the "New Securities"). The terms and conditions of the Exchange Offer as currently contemplated are set forth in a prospectus, dated September _____, 1998 (the "Prospectus"), proposed to be distributed to all record holders of the Old Securities. The Old Securities and the New Securities are collectively referred to herein as the "Securities". The Company hereby appoints The Bank of New York to act as exchange agent (the "Exchange Agent") in connection with the Exchange Offer. References hereinafter to "you" shall refer to The Bank of New York. The Exchange Offer is expected to be commenced by the Company on or about _______, 1998. The Letter of Transmittal accompanying the Prospectus (or in the case of book entry securities, the ATOP system) is to be used by the holders of the Old Securities to accept the Exchange Offer and contains instructions with respect to the delivery of certificates for Old Securities tendered in connection therewith. The Exchange Offer shall expire at 5:00 P.M., New York City time, on _____________, 1998 or on such later date or time to which the Company may extend the Exchange Offer (the "Expiration Date"). Subject to the terms and conditions set forth in the Prospectus, the Company expressly reserves the right to extend the Exchange Offer from time to time and may extend the Exchange Offer by giving oral (confirmed in writing) or written notice to you before 9:00 A.M., New York City time, on the business day following the previously scheduled Expiration Date. The Company expressly reserves the right to amend or terminate the Exchange Offer, and not to accept for exchange any Old Securities not theretofore accepted for exchange, upon the occurrence of any of the events in the Prospectus under the caption "The Exchange Offer -- Certain Conditions to the Offer." The Company will give oral (confirmed in writing) or written notice of any amendment, termination or nonacceptance to you as promptly as practicable.] In carrying out your duties as Exchange Agent, you are to act in accordance with the following instructions: 1. You will perform such duties and only such duties as are specifically set forth in the section of the Prospectus captioned ["The Exchange Offer"] or as specifically set forth herein; PROVIDED, HOWEVER, that in no way will your general duty to act in good faith be discharged by the foregoing. 2. You will establish an account with respect to the Old Securities at The Depository Trust Company (the "Book-Entry Transfer Facility") for purposes of the Exchange Offer within two business days after the date of the Prospectus, and any financial institution that is a participant in the Book-Entry Transfer Facility's systems may make book-entry delivery of the Old Securities by causing the Book-Entry Transfer Facility to transfer such Old Securities into your account in accordance with the Book-Entry Transfer Facility's procedure for such transfer. 3. You are to examine each of the Letters of Transmittal and certificates for Old Securities (or confirmation of book-entry transfer into your account at the Book-Entry Transfer Facility) and any other documents delivered or mailed to you by or for holders of the Old Securities to ascertain whether: (i) the Letters of Transmittal and any such other documents are duly executed and properly completed in accordance with instructions set forth therein and (ii) the Old Securities have otherwise been properly tendered. In each case where the Letter of Transmittal or any other document has been improperly completed or executed or any of the certificates for Old Securities are not in proper form for transfer or some other irregularity in connection with the acceptance of the Exchange Offer exists, you will endeavor to inform the presenters of the need for fulfillment of all requirements and to take any other action as may be necessary or advisable to cause such irregularity to be corrected. 4. With the approval of the President, Senior Vice President, Executive Vice President, or any Vice President of the Company (such approval, if given orally, to be confirmed in writing) or any other party designated by such an officer in writing, you are authorized to waive any irregularities in connection with any tender of Old Securities pursuant to the Exchange Offer. 5. Tenders of Old Securities may be made only as set forth in the Letter of Transmittal and in the section of the Prospectus captioned ["The Exchange Offer -- Procedures - 2 - for Tendering Old Securities"], and Old Securities shall be considered properly tendered to you only when tendered in accordance with the procedures set forth therein. Notwithstanding the provisions of this paragraph 5, Old Securities which the President, Senior Vice President, Executive Vice President, or any Vice President of the Company shall approve as having been properly tendered shall be considered to be properly tendered (such approval, if given orally, shall be confirmed in writing). 6. You shall advise the Company with respect to any Old Securities received subsequent to the Expiration Date and accept its instructions with respect to disposition of such Old Securities. 7. You shall accept tenders: (a) in cases where the Old Securities are registered in two or more names only if signed by all named holders; (b) in cases where the signing person (as indicated on the Letter of Transmittal) is acting in a fiduciary or a representative capacity only when proper evidence of his or her authority so to act is submitted; and (c) from persons other than the registered holder of Old Securities provided that customary transfer requirements, including any applicable transfer taxes, are fulfilled. You shall accept partial tenders of Old Securities where so indicated and as permitted in the Letter of Transmittal and deliver certificates for Old Securities to the transfer agent for split-up and return any untendered Old Securities to the holder (or such other person as may be designated in the Letter of Transmittal) as promptly as practicable after expiration or termination of the Exchange Offer. 8. Upon satisfaction or waiver of all of the conditions to the Exchange Offer, the Company will notify you (such notice, if given orally, to be confirmed in writing) of its acceptance, promptly after the Expiration Date, of all Old Securities properly tendered and you, on behalf of the Company, will exchange such Old Securities for New Securities and cause such Old Securities to be cancelled. Delivery of New Securities will be made on behalf of the Company by you at the rate of $1,000 principal amount of New Securities for each $1,000 principal amount of the corresponding series of Old Securities tendered promptly after notice (such notice if given orally, to be confirmed in writing) of acceptance of said Old Securities by the Company; provided, however, that in all cases, Old Securities tendered pursuant to the Exchange Offer will be exchanged only after timely receipt by you of - 3 - certificates for such Old Securities (or confirmation of book-entry transfer into your account at the Book-Entry Transfer Facility), a properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantees and any other required documents. You shall issue New Securities only in denominations of $1,000 or any integral multiple thereof. 9. Tenders pursuant to the Exchange Offer are irrevocable, except that, subject to the terms and upon the conditions set forth in the Prospectus and the Letter of Transmittal, Old Securities tendered pursuant to the Exchange Offer may be withdrawn at any time prior to the Expiration Date. 10. The Company shall not be required to exchange any Old Securities tendered if any of the conditions set forth in the Exchange Offer are not met. Notice of any decision by the Company not to exchange any Old Securities tendered shall be given (and confirmed in writing) by the Company to you. 11. If, pursuant to the Exchange Offer, the Company does not accept for exchange all or part of the Old Securities tendered because of an invalid tender, the occurrence of certain other events set forth in the Prospectus under the caption ["The Exchange Offer -- Certain Conditions to the Exchange Offer"] or otherwise, you shall as soon as practicable after the expiration or termination of the Exchange Offer return those certificates for unaccepted Old Securities (or effect appropriate book-entry transfer), together with any related required documents and the Letters of Transmittal relating thereto that are in your possession, to the persons who deposited them. 12. All certificates for reissued Old Securities, unaccepted Old Securities or for New Securities shall be forwarded by first-class mail. 13. You are not authorized to pay or offer to pay any concessions, commissions or solicitation fees to any broker, dealer, bank or other persons or to engage or utilize any person to solicit tenders. 14. As Exchange Agent hereunder you: (a) shall have no duties or obligations other than those specifically set forth herein or as may be subsequently agreed to in writing by you and the Company; (b) will be regarded as making no representations and having no responsibilities as to the validity, sufficiency, value or genuineness of any of the certificates or the Old Securities represented thereby deposited with you pursuant to the Exchange Offer, and will not be required to and - 4 - will make no representation as to the validity, value or genuineness of the Exchange Offer; (c) shall not be obligated to take any legal action hereunder which might in your reasonable judgment involve any expense or liability, unless you shall have been furnished with reasonable indemnity; (d) may reasonably rely on and shall be protected in acting in reliance upon any certificate, instrument, opinion, notice, letter, telegram or other document or security delivered to you and reasonably believed by you to be genuine and to have been signed by the proper party or parties; (e) may reasonably act upon any tender, statement, request, comment, agreement or other instrument whatsoever not only as to its due execution and validity and effectiveness of its provisions, but also as to the truth and accuracy of any information contained therein, which you shall in good faith believe to be genuine and to have been signed or represented by a proper person or persons; (f) may rely on and shall be protected in acting upon written or oral instructions from any officer of the Company; (g) may consult with your counsel with respect to any questions relating to your duties and responsibilities and the advice or opinion of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by you hereunder in good faith and in accordance with the advice or opinion of such counsel; and (h) shall not advise any person tendering Old Securities pursuant to the Exchange Offer as to the wisdom of making such tender or as to the market value or decline or appreciation in market value of any Old Securities. 15. You shall take such action as may from time to time be requested by the Company or its counsel (and such other action as you may reasonably deem appropriate) to furnish copies of the Prospectus, Letter of Transmittal and the Notice of Guaranteed Delivery (as defined in the Prospectus) or such other forms as may be approved from time to time by the Company, to all persons requesting such documents and to accept and comply with telephone requests for information relating to the Exchange Offer, provided that such information shall relate only to the procedures for accepting (or withdrawing from) the Exchange Offer. The Company will furnish you with copies of such documents at your request. All other requests for information relating to the Exchange Offer shall be directed to the Company, Attention: General Counsel. - 5 - 16. You shall advise by facsimile transmission or telephone, and promptly thereafter confirm in writing to the Vice President and Associate General Counsel of the Company and such other person or persons as it may request, daily (and more frequently during the week immediately preceding the Expiration Date and if otherwise requested) up to and including the Expiration Date, as to the number of Old Securities which have been tendered pursuant to the Exchange Offer and the items received by you pursuant to this Agreement, separately reporting and giving cumulative totals as to items properly received and items improperly received. In addition, you will also inform, and cooperate in making available to, the Company or any such other person or persons upon oral request made from time to time prior to the Expiration Date of such other information as it or he or she reasonably requests. Such cooperation shall include, without limitation, the granting by you to the Company and such person as the Company may request of access to those persons on your staff who are responsible for receiving tenders, in order to ensure that immediately prior to the Expiration Date the Company shall have received information in sufficient detail to enable it to decide whether to extend the Exchange Offer. You shall prepare a final list of all persons whose tenders were accepted, the aggregate principal amount of Old Securities tendered, the aggregate principal amount of Old Securities accepted and deliver said list to the Company. 17. Letters of Transmittal and Notices of Guaranteed Delivery shall be stamped by you as to the date and the time of receipt thereof and shall be preserved by you for a period of time at least equal to the period of time you preserve other records pertaining to the transfer of securities. You shall dispose of unused Letters of Transmittal and other surplus materials by returning them to the Company. 18. You hereby expressly waive any lien, encumbrance or right of set-off whatsoever that you may have with respect to funds deposited with you for the payment of transfer taxes by reasons of amounts, if any, borrowed by the Company, or any of its subsidiaries or affiliates pursuant to any loan or credit agreement with you or for compensation owed to you hereunder. 19. For services rendered as Exchange Agent hereunder, you shall be entitled to such compensation as set forth on Schedule I attached hereto. 20. You hereby acknowledge receipt of the Prospectus and the Letter of Transmittal and further acknowledge that you have examined each of them. Any inconsistency between this Agreement, on the one hand, and the Prospectus and the Letter of Transmittal (as they may be amended from time to time), on the other hand, shall be resolved in favor of the latter two documents, except with respect to the duties, - 6 - liabilities and indemnification of you as Exchange Agent, which shall be controlled by this Agreement. 21. The Company covenants and agrees to indemnify and hold you harmless in your capacity as Exchange Agent hereunder against any loss, liability, cost or expense, including attorneys' fees and expenses, arising out of or in connection with any act, omission, delay or refusal made by you in reliance upon any signature, endorsement, assignment, certificate, order, request, notice, instruction or other instrument or document reasonably believed by you to be valid, genuine and sufficient and in accepting any tender or effecting any transfer of Old Securities reasonably believed by you in good faith to be authorized, and in delaying or refusing in good faith to accept any tenders or effect any transfer of Old Securities; provided, however, that the Company shall not be liable for indemnification or otherwise for any loss, liability, cost or expense to the extent arising out of your gross negligence or willful misconduct. In no case shall the Company be liable under this indemnity with respect to any claim against you unless the Company shall be notified by you, by letter or by facsimile confirmed by letter, of the written assertion of a claim against you or of any other action commenced against you, promptly after you shall have received any such written assertion or notice of commencement of action. The Company shall be entitled to participate at its own expense in the defense of any such claim or other action, and, if the Company so elects, the Company shall assume the defense of any suit brought to enforce any such claim. In the event that the Company shall assume the defense of any such suit, the Company shall not be liable for the fees and expenses of any additional counsel thereafter retained by you so long as the Company shall retain counsel reasonably satisfactory to you to defend such suit, and so long as you have not determined, in your reasonable judgment, that a conflict of interest exists between you and the Company. 22. You shall arrange to comply with all requirements under the tax laws of the United States, including those relating to missing Tax Identification Numbers, and shall file any appropriate reports with the Internal Revenue Service. The Company understands that you are required to deduct 31% on payments to holders who have not supplied their correct Taxpayer Identification Number or required certification. Such funds will be turned over to the Internal Revenue Service in accordance with applicable regulations. 23. You shall deliver or cause to be delivered, in a timely manner to each governmental authority to which any transfer taxes are payable in respect of the exchange of Old Securities, the Company's check in the amount of all transfer taxes so payable, and the Company shall reimburse you for the amount of any and all transfer taxes payable in respect of the exchange of Old Securities; provided, however, that you - 7 - shall reimburse the Company for amounts refunded to you in respect of your payment of any such transfer taxes, at such time as such refund is received by you. 24. This Agreement and your appointment as Exchange Agent hereunder shall be construed and enforced in accordance with the laws of the State of New York applicable to agreements made and to be performed entirely within such state, and without regard to conflicts of law principles, and shall inure to the benefit of, and the obligations created hereby shall be binding upon, the successors and assigns of each of the parties hereto. 25. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 26. In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 27. This Agreement shall not be deemed or construed to be modified, amended, rescinded, cancelled or waived, in whole or in part, except by a written instrument signed by a duly authorized representative of the party to be charged. This Agreement may not be modified orally. 28. Unless otherwise provided herein, all notices, requests and other communications to any party hereunder shall be in writing (including facsimile or similar writing) and shall be given to such party, addressed to it, at its address or telecopy number set forth below: - 8 - If to the Company: Tenet Healthcare Corporation 3820 State Street Santa Barbara, CA 93105 Facsimile: (805) 563-7085 Attention: General Counsel If to the Exchange Agent: The Bank of New York 101 Barclay Street Floor 21 West New York, New York 10286 Facsimile: (212) 815-5915 Attention: Corporate Trust Trustee Administration 29. Unless terminated earlier by the parties hereto, this Agreement shall terminate 90 days following the Expiration Date. Notwithstanding the foregoing, Paragraphs 19, 21 and 23 shall survive the termination of this Agreement. Upon any termination of this Agreement, you shall promptly deliver to the Company any certificates for Securities, funds or property then held by you as Exchange Agent under this Agreement. 30. This Agreement shall be binding and effective as of the date hereof. - 9 - Please acknowledge receipt of this Agreement and confirm the arrangements herein provided by signing and returning the enclosed copy. TENET HEALTHCARE CORPORATION By: ------------------------------------ Name: Title: Accepted as of the date first above written: THE BANK OF NEW YORK, as Exchange Agent By: -------------------------------- Name: Title: - 10 - SCHEDULE I FEES - 11 - -----END PRIVACY-ENHANCED MESSAGE-----