-----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, JgQBP6Rxab/wxN67XkfG55c7FZjral/BMbCtpXLPlHQYgcds1OvpGJ5VKmrKEU7j 4KIPtKLnL6DJzSWhFaxxcQ== 0000950149-96-001545.txt : 19961008 0000950149-96-001545.hdr.sgml : 19961008 ACCESSION NUMBER: 0000950149-96-001545 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 19961007 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: VIVRA INC CENTRAL INDEX KEY: 0000850882 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISC HEALTH & ALLIED SERVICES, NEC [8090] IRS NUMBER: 943096645 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-13625 FILM NUMBER: 96640385 BUSINESS ADDRESS: STREET 1: 1850 GATEWAY DRIVE STREET 2: SUITE 500 CITY: SAN MATEO STATE: CA ZIP: 94404 BUSINESS PHONE: 415-577-5700 MAIL ADDRESS: STREET 1: 1850 GATEWAY DRIVE STREET 2: SUITE 500 CITY: SAN MATEO STATE: CA ZIP: 94404 S-3 1 VIVRA INCORPORATED FORM S-3 DATED 10/07/96 1 As filed with the Securities and Exchange Commission on October 7, 1996. Registration No. 333-________ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 VIVRA INCORPORATED (Exact name of registrant as specified in its charter) Delaware 94-3096645 (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) -------------------- 1850 Gateway Drive, Suite 500 San Mateo, California 94404 (415) 577-5700 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) -------------------- KENT S. THIRY President and Chief Executive Officer VIVRA INCORPORATED 1850 Gateway Drive, Suite 500 San Mateo, California 94404 (415) 577-5700 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copy to: SCOTT T. SMITH, ESQ. PILLSBURY MADISON & SUTRO LLP 2700 Sand Hill Road Menlo Park, California 94025 (415) 233-4500 -------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: On a delayed or continuous basis pursuant to Rule 415. -------------------- If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. / / If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. /X/ If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / -------------------- CALCULATION OF REGISTRATION FEE
=================================================================================================================================== PROPOSED MAXIMUM PROPOSED MAXIMUM TITLE OF EACH CLASS OF SECURITIES TO AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF BE REGISTERED REGISTERED SECURITY PRICE REGISTRATION FEE(1) - ----------------------------------------------------------------------------------------------------------------------------------- 5% Convertible Subordinated Notes Due 2001............................ $158,545,000 100% $158,545,000 $48,043.94 - ----------------------------------------------------------------------------------------------------------------------------------- Common Stock, par value $.01 per share............................... 4,261,962 shares(2) -- -- -- - ----------------------------------------------------------------------------------------------------------------------------------- Rights to Purchase Series A Junior Participating Preferred Stock(3).... 4,261,962 -- -- -- ===================================================================================================================================
(1) Calculated pursuant to Rule 457(i) under the Securities Act of 1933, as amended. (2) Based on a conversion price of $37.20 per share, and is deemed to include any additional shares of Common Stock that may be issuable upon conversion of the Notes as a result of the antidilution provisions thereof. Pursuant to Rule 457(i), no registration fee is required for these shares. (3) Associated with the Common Stock are Rights to purchase Series A Junior Participating Preferred Stock that will not be exercisable or evidenced separately from the Common Stock prior to the occurrence of certain events. -------------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. 2 Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State. SUBJECT TO COMPLETION, DATED OCTOBER 7, 1996 PROSPECTUS $158,545,000 VIVRA INCORPORATED 5% CONVERTIBLE SUBORDINATED NOTES DUE 2001 AND SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION THEREOF This Prospectus relates to the resale from time to time by the holders (the "Selling Securityholders") of up to $158,545,000 aggregate principal amount of 5% Convertible Subordinated Notes Due 2001 (the "Notes") of Vivra Incorporated ("Vivra" or the "Company"), and the resale of up to 4,261,962 shares of Common Stock, par value of $.01 per share (the "Common Stock"), of the Company issuable upon the conversion thereof (the "Conversion Shares"). The Notes are convertible at the option of the holder into shares of Common Stock of the Company, at any time at or prior to maturity, unless previously redeemed or repurchased, at a conversion price of $37.20 per share (equivalent to a conversion rate of 26.88 shares per $1,000 principal amount of Notes), subject to adjustment in certain events. Interest on the Notes is payable semi-annually on January 1 and July 1 of each year, commencing on January 1, 1997. The Notes are redeemable, in whole or in part, at the option of the Company, at any time on or after July 10, 1999, at the redemption prices set forth herein, plus accrued and unpaid interest to the date of redemption. Upon a Change of Control (as defined), each holder of the Notes will have the right to require the Company to repurchase all or any part of such holder's Notes at 100% of the principal amount thereof, plus accrued and unpaid interest. The Notes are unsecured general obligations of the Company and are subordinated to all existing and future Senior Indebtedness (as defined) of the Company. See "Description of the Notes." The Notes were originally issued by the Company in a private placement on July 8 and August 6, 1996 to the Initial Purchasers (as defined) and were simultaneously sold by the Initial Purchasers in transactions exempt from registration under the Securities Act of 1933, as amended (the "Securities Act"), in the United States to persons reasonably believed to be "qualified institutional buyers" as defined in Rule 144A under the Securities Act, to certain qualified institutional buyers acting on behalf of institutional "accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) and outside the United States to non-U.S. persons in offshore transactions in reliance on Regulation S under the Securities Act. The Selling Securityholders may offer Notes or Conversion Shares from time to time to purchasers directly or through underwriters, dealers or agents. Such Notes or Conversion Shares may be sold at market prices prevailing at the time of sale or at negotiated prices. Each Selling Securityholder will be responsible for payment of any and all commissions to brokers, which will be negotiated on an individual basis. The Notes have been designated for trading in the Private Offerings, Resales and Trading through Automated Linkages ("PORTAL") Market. The Common Stock is listed on the New York Stock Exchange (the "NYSE") under the trading symbol "V." On October 4, 1996, the last reported sale price of the Common Stock as reported on the NYSE was $31.875 per share. The Conversion Shares have been listed on the NYSE. For a description of certain federal income tax consequences to the holders of the Notes, see "Certain Federal Income Tax Consequences." The Company will not receive any of the proceeds from the sale of any Notes or Conversion Shares by the Selling Securityholders. Expenses of preparing and filing the registration statement to which this Prospectus relates and all post-effective amendments will be borne by the Company. See "Plan of Distribution" for a description of the indemnification arrangements between the Company and the Selling Securityholders. SEE "RISK FACTORS" BEGINNING ON PAGE OF THIS PROSPECTUS FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SECURITIES OFFERED HEREBY. -------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. -------------------- The date of this Prospectus is October __, 1996. 3 AVAILABLE INFORMATION The Company has filed with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-3 (together will all amendments and exhibits, referred to as the "Registration Statement") under the Securities Act with respect to the Notes and the Conversion Shares offered by this Prospectus. This Prospectus does not contain all of the information set forth in the Registration Statement, certain parts of which are omitted in accordance with the Rules and Regulations of the Commission. For further information with respect to the Company and the securities offered hereby, reference is made to the Registration Statement and the exhibits and schedules thereto, all of which may be obtained from the Commission in Washington, D.C., as described below. The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended, (the "Exchange Act") and, in accordance therewith, files reports, proxy statements and other information with the Commission. Such reports, proxy statements and other information may be inspected and copied at the public reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street N.W., Room 1034, Washington, D.C. 20549, and at the following Regional Offices of the Commission: 7 World Trade Center, Suite 1300, New York, New York 10048; and the Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such reports and other information may be obtained from the Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Reports, proxy statements and other information concerning the Company may be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. In addition, the Company files electronically with the Commission certain reports, proxy statements and other information, and the Commission maintains a Web site on the Internet (www.sec.gov) that contains such reports, proxy statements and other information regarding the Company. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents have been filed with the Commission and are incorporated herein by reference: (i) Annual Report of the Company on Form 10-K, as amended, for the fiscal year ended November 30, 1995; (ii) Quarterly Reports of the Company on Form 10-Q for the three months ended February 29, 1996, and for the three months ended May 31, 1996; (iii) Current Reports of the Company on Form 8-K dated December 21, 1995, January 26, 1996, February 15, 1996, March 13, 1996, March 15, 1996, March 29, 1996, April 11, 1996, May 1, 1996, May 14, 1996, June 13, 1996, June 21, 1996 and September 24, 1996; and (iv) the description of the Company's Common Stock contained in the Registration Statement on Form S-1 filed on April 19, 1990, Registration No. 33-34438, including any amendments and reports filed for the purpose of updating such description. All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the offering of the Notes and the Conversion Shares shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will provide without charge to each person to whom this Prospectus is delivered, upon the written or oral request of such person, a copy of any or all of the foregoing documents incorporated herein by reference, other than exhibits to such documents (unless such exhibits are specifically incorporated by reference into such documents). Requests for such documents should be submitted to LeAnne M. Zumwalt, Chief Financial Officer, Treasurer and Secretary, Vivra Incorporated, 1850 Gateway Drive, Suite 500, San Mateo, California 94404 (Telephone: (415) 577-5700). In order to ensure timely delivery of the documents, any request should be made at least five business days prior to the date on which the final investment decision must be made. 2 4 NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY THE SECURITIES DESCRIBED HEREIN BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING THE OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. UNDER NO CIRCUMSTANCES SHALL THE DELIVERY OF THIS PROSPECTUS OR ANY SALE MADE PURSUANT TO THIS PROSPECTUS CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS. -------------------- TABLE OF CONTENTS
Page ---- Available Information.......................................................................................... 2 Incorporation of Certain Documents by Reference................................................................ 2 Prospectus Summary............................................................................................. 4 Risk Factors................................................................................................... 6 Use of Proceeds................................................................................................ 11 Ratio of Earnings to Fixed Charges............................................................................. 11 Business....................................................................................................... 12 Description of the Notes....................................................................................... 21 Description of Capital Stock................................................................................... 31 Certain Federal Income Tax Considerations...................................................................... 33 Plan of Distribution........................................................................................... 37 Legal Matters.................................................................................................. 37 Experts........................................................................................................ 38
3 5 PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information, including "Risk Factors," appearing elsewhere in this Prospectus or incorporated herein by reference. THE COMPANY Vivra is a specialty care company. The Company's business strategy is to compete in specialties/disease states where Vivra can demonstrably deliver differentiated care to high-cost patient populations. The Company provides services through Vivra Renal Care ("VRC") and Vivra Specialty Partners ("VSP"). VRC is the second largest provider of dialysis services in the United States and, as of August 31, 1996, had approximately 13,350 patients at 237 centers in 27 states and the District of Columbia. VSP provides physician network and disease management services to entities responsible for coordinating health care for a patient population, principally managed care organizations. VSP coordinates care in multiple specialties, including asthma/allergy, cardiology, diabetes, dialysis/nephrology, otolaryngology ("ENT"), obstetrics/gynecology and orthopedics. In these specialties, VSP currently provides services through 38 contracts and also owns 31 specialty practices with 58 physicians and manages one additional specialty practice with 15 physicians. The Company's principal executive offices are located at 1850 Gateway Drive, Suite 500, San Mateo, California 94044, and its telephone number is (415) 577-5700.
THE OFFERING Securities Offered......................... $158,545,000 principal amount of 5% Convertible Subordinated Notes Due 2001 (the "Notes"), and the Common Stock issuable upon conversion thereof (the "Conversion Shares"). Interest Payments Dates.................... January 1 and July 1, commencing January 1, 1997. Maturity Date.............................. July 1, 2001. Conversion................................. The Notes are convertible into Common Stock of the Company at any time through maturity, unless previously redeemed or repur- chased, at a conversion price of $37.20 per share, subject to adjustment in certain circumstances. Redemption at the Option of the Company............................... The Notes are not redeemable prior to July 10, 1999. Thereafter, the Notes will be redeemable at the option of the Company, in whole or in part, at any time at the redemption prices set forth herein, plus accrued and unpaid interest thereon. Repurchase Upon Change in Control.......................... Upon a Change in Control (as defined), each holder of the Notes will have the right, subject to certain restrictions and conditions, to require the Company to purchase all or any part of such holder's Notes at 100% of the principal amount thereof, plus accrued and unpaid interest thereon to the date of repurchase.
4 6 Subordination.............................. The Notes are subordinated to all existing and future Senior Indebt- edness (as defined) of the Company and effectively subordinated to all indebtedness and other liabilities of the Company's subsidiaries. As of August 31, 1996, there was no Senior Indebtedness outstanding and approximately $3.2 million of indebtedness of the Company's subsidiaries. The Indenture (as defined) under which the Notes have been issued does not restrict the incurrence of additional Senior Indebtedness or other indebtedness by the Company or any of its subsidiaries. Use of Proceeds............................ The Company will not receive any of the proceeds from the sale of the Notes or the Conversion Shares. Trading.................................... The Notes have been approved for trading in the PORTAL market. The Company's Common Stock is traded on the New York Stock Exchange under the symbol "V."
5 7 RISK FACTORS When used in this Prospectus, the words "estimate," "project" and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, including those discussed below, that could cause actual results to differ materially from those projected. These forward-looking statements speak only as of the date hereof. In addition to the other information in this Prospectus, the following risk factors should be considered carefully in evaluating the Company and its business before purchasing the Notes or the Conversion Shares offered hereby. Medicare and Medicaid Dialysis Reimbursement. The Company estimates that approximately 66% and 70% of its dialysis revenues, including revenues from the reimbursement of the administration of the drug erythropoietin ("EPO"), for fiscal 1994 and 1995, respectively, were reimbursements from Medicare and Medicaid under the EndStage Renal Disease ("ESRD") program administered by the Health Care Financing Administration ("HCFA"). Numerous Congressional actions have resulted in changes in the average Medicare reimbursement rate from a fixed fee of $138 per treatment in 1983, to a current average rate of $126. The Medicaid programs are also subject to statutory and regulatory changes that could affect the rate of Medicaid reimbursement. The Company is not able to predict whether and to what extent changes to Medicare and Medicaid reimbursement rates will be made in the future, including the impact of potential legislative measures regarding welfare reform, the Medicare trust fund deficit, the health care delivery system and the approval of a federal budget. Any reduction in reimbursement rates would have a material adverse effect on the Company's revenues and net earnings. See "Business--Vivra Renal Care." In March 1996, HCFA published a request for proposals from managed care companies to arrange for the treatment of ESRD patients on a large scale. While the Company is unable to predict the effect of the introduction of managed care on dialysis services, such introduction could result in a reduction in the rates of reimbursement for the Company's services. The Company may also be required to enter into contracts directly with managed care providers. EPO Reimbursement and Supply. Since June 1, 1989, Medicare and Medicaid have provided reimbursement for the administration of EPO to dialysis patients for the treatment of anemia. During fiscal 1994 and 1995, approximately 84% and 85%, respectively, of the Company's dialysis patients received EPO. The Company's revenues from the administration of EPO were approximately $43.5 million and $56.0 million, respectively, or 17% and 18% of dialysis revenues, for those periods. Effective January 1, 1994, Medicare and Medicaid reimbursement for the administration of EPO was reduced from $11.00 to $10.00 per 1,000 units. Any further reduction in the reimbursement rate for the administration of EPO could have a material adverse effect on the Company's revenues and net earnings. In addition, EPO is produced by a single manufacturer and any interruption of supply could have a material adverse effect on the Company's revenues and net earnings. Other Sources of Dialysis Reimbursement. The Company estimates that approximately 34% and 30% of its dialysis revenues for fiscal 1994 and 1995, respectively, were derived from sources other than Medicare and Medicaid. Of these revenues, the largest portion came from private insurance, including managed care organizations. Reimbursement from hospitals for acute dialysis treatments was also significant. In general, these sources of reimbursement are at rates significantly in excess of Medicare and Medicaid rates. The Company believes that private payers may be required in the future to assume a greater percentage of the costs of dialysis care as the existing ESRD program is reviewed by the United States Congress. Irrespective of legislative action, the Company expects that these non-governmental payers will reduce payment for dialysis services. In addition, as managed care organizations expand, they will have a strong incentive to further reduce the costs of specialty care and will aggressively seek to reduce amounts paid for dialysis treatments. If private payer rates are reduced significantly, the Company's revenues and net earnings will be materially and adversely affected. Capitated Agreements. The Company believes it will be necessary to contract with managed care payers on a capitated or at-risk basis in order to maintain or expand the businesses of VRC and VSP. The Company currently has and intends to enter into additional capitated agreements. Under capitated or at-risk contracts, the health care provider agrees to provide care for a fixed rate based on the number of health care plan members, regardless of the 6 8 amount of care required. To the extent that health care plan members require more care than anticipated, the capitation rate received may be insufficient to cover the costs associated with the provided services. The Company would, directly or indirectly, be forced to absorb some of these excess costs, which could have a material adverse effect on the Company's revenues and net earnings. Operating Margins. There can be no assurance that the Company will be able to maintain its historical operating margins in its dialysis business. The Company's costs are subject to continuing increases as a result of rising labor and supply costs, opening and start-up expenses for new dialysis centers, the development of new managed care products and general inflation. At the same time, reimbursement rates for dialysis treatments, from both public and private payers, depend on a number of factors and may remain flat or be reduced, as many payers are seeking to reduce the amounts paid for dialysis services. The Company is attempting to improve operating margins through increased productivity and various cost containment programs; however, there can be no assurance that its operating margins will not decline in the future. VSP has a limited operating history and to date has not been profitable. The specialty network and physician practice management business is rapidly evolving, and there can be no assurance that VSP will ever achieve profitability. In addition, even if planned operating margins are achieved, the Company believes that they will be significantly lower than those in its historical dialysis business. Limitations on Growth. The dialysis industry is highly competitive with respect to the acquisition of existing dialysis facilities and the recruitment of Medical Directors for new centers. In the past two years, acquisition prices and the competition for Medical Directors and new facilities have increased. To the extent that the Company is unable to acquire existing dialysis facilities economically, to develop facilities profitably or to recruit Medical Directors to operate its facilities, its ability to expand its dialysis business and maintain earnings per share growth and return on total capital would be adversely impacted. The Company intends to expand VSP significantly through the acquisition and development of related businesses, primarily specialty physician networks and practices. This expansion will require significant capital commitments, and the Company expects to spend a substantial portion of the proceeds of this offering on such expansion. The Company is incurring expenditures to develop its infrastructure and systems for VSP in anticipation of significant growth. In addition, there are a number of factors outside the Company's control which may delay or hinder the expansion of VSP's operations, including acceptance of the Company's services by physicians and payers. To the extent VSP's operations do not expand as planned and the Company does not realize revenues sufficient to offset such increased expenses, the Company's operating margins will be adversely affected and VSP may experience delays in attaining profitability or may never become financially viable. Further, VSP may not realize revenue and operating margins as predictable as those historically provided by VRC. Certain companies, some of which have longer operating histories and greater financial resources than those of VSP, are providing services similar to those that VSP is providing or pursuing. VSP may be forced to compete with these entities for acquisitions, network and management contracts and, in some cases, the employment of practice physicians. There can be no assurance that VSP will be able to compete effectively with such competitors, that additional competitors will not enter VSP's markets, or that such competition will not make it more difficult to expand in such markets on terms beneficial to VSP. See "Business--Competition." Limited Operating History of VSP and Integration of Operations. Since February 1996, VSP has grown aggressively, principally through acquisitions. VSP will continue to pursue an aggressive growth strategy that includes both acquisitions and the marketing of network services to payers ("Development Activities"). VSP negotiates payer contracts to provide specialty physician care, then acquires or develops specialty physician networks to service the contracts and in some instances acquires physician practices. The process of obtaining payer contracts, acquiring or establishing appropriate networks, and developing management services, administrative organizations, facilities, management information systems and other aspects of operations, while managing a larger and geographically expanded entity, presents a significant challenge to the management of Vivra and VSP, and there can be no assurance that the Company will be successful in these efforts. The dedication of management resources to such integration may detract attention from the day-to-day operations of Vivra and VRC. The difficulties of 7 9 integration may be increased by the necessity of coordinating geographically separated organizations, integrating personnel with disparate business backgrounds and combining different corporate cultures. There can be no assurance that there will not be substantial unanticipated costs associated with such activities or that there will not be other material adverse effects of these Development Activities. See "Business--Vivra Specialty Partners." Dependence on Key Personnel and Physicians. The Company is dependent on certain key senior management personnel, the loss of any of whom could have an adverse effect on the Company's business. In addition, the Company will need to continue to attract and retain highly skilled health care executives, the competition for whom is intense. The Company's dialysis facilities depend upon their Medical Directors and to a lesser extent local nephrologists and other physicians for referrals of ESRD patients for treatment. As is generally true in the dialysis industry, at each facility one or a few physicians account for all or a substantial portion of the patient base. The loss of one or more key physicians at a particular facility could have a material adverse effect on the operations of that facility, and the loss of a significant number of physicians could adversely affect the Company's overall operations. VSP is dependent upon its affiliations with physicians. Moreover, the Company believes that its future success will be dependent largely on its ability to attract and retain qualified physicians. VSP has entered into management, provider and/or employment agreements with physicians, a significant number of whom have the right to terminate their contracts with limited or no notice. In the event that a significant number of such physicians terminate their contracts or become unable or unwilling to continue in their roles, the Company's revenues and net earnings could be materially and adversely affected. Governmental Regulation. The Company is subject to extensive federal and state regulation regarding, among other things, fraud and abuse, health and safety, environmental compliance and toxic waste disposal. The illegal remuneration provisions of the Social Security Act and similar state laws impose civil and criminal sanctions. These sanctions include disqualification from participation in the Medicare and Medicaid programs for persons who solicit, offer, receive or pay any remuneration, directly or indirectly, for referring a patient for treatment which is paid for in whole or in part by Medicare and Medicaid or for otherwise generating revenues reimbursed by either of these programs. In July 1991 and in November 1992, the federal government published final regulations that provide exceptions or "safe harbors" from the illegal remuneration prohibitions for certain business transactions. Transactions that satisfy the criteria under the applicable safe harbors are deemed not to violate the illegal remuneration provisions. The Company seeks to comply with the safe harbors where possible. Due to the breadth of the statutory provisions and the absence in certain instances of regulations or court decisions addressing many of the specific arrangements by which the Company conducts its business, it is possible that the Company's practices might be challenged under these laws. The Office of Inspector General (the "OIG") of the Department of Health and Human Services ("HHS") has previously published warnings that it believes two practices common in the dialysis services industry may violate certain statutory provisions. The Company believes that it has a reasonable basis for continuing practices which the OIG may regard as within the scope of the OIG's warnings and that, if challenged by the OIG, it could defend these practices. However, there can be no assurance that the Company will not be required to change one or more of these practices or be subject to sanctions. The Company's revenues and net earnings would be adversely affected as a result of any such change or sanctions. The Company has never been challenged under these statutes, however, and believes it complies in all material respects with these and all other applicable laws and regulations. Under both the Omnibus Budget Reconciliation Act of 1993 ("Stark II") and certain state legislation, it is unlawful for a physician to refer patients for certain designated health services to an entity with which the physician has a financial relationship. The Company believes that the language and history of Stark II indicate that Congress did not intend to include dialysis services and certain services and items provided incident to dialysis services within the legislative prohibition. However, certain services, including prescription drugs, clinical laboratory services and parenteral and enteral nutrients, equipment, and supplies, even when provided in conjunction with dialysis services, could be construed as designated health services within the meaning of Stark II. Due to the breadth of the statutory provisions and the absence of regulations or court decisions addressing the specific arrangements by which the 8 10 Company conducts its business, it is possible that certain of the Company's practices might be challenged under these laws which could result in civil penalties, including exclusion or suspension of the Company from future participation in Medicare and Medicaid programs, and substantial fines. Although there can be no assurance, the Company believes that if Stark II is interpreted to apply to the Company's operations, the Company will be able to bring its financial relationships with referring physicians into material compliance under the provisions of Stark II, including relevant exceptions. If Stark II is broadly interpreted by HCFA to apply to the Company and the Company cannot achieve material compliance, it could have a material adverse effect on the Company's revenues and net earnings. The health care industry and physicians' medical practices are highly regulated at the federal and state levels. Because of the uniqueness of the structure of the relationships between the Company and the physician groups and its networks and the nature of the Company's business, there can be no assurance that review of the Company's business by courts or health care, tax, labor and other regulatory authorities will not result in determinations or actions, including decertification or disqualification from eligibility to receive reimbursement from Medicare or Medicaid, that could adversely affect the operations of the Company or that the health care regulatory environment will not change in a manner that would restrict the Company's existing operations or limit the expansion of the Company's business or otherwise adversely affect the Company. Many state laws restrict the unlicensed practice of medicine, the splitting or sharing of fees with non-physician entities and the enforcement of non-competition agreements. Increased attention has been devoted to the application of federal and state antitrust laws to physician networks and provider agreements. For example, federal law prohibits conduct that may result in price-fixing or other anticompetitive conduct. Although management of the Company believes the operations of the Company are in material compliance with existing law, there can be no assurance that the Company's existing agreements with its physicians, including service agreements or network agreements, will not be successfully challenged. See "Business--Governmental Regulation." Intradialytic Parenteral Nutrition Therapy Reimbursement. Intradialytic parenteral nutrition ("IDPN") therapy is a nutritional supplement administered during dialysis to patients suffering from nutritional deficiencies. In early 1993, HCFA designated four durable medical equipment regional carriers (the "DMERCs") to process reimbursement claims for IDPN therapy. To date, these DMERCs have denied most claims and the Company is currently appealing these denied claims. HCFA is currently reviewing the DMERCs' position with respect to medical policy and claims reimbursement. The final outcome of this review is uncertain and may ultimately affect the number of patients eligible to receive reimbursement for IDPN therapy. Patients receiving IDPN therapy prior to the DMERCs' designation are "grandfathered" under the prior carriers' medical policies and continue to be eligible for reimbursement. Since May 1995 and based upon the continued uncertainty with respect to reimbursement for services provided, the Company has limited administration of this therapy only to patients who have been grandfathered or have private insurance. National Health Care Reform. There is significant national concern today about the availability and rising cost of health care in the United States. It is anticipated that new federal and/or state legislation will be passed and regulations adopted to attempt to provide broader and better health care coverage and to manage and contain its cost. The Company is unable to predict the content of any legislation or what, if any, changes may occur in the method and rates of its Medicare and Medicaid reimbursement or in other government regulations that may affect its businesses, or, whether such changes, if made, will have a material adverse effect on its revenues and net earnings. Subordination. The Notes are unsecured obligations of the Company subordinated to all existing and future Senior Indebtedness of the Company and effectively subordinated to all indebtedness and other liabilities of the Company's subsidiaries (including trade payables and lease obligations). As of August 31, 1996, there was no Senior Indebtedness outstanding and approximately $3.2 million of indebtedness of the Company's subsidiaries. Upon any distribution of assets of the Company pursuant to any insolvency, bankruptcy, dissolution, winding up, liquidation or reorganization, the payment of the principal of and interest on the Notes will be subordinated to the extent provided in the Indenture to the prior payment in full of all Senior Indebtedness. In addition, the Company may not repurchase any Notes upon a Change in Control if at such time the subordination provisions of the Indenture would prohibit the Company from making payments of principal in respect of the Notes. Such provisions may limit the ability of the Company to repurchase the Notes in the event of a Change in Control, and the failure to so repurchase the Notes when required would result in an Event of Default (as defined) under the Indenture. In addition, the 9 11 Company conducts its operations through subsidiaries and depends on the earnings and cash flows of such subsidiaries to pay its obligations, including payments in respect of its indebtedness. Any right of the Company and its creditors to participate in the assets of any such subsidiary upon any liquidation or reorganization of any such subsidiary will be subject to the prior claims of that subsidiary's creditors, including trade creditors. See "Description of the Notes." Limitation on Repurchase upon a Change in Control. The Company's ability to repurchase the Notes upon a Change in Control may be limited by law, the Indenture and by the terms of other agreements relating to borrowings that constitute Senior Indebtedness, as such indebtedness or agreements may be entered into, replaced, supplemented or amended from time to time. As a result of such limitations, a holder of the Notes may not be able to compel the Company to repurchase the Notes upon a Change in Control. The Company may be required to refinance Senior Indebtedness in order to make any such payment. The Company may not have the financial ability to repurchase the Notes in the event payment of Senior Indebtedness is accelerated. The Change in Control provision may not, in some instances, prevent a decrease in the value of the Notes in the event the Company incurs additional leverage through certain types of recapitalizations, leveraged buyouts or similar transactions. See "Description of Notes--Repurchase at Option of Holder Upon Change in Control." Possible Volatility of Stock Price. There has been volatility in the market price of securities of health care companies. Future announcements concerning the Company or its competitors, including government regulations, reimbursement changes, litigation, or other developments, as well as changes in, or the failure by the Company to meet, estimates of securities analysts, may have a significant impact on the market price of the Company's Common Stock. In addition, broad market fluctuations and general economic or political conditions may adversely affect the market price of the Company's Common Stock, regardless of the Company's actual performance. See "Business--Competition" and "--Governmental Regulation." Anti-Takeover Provisions. The Company's Restated Certificate of Incorporation and the Delaware General Corporation Law (the "General Corporation Law") contain provisions that may have the effect of making more difficult or delaying attempts by others to obtain control of the Company, even when these attempts may be in the best interest of stockholders. The General Corporation Law also imposes conditions on certain business combination transactions with "interested stockholders" (as defined therein). In addition, the Company has issued to its holders of Common Stock, pursuant to a stockholders rights plan, rights that will cause substantial dilution to a person or group that attempts to acquire the Company on terms not approved by the Company's Board of Directors. See "Description of Capital Stock." 10 12 USE OF PROCEEDS The Company will not receive any proceeds from the sale by the Selling Securityholders of the Notes or the Conversion Shares. RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth the Company's ratio of earnings to fixed charges on a historical basis in each of the five years in the period ended November 30, 1995, and for the six-month periods ended May 31, 1996 and 1995.
SIX MONTHS YEAR ENDED NOVEMBER 30, ENDED MAY 31, ---------------------------------------------------------- ------------------ 1995 1994 1993 1992 1991 1996 1995 ---------- ---------- ---------- ---------- ---------- ---------- ------- Ratio of earnings to fixed charges......... 16.7x 16.6x 14.2x 15.1x 14.4x 20.1x 14.3x
For purposes of computing the ratio of earnings to fixed charges, earnings include earnings from continuing operations before income taxes plus fixed charges. Fixed charges consist of interest expense and such portion of rental expense which is representative of interest. 11 13 BUSINESS Vivra is a specialty care company. The Company's business strategy is to compete in specialties/disease states where Vivra can demonstrably deliver differentiated care to high-cost patient populations. The Company provides services through Vivra Renal Care ("VRC") and Vivra Specialty Partners ("VSP"). VRC is the second largest provider of dialysis services in the United States and, as of August 31, 1996, had approximately 13,350 patients at 237 centers in 27 states and the District of Columbia. VSP provides physician network and disease management services to entities responsible for coordinating health care for a patient population, principally managed care organizations. VSP coordinates care in multiple specialties, including asthma/allergy, cardiology, diabetes, dialysis/nephrology, ENT, obstetrics/gynecology and orthopedics. In these specialties VSP currently provides services through 38 contracts and also owns 31 specialty practices with 58 physicians and manages one additional specialty practice with 15 physicians. VIVRA RENAL CARE Industry Overview End-Stage Renal Disease. ESRD is the state of advanced renal impairment that is irreversible and fatal without treatment. According to HCFA, the number of patients who require chronic dialysis services grew from approximately 66,000 in 1982 to approximately 187,000 in 1994, representing a compound annual growth rate of 9%. VRC attributes the continuing growth in the number of ESRD patients principally to the aging of the general population, demographic trends and medical advances resulting in increased life expectancy of patients with hypertension, diabetes and other illnesses that lead to ESRD. Additionally, management believes improved technology has enabled older patients and those who previously could not tolerate dialysis due to other illnesses to benefit from this life-prolonging treatment. Qualified patients with ESRD have been entitled since 1973 to Medicare benefits regardless of age or financial circumstances. Treatment Options for ESRD. Treatment options for ESRD include hemodialysis, peritoneal dialysis and kidney transplant surgery. HCFA estimates that, as of December 31, 1994, 82% of the ESRD patients in the United States were receiving hemodialysis treatment in outpatient facilities. The remaining 18% were treated in the home or in the hospital as inpatients. Patients treated in the home are monitored by a designated outpatient facility or qualified physician's office. Hemodialysis uses an artificial kidney, called a dialyzer, to remove certain toxins, fluid and salt from the patient's blood, and a machine to control external blood flow and to monitor certain vital signs of the patient. Typically dialysis for the chronic patient is performed three times per week, for approximately four hours per treatment, and continues for the patient's lifetime. Peritoneal dialysis is generally performed by the patient at home. The most common methods are continuous ambulatory peritoneal dialysis ("CAPD") and continuous cycling peritoneal dialysis ("CCPD"). Peritoneal dialysis offers patients an improved lifestyle, but is limited in application by a higher incidence of infection. Both CAPD and CCPD use the patient's peritoneal (abdominal) cavity to eliminate fluid and toxins from the patient. CCPD uses a mechanical device to cycle dialysis solution while a patient is sleeping. An alternative treatment not provided by VRC is kidney transplantation. While this option, when successful, is the most desirable form of therapeutic intervention, the shortage of suitable donors limits the availability of this surgical procedure as a treatment option. In addition, attempts are being made to develop new drugs, medical treatments or artificial kidneys that reduce or eliminate the necessity for dialysis. VRC Facilities and Operations VRC intends to develop and acquire facilities primarily in existing and contiguous geographic markets and to increase the number of physicians and other sources of patient referrals. However, the dialysis industry is highly competitive and, as a result, VRC may not be able to acquire new dialysis facilities economically. As of August 12 14 31, 1996, VRC owned and operated 237 facilities in 27 states and the District of Columbia. The facilities range in size from 6 to 41 stations; the average size is 15 stations. The number of VRC's facilities has increased significantly during the past five years through the acquisition of 51 existing facilities and the development of 56 new facilities, offset by the closure of 12 facilities. As a result of a net increase in facilities, as well as an increase in the number of treatments at existing centers, VRC has increased total treatments provided by 101.1% over the past 5 years. During fiscal 1995, VRC's "same store" patient growth was 6.0%. There can be no assurance that VRC will continue to experience similar growth in the future.
NUMBER OF NUMBER OF TREATMENTS FISCAL YEAR END FACILITIES PROVIDED --------------- ---------- -------- 1990 104 664,955 1991 112 768,743 1992 128 911,979 1993 138 1,116,199 1994 150 1,289,200 1995 199 1,545,510
The above table includes total CAPD and CCPD treatments of 48,164, 64,463, 83,579, 114,340, 136,092 and 171,846 in fiscal 1990 through 1995, respectively. As of August 31, 1996, VRC's facilities were located as follows: California (41); Florida (35); Texas (21); Georgia and South Carolina (20 each); Pennsylvania and Alabama (15 each); Virginia (14); North Carolina (7); Louisiana (6); Maryland (5); District of Columbia (4); Connecticut, Michigan, Missouri, New Jersey, New Mexico, Oklahoma and Oregon (3 each); Arizona, Kansas, Massachusetts and Tennessee (2 each); Colorado, Illinois, Iowa, Ohio and West Virginia (1 each). As required by Medicare regulations, each of VRC's facilities is supervised by a Medical Director. VRC's Medical Directors are licensed physicians in private practice who are directly responsible for assuring the quality of patient care. A Unit Administrator, who is generally a registered nurse, supervises the day-to-day operation of each facility and the staff. The staff consists of registered nurses, medical technicians, nurses' aides, a unit clerk, and certain part-time employees, including a social worker, a registered dietitian and a machine repair technician. Each facility is staffed in a manner that allows the number of personnel to be adjusted efficiently according to the number of patients receiving treatment. VRC engages in organized and systematic efforts to measure, maintain and improve the quality of services it delivers. Each of VRC's facilities collects and analyzes quality assurance data which is reviewed regularly by regional and corporate management to continually monitor and improve the standard of care being provided. Sources of Dialysis Revenues. VRC estimates that approximately 70% of its dialysis revenues, including revenues for the reimbursement of the administration of EPO, for each of the fiscal years 1991, 1992 and 1993, 66% for fiscal year 1994 and 70% for fiscal 1995, were reimbursements from Medicare and Medicaid under ESRD administered by HCFA and the states. Numerous congressional actions have resulted in changes in the average Medicare reimbursement rate from a fixed fee of $138 per treatment in 1983, to a current average rate of $126. The Medicaid programs are also subject to statutory and regulatory changes that could affect the rate of Medicaid reimbursement. VRC is not able to predict whether and to what extent changes to Medicare and Medicaid reimbursement rates will be made in the future. Any reduction in these reimbursement rates would have material adverse effects on VRC's revenues and net earnings. New dialysis patients must wait 90 days after commencement of dialysis treatments to qualify under the Medicare ESRD reimbursement program. Often patients do not have the means or insurance to pay for treatment during this 90-day waiting period. If new patients do have private insurance or belong to an employer group health plan, regulations require such insurance to pay for up to the first 21 months of dialysis treatment before Medicare reimbursement begins. If a secondary carrier such as Medicaid or a private insurer cannot be found, the Company 13 15 may not be reimbursed for the initial waiting period or the 20% copayment of the ESRD rate which is not paid by Medicare. VRC seeks to assist patients who may not initially have adequate sources of reimbursement or insurance to obtain coverage, if possible. Since June 1, 1989, Medicare and Medicaid have provided reimbursement for the administration of EPO to dialysis patients for the treatment of anemia. During fiscal 1994 and 1995, approximately 84% and 85%, respectively, of VRC's dialysis patients received EPO. Revenues from the administration of EPO were approximately $43.5 million and $56.0 million, respectively, or 17% and 18%, respectively, of dialysis revenues, for those periods. Effective January 1, 1994, Medicare and Medicaid reimbursement for the administration of EPO was reduced from $11.00 to $10.00 per 1,000 units. Any further reduction in the reimbursement rate for the administration of EPO would have a negative impact on Vivra's revenues and net earnings. In addition, EPO is produced by a single manufacturer, and any interruption of supply could adversely affect Vivra's revenues and net earnings. VRC estimates that approximately 34% of its dialysis revenues for the fiscal year ended 1994 and 30% for 1995, were derived from sources other than Medicare and Medicaid. Of these revenues, the largest portion came from private insurance for chronic dialysis treatments. In general, private insurance reimbursement and reimbursement for treatments performed at acute care hospitals are at rates significantly in excess of Medicare and Medicaid rates. VRC believes that private payers will be required in the future to assume a greater percentage of the costs of dialysis care as the existing federal ESRD program is reviewed by the United States Congress, and as a result, private payers will focus on reducing dialysis payments as their overall dialysis costs increase. In addition, as HMOs and other managed care providers expand, they will have a strong incentive to further reduce the costs of specialty care and will aggressively seek to reduce amounts paid for dialysis. VRC is unable to predict to what extent decreases in these reimbursement rates will be made in the future. Any reduction in the ability of VRC to charge rates that are in excess of those paid by Medicare and Medicaid would have a significant negative effect on the Company's revenues and net earnings. Ancillary Services. In September 1991, the Company established Associated Health Services ("AHS") to provide IDPN pharmacy and support services to its dialysis patients. AHS operates a pharmacy in Southern California and provides IDPN therapy services to dialysis patients in facilities owned by third parties, in addition to VRC's patients. In 1996, VRC began development of a dialysis laboratory and concurrently entered into a management agreement with an independent third party to manage the laboratory, which is currently scheduled to begin operations in July 1996. Tests to be performed at the laboratory will include: (i) blood tests which are reimbursed as part of the dialysis composite rate, (ii) blood tests ordered for co-morbidity ESRD conditions (i.e., diseases that are the result of or cause ESRD) and (iii) general symptom testing. VIVRA SPECIALTY PARTNERS VSP believes that, with the growth of managed care, substantial opportunities may exist to provide network and practice management services related to high-cost specialty care. VSP believes that its physician networks have the ability to effectively manage expenses related to high cost diseases, which account for a significant portion of total medical expenses. In addition, VSP believes that it will have the opportunity to acquire a significant number of specialty practices. VSP's strategy is to contract for and manage the delivery of high quality, cost-effective specialty care through organized physician networks. VSP's networks are integrated groups of physicians within the same specialty who are contractually linked to VSP for the purpose of delivering specialty care to patient populations. The networks are typically arranged to provide comprehensive geographic coverage in and across the service area of managed care organizations. VSP provides operating and systems infrastructure, secures managed care contracts and facilitates the care process while providing physicians significant autonomy and the ability to co-govern their financial affairs and generate utilization and practice quality enhancements. VSP has acquired and intends to continue to acquire specialty physician practices which are complementary to its physician networks and where VSP has sub-capitated or case-rate contracts, or where it expects to obtain such contracts. The Company believes that these specialty practices may allow it to develop clinical and management insights to enhance the provision of specialty care. 14 16 VSP currently owns networks and/or practices and provides services in the following specialties: - - Asthma & Allergy - ENT - - Cardiology - OB/GYN - - Diabetes - Orthopedics - - Dialysis/Nephrology In these specialties, VSP provides services for approximately 4.1 million "Specialty Lives" through 38 contracts. Each health plan member is deemed to have one Specialty Life for each specialty contracted. VSP owns 31 specialty practices with 58 physicians and manages one additional specialty practice with 15 physicians. To date, VSP's acquired practices are primarily in asthma/allergy and cardiology. However, the Company intends to acquire practices in the other specialties it serves. VSP's network information processing company, Vivra Network Services ("VNS"), provides claims processing and management reporting to VSP's specialty networks. In addition, VNS has contracts with ten third-party specialty networks covering approximately 1.8 million Specialty Lives to provide claims processing and management reporting services. VSP intends to continue to aggressively expand through the acquisition and development of related businesses, primarily physician network and practice entities. Expansion of the VSP business will require significant capital commitments by the Company and will require that physicians and payers accept the Company's services and, accordingly, there can be no guarantee that these new businesses will ever become profitable or obtain financial viability. Further, there can be no assurance that VSP will be able to successfully compete with companies which provide services similar to VSP, some of which have greater financial resources and longer operating histories. COMPETITION VRC. It is estimated that the six largest dialysis providers constitute approximately 40% of the estimated $4 billion outpatient dialysis treatment market. The balance of the market is still fragmented into hospital-based centers and facilities owned by individual nephrologists. Industry consolidation has accelerated as large providers have increased the pace at which they are making acquisitions. As a result, VRC faces competition for the acquisition and development of new centers as well as competition for qualified physicians to act as Medical Directors. A primary consideration of a patient or a physician when selecting a dialysis facility is convenience of location for the patient. Other competitive factors include quality of care and service. On occasion, VRC has experienced competition from the establishment of a facility by a former Medical Director. VSP. Certain companies, some of which have longer operating histories and greater financial resources than those of VSP, are providing network and management services similar to those that VSP is providing or pursuing. VSP may be forced to compete with these entities for acquisitions, network and management contracts and, in some cases, the employment of practice physicians. There can be no assurance that VSP will be able to compete effectively with such competitors, that additional competitors will not enter VSP's markets, or that such competition will not make it more difficult to expand in such markets on terms beneficial to VSP. GOVERNMENTAL REGULATION General. The Company's operations are subject to extensive governmental regulation at the federal, state and local levels. Fraud and Abuse. The Company's operations are subject to the illegal remuneration provisions of the Social Security Act (sometimes referred to as the "anti-kickback" statute) and similar state laws that impose criminal and civil sanctions on persons who knowingly and willfully solicit, offer, receive or pay any remuneration, whether directly or indirectly, in return for, or to induce, the referral of a patient for treatment, or, among other things, the 15 17 ordering, purchasing, or leasing, of items or services that are paid for in whole or in part by Medicare, Medicaid or similar state programs. Violations of the federal anti-kickback statute are punishable by criminal penalties, including imprisonment, fines and exclusion of the provider from future participation in the Medicare and Medicaid programs. Federal enforcement officials also may attempt to impose civil false claims liability with respect to claims resulting from an anti-kickback violation. If successful, civil penalties could be imposed, including assessments of $2,000 per improper claim for payment plus twice the amount of such claim and suspension from future participation in Medicare and Medicaid programs. Civil suspension for anti-kickback violations also can be imposed through an administrative process, without the imposition of civil monetary penalties. Some state statutes also include criminal penalties. While the federal anti-kickback statute expressly prohibits transactions that have traditionally had criminal implications, such as kickbacks, rebates or bribes for patient referrals, its language has been construed broadly and has not been limited to such obviously wrongful transactions. Court decisions state that, under certain circumstances, the statute is also violated when one purpose (as opposed to the "primary" or a "material" purpose) of a payment is to induce referrals. Congress has frequently considered federal legislation that would expand the federal antikickback statute to include the same broad prohibitions regardless of payer source. In July 1991 and in November 1992, the Secretary of HHS published regulations that create exceptions or "safe harbors" for certain business transactions. Transactions that satisfy the criteria under the applicable safe harbors will be deemed not to violate the federal anti-kickback statute. Transactions that do not satisfy all elements of a relevant safe harbor do not necessarily violate the statute, although such transactions would be subject to scrutiny by enforcement agencies. The Company seeks to structure its various business arrangements to satisfy as many safe harbor elements as possible under the circumstances, although many of the Company's arrangements satisfy all of the elements of the relevant safe harbor. Although the Company has never been challenged under the anti-kickback statute and believes it complies in all material respects with this statute and all other applicable related laws and regulations, there can be no assurance that the Company will not be required to change its practices or experience a material adverse effect as a result of any such challenge or any sanction which might be imposed. On July 21, 1994, the Secretary of HHS proposed a rule that would modify the original set of safe harbor provisions to give greater clarity to the rulemaking's original intent. The proposed rule would make changes to the safe harbors on personal services and management contracts, small entity investment interests and space rentals, among others. The Company does not believe that the application of these safe harbors to its current arrangements, as set forth above, would change if the proposed rule were adopted in the form proposed. However, the Company cannot predict the outcome of the rulemaking process or whether changes in the safe harbors rule will affect the Company's position with respect to the anti-kickback statute. Stark II. Federal law, commonly referred to as Stark II, restricts physician referrals for certain designated health services to entities with which a physician or an immediate family member has a "financial relationship." The entity is prohibited from claiming payment under the Medicare or Medicaid programs for services rendered pursuant to a prohibited referral and is liable for the refund of amounts received pursuant to prohibited claims. The entity also can receive civil penalties of up to $15,000 per improper claim and can be excluded from participation in the Medicare and Medicaid programs. Comparable provisions applicable to clinical laboratory services became effective in 1992. Stark II provisions which may be relevant to the Company became effective on January 1, 1995. A "financial relationship" under Stark II is defined as an ownership or investment interest in, or a compensation arrangement between, the physician and the entity. The Company has entered into compensation agreements with its Medical Directors and other referring physicians and some Medical Directors own stock in the Company. The Company is not aware of any family relationship between a Medical Director and staff at its dialysis facilities. Stark II includes certain exceptions for compensation arrangements and ownership that satisfy certain criteria. With respect to compensation arrangements, remuneration from an entity pursuant to a personal services compensation arrangement is excepted from Stark II prohibitions if: (i) the arrangement is set out in writing, signed by the parties, and specifies the services covered by the arrangement; (ii) the arrangement covers all of the services to be provided by the physician (or an immediate family member of such physician) to the entity; (iii) the aggregate services contracted for do not exceed those that are reasonable and necessary for the legitimate business purposes of the arrangement; (iv) the term of the arrangement is for at least one year; (v) the compensation to be paid over 16 18 the term of the arrangement is set in advance, does not exceed fair market value, and is not determined in a manner that takes into account the volume or value of any referrals or other business generated between the parties; (vi) the services to be performed do not involve the counseling or promotion of a business arrangement or other activity that violates any state or federal law; and (vii) the arrangement meets such other requirements that may be imposed pursuant to regulations promulgated by HHS. Another Stark II exception for compensation arrangements applies to bona fide employment relationships. This exception can apply to amounts paid by an employer to a physician-employee if: (i) the employment is for identifiable services; (ii) the amount of remuneration is consistent with the fair market value of services and is not determined in a manner that takes into account, directly or indirectly, the volume or value of any referrals by the referring physician; (iii) the remuneration is provided pursuant to an agreement which would be commercially reasonable even if no referrals were made to the employer; and (iv) the employment meets such other standards that HHS may impose to protect against program or patient abuse. In addition, this exception would permit certain types of productivity bonuses based on personal services performed by the physician or an immediate family member. Stark II also includes an exception for a physician's ownership or investment interest in shares in an Investment Company or securities listed on an exchange or quoted on the Nasdaq National Market which, in either case, meets certain financial criteria. State Referral Regulations. Various states have in place or are considering anti-referral statutes which impose requirements on or prohibit certain referrals. The Company could be subject to sanctions and could be required to restructure some or all of its relationships with the referring physicians with whom it contracts for Medical Director and similar services. The consequences of such restructuring, if any, cannot be predicted. State Laws Regarding Provision of Medicine and Insurance. The laws of many states prohibit physicians from splitting fees with non-physicians and prohibit non-physician entities from practicing medicine. These laws vary from state to state and are enforced by the courts and by regulatory authorities with broad discretion. Although the Company believes its operations as currently conducted are in material compliance with existing applicable laws, many aspects of the Company's business operations, including the structure of the relationships between the Company and its medical providers, have not been the subject of state or federal regulatory interpretation. There can be no assurance that review of the Company's business by courts or regulatory authorities will not result in determinations that could adversely affect the operations of the Company or that the health care regulatory environment will not change so as to restrict the Company's existing operations or their expansion. Dialysis Segment. With respect to the Company's dialysis operations, the Company must meet various standards relating to, among other things, the management of facilities, personnel, maintenance of proper records, equipment and quality assurance programs. The dialysis facilities are subject to periodic inspection by state agencies and other governmental authorities to determine if the premises, equipment, personnel and patient care meet applicable standards. To receive Medicare reimbursement, the Company's dialysis facilities must be certified by HCFA. Any loss by the Company of its various federal certifications, its authorization to participate in the Medicare or Medicaid programs or its licenses under the laws of any state or other governmental authority from which a substantial portion of its revenues is derived, or a change resulting from health care reform reducing dialysis reimbursement or reducing or eliminating coverage for dialysis services, would have a material adverse effect on the Company's business. The health care services industry will continue to be subject to intense regulation at the federal and state levels, the scope and effect of which cannot be predicted. No assurance can be given that the activities of the Company will not be reviewed and challenged or that health care reform will not result in a material adverse change to the Company. The conditions for coverage under the Medicare ESRD program mandate that treatment at a dialysis facility be under the general supervision of a Medical Director who is a physician. Generally, the Medical Director must be board eligible or board certified in internal medicine or pediatrics and have had at least 12 months of experience or training in the care of patients at ESRD facilities. The Company has engaged Medical Directors at each of its facilities. The compensation of the Medical Directors and other physicians under contract is separately negotiated 17 19 and generally depends upon competitive factors in the local market, the physician's professional qualifications and responsibilities and the size and utilization of the facility or relevant program. The aggregate compensation of the Medical Directors and other physicians under contract is generally fixed in advance for periods of one year or more by written agreement and is set to reflect the fair market value of the services rendered. Because in all cases the Company's Medical Directors and the other physicians under contract refer patients to the Company's facilities, the federal anti-kickback statute could apply. However, the Company believes its contractual arrangements with these physicians are in material compliance with the anti-kickback statute. Among the safe harbors promulgated by the Secretary of HHS is one relevant to the Company's arrangements with its Medical Directors and the other physicians under contract. The Company endeavors to enter into agreements with its Medical Directors and other physicians under contracts which satisfy the requirements of the personal services and management contract safe harbor. The OIG has published warnings to the dialysis services industry generally that it believes that the industry-wide practices of obtaining discounts on certain laboratory charges and the payment of remuneration for services provided for IDPN therapy at dialysis centers violate the anti-kickback statute in many, if not most, circumstances. The Company believes that it has a reasonable basis for continuing practices which the OIG may regard as within the scope of the warnings and that, if challenged by the OIG, it could defend these practices. However, there can be no assurance that the Company will not be challenged under the statutes or that, whether or not challenged and subject to sanctions, the Company will not be required to change its current practices. Any such change or challenge, including any sanctions, would have an adverse effect on the Company's revenues and net earnings, as well as its competitors that engage in similar practices. Stark II may require the Company to restructure certain existing compensation arrangements with its Medical Directors or, in the alternative, to refuse to accept referrals for designated health services from such physicians. Although there can be no assurance, the Company believes that if Stark II is interpreted to apply to the Company's operations, the Company will be able to bring its financial relationships with referring physicians into material compliance with the provisions of Stark II, including relevant exceptions. If the Company cannot achieve such material compliance, and Stark II is broadly interpreted by HHS to apply to the Company, such application of Stark II could have a material adverse effect on the Company. A broad interpretation of Stark II to include dialysis services and items provided incident to dialysis services would apply to the Company's competitors as well. For purposes of Stark II, "designated health services" include, among other things: clinical laboratory services; parenteral and enteral nutrients, certain equipment and supplies; prosthetics; orthotics; prosthetic devices; physical and occupational therapy services; outpatient prescription drugs; and inpatient and outpatient hospital services. Dialysis is not a designated health service, and the Company believes that the language and legislative history of Stark II indicate that Congress may not have intended to include the services and items provided incident to dialysis services within the Stark II prohibitions. However, the Company's provision of, or arrangement and assumption of financial responsibility for, outpatient prescription drugs, including EPO and IDPN, clinical laboratory services, facility dialysis services and supplies, home dialysis supplies and equipment, and services to hospital inpatients and outpatients, include services and items which could be construed as designated health services within the meaning of Stark II. Although the Company does not bill Medicare or Medicaid for hospital inpatient and outpatient services, the Company's Medical Directors may request or establish a plan of care that includes dialysis services for hospital inpatients and outpatients that may be considered a referral to the Company within the meaning of Stark II. Specialty Care Segment. Most states have laws regulating insurance companies, HMOs and third-party administrators. The Company is not licensed in any state to engage in the insurance, HMO or third-party administrator businesses. As the managed care business evolves, state regulators may begin to scrutinize the practices of, and relationships between, third-party payers, medical service providers and entities providing management and other services to medical service providers with respect to the application of insurance, HMO and third-party administrator laws and regulations. The Company does not believe that its practices in either VRC or VSP, which are consistent with those of other health care companies, would subject it to such laws and regulations. However, given the limited regulatory history with respect to such practices, there can be no assurance that states will not attempt to assert jurisdiction. The Company may be subject to prosecution by state regulatory agencies, and accordingly may be required to change or discontinue certain practices which could have a material adverse effect on the Company. 18 20 Certain of the Company's other operations also receive Medicare and Medicaid reimbursement. While the Company believes that its other operations comply in all material respects with applicable law, there can be no assurance that the Company's other operations will not be subject to challenge or sanctions. Any such challenge or sanctions could have a material adverse effect on the Company's revenues and net earnings. In recent years, increased attention has been focused on the application of federal and state antitrust laws to physician networks and provider arrangements. Federal law prohibits conduct that may result in price-fixing or other anticompetitive conduct. Although management of the Company believes the operations of the Company are in material compliance with existing law, there can be no assurance that the Company's existing agreements with its physicians, including service agreements or network agreements, will not be successfully challenged. Medicare and Healthcare Reform. Because the Medicare program represents a substantial portion of the federal budget, Congress takes action in almost every legislative session to modify the Medicare program for the purpose of reducing the amounts otherwise payable by the program to health care providers in order to achieve deficit reduction targets, among other reasons. Legislation or regulations may be enacted in the future that may significantly modify the ESRD program or substantially reduce the amount paid for the Company's dialysis or other services. Further, statutes or regulations may be adopted which impose additional requirements in order for the Company to be eligible to participate in the federal and state payment programs. Such new legislation or regulations may adversely affect the Company's business operations. Other Regulations. The Company's operations are subject to various state hazardous waste disposal laws. Those laws as currently in effect do not classify most of the waste produced during the provision of dialysis services to be hazardous, although disposal of non-hazardous medical waste is also subject to regulation. OSHA regulations require employers of workers who are occupationally subject to blood or other potentially infectious materials to provide those workers with certain prescribed protections against bloodborne pathogens. The regulatory requirements apply to all health care facilities, including dialysis facilities, and require employers to make a determination as to which employees may be exposed to blood or other potentially infectious materials and to have in effect a written exposure control plan. In addition, employers are required to provide hepatitis B vaccinations, personal protective equipment, infection control training, post-exposure evaluation and follow-up, waste disposal techniques and procedures, and engineering and work practice controls. Employers are also required to comply with certain record-keeping requirements. The Company believes it is in material compliance with the foregoing laws and regulations. Some states have established certificate of need ("CON") programs regulating the establishment or expansion of health care facilities, including dialysis facilities. The CON laws formerly applicable to freestanding dialysis facilities in seven states in which the Company operates dialysis facilities (Arizona, California, Florida, Louisiana, New Mexico, Texas and Virginia) have been repealed or have lapsed and have not been re-enacted. The Company believes it is in material compliance with current applicable laws and regulations. No assurance can be made that in the future the Company's business arrangements, past or present, will not be the subject of an investigation or prosecution by a federal or state governmental authority. Such investigation could result in any, or any combination, of the penalties discussed above depending upon the agency involved in such investigation and prosecution. None of the Company's business arrangements with physicians, vendors, patients or others have been the subject of investigation by any governmental authority. No assurance can be given that the Company's activities will not be reviewed or challenged by regulatory authorities. The Company monitors legislative developments and would seek to restructure a business arrangement if the Company determined that one or more of its business relationships placed it in material noncompliance with such a statute. The health care service industry will continue to be subject to substantial regulation at the federal and state levels, the scope and effect of which cannot be predicted by the Company. Any loss by the Company of its various federal certifications, its authorization to participate in the Medicare and Medicaid programs or its licenses under the laws of any state or other governmental authority from which a substantial portion of its revenues are derived would have a material adverse effect on its business. 19 21 INSURANCE The Company carries insurance for property damage, public liability and malpractice covering all of its businesses. The public liability and malpractice coverage limits are $40.0 million for each loss occurrence. The all risk property insurance coverage limits are $10.0 million based on replacement cost for each loss occurrence. The loss occurrence limit includes separate annual aggregate sublimits for earthquake and flood damage of $5.0 million for each state. The Company believes that its insurance coverage is adequate. EMPLOYEES As of August 31, 1996, the Company had approximately 4,700 employees. Employees at one of the Company's dialysis facilities (representing less than 1% of total employees) are covered by a union agreement. The Company considers its labor relations to be satisfactory. 20 22 DESCRIPTION OF THE NOTES The Notes have been issued under an Indenture between the Company and State Street Bank and Trust Company, as Trustee (the "Indenture"). The Notes are subject to all the terms stated in the Indenture and such terms as are made a part thereof by reference to the Trust Indenture Act of 1939. The following summaries of certain provisions of the Indenture do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all of the provisions of the Notes and the Indenture, including the definitions therein of certain terms which are not otherwise defined in this Prospectus. The defined terms of the Indenture (or the form of Note attached thereto) are incorporated herein by reference. GENERAL The Notes are limited to $158,545,000 aggregate principal amount. The Notes are unsecured subordinated obligations of the Company and will mature on July 1, 2001, unless earlier redeemed at the option of the Company or repurchased by the Company at the option of the holder upon a Change in Control of the Company. The Notes bear interest from the most recent date to which interest has been paid, or if no interest has been paid, from date of initial issuance, at 5% per annum computed on the basis of a 360-day year of twelve 30-day months. Interest is payable semiannually on January 1 and July 1 of each year, commencing on January 1, 1997, to the person in whose name the Notes are registered at the close of business on the preceding December 15 or June 15, respectively. The Indenture does not contain any restriction on (i) the payment of dividends, (ii) the issuance of Senior Indebtedness or other indebtedness or (iii) the repurchase of securities of the Company, and does not contain any financial covenants. The Indenture contains no covenants or other provisions to afford protection to holders of Notes in the event of a highly leveraged transaction or a Change in Control of the Company except to the extent described under "Repurchase at Option of Holder Upon Change in Control." The Indenture and the Notes are governed by and are to be construed under the laws of the State of New York. FORM, DENOMINATION AND REGISTRATION Global Note; Book-Entry Form Notes held by "qualified institutional buyers," as defined in Rule 144A under the Securities Act ("Qualified Institutional Buyers"), but not by other purchasers, will be evidenced by a global Note (the "144A Global Note") which has been deposited with, or on behalf of, The Depository Trust Company, New York, New York ("DTC") and registered in the name of Cede & Co. ("Cede") as DTC's nominee. Notes held by persons who acquired such Notes in compliance with Regulation S under the Securities Act ("Foreign Persons") initially will be evidenced by a temporary global Note (the "Regulation S Temporary Global Note"), which has been deposited with, or on behalf of, DTC and registered in the name of Cede as DTC's nominee. Beneficial interests in the Regulation S Temporary Global Note may only be held through the Euroclear System ("Euroclear") or Cedel Bank, Societe Anonyme ("Cedel"). Except as set forth below, the record ownership of the Global Note (defined herein) may be transferred, in whole or in part, only to another nominee of DTC or to a successor of DTC or its nominee. A Qualified Institutional Buyer may hold its interest in the Global Note directly through DTC if such Qualified Institutional Buyer is a participant in DTC, or indirectly through organizations which are participants in DTC (the "Participants"). Transfers between Participants will be effected in the ordinary way in accordance with DTC rules and will be settled in same-day funds. The laws of some states require that certain persons take physical delivery of securities in definitive form. Consequently, the ability to transfer beneficial interests in the Global Note to such persons may be limited. After the expiration of the 40-day restricted period referred to in Rule 903(c)(3) of Regulation S under the Securities Act (the "40-day restricted period"), the Regulation S Temporary Global Note will be exchanged for the Regulation S Permanent Global Note upon delivery to DTC of certification of compliance with the transfer restrictions applicable to the Notes and pursuant to Regulation S under the Securities Act as provided in the 21 23 Indenture. The Regulation S Permanent Global Note will be deposited with a custodian and will be registered in the name of a nominee of DTC. Cedel and Euroclear will hold beneficial interests in the Regulation S Permanent Global Note on behalf of their participants through their respective depositaries, which in turn will hold such beneficial interests in the Regulation S Permanent Global Note in participants' securities accounts in the depositaries' names on the books of DTC. A beneficial interest in the Regulation S Temporary Global Note may be transferred to a person who takes delivery in the form of an interest in the 144A Global Note only upon receipt by the Trustee of a written certification from the transferor in the form required by the Indenture to the effect that such transfer is being made (i)(a) to a person whom the transferor reasonably believes is a Qualified Institutional Buyer in a transaction meeting the requirements of Rule 144A or (b) pursuant to another exemption from the registration requirements under the Securities Act (in which case such certificate must be accompanied by an opinion of counsel regarding the availability of such exemption) and (ii) in accordance with all applicable securities laws of any state of the United States or any other jurisdiction. Beneficial interests in the 144A Global Note may be transferred to a person who takes delivery in the form of an interest in the Regulation S Temporary or Permanent Global Note, only upon receipt by the Trustee of a written certification from the transferor in the form required by the Indenture to the effect that such transfer is being made in accordance with Regulation S. Any beneficial interest in one of the Global Notes that is transferred to a person who takes delivery in the form of an interest in another Global Note will, upon transfer, cease to be an interest in such Global Note and become an interest in such other Global Note and, accordingly, will thereafter be subject to all transfer restrictions and other procedures applicable to beneficial interests in such other Global Note for as long as it remains such an interest. A Foreign Person may hold its interest in the Regulation S Permanent Global Note directly through Cedel or Euroclear, or indirectly through organizations that are participants in Cedel or Euroclear. Cedel and Euroclear will hold interests in the Regulation S Permanent Global Note on behalf of their participants through DTC. Transfers between participants in Euroclear and Cedel will be effected in the ordinary way in accordance with their respective rules and operating procedures. The 144A Global Note, Regulation S Temporary Global Note, and Regulation S Permanent Global Note are collectively referred to herein as the "Global Note." Qualified Institutional Buyers and Foreign Persons who are not Participants may beneficially own interests in the Global Note held by DTC only through Participants, including Euroclear and Cedel, or certain banks, brokers, dealers, trust companies and other parties that clear through or maintain a custodial relationship with a Participant, either directly or indirectly ("Indirect Participants"). So long as Cede, as the nominee of DTC, is the registered owner of the Global Note, Cede for all purposes will be considered the sole holder of the Global Note. Except as provided below, owners of beneficial interests in the Global Note will not be entitled to have certificates registered in their names, will not receive or be entitled to receive physical delivery of certificates in definitive form, and will not be considered holders thereof. Subject to compliance with the transfer restrictions applicable to the Global Notes described herein and in the Indenture, cross-market transfers between holders of interests in the Rule 144A Global Note, on the one hand, and direct or indirect account holders at a Euroclear or Cedel participant (each, a "Member Organization") holding interests in the Regulation S Permanent Global Note, on the other hand, will be effected through DTC in accordance with DTC's rules and the rules of Euroclear or Cedel, as applicable. Such cross-market transactions require, among other things, delivery of instructions by such Member Organization to Euroclear or Cedel, as the case may be, in accordance with the rules and procedures and within deadlines (Brussels time) established in Euroclear or Cedel, as the case may be. If the transaction complies with all relevant requirements, Euroclear or Cedel, as the case may be, will then deliver instructions to its depositary to take action to effect final settlement on its behalf. Payment of interest on and the redemption price of the Global Note is to be made to Cede, the nominee for DTC, as the registered owner of the Global Note, by wire transfer of immediately available funds on each Interest Payment Date or redemption date, as the case may be. Neither the Company, the Trustee nor any paying agent has any responsibility or liability for any aspect of the records relating to or payments made on account of a beneficial ownership interest in the Global Note or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. 22 24 The Company has been informed by DTC that, with respect to any payment of interest on or the redemption price of the Global Note, DTC's practice is to credit Participants' accounts on the payment date therefor with payments in amounts proportionate to their respective beneficial interests in the principal amount represented by the Global Note, as shown on the records of DTC, unless DTC has reason to believe that it will not receive payment on such payment date. Payments by Participants to owners of beneficial interests in the principal amount represented by the Global Note held through such Participants are the responsibility of such Participants, as is now the case with securities held for the accounts of customers registered in "street name." Holders who desire to convert their Notes into Common Stock pursuant to the terms of the Notes should contact their brokers or other Participants or Indirect Participants to obtain information on procedures, including proper forms and cut-off times, for submitting such requests. Because DTC can only act on behalf of Participants, who in turn act on behalf of Indirect Participants and certain banks, the ability of a person having a beneficial interest in the principal amount represented by the Global Note to pledge such interest to persons or entities that do not participate in the DTC system, or otherwise take actions in respect of such interest, may be affected by the lack of a physical certificate evidencing such interest. Neither the Company nor the Trustee (or any registrar, paying agent or conversion agent under the Indenture) has any responsibility for the performance by DTC or its Participants or Indirect Participants of their respective obligations under the rules and procedures governing their operations. DTC has advised the Company that it will take any action permitted to be taken by a holder of Notes (including, without limitation, the presentation of Notes for exchange as described below) only at the direction of one or more Participants to whose account with DTC interests in the Global Note are credited and only in respect of the principal amount of the Notes represented by the Global Note as to which such Participant or Participants has or have given such direction. DTC has advised the Company as follows: DTC is a limited purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). DTC was created to hold securities for its Participants and to facilitate the clearance and settlement of securities transactions between Participants through electronic book-entry changes to accounts of its Participants, thereby eliminating the need for physical movement of certificates. Participants include securities brokers and dealers, banks, trust companies and clearing corporations and may include certain other organizations such as the Initial Purchasers. Certain of such Participants (or their representatives), together with other entities, own DTC. Indirect access to the DTC system is available to others such as banks, brokers, dealers and trust companies that clear through, or maintain a custodial relationship with a Participant, either directly or indirectly. Although DTC, Euroclear and Cedel have agreed to the foregoing procedures in order to facilitate transfers of interests in the Global Note among Participants of DTC, Euroclear and Cedel, they are under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. If DTC is at any time unwilling or unable to continue as depositary and a successor depositary is not appointed by the Company within 90 days, the Company will cause the Notes to be issued in definitive form in exchange for the Global Note. Certificated Notes Notes transferred to investors that are neither Qualified Institutional Buyers nor Foreign Persons will be issued in definitive registered form and may not be represented by the Global Note. In addition, Qualified Institutional Buyers and Foreign Persons may request that certificated Notes be issued in exchange for Notes represented by the Global Note. Furthermore, certificated Notes may be issued in exchange for Notes represented by the Global Note if a depositary is unwilling or unable to continue as depositary for the Global Note as set forth above. 23 25 Payments: Certifications by Holders of the Regulation S Temporary Global Note A holder of a beneficial interest in the Regulation S Temporary Global Note must provide Euroclear or Cedel, as the case may be, with a certificate in the form required by the Indenture certifying that the beneficial owner of the interest in the Regulation S Temporary Global Note is either not a U.S. person (as defined below) or has purchased such interest in a transaction that is exempt from the registration requirements under the Securities Act and is in the process of obtaining a beneficial interest in the 144A Global Note in exchange for its beneficial interest in the Regulation S Temporary Global Note, and Euroclear or Cedel, as the case may be, must provide to the Trustee (or the Paying Agent if other than the Trustee) a certificate in the form required by the Indenture, prior to (i) the payment of interest or principal with respect to such holder's beneficial interest in the Regulation S Temporary Global Note and (ii) any exchange of such beneficial interest for a beneficial interest in the Regulation S Permanent Global Note. "U.S. person" means (i) any individual resident in the United States, (ii) any partnership or corporation organized or incorporated under the laws of the United States, (iii) any estate of which an executor or administrator is a U.S. person (other than an estate governed by foreign law and of which at least one executor or administrator is a non-U.S. person who has sole or shared investment discretion with respect to its assets), (iv) any trust of which any trustee is a U.S. person (other than a trust of which at least one trustee is a non-U.S. person who has sole or shared investment discretion with respect to its assets and no beneficiary of the trust (and no settlor if the trust is revocable) is a U.S. person), (v) any agency or branch of a foreign entity located in the United States, (vi) any non-discretionary or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. person, (vii) any discretionary or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated or (if an individual) resident in the United States (other than such an account held for the benefit or account of a non-U.S. person), (viii) any partnership or corporation organized or incorporated under the laws of a foreign jurisdiction and formed by a U.S. person principally for the purpose of investing in securities not registered under the Securities Act (unless it is organized or incorporated, and owned, by accredited investors within the meaning of Rule 501(a) under the Securities Act who are not natural persons, estates or trusts); provided, however, that the term "U.S. person" does not include (A) a branch or agency of a U.S. person that is located and operating outside the United States for valid business purposes as a locally regulated branch or agency engaged in the banking or insurance business, (B) any employee benefit plan established and administered in accordance with the law, customary practices and documentation of a foreign country and (C) the international organizations set forth in Section 902(c)(7) of Regulation S under the Securities Act and any other similar international organizations, and their agencies, affiliates and pension plans. Neither the Company nor the Trustee will be liable for any delay by the Global Note holder or DTC in identifying the beneficial owners of Notes and the Company and the Trustee may conclusively rely on, and will be protected in relying on, instructions from the Global Note holder or DTC for all purposes. CONVERSION The holder of any Note has the right to convert such Note, or any portion thereof which is an integral multiple of $1,000, into shares of Common Stock of the Company at any time prior to maturity (unless earlier redeemed or repurchased), initially at the conversion price of $37.20 per share (which is equivalent to a conversion rate of 26.88 shares per $1,000 principal amount of Notes), subject to adjustment as described below. The right to convert Notes called for redemption will terminate at the close of business on the fifth business day immediately preceding the Redemption Date (unless the Company defaults in making the payments due upon redemption, in which case the conversion right shall not terminate until the close of business on the date such default is cured and such Notes are redeemed). A Note for which a holder has delivered a notice exercising the option of such holder to require the Company to repurchase such Note may be converted only if such notice is withdrawn by a written notice of withdrawal delivered by such holder to the Company (or an agent designated by the Company for such purpose) prior to the close of business on the Repurchase Date (as defined herein) in accordance with the terms of the Indenture. The Notes will be convertible at the offices or agencies of the Company maintained for such purposes in The City of New York. The conversion price is subject to adjustment in certain events, including (i) dividends (and other distributions) payable in Common Stock on any class of capital stock of the Company, (ii) subdivisions, combinations and reclass- 24 26 ifications of Common Stock, (iii) the issuance of rights or warrants entitling the holder thereof to subscribe for or purchase Common Stock at less than the then current market price (as defined in the Indenture), (iv) distributions to all holders of Common Stock of evidence of indebtedness of the Company or assets (including shares of its capital stock (other than Common Stock) and other securities, but excluding those rights, warrants, dividends and distributions referred to in clauses (i) and (iii) above, subdivisions of shares referred to in clause (ii) above and dividends and distributions paid in cash in an aggregate amount that, combined together with (x) all other such all-cash distributions made within the preceding 12 months in respect of which no adjustment has been made and (y) the excess of any cash and the fair market value of other consideration payable in respect of repurchases by the Company or any of its subsidiaries of Common Stock concluded within the preceding 12 months in respect of which no adjustment has been made over the current market price of the Common Stock, does not exceed 20% of the Company's market capitalization (being the product of the then current market price of the Common Stock times the number of shares of Common Stock then outstanding) on the record date for such distribution), and (v) certain repurchases by the Company and its subsidiaries of Common Stock, to the extent the consideration paid therefor exceeds the current market price (excluding shares which, together with certain cash distributions referred to in clause (iv) do not exceed 20% of the Company's market capitalization). In addition to the foregoing adjustments, the Company is permitted to make such reductions in the conversion price as it considers to be advisable in order that any event treated for federal income tax purposes as a dividend of stock or stock rights will not be taxable to the holders of Common Stock. In the event of a pro rata distribution to holders of Common Stock of rights to subscribe for additional shares of Common Stock (other than those referred to in (iii) above) or of evidences of indebtedness or assets as provided in (iv) above, the Company may, instead of making any adjustment in the conversion price, make proper provision so that each holder of a Note who converts such Note (or a portion thereof) after the record date for such distribution and prior to the expiration or redemption of such rights shall be entitled to receive upon conversion, in addition to the shares of Common Stock issuable upon conversion, an appropriate number of such rights, evidences of indebtedness or assets, as the case may be, as if such holders had converted the Notes immediately before the record date for any such distribution. No adjustment in the conversion price is required unless such adjustment would require a change of at least 1% of the price then in effect, provided, however, that any adjustment that would otherwise be required to be made shall be carried forward and taken into account in any subsequent adjustment. Notes surrendered for conversion during the period from the close of business on any record date to the opening of business on the next succeeding interest payment date (except Notes to be redeemed during the period from the close of business on such record date to the opening of business on the date five business days after such interest payment date) must be accompanied by payment of an amount equal to the interest thereon which the registered holder thereof on such record date is to receive on such interest payment date. A Note surrendered for conversion on an interest payment date need not be accompanied by any payment, and the interest on the principal amount of such Note being converted will be paid on such interest payment date to the registered holder at the record date immediately preceding such interest payment date. Subject to the aforesaid right of the holder of record at any record date to receive an installment of interest, no payment or adjustment will be made on conversion for interest accrued on the converted Note or for dividends on the Common Stock issued on conversion. Fractional shares of Common Stock are not to be issued upon conversion, but, in lieu thereof, the Company will pay a cash adjustment based upon the market price of the Common Stock on the date of conversion, as provided in the Indenture. The Indenture provides that the Company will provide that upon conversion of the Notes the holders will receive, in addition to the Common Stock issuable upon such conversion, the rights issued under the Company's stockholders rights plan (the "Rights") whether or not the Rights have become separated from the Common Stock at or prior to the time of the conversion. The Board of Directors of the Company has authorized such provision. The Indenture also provides that, in the event of the occurrence of certain events affecting the Rights, appropriate adjustments to the conversion price applicable to the Notes will be made. In addition, the Indenture provides that if the Company implements a new stockholder rights plan, such rights plan must provide that upon conversion of the Notes the holders will receive, in addition to the Common Stock issuable upon such conversion, the rights issued under such plan (whether or not such rights have separated from the Common Stock at the time of such conversion). In case of any consolidation or merger of the Company with or into any other corporation, or in the case of any consolidation or merger of another corporation into the Company in which the Company is the surviving corporation 25 27 involving a reclassification, conversion, exchange or cancellation of shares of Common Stock, or any sale or transfer of all or substantially all of the assets of the Company, the holder of each Note shall, after such consolidation, merger, sale or transfer, have the right to convert such Note into the kind and amount of securities or other property, which may include cash, which such holder would have been entitled to receive upon such consolidation, merger, sale or transfer if such holder had held the Common Stock issuable upon the conversion of such Note immediately prior to such consolidation, merger, sale or transfer. SUBORDINATION OF NOTES The payment of the principal of and premium, if any, and interest on the Notes (including, without limitation, the payment of the redemption price or repurchase price with respect to the Notes), is subordinated in right of payment to the extent set forth in the Indenture to the prior payment in full of all existing and future Senior Indebtedness. The Indenture does not limit the amount of Senior Indebtedness that may be incurred by the Company or any other indebtedness or obligations that may be incurred by the Company or its subsidiaries. In addition, the Notes are effectively subordinated to all indebtedness and other liabilities and commitments (including trade payables and lease obligations) of the Company's subsidiaries. The Company expects from time to time to incur additional Senior Indebtedness and other indebtedness and obligations. Upon any payment or distribution of assets of the Company to creditors resulting from any liquidation, dissolution, winding-up, reorganization or any insolvency proceedings of the Company, the holders of all Senior Indebtedness are first entitled to receive payment in full before the holders of the Notes are entitled to receive any payment upon the principal of or premium, if any, or interest on the Notes (including, without limitation, the payment of the redemption price or repurchase price with respect to the Notes). Upon the happening and during the continuance of an event of default in any payment with respect to any Senior Indebtedness, no payment may be made by the Company on or in respect of the Notes. Upon the happening and during the continuance of a default on any Senior Indebtedness (other than a payment event of default) that occurs and is continuing that permits the holders of such Senior Indebtedness to accelerate its maturity, and following receipt by the Company and the Trustee of the notice provided for by the Indenture, no payment may be made on the Notes for a period of up to 179 days during the consecutive 365-day period, unless such default is cured or waived. No such subordination will prevent the occurrence of any Event of Default in respect of the Notes. As a result of these subordination provisions, in the event of insolvency, holders of the Notes may recover less ratably than general creditors of the Company. "Senior Indebtedness" means the following, whether outstanding upon issuance of the Notes or thereafter incurred or created: (a) the principal of and premium, if any, and interest on, and fees, costs, enforcement expenses, collateral protection expenses and other reimbursement or indemnity obligations in respect of all indebtedness or obligations of the Company to any Person, including but not limited to banks and other lending institutions, for money borrowed that is evidenced by a note, bond, debenture, loan agreement, or similar instrument or agreement (including purchase money obligations with original maturities in excess of one year and noncontingent reimbursement obligations in respect of amounts paid under letters of credit); (b) commitment or standby fees due and payable to lending institutions with respect to credit facilities available to the Company; (c) all noncontingent obligations of the Company (i) for the reimbursement of any obligor on any letter of credit, banker's acceptance, or similar credit transaction, (ii) under interest rate swaps, caps, collars, options, and similar arrangements, and (iii) under any foreign exchange contract, currency swap agreement, futures contract, currency option contract, or other foreign currency hedge; (d) all obligations of the Company for the payment of money relating to capitalized lease obligations; (e) any liabilities of others described in the preceding clauses that the Company has guaranteed or which are otherwise its legal liability; and (f) renewals, extensions, refundings, refinancings, restructurings, amendments, and modifications of any such indebtedness or guarantee; other than any indebtedness or other obligation of the Company that by its terms or the terms of the instrument creating or evidencing it is stated to be not superior in right of payment to the Notes. As of August 31, 1996, there was no Senior Indebtedness outstanding and approximately $3.2 million of indebtedness of the Company's subsidiaries. The Company primarily conducts its operations through subsidiaries 26 28 and presently expects that its future operating activities will be similarly structured to involve operating subsidiaries. The rights of the Company and its creditors, including holders of the Notes, to participate in the assets of any subsidiary, partnership or other joint venture in which the Company has interests upon any liquidation or reorganization of any such entity or otherwise will be effectively subordinated to and subject to the prior claims of creditors of such entity, except to the extent that the Company may itself be a creditor with recognized claims against such entity, in which case the claims of the Company would still be subordinated to any security in the assets of such entity and any indebtedness of such entity senior to that held by the Company. The ability of the Company to pay principal of and premium, if any, and interest on the Notes (including, without limitation, the payment of the redemption price or repurchase price with respect to the Notes) will be dependent upon the receipt of funds from its subsidiaries and the partnerships and ventures in which it participates by way of dividends, distributions, fees, interest, loans or otherwise. In the event that, notwithstanding the foregoing, the Trustee or any holder of Notes receives any payment or distribution of assets of the Company of any kind in contravention of any of the terms of the Indenture, whether in cash, property or securities, including, without limitation, by way of set-off or otherwise, in respect of the Notes before all Senior Indebtedness is paid in full, then such payment or distribution will be held by the recipient in trust for the benefit of holders of Senior Indebtedness of the Company, and will be immediately paid over or delivered to the holders of Senior Indebtedness of the Company or their representative or representatives to the extent necessary to make payment in full of all Senior Indebtedness of the Company remaining unpaid, after giving effect to any concurrent payment or distribution, or provision therefor, to or for the holders of Senior Indebtedness of the Company. REDEMPTION AT OPTION OF COMPANY The Notes may not be redeemed by the Company prior to July 10, 1999. Thereafter, the Notes may be redeemed at the option of the Company, in whole or in part, upon not less than 20 nor more than 60 days' notice by mail. The redemption prices (expressed as a percentage of principal amount) in each case plus accrued and unpaid interest to the date of redemption are as follows for the 12-month period (unless otherwise noted) beginning July 10 of the following years:
REDEMPTION YEAR PRICE - ---- ----- 1999............................................. 102% 2000 (through June 30, 2001)..................... 101%
If less than all of the Notes are to be redeemed, the Trustee will select the particular Notes (or the portions thereof) to be redeemed either by lot, pro rata or by such other method as the Trustee shall deem fair or appropriate. No sinking fund is provided for the Notes. REPURCHASE AT OPTION OF HOLDER UPON CHANGE IN CONTROL Upon any Change in Control (as defined below), each holder of Notes shall have the right (the "Repurchase Right"), at the holder's option, subject to the terms and conditions of the Indenture, to require the Company to repurchase all of such holder's Notes, or a portion thereof which is $1,000 or any integral multiple thereof, on the date (the "Repurchase Date") fixed by the Company that is not less than 45 days nor more than 60 days after the date of the Company Notice (as defined below) at a price equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest, if any, to the Repurchase Date. Within 30 days after the occurrence of a Change in Control, the Company is obligated to give to the Trustee and to each holder of the Notes a notice (the "Company Notice") of the occurrence of such Change in Control, and 27 29 the Repurchase Right arising as result thereof setting forth, among other things, the terms and conditions of, and the procedures required for the exercise of, such Repurchase Right. To exercise the Repurchase Right, a holder of Notes must deliver on or before the close of business on the Repurchase Date written notice to the Company (or an agent designated by the Company for such purpose) and the Trustee of the holder's exercise of such Repurchase Right specifying the Notes with respect to which the right is being exercised. Such notice of exercise may be withdrawn by the holder by a written notice of withdrawal delivered to the Company or such agent at any time on or before the close of business on the Repurchase Date. The term "Change in Control" shall mean any of the following: (i) (A) a "person" or "group" (within the meaning of Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act, except that a person shall be deemed to be the "beneficial owner" of all securities that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the total voting power of all outstanding Voting Shares; and (B) immediately following the date upon which such person or group becomes a beneficial owner of such securities the aggregate market value of the Common Stock held by stockholders, excluding shares beneficially owned by such person or group and other affiliates of the Company, is less than $700,000,000; (ii) any consolidation of the Company with, or merger of the Company into, any other person, any merger of another person into the Company, or any sale or transfer of all or substantially all of the assets of the Company to another person (other than (a) a consolidation or merger which does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of Capital Stock other than shares of Capital Stock owned by either of the parties to be consolidated or merged in which the net worth of the surviving corporation immediately after consummation equals or exceeds the net worth of the Company immediately prior to such transaction, (b) the sale, transfer or other disposition of VRC, provided the acquirer or VRC expressly becomes a co-obligor of the payment of principal of and premium, if any, and interest on the Notes, (c) a merger which is effected solely to change the jurisdiction of incorporation of the Company or (d) any consolidation with or merger of the Company into a wholly owned subsidiary of the Company, or any sale or transfer by the Company of all or substantially all of its assets to one or more of its wholly owned subsidiaries, in any one transaction or a series of transactions, provided, in any such case, that the resulting corporation or each such subsidiary assumes or guarantees the Company's obligations under the Notes and the net worth of the surviving or acquiring corporation in any such consolidation, merger or sale of assets immediately after the consummation of such transaction equals or exceeds the net worth of the Company immediately prior to such transaction); or (iii) a change in the Board of Directors of the Company in which the individuals who constituted the Board of Directors of the Company at the beginning of the two-year period immediately preceding such change (together with any other director whose election by the Board of Directors of the Company or whose nomination for election by the stockholders of the Company was approved by a vote of at least a majority of the directors then in office either who were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the directors then in office; provided, however, that a Change in Control shall not be deemed to have occurred if either (a) the closing price per share of the Common Stock for any five trading days within the period of 10 consecutive trading days ending immediately after the later of the Change in Control or the public announcement of the Change in Control (in the case of a Change in Control under clause (i) above) or ending immediately before the Change in Control (in the case of a Change in Control under clauses (ii) and (iii) above) shall equal or exceed 105% of the conversion price in effect on each such trading day, or (b) (i) at least 90% of the consideration (excluding cash payments for fractional shares) in the transaction or transactions constituting the Change in Control consists of shares of common stock traded on a national securities exchange or quoted on the Nasdaq National Market (or which will be so traded or quoted when issued or exchanged in connection with such Change in Control) (such securities being referred to as "Publicly Traded Securities") and as a result of such transaction or transactions such Notes become convertible solely 28 30 into such Publicly Traded Securities and (ii) the consideration in the transaction or transactions constituting the Change in Control consists of cash, Publicly Traded Securities or a combination of cash and Publicly Traded Securities with an aggregate fair market value (which, in the case of Publicly Traded Securities, shall be equal to the average closing price of such Publicly Traded Securities during the 10 consecutive trading days commencing with the sixth trading day following consummation of the transaction or transactions constituting the Change in Control) is at least 105% of the conversion price in effect on the date immediately preceding the date of consummation of such Change in Control. Rule 13e-4 under the Exchange Act requires the dissemination of certain information to security holders in the event of an issuer tender offer and may apply in the event that the Repurchase Right becomes available to holders of the Notes. The Company will comply with this rule to the extent applicable at that time and with Rule 14e-1 and all other applicable federal and state securities laws in connection with any such repurchase option. The Company may not repurchase any Notes upon a Change in Control if at such time the subordination provisions of the Indenture would prohibit the Company from making payments of principal in respect of the Notes. Agreements relating to the Company's Senior Indebtedness contain, and agreements relating to Senior Indebtedness incurred by the Company in the future are likely to contain, restrictions relating to the repurchase by the Company of the Notes pursuant to the Repurchase Right. Such provisions, together with the subordination of the Notes to all existing and future Senior Indebtedness of the Company, and the funds then available to the Company, may limit the ability of the Company to repurchase the Notes in the event of a Change in Control. Failure by the Company to repurchase the Notes when required upon a Change in Control will result in an Event of Default under the Indenture whether or not such repurchase is permitted by the subordination provisions. See "Subordination of Notes." The Indenture does not permit the Company's Board of Directors to waive the Company's obligation to repurchase the Notes at the option of the holder pursuant to the repurchase right in the event of a Change in Control. The repurchase right, however, would not necessarily afford holders of the Notes protection in the event of highly leveraged or other transactions involving the Company that may adversely affect holders of the Notes. Notwithstanding the foregoing, the right to require the Company to repurchase the Notes pursuant to the Repurchase Right could delay or deter a potential acquisition of the Company regardless of whether such acquisition is supported or approved by the Board of Directors of the Company. If a Change in Control were to occur, there can be no assurance that the Company would be able to obtain sufficient funds with which to repurchase all the Notes tendered by the holders thereof. MERGERS AND SALES OF ASSETS BY THE COMPANY The Indenture provides that the Company may not consolidate with or merge into any other Person, or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and may not permit any Person to consolidate with or merge into the Company or convey, transfer or lease its properties and assets substantially as an entirety to the Company, unless (i) either the Company is the resulting or surviving corporation or the Person formed by such consolidation or into which the Company is merged or the person to which the properties and assets of the Company are transferred or leased substantially as an entirety shall be a corporation organized and existing under the laws of the United States, any State thereof or the District of Columbia and shall expressly assume the payment of the principal of and premium, if any, and interest on the Notes and the performance of every covenant of the Company under the Indenture, and (ii) immediately before and immediately after giving effect to such transaction, no Event of Default shall have occurred and be continuing. Upon such consolidation, merger, transfer or lease, the successor corporation shall succeed to and be substituted for and may exercise all rights of the Company under the Indenture, and thereafter the Company will be relieved of all obligations and covenants under the Indenture and Notes. The Company may not sell, transfer or otherwise dispose of VRC without having the acquirer or VRC become a co-obligor of payment of principal of and premium, if any, and interest on the Notes as provided in the Indenture. 29 31 MODIFICATION OF THE INDENTURE With the consent of the holders of not less than a majority in aggregate principal amount of the Outstanding Notes, the Company and the Trustee may make modifications and amendments to the Indenture to add any provision to, or change in any manner, or eliminate any of the provisions of the Indenture and the Notes, provided that no such modification or amendment may, without the consent of the holder of each Outstanding Note affected thereby, (i) change the stated maturity date of the principal of, or any installment of interest on, any Note, (ii) reduce the principal amount of, or the rate of interest on, or any premium payable on, any Note, whether upon acceleration, redemption or otherwise, (iii) change the currency for payment of principal of, or premium or interest on, any Note, (iv) impair the right to institute suit for the enforcement of any such payment when due, (v) adversely affect the right provided in the Indenture to convert any Note, (vi) modify the provisions of the Indenture with respect to the subordination of the Notes in a manner adverse to the holders, (vii) modify the obligation of the Company under the Indenture to purchase Notes upon a Change in Control in a manner adverse to the holders, (viii) reduce the percentage of principal amount of Outstanding Notes necessary to modify or amend the Indenture or to consent to any waiver provided for in the Indenture, (ix) waive a default in the payment of the principal of or premium or interest on any Note, or (x) change the provisions of the Indenture relating to waivers upon the occurrence of other events of default or the provisions of the Indenture relating to the unconditional right to receive payments thereunder. The holders of not less than a majority in principal amount of the Outstanding Notes may waive compliance with certain restrictive covenants and provisions of the Indenture without notice to any holder of the Notes. See "--Events of Default, Notice and Waiver." Without the consent of or notice to any holder of the Notes, the Company and the Trustee may amend or supplement the Indenture to cure any ambiguity, omission, defect or inconsistency, to provide for the assumption by a successor corporation of the obligations of the Company under the Indenture if in compliance with the Indenture, to make any change that does not adversely affect the rights of any holder of the Notes or to comply with any requirement of the Commission in connection with the qualification of the Indenture under the Trust Indenture Act. EVENTS OF DEFAULT, NOTICE AND WAIVER The following are Events of Default under the Indenture: (i) default in the payment of any interest, continued for 30 days, (ii) default in the payment of principal or premium, if any, when due or in the payment of any redemption obligation, (iii) default by the Company or any Significant Subsidiary with respect to its obligation to pay principal of or interest on indebtedness for borrowed money aggregating more than $10,000,000, or the acceleration of such indebtedness under the terms of the instruments evidencing such indebtedness which has not been withdrawn within 10 days from the date of such default, (iv) failure to perform any other covenant or warranty of the Company, continued for 60 days after written notice as provided in the Indenture, (v) final judgments or orders are rendered against the Company or any of its Subsidiaries which require the payment by the Company or any of its Subsidiaries of an amount (to the extent not covered by insurance) in excess of $10,000,000 and such judgments or orders remain unsatisfied, undischarged, unvacated, unbonded and unstayed for more than 60 days and are not being contested in good faith by appropriate proceedings, and (vi) certain events of bankruptcy, insolvency or reorganization with respect to the Company or any of its Subsidiaries. If an Event of Default shall occur and be continuing, the Trustee or the holders of not less than 25% in principal amount of the Outstanding Notes may declare such portion of the principal amount of the Notes and interest accrued thereon to be due and payable. Under certain circumstances, however, such declarations may be annulled and past defaults (other than certain payment defaults) may be waived by the holders of a majority in principal amount of the Outstanding Notes. If an Event of Default resulting from certain events of bankruptcy, insolvency or reorganization were to occur, all unpaid principal of and accrued interest on the Outstanding Notes will become due and payable immediately without any declaration or other act on the part of the Trustee or any holders of Notes. The Indenture provides that the Trustee shall, within 90 days after the occurrence of a default, give to the registered holders of Notes notice of all uncured defaults known to it, but the Trustee shall be protected in withholding such notice if it in good faith determines that the withholding of such notice is in the best interest of such registered holders, except in the case of a default in the payment of the principal of, or premium, if any, or interest on, any of the Notes when due or in the payment of any redemption obligation. 30 32 The Indenture provides that the holders of a majority in principal amount of the Outstanding Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee. Before proceeding to exercise any right or power under the Indenture at the direction of such holders, the Trustee shall be entitled to receive from such holders reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in complying with any such direction. The right of a holder to institute a proceeding with respect to the Indenture is subject to certain conditions precedent, including notice and indemnity to the Trustee and the written request by the holders of not less than 25% in principal amount of the Outstanding Notes that such a proceeding be instituted, but the holder has an absolute right to institute suit for the enforcement of payment of the principal of, and premium, if any, and interest on, such holder's Notes when due and to convert such Notes. The holders of not less than a majority in principal amount of the Outstanding Notes may on behalf of the holders of all Notes waive any past defaults, except a default in payment of the principal of, or premium, if any, or interest on, any Note when due or in respect of certain provisions of the Indenture which cannot be modified or amended without the consent of the holder of each Outstanding Note affected thereby. The Company is required to furnish to the Trustee annually a statement of certain officers of the Company stating whether or not to the best of their knowledge the Company is in default in the performance and observance of certain terms of the Indenture and, if they have knowledge that the Company is in default, specifying such default. THE TRUSTEE State Street Bank and Trust Company, the Trustee under the Indenture, has been appointed by the Company as the paying agent, conversion agent, registrar and custodian with regard to the Notes. The First National Bank of Boston is the Company's Transfer Agent and Registrar with regard to the Company's Common Stock. The Indenture provides that, except during the continuance of an Event of Default, the Trustee will perform only such duties as specifically set forth in the Indenture. During the existence of an Event of Default, the Trustee will exercise such rights and powers vested in it under the Indenture and use the same degree of care and skill in its exercise as a prudent Person would exercise under the circumstances in the conduct of such Person's own affairs. The Indenture contains limitations of the rights of the Trustee, should it become a creditor of the Company, to obtain payment of claims in certain cases or to realize on certain property received by it in respect of any such claim as security or otherwise. The Trustee is permitted to engage in other transactions, provided, however, that if it acquires any conflicting interest (as defined in the Indenture) it must eliminate such conflict or resign. DESCRIPTION OF CAPITAL STOCK The authorized capital stock of the Company consists of 80,000,000 shares of Common Stock, $.01 par value and 10,000,000 shares of Preferred Stock, $.01 par value. COMMON STOCK As of September 30, 1996, there were 40,012,102 shares of Common Stock outstanding. Holders of Common Stock are entitled to one vote per share on all matters to be voted upon by the stockholders. Subject to preferences that may be applicable to the holders of outstanding shares of Preferred Stock, if any, the holders of Common Stock are entitled to receive such lawful dividends as may be declared by the Board of Directors. In the event of liquidation, dissolution or winding up of the Company, and subject to the rights of the holders of outstanding shares of Preferred Stock, if any, the holders of shares of Common Stock shall be entitled to receive pro rata all of the remaining assets of the Company available for distribution to the stockholders. There are no redemption or sinking fund provisions applicable to the Common Stock. All outstanding shares of Common Stock are fully paid and non-assessable. 31 33 PREFERRED STOCK The Company currently has 600,000 shares of Series A Junior Participating Preferred Stock authorized, of which no shares are outstanding. See "--Stockholder Rights Plan." The Board of Directors has the authority, without further action by the stockholders, to issue from time to time the Preferred Stock in one or more series and to fix the number of shares, designations, preferences, powers, and relative, participating, optional or other special rights and the qualifications or restrictions thereof. The preferences, powers, rights and restrictions of different series of Preferred Stock may differ with respect to dividend rates, amounts payable on liquidation, voting rights, conversion rights, redemption provisions, sinking fund provisions, and purchase funds and other matters. The issuance of Preferred Stock could decrease the amount of earnings and assets available for distribution to holders of Common Stock or affect adversely the rights and powers, including voting rights, of the holders of Common Stock, and may have the effect of delaying, deferring or preventing a change in control of the Company. The ability of the Board of Directors to issue Preferred Stock without further stockholder approval could also have the effect of entrenching management by discouraging potential acquisition proposals even if such a transaction is favored by a majority of the independent stockholders. STOCKHOLDER RIGHTS PLAN On February 13, 1996, the Company's Board of Directors adopted an amended and restated stockholder rights plan pursuant to which the Rights attach to each share of Common Stock on the basis of one Right for each share held. In general, the Rights become exercisable or transferable only upon the occurrence of certain events related to changes in ownership of the Common Stock. Once exercisable, each Right entitles its holder to purchase from the Company one one-hundredth of a share ("unit") of Series A Junior Participating Preferred Stock at a purchase price of $100 per unit, subject to adjustment. The Rights will separate from the Common Stock and become exercisable or transferable on a distribution date (the "Distribution Date"), which will occur on the earlier of (i) 10 days following a public announcement that a person or group of affiliated or associated persons (an "Acquiring Person") has acquired beneficial ownership of securities representing 15% or more of the outstanding Common Stock or (ii) 10 business days following the commencement of (or a public announcement of an intention to make) a tender or exchange offer that would result in a person or group of related persons becoming an Acquiring Person. Upon the occurrence of certain other events related to changes in the ownership of the Common Stock, each holder of a Right would be entitled to purchase shares of the Common Stock, or an acquiring corporation's common stock, having a market value equal to two times the exercise value of the Right. The Rights expire on the earliest of (i) August 31, 1999, (ii) redemption of the Rights or (iii) exchange of the Rights. Subject to certain conditions, the Rights may be redeemed by the Company's Board of Directors at any time at a price of $.001 per Right or may be exchanged in whole or in part for Preferred Stock or Common Stock. The Rights are not currently exercisable and trade together with the shares of Common Stock associated therewith. The Rights, if exercised, will cause a substantial dilution to the equity interest in Vivra to a person or group's ownership interest in the Company's Common Stock that attempts to acquire the Company on terms not approved by the Company's Board of Directors. See "Risk Factors--Anti-Takeover Provisions." ANTI-TAKEOVER PROVISIONS The Company's Certificate of Incorporation provides that certain provisions thereof and the Company's Bylaws may be repealed or amended only by a vote of 80% of the stockholders. Further, the Certificate of Incorporation requires that all stockholder action be taken at a stockholders' meeting. In addition, those provisions of the Certificate of Incorporation may only be amended or repealed by the holders of at least 80% of the voting power of all the then-outstanding shares of stock entitled to vote generally for the election of directors voting together as a single class. 32 34 The Company's Certificate of Incorporation contains, in addition to other provisions which have an anti-takeover effect, a "fair price" provision and a provision for a classified Board of Directors. The "fair price" provision requires the affirmative vote of the holders of at least 80% of the outstanding shares of voting stock of the Company in the case of certain mergers, sales or other dispositions involving a beneficial holder of 5% or more of the Company's outstanding voting stock or a liquidation or dissolution of the Company proposed by such a substantial stockholder, or in the case of certain other specified transactions involving such a substantial stockholder, whether or not they otherwise require a stockholder vote. The provisions described above, together with the Rights, may have the effect of deterring a hostile takeover or delaying a change in control or management of the Company. See "--Stockholder Rights Plan." DELAWARE LAW The Company is subject to the provisions of Section 203 of the General Corporation Law ("Section 203"). Section 203 provides, with certain exceptions, that a Delaware corporation may not engage in any of a broad range of business combinations with a person or an affiliate, or associate of such person, who is an "interested stockholder" for a period of three years from the date that such person became an interested stockholder unless: (i) the transaction resulting in a person becoming an interested stockholder, or the business combination, is approved by the board of directors of the corporation before the person becomes an interested stockholder, (ii) the interested stockholder acquired 85% or more of the outstanding voting stock of the corporation in the same transaction that makes such person an interested stockholder (excluding shares owned by persons who are both officers and directors of the corporation, and shares held by certain employee stock ownership plans) or (iii) on or after the date the person becomes an interested stockholder, the business combination is approved by the corporation's board of directors and by the holders of at least 66 2/3% of the corporation's outstanding voting stock at an annual or special meeting, excluding shares owned by the interested stockholder. Under Section 203, an "interested stockholder" is defined as any person who is (i) the owner of 15% or more of the outstanding voting stock of the corporation or (ii) an affiliate or associate of the corporation and who was the owner of 15% or more of the outstanding voting stock of the corporation at any time within the three-year period immediately prior to the date on which it is sought to be determined whether such person is an interested stockholder. A corporation may, at its option, exclude itself from the coverage of Section 203 by amending its certificate of incorporation or bylaws by action of its stockholders to exempt itself from coverage, provided that such amendment shall not become effective until 12 months after the date it is adopted. The Company has not adopted such an amendment to its Certificate of Incorporation or Bylaws. TRANSFER AGENT AND REGISTRAR The Transfer Agent and Registrar for the Company's Common Stock is The First National Bank of Boston. CERTAIN FEDERAL INCOME TAX CONSIDERATIONS The following is a general discussion of certain United States federal income tax considerations relevant to holders of the Notes and the Conversion Shares. This discussion is based upon the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations, Internal Revenue Service ("IRS") rulings and judicial decisions now in effect, all of which are subject to change (possibly with retroactive effect) or different interpretations. This discussion does not purport to deal with all aspects of federal income taxation that may be relevant to a particular investor's decision to purchase the Notes, and it is not intended to be wholly applicable to all categories of investors, some of which, such as dealers in securities, banks, insurance companies, tax-exempt organizations and non-United States persons, may be subject to special rules. In addition, this discussion is limited to persons that purchase the Notes in the offering and hold the Notes as a "capital asset" within the meaning of Section 1221 of the Code. ALL PROSPECTIVE PURCHASERS OF THE NOTES ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES AND THE COMMON STOCK. 33 35 Conversion of Notes into Common Stock In general, no gain or loss will be recognized for federal income tax purposes on a conversion of the Notes into shares of Common Stock. However, cash paid in lieu of a fractional share of Common Stock will likely result in taxable gain (or loss), which will be capital gain (or loss), to the extent that the amount of such cash exceeds (or is exceeded by) the portion of the adjusted basis of the Note allocable to such fractional share. The aggregate adjusted basis of shares of Common Stock received on conversion will equal the adjusted basis of the Note converted, reduced by the portion of adjusted basis allocated to any fractional share of Common Stock exchanged for cash. The holding period of an investor in Common Stock received on conversion will include the period during which the converted Notes were held. The conversion price of the Notes is subject to adjustment under certain circumstances. See "Description of the Notes--Conversion." Section 305 of the Code and the Treasury Regulations issued thereunder may treat the holders of the Notes as having received a constructive distribution, resulting in ordinary income (subject to a possible dividends received deduction in the case of corporate holders) to the extent of the Company's accumulated earnings and profits at the time of or current earnings and profits for the taxable year of the adjustment, if and to the extent that certain adjustments in the conversion price that may occur in limited circumstances (particularly an adjustment to reflect a taxable dividend to holders of Common Stock) increase the proportionate interest of a holder of Notes in the fully diluted Common Stock, whether or not such holder ever exercises its conversion privilege. Moreover, if there is not a full adjustment to the conversion price of the Notes to reflect a stock dividend or other event increasing the proportionate interest of the holders of outstanding Common Stock in the assets or earnings and profits of the Company, then such increase in the proportionate interest of the holders of the Common Stock generally will be treated as a distribution to such holders, taxable as ordinary income (subject to a possible dividends received deduction in the case of corporate holders) to the extent of the Company's accumulated earnings and profits at the time of or current earnings and profits for the taxable year of such deemed distribution. Market Discount Investors acquiring Notes pursuant to this Prospectus should note that the resale of those Notes may be adversely affected by the market discount provisions of Sections 1276 through 1278 of the Code. Under the market discount rules, if a holder of a Note purchases it at market discount (i.e., at the price below its stated redemption price at maturity) in excess of a statutorily defined de minimis amount and thereafter recognizes a gain upon a disposition or retirement of the Note, then the lesser of the gain recognized or the portion of the market discount that accrued on a ratable basis (or, if elected, on a constant interest rate basis) while the holder held the Note generally will be treated as ordinary income at the time of the disposition. Moreover, any market discount on a Note may be taxable to an investor to the extent of appreciation at the time of certain otherwise non-taxable transactions (e.g., gifts). Any accrued market discount not previously taken into income prior to a conversion of a Note, however, should (under Treasury Regulations not yet issued) carry over to the Common Stock received on conversion and be treated as ordinary income upon a subsequent disposition of such Common Stock to the extent of any gain recognized on such disposition. In addition, absent an election to include market discount in income as it accrues, a holder of a market discount debt instrument may be required to defer a portion of any interest expense that otherwise may be deductible on any indebtedness incurred or maintained to purchase or carry such debt instrument until the holder disposes of the debt instrument in a taxable transaction. Sale, Exchange or Retirement of Notes Each holder of Notes generally will recognize gain or loss upon the sale, exchange, redemption, repurchase, retirement or other disposition of Notes measured by the difference (if any) between (i) the amount of cash and the fair market value of any property received (except to the extent that such cash or other property is attributable to the payment of accrued interest not previously included in income, which amount will be taxable as ordinary income), and (ii) the holder's adjusted tax basis in the Notes disposed of (including any market discount previously included in income by the holder). Each holder of Common Stock into which the Notes are converted, in general, will recognize gain or loss upon the sale, exchange, redemption, repurchase or other disposition of the Common Stock measured under rules similar to those described in the preceding sentence for the Notes. Special rules may 34 36 apply to redemptions of Common Stock which may result in different treatment. Any such gain or loss recognized on the sale, exchange, redemption, repurchase, retirement or other disposition of a Note or share of Common Stock should be capital gain or loss (except as discussed under "Market Discount" above), and would be long-term capital gain or loss if the Note or the Common Stock had been held for more than one year at the time of the disposition. An investor's initial basis in a Note will be the cash price paid therefor. Backup Withholding A holder of Notes or Common Stock may be subject to "backup withholding" at a rate of 31% with respect to certain "reportable payments," including interest payments, dividend payments and, under certain circumstances, principal payments on the Notes. These backup withholding rules apply if the holder, among other things, (i) fails to furnish a social security number or other taxpayer identification number ("TIN") certified under penalties of perjury within a reasonable time after the request therefor, (ii) furnishes an incorrect TIN, (iii) fails to report properly interest or dividends or (iv) under certain circumstances, fails to provide a certified statement, signed under penalties of perjury, that the TIN furnished is the correct number and that such holder is not subject to backup withholding. A holder who does not provide the Company with its correct TIN also may be subject to penalties imposed by the IRS. Any amount withheld from a payment to a holder under the backup withholding rules is creditable against the holder's federal income tax liability, provided the required information is furnished to the IRS. Backup withholding will not apply, however, with respect to payments made to certain holders, including corporations, tax-exempt organizations and certain foreign persons, provided their exemption from backup withholding is properly established. The Company will report to the holders of Notes and Common Stock and to the IRS the amount of any "reportable payments," including reportable interest and dividend payments, for each calendar year and the amount of tax withheld, if any, with respect to such payments. Foreign Holders The following discussion is a summary of certain United States federal income tax consequences to a Foreign Person that holds a Note. The term "Foreign Person" means a nonresident alien individual or foreign corporation, but only if the income or gain on the Note is not "effectively connected with the conduct of a trade or business within the United States." If the income or gain on the Note is "effectively connected with the conduct of a trade or business within the United States," then the nonresident alien individual or foreign corporation will be subject to tax on such income or gain in essentially the same manner as a U.S. citizen or resident or a domestic corporation, as discussed above, and in the case of a foreign corporation, may also be subject to the branch profits tax. Under the portfolio interest exception to the general rules for the withholding of tax on interest paid to a Foreign Person, a Foreign Person will not be subject to United States federal income tax (or to withholding) on interest payments on a Note, provided that (i) the Foreign Person 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 is not a controlled foreign corporation with respect to the United States that is related to the Company through stock ownership, and (ii) the Company, its paying agent or the person who would otherwise be required to withhold tax receives either (A) a statement (an "Owner's Statement") signed under penalties of perjury by the beneficial owner of the Note in which the owner certifies that the owner is not a U.S. person and which provides the owner's name and address, or (B) a statement signed under penalties of perjury by the Financial Institution holding the Note on behalf of the beneficial owner, together with a copy of the Owner's Statement. The term "Financial Institution" means a securities clearing organization, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business and that holds a Note on behalf of the owner of the Note. A Foreign Person who does not qualify for the "portfolio interest" exception, would, under current law, generally be subject to United States federal withholding tax at a flat rate of 30% (or lower applicable treaty rate) on interest payments. If a Foreign Person is treated as receiving a distribution taxable as a dividend as a result of an adjustment in the conversion price of the Notes, as described above under "--Conversion of Notes into Common Stock," such deemed dividend will be subject to United States federal withholding tax at a 30% (or lower applicable treaty) rate. 35 37 In general, gain recognized by a Foreign Person upon the sale, exchange, redemption, repurchase, retirement or other disposition of a Note (including any gain representing accrued market discount) will not be subject to United States federal income tax. However, a Foreign Person may be subject to United States federal income tax at a flat rate of 30% (unless exempt by an applicable treaty) on any such gain if the Foreign Person is an individual present in the United States for 183 days or more during the taxable year in which the Note is disposed of and certain other requirements are met. 36 38 PLAN OF DISTRIBUTION The Notes and the Conversion Shares may be sold from time to time by any of the Selling Securityholders or by donees or transferees, directly or through underwriters, dealers or agents, who may receive compensation in the form of underwriting discounts, concessions or commissions from the Selling Securityholders or the purchasers of Notes or Conversion Shares for whom they may act as agent. The Notes or the Conversion Shares or any part of the Notes or the Conversion Shares may be sold in amounts and on terms to be determined at the time of sale, including, without limitation, block trades, in the over-the-counter market, through an exchange or otherwise, at negotiated prices or at or relating to quoted market prices then prevailing. The Selling Securityholders reserve the sole right to accept and, together with any agent of the Selling Securityholders, to reject in whole or in part any proposed purchase of the Notes or the Conversion Shares. The Selling Securityholders will pay any sales commissions or other seller's compensation applicable to such transactions. To the extent required, the amount of the Notes or Conversion Shares to be sold, purchase prices, public offering prices, the names of any agents, dealers or underwriters, and any applicable commissions or discounts with respect to a particular offer will be set forth by the Company in a Prospectus Supplement accompanying this Prospectus or, if appropriate, a post-effective amendment to the Registration Statement. The Selling Securityholders and agents who execute orders on their behalf may be deemed to be underwriters as that term is defined in Section 2(11) of the Securities Act and a portion of any proceeds of sales and discounts, commissions or other seller's compensation may be deemed to be underwriting compensation for purposes of the Securities Act. Offers or sales of the Notes or the Conversion Shares have not been registered or qualified under the laws of any country, other than the United States. To comply with certain states' securities laws, if applicable, the Notes and the Conversion Shares will be offered or sold in such jurisdictions only through registered or licensed brokers or dealers. In addition, in certain states the Notes and the Conversion Shares may not be offered or sold unless they have been registered or qualified for sale in such states or an exemption from registration or qualification is available and is complied with. Under applicable rules and regulations under the Exchange Act, any person engaged in a distribution of the Notes or the Conversion Shares may not simultaneously engage in market-making activities with respect to such securities for a period of two to nine business days prior to the commencement of such distribution. In addition to and without limiting the foregoing, each Selling Securityholder and any other person participating in a distribution will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including without limitation Rules 10b-2, 10b-6 and 10b-7, which provisions may limit the timing of purchases and sales of any of the Notes or the Conversion Shares by the Selling Securityholders or any such other person. All of the foregoing may affect the marketability of the Notes and the Conversion Shares and the brokers' and dealers' ability to engage in market-making activities with respect to such securities. Pursuant to an agreement with the Selling Securityholders, the Company will pay substantially all of the expenses incident to the registration of the Notes and the Conversion Shares, estimated to be approximately $100,000. Under agreements entered into with the Company, the Selling Securityholders will be indemnified by the Company against certain civil liabilities, including liabilities under the Securities Act. LEGAL MATTERS Certain matters with respect to the legality of the securities offered hereby will be passed upon for the Company by Charles W. Ott, General Counsel of Vivra Incorporated. Certain legal matters in connection with the offering will be passed upon for the Selling Securityholders by Latham & Watkins, Costa Mesa, California. 37 39 EXPERTS The consolidated financial statements of the Company appearing in the Company's Current Report on Form 8-K dated June 13, 1996 (which have been restated to give retroactive effect to the merger of Vivra Incorporated; Kidney Centers of Charleston, Inc.; Brennan, Martell, and Mirmelli, M.D.s, P.A. and Allergy & Asthma Institute of South Florida, P.A.; and Orthonet, Inc.), have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon included therein and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. The financial statements of Kidney Centers of Charleston, Inc. appearing in the Company's Current Report on Form 8-K dated May 1, 1996, have been audited by Pratt-Thomas, Gumb & Co., P.A., independent auditors, as set forth in their report thereon included therein and incorporated herein by reference. Such financial statements are incorporated herein by reference in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. The combined financial statements of Brennan, Martell, and Mirmelli, M.D.s, P.A. and Allergy & Asthma Institute of South Florida, P.A. appearing in the Company's Current Report on Form 8-K dated May 1, 1996, have been audited by Arthur Andersen LLP, independent certified public accountants, as indicated in their report thereon included therein and incorporated herein by reference. Such combined financial statements are incorporated herein by reference in reliance upon the authority of such firm as experts in giving said reports. The supplemental consolidated financial statements of the Company appearing in the Company's Current Report on Form 8-K dated September 24, 1996 (which have been restated to give retroactive effect to the merger of Vivra Incorporated; Portsmouth Medical Specialists, Inc. and Churchland Renal Center Inc.; and Cooper, Moody, Altschuler, Chizner, Dennis and Niederman, P.A. d/b/a/ The Greater Ft. Lauderdale Heart Group), have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon included therein and incorporated herein by reference. Such supplemental consolidated financial statements are incorporated herein by reference in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. The combined financial statements of Portsmouth Medical Specialists, Inc. and Churchland Renal Center Inc. and the financial statements of Cooper, Moody, Altschuler, Chizner, Dennis and Niederman, P.A. d/b/a The Greater Ft. Lauderdale Heart Group, each appearing in the Company's Current Report on Form 8-K dated September 24, 1996 have each been audited by Ernst & Young LLP, independent auditors, as set forth in their reports thereon included therein and incorporated herein by reference. Such financial statements are incorporated herein by reference in reliance upon such reports given upon the authority of such firm as experts in accounting and auditing. 38 40 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following table sets forth all expenses payable by the Registrant in connection with the offering of the Notes and the Conversion Shares being registered. The Selling Securityholders will not share in the payment of any portion of these expenses. The table omits any applicable selling commissions or discounts, which are payable solely by the Selling Securityholders. All the amounts shown are estimates, except for the registration fee and the NYSE listing fee. Registration fee....................................................... $ 48,043.94 NYSE listing fee....................................................... 1,500.00 Printing expenses...................................................... 10,000.00 Legal fees and expenses................................................ 20,000.00 Accounting fees and expenses........................................... 10,000.00 Transfer agent and registrar fees...................................... 5,000.00 Miscellaneous.......................................................... 5,000.00 ------------------ Total.................................................... $ 99,543.94 ==================
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS Section 145 of the Delaware General Corporation Law permits the Company's board of directors to indemnify any person against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with any threatened, pending or completed action, suit or proceeding in which such person is made a party by reason of his being or having been a director, officer, employee or agent of the Company, in terms sufficiently broad to permit such indemnification under certain circumstances for liabilities (including reimbursement for expenses incurred) arising under the Securities Act of 1933, as amended (the "Act"). The statute provides that indemnification pursuant to its provisions is not exclusive of other rights of indemnification to which a person may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors, or otherwise. Article 8 of the Company's Certificate of Incorporation provides for indemnification of its directors, officers, employees and other agents to the maximum extent permitted by law. In addition, the Company has entered into separate indemnification agreements with its directors and officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers to the fullest extent not prohibited by law. ITEM 16. EXHIBITS Exhibit Number Description of Document ------ ----------------------- 2 Plan of acquisition *2.1 Stock Purchase Agreement dated as of March 31, 1995, by and among Vivra Incorporated, Cape Coral Dialysis Center, Inc. and Dialysis Services of Southwest Florida, Inc. and each of the Stockholders listed on Exhibit A thereto (filed as an exhibit to the Prospectus Supplement to the Prospectus dated March 14, 1995 (File No. 33-85736) and incorporated herein by reference). II-1 41 Exhibit Number Description of Document ------ ----------------------- *2.2 Agreement for Sale and Purchase of Assets, dated July 1, 1995, by and among CDC and Oakwood, Chilikapati Family Limited Partnership and Thavarajah Family Limited Partnership, Vijay Kumar Chilikapati Revocable Living Trust dated September 26, 1984 and the Krishnapilla Thavarajah Revocable Living Trust, the sole shareholders of Oakwood and K. Thavarajah, M.D. and C.V. Kumar, M.D. (filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated August 16, 1995 and incorporated herein by reference). *2.3 Agreement for Sale and Purchase of Assets, dated as of July 1, 1995, by and among CDC and Wyandotte and CTA Investment Group, Vijay Kumar Chilikapati Revocable Living Trust dated September 26, 1984, the Krishnapilla Thavarajah Revocable Living Trust, and Syed Akbar, M.D., an individual and K. Thavarajah, M.D., an individual, and C.V. Kumar, M.D., an individual (filed as Exhibit 10.2 to the Registrant's Current Report on Form 8-K dated August 16, 1995 and incorporated herein by reference). *2.4 Master Merger Agreement among Asthma & Allergy CareAmerica, Inc.; Vivra Incorporated; Pediatric Allergy Group, a Professional Association; Jerald M. Duncan, M.D.; Fred T. Grogan, Jr., M.D.; Jourdan A. Roane, M.D.; Phillip L. Lieberman, M.D., P.C.; Phillip L. Lieberman, M.D.; George H. Treadwell, III, M.D., P.C.; and George H. Treadwell, III, M.D. (filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated January 26, 1996 and incorporated herein by reference). *2.5 Agreement and Plan of Merger among Asthma & Allergy CareAmerica, Inc.; Vivra Incorporated; and Pediatric Allergy Group, a Professional Association (filed as Exhibit 10.2 to the Registrant's Current Report on Form 8-K dated January 26, 1996 and incorporated herein by reference). *2.6 Agreement and Plan of Merger among Asthma & Allergy CareAmerica, Inc., Vivra Incorporated, Phillip L. Lieberman, M.D., P.C. and Phillip L. Lieberman, M.D. (filed as Exhibit 10.3 to the Registrant's Current Report on Form 8-K dated January 26, 1996 and incorporated herein by reference). *2.7 Agreement and Plan of Merger among Asthma & Allergy CareAmerica, Inc.; Vivra Incorporated; George H. Treadwell, III, M.D., P.C.; and George H. Treadwell, III (filed as Exhibit 10.4 to the Registrant's Current Report on Form 8-K dated January 26, 1996 and incorporated herein by reference). *2.8 Stock Exchange Agreement among Vivra Incorporated; Raj & Jay, Inc.; Vadakkipalayam Devarajan, M.D.; Chemmale Jayakrishnan, M.D.; David J. Vial, M.D.; and Martin Ballenger, M.D. (filed as Exhibit 10.5 to the Registrant's Current Report on Form 8-K dated January 26, 1996 and incorporated herein by reference). *2.9 Stock Exchange Agreement among Vivra Renal Care, Inc.; Vivra Incorporated; Martin Gelman, M.D. and Gerald Bousquet, M.D. (filed as Exhibit 10.5 to the Registrant's Current Report on Form 8-K dated March 13, 1996 and incorporated herein by reference). *2.10 Stock Exchange Agreement among Vivra Orthopedics, Inc.; Vivra Incorporated; and Joseph Zagorski, M.D. (filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated March 15, 1996 and incorporated herein by reference). II-2 42 Exhibit Number Description of Document ------ ----------------------- *2.11 Stock Exchange Agreement among Vivra Incorporated; Mr. Qualls and Mr. Robins (filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated March 29, 1996 and incorporated herein by reference). *2.12 Master Merger Agreement among Asthma & Allergy CareAmerica, Inc.; Vivra Incorporated; Pollard & Sublett, PSC; Stephen J. Pollard, M.D.; James L. Sublett, M.D. and Allergy & Asthma Research Institute, Inc. (filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated April 11, 1996 and incorporated herein by reference). *2.13 Agreement and Plan of Merger among Asthma & Allergy CareAmerica, Inc.; Vivra Incorporated; Pollard & Sublett, PSC; Stephen J. Pollard, M.D. and James L. Sublett, M.D. (filed as Exhibit 10.2 to the Registrant's Current Report on Form 8-K dated April 11, 1996 and incorporated herein by reference). *2.14 Agreement and Plan of Merger among Asthma & Allergy CareAmerica, Inc.; Vivra Incorporated; Allergy & Asthma Research Institute, Inc.; Stephen J. Pollard, M.D. and James L. Sublett, M.D. (filed as Exhibit 10.3 to the Registrant's Current Report on Form 8-K dated April 11, 1996 and incorporated herein by reference). *2.15 Master Merger Agreement among Asthma & Allergy CareAmerica, Inc.; Vivra Incorporated; Brennan, Martell & Mirmelli, M.D.'s, P.A.; Asthma & Allergy CareAmerica of Florida, Inc.; Frank R. Martell, M.D.; Philip C. Mirmelli, M.D. and Asthma & Allergy Institute of South Florida, Inc. (filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated May 14, 1996 and incorporated herein by reference). *2.16 Agreement and Plan of Merger among Asthma & Allergy CareAmerica, Inc.; Vivra Incorporated; Brennan, Martell & Mirmelli, M.D.'s, P.A.; Asthma & Allergy CareAmerica of Florida, Inc.; Frank R. Martell, M.D. and Philip C. Mirmelli, M.D. (filed as Exhibit 10.2 to the Registrant's Current Report on Form 8-K dated May 14, 1996 and incorporated herein by reference). *2.17 Agreement and Plan of Merger among Asthma & Allergy CareAmerica, Inc.; Vivra Incorporated; AACA-AAI Acquisition, Inc.; Asthma & Allergy Institute of South Florida, Inc.; Frank R. Martell, M.D. and Philip C. Mirmelli, M.D. (filed as Exhibit 10.3 to the Registrant's Current Report on Form 8-K dated May 14, 1996 and incorporated herein by reference). *2.18 Agreement and Plan of Merger among Vivra Renal Care, Inc.; Vivra Incorporated; Charleston Kidney Center, Inc.; Georgia Malanos, M.D.; Jerry Owens, M.D. and Arthur Smith, M.D. (filed as Exhibit 10.4 to the Registrant's Current Report on Form 8-K dated May 14, 1996 and incorporated herein by reference). *2.19 Agreement and Plan of Merger among Vivra Specialty Partners, Inc.; Vivra Incorporated; Melter, Inc.; Melter Rehabilitation Services, Inc. and Melvyn Drucker, M.D. (filed as Exhibit 10.5 to the Registrant's Current Report on Form 8-K dated May 14, 1996 and incorporated herein by reference). 4 Instruments defining the rights of security holders, including indentures. *4.1 Amended and Restated Rights Agreement dated as of February 13, 1996 by and between Vivra Incorporated and The First National Bank of Boston, as Rights Agent (filed as Exhibit 4D to the Registrant's Form 10/A dated February 14, 1996 and incorporated herein by reference). II-3 43 Exhibit Number Description of Document ------ ----------------------- 4.2 Indenture by and between Vivra Incorporated and State Street Bank and Trust Company, as Trustee, dated as of July 8, 1996, regarding the Company's 5% Convertible Subordinated Notes Due 2001. 4.3 Registration Rights Agreement dated as of July 8, 1996 by and among Vivra Incorporated, Alex. Brown & Sons Incorporated, Montgomery Securities, Bear, Stearns & Co. Inc., Smith Barney Inc. and UBS Securities LLC, as the Initial Purchasers of the Company's 5% Convertible Subordinated Notes Due 2001, with respect to the registration of said Notes under applicable securities laws. 5.1 Opinion of Charles W. Ott. 12 Statement re computation of ratios. 23 Consents 23.1 Consent of Charles W. Ott (included in Exhibit 5.1). 23.2 Consent of Ernst & Young LLP. 23.3 Consent of Pratt-Thomas, Gumb & Co., P.A. 23.4 Consent of Arthur Andersen LLP * Previously filed, and incorporated by reference. ITEM 17. UNDERTAKINGS Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described in Item 15 above, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. 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: (a) To include any prospectus required by Section 10(a)(3) of the Act; (b) To reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in II-4 44 the aggregate, represent a fundamental change in the information set forth in this Registration Statement; and (c) To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement. (2) That, for the purpose of determining any liability under the Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-offering amendment any of the securities being registered which remain unsold at the termination of the offering. (4) For purposes of determining any liability under the Act, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-5 45 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Mateo, State of California on September 30, 1996. VIVRA INCORPORATED By /s/ LeANNE M. ZUMWALT -------------------------------- LeAnne M. Zumwalt Chief Financial Officer, Secretary and Treasurer POWER OF ATTORNEY Each of the undersigned hereby appoints Kent J. Thiry, LeAnne M. Zumwalt and Charles W. Ott, and each of them (with full power to act alone), as attorneys and agents for the undersigned, with full power of substitution for and in the same place and stead of the undersigned, to sign and file with the Securities and Exchange Commission under the Securities Act of 1933 any and all amendments and exhibits to this Registration Statement and any and all applications, instruments or other documents to be filed with the Securities and Exchange Commission pertaining to the registration of the securities covered hereby, with full power and authority to do and perform any and all acts and things whatsoever required or desirable. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-3 has been signed by the following persons in the capacities and on the dates indicated.
Name Title Date ---- ----- ---- /s/ KENT J. THIRY Director, President and Chief September 5, 1996 - ----------------------------------------------- Executive Officer (Principal (Kent J. Thiry) Executive Officer) /s/ LeANNE M. ZUMWALT Director and Chief Financial Officer, September 5, 1996 - ----------------------------------------------- Treasurer and Secretary (Principal (LeAnne M. Zumwalt) Accounting Officer and Principal Financial Officer) /s/ DAVID G. CONNOR, M.D. Director September 5, 1996 - ----------------------------------------------- (David G. Connor, M.D.)
II-6 46
Name Title Date ---- ----- ---- /s/ RICHARD B. FONTAINE Director September 30, 1996 - ----------------------------------------------- (Richard B. Fontaine) /s/ ALAN HOOPS Director September 6, 1996 - ----------------------------------------------- (Alan Hoops) /s/ DAVID LOWE Director September 7, 1996 - ----------------------------------------------- (David Lowe) /s/ JOHN M. NEHRA Director September 9, 1996 - ----------------------------------------------- (John M. Nehra) Director September __, 1996 - ----------------------------------------------- (Stephen G. Pagliuca)
II-7 47 EXHIBIT INDEX 4.2 Indenture by and between Vivra Incorporated and State Street Bank and Trust Company, as Trustee, dated as of July 8, 1996, regarding the Company's 5% Convertible Subordinated Notes Due 2001. 4.3 Registration Rights Agreement dated as of July 8, 1996 by and among Vivra Incorporated, Alex. Brown & Sons Incorporated, Montgomery Securities, Bear, Stearns & Co. Inc., Smith Barney Inc. and UBS Securities LLC, as the Initial Purchasers of the Company's 5% Convertible Subordinated Notes Due 2001, with respect to the registration of said Notes under applicable securities laws. 5.1 Opinion of Charles W. Ott. 12 Statement re computation of ratios. 23 Consents 23.1 Consent of Charles W. Ott (included in Exhibit 5.1). 23.2 Consent of Ernst & Young LLP 23.3 Consent of Pratt-Thomas, Gumb & Co., P.A. 23.4 Consent of Arthur Andersen LLP EX-4.2 2 INDENTURE BETWEEN VIVRA AND STATE STREET BANK AND 1 VIVRA INCORPORATED 5% Convertible Subordinated Notes Due 2001 INDENTURE Dated as of July 8, 1996 STATE STREET BANK AND TRUST COMPANY, AS TRUSTEE 2 TABLE OF CONTENTS1 Page ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE....................... 1 SECTION 1.1 Definitions.......................................... 1 SECTION 1.2 Other Definitions.................................... 5 SECTION 1.3 Incorporation by Reference of Trust Indenture Act.... 6 SECTION 1.4 Rules of Construction................................ 6 ARTICLE 2 THE SECURITIES................................................... 7 SECTION 2.1 Designation, Form and Dating......................... 7 SECTION 2.2 Execution and Authentication......................... 9 SECTION 2.3 Registrar, Paying Agent and Conversion Agent......... 10 SECTION 2.4 Paying Agent to Hold Money in Trust.................. 10 SECTION 2.5 Securityholder Lists................................. 10 SECTION 2.6 Transfer and Exchange................................ 10 SECTION 2.7 Replacement Securities............................... 20 SECTION 2.8 Outstanding Securities............................... 20 SECTION 2.9 Treasury Securities.................................. 20 SECTION 2.10 Temporary Securities................................. 21 SECTION 2.11 Cancellation......................................... 21 ARTICLE 3 REDEMPTION AND REPURCHASE........................................ 21 SECTION 3.1 Right to Redeem; Notice to Trustee................... 21 SECTION 3.2 Selection of Securities To Be Redeemed............... 22 SECTION 3.3 Notice of Redemption................................. 22 SECTION 3.4 Effect of Notice of Redemption....................... 23 SECTION 3.5 Deposit of Redemption Price.......................... 23 SECTION 3.6 Securities Redeemed in Part.......................... 23 SECTION 3.7 Conversion Arrangement on Call for Redemption........ 23 SECTION 3.8 Repurchase of Securities at Option of the Holder upon Change in Control.................................... 24 SECTION 3.9 Effect of Repurchase Notice.......................... 27 SECTION 3.10 Deposit of Repurchase Price.......................... 27 SECTION 3.11 Securities Repurchased in Part....................... 27 SECTION 3.12 Compliance with Securities Laws upon Repurchase of Securities........................................... 28 SECTION 3.13 Repayment to the Company............................. 28 ARTICLE 4 CONVERSION....................................................... 28 SECTION 4.1 Conversion Privilege................................. 28 SECTION 4.2 Conversion Procedure................................. 29 SECTION 4.3 Fractional Shares.................................... 29 SECTION 4.4 Taxes on Conversion.................................. 30 SECTION 4.5 Company to Provide Stock............................. 30 - -------- 1 This Table of Contents shall not, for any purpose, be deemed to be a part of this Indenture. i 3 Page SECTION 4.6 Adjustment of Conversion Price....................... 30 SECTION 4.7 No Adjustment........................................ 33 SECTION 4.8 Equivalent Adjustments............................... 34 SECTION 4.9 Adjustment for Tax Purposes.......................... 34 SECTION 4.10 Notice of Adjustment................................. 34 SECTION 4.11 Notice of Certain Transactions....................... 34 SECTION 4.12 Effect of Reclassification, Consolidation, Merger or Sale on Conversion Privilege...................... 35 SECTION 4.13 Trustee's Disclaimer................................. 36 SECTION 4.14 Voluntary Reduction.................................. 36 ARTICLE 5 SUBORDINATION.................................................... 36 SECTION 5.1 Securities Subordinated to Senior Indebtedness....... 36 SECTION 5.2 Securities Subordinated to Prior Payment of All Senior Indebtedness on Dissolution, Liquidation, Reorganization, Etc., of the Company.... 37 SECTION 5.3 Securityholders To Be Subrogated to Right of Holders of Senior Indebtedness....................... 38 SECTION 5.4 Obligations of the Company Unconditional............. 38 SECTION 5.5 Company Not To Make Payment with Respect to Securities in Certain Circumstances.................. 38 SECTION 5.6 Notice to Trustee.................................... 39 SECTION 5.7 Application by Trustee of Monies Deposited with It... 39 SECTION 5.8 Subordination Rights Not Impaired by Acts or Omissions of Company or Holders of Senior Indebtedness......................................... 40 SECTION 5.9 Trustee To Effectuate Subordination.................. 40 SECTION 5.10 Right of Trustee To Hold Senior Indebtedness......... 40 SECTION 5.11 Article 5 Not To Prevent Events of Default........... 40 SECTION 5.12 No Fiduciary Duty Created to Holders of Senior Indebtedness......................................... 40 SECTION 5.13 Article Applicable to Paying Agents.................. 40 SECTION 5.14 Certain Conversion Deemed Payment.................... 41 ARTICLE 6 COVENANTS........................................................ 41 SECTION 6.1 Payment of Securities................................ 41 SECTION 6.2 SEC Reports; 144A Information........................ 41 SECTION 6.3 Liquidation.......................................... 42 SECTION 6.4 Compliance Certificates.............................. 42 SECTION 6.5 Notice of Defaults................................... 43 SECTION 6.6 Payment of Taxes and Other Claims.................... 43 SECTION 6.7 Corporate Existence.................................. 43 SECTION 6.8 Maintenance of Properties............................ 43 SECTION 6.9 Further Instruments and Acts......................... 43 SECTION 6.10 Maintenance of Office or Agency...................... 43 ARTICLE 7 SUCCESSOR CORPORATION............................................ 44 SECTION 7.1 When Company May Merge, Etc.......................... 44 SECTION 7.2 Successor Corporation Substituted.................... 44 ii 4 Page ARTICLE 8 DEFAULT AND REMEDIES............................................. 45 SECTION 8.1 Events of Default.................................... 45 SECTION 8.2 Acceleration......................................... 46 SECTION 8.3 Other Remedies....................................... 47 SECTION 8.4 Waiver of Defaults and Events of Default............. 47 SECTION 8.5 Control by Majority.................................. 47 SECTION 8.6 Limitation on Suits.................................. 47 SECTION 8.7 Rights of Holders to Receive Payment................. 48 SECTION 8.8 Collection Suit by Trustee........................... 48 SECTION 8.9 Trustee May File Proofs of Claim..................... 48 SECTION 8.10 Priorities........................................... 48 SECTION 8.11 Undertaking for Costs................................ 49 SECTION 8.12 Restoration of Rights and Remedies................... 49 SECTION 8.13 Rights and Remedies Cumulative....................... 49 SECTION 8.14 Delay or Omission Not Waiver......................... 49 ARTICLE 9 TRUSTEE.......................................................... 50 SECTION 9.1 Duties of Trustee.................................... 50 SECTION 9.2 Rights of Trustee.................................... 50 SECTION 9.3 Individual Rights of Trustee......................... 51 SECTION 9.4 Trustee's Disclaimer................................. 51 SECTION 9.5 Notice of Default or Events of Default............... 51 SECTION 9.6 Reports by Trustee to Holders........................ 51 SECTION 9.7 Compensation and Indemnity........................... 51 SECTION 9.8 Replacement of Trustee............................... 52 SECTION 9.9 Successor Trustee by Merger, Etc..................... 53 SECTION 9.10 Eligibility; Disqualification........................ 53 SECTION 9.11 Preferential Collection of Claims Against Company.... 53 ARTICLE 10 SATISFACTION AND DISCHARGE OF INDENTURE......................... 53 SECTION 10.1 Termination of Company's Obligations................. 53 SECTION 10.2 Application of Trust Money........................... 54 SECTION 10.3 Repayment to Company................................. 54 SECTION 10.4 Reinstatement........................................ 54 ARTICLE 11 AMENDMENTS, SUPPLEMENTS AND WAIVERS............................. 54 SECTION 11.1 Without Consent of Holders........................... 54 SECTION 11.2 With Consent of Holders.............................. 55 SECTION 11.3 Compliance with Trust Indenture Act.................. 56 SECTION 11.4 Revocation and Effect of Consents.................... 56 SECTION 11.5 Notation on or Exchange of Securities................ 56 SECTION 11.6 Trustee To Sign Amendments, Etc...................... 56 iii 5 Page ARTICLE 12 MISCELLANEOUS................................................... 56 SECTION 12.1 Trust Indenture Act Controls......................... 56 SECTION 12.2 Notices.............................................. 57 SECTION 12.3 Communications by Holders with Other Holders......... 57 SECTION 12.4 Certificate and Opinion as to Conditions Precedent... 57 SECTION 12.5 Record Date for Vote or Consent of Securityholders... 58 SECTION 12.6 Rules by Trustee, Paying Agent, Registrar............ 58 SECTION 12.7 Legal Holidays....................................... 58 SECTION 12.8 Governing Law........................................ 58 SECTION 12.9 No Adverse Interpretation of Other Agreements........ 59 SECTION 12.10 No Recourse Against Others........................... 59 SECTION 12.11 Successors........................................... 59 SECTION 12.12 Multiple Counterparts................................ 59 SECTION 12.13 Separability......................................... 59 SECTION 12.14 Table of Contents, Headings, Etc..................... 59 Exhibit A-1 FORM OF SECURITY............................................ A1-1 Exhibit A-2 FORM OF SECURITY............................................ A2-1 Exhibit B-1 FORM OF PURCHASER LETTER.................................... B1-1 Exhibit B-2 FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER FROM RULE 144A GLOBAL NOTE TO REGULATION S GLOBAL NOTE.................................... B2-1 Exhibit B-3 FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER FROM REGULATION S GLOBAL NOTE TO RULE 144A GLOBAL NOTE....................................... B3-1 Exhibit B-4 FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER OF CERTIFICATED NOTES........................... B4-1 Exhibit B-5 FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER FROM RULE 144A GLOBAL NOTE OR REGULATION S PERMANENT GLOBAL NOTE TO CERTIFICATED NOTE.................. B5-1 Exhibit B-6 FORM OF CERTIFICATE FOR TRANSFERS OF REGULATION S TEMPORARY GLOBAL NOTE FOR REGULATION S PERMANENT GLOBAL NOTE................................................. B6-1 iv 6 INDENTURE dated as of July 8, 1996 between VIVRA Incorporated, a Delaware corporation (the "Company"), and State Street Bank and Trust Company, a Massachusetts trust company, as Trustee (the "Trustee"). Both parties agree as follows for the benefit of the other and for the equal and ratable benefit of the registered holders of the Company's 5% Convertible Subordinated Notes Due 2001. ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.1 DEFINITIONS. The terms defined in this Section 1.1 (except as herein otherwise expressly provided or unless the context otherwise requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section 1.1. "Affiliate" of any specified person means any other person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified person. For the purposes of this definition, "control" when used with respect to any person means the power to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Agent" means any Registrar, Paying Agent or Conversion Agent. "Applicable Procedures" means any procedures required to be followed by the Depositary, Euroclear or Cedel including, but not limited to, the "Operating Procedures of the Euroclear System" and "Terms and Conditions Governing Use of Euroclear" and the "Management Regulations" and "Instructions to Participants" of Cedel Bank. "Associate" shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act, as such Rule is in effect on the date of this Indenture. "Board of Directors" means the Board of Directors of the Company or any authorized committee of the Board of Directors, except that for the purposes of Section 3.8, "Board of Directors" shall mean the entire Board of Directors of the Company. "Business Day" means a day that is not a Legal Holiday. "Cash" or "cash" means such coin or currency of the United States as at any time of payment is legal tender for the payment of public and private debts. "Certificated Security" means a Security issued to a purchaser in definitive form in the form of Note attached hereto as Exhibit A-1 that contains the Restricted Securities Legend, if applicable, but that does not contain the Global Note Legend, the Global Note Insert or the Global Note Transfer Schedule. "Common Stock" means any stock of any class of the Company which has no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which is not subject to redemption by the Company. Subject to the provisions of Section 4.12, however, shares issuable on conversion of Securities shall include only shares of Common Stock, $0.01 par value per share (which is the class designated as Common Stock of the Company at the date of this Indenture), or shares of any class or classes resulting from any reclassification or reclassifications thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or 1 7 involuntary liquidation, dissolution or winding up of the Company and which are not subject to redemption by the Company; provided that if at any time there shall be more than one such resulting class, the shares of each such class then so issuable shall be substantially in the proportion to which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications. "Company" means the party named as such in this Indenture until a successor replaces it pursuant to this Indenture and thereafter means the successor. "Consolidated Net Worth" means, with respect to any Person, the consolidated stockholders' equity (excluding any capital stock that by its terms is, or upon the happening of an event or passage of time would be, required to be redeemed prior to the maturity of the Securities or is redeemable at the option of the holder thereof at any time prior to such maturity or is convertible or exchangeable for debt securities at any time prior to such maturity at the option of the holder thereof) of such Person and its consolidated subsidiaries, as determined in accordance with generally accepted accounting principles. "Corporate Trust Office" of the Trustee means the office of the Trustee at which its corporate trust business is administered, which office initially is located at 2 International Place, Boston, Massachusetts 02110, attention: Corporate Trust Department, 4th Floor (VIVRA Incorporated 5% Convertible Subordinated Notes Due 2001). "Default" or "default" means any event which is, or after notice of passage of time, or both, would be, an Event of Default. "Depositary" means, with respect to the Securities issuable or issued in whole or in part in global form, the person specified in Section 2.6(g) as the Depositary with respect to the Securities, until a successor shall have been appointed and become such pursuant to the applicable provisions of this Indenture, and thereafter, "Depositary" shall mean or include such successor. "Global Notes" means, individually and collectively, the Regulation S Temporary Global Note, the Regulation S Permanent Global Note and the Rule 144A Global Note. "Holder" or "Securityholder" means the person in which name a Security is registered on the Registrar's books. "Indenture" means this Indenture as amended or supplemented from time to time. "Institutional Accredited Investor" means an institutional "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act. "Initial Purchasers" means Alex. Brown & Sons Incorporated, Montgomery Securities, Bear, Stearns & Co. Inc., Smith Barney Inc. and UBS Securities LLC, as Initial Purchasers under the Placement Agreement. "Instrument" means any agreement, indenture, instrument or other document under which any obligation is evidenced, assumed, guaranteed or secured. "Investment" means, with respect to any Person, directly or indirectly, any advance, loan or other extension of credit or capital contribution to, or any purchase, acquisition or ownership by such Person of any capital stock, bonds, notes, debentures or other securities issued or owned by any other Person. 2 8 "Market Capitalization" means an amount determined by multiplying the number of shares of Common Stock outstanding on the applicable date by the current market price of the Common Stock (determined as provided in Section 4.6(e)) as of such date. "Officer" means the Chairman of the Board, the President, any Vice President, the Chief Financial Officer, the Treasurer or the Secretary of the Company. "Officers' Certificate" means a certificate signed by two Officers of the Company; provided, however, that for purposes of Section 6.4 "Officers' Certificate" means a certificate signed by the principal executive officer, principal financial officer or principal accounting officer of the Company. "Opinion of Counsel" means a written opinion from legal counsel to the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee. "Over-Allotment Option" means the option to purchase up to $22,500,000 in aggregate principal amount of Securities granted by the Company to the Initial Purchasers pursuant to the Placement Agreement. "Payment Default" means any default in the payment of principal of (or premium, if any) or interest on Senior Indebtedness. "Payment in full" or "paid in full" means payment in full in cash. "Person" or "person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof. "Placement Agreement" means the Placement Agreement dated July 1, 1996 among the Company, Alex. Brown & Sons Incorporated, Montgomery Securities, Bear, Stearns & Co. Inc., Smith Barney Inc. and UBS Securities LLC. "PORTAL Market" means the Private Offerings, Resales and Trading through Automated Linkages Market operated by the National Association of Securities Dealers, Inc. or any successor thereto. "Principal" or "principal" of a debt security, including the Securities, means the principal of the security plus, when appropriate, the premium, if any, on the security. "QIB" means a "Qualified Institutional Buyer" as that term is defined in Rule 144A. "Redemption Date" or "redemption date," when used with respect to any Security to be redeemed, means the date fixed for such redemption pursuant to this Indenture, as set forth in the form of Security annexed as Exhibit A hereto. "Redemption Price" or "redemption price," when used with respect to any Security to be redeemed, means the price fixed for such redemption pursuant to this Indenture, as set forth in the form of Security annexed as Exhibit A hereto. "Registration Rights Agreement" means the Registration Rights Agreement dated as of July 8, 1996 between the Company and the Initial Purchasers and certain permitted assigns. "Regulation S" means Regulation S promulgated under the Securities Act. "Regulation S Global Note" means a Regulation S Temporary Global Note or Regulation S Permanent Global Note, as appropriate. 3 9 "Regulation S Permanent Global Note" means a permanent global note in the form of the Note attached hereto as Exhibit A-1 that contains the Global Note Legend, the Global Note Insert and the Global Note Transfer Schedule as each is set forth in Exhibit A-1 hereto, and that is deposited with and is registered in the name of the Depositary, representing a series of Notes sold in reliance on Regulation S. "Regulation S Temporary Global Note" means a single temporary global note in the form of the Note attached hereto as Exhibit A-2 that is deposited with and registered in the name of the Depositary, representing a series of Notes sold in reliance on Regulation S, which Regulation S Temporary Global Note shall be converted into a Regulation S Permanent Global Note pursuant to Section 2.1(a) hereof following the termination of the "40-day restricted period" (as defined in Regulation S). "Reorganization Securities" means securities of the Company or any other corporation provided for by a plan of reorganization or readjustment of the Company (a) which are equity securities that do not provide for any mandatory payments to holders thereof, including by way of dividends or mandatory redemption; or (b) the payment of which is subordinated, at least to the extent provided in Article 5 with respect to the Securities, to the payment of all Senior Indebtedness which may at the time be outstanding. "Representative" means the indenture trustee or other trustee, agent or representative for any class of Senior Indebtedness. "Restricted Security" means each Security, other than a Regulation S Global Note, until the earliest to occur of (a) the date on which such Note has been effectively registered under the Securities Act and disposed of in accordance with a shelf registration statement pursuant to the Registration Rights Agreement and (b) the date on which such Note is distributed to the public pursuant to Rule 144 under the Securities Act. Each Restricted Security shall bear the appropriate legend set forth in Section 2.6(g). "Rule 144" means Rule 144 as promulgated under the Securities Act. "Rule 144A" means Rule 144A as promulgated under the Securities Act. "Rule 144A Global Note" means a permanent global note in the form of the Note attached hereto as Exhibit A-1 that contains the Global Note Insert, the Global Note Legend, the Global Note Transfer Schedule and the Restricted Securities Legend (if applicable), as each such legend or schedule is set forth in Exhibit A-1 hereto, and that is deposited with and registered in the name of the Depositary, representing a series of Notes sold in reliance on Rule 144A. "SEC" or "Commission" means the Securities and Exchange Commission. "Securities" means the 5% Convertible Subordinated Notes Due 2001 or any of them (each a "Security"), as amended or supplemented from time to time, that are issued under this Indenture. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "Senior Agent" means, on any date, the Representative of the class of Senior Indebtedness having the highest principal amount (including all revolving credit, letter of credit and other working capital commitments) then outstanding. "Senior Indebtedness" means the following, whether outstanding upon issuance of the Notes or thereafter incurred or created: (a) the principal of and premium, if any, and interest on, and fees, costs, enforcement expenses, collateral protection expenses and other reimbursements or indemnity obligations in respect of all indebtedness or obligations of the Company to any Person, including but not limited to banks and 4 10 other lending institutions, for money borrowed that is evidenced by a note, bond, debenture, loan agreement, or similar instrument or agreement (including purchase money obligations with original maturities in excess of one year and noncontingent reimbursement obligations in respect of amounts paid under letters of credit); (b) commitment or standby fees due and payable of lending institutions with respect to credit facilities available to the Company; (c) all noncontingent obligations of the Company (i) for the reimbursement of any obligor on any letter of credit, banker's acceptance, or similar credit transaction, (ii) under interest rate swaps, caps, collars, options, and similar arrangements, and (iii) under any foreign exchange contract, currency swap agreement, futures contract, currency option contract, or other foreign currency hedge; (d) all obligations of the Company for the payment of money relating to capitalized lease obligations; (e) any liabilities of others described in the preceding clauses that the Company has guaranteed or which are otherwise its legal liability; and (f) renewals, extensions, refundings, refinancings, restructurings, amendments, and modifications of any such indebtedness or guarantee; other than any indebtedness or other obligation of the Company that by its terms or the terms of the instrument creating or evidencing it is stated to be not superior in right of payment to the Notes. "Significant Subsidiary" means any Subsidiary of the Company which is a"significant subsidiary" as defined in Rule 1-02(w) of Regulation S-X under the Securities Act and the Exchange Act (as such Regulation is in effect on the date hereof). "Subsidiary" means any corporation of which at least a majority of the outstanding capital stock having voting power under ordinary circumstances to elect directors of such corporation shall at the time be held, directly or indirectly, by the Company, by the Company and one or more Subsidiaries or by one or more Subsidiaries. "TIA" means the Trust Indenture Act of 1939, as amended by the Trust Indenture Reform Act of 1990 and as in effect on the date of this Indenture, except as provided in Section 11.3 hereof, and except to the extent any amendment to the Trust Indenture Act expressly provides for application of the Trust Indenture Act as in effect on another date. "Transfer Restricted Security" means securities that bear or are required to bear the Legend set forth in Section 2.6(g) hereof. "Trustee" means State Street Bank and Trust Company until a successor replaces it in accordance with the provisions of this Indenture and thereafter means the successor. "Trust Officer" means any officer in the Corporate Trust Office of the Trustee or any other officer customarily performing functions similar to those performed by any of the above-designated officers who shall, in any case, be responsible for the administration of this Indenture or have familiarity with it, and also means, with respect to a particular corporate matter, any other officer of the Trustee to whom corporate trust matters are referred because of his knowledge of and familiarity with the particular subject. "U.S. Person" has the meaning specified in Regulation S. "VRC" means Vivra Renal Care, Inc., a Nevada corporation, and any other Subsidiary which operates 10% or more of the Company's kidney dialysis business. "VSP" means Vivra Specialty Partners, Inc., a Nevada corporation and any other Subsidiary which operates 10% or more of the Company's high-cost specialty care network and practice management services. SECTION 1.2 OTHER DEFINITIONS. Defined Term in Section 5 11 "Affiliate Legend".................................... 2.6 "Agent Members"....................................... 2.1(b) "Bankruptcy Laws"..................................... 8.1 "Beneficial Owner".................................... 3.8 "Change in Control"................................... 3.8 "Closing Price"....................................... 4.6 "Company Order"....................................... 2.2 "Conversion Agent".................................... 2.3 "Conversion Price".................................... 4.6 "Conversion Shares"................................... 4.6 "Custodian"........................................... 8.1 "Distribution Date"................................... 4.6 "Event of Default".................................... 8.1 "Exchange Act"........................................ 3.8 "Legal Holiday"....................................... 12.7 "Paying Agent"........................................ 2.3 "Payment Blockage Period"............................. 5.5 "Registrar"........................................... 2.3 "Rights".............................................. 4.6 "Repurchase Date"..................................... 3.8 "Repurchase Price".................................... 3.8 "Repurchase Note"..................................... 3.8 "Restricted Securities Legend" ....................... 2.6 "Restricted Stock Legend" ............................ 2.6 "Securities Act"...................................... 2.1 "Trading Day"......................................... 4.6 "U.S. Government Obligations"......................... 10.1 "Voting Shares"....................................... 3.8 SECTION 1.3 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. This Indenture is hereby made subject to, and shall be governed by, the provisions of the TIA required to be part of and to govern indentures qualified under the TIA. The following TIA terms used in this Indenture have the following meanings: "Commission" means the SEC. "indenture securities" means the Securities. "indenture security holder" means a Securityholder. "indenture to be qualified" means this Indenture. "indenture trustee" or "institutional trustee" means the Trustee. "obligor" on the indenture securities means the Company or any other obligor on the Securities. All other terms used in this Indenture that are defined in the TIA, defined by a TIA reference to another statute or defined by SEC rule and not otherwise defined herein have the meanings assigned to them therein. SECTION 1.4 RULES OF CONSTRUCTION. 6 12 Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles in effect on the date hereof, and any other reference in this Indenture to "generally accepted accounting principles" refers to generally accepted accounting principles in effect on the date hereof; (3) "or" is not exclusive; (4) words in the singular include the plural, and words in the plural include the singular; (5) provisions apply to successive events and transactions; and (6) "herein," "hereof" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. ARTICLE 2 THE SECURITIES SECTION 2.1 DESIGNATION, FORM AND DATING. The Securities shall be designated as the "5% Convertible Subordinated Notes Due 2001." Other than as provided in Section 2.1(a) hereof, the Securities and the Trustee's certificate of authentication to be borne by the Securities shall be substantially in the form of Exhibit A-1 attached hereto, which is incorporated in and made part of this Indenture. The Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to the terms and provisions of the Securities and to be bound thereby. In addition to such legends as may be required pursuant to Section 2.6(g) hereof, any of the Securities may have imprinted thereon such legends or endorsements as the officers executing the same may approve (execution thereof to be conclusive evidence of such approval) and as are not inconsistent with the provisions of this Indenture, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which the Securities may be listed or any trading system in which the Securities may be admitted, or to conform to usage. Each Security shall be dated the date of its authentication. (a) Global Notes. Securities offered and sold to QIBs in reliance on Rule 144A shall be issued initially in the form of Rule 144A Global Notes in the form of the Note attached hereto as Exhibit A-1, with the Global Securities Legend, the Global Note Insert and the Global Note Transfer Schedule as each is set forth in Exhibit A-1 hereto. Such Rule 144A Global Notes shall be deposited on behalf of the purchasers of the Securities represented thereby with the Depositary at its New York office, and registered in the name of the Depositary or a nominee of the Depositary, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of the Rule 144A Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee as hereinafter provided. Payment of principal of and interest and premium, if any, on any Security in global form shall be made to the holder of such Security. Securities offered and sold in reliance on Regulation S shall be issued initially in the form of the Regulation S Temporary Global Note set forth in Exhibit A-2 hereto, which shall be deposited on behalf of the purchasers of the Securities represented thereby with the Depositary, and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear 7 13 or Cedel Bank, duly executed by the Company and authenticated by the Trustee as hereinafter provided. Following the termination of the "40-day restricted period" (as defined in Regulation S), beneficial interests in the Regulation S Temporary Global Note shall be exchanged pursuant to the Applicable Procedures and upon receipt of certificates substantially in the form of Exhibits B-6 and B-7 hereto for beneficial interests in Regulation S Permanent Global Notes in the form of the Note attached hereto as Exhibit A-1 with the Global Note Legend, the Global Note Insert and the Global Note Transfer Schedule as each is set forth in Exhibit A-1 hereto. Simultaneously with the authentication of Regulation S Permanent Global Notes, the Trustee shall cancel the Regulation S Temporary Global Note. The "40-day restricted period" (as defined in Regulation S) shall be terminated upon the receipt by the Trustee of (i) a written certificate from the Depositary, together with copies of certificates from Euroclear and Cedel Bank, certifying that they have received certification of non-United States beneficial ownership of 100% of the aggregate principal amount of the Regulation S Temporary Global Note (except to the extent of any beneficial owners thereof who acquired an interest therein pursuant to another exemption from registration under the Securities Act and who will take delivery of a beneficial ownership interest in a Rule 144A Global Note, all as contemplated by Section 2.6(a)(ii) hereof), and (ii) an Officers' Certificate from the Company. The aggregate principal amount of the Regulation S Temporary Global Note and the Regulation S Permanent Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided. Each Global Note shall represent such of the outstanding Securities as shall be specified therein and each shall provide that it shall represent the aggregate amount of outstanding Securities from time to time endorsed thereon and that the aggregate amount of outstanding Securities represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the amount of outstanding Securities represented thereby shall be made by the Trustee or the Securities Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof. The provisions of the "Operating Procedures of the Euroclear System" and "Terms and Conditions Governing Use of Euroclear" and the "Management Regulations" and "Instructions to Participants" of Cedel Bank shall be applicable to interests in the Regulation S Temporary Global Note and the Regulation S Permanent Global Notes that are held by the Agent Members through Euroclear or Cedel Bank. Except as set forth in Section 2.6 hereof, the Global Notes may be transferred, in whole and not in part, only to another nominee of the Depositary or to a successor of the Depositary or its nominee. The Trustee and the Company shall treat the Holder of any Global Note as the owner of such Security for the purpose of receiving payment of the principal of, premium, if any, and interest on such Global Note and for all other purposes whatsoever. In addition to such legends as may be required pursuant to Section 2.6(g) hereof, any Security in global form may be endorsed with or have incorporated in the text thereof such legends or recitals or changes not inconsistent with the provisions of this Indenture as may be required by the Depositary or by the National Association of Securities Dealers, Inc. in order for the Securities to be tradeable on the PORTAL Market or as may be required for the Securities to be tradeable on any other market developed for trading of securities pursuant to Rule 144A or required to comply with any applicable law or any regulation thereunder or with the rules and regulations of any securities exchange upon which the Securities may be listed or traded or to conform with any usage with respect thereto, or to indicate any special limitations or restrictions to which any particular Securities are subject. (b) Book-Entry Provisions. This Section 2.1(b) shall apply only to Rule 144A Global Notes and the Regulation S Permanent Global Notes deposited with or on behalf of the Depositary. 8 14 The Company shall execute and the Trustee shall, in accordance with this Section 2.1(b), authenticate and deliver the Global Notes that (i) shall be registered in the name of the Depositary or the nominee of the Depositary and (ii) shall be delivered by the Trustee to the Depositary or pursuant to the Depositary's instructions or held by the Trustee as custodian for the Depositary. Members of, or participants in, the Depositary ("Agent Members") shall have no rights either under this Indenture with respect to any Global Note held on their behalf by the Depositary or by the Trustee as custodian for the Depositary or under such Global Note, and the Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices of such Depositary governing the exercise of the rights of an owner of a beneficial interest in any Global Note. (c) Certificated Securities. Except as provided in Section 2.10 owners of beneficial interest in Global Notes will not be entitled to receive physical delivery of Certificated Securities. Purchasers of Securities who are not QIBs and did not purchase Securities sold in reliance on Regulation S under the Securities Act will receive Certificated Securities bearing the Restricted Securities Legend as set forth in Section 2.6(g) hereof. Certificated Securities will bear the Restricted Securities Legend set forth in Section 2.6(g) hereof unless removed in accordance with Section 2.6(g) hereof and may not be exchanged for a Global Note, or interest therein, at any time. Pursuant to Section 2.6(g) hereof, the Certificated Securities and shares of Common Stock issuable upon conversion thereof shall be required, in certain circumstances described in Section 2.6(g), to bear legends restricting their transfer. By its acceptance of any Security or share of Common Stock bearing the aforesaid legend, each Holder acknowledges the restrictions on transfer set forth on such Security or share of Common Stock and agrees that it will transfer such Security or share of Common Stock only as provided thereon. SECTION 2.2 EXECUTION AND AUTHENTICATION. Two Officers of the Company shall sign the Certificated Securities for the Company by manual or facsimile signature. If an Officer whose signature is on a Security no longer holds that office at the time the Trustee authenticates the Security, the Security shall be valid nevertheless. A Security shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Security. The signature shall be conclusive evidence that the Security has been authenticated under this Indenture. The Trustee shall authenticate and make available for delivery Securities for original issue in the aggregate principal amount of up to $150,000,000, upon a written order or orders of the Company signed by two Officers or by an Officer and an Assistant Treasurer or Assistant Secretary of the Company (a "Company Order"). The Company Order shall specify the amount of Securities to be authenticated and the date on which the original issue of Securities is to be authenticated. Upon the exercise of the Over-Allotment Option by the Initial Purchasers, additional Securities in the aggregate principal amount of up to $22,500,000 shall be executed by the Company in the aforementioned manner and delivered to the Trustee for authentication, and shall thereupon be authenticated and delivered by the Trustee upon Company Order. The aggregate principal amount of Securities outstanding under this Indenture at any time may not exceed $172,500,000, except as provided in Section 2.7. The Trustee shall act as the initial authenticating agent. Thereafter, the Trustee may appoint an authenticating agent acceptable to the Company to authenticate Securities. An authenticating agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by 9 15 the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with the Company or an Affiliate of the Company. The Securities shall be issuable only in registered form without coupons only in denominations of $1,000 and any integral multiple thereof. SECTION 2.3 REGISTRAR, PAYING AGENT AND CONVERSION AGENT. The Company shall maintain an office or agency where Securities may be presented for registration of transfer or for exchange (the "Registrar"), an office or agency where Securities may be presented for payment (the "Paying Agent"), an office or agency where Securities may be presented for conversion (the "Conversion Agent") and an office or agency where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The Registrar shall keep a register of the Securities and of their transfer and exchange. The Company may have one or more co-Registrars, one or more additional Paying Agents and one or more additional Conversion Agents. The term "Registrar" includes any co-Registrar, the term "Paying Agent" includes any additional Paying Agent and the term "Conversion Agent" includes any additional Conversion Agent. The Company shall enter into an appropriate agency agreement with any Agent not a party to this Indenture. The agreement shall implement the provisions of this Indenture that relate to such Agent. The Company shall notify the Trustee of the name and address of any Agent not a party to this Indenture. If the Company fails to maintain a Registrar, Paying Agent, Conversion Agent or agent for service of notices and demands, or fails to give the foregoing notice, the Trustee shall act as such. The Company or any Affiliate of the Company may act as Paying Agent (except for the purposes of Section 6.3 and Article 10), Registrar or Conversion Agent. The Company initially appoints the Trustee as Registrar, Paying Agent, Conversion Agent and agent for service of notices and demands in connection with the Securities. SECTION 2.4 PAYING AGENT TO HOLD MONEY IN TRUST. On or prior to each due date of the principal of or interest on any Securities, the Company shall deposit with the Paying Agent a sum sufficient to pay such principal or interest so becoming due. Subject to Section 5.7, the Paying Agent shall hold in trust for the benefit of Securityholders or the Trustee all money held by the Paying Agent for the payment of principal of or interest on the Securities, and shall notify the Trustee of any default by the Company (or any other obligor on the Securities) in making any such payment. If the Company or an Affiliate of the Company acts as Paying Agent, it shall on or before each due date of the principal of or interest on any Securities segregate the money and hold it as a separate trust fund. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and the Trustee may at any time during the continuance of any default, upon written request to a Paying Agent, require such Paying Agent to forthwith pay to the Trustee all sums so held in trust by such Paying Agent. Upon doing so, the Paying Agent (other than the Company) shall have no further liability for the money. SECTION 2.5 SECURITYHOLDER LISTS. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders. If the Trustee is not the Registrar, the Company shall furnish to the Trustee on or before each semi-annual interest payment date and at such other times as the Trustee 10 16 may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Securityholders. SECTION 2.6 TRANSFER AND EXCHANGE. (a) Transfer and Exchange of Global Notes. The transfer and exchange of Global Notes or beneficial interests therein shall be effected through the Depositary, in accordance with this Indenture and the Applicable Procedures, which shall include restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Beneficial interests in a Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Global Note in accordance with the transfer restrictions set forth in the legend in subsection (g) of this Section 2.6. Transfers of beneficial interests in the Global Notes to Persons required to take delivery thereof in the form of an interest in another Global Note shall be permitted as follows: (i) Rule 144A Global Note to Regulation S Global Note. If, at any time, an owner of a beneficial interest in a Rule 144A Global Note deposited with the Depositary (or the Trustee as custodian for the Depositary) wishes to transfer its interest in such Rule 144A Global Note to a Person who is required or permitted to take delivery thereof in the form of an interest in a Regulation S Global Note, such owner shall, subject to the Applicable Procedures, exchange or cause the exchange of such interest for an equivalent beneficial interest in a Regulation S Global Note as provided in this Section 2.6(a)(i). Upon receipt by the Trustee of (1) instructions given in accordance with the Applicable Procedures from an Agent Member directing the Trustee to credit or cause to be credited a beneficial interest in the Regulation S Global Note in an amount equal to the beneficial interest in the Rule 144A Global Note to be exchanged, (2) a written order given in accordance with the Applicable Procedures containing information regarding the participant account of the Depositary and the Euroclear or Cedel Bank account to be credited with such increase, and (3) a certificate in the form of Exhibit B-2 hereto given by the owner of such beneficial interest stating that the transfer of such interest has been made in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with Rule 903 or Rule 904 of Regulation S, then the Trustee, as Registrar, shall instruct the Depositary to reduce or cause to be reduced the aggregate principal amount at maturity of the applicable Rule 144A Global Note and to increase or cause to be increased the aggregate principal amount at maturity of the applicable Regulation S Global Note by the principal amount at maturity of the beneficial interest in the Rule 144A Global Note to be exchanged, to credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Regulation S Global Note equal to the reduction in the aggregate principal amount at maturity of the Rule 144A Global Note, and to debit, or cause to be debited, from the account of the Person making such exchange or transfer the beneficial interest in the Rule 144A Global Note that is being exchanged or transferred. (ii) Regulation S Global Note to Rule 144A Global Note. If, at any time, an owner of a beneficial interest in a Regulation S Global Note deposited with the Depositary or with the Trustee as custodian for the Depositary wishes to transfer its interest in such Regulation S Global Note to a Person who is required or permitted to take delivery thereof in the form of an interest in a Rule 144A Global Note, such owner shall, subject to the Applicable Procedures, exchange or cause the exchange of such interest for an equivalent beneficial interest in a Rule 144A Global Note as provided in this Section 2.6(a)(ii). Upon receipt by the Trustee of (1) instructions from Euroclear or Cedel Bank, if applicable, and the Depositary, directing the Trustee, as Registrar, to 11 17 credit or cause to be credited a beneficial interest in the Rule 144A Global Note equal to the beneficial interest in the Regulation S Global Note to be exchanged, such instructions to contain information regarding the participant account with the Depositary to be credited with such increase, (2) a written order given in accordance with the Applicable Procedures containing information regarding the participant account of the Depositary and (3) a certificate in the form of Exhibit B-3 attached hereto given by the owner of such beneficial interest stating (A) if the transfer is pursuant to Rule 144A, that the Person transferring such interest in a Regulation S Global Note reasonably believes that the Person acquiring such interest in a Rule 144A Global Note is a QIB and is obtaining such beneficial interest in a transaction meeting the requirements of Rule 144A and any applicable blue sky or securities laws of any state of the United States, (B) that the transfer complies with the requirements of Rule 144 under the Securities Act and any applicable blue sky or securities laws of any state of the United States or (C) if the transfer is pursuant to any other exemption from the registration requirements of the Securities Act, that the transfer of such interest has been made in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the requirements of the exemption claimed, such statement to be supported by an Opinion of Counsel from the transferee or the transferor in form reasonably acceptable to the Company and to the Registrar, then the Trustee, as Registrar, shall instruct the Depositary to reduce or cause to be reduced the aggregate principal amount at maturity of such Regulation S Global Note and to increase or cause to be increased the aggregate principal amount at maturity of the applicable Rule 144A Global Note by the principal amount at maturity of the beneficial interest in the Regulation S Global Note to be exchanged, and the Trustee, as Registrar, shall instruct the Depositary, concurrently with such reduction, to credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the applicable Rule 144A Global Note equal to the reduction in the aggregate principal amount at maturity of such Regulation S Global Note and to debit or cause to be debited from the account of the Person making such transfer the beneficial interest in the Regulation S Global Note that is being transferred. (b) Transfer and Exchange of Certificated Notes. When Certificated Notes are presented by a Holder to the Registrar with a request: to register the transfer of the Certificated Notes; or to exchange such Certificated Notes for an equal principal amount of Certificated Notes of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested; provided, however, that the Certificated Notes presented or surrendered for register of transfer or exchange: (i) shall be duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by his attorney, duly authorized in writing; and (ii) in the case of a Certificated Note that is a Restricted Security, such request shall be accompanied by a Purchaser Letter, in substantially the form of Exhibit B-1 hereto, together with the following additional information and documents, as applicable: (A) if such Restricted Security is being delivered to the Registrar by a Holder for registration in the name of such Holder, without transfer, or such Restricted Security is being transferred to the Company, a certification to that effect from such Holder (in substantially the form of Exhibit B-4 hereto); (B) if such Restricted Security is being transferred to a QIB in accordance with Rule 144A under the Securities Act or pursuant to an exemption from registration in accordance with Rule 144 under the Securities Act or pursuant to an effective registration statement under the Securities Act, a certification to that effect from such Holder (in substantially the form of Exhibit B-4 hereto); or (C) if such Restricted Security is being transferred in reliance on any other exemption from the registration requirements of the Securities Act, a certification to that effect from such Holder (in substantially the form of Exhibit B-4 hereto) and an Opinion of Counsel from such Holder or the transferee reasonably acceptable to the Company and to the Registrar to the effect that such transfer is in compliance with the Securities Act. 12 18 (c) Transfer of a Beneficial Interest in a Rule 144A Global Note or Regulation S Permanent Global Note for a Certificated Note. (i) Any Person having a beneficial interest in a Rule 144A Global Note or Regulation S Permanent Global Note may upon request, subject to the Applicable Procedures, exchange such beneficial interest for a Certificated Note. Upon receipt by the Trustee of written instructions or such other form of instructions as is customary for the Depositary (or Euroclear or Cedel Bank, if applicable), from the Depositary or its nominee on behalf of any Person having a beneficial interest in a Rule 144A Global Note or Regulation S Permanent Global Note, and, in the case of a Restricted Security, a Purchaser Letter, in substantially the form of Exhibit B-1 hereto, together with the following additional information and documents, as applicable (all of which may be submitted by facsimile): (A) if such beneficial interest is being transferred to the Person designated by the Depositary as being the beneficial owner, a certification to that effect from such Person (in substantially the form of Exhibit B-5 hereto); (B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A under the Securities Act or pursuant to an exemption from registration in accordance with Rule 144 under the Securities Act or pursuant to an effective registration statement under the Securities Act, a certification to that effect from the transferor (in substantially the form of Exhibit B-5 hereto; or (C) if such beneficial interest is being transferred in reliance on any other exemption from the registration requirements of the Securities Act, a certification to that effect from the transferor (in substantially the form of Exhibit B-5 hereto) and an Opinion of Counsel from the transferee or the transferor reasonably acceptable to the Company and to the Registrar to the effect that such transfer is in compliance with the Securities Act, in which case the Trustee or the Custodian, at the direction of the Trustee, shall, in accordance with the standing instructions and procedures existing between the Depositary and the Custodian, cause the aggregate principal amount of Rule 144A Global Notes or Regulation S Permanent Global Notes, as applicable, to be reduced accordingly and, following such reduction, the Company shall execute and, the Trustee shall authenticate and deliver to the transferee a Certificated Note in the appropriate principal amount. (ii) Certificated Notes issued in exchange for a beneficial interest in a Rule 144A Global Note or Regulation S Permanent Global Note, as applicable, pursuant to this Section 2.6(c) shall be registered in such names and in such authorized denominations as the Depositary, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. Upon execution and authentication, the Trustee shall deliver such Certificated Notes to the Persons in whose names such Notes are so registered. Following any such issuance of Certificated Notes, the Trustee, as Registrar, shall instruct the Depositary to reduce or cause to be reduced the aggregate principal amount at maturity of the applicable Global Note to reflect the transfer and an endorsement shall be made on such Security in global form by the Trustee to reflect such reduction of increase. (d) Restrictions on Transfer and Exchange of Global Notes. Notwithstanding any other provision of this Indenture (other than the provisions set forth in subsection (f) of this Section 2.6), a Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. 13 19 (e) Transfer and Exchange of a Certificated Note for a Beneficial Interest in a Global Note. A Certificated Note may not be transferred or exchanged for a beneficial interest in a Global Note. (f) Authentication of Certificated Notes in Absence of Depositary. If at any time: (i) the Depositary for the Securities notifies the Company that the Depositary is unwilling or unable to continue as Depositary for the Global Notes and a successor Depositary for the Global Notes is not appointed by the Company within 90 days after delivery of such notice; or (ii) the Company, at its sole discretion, notifies the Trustee in writing that it elects to cause the issuance of Certificated Notes under this Indenture, then the Company shall execute, and the Trustee shall, upon receipt of an authentication order in accordance with Section 2.2 hereof, authenticate and deliver, Certificated Debentures in an aggregate principal amount equal to the principal amount of the Global Notes in exchange for such Global Notes. (g) Legends. (i) Every Security issued by the Company either upon original issuance or upon registration of transfer or exchange prior to the earlier of (i) the sale of such Security pursuant to an effective registration statement under the Securities Act and (ii) the expiration of three years after the date of original issuance of such Security shall be deemed a Restricted Security. Every Restricted Security shall be subject to the restrictions on transfer provided in the legend required to be borne by each Restricted Security pursuant to this Section 2.6, unless such restrictions on transfer shall be waived by the written consent of the Company, and the holder of each Restricted Security, by such Securityholder's acceptance thereof, agrees to be bound by such restrictions on transfer. Whenever any Restricted Security is presented or surrendered for registration of transfer or for exchange for a Security registered in a name other than that of the Holder, (i) the notice of assignment set forth in Exhibit A must be properly completed, dated the date of such surrender and signed by the Holder of such Restricted Security, and (ii) the Holder of such Restricted Security shall deliver, prior to such transfer, any other documents required by the Trustee or the Company pursuant to such notice of assignment, including in the case of any proposed transfer by a Holder to an Institutional Accredited Investor, a letter signed by such Institutional Accredited Investor substantially in the form of Exhibit B-1 relating to certain representations and agreements regarding restrictions on transfer of such Restricted Security. The Trustee shall not be required to accept for such registration of transfer or exchange any Restricted Security if such conditions in the two preceding sentences have not been satisfied. Notwithstanding the preceding three sentences, any transfer of an interest in any Security in global form by a QIB to a QIB through the facilities of The Depository Trust Company or any other United States securities clearance and settlement organization may be effected without delivery of any additional notices or documents to the Trustee or the Company, provided that such transfer does not require a change in the name (other than to another nominee of The Depository Trust Company or such other securities clearance and settlement organization) in which such Security is then registered. The restrictions imposed by this Section 2.6 upon the transferability of any particular Restricted Security shall cease and terminate upon the earlier of (i) the sale of such Restricted Security pursuant to an effective registration statement under the Securities Act and (ii) the expiration of three years after the date of original issuance of such Security. The Company shall promptly inform the Trustee 14 20 in writing of the effective date of any registration statement registering the Securities under the Securities Act. Any Security as to which such restrictions on transfer have expired in accordance with their terms or have been otherwise terminated may, upon surrender of such Security for exchange to the Trustee in accordance with the provisions of this Section 2.6, be exchanged for a new Security, of like tenor and aggregate principal amount, which shall not bear the restrictive legend required by this Section 2.6. The Trustee shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with this paragraph. As used in this Section 2.6(g), the term "transfer" encompasses any sale, pledge, transfer or other disposition of any Restricted Security. Until the earlier of (i) the sale of such Restricted Security pursuant to an effective registration statement under the Securities Act and (ii) the expiration of three years after the date of original issuance of such Restricted Security, any certificate evidencing such Security (and all securities issued in exchange or substitution therefor, other than Common Stock, if any, issued upon conversion thereof that shall bear the legend set forth in Section 2.6(g)(ii), if applicable) shall bear a legend in substantially the following form (the "Restricted Securities Legend"), unless otherwise agreed by the Company (with written notice thereof to the Trustee): THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED OR SOLD 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 ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE SECURITY EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THE SECURITY EVIDENCED HEREBY RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH SECURITY EXCEPT (A) TO VIVRA INCORPORATED OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHED TO STATE STREET BANK AND TRUST COMPANY, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE SECURITY EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE), (D) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT OR (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF SUCH SECURITY, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO STATE STREET 15 21 BANK AND TRUST COMPANY, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE). IF THE PROPOSED TRANSFER IS PURSUANT TO CLAUSE 2(C), 2(D) OR 2(E) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO STATE STREET BANK AND TRUST COMPANY, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS VIVRA INCORPORATED MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION OF THREE YEARS FROM THE ORIGINAL ISSUANCE OF THE SECURITY EVIDENCED HEREBY. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. The Depositary shall be a clearing agency registered under the Exchange Act. The Company initially appoints The Depository Trust Company to act as Depositary with respect to the Securities in global form. Initially, the Global Note shall be issued to the Depositary, registered in the name of Cede & Co., as the nominee of the Depositary, and deposited with the custodian for Cede & Co. If a definitive Security is issued in exchange for any portion of a Security in global form after the close of business at the office or agency where such exchange occurs on any record date and before the opening of business at such office or agency on the next succeeding interest payment date, interest will not be payable on such interest payment date in respect of such Security, but will be payable on such interest payment date only to the person to whom interest in respect of such portion of such Security in global form is payable in accordance with the provisions of this Indenture. (ii) Until three years after the original issuance date of any Security, any stock certificate representing Common Stock issued upon conversion of such Security shall bear a legend in substantially the following form (the "Restricted Stock Legend"), unless otherwise agreed by the Company (with written notice thereof to the Trustee): THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. THE HOLDER HEREOF AGREES THAT UNTIL THE EXPIRATION OF THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THE SECURITY UPON THE CONVERSION OF WHICH THE COMMON STOCK EVIDENCED HEREBY WAS ISSUED, (1) IT WILL NOT RESELL OR OTHERWISE TRANSFER THE COMMON STOCK EVIDENCED HEREBY EXCEPT (A) TO VIVRA INCORPORATED OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN COMPLIANCE WITH RULE 144A, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE FIRST NATIONAL BANK OF BOSTON, AS TRANSFER AGENT (OR A SUCCESSOR TRANSFER AGENT, AS APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE COMMON STOCK EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRANSFER AGENT), (D) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM 16 22 REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (2) PRIOR TO ANY SUCH TRANSFER, IT WILL FURNISH TO THE FIRST NATIONAL BANK OF BOSTON, AS TRANSFER AGENT (OR A SUCCESSOR TRANSFER AGENT, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS VIVRA INCORPORATED MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) IT WILL DELIVER TO EACH PERSON TO WHOM THE COMMON STOCK EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION OF THREE YEARS FROM THE ORIGINAL ISSUANCE OF THE SECURITY UPON THE CONVERSION OF WHICH THE COMMON STOCK EVIDENCED HEREBY WAS ISSUED OR UPON THE EARLIER SATISFACTION OF THE FIRST NATIONAL BANK OF BOSTON, AS TRANSFER AGENT (OR A SUCCESSOR TRANSFER AGENT, AS APPLICABLE), THAT THE COMMON STOCK HAS BEEN OR IS BEING OFFERED AND SOLD IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT. AS USED HEREIN, THE TERMS "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. (iii) Any certificate evidencing a Security that has been transferred to an Affiliate of the Company within three years after the original issuance date of the Security, as evidenced by a notation on the Assignment Form for such transfer or in the representation letter delivered in respect thereof, shall, until three years after the last date on which the Company or any Affiliate of the Company was an owner of such Security, bear a legend in substantially the following form (the "Affiliate Legend "), unless otherwise agreed by the Company (with written notice thereof to the Trustee); THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD 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, THE HOLDER AGREES (1) THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH SECURITY EXCEPT (A) TO VIVRA INCORPORATED OR ANY SUBSIDIARY THEREOF, (B) IN A TRANSACTION REGISTERED UNDER THE SECURITIES ACT OR (C) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) AND (2) THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IF THE PROPOSED TRANSFER IS PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO STATE STREET BANK AND TRUST COMPANY, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, IF APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "UNITED STATES" AND 17 23 "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. Any stock certificate representing Common Stock issued upon conversion of a Security that has been transferred to an Affiliate of the Company within three years after the original issuance date of the Security, as evidenced by a notation on the Assignment Form for such transfer or in the representation letter delivered in respect thereof, shall also bear a legend in substantially the form indicated above, unless otherwise agreed by the Company (with written notice thereof to the Trustee). (iv) Upon any sale or transfer of a Restricted Security (including any Restricted Security represented by a Global Note) pursuant to Rule 144 under the Securities Act or pursuant to an effective registration statement under the Securities Act: (A) in the case of any Restricted Security that is a Certificated Note, the Registrar shall permit the Holder thereof to exchange such Restricted Security for a Certificated Note that does not bear the legend set forth in (i) above and rescind any restriction on the transfer of such Restricted Security upon receipt of a certification from the transferring Holder substantially in the form of Exhibit B-5 hereto; and (B) in the case of any Restricted Security represented by a Global Note, such Restricted Security shall not be required to bear the legend set forth in (i) above, but shall continue to be subject to the provisions of Section 2.6(a) and (d) hereof; provided, however, that with respect to any request for an exchange of a Restricted Security that is represented by a Global Note for a Certificated Note that does not bear the legend set forth in (i) above, which request is made in reliance upon Rule 144, the Holder thereof shall certify in writing to the Registrar that such request is being made pursuant to Rule 144 (such certification to be substantially in the form of Exhibit B-5 hereto). (v) Upon any sale or transfer of a Restricted Security (including any Restricted Security represented by a Global Note) in reliance on any exemption from the registration requirements of the Securities Act (other than exemptions pursuant to Rule 144A or Rule 144 under the Securities Act) in which the Holder or the transferee provides an Opinion of Counsel to the Company and the Registrar in form and substance reasonably acceptable to the Company and the Registrar (which Opinion of Counsel shall also state that the transfer restrictions contained in the legend are no longer applicable): (A) in the case of any Restricted Security that is a Certificated Note, the Registrar shall permit the Holder thereof to exchange such Restricted Security for a Certificated Note that does not bear the legend set forth in (i) above and rescind any restriction on the transfer of such Restricted Security; and (B) in the case of any Restricted Security represented by a Global Note, such Restricted Security shall not be required to bear the legend set forth in (i) above, but shall continue to be subject to the provisions of Section 2.6(a) and (d) hereof. (h) Notwithstanding any provision of Section 2.5 to the contrary, in the event Rule 144(k) as promulgated under the Securities Act (or any successor rule) is amended to shorten the three-year period under Rule 144(k) (or the corresponding period under any successor rule), then in that event, from and after receipt by 18 24 the Trustee of the Officers' Certificate and Opinion of Counsel provided for in this Section 2.6(h), (1) the references in the first and sixth sentences of the first paragraph of Section 2.6(g)(i) to "three years") and in the restrictive legend set forth in the third paragraph of such Section to "THREE YEARS" shall be deemed for all purposes hereof to be references to such shorter period, (2) the references in the first sentence each of Sections 2.6(g)(ii) and (iii) and the last sentence of Section 2.6(g)(iii) to "three years" and in the restrictive legend set forth in such Sections to "THREE YEARS" shall be deemed for all purposes hereof to be references to such shorter period, (3) the reference in the last sentence of Section 6.2 to "three years") shall be deemed for all purposes hereof to be a reference to such shorter period, and (4) all corresponding references in the Securities and the restrictive legends thereon (including the restrictive legends on any Common Stock issuable upon conversion of the Securities) shall be deemed for all purposes hereof to be references to such shorter period, provided that such changes shall not become effective if they are otherwise prohibited by, or would otherwise cause a violation of, the then-applicable federal securities laws. As soon as practicable after the Company has knowledge of the effectiveness of any such amendment to shorten the three-year period under Rule 144(k) (or the corresponding period under any successor rule, unless such changes would otherwise be prohibited by, or would otherwise cause a violation of, the then-applicable federal securities law, the Company shall provide to the Trustee an Officers' Certificate and Opinion of Counsel informing the Trustee of the effectiveness of such amendment and the effectiveness of the foregoing changes to Sections 2.6(g) and 6.2 and the Securities. This Section 2.6(h) shall apply to successive amendments to Rule 144(k) (or any successor rule) shortening the holding period thereunder. (i) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in Global Notes have been exchanged for Certificated Notes, redeemed, repurchased or cancelled, all Global Notes shall be returned to or retained and cancelled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for Certificated Notes, redeemed, repurchased or cancelled, the principal amount of Securities represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note, by the Trustee or the Custodian, at the direction of the Trustee, to reflect such reduction. (j) General Provisions Relating to Transfers and Exchanges. (i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Certificated Notes and Global Notes at the Registrar's request. (ii) No service charge shall be made to a Holder for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 3.7, 4.10, 4.15 and 9.5 hereto). (iii) The Registrar shall not be required to register the transfer of or exchange any Security selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part. (iv) All Certificated Notes and Global Notes issued upon any registration of transfer or exchange of Certificated Notes or Global Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Certificated Notes or Global Notes surrendered upon such registration of transfer or exchange. (v) The Company shall not be required: 19 25 (A) to issue, to register the transfer of or to exchange Securities during a period beginning at the opening of business 15 days before the day of any selection of Securities for redemption under Section 3.2 hereof and ending at the close of business on the day of selection; or (B) to register the transfer of or to exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part; or (C) to register the transfer of or to exchange a Security between a record date and the next succeeding interest payment date. (vi) Prior to due presentment for the registration of a transfer of any Security, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Security is registered as the absolute owner of such Security for the purpose of receiving payment of principal of and interest on such Securities, and neither the Trustee, any Agent nor the Company shall be affected by notice to the contrary. (vii) The Trustee shall authenticate Certificated Notes and Global Notes in accordance with the provisions of Section 2.2 hereof. SECTION 2.7 REPLACEMENT SECURITIES. If any mutilated Security is surrendered to the Company or the Trustee, or the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Security, and there is delivered to the Company and the Trustee such Security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute, and upon its written request the Trustee shall authenticate and deliver, in exchange for any such mutilated Security or in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and principal amount, bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, or is about to be redeemed by the Company pursuant to Article 3, the Company in its discretion may, instead of issuing a new Security, pay or redeem such Security, as the case may be. Upon the issuance of any new Securities under this Section 2.7, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) in connection therewith. Every new Security issued pursuant to this Section 2.7 in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder. The provisions of this Section 2.7 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. SECTION 2.8 OUTSTANDING SECURITIES. Securities outstanding at any time are all Securities authenticated by the Trustee, except for those canceled by it, those delivered to it for cancellation and those described in this Section 2.8 as not outstanding. 20 26 If a Security is replaced pursuant to Section 2.7, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Security is held by a bona fide purchaser. If the Paying Agent (other than the Company or an Affiliate of the Company) holds on a redemption date, repurchase date or maturity date money sufficient to pay the principal of, premium, if any, and accrued interest on Securities payable on that date, then on and after that date such Securities cease to be outstanding and interest on them ceases to accrue. Subject to the restrictions contained in Section 2.9, a Security does not cease to be outstanding because the Company or an Affiliate of the Company holds the Security. SECTION 2.9 TREASURY SECURITIES. In determining whether the Holders of the required principal amount of Securities have concurred in any notice, direction, waiver or consent, Securities owned by the Company or any other obligor on the Securities or by any Affiliate of the Company or of such other obligor shall be disregarded, except that for purposes of determining whether the Trustee shall be protected in relying on any such notice, direction, waiver or consent, only Securities which the Trustee knows are so owned shall be so disregarded. Securities so owned which have been pledged in good faith shall not be disregarded if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to the Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor. SECTION 2.10 TEMPORARY SECURITIES. Until definitive Securities are ready for delivery, the Company may prepare and execute, and, upon the order of the Company, the Trustee shall authenticate and deliver temporary Securities. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company with the consent of the Trustee considers appropriate for temporary Securities. Every such temporary Security shall be executed by the Company and authenticated by the Trustee upon the same conditions and in substantially the same manner, and with the same effect, as the definitive Securities. Without unreasonable delay the Company will execute and deliver to the Trustee definitive Securities and thereupon any or all temporary Securities may be surrendered in exchange therefor, at each office or agency maintained by the Company pursuant to Section 5.2 and the Trustee shall authenticate and deliver in exchange for such temporary Securities an equal aggregate principal amount at maturity of definitive Securities. Such exchange shall be made by the Company at its own expense and without any charge therefor. Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities authenticated and delivered hereunder. SECTION 2.11 CANCELLATION. The Company at any time may deliver Securities to the Trustee for cancellation. The Registrar, the Paying Agent and the Conversion Agent shall forward to the Trustee any Securities surrendered to them for transfer, exchange, payment or conversion. The Trustee and no one else shall cancel all Securities surrendered for transfer, exchange, payment (including redemption or repurchase), conversion or cancellation and shall destroy cancelled Securities and thereupon deliver a certificate of cancellation to the Company. The Company may not issue new Securities to replace Securities it has paid or delivered to the Trustee for cancellation or which have been converted. ARTICLE 3 REDEMPTION AND REPURCHASE 21 27 SECTION 3.1 RIGHT TO REDEEM; NOTICE TO TRUSTEE. The Company may, at its option, redeem all or from time to time any part of the Securities on any date on or after July 10, 1999 and prior to maturity, upon notice as set forth below, and at the redemption prices set forth in paragraph 5 of the form of Security attached hereto as Exhibit A, together with accrued interest to the date of redemption. If the Company elects to redeem Securities pursuant to paragraph 5 of the Securities, it shall notify the Trustee at least 60 days prior to the redemption date as fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee) of the redemption date and the principal amount of Securities to be redeemed. If fewer than all of the Securities are to be redeemed, the record date relating to such redemption shall be selected by the Company and given to the Trustee, which record date shall not be less than 10 days after the date of notice to the Trustee. SECTION 3.2 SELECTION OF SECURITIES TO BE REDEEMED. If less than all of the Securities are to be redeemed, the Trustee shall, not more than 60 days prior to the redemption date, select the Securities to be redeemed by lot, pro rata or by another method the Trustee considers fair and appropriate; provided that such method is not prohibited by any stock exchange or market on which the Securities are then listed. The Trustee shall make the selection from the Securities outstanding and not previously called for redemption. Securities in denominations of $1,000 may only be redeemed in whole. The Trustee may select for redemption portions (equal to $1,000 or any multiple thereof) of the principal of Securities that have denominations larger than $1,000. Provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption. SECTION 3.3 NOTICE OF REDEMPTION. At least 20 days but not more than 60 days before a redemption date, the Company shall mail or cause to be mailed a notice of redemption by first-class mail to each Holder of Securities to be redeemed at such Holder's address as it appears on the Registrar's books. The notice shall identify the Securities to be redeemed and shall state: (1) the redemption date; (2) the redemption price; (3) the then current conversion price; (4) the name and address of the Paying Agent and the Conversion Agent; (5) that Securities called for redemption must be presented and surrendered to the Paying Agent to collect the redemption price; (6) that the Securities called for redemption may be converted at any time before the close of business on the fifth business day immediately preceding the redemption date; (7) that Holders who wish to convert Securities must satisfy the requirements in paragraph 8 of the Securities; (8) that, unless the Company defaults in making the redemption payment, interest on Securities called for redemption ceases to accrue on and after the redemption date and the only 22 28 remaining right of the Holder is to receive payment of the redemption price upon presentation and surrender to the Paying Agent of the Securities; and (9) if any Security is being redeemed in part, the portion of the principal amount of such Security to be redeemed and that, after the redemption date, upon presentation and surrender of such Security, a new Security or Securities in principal amount equal to the unredeemed portion thereof will be issued. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at the Company's expense. SECTION 3.4 EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption is mailed, Securities called for redemption become due and payable on the redemption date and at the redemption price stated in the notice, except for Securities that are converted in accordance with the provisions of Section 4.1 hereof. Upon presentation and surrender to the Paying Agent, such Securities shall be paid at the redemption price, plus accrued interest to the redemption date. The notice if mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the holder receives such notice. In any case, failure to give such notice by mail or any defect in the notice to the holder of any Note designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Note. SECTION 3.5 DEPOSIT OF REDEMPTION PRICE. On or prior to the redemption date, the Company shall deposit with the Paying Agent (or if the Company or an Affiliate of the Company acts as Paying Agent, shall segregate and hold in trust) money sufficient to pay the redemption price of and accrued interest on all Securities to be redeemed on that date, other than Securities or portions thereof called for redemption on that date which have been delivered by the Company to the Trustee for cancellation or have been converted. The Paying Agent shall return to the Company any money not required for that purpose because of the conversion of Securities pursuant to Article 4 or otherwise. If such money is then held by the Company or an Affiliate of the Company in trust and is not required for such purpose, it shall be discharged from the trust. Any rights of Holders, contractual or otherwise, arising under or pursuant to any deposit made by the Company under this Section 3.5 shall be subordinated in right of payment to all Senior Indebtedness to the same extent as the Securities are subordinated to Senior Indebtedness under the provisions of Article 5. SECTION 3.6 SECURITIES REDEEMED IN PART. Upon presentation and surrender of a Security that is redeemed in part, the Company shall execute and the Trustee shall authenticate for and deliver to the Holder a new Security equal in principal amount to the unredeemed portion of the Security surrendered. SECTION 3.7 CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION. In connection with any redemption of Securities, the Company may arrange for the purchase and conversion of any Securities called for redemption by an agreement with one or more investment bankers or other purchasers to purchase all or a portion of such Securities by paying to the Paying Agent in trust for the Securityholders whose Securities are to be so purchased, on or before the close of business on the redemption date, an amount that, together with any amounts deposited with the Paying Agent by the Company for the redemption of such Securities, is not less than the redemption price, together with interest, if any, accrued to the redemption date of such Securities. Notwithstanding anything to the contrary contained in this Article 3, the obligation of the Company to pay the redemption price of such Securities, including all accrued interest, if any, 23 29 shall be deemed to be satisfied and discharged to the extent such amount is so paid by such purchasers. If such an agreement is entered into, any Securities not duly surrendered for conversion by the Holders thereof may, at the option of the Company, be deemed, to the fullest extent permitted by law, acquired by such purchasers from such Holders and (notwithstanding anything to the contrary contained in Article 4) surrendered by such purchasers for conversion, subject to payment of the above amount as aforesaid. The Paying Agent shall hold and pay to the Holders whose Securities are selected for redemption any such amount paid to it in the same manner as it would moneys deposited with it by the Company for the redemption of securities. Without the prior written consent of the Trustee and the Paying Agent, no arrangement between the Company and such purchasers for the purchase and conversion of any Securities shall increase or otherwise affect any of the powers, duties, responsibilities or obligations of the Trustee or the Paying Agent as set forth in this Indenture, and the Company agrees to indemnify the Trustee and the Paying Agent from, and hold it harmless against, any loss, liability or expense arising out of or in connection with any such arrangement for the purchase and conversion of any Securities between the Company and such purchasers, including the costs and expenses incurred by the Trustee and the Paying Agent in the defense of any claim or liability arising out of or in connection with the exercise or performance of any of its powers, duties, responsibilities or obligations under this Indenture. SECTION 3.8 REPURCHASE OF SECURITIES AT OPTION OF THE HOLDER UPON CHANGE IN CONTROL. (a) If at any time that Securities remain outstanding there shall have occurred a Change in Control (as hereinafter defined), Securities shall be repurchased by the Company at the option of the Holder thereof, at a purchase price (the "Repurchase Price") equal to the principal amount thereof plus accrued interest up to and including the Repurchase Date (as hereinafter defined), on the date (the "Repurchase Date") fixed by the Company that is not less than 45 days nor more than 60 days after the date of the Company Notice (as hereinafter defined), subject to satisfaction by or on behalf of the Holder of the requirements set forth in subsection (c) of this Section 3.8. Any rights of Holders, contractual or otherwise, arising under or pursuant to any offer to repurchase Securities made by the Company under this Section 3.8 shall be subordinated in right of payment to all Senior Indebtedness to the same extent as the Securities are subordinated to Senior Indebtedness under the provisions of Article 5 and such offer to repurchase shall provide that, if at the time the Securities are required to be repurchased pursuant to such offer, payment of the Securities is not permitted pursuant to the provisions of Article 5, the Company shall use its best efforts to obtain all necessary waivers from, or to repay in full, the holders of Senior Indebtedness in order to permit such repurchase. Notwithstanding the foregoing, any failure by the Company to comply with this Section 3.8 to offer to repurchase, or to repurchase, the Securities shall be a default in the performance by the Company hereunder. A "Change in Control" shall be deemed to have occurred at such time after the original issuance of the Securities as any of the following occur: (1) (A) a "person" or "group" (within the meaning of Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act, except that a person shall be deemed to be the "beneficial owner" of all securities that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the total voting power of all outstanding Voting Shares; and (B) immediately following the date upon which such person or group becomes a beneficial owner of such securities the aggregate market value of the Common Stock held by stockholders, excluding shares beneficially owned by such person or group and other affiliates of the Company, is less than $700,000,000; (2) any consolidation of the Company with, or merger of the Company into, any other person, any merger of another person into the Company, or any sale or transfer of all or substantially all of the assets of the Company to another person (other than (a) a consolidation or merger which does not 24 30 result on any reclassification, conversion, exchange or cancellation of outstanding shares of capital stock other than shares of capital stock owned by either of the parties to be consolidated or merged in which the Consolidated Net Worth of the surviving corporation immediately after consummation equals or exceeds the Consolidated Net Worth of the Company immediately prior to such transaction, (b) the sale, transfer or other disposition of VRC, provided the acquirer or VRC expressly becomes a co-obligor of the payment of principal of and premium, if any, and interest on the Securities, (c) a merger which is effected solely to change and jurisdiction of incorporation of the Company or (d) any consolidation with or merger of the Company, or the sale or transfer by the Company of all or substantially all of its assets to one or more of its wholly owned subsidiaries, in any one transaction or a series of transactions, provided, in any such case, that the resulting corporation or each such subsidiary assumes or guarantees the Company's obligations under the Securities and the Consolidated Net Worth of the surviving or acquiring corporation in any such consolidation, merger or sale of assets immediately after the consummation of such transaction equals or exceeds the Consolidated Net Worth of the Company immediately prior to such transaction); or (3) a change in the Board of Directors of the Company in which the individuals who constituted the Board of Directors of the Company at the beginning of the two-year period immediately preceding such change (together with any other director whose election by the Board of Directors of the Company or whose nomination for election by the Stockholders of the Company was approved by a vote of at least a majority of the directors then in office either who were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the directors then in office; provided, however, that a Change in Control shall not be deemed to have occurred if either (a) the closing price per share of the Common Stock for any five Trading Days within the period of 10 consecutive Trading Days ending immediately after the later of the Change in Control or the public announcement of the Change in Control (in the case of a Change in Control under clause (1) above) or ending immediately before the Change in Control (in the case of a Change in Control under clauses (2) and (3) above) shall equal or exceed 105% of the Conversion Price in effect on each such Trading Day, or (b) (i) at least 90% of the consideration (excluding cash payments for fractional shares) in the transaction or transactions constituting the Change in Control consists of shares of common stock traded on a national securities exchange or quoted on The Nasdaq Stock Market (or which will be so traded or quoted when issued or exchanged in connection with such Change in Control) (such securities being referred to as "Publicly Traded Securities") and as a result of such transaction or transactions the Securities become convertible solely into such Publicly Traded Securities and (ii) the consideration in the transaction or transactions constituting the Change in Control consists of cash, Publicly Traded Securities or a combination of cash and Publicly Traded Securities with an aggregate fair market value (which, in the case of Publicly Traded Securities, shall be equal to the average closing price of such Publicly Traded Securities during the 10 consecutive Trading Days commencing with the sixth trading day following consummation of the transaction or transactions constituting the Change in Control) is at least 105% of the conversion price in effect on the date immediately preceding the date of consummation of such Change in Control. "Beneficial owner" shall be determined in accordance with Rule 13d-3 promulgated by the SEC under the Exchange Act, as in effect on the date of execution of the Indenture, except that a person shall be deemed to be the "beneficial owner" of all securities that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time. "Voting Shares" means all outstanding shares of any class or classes (however designated) of capital stock of the Company entitled to vote generally in the election of the Board of Directors of the Company. (b) Within 30 days after the occurrence of a Change in Control, the Company shall mail a written notice (the "Company Notice") by first-class mail to the Trustee and to each Holder (and to beneficial owners as required by applicable law) and shall cause a copy of such notice to be published in a daily newspaper of 25 31 national circulation. The notice shall include the form of a Repurchase Notice (as defined below) to be completed by the Holder and shall state: (1) the date of such Change in Control and, briefly, the events causing such Change in Control; (2) the date by which the Repurchase Notice pursuant to this Section 3.8 must be given; (3) the Repurchase Date; (4) the Repurchase Price; (5) briefly, the conversion rights of the Securities including, without limitation, the current Conversion Price and any adjustments thereto; (6) the name and address of the Paying Agent and the Conversion Agent; (7) whether the lenders under the Company's Senior Indebtedness will permit the payment of the Repurchase Price; (8) that Securities as to which a Repurchase Notice has been given may be converted into Common Stock only to the extent that the Repurchase Notice has been withdrawn in accordance with the terms of this Indenture; (9) the procedures that the Holder must follow to exercise rights under this Section 3.8; (10) the procedures for withdrawing a Repurchase Notice, including a form of notice of withdrawal; and (11) that the Holder must satisfy the requirements set forth in the Securities in order to convert the Securities. (c) A Holder may exercise its rights specified in subsection (a) of this Section 3.8 upon delivery of a written notice of the exercise of such rights (a "Repurchase Notice") to the Paying Agent at any time prior to the close of business on the Repurchase Date, stating: (1) the certificate number of each Security that the Holder will deliver to be repurchased, (2) the portion of the principal amount of each Security that the Holder will deliver to be repurchased, which portion must be $1,000 or an integral multiple thereof; and (3) that such Security shall be repurchased pursuant to the terms and conditions specified in this Indenture. The delivery of such Security to the Paying Agent prior to, on or after the Repurchase Date (together with all necessary endorsements) at the office of the Paying Agent shall be a condition to the receipt by the Holder of the Repurchase Price therefor; provided, however, that such Repurchase Price shall be so paid pursuant to this Section 3.8 only if the Security so delivered to the Paying Agent shall conform in all respects to the description thereof set forth in the related Repurchase Notice. The Company shall repurchase from the Holder thereof, pursuant to this Section 3.8, a portion of a Security if the principal amount of such portion is $1,000 or an integral multiple of $1,000. Provisions of this 26 32 Indenture that apply to the repurchase of all of a Security pursuant to Sections 3.8 through 3.12 also apply to the repurchase of such portion of such Security. Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the Repurchase Notice contemplated by this Section 3.8(c) shall have the right to withdraw such Repurchase Notice in whole or in a portion thereof that is $1,000 or an integral multiple thereof at any time prior to the close of business on the Repurchase Date by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section 3.9. The Paying Agent shall promptly notify the Company of the receipt by it of any Repurchase Notice or written withdrawal thereof. SECTION 3.9 EFFECT OF REPURCHASE NOTICE. Upon receipt by the Paying Agent of the Repurchase Notice specified in Section 3.8(c), the Holder of the Security in respect of which such Repurchase Notice was given shall (unless such Repurchase Notice is withdrawn as specified below) thereafter be entitled to receive solely the Repurchase Price with respect to such Security. Such Repurchase Price shall be paid to such Holder promptly following the later of (i) the Repurchase Date with respect to such Security (provided the conditions in Section 3.8(c) have been satisfied) and (ii) the time of delivery of such Security to the Paying Agent by the Holder thereof in the manner required by Section 3.8(c). Securities in respect of which a Repurchase Notice has been given by the Holder thereof may not be converted into shares of Common Stock on or after the date of the delivery of such Repurchase Notice unless such Repurchase Notice has first been validly withdrawn. A Repurchase Notice may be withdrawn by means of a written notice of withdrawal delivered by the Holder to the office of the Paying Agent at any time prior to the close of business on the Repurchase Date to which it relates, specifying: (1) the certificate number of each Security in respect of which such notice of withdrawal is being submitted; (2) the principal amount of the Security or portion thereof with respect to which such notice of withdrawal is being submitted; and (3) the principal amount, if any, of such Security that remains subject to the original Repurchase Notice and that has been or will be delivered for purchase by the Company. SECTION 3.10 DEPOSIT OF REPURCHASE PRICE. On or before the Repurchase Date, the Company shall deposit with the Trustee or with the Paying Agent (or, if the Company is acting as the Paying Agent, shall segregate and hold in trust as provided in Section 2.4) an amount of money sufficient to pay the aggregate Repurchase Price of all the Securities or portions thereof that are to be repurchased as of such Repurchase Date. The manner in which the deposit required by this Section 3.10 is made by the Company shall be at the option of the Company, provided that such deposit shall be made in a manner such that the Trustee or the Paying Agent shall have immediately available funds on the Repurchase Date. If the Paying Agent holds, in accordance with the terms hereof, money sufficient to pay the Repurchase Price of any Security tendered for repurchase on the Business Day prior to the Repurchase Date, then, on and after the Repurchase Date, such Security will cease to be outstanding and interest on such Security will cease to accrue and will be deemed paid, whether or not such Security is delivered to the Paying Agent, and all other 27 33 rights of the Holder in respect thereof shall terminate (other than the right to receive the Repurchase Price upon delivery of such Security). SECTION 3.11 SECURITIES REPURCHASED IN PART. Any Security that is to be repurchased only in part shall be surrendered at the office of the Paying Agent (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder's attorney duly authorized in writing), and the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Security, without service charge, a new Security or Securities, or such authorized denomination or denominations as may be requested by such Holder, in aggregate principal amount equal to, and in exchange for, the portion of the principal amount of the Security so surrendered that is not purchased. SECTION 3.12 COMPLIANCE WITH SECURITIES LAWS UPON REPURCHASE OF SECURITIES. In connection with any offer to repurchase or repurchase of Securities under Section 3.8 hereof (provided that such offer or repurchase constitutes an "issuer tender offer" for purposes of Rule 13e-4 (which term, as used herein, includes any successor provision thereto) at the time of such offer or repurchase), the Company shall (i) comply with Rule 13e-4 and Rule 14e-1 under the Exchange Act, (ii) file the related Schedule 13E-4 (or any successor schedule, form or report) under the Exchange Act, and (iii) otherwise comply with all federal and state securities laws so as to permit the rights of the Holders and obligations of the Company under Sections 3.8 through 3.11 to be exercised in the time and in the manner specified therein. SECTION 3.13 REPAYMENT TO THE COMPANY. Subject to the provisions of Section 5.7, to the extent that the aggregate amount of cash deposited by the Company pursuant to Section 3.10 exceeds the aggregate Repurchase Price of the Securities or portions thereof to be repurchased, then promptly after the Business Day following the Repurchase Date the Trustee or the Paying Agent, as the case may be, shall return any such excess to the Company. ARTICLE 4 CONVERSION SECTION 4.1 CONVERSION PRIVILEGE. At any time after 60 days following the latest date of original issuance of the Securities and prior to the close of business on July 1, 2001, a Holder of a Security may convert such Security into Common Stock, at the conversion price then in effect, together with those rights specified in Section 4.15 hereof; provided that, if such Security is called for redemption pursuant to Article 3, such conversion right shall terminate at the close of business on the fifth business day before the redemption date for such Security (unless the Company shall default in making the redemption payment then due, in which case the conversion right shall terminate on the date such default is cured and such Security is redeemed). The number of shares of Common Stock issuable upon conversion of a Security shall be determined by dividing the principal amount of the Security or portion thereof surrendered for conversion by the conversion price in effect on the conversion date. The initial conversion price is set forth in paragraph 8 of the Securities and is subject to adjustment as provided in this Article 4. A Holder may convert a portion of a Security equal to $1,000 or any integral multiple thereof. Provisions of this Indenture that apply to conversion of all of a Security also apply to conversion of a portion of a Security. 28 34 A Security in respect of which a Holder has delivered a Repurchase Notice pursuant to Section 3.8(c) exercising the option of such Holder to require the Company to repurchase such Security may be converted only if such Repurchase Notice is withdrawn by a written notice of withdrawal delivered to the Paying Agent prior to the close of business on the repurchase date in accordance with Section 3.8. A Holder of Securities is not entitled to any rights of a holder of Common Stock until such Holder has converted his Securities into Common Stock and, upon such conversion, only to the extent such Securities are deemed to have been converted into Common Stock pursuant to this Article 4. SECTION 4.2 CONVERSION PROCEDURE. To convert a Security, a Holder must (i) complete and manually sign the conversion notice on the back of the Security and deliver such notice to the Conversion Agent, (ii) surrender the Security to the Conversion Agent, (iii) furnish appropriate endorsements and transfer documents if required by the Registrar or the Conversion Agent and (iv) pay any transfer or other tax, if required by Section 4.4. The date on which the Holder satisfies all of the foregoing requirements is the conversion date. As soon as practicable after the conversion date, the Company shall deliver to the Holder through the Conversion Agent a certificate for the number of whole shares of Common Stock issuable upon the conversion and cash in lieu of any fractional shares pursuant to Section 4.3. The person in whose name the certificate is registered shall be deemed to be a stockholder of record on the conversion date; provided, however, that no surrender of a Security on any date when the stock transfer books of the Company shall be closed shall be effective to constitute the person or persons entitled to receive the shares of Common Stock upon such conversion as the record holder or holders of such shares of Common Stock on such date, but such surrender shall be effective to constitute the person or persons entitled to receive such shares of Common Stock as the record holder or holders thereof for all purposes at the close of business on the next succeeding day on which such stock transfer books are open; provided, further, that such conversion shall be at the Conversion Price in effect on the date that such Security shall have been surrendered for conversion, as if the stock transfer books of the Company had not been closed. Upon conversion of a Security, such person shall no longer be a Holder of such Security. No payment or adjustment will be made for accrued interest on a converted Security or for dividends or distributions on shares of Common Stock issued upon conversion of a Security, but if any Holder surrenders a Security for conversion between the record date for the payment of an installment of interest and the next interest payment date, then, notwithstanding such conversion, the interest payable on such interest payment date shall be paid to the Holder of such Security on such record date. In such event, such Security, when surrendered for conversion, must be accompanied by delivery of a check or draft payable to the Conversion Agent in an amount equal to the interest payable on such interest payment date on the portion so converted. If such payment does not accompany such Security, the Security shall not be converted; provided, however, that no such check or draft shall be required if such Security has been called for redemption between such record date and the date five business days after such interest payment date, or if such Security is surrendered for conversion on the interest payment date. If the Company defaults in the payment of interest payable on the interest payment date, the Conversion Agent shall repay such funds to the Holder. If a Holder converts more than one Security at the same time, the number of shares of Common Stock issuable upon the conversion shall be based on the aggregate principal amount of Securities converted. Upon surrender of a Security that is converted in part, the Company shall execute, and the Trustee shall authenticate and deliver to the Holder, a new Security equal in principal amount to the unconverted portion of the Security surrendered. 29 35 SECTION 4.3 FRACTIONAL SHARES. Before taking any action which would cause an adjustment decreasing the Conversion Price so that the shares of Common Stock issuable upon conversion of the Securities would be issued for less than the par value of such Common Stock, the Company will take all corporate action which may be necessary in order that the Company may validly and legally issue fully paid and nonassessable shares of such Common Stock at such adjusted Conversion Rate. SECTION 4.4 TAXES ON CONVERSION. If a Holder converts a Security, the Company shall pay any documentary, stamp or similar issue or transfer tax due on the issue of shares of Common Stock upon such conversion. However, the Holder shall pay any such tax which is due because the Holder requests the shares to be issued in a name other than the Holder's name. The Conversion Agent may refuse to deliver the certificates representing the Common Stock being issued in a name other than the Holder's name until the Conversion Agent receives a sum sufficient to pay any tax which will be due because the shares are to be issued in a name other than the Holder's name. Nothing herein shall preclude any tax withholding required by law or regulations. SECTION 4.5 COMPANY TO PROVIDE STOCK. The Company shall, prior to issuance of any Securities hereunder, and from time to time as may be necessary, reserve, out of its authorized but unissued Common Stock a sufficient number of shares of Common Stock to permit the conversion of all outstanding Securities for shares of Common Stock. The shares of Common Stock or other securities issued upon conversion of the Securities shall bear any legend required in accordance with Section 2.6(g) hereof. No fractional shares of Common Stock or scrip representing fractional shares shall be issued upon conversion of Securities. If more than one Security shall be surrendered for conversion at one time by the same holder, the number of full shares which shall be issuable upon conversion shall be computed on the basis of the aggregate principal amount of the Securities (or specified portions thereof to the extent permitted hereby) so surrendered. If any fractional share of stock would be issuable upon the conversion of any Security or Securities, the Company shall make an adjustment thereof in cash at the current market value thereof. For these purposes, the current market value of a share of Common Stock shall be the Closing Price on the first day (which is not a Legal Holiday) immediately preceding the day on which the Securities (or specified portions thereof) are deemed to have been converted. The Company covenants that all shares of Common Stock delivered upon conversion of the Securities shall be newly issued shares or treasury shares, shall be duly authorized, validly issued, fully paid and non-assessable and shall be free from preemptive rights and free of any lien or adverse claim. The Company will endeavor promptly to comply with all federal and state securities laws regulating the offer and delivery of shares of Common Stock upon conversion of Securities, if any, and will list or cause to have quoted such shares of Common Stock on each national securities exchange or in the over-the-counter market or such other market on which the Common Stock is then listed or quoted. SECTION 4.6 ADJUSTMENT OF CONVERSION PRICE. The conversion price (the "Conversion Price") shall be that price set forth in paragraph 8 of the form of Security attached hereto as Exhibit A-1 and shall be adjusted from time to time by the Company as follows: (a) In case the Company shall (i) pay a dividend or other distribution in shares of Common Stock to holders of Common Stock, (ii) subdivide its outstanding Common Stock into a greater number of shares, 30 36 (iii) combine its outstanding Common Stock into a smaller number of shares, or (iv) reclassify its outstanding Common Stock, the Conversion Price in effect immediately prior thereto shall be adjusted so that the Holder of any Security thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock which he would have owned or have been entitled to receive had such Security been converted immediately prior to the happening of such event. An adjustment made pursuant to this subsection (a) shall become effective immediately after the record date in the case of a dividend or distribution and shall become effective immediately after the effective date in the case of subdivision or combination. (b) In case the Company shall issue rights or warrants to all or substantially all holders of its Common Stock entitling them (for a period commencing no earlier than the record date described below and expiring not more than 45 days after such record date) to subscribe for or purchase shares of Common Stock (or securities convertible into Common Stock) at a price per share less than the current market price per share of Common Stock (as determined in accordance with subsection (e) below) at the record date for the determination of stockholders entitled to receive such rights or warrants, the Conversion Price in effect immediately prior thereto shall be adjusted so that the Conversion Price shall equal the price determined by multiplying the Conversion Price in effect immediately prior to such record date by a fraction of which the numerator shall be the number of shares of Common Stock outstanding on such record date, plus the number of shares which the aggregate subscription or purchase price for the total number of shares of Common Stock offered by the rights or warrants so issued (or the aggregate conversion price of the convertible securities offered by such rights or warrants) would purchase at such current market price, and of which the denominator shall be the number of shares of Common Stock outstanding on such record date plus the number of additional shares of Common Stock offered by such rights or warrants (or into which the convertible securities so offered by such rights or warrants are convertible). Such adjustment shall be made successively whenever any such rights or warrants are issued, and shall become effective immediately after such record date. If at the end of the period during which such rights or warrants are exercisable not all rights or warrants shall have been exercised, the adjusted Conversion Price shall be immediately readjusted to what it would have been upon application of the foregoing adjustment substituting the number of additional shares of Common Stock actually issued (or the number of shares of Common Stock issuable upon conversion of convertible securities actually issued) for the total number of shares of Common Stock offered (or the convertible securities offered). (c) In case the Company shall distribute to all or substantially all holders of its Common Stock any shares of capital stock of the Company (other than Common Stock) or evidences of its indebtedness, cash, other securities or other assets, or shall distribute to all or substantially all holders of its Common Stock rights or warrants to subscribe for or purchase any of its securities (excluding (i) those rights and warrants referred to in subsection (b) above; (ii) those dividends, distributions, subdivisions and combinations referred to in subsection (a) above; and (iii) dividends and distributions paid in cash from retained earnings in an aggregate amount that, combined together with (A) all other such cash distributions made within the preceding 12 months in respect of which no adjustment has been made under this Section 4.6 and (B) the excess of (1) the fair market value of consideration payable in respect of any repurchases (including by way of tender offers) by the Company or any of its Subsidiaries or Affiliates, or any employee benefit plan for the benefit of employees of the Company or any of its Subsidiaries or Affiliates (a "Company Benefit Plan"), of Common Stock concluded within the preceding 12 months over (2) the applicable current market price (determined as of the date such purchase is consummated), in each case in respect of which no adjustment has been made under this Section 4.6, does not exceed 20% of Market Capitalization as of the record date for such distribution), then in each such case the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the date of such distribution or purchase by a fraction of which the numerator shall be the current market price per share (as defined in subsection (e) below) of the Common Stock on the record date mentioned below less the fair market value on such record date (as determined by the Board of Directors of the Company, whose determination shall be conclusive evidence of such fair market value) of the portion of the capital stock or evidences of indebtedness, securities or assets so distributed or of such rights or warrants, in each case as applicable to one share of Common Stock, and of which the denominator shall be the current market price per share (as defined in subsection (e) below) of the Common Stock on such record 31 37 date. Such adjustment shall become effective immediately after the record date for the determination of shareholders entitled to receive such distribution. Notwithstanding the foregoing, in the event that the Company shall make any distribution described in the first sentence of this subsection (c) pro rata to holders of Common Stock, the Company may, in lieu of making any adjustment pursuant to this Section 4.6, make proper provisions so that each holder of a Security who converts such Security (or any portion thereof) after the record date for such distribution shall be entitled to receive upon such conversion, in addition to the shares of Common Stock issuable upon such conversion (the "Conversion Shares") the evidence of its indebtedness, cash, other securities or other assets, as the case may be, as if such holder had converted the Securities immediately before the record date for such distribution. Notwithstanding the foregoing, in the event that the Company shall distribute (AA) rights or warrants (other than those referred to in subsection (b) above) ("Rights") pro rata to holders of Common Stock, the Company may, in lieu of making any adjustment pursuant to this Section 4.6, or (BB) rights issued pursuant to the Company's Amended and Restated Rights Agreement, dated February 13, 1996, pro rata to holders of Common Stock the Company shall, make proper provision so that each holder of a Security who converts such Security (or any portion thereof) after the record date for such distribution and prior to the expiration or redemption of the Rights shall be entitled to receive upon such conversion, in addition to the Conversion Shares, a number of Rights to be determined as follows: (x) if such conversion occurs on or prior to the date for the distribution to the holders of Rights of separate certificates evidencing such Rights (the "Distribution Date"), the same number of Rights to which a holder of a number of shares of Common Stock equal to the number of Conversion Shares is entitled at the time of such conversion in accordance with the terms and provisions of and applicable to the Rights; and (y) if such conversion occurs after the Distribution Date, the same number of Rights to which a holder of the number of shares of Common Stock into which the principal amount of the Security so converted was convertible immediately prior to the Distribution Date would have been entitled on the Distribution Date in accordance with the terms and provisions of and applicable to the Rights. If the Company implements a new stockholder rights plan, the Company agrees that such rights plan will provide that upon conversion of the Notes, the Holders of the Common Stock issued upon conversion shall receive the rights issued under such plan, whether or not such rights have separated from the Common Stock at the time of such conversion. If the rights under such new plan have become separated from the Common Stock prior to the conversion of a Security, the Holders of the Common Stock issued upon conversion shall receive the Rights that they would have received if the Security had been converted immediately prior to the separation of the Rights. (d) In case the Company or any of its Subsidiaries or any Company Benefit Plan shall repurchase (including by way of tender offer) shares of Common Stock and the price per share of Common Stock paid by the Company or such Subsidiary or Company Benefits Plan, as the case may be, exceeds the current market price (determined as of the date such purchase is consummated), and the fair market value of the sum of (i) the aggregate consideration paid for such Common Stock in excess of the current market price, (ii) the aggregate fair market value of cash dividends and distributions of the type described in clause (iii) of the preceding paragraph (c) paid within the twelve (12) months preceding the date of purchase of such shares of Common Stock in respect of which no adjustment pursuant to this Section 4.6 previously has been made, and (iii) the aggregate fair market value of any amounts previously paid for the repurchase of Common Stock in excess of the applicable current market price of a type described in this paragraph (d) within the twelve (12) months preceding the date of purchase of such shares of Common Stock in respect of which no adjustment pursuant to this Section 4.6 previously has been made, exceeds 20% of Market Capitalization on the date of, and after giving effect to, such repurchase, then the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the date of such distribution or purchase by a fraction of which the numerator shall be the current market price per share (as defined in subsection (e) below) of the Common Stock on the date of such repurchase, less the quotient of (A) the excess of the sum of clauses (i), (ii) and (iii) of this paragraph (d) over 20% of Market Capitalization on the date of such repurchase, divided by (B) the number of shares of Common Stock outstanding on such date and of which the denominator shall be the current market price per share (as defined in subsection (e) below) of the Common Stock on the date of such repurchase. Such adjustment shall become effective immediately after the date of such repurchase. 32 38 (e) For the purpose of any computation under subsections (b), (c) and (d) above, the current market price per share of Common Stock on any date shall be deemed to be the average of the Closing Prices for 20 consecutive Trading Days commencing 30 Trading Days before the record date with respect to any distribution, issuance or other event requiring such computation. The Closing Price for each day shall be (i) the last sale price, or the closing bid price if no sale occurred, of such class of stock on the principal securities exchange on which such class of stock is listed, if the Common Stock is listed or admitted for trading on any national securities exchange, (ii) the last reported sale price of Common Stock on The Nasdaq Stock Market, or any similar system of automated dissemination of quotations of securities prices then in common use, if so quoted, or (iii) if not quoted as described in clause (i), the mean between the high bid and low asked quotations for Common Stock as reported by the National Quotation Bureau Incorporated if at least two securities dealers have inserted both bid and asked quotations for such class of stock on at least 5 of the 10 preceding days. If the Common Stock is quoted on a national securities or central market system, in lieu of a market or quotation system described above, the Closing Price shall be determined in the manner set forth in clause (iii) of the preceding sentence if bid and asked quotations are reported but actual transactions are not, and in the manner set forth in clause (ii) of the preceding sentence if actual transactions are reported. If none of the conditions set forth above is met, the Closing Price of Common Stock on any day or the average of such last reported sale prices for any period shall be the fair market value of such class of stock as determined by a member firm of the New York Stock Exchange, Inc. selected by the Company. As used herein the term "Trading Days" with respect to Common Stock means (i) if the Common Stock is listed or admitted for trading on any national securities exchange, days on which such national securities exchange is open for business or (ii) if the Common Stock is quoted on The Nasdaq Stock Market or any similar system of automated dissemination of quotations of securities prices, days on which trades may be made on such system. (f) Rights or warrants distributed by the Company to all holders of Common Stock entitling the holders thereof to subscribe for or purchase shares of the Company's capital stock (either initially or under certain circumstances), which rights or warrants, until the occurrence of a specified event or events ("Trigger Event"): (1) are deemed to be transferred with such shares of Common Stock, (2) are not exercisable, and (3) are also issued in respect of future issuances of Common Stock, shall not be deemed distributed for purposes of this Section 4.6 until the occurrence of the earliest Trigger Event. In addition, in the event of any distribution of rights or warrants, or any Trigger Event with respect thereto, that shall have resulted in an adjustment to the Conversion Price under this Section 4.6, (1) in the case of any such rights or warrants which shall all have been redeemed or repurchased without exercise by any holders thereof, the Conversion Rate shall be readjusted upon such final redemption or repurchase to give effect to such distribution or Trigger Event, as the case may be, as though it were a cash distribution, equal to the per share redemption or repurchase price received by a holder of Common Stock with respect to such rights or warrants (assuming such holder had retained such rights or warrants), made to all holders of Common Stock as of the date of such redemption or repurchase, and (2) in the case of any such rights or warrants all of which shall have expired without exercise by any holder thereof, the Conversion Rate shall be readjusted as if such issuance had not occurred. (g) In any case in which this Section 4.6 shall require that an adjustment be made immediately following a record date established for purposes of Section 4.6, the Company may elect to defer (but only until five Business Days following the filing by the Company with the Trustee of the certificate described in Section 4.10 below) issuing to the holder of any Security converted after such record date the shares of Common 33 39 Stock and other capital stock of the Company issuable upon such conversion over and above the shares of Common Stock and other capital stock of the Company issuable upon such conversion only on the basis of the Conversion Price prior to adjustment; and, in lieu of the shares the issuance of which is so deferred, the Company shall issue or cause its transfer agents to issue due bills or other appropriate evidence of the right to receive such shares. SECTION 4.7 NO ADJUSTMENT. No adjustment in the Conversion Price shall be required unless the adjustment would require an increase or decrease of at least 1% in the Conversion Price as last adjusted; provided, however, that any adjustments which by reason of this Section 4.7 are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Article 4 shall be made to the nearest cent or to the nearest one-hundredth of a share, as the case may be. No adjustment need be made for rights to purchase Common Stock or issuances of Common Stock pursuant to a Company plan for reinvestment of dividends or interest. No adjustment need be made for a change in the par value or a change to no par value of the Common Stock. To the extent that the Securities become convertible into cash, no adjustment need be made thereafter as to the cash. Interest will not accrue on the cash. SECTION 4.8 EQUIVALENT ADJUSTMENTS. In the event that, as a result of an adjustment made pursuant to Section 4.6 above, the holder of any Security thereafter surrendered for conversion shall become entitled to receive any shares of capital stock of the Company other than shares of its Common Stock, thereafter the Conversion Price of such other shares so receivable upon conversion of any Securities shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to Common Stock contained in this Article 4. SECTION 4.9 ADJUSTMENT FOR TAX PURPOSES. The Company shall be entitled to make such reductions in the Conversion Price, in addition to those required by Section 4.6, as it in its discretion shall determine to be advisable in order that any stock dividends, subdivision of shares, distribution of rights to purchase stock or securities, or a distribution or securities convertible into or exchangeable for stock hereafter made by the Company to its stockholders shall not be taxable. SECTION 4.10 NOTICE OF ADJUSTMENT. Whenever the Conversion Price is adjusted, or Securityholders become entitled to other Securities or due bills the Company shall promptly mail to Securityholders a notice of the adjustment and file with the Trustee an Officers' Certificate briefly stating the facts requiring the adjustment and the manner of computing it. The certificate shall be conclusive evidence of the correctness of such adjustment and the Trustee may conclusively assume that, unless and until such certificate is received by it, no such adjustment is required. SECTION 4.11 NOTICE OF CERTAIN TRANSACTIONS In case: 34 40 (a) the Company shall declare a dividend (or any other distribution) on its Common Stock (other than in cash out of retained earnings); or (b) the Company shall authorize the granting to the holders of its Common Stock of rights or warrants to subscribe for or purchase any share of any class or any other rights or warrants; or (c) of any reclassification of the Common Stock of the Company (other than a subdivision or combination of its outstanding Common Stock, or a change in par value, or from par value to no par value, or from no par value to par value), or of any consolidation or merger to which the Company is a party and for which approval of any shareholders of the Company is required, or of the sale or transfer of all or substantially all of the assets of the Company; or (d) of the voluntary or involuntary dissolution, liquidation or winding-up of the Company; the Company shall cause to be filed with the Trustee and to be mailed to each holder of Securities at his address appearing on the list, provided for in Section 2.5 of this Indenture, as promptly as possible but in any event at least fifteen days prior to the applicable date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution or rights or warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution or rights are to be determined, or (y) the date on which such reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding-up is expected to become effective or occur, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding-up. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such dividend, distribution, reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding-up. SECTION 4.12 EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE ON CONVERSION PRIVILEGE. If any of the following shall occur, namely: (i) any reclassification or change of outstanding shares of Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination); (ii) any consolidation, combination or merger to which the Company is a party other than a merger in which the Company is the continuing corporation and which does not result in any reclassification of, or change (other than a change in name, or par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination) in, outstanding shares of Common Stock; or (iii) any sale or conveyance of all or substantially all of the property or business of the Company, then the Company, or such successor or purchasing corporation, as the case may be, shall, as a condition precedent to such reclassification, change, consolidation, merger, sale or conveyance, execute and deliver to the Trustee a supplemental indenture providing that the Holder of each Security then outstanding shall have the right to convert such Security into the kind and amount of shares of stock and other securities and property (including cash) receivable upon such reclassification, change, consolidation, merger, sale or conveyance by a holder of the number of shares of Common Stock deliverable upon conversion of such Security immediately prior to such reclassification, change, consolidation, merger, sale or conveyance. Such supplemental indenture shall provide for adjustments of the Conversion Price which shall be as nearly equivalent as may be practicable to the adjustments of the Conversion Price provided for in this Article 4. The foregoing, however, shall not in any way affect the right a holder of a Security may otherwise have, pursuant to clause (ii) of the last sentence of subsection (c) of Section 4.6, to receive Rights upon conversion of a Security. If, in the case of any such consolidation, merger, sale or conveyance the stock or other securities and property (including cash) receivable thereupon by a holder of Common Stock includes shares of stock or other securities and property of a corporation other than the successor or purchasing corporation, as the case may be, in such consolidation, merger, sale or conveyance, then such supplemental indenture shall also be executed by such other corporation and shall contain such additional provisions to protect the interests of the Holders of the Securities as the Board 35 41 of Directors of the Company shall reasonably consider necessary by reason of the foregoing. The provision of this Section 4.12 shall similarly apply to successive consolidations, mergers, sales or conveyances. Notwithstanding the foregoing, a distribution by the Company to all or substantially all holders of its Common Stock for which an adjustment to the Conversion Price or provision for conversion of the Securities may be made pursuant to Section 4.6 hereof shall not be deemed to be a sale or conveyance of all or substantially all of the property or business of the Company for purposes of this Section 4.12. In the event the Company shall execute a supplemental indenture pursuant to this Section 4.12, the Company shall promptly file with the Trustee an Officers' Certificate briefly stating the reasons therefor, the kind or amount of shares of stock or securities or property (including cash) receivable by Holders of the Securities upon the conversion of their Securities after any such reclassification, change, consolidation, merger, sale or conveyance, any adjustment to be made with respect thereto and that all conditions precedent have been complied with. SECTION 4.13 TRUSTEE'S DISCLAIMER. The Trustee has no duty to determine when an adjustment under this Article 4 should be made, how it should be made or what such adjustment should be, but may accept as conclusive evidence of the correctness of any such adjustment, and shall be protected in relying upon, the Officers' Certificate with respect thereto which the Company is obligated to file with the Trustee pursuant to Section 4.10. The Trustee makes no representation as to the validity or value of any securities or assets issued upon conversion of Securities, and the Trustee shall not be responsible for the Company's failure to comply with any provisions of this Article 4. The Trustee shall not be under any responsibility to determine the correctness of any provisions contained in any supplemental indenture executed pursuant to Section 4.12, but may accept as conclusive evidence of the correctness thereof, and shall be protected in relying upon, the Officers' Certificate with respect thereto which the Company is obligated to file with the Trustee pursuant to Section 4.12. SECTION 4.14 VOLUNTARY REDUCTION. The Company from time to time may reduce the Conversion Price by any amount for any period of time if the period is at least 20 days or such longer period as may be required by law and if the reduction is irrevocable during the period; provided, that in no event may the Conversion Price be less than the par value of a share of Common Stock. ARTICLE 5 SUBORDINATION SECTION 5.1 SECURITIES SUBORDINATED TO SENIOR INDEBTEDNESS. The Company covenants and agrees, and each holder of Securities by his acceptance thereof likewise covenants and agrees, that all Securities are subject to the provisions of this Article 5; and each Person holding any Security, whether upon original issue or upon transfer or assignment thereof, accepts and agrees to be bound by such provisions and acknowledges that such provisions are for the benefit of, and shall be enforceable directly by, the holders of Senior Indebtedness. Each holder of Securities authorizes and directs the Trustee on such holder's behalf to take such action as may be necessary or appropriate, in the sole discretion of the Trustee, to acknowledge or effectuate the subordination between the holders of Securities and the holders of Senior Indebtedness as provided in this Article and appoints the Trustee as such holder's attorney-in-fact for any and all such purposes. 36 42 The payment of the principal of, premium, if any, and interest on and any other payment due pursuant to this Indenture or any Securities issued hereunder (including, without limitation, the payment or deposit of the redemption price or repurchase price pursuant to Article 3 and any deposit pursuant to Section 6.3) shall, to the extent and in the manner hereinafter set forth, be subordinated and subject in right of payment to the prior payment in full of all Senior Indebtedness, whether outstanding at the date of this Indenture or thereafter created, incurred, assumed or guaranteed. SECTION 5.2 SECURITIES SUBORDINATED TO PRIOR PAYMENT OF ALL SENIOR INDEBTEDNESS ON DISSOLUTION, LIQUIDATION, REORGANIZATION, ETC., OF THE COMPANY. Upon any payment or distribution of the assets of the Company of any kind or character, whether in cash, property or securities (including any collateral at any time securing the Securities), to creditors upon any dissolution, winding-up, total or partial liquidation, or reorganization of the Company (whether voluntary or involuntary, or in bankruptcy, insolvency, reorganization, liquidation, or receivership proceedings, or upon an assignment for the benefit of creditors, or any marshalling of the assets and liabilities of the Company, or otherwise), then in such event: (a) all Senior Indebtedness (including principal thereof and interest thereon) shall first be paid in full before any Payment of the Securities (as defined in Section 5.5) is made; (b) any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities (including any collateral at any time securing the Securities) (other than Reorganization Securities), to which the Holders or the Trustee on behalf of the Holders would be entitled except for the provisions of this Article 5, including any such payment or distribution which may be payable or deliverable by reason of the payment of another debt of the Company being subordinated to the payment of the Securities, shall be paid or delivered by any debtor, Custodian or other person making such payment or distribution, directly to the holders of the Senior Indebtedness or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing any of such Senior Indebtedness may have been issued, ratably according to the aggregate amounts remaining unpaid on account of the principal of and interest on the Senior Indebtedness held or represented by each, for application to payment of all Senior Indebtedness remaining unpaid, to the extent necessary to pay all Senior Indebtedness in full after giving effect to any concurrent payment or distribution, or provision therefor, to the holders of such Senior Indebtedness; and (c) in the event that, notwithstanding the foregoing provisions of this Section 5.2, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities (other than Reorganization Securities), shall be received by the Trustee or the Holders before all Senior Indebtedness is paid in full, such payment or distribution (subject to the provisions of Sections 5.6 and 5.7) shall be held in trust for the benefit of, and shall be immediately paid or delivered by the Trustee or such Holders, as the case may be, to the holders of Senior Indebtedness remaining unpaid, or their Representative or Representatives, ratably according to the aggregate amounts remaining unpaid on account of the principal of and interest on the Senior Indebtedness held or represented by each, for application to the payment of all Senior Indebtedness remaining unpaid, to the extent necessary to pay all Senior Indebtedness in full after giving effect to any concurrent payment or distribution, or provision therefor, to or for the holders of such Senior Indebtedness. The Company shall give prompt notice to the Trustee of any dissolution, winding-up, liquidation or reorganization of the Company. Upon any distribution of assets of the Company referred to in this Article 5, the Trustee, subject to the provisions of Sections 9.1 and 9.2, and the Holders shall be entitled to rely upon any order or decree by any court of competent jurisdiction in which such dissolution, winding-up, liquidation or reorganization proceeding is 37 43 pending, or a certificate of the liquidating trustee or agent or other person making any distribution to the Trustee or to the Holders, for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of the Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 5; provided that the foregoing shall apply only if such court, trustee, liquidating trustee or other person has been fully apprised of the provisions of this Article. SECTION 5.3 SECURITYHOLDERS TO BE SUBROGATED TO RIGHT OF HOLDERS OF SENIOR INDEBTEDNESS. Subject to the prior payment in full of all Senior Indebtedness, the Holders shall be subrogated (equally and ratably with the holders of all indebtedness of the Company which by its express terms is subordinated to indebtedness of the Company to substantially the same extent as the Securities are subordinated and is entitled to like rights of subrogation) to the rights of the holders of Senior Indebtedness to receive payments or distributions of assets of the Company applicable to the Senior Indebtedness until the principal of and interest on the Securities shall be paid in full, and for purposes of such subrogation, no payments or distributions to the holders of Senior Indebtedness of assets, whether in cash, property or securities, distributable to the holders of Senior Indebtedness under the provisions hereof to which the Holders would be entitled except for the provisions of this Article 5, and no payment pursuant to the provisions of this Article 5 to the holders of Senior Indebtedness by the Holders shall, as among the Company, its creditors other than the holders of Senior Indebtedness, and the Holders, be deemed to be a payment by the Company to or on account of Senior Indebtedness, it being understood that the provisions of this Article 5 are, and are intended, solely for the purpose of defining the relative rights of the Holders, on the one hand, and the holders of Senior Indebtedness, on the other hand. SECTION 5.4 OBLIGATIONS OF THE COMPANY UNCONDITIONAL. Nothing contained in this Article 5 or elsewhere in this Indenture or in any Security is intended to or shall impair the obligation of the Company, which is absolute and unconditional, to pay to the Holders the principal of and interest on the Securities, as and when the same shall become due and payable in accordance with the terms of the Securities, or to affect the relative rights of the Holders and other creditors of the Company other than the holders of Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or any Holder from exercising all remedies otherwise permitted by applicable law upon the happening of an Event of Default under this Indenture, subject to the provisions of Article 8, and the rights, if any, under this Article 5 of the holders of Senior Indebtedness in respect of assets, whether in cash, property or securities, of the Company received upon the exercise of any such remedy. SECTION 5.5 COMPANY NOT TO MAKE PAYMENT WITH RESPECT TO SECURITIES IN CERTAIN CIRCUMSTANCES. (a) Upon the occurrence of a Payment Default, unless and until the amount of such Senior Indebtedness then due shall have been paid in full, or such default shall have been cured or waived or shall have ceased to exist, the Company shall not pay principal of, premium, if any, or interest on the Securities or any other amount due pursuant to this Indenture or any Securities or make any deposit pursuant to Article 3 or Section 6.3 or 10.1 and shall not repurchase, redeem or otherwise retire any Securities (collectively, "a Payment of the Securities"). (b) Unless Section 5.2 shall be applicable, upon (1) the occurrence of a default on Senior Indebtedness (other than a Payment Default) that occurs and is continuing that permits the holders of such Senior Indebtedness (or their Representative or Representatives) to accelerate its maturity and (2) receipt by the Company and the Trustee from the Senior Agent of written notice of such occurrence and the imposition of a Payment Blockage Period hereunder, then the Company shall not make any Payment of the Securities for a period (the "Payment Blockage Period") commencing on the earlier of the date of receipt by the Company or 38 44 the Trustee of such notice from the Senior Agent and ending on the earlier of (subject to any blockage of payments that may then be in effect under subsection (a) of this Section) (x) the date 179 days after such date, (y) the date such default shall have been cured or waived in writing or shall have ceased to exist or such Senior Indebtedness shall have been discharged, or (z) the date such Payment Blockage Period shall have been terminated by written notice to the Company or the Trustee from the Senior Agent, after which, in case of clause (x), (y) or (z), as the case may be, the Company shall resume making any and all required payments. Notwithstanding any other provision of this Agreement, only one Payment Blockage Period may be commenced within any consecutive 365-day period, and no event of default with respect to any Senior Indebtedness which existed or was continuing on the date of the commencement of any Payment Blockage Period with respect to such Senior Indebtedness shall be, or can be made, the basis for the commencement of a second Payment Blockage Period whether or not within a period of 365 consecutive days unless such event of default shall have been cured or waived for a period of not less than 90 consecutive days. In no event will a Payment Blockage Period extend beyond 179 days. (c) In the event that, notwithstanding the foregoing provisions of this Section 5.5, any Payment of the Securities shall be made by or on behalf of the Company and received by the Trustee, any Holder or any Paying Agent (or, if the Company is acting as its own Paying Agent, money for any such payment shall be segregated and held in trust), which payment was prohibited by this Section 5.5, then, unless and until the amount of Senior Indebtedness then due, as to which a default shall have occurred, shall have been paid in full, or such default shall have been cured or waived, such payment (subject, in each case, to the provisions of Sections 5.6 and 5.7) shall be held in trust for the benefit of, and shall be immediately paid over to, the holders of Senior Indebtedness or their Representative or Representatives, ratably according to the aggregate amounts remaining unpaid on account of the principal of and interest on the Senior Indebtedness held or represented by each, for application to the payment of all Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior Indebtedness in accordance with its terms, after giving effect to any concurrent payment or distribution to or for the benefit of the holders of Senior Indebtedness. The Company shall give prompt written notice to the Trustee of any default under any Senior Indebtedness or under any agreement pursuant to which Senior Indebtedness may have been issued. SECTION 5.6 NOTICE TO TRUSTEE. The Company shall give prompt written notice to the Trustee of any fact known to the Company which would prohibit the making of any payment to or by the Trustee in respect of the Securities. Notwithstanding the provisions of this Article 5 or any other provision of this Indenture, the Trustee shall not at any time be charged with knowledge of the existence of any facts which would prohibit the making of any payment to or by the Trustee, unless and until the Trustee shall have received notice thereof from the Company or from the holder or holders of Senior Indebtedness or from their Representative or Representatives; and, prior to the receipt of any such notice, the Trustee, subject to the provisions of Sections 9.1 and 9.2, shall be entitled to assume conclusively that no such facts exist. The Trustee shall be entitled to rely on the delivery to it of a written notice by a person representing himself to be a holder of Senior Indebtedness (or a Representative of such holder) to establish that such notice has been given by a holder of Senior Indebtedness or a Representative of any such holder. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article 5, the Trustee may request such person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such person, the extent to which such person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of each person under this Article 5, and if such evidence is not furnished, the Trustee may defer any payment to such person pending judicial determination as to the right of such person to receive such payment. SECTION 5.7 APPLICATION BY TRUSTEE OF MONIES DEPOSITED WITH IT. 39 45 Money or U.S. Government Obligations deposited in trust with the Trustee pursuant to Sections 6.3 and 10.1 and not in violation of this Article 5 shall be for the sole benefit of Securityholders and shall thereafter not be subject to the subordination provisions of this Article 5. Otherwise, any deposit of monies by the Company with the Trustee or any Paying Agent (whether or not in trust) for the payment of the principal of or interest on any Securities shall be subject to the provisions of Sections 5.1, 5.2, 5.3 and 5.5; except that, if two Business Days prior to the date on which by the terms of this Indenture any such monies may become payable for any purpose (including, without limitation, the payment of either the principal of or interest on any Security), the Trustee shall not have received with respect to such monies the notice provided for in Section 5.6, then the Trustee or any Paying Agent shall have full power and authority to receive such monies and to apply such monies to the purpose for which they were received, and shall not be affected by any notice to the contrary which may be received by it on or after such date. This Section 5.7 shall be construed solely for the benefit of the Trustee and the Paying Agent and shall not otherwise affect the rights that holders of Senior Indebtedness may have to recover any such payments from the Holders in accordance with the provisions of this Article 5. SECTION 5.8 SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF COMPANY OR HOLDERS OF SENIOR INDEBTEDNESS. No right of any present or future holders of any Senior Indebtedness to enforce subordination, as herein provided, shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof which any such holder may have or be otherwise charged with. The holders of any Senior Indebtedness may extend, renew, modify or amend the terms of such Senior Indebtedness or any security therefor and release, sell or exchange such security and otherwise deal freely with the Company, all without affecting the liabilities and obligations of the parties to this Indenture or the Holders. No amendment of this Article 5 or any defined terms used herein or any other Sections referred to in this Article 5 which adversely affects the rights hereunder of holders of Senior Indebtedness, shall be effective unless the holders of such Senior Indebtedness (required pursuant to the terms of such Senior Indebtedness to give such consent) have consented thereto. SECTION 5.9 TRUSTEE TO EFFECTUATE SUBORDINATION. Each holder of a Security by his acceptance thereof authorizes and directs the Trustee in his behalf to take such action as may be necessary or appropriate to acknowledge and effectuate the subordination provided in this Article 5 and appoints the Trustee his attorney-in-fact for any and all such purposes. SECTION 5.10 RIGHT OF TRUSTEE TO HOLD SENIOR INDEBTEDNESS. The Trustee, in its individual capacity, shall be entitled to all of the rights set forth in this Article 5 in respect of any Senior Indebtedness at any time held by it to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall be construed to deprive the Trustee of any of its rights as such holder. SECTION 5.11 ARTICLE 5 NOT TO PREVENT EVENTS OF DEFAULT. The failure to make a Payment of the Securities by reason of any provision in this Article 5 shall not be construed as preventing the occurrence of an Event of Default under Section 8.1. SECTION 5.12 NO FIDUCIARY DUTY CREATED TO HOLDERS OF SENIOR INDEBTEDNESS. Notwithstanding any other provision in this Article 5, the Trustee shall not be determined to owe any fiduciary duty to the holders of Senior Indebtedness by virtue of the provisions of this Article 5. 40 46 SECTION 5.13 ARTICLE APPLICABLE TO PAYING AGENTS. In case at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term "Trustee" as used in this Article 5 shall in such case (unless the context shall otherwise require) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article 5 in addition to or in place of the Trustee; provided, however, that Sections 5.6, 5.10 and 5.12 shall not apply to the Company if it acts as Paying Agent. SECTION 5.14 CERTAIN CONVERSION DEEMED PAYMENT. For the purposes of this Article only, (1) the issuance and delivery of junior securities upon conversion of Securities in accordance with Article 4 shall not be deemed to constitute a payment or distribution on account of the principal of or premium or interest on Securities or on account of the purchase or other acquisition of Securities, and (2) the payment, issuance or delivery of cash, property or securities (other than junior securities) upon conversion of a Security shall be deemed to constitute payment on account of principal of such Security. For the purposes of this Section, the term "junior securities" means (a) shares of any stock of any class of the Company and (b) securities of the Company which are subordinated in right of payment to all Senior Indebtedness which may be outstanding at the time of issuance or delivery of such securities to substantially the same extent as, or to a greater extent than, the Securities are so subordinated as provided in this Article. Nothing contained in this Article or elsewhere in this Indenture or in the Securities is intended to or shall impair, as among the Company, its creditors other than holders of Senior Indebtedness and the Holders of the Securities, the right, which is absolute and unconditional, of the Holder of any Security to convert such Security in accordance with Article 4. ARTICLE 6 COVENANTS SECTION 6.1 PAYMENT OF SECURITIES. The Company covenants and agrees that it will duly and punctually pay or cause to be paid the principal amount at maturity, Redemption Price, Repurchase Price and interest, in respect of each of the Securities at the places, at the respective times and in the manner provided herein and in the Securities. Each installment of interest on the Securities may be paid by mailing checks for the interest payable to or upon the written order of the holders of Securities entitled thereto as they shall appear on the registry books of the Company; provided that with respect to any holder of Securities with an aggregate principal amount equal to or in excess of $5 million, at the request of such holder in writing the Company shall pay interest on such holder's Securities by wire transfer in immediately available funds. SECTION 6.2 SEC REPORTS; 144A INFORMATION. The Company shall file all reports and other information and documents which it is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act, and within 15 days after it files them with the SEC, the Company shall file copies of all such reports, information and other documents with the Trustee. The Company will cause any quarterly and annual reports which it mails to its stockholders to be mailed to the Holders of the Securities. In the event the Company is at any time no longer subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company will prepare, for the first three quarters of each fiscal year, quarterly 41 47 financial statements substantially equivalent to the financial statements required to be included in a report on Form 10-Q under the Exchange Act. The Company will also prepare, on an annual basis, complete audited consolidated financial statements including, but not limited to, a balance sheet, a statement of income and retained earnings, a statement of cash flows and all appropriate notes. All such financial statements will be prepared in accordance with generally accepted accounting principles consistently applied, except for changes with which the Company's independent accountants concur, and except that quarterly statements may be subject to year-end adjustments. The Company will cause a copy of such financial statements to be filed with the Trustee and mailed to the Holders of the Securities within 50 days after the close for each of the first three quarters of each fiscal year and within 95 days after the close of each fiscal year. The Company will also comply with the other provisions of TIA ss.314(a). At any time when the Company is not subject to Section 13 or 15(d) of the Exchange Act, upon the request of a holder or beneficial owner of a Security, the Company will promptly furnish or cause to be furnished Rule 144A Information (as defined below) to such holder, to such beneficial owner or to a prospective purchaser designated by such Securityholder or beneficial owner, as the case may be, in order to permit compliance by such Securityholder or beneficial owner with Rule 144A under the Securities Act in connection with the resale of such Note by such Securityholder or beneficial owner; provided, however, the Company shall not be required to furnish such information in connection with any request made on or after the date which is three years from the later of (i) the date such Note (or any predecessor Note) was acquired from the Company or (ii) the date such Note (or any predecessor Note) was last acquired from an "affiliate" of the Company within the meaning of Rule 144 under the Securities Act. "Rule 144A Information" shall be such information as is specified pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision thereto). SECTION 6.3 LIQUIDATION. Subject to the provisions of Article 5, insofar as they may be applicable hereto, the Board of Directors or the stockholders of the Company may not adopt a plan of liquidation which plan provides for, contemplates, or the effectuation of which is preceded by (a) the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company otherwise than substantially as an entirety (Article 7 of this Indenture being the Article which governs any such sale, lease, conveyance or other disposition substantially as an entirety), and (b) the distribution of all or substantially all of the proceeds of such sale, lease, conveyance or other disposition and of the remaining assets of the Company to the holders of the capital stock of the Company, unless the Company shall in connection with the adoption of such plan make provision for, or agree that prior to making any liquidating distributions to the holders of capital stock of the Company it will make provision for, the satisfaction of the Company's obligations hereunder and under the Securities as to the payment of principal and interest. The Company shall be deemed to have made provision for such payments only if (1) the Company irrevocably deposits in trust with the Trustee money or U.S. Government Obligations maturing as to principal and interest in such amounts and at such times as are sufficient, without consideration of any reinvestment of such interest, to pay the principal of and interest on the Securities then outstanding to maturity and to pay all other sums payable by it hereunder, or (2) there is an express assumption of the due and punctual payment of the Company's obligations hereunder and under the Securities and the performance and observance of all covenants and conditions to be performed by the Company hereunder, by the execution and delivery of a supplemental indenture in form reasonably satisfactory to the Trustee by a person who acquires, or will acquire (otherwise than pursuant to a lease) a portion of the assets of the Company, and which person will have Consolidated Net Worth (immediately after the acquisition) equal to not less than the Consolidated Net Worth of the Company (immediately preceding such acquisition), and which is a corporation organized under the laws of the United States, any State thereof or the District of Columbia; provided, however, that the Company shall not make any liquidating distribution to the holders of capital stock of the Company described in the first sentence of this Section 6.3 until after the Company shall have certified to the Trustee with an Officers' Certificate at least five days prior to the making of any liquidating distribution that it has complied with the provisions of this Section 6.3. 42 48 SECTION 6.4 COMPLIANCE CERTIFICATES. The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company, an Officers' Certificate as to the signer's knowledge of the Company's compliance with all conditions and covenants on its part contained in this Indenture and stating whether or not the signer knows of any default or Event of Default. If such signer knows of such a default or Event of Default, the Certificate shall describe the default or Event of Default and the efforts to remedy the same. For the purposes of this Section 6.4, compliance shall be determined without regard to any grace period or requirement of notice provided pursuant to the terms of this Indenture. The Certificate need not comply with Section 12.4 hereof. SECTION 6.5 NOTICE OF DEFAULTS. The Company will give notice to the Trustee, promptly upon becoming aware thereof, of the existence of any Event of Default hereunder. SECTION 6.6 PAYMENT OF TAXES AND OTHER CLAIMS. The Company will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (1) all material taxes, assessments and governmental charges levied or imposed upon the Company, directly or by reason of its ownership of any Subsidiary or upon the income, profits or property of the Company; and (2) all material lawful claims for labor, materials and supplies, which, if unpaid, might by law become a lien upon the property of the Company; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings and for which adequate provision has been made. SECTION 6.7 CORPORATE EXISTENCE. Subject to Section 6.3 and Article 7, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and rights (charter and statutory); provided, however, that the Company shall not be required to preserve any right if the Company shall determine that the preservation is no longer desirable in the conduct of the Company's business and that the loss thereof is not, and will not be, adverse in any material respect to the Holders. SECTION 6.8 MAINTENANCE OF PROPERTIES. Subject to Section 6.3, the Company will cause all material properties owned, leased or licensed in the conduct of its business to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof and thereto, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times while any Securities are outstanding; provided, however, that nothing in this Section 6.8 shall prevent the Company from doing otherwise if, in the judgment of the Company, the same is desirable in the conduct of the Company's business and is not, and will not be, adverse in any material respect to the Holders. SECTION 6.9 FURTHER INSTRUMENTS AND ACTS. Upon request of the Trustee, the Company will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purposes of this Indenture. 43 49 SECTION 6.10 MAINTENANCE OF OFFICE OR AGENCY. The Company will maintain in The City of New York an office or agency where Securities may be presented or surrendered for payment or repurchase, where Securities may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The office of the agent of the Trustee in The City of New York shall be such office or agency of the Company, unless the Company shall designate and maintain some other office or agency for one or more of such purposes. The Company will give prompt written notice to the Trustee of any change in the location of any such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. The Company may from time to time designate one or more other offices or agencies where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind such designation; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in The City of New York for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and any change in the location of any such office or agency. ARTICLE 7 SUCCESSOR CORPORATION SECTION 7.1 WHEN COMPANY MAY MERGE, ETC. The Company shall not consolidate with or merge into any other Person, or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and shall not permit any Person to consolidate with or merge into the Company or convey, transfer or lease its properties and assets substantially as an entirety to the Company, unless: (a) in case the Company shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the Person formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company substantially as an entirety shall be a corporation, partnership or trust, shall be organized and validly existing under the laws of the United States of America, any State thereof or the District of Columbia and shall expressly assume, by an indenture supplemental thereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of (and premium, if any) and interest on all the Securities and the performance or observance of every covenant of this Indenture on the part of the Company to be performed or observed and shall have provided for conversion rights in accordance with Section 4.12; (b) immediately after giving effect to such transaction and treating any indebtedness which becomes an obligation of the Company or a Subsidiary as a result of such transaction as having been incurred by the Company or such Subsidiary at the time of such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; and (c) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with. 44 50 SECTION 7.2 SUCCESSOR CORPORATION SUBSTITUTED. Upon any consolidation of the Company with, or merger of the Company into, any other Person or any conveyance, transfer or lease of the properties and assets of the Company substantially as an entirety in accordance with Section 7.1, the successor person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Notes. SECTION 7.3 DISPOSITION OF VRC. The Company shall not sell, transfer or otherwise dispose of VRC unless the transferee or VRC, as the case may be, becomes a co-obligor of the payment of principal of and premium, if any, and interest on the Securities and enters into a supplemental Indenture to that effect. ARTICLE 8 DEFAULT AND REMEDIES SECTION 8.1 EVENTS OF DEFAULT. An "Event of Default" occurs if: (1) the Company defaults in the payment of interest on any Security when the same becomes due and payable and the default continues for a period of 30 days; (2) the Company defaults in the payment of the principal of any Security when the same becomes due and payable at maturity, upon redemption or otherwise; (3) the Company fails to comply with any other covenant, warranty or agreement contained in the Securities or this Indenture and the default continues for the period and after the notice specified below; (4) the Company or any Significant Subsidiary shall fail to pay when due and owing principal of, premium, if any, or interest on any indebtedness for borrowed money or upon acceleration of such indebtedness under the terms of the instruments evidencing such indebtedness (provided, however, such acceleration is not withdrawn, cancelled or otherwise annulled within 10 days following the occurrence of such acceleration); provided, however, no such Event of Default shall exist under this Section 8.1(4) unless the aggregate amount of such principal, premium, if any, and interest is in excess of $10,000,000; (5) final judgments or orders are rendered against the Company or any Subsidiary which require the payment in money by the Company or any Subsidiary, either individually or in the aggregate, of an amount (to the extent not covered by insurance) that is more than $10,000,000 and such judgments or orders remain unsatisfied, undischarged, unvacated, unbonded and unstayed for more than 60 days and are not being contested in good faith by appropriate proceedings; (6) the Company or any Subsidiary pursuant to or within the meaning of any Bankruptcy Law: 45 51 (A) commences a voluntary case or proceeding; (B) consents to the entry of an order for relief against it in an involuntary case or proceeding; (C) consents to the appointment of a Custodian of it or for all or substantially all of its property; or (D) makes a general assignment for the benefit of its creditors; or (7) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (A) is for relief against the Company or any Subsidiary in an involuntary case or proceeding; (B) appoints a Custodian of the Company or any Subsidiary or for all or substantially all of the property of any of them; or (C) orders the liquidation of the Company or any Subsidiary; and in each case the order or decree remains unstayed and in effect for 60 days. The term "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal or state law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator, sequestrator or similar official under any Bankruptcy Law. A default under clause (3) is not an Event of Default until the Trustee notifies the Company, or the Holders of at least 25% in principal amount of the Securities then outstanding notify the Company and the Trustee, of the default, and the Company does not cure the default within 60 days after receipt of such notice. The notice given pursuant to this Section 8.1 must specify the default, demand that it be remedied and state that the notice is a "Notice of Default." When a default is cured, it ceases. Subject to the provisions of Sections 9.1 and 9.2, the Trustee shall not be charged with knowledge of any Event of Default unless written notice thereof shall have been given to a Trust Officer at the Corporate Trust Office of the Trustee by the Company, the Paying Agent, any Holder or an agent of any Holder. SECTION 8.2 ACCELERATION. If an Event of Default (other than an Event of Default specified in Section 8.1(6) or (7)) occurs and is continuing, the Trustee may, by notice to the Company, or the Holders of at least 25% in principal amount of the Securities then outstanding may, by notice to the Company and the Trustee, and the Trustee shall, upon the request of such Holders, declare all unpaid principal of and accrued interest to the date of acceleration on the Securities then outstanding (if not then due and payable) to be due and payable upon any such declaration, and the same shall become and be immediately due and payable. If an Event of Default specified in Section 8.1(6) or (7) occurs, all unpaid principal of and accrued interest on the Securities then outstanding shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Securityholder. The Holders of a majority in principal amount of the Securities then outstanding by notice to the Trustee may rescind an acceleration and its consequences if (i) all existing Events of Default, other than the nonpayment of the principal of and accrued interest on the Securities which has become due solely by such declaration of 46 52 acceleration, have been cured or waived; (ii) the Company has paid or deposited with the Trustee a sum sufficient to pay (a) all overdue interest on the Securities; (b) the principal of any Security which has become due otherwise then by such declaration of acceleration, and (c) to the extent the payment of such interest is lawful, interest on overdue installments of interest and overdue principal, which has become due otherwise than by such declaration of acceleration; (iii) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction; and (iv) all payments due to the Trustee and any predecessor Trustee under Section 9.7 have been made. No such rescission shall affect any subsequent default or impair any right consequent thereon. Anything herein contained to the contrary notwithstanding, in the event of any acceleration pursuant to this Section 8.2, the Company shall not be obligated to pay any premium which it would have had to pay if it had then elected to redeem the Securities pursuant to paragraph 5 of the Securities, except 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 which it would have had to pay if it had then elected to redeem the Securities pursuant to paragraph 5 of the Securities, in which case an equivalent premium shall also become and be immediately due and payable to the extent permitted by law. SECTION 8.3 OTHER REMEDIES. In case of an Event of Default hereunder the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either by suit in equity or by action at law or by proceeding in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture, or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law. The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative to the extent permitted by law. SECTION 8.4 WAIVER OF DEFAULTS AND EVENTS OF DEFAULT. Subject to Section 8.7, the Holders of a majority in principal amount of the Securities then outstanding by notice to the Trustee may waive an existing default or Event of Default and its consequences, except a default in the payment of the principal of (or premium, if any) or interest on any Security as specified in clauses (1) and (2) of Section 8.1, or a default in respect of a covenant or provision hereof which cannot be modified or amended pursuant to Section 11.2 without the consent of the holder of each Note affected thereby. When a default or Event of Default is waived, it is cured and ceases. SECTION 8.5 CONTROL BY MAJORITY. The Holders of a majority in principal amount of the Securities then outstanding may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture; provided that the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. SECTION 8.6 LIMITATION ON SUITS. A Securityholder may not pursue any remedy with respect to this Indenture or the Securities (except actions for payment of overdue principal or interest or for the conversion of the Securities pursuant to Article 4) unless: 47 53 (1) the Holder gives to the Trustee written notice of a continuing Event of Default; (2) the Holders of at least 25% in principal amount of the then outstanding Securities make a written request to the Trustee to pursue the remedy; (3) such Holder or Holders offer to the Trustee indemnity reasonably satisfactory to the Trustee against any loss, liability or expense; (4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Securities then outstanding. A Securityholder may not use any provision of this Indenture to prejudice the rights of another Securityholder or to obtain a preference or priority over such other Securityholder, or to enforce any rights under this Indenture other than in the manner herein provided and for the equal and ratable benefit of all the Securityholders. SECTION 8.7 RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding any other provision of this Indenture (but subject to Article 5 hereof), the right of any Holder of a Security to receive payment of principal of (and premium, if any) and interest on the Security, on or after the respective dates on which such payments are due as expressed in the Security, or to convert the Security, or to bring suit for the enforcement of any such payment on or after such respective dates, is absolute and unconditional and shall not be impaired or affected without the consent of the Holder. SECTION 8.8 COLLECTION SUIT BY TRUSTEE. If an Event of Default in the payment of principal or interest specified in Section 8.1(1) or (2) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company or another obligor on the Securities for the whole amount of principal and accrued interest remaining unpaid, together with interest on overdue principal and, to the extent that payment of such interest is lawful, interest on overdue installments of interest, in each case at the rate per annum borne by the Securities and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. SECTION 8.9 TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Securityholders allowed in any judicial proceedings relative to the Company (or any other obligor on the Securities), its creditors or its property and shall be entitled and empowered to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same, and any Custodian in any such judicial proceeding is hereby authorized by each Securityholder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Securityholders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 9.7, and to the extent that such payment of the reasonable compensation, expenses, disbursements and advances in any such proceedings shall be denied for any reason, payment of the same shall be secured by a lien on, and shall be paid out of, any and all 48 54 distributions, dividends, monies, securities and other property which the Securityholders may be entitled to receive in such proceedings, whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or the Trustee to authorize or accept or adopt on behalf of any Securityholder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Securityholder in any such proceeding. SECTION 8.10 PRIORITIES. Subject to Article 5, if the Trustee collects any money pursuant to this Article 8, it shall pay out the money in the following order: First, to the Trustee for amounts due under Section 9.7; Second, to Securityholders for amounts due and unpaid on the Securities for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal and interest, respectively; and Third, to the Company. The Trustee may fix a record date and payment date for any payment to Securityholders pursuant to this Section 8.10. SECTION 8.11 UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 8.11 does not apply to a suit made by the Trustee, a suit by a Holder pursuant to Section 8.7, or a suit by any Holder, or group of Holders, of more than 10% in principal amount of the Securities then outstanding. SECTION 8.12 RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any Securityholder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Securityholder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Securityholders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Securityholders shall continue as though no such proceeding had been instituted. SECTION 8.13 RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 2.7, no right or remedy herein conferred upon or reserved to the Trustee or to the Securityholders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. 49 55 SECTION 8.14 DELAY OR OMISSION NOT WAIVER. No delay or omission of the Trustee or of any Securityholder to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Securityholders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Securityholders, as the case may be. 50 56 ARTICLE 9 TRUSTEE SECTION 9.1 DUTIES OF TRUSTEE. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the continuance of an Event of Default: (1) the Trustee need perform only those duties as are specifically set forth in this Indenture and no others; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. The Trustee, however, shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) The Trustee may not be relieved, and no provision of this Indenture shall be construed to relieve the Trustee, from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1) this paragraph does not limit the effect of paragraph (b) of this Section 9.1; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (3) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 8.5. (d) The Trustee may refuse to perform any duty or exercise any right or power unless it receives indemnity reasonably satisfactory to it against any loss, liability, expense or fee. (e) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 9.1. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. SECTION 9.2 RIGHTS OF TRUSTEE. Subject to Section 9.1: (a) The Trustee may rely on any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document. 51 57 (b) Whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, it may require an Officers' Certificate or an Opinion of Counsel, which shall conform to Section 12.4(b). The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Certificate or Opinion. (c) The Trustee may act through its agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes in good faith to be authorized or within its rights or powers. (e) The Trustee may consult with counsel and the advice or opinion of such counsel as to matters of law that shall be full and complete authorization and protection in respect of any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel. SECTION 9.3 INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or an affiliate of the Company with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. However, the Trustee is subject to Sections 9.10 and 9.11. SECTION 9.4 TRUSTEE'S DISCLAIMER. The Trustee makes no representation as to the validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Company's use of the proceeds from the Securities, and it shall not be responsible for any statement in the Securities other than its certificate of authentication. SECTION 9.5 NOTICE OF DEFAULT OR EVENTS OF DEFAULT. If a default or an Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to each Securityholder notice of the default or Event of Default within 90 days after it occurs. Except in the case of a default or an Event of Default in payment of the principal of or interest on any Security, the Trustee may withhold the notice if and so long as a committee of its Trust Officers in good faith determines that withholding the notice is in the interest of Securityholders. SECTION 9.6 REPORTS BY TRUSTEE TO HOLDERS. If such report is required by TIA ss.313, within 60 days after each May 15, beginning with the May 15 following the date of this Indenture, the Trustee shall mail to each Securityholder a brief report dated as of such May 15 that complies with TIA ss.313(a). The Trustee also shall comply with TIA ss.313(b)(2) and (c). A copy of each report at the time of its mailing to Securityholders shall be mailed to the Company and filed with the SEC and each stock exchange, if any, on which the Securities are listed. The Company shall notify the Trustee whenever the Securities become listed on any stock exchange and any changes in the stock exchanges on which the Securities are listed. SECTION 9.7 COMPENSATION AND INDEMNITY. The Company shall pay to the Trustee from time to time reasonable compensation for its services (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust). The Company shall reimburse the Trustee upon request for all reasonable disbursements, 52 58 expenses and advances incurred or made by it. Such expenses may include the reasonable compensation, disbursements and expenses of Trustee's agents and counsel. The Company shall indemnify the Trustee for, and hold it harmless against, any loss, liability or expense incurred by it in connection with its duties under this Indenture or any action or failure to act as authorized or within the discretion or rights or powers conferred upon the Trustee hereunder. The Trustee shall notify the Company promptly of any claim asserted against the Trustee for which it may seek indemnity. The Trustee shall have the option of undertaking the defense of such claims; provided, however, that if the Trustee opts not to defend itself, the Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement without its written consent. The Company need not reimburse the Trustee for any expense or indemnify it against any loss or liability incurred by it through its own negligent action, failure to act or willful misconduct. When the Trustees incurs expenses or renders services after an Event of Default specified in Section 8.1(6) or (7) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law. SECTION 9.8 REPLACEMENT OF TRUSTEE. The Trustee may resign by so notifying the Company; provided, however, no such resignation shall be effective until a successor Trustee has accepted its appointment pursuant to this Section 9.8. The Holders of a majority in principal amount of the Securities then outstanding may remove the Trustee by so notifying the Trustee and may appoint a successor Trustee with the Company's written consent. The Company may remove the Trustee if: (1) the Trustee fails to comply with Section 9.10; (2) the Trustee is adjudged a bankrupt or an insolvent; (3) a receiver or other public officer takes charge of the Trustee or its property; or (4) the Trustee becomes incapable of acting as trustee. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. If a successor Trustee does not take office within 45 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of 10% in principal amount of the Securities then outstanding may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee fails to comply with Section 9.10 any Securityholder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Immediately after that, the retiring Trustee shall transfer all property held by it as Trustee to the successor Trustee and be released from its obligations (exclusive of any liabilities Trustee may have incurred while acting as Trustee) hereunder, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. A successor Trustee shall mail notice of its succession to each Securityholder. 53 59 Notwithstanding replacement of the Trustee pursuant to this Section 9.8, the Company's obligations under Section 9.7 hereof shall continue for the benefit of the retiring Trustee. SECTION 9.9 SUCCESSOR TRUSTEE BY MERGER, ETC. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust assets to, another corporation, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee, provided such transferee corporation shall qualify and be eligible under Section 9.10. SECTION 9.10 ELIGIBILITY; DISQUALIFICATION. There shall at all times be a Trustee hereunder which shall be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to exercise corporate trust process, having (together with any Person directly or indirectly controlling the Trustee) a combined capital and surplus of at least $25,000,000, subject to supervision or examination by federal or state authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect specified above in this Article. SECTION 9.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The Trustee shall comply with TIA section 311(a), excluding any creditor relationship listed in TIA section 311(b). A trustee who has resigned or been removed shall be subject to TIA section 311(a) to the extent indicated therein. ARTICLE 10 SATISFACTION AND DISCHARGE OF INDENTURE SECTION 10.1 TERMINATION OF COMPANY'S OBLIGATIONS. The Company may terminate all of its obligations under the Securities and this Indenture (except those obligations referred to in the immediately succeeding paragraph) if all Securities previously authenticated and delivered (other than destroyed, lost or stolen Securities which have been replaced or paid or Securities for whose payment money has theretofore been held in trust and thereafter repaid to the Company, as provided in Section 10.3) have been delivered to the Trustee for cancellation and the Company has paid all sums payable by it hereunder, or if the Company irrevocably deposits in trust with the Trustee money or U.S. Government Obligations maturing as to principal and interest in such amounts and at such times as are sufficient, without consideration of any reinvestment of such interest, to pay the principal of and interest on the Securities then outstanding to maturity or to the date fixed for redemption and to pay all other sums payable by it hereunder. The Company may make an irrevocable deposit pursuant to this Section 10.1 only if at such time it is not prohibited from doing so under the provisions of Article 5 and the Company shall have delivered to the Trustee and any such Paying Agent an Officers' Certificate to that effect and that all other conditions to such deposit have been complied with. 54 60 The Company's obligations in paragraphs 8 and 12 of the Securities, in Sections 6.1, 6.2, 9.7, 9.8 and 10.4, and in Articles 2 and 4 shall survive until the Securities are no longer outstanding. Thereafter, the Company's obligations in such paragraph 12 and in Section 9.7 shall survive. After such irrevocable deposit, the Trustee upon request shall acknowledge in writing the discharge of the Company's obligations under the Securities and this Indenture, except for those surviving obligations specified above. "U.S. Government Obligations" means direct non-callable obligations of, or non-callable obligations guaranteed by, the United States of America for the payment of which guarantee or obligation the full faith and credit of the United States is pledged. SECTION 10.2 APPLICATION OF TRUST MONEY. The Trustee or the Paying Agent shall hold in trust, for the benefit of the Holders, money or U.S. Government Obligations deposited with it pursuant to Section 10.1, and shall apply the deposited money and the money from U.S. Government Obligations in accordance with this Indenture to the payment of the principal of and interest on the Securities. Money and U.S. Government Obligations so held in trust and deposited in compliance with Section 10.1 and Article 5 shall not be subject to the subordination provisions of Article 5. SECTION 10.3 REPAYMENT TO COMPANY. Subject to Section 10.1, the Trustee and the Paying Agent shall promptly pay to the Company upon request any excess money or U.S. Government Obligations held by them at any time. The Trustee and the Paying Agent shall pay to the Company upon request any money held by them for the payment of principal or interest that remains unclaimed for two years after a right to such money has matured; provided, however, that the Trustee or such Paying Agent, before being required to make any such payment, may at the expense of the Company cause to be published once in a newspaper of general circulation in The City of New York or mail to each Holder entitled to such money notice that such money remains unclaimed and that after a date specified therein, which shall be at least 30 days from the date of such publication or mailing, any unclaimed balance of such money then remaining will be repaid to the Company. After that, Holders entitled to money must look to the Company for payment unless an abandoned property law designates another person. SECTION 10.4 REINSTATEMENT. If the Trustee or the Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with Section 10.1 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to Section 10.1 until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with Section 10.1; provided, however, that if the Company has made any payment of the principal of or interest on any Securities because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive any such payment from the money or U.S. Government Obligations held by the Trustee or the Paying Agent. ARTICLE 11 AMENDMENTS, SUPPLEMENTS AND WAIVERS 55 61 SECTION 11.1 WITHOUT CONSENT OF HOLDERS. The Company and the Trustee may amend or supplement this Indenture or the Securities without notice to or consent of any Securityholder: (a) to comply with Sections 4.12, 6.3 and 7.1; (b) to cure any ambiguity, omission, defect or inconsistency, or to make any other change that does not adversely affect the rights of any Securityholder; (c) to make provisions with respect to the conversion right of the Holders pursuant to Section 4.6(c); (d) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities; or (e) to comply with the provisions of the TIA or with any requirement of the SEC arising solely as a result of the qualification of this Indenture under the TIA. SECTION 11.2 WITH CONSENT OF HOLDERS. The Company and the Trustee may amend or supplement this Indenture or the Securities without notice to any Securityholder but with the written consent of the Holders of a majority in aggregate principal amount of the Securities then outstanding. The Holders of a majority in aggregate principal amount of the Securities then outstanding may waive compliance in a particular instance by the Company with any provision of this Indenture or the Securities without notice to any Securityholder. Subject to Section 11.4, without the written consent of each Securityholder affected, however, an amendment, supplement or waiver, including a waiver pursuant to Section 8.4, may not: (a) change the stated maturity date of the principal of, or any installment of interest on, any Security; (b) reduce the principal amount of, or the rate of interest on, or any premium payable on, any Security, whether upon acceleration, redemption or otherwise; (c) change the currency for payment of principal of, or premium or interest on any Security; (d) impair the right to institute suit for the enforcement of any payment of principal of, or premium or interest on any Security when due; (e) adversely affect the conversion rights provided in Article 4 hereof; (f) modify the provisions of Article 5 hereof with respect to the subordination of the Securities in a manner adverse to the holders; (g) modify the obligation of the Company hereunder to purchase Securities upon a Change of Control in a manner adverse to the holders; (h) reduce the percentage of principal amount of Securities necessary to modify or amend this Indenture or to consent to any waiver provided for in this Indenture; (i) waive a default in the payment of the principal of or premium or interest on any Security; or 56 62 (j) make any changes in Section 8.4, 8.7 or this sentence. It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under this Section becomes effective, the Company shall mail to the Holders affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amendment, supplement or waiver. An amendment under this Section 11.2 may not make any change that adversely affects the rights under Article 5 of any holder of an issue of Senior Indebtedness unless the holders of that issue, pursuant to its terms, consent to the change. SECTION 11.3 COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment to or supplement of this Indenture or the Securities shall comply with TIA as in effect at the date of such amendment or supplement. SECTION 11.4 REVOCATION AND EFFECT OF CONSENTS. Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder is a continuing consent by the Holder and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security, even if notation of the consent is not made on any Security. However, any such Holder or subsequent Holder may revoke the consent as to his Security or portion of a Security if the Trustee receives the notice of revocation before the date the amendment, supplement or waiver becomes effective. After an amendment, supplement or waiver becomes effective, it shall bind every Securityholder, unless it makes a change described in any of clauses (a) through (h) of Section 11.2. In that case the amendment, supplement or waiver shall bind each Holder of a Security who has consented to it and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security. SECTION 11.5 NOTATION ON OR EXCHANGE OF SECURITIES. If an amendment, supplement or waiver changes the terms of a Security, the Trustee may require the Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate notation on the Security about the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Security shall issue and the Trustee shall authenticate a new Security that reflects the changed terms. SECTION 11.6 TRUSTEE TO SIGN AMENDMENTS, ETC. The Trustee shall sign any amendment or supplement authorized pursuant to this Article 11 if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may but need not sign it. In signing or refusing to sign such amendment or supplement, the Trustee shall be entitled to receive and, subject to Section 9.1 shall be fully protected in relying upon, an Opinion of Counsel stating that such amendment or supplement is authorized or permitted by this Indenture. The Company may not sign an amendment or supplement until the Board of Directors approves it. 57 63 ARTICLE 12 MISCELLANEOUS SECTION 12.1 TRUST INDENTURE ACT CONTROLS. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by any of Sections 310 to 317, inclusive, of the TIA through operation of Section 318(c) thereof, upon qualification of this Indenture thereunder such imposed duties shall control. SECTION 12.2 NOTICES. Any notice or communication shall be given in writing and delivered in person or mailed by first class mail, postage prepaid, addressed as follows: If to the Company: VIVRA Incorporated 1850 Gateway Drive San Mateo, California 94404-2467 Attention: Chief Financial Officer If to the Trustee: State Street Bank and Trust Company 2 International Place, 4th Floor Boston, Massachusetts 02110 Attention: Corporate Trust Department (VIVRA Incorporated 5% Convertible Subordinated Notes Due 2001) Such notices or communications shall be effective when received. The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notice or communications. Any notice or communication mailed to a Securityholder shall be mailed by first class mail to him at his address shown on the register kept by the Registrar. Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders. If a notice or communication to a Securityholder is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. SECTION 12.3 COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS. Securityholders may communicate pursuant to TIA ss.312(b) with other Securityholders with respect to their rights under this Indenture or the Securities. The Company, the Trustee, the Registrar and any other person shall have the protection of TIA ss.312(c). 58 64 SECTION 12.4 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. (a) Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee at the request of the Trustee: (1) an Officers' Certificate stating that, in the opinion of the signers, all conditions precedent (including any covenants compliance with which constitutes a condition precedent), if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent (including any covenants compliance with which constitutes a condition precedent) have been complied with. (b) Each Officers' Certificate and Opinion of Counsel with respect to compliance with a condition or covenant provided for in this Indenture (other than annual certificates provided pursuant to Section 6.4 hereof) shall include: (1) a statement that the person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with; provided, however, that with respect to matters of fact an Opinion of Counsel may rely on Officers' Certificates or certificates of public officials. SECTION 12.5 RECORD DATE FOR VOTE OR CONSENT OF SECURITYHOLDERS. The Company (or, in the event deposits have been made pursuant to Section 6.3 or 10.1, the Trustee) may set a record date for purposes of determining the identity of Securityholders entitled to vote or consent to any action by vote or consent authorized or permitted under this Indenture, which record date shall be the later of 10 days prior to the first solicitation of such vote or consent or the date of the most recent list of Securityholders furnished to the Trustee pursuant to Section 2.5 hereof prior to such solicitation. If a record date is fixed, those persons who were Holders of Securities at such record date (or their duly designated proxies), and only those persons, shall be entitled to take such action by vote or consent or to revoke any vote or consent previously given, whether or not such persons continue to be Holders after such record date. SECTION 12.6 RULES BY TRUSTEE, PAYING AGENT, REGISTRAR. The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or the Paying Agent may make reasonable rules for its functions. SECTION 12.7 LEGAL HOLIDAYS. 59 65 A "Legal Holiday" is a Saturday, or a Sunday or a day on which state or Federally chartered banking institutions in New York or the city and state where the Trustee's corporate trust operations are located (which initially is Boston, Massachusetts) are not required to be open. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. SECTION 12.8 GOVERNING LAW. The laws of the State of New York shall govern this Indenture and the Securities without regard to principles of conflicts of law. SECTION 12.9 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or a Subsidiary. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. SECTION 12.10 NO RECOURSE AGAINST OTHERS. All liability described in paragraph 17 of the Securities of any director, officer, employee or stockholder, as such, of the Company is waived and released. SECTION 12.11 SUCCESSORS. All agreements of the Company in this Indenture and the Securities shall bind its successor. All agreements of the Trustee in this Indenture shall bind its successor. SECTION 12.12 MULTIPLE COUNTERPARTS. The parties may sign multiple counterparts of this Indenture. Each signed counterpart shall be deemed an original, but all of them together represent the same agreement. SECTION 12.13 SEPARABILITY. In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 12.14 TABLE OF CONTENTS, HEADINGS, ETC. The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof. 60 66 IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as of the 8th day of July, 1996. VIVRA INCORPORATED By: /s/ LeAnne M. Zumwalt ----------------------------------- Name: LeAnne M. Zumwalt Title: Chief Financial Officer, Treasurer and Secretary [SEAL] Attest: /s/ Kent J. Thiry - --------------------------------- Name: Kent J. Thiry Title: President and Chief Executive Officer STATE STREET BANK AND TRUST COMPANY, as Trustee By: /s/ Henry W. Seemore ----------------------------------- Name: Henry W. Seemore Title: Assistant Vice President [SEAL] Attest: /s/ Christina Van Ryzin - --------------------------------- Name: Christina Van Ryzin Title: Assistant Secretary 61 67 EXHIBIT A-1 FORM OF SECURITY (Certificated Note - Rule 144A Global Note - Regulation S Permanent Global Note) Number ______ CUSIP 92855MAC8 CUSIP 92855MAB0 CINS U92298AA3 [GLOBAL NOTE LEGEND: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO VIVRA INCORPORATED OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFER IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.] [RESTRICTED SECURITIES LEGEND: THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED OR SOLD 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, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE NOTE EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT (A) TO VIVRA INCORPORATED OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO STATE STREET BANK AND TRUST COMPANY, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE), (D) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT OR (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE NOTE EVIDENCED A1-1 68 HEREBY WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF SUCH NOTE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO STATE STREET BANK AND TRUST COMPANY, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE). IF THE PROPOSED TRANSFER IS PURSUANT TO CLAUSE (2)(C), (2)(D) OR (2)(E) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO STATE STREET BANK AND TRUST COMPANY, AS TRUSTEE, (OR A SUCCESSOR TRUSTEE, AS APPLICABLE) SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS SUCH TRUSTEE OR VIVRA INCORPORATED MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION OF THREE YEARS FROM THE ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.] A1-2 69 [FORM OF FACE OF SECURITY] VIVRA INCORPORATED 5% Convertible Subordinated Note Due 2001 VIVRA Incorporated, a Delaware corporation, promises to pay to ______________________ or registered assigns, the principal sum of __________________________ Dollars ($__________) on July 1, 2001 and to pay interest on the principal amount of this Note beginning July 8, 1996 at the rate of 5% per annum. Interest Payment Dates: January 1 and July 1 Record Dates: December 15 and June 15 This Note is convertible at such times and as specified on the other side of this Note. Additional provisions of this Note are set forth on the other side of this Note. Dated: July 8, 1996 VIVRA INCORPORATED By: ________________________________ Name: Title: [SEAL] Attest: By: ____________________________________________ Name: Title: Trustee's Certificate of Authentication: This is one of the Securities referred to in the within mentioned Indenture. STATE STREET BANK AND TRUST COMPANY, as Trustee By: ____________________________________________ Authorized Signatory A1-3 70 [FORM OF REVERSE SIDE OF SECURITY] VIVRA Incorporated 5% Convertible Subordinated Note Due 2001 1. Interest. VIVRA Incorporated, a Delaware corporation (the "Company"), promises to pay interest on the principal amount of this Note at the rate per annum shown above. The Company shall pay interest semi-annually on January 1 and July 1 of each year, commencing January 1, 1997. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from July 8, 1996. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Holder of this Note is entitled to the benefits of the Registration Rights Agreement, dated July 8, 1996, among the Company, Alex. Brown & Sons Incorporated, Montgomery Securities, Bear, Stearns & Co. Inc., Smith Barney Inc. and UBS Securities LLC. 2. Method of Payment. The Company will pay interest on this Note (except defaulted interest) to the person who is the registered Holder of this Note at the close of business on the December 15 and June 15 next preceding the interest payment date. The Holder must surrender this Note to the Paying Agent to collect payment of principal. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. The Company, however, may pay principal and interest by its check payable in such money. It may mail an interest check to the Holder's registered address. 3. Paying Agent, Registrar and Conversion Agent. Initially, State Street Bank and Trust Company (the "Trustee") will act as Paying Agent, Registrar and Conversion Agent. The Company may change any Paying Agent, Registrar or Conversion Agent without notice to the holder. The Company or any of its Subsidiaries may act as Paying Agent, Registrar or Conversion Agent. 4. Indenture; Limitations. This Note is one of a duly authorized issue of Notes of the Company designated as its 5% Convertible Subordinated Notes Due 2001 (the "Notes"), issued under an Indenture dated as of July 8, 1996 (the "Indenture"), between the Company and the Trustee. The terms of this Note include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.77aaa-77bbbb), as amended by the Trust Indenture Reform Act of 1990, as in effect on the date hereof or, from and after the date that the Indenture shall be qualified thereunder, as in effect on such date. This Note is subject to all such terms, and the holder of this Note is referred to the Indenture and said Act for a statement of them. The Notes are subordinated unsecured obligations of the Company limited to up to $150,000,000 aggregate principal amount plus an additional principal amount not exceeding $22,500,000 in the aggregate as may be issued upon the exercise by the Initial Purchasers, in whole or in part, of the Over-Allotment Option. A1-4 71 5. Redemption. The Notes may be redeemed at the Company's option, in whole or in part, at any time and from time to time on and after July 10, 1999. The redemption prices for Notes are as follows (expressed in percentages of principal amount), if redeemed during the 12-month period beginning July 10 of each of the years indicated below: Year Percentage 1999 102% 2000 (through June 31, 2001) 101% together in the case of any such redemption with accrued interest to the date of redemption, but any interest payment that is due and payable on or prior to such date of redemption will be payable to the Holders of such Notes, or one or more predecessor Notes, of record at the close of business on the relevant record dates referred to on the face hereof, all as provided in the Indenture. 6. Notice of Redemption. Notice of redemption will be mailed by first class mail at least 20 days but not more than 60 days before the redemption date to each Holder of Notes to be redeemed at his registered address. Notes in denominations larger than $1,000 may be redeemed in part, but only in whole multiples of $1,000. On and after the redemption date, subject to the deposit with the Paying Agent of funds sufficient to pay the redemption price, interest ceases to accrue on Notes or portions of them called for redemption. 7. Repurchase of Notes at Option of Holder upon a Change in Control. If at any time that Notes remain outstanding there shall have occurred a Change in Control (as defined in the Indenture), at the option of the Holder and subject to the terms and conditions of the Indenture, the Company shall become obligated to repurchase all or any part specified by the Holder (so long as the principal amount of such part is $1,000 or an integral multiple thereof) of the Notes held by such Holder on the Repurchase Date. The Holder shall have the right to withdraw any Repurchase Notice by delivering a written notice of withdrawal to the Paying Agent in accordance with the terms of the Indenture. 8. Conversion. At any time after 60 days following the latest date of original issuance of the Notes and prior to the close of business on July 1, 2001, a Holder of a Note may convert such Note into shares of Common Stock of the Company; provided, however, that if the Note is called for redemption, the conversion right will terminate at the close of business on the fifth business day before the redemption date of such Note (unless the Company shall default in making the redemption payment when due, in which case the conversion right shall terminate at the close of business on the date such default is cured and such Note is redeemed). The initial conversion price is $37.20 per share, subject to adjustment under certain circumstances as described in the Indenture. The number of shares issuable upon conversion of a Note is determined by dividing the principal amount converted by the conversion price in effect on the conversion date. Upon conversion, no adjustment for interest or dividends will be made. No fractional shares will be issued upon conversion; in lieu thereof, an amount will be paid in cash based upon the current market price (as defined in the Indenture) of the Common Stock on the last trading day prior to the date of conversion. To convert a Note, a Holder must (a) complete and sign the conversion notice set forth below and deliver such notice to the Conversion Agent, (b) surrender the Note to the Conversion Agent, (c) furnish appropriate endorsements or transfer documents if required by the Registrar or the Conversion Agent and (d) pay A1-5 72 any transfer or similar tax, if required. If a Holder surrenders a Note for conversion between the record date for the payment of an installment of interest and the next interest payment date, the Note must be accompanied by payment of an amount equal to the interest payable on such interest payment date on the principal amount of the Note or portion thereof then converted; provided, however, that no such payment shall be required if such Note has been called for redemption between such record date and the date five business days after such interest payment date, or if such Note is surrendered for conversion on the interest payment date. A Holder may convert a portion of a Note equal to $1,000 or any integral multiple thereof. A Note in respect of which a Holder had delivered a Repurchase Notice exercising the option of such Holder to require the Company to repurchase such Note may be converted only if the notice of exercise is withdrawn as provided above and in accordance with the terms of the Indenture. 9. Subordination. The indebtedness evidenced by the Notes is, to the extent and in the manner provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Indebtedness of the Company, as defined in the Indenture. Any Holder by accepting this Note agrees to and shall be bound by such subordination provisions and authorizes the Trustee to give them effect. In addition to all other rights of Senior Indebtedness described in the Indenture, the Senior Indebtedness shall continue to be Senior Indebtedness and entitled to the benefits of the subordination provisions irrespective of any amendment, modification or waiver of any terms of any instrument relating to the Senior Indebtedness or any extension or renewal of the Senior Indebtedness. 10. Denominations, Transfer, Exchange. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples thereof. A Holder may register the transfer of or exchange Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes or other governmental charges that may be imposed by law or permitted by the Indenture. [Global Note Insert: The aggregate principal amount of the Note in global form represented hereby may from time to time be reduced or increased to reflect exchanges of a part of this Note in global form for definitive Notes or exchanges of definitive Notes for a part of this Note in global form or conversions or redemptions of a part of this Note in global form or cancellations of a part of this Note in global form or transfers of definitive Notes in return for a part of this Note in global form or transfers of a part of this Note in global form effected by delivery of definitive Notes, in each case, and in any such case, by means of notations on the Schedule of Exchanges, Conversions, Redemptions, Cancellations and Transfers on the last page hereof. Notwithstanding any provision of this Note to the contrary, (i) exchanges of a part of this Note in global form for definitive Notes, (ii) exchanges of definitive Notes for a part of this Note in global form, (iii) conversions or redemptions of a part of this Note in global form, (iv) cancellations of a part of this Note in global form, (v) transfers of definitive Notes in return for a part of this Note in global form and (vi) transfers of a part of this Note in global form effected by delivery of definitive Notes may be effected without the surrendering of this Note in global form, provided that appropriate notations on the Schedule of A1-6 73 Exchanges, Conversions, Redemptions, Cancellations and Transfers are made by the Trustee, or the Custodian at the direction of the Trustee, to reflect the appropriate reduction or increase, as the case may be, in the aggregate principal amount of this Note in a global form resulting therefrom or as a consequence thereof.] 11. Persons Deemed Owners. The registered holder of a Note may be treated as the owner of it for all purposes. 12. Unclaimed Money. If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent will pay the money back to the Company at its request. After that, Holders entitled to money must look to the Company for payment unless an abandoned property law designates another person. 13. Amendment, Supplement, Waiver. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of a majority in principal amount of the Notes then outstanding and any past default or compliance with any provision may be waived in a particular instance with the consent of the Holders of a majority in principal amount of the Notes then outstanding. Without the consent of or notice to any Holder, the Company and the Trustee may amend or supplement the Indenture or the Notes to, among other things, provide for uncertificated Notes in addition to or in place of certificated Notes, or to cure any ambiguity, omission, defect or inconsistency or make any other change that does not adversely affect the rights of any Holder. 14. Successor Corporation. When a successor corporation assumes all the obligations of its predecessor under the Notes and the Indenture, the predecessor corporation will be released from those obligations. 15. Defaults and Remedies. An Event of Default is: default for 30 days in payment of interest on the Notes; default in payment of principal on the Notes when due; failure by the Company for 60 days after notice to it to comply with any of its other agreements contained in the Indenture or the Notes; default by the Company or any Significant Subsidiary with respect to its obligation to pay principal of or interest on indebtedness for borrowed money aggregating more than $10 million or the acceleration of such indebtedness if not withdrawn within 10 days from the date of such acceleration; certain final orders or judgments are rendered against the Company or any of its subsidiaries; and certain events of bankruptcy, insolvency or reorganization of the Company or any of its subsidiaries. If an Event of Default (other than as a result of certain events of bankruptcy, insolvency or reorganization) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Notes then outstanding may declare all unpaid principal of and accrued interest to the date of acceleration on the Notes then outstanding to be due and payable immediately, all as and to the extent provided in the Indenture. If an Event of Default occurs as a result of certain events of bankruptcy, insolvency or reorganization, all unpaid principal of and accrued interest on the Notes then outstanding shall become due and payable immediately without any declaration or other act on the part of the Trustee or any Holder, all as and to the extent provided in the Indenture. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Notes. Subject to certain limitations, Holders of a majority in principal amount of the Notes then outstanding may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing default (except A1-7 74 a default in payment of principal or interest) if it determines that withholding notice is in their interests. The Company is required to file periodic reports with the Trustee as to the absence of default. 16. Trustee Dealings with the Company. State Street Bank and Trust Company, the Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or an Affiliate of the Company, and may otherwise deal with the Company or an Affiliate of the Company, as if it were not the Trustee. 17. No Recourse Against Others. A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Notes or the Indenture or for any claim based on, in respect or by reason of, such obligations or their creation. The Holder of this Note by accepting this Note waives and releases all such liability. The waiver and release are part of the consideration for the issue of this Note. 18. Discharge Prior to Maturity. If the Company deposits with the Trustee or the Paying Agent money or U.S. Government Obligations sufficient to pay the principal of and interest on the Notes to maturity as provided in the Indenture, the Company will be discharged from the Indenture except for certain Sections thereof. 19. AUTHENTICATION. This Note shall not be valid until the Trustee or an authenticating agent signs the certificate of authentication on the other side of this Note. 20. ABBREVIATIONS AND DEFINITIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors Act). All capitalized terms used in this Note and not specifically defined herein are defined in the Indenture and are used herein as so defined. 21. INDENTURE TO CONTROL. In the case of any conflict between the provisions of this Note and the Indenture, the provisions of the Indenture shall control. The Company will furnish to any Holder, upon written request and without charge, a copy of the Indenture. Requests may be made to: VIVRA Incorporated, 1850 Gateway Drive, San Mateo, California 94404-2467, Attention: Chief Financial Officer. A1-8 75 TRANSFER NOTICE This Transfer Notice Relates to $__________ principal amount of the 5% Convertible Subordinated Notes Due 2001 of VIVRA Incorporated, a Delaware corporation, held by ______________________________ (the "Transferor"). (I) or (we) assign and transfer this Convertible Note to _______________________________________________________________________________ (Print or type assignee's name, address and zip code) _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ (Insert assignee's social security or tax I.D. no.) and irrevocably appoint _______________________________ agent to transfer this Note on the books of the Company. The agent may substitute another to act for him. Your Signature: ___________________________________________________________ (Sign exactly as your name appears on the other side of this Convertible Note) Date: _____________________________________________________________________ Signature Guarantee:(1) _____________________________________________________ In connection with any transfer of any of the Notes evidenced by this certificate occurring prior to the date that is three years after the later of the date of original issuance of such Notes and the last date, if any, on which such Notes were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Notes are being transferred: CHECK ONE BOX BELOW (1) / / to VIVRA Incorporated; or (2) / / pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended; or (3) / / pursuant to and in compliance with Regulation S under the Securities Act of 1933, as amended; or (4) / / to an institutional "accredited investor" (as defined in Rule 501(a) (1), (2), (3) or (7) under the Securities Act of 1933, as amended, that has furnished to the Trustee a signed letter containing certain representations and agreements (the form of which letter can be obtained from the Trustee)); or - -------- (1) Signature must be guaranteed by a commercial bank, trust company or member firm of the New York Stock Exchange. A1-9 76 (5) / / pursuant to another available exemption from the registration requirements of the Securities Act of 1933; or (6) / / pursuant to an effective registration statement under the Securities Act of 1933. Unless one of the boxes is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any person other than the registered holder thereof; provided, however, that if box (2), (3), (4) or (5) is checked, the Trustee may require, prior to registering any such transfer of the Notes such legal opinions, certifications and other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act. Unless the box below is checked, the undersigned confirms that such Note is not being transferred to an "affiliate" of the Company as defined in Rule 144 under the Securities Act of 1933, as amended (an "Affiliate"): 7. / / The transferee is an Affiliate of the Company. --------------------------------------- Signature --------------------------------------- Date --------------------------------------- Signature Guarantee(1) TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED. The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: --------------------------- -------------------------------------- [Signature of executive officer of purchaser] Name: --------------------------------- Title: -------------------------------- - -------- (1) Signature must be guaranteed by a commercial bank, trust company or member firm of the New York Stock Exchange. A1-10 77 CONVERSION NOTICE To VIVRA Incorporated: The undersigned owner of this Note hereby irrevocably exercises the option to convert this Note, or the portion below designated, into Common Stock of VIVRA Incorporated in accordance with the terms of the Indenture referred to in this Note, and directs that the shares issuable and deliverable upon conversion, together with any check in payment for fractional shares, be issued in the name of and delivered to the undersigned, unless a different name has been indicated in the assignment below. If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Any holder of Notes, upon exercise of its conversion rights in accordance with the terms of the Indenture and the Security, agrees to be bound by the terms of the Registration Rights Agreement relating to the Common Stock issuable upon conversion of the Notes. / / Convert whole / / Convert in part Amount of Note to be converted ($1,000 or integral multiples thereof): $ -------------------- ------------------------------------------ Signature (sign exactly as name appears on the other side of this Note) ------------------------------------------ Signature Guarantee:(1) If you want the stock certificate made out in another person's name, complete the following for such person: - ------------------------------------ Name - ------------------------------------ Social Security or Taxpayer Identification Number - ------------------------------------ Street Address - ------------------------------------ City, State and Zip Code - -------- (1) Signature must be guaranteed by a commercial bank, trust company or member firm of the New York Stock Exchange. A1-11 78 OPTION OF HOLDER TO ELECT REPURCHASE If you want to elect to have this Note repurchased by the Company pursuant to Section 3.8 of the Indenture, check the box: / / If you want to elect to have only part of this Note repurchased by the Company pursuant to Section 3.8 of the Indenture, state the principal amount (which shall be $1,000 or a multiple thereof) to be repurchased: $ -------------------- Dated: ------------------------- ---------------------------------------- Signature (sign exactly as name appears on the other side of this Note) - ------------------------------- Signature Guarantee:(1) - -------- (1) Signature must be guaranteed by a commercial bank, trust company or member firm of the New York Stock Exchange. A1-12 79 [Schedule A to Exhibit A-1 Global Note Transfer Schedule Changes to Principal Amount of Global Security
==================================================================================================================== Principal Amount of Securities by which this Global Security Is to Be Remaining Principal Amount of this Authorized Signature Reduced or Increased, and Reason Global Security of officer of Trustee Date for Reduction or Increase (following increase or decrease) or Note Custodian ==================================================================================================================== - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- ====================================================================================================================
Schedule to be maintained by Depositary in cooperation with Trustee.] A1-13 80 EXHIBIT A-2 FORM OF SECURITY (Regulation S Temporary Global Note) Number ______ CINS No. U92298AA3 UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR REGULATION S PERMANENT GLOBAL NOTES PURSUANT TO THE TERMS OF THE INDENTURE (AS DEFINED HEREIN), THIS REGULATION S TEMPORARY GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND (A) MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) BY THE INITIAL INVESTOR (a) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (c) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (d) TO THE COMPANY OR (e) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (2), BY SUBSEQUENT INVESTORS, AS SET FORTH IN (1) ABOVE AND, IN ADDITION, TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND, IN EACH CASE, IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE NOTE EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR RESALE OF THE NOTES. THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON. A2-1 81 [FORM OF FACE OF REGULATION S TEMPORARY GLOBAL NOTE] VIVRA INCORPORATED 5% Convertible Subordinated Note Due 2001 VIVRA Incorporated, a Delaware corporation, promises to pay to ______________________ or registered assigns, the principal sum of __________________________ Dollars ($__________) on July 1, 2001 and to pay, subject to the provisions set forth herein, interest on the principal amount of this Note beginning July 8, 1996 at the rate of 5% per annum. Interest Payment Dates: January 1 and July 1 Record Dates: December 15 and June 15 Additional provisions of this Note are set forth on the other side of this Note. Dated: July 8, 1996 VIVRA INCORPORATED By: ------------------------------------ Name: Title: [SEAL] Attest: By: ----------------------------------- Name: Title: Trustee's Certificate of Authentication: This is one of the Securities referred to in the within mentioned Indenture. STATE STREET BANK AND TRUST COMPANY, as Trustee By: ----------------------------------- Authorized Signatory A2-2 82 [FORM OF REVERSE SIDE OF SECURITY] VIVRA INCORPORATED 5% Convertible Subordinated Note Due 2001 1. Interest. Subject to the provisions hereof, VIVRA Incorporated, a Delaware corporation, (the "Company"), promises to pay interest on the principal amount of this Note at the rate per annum shown above. Interest shall be payable in cash semi-annually in arrears on January 1 and July 1, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"); provided that the first Interest Payment Date shall be January 1, 1997. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of original issuance. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. 2. Indenture and Trustee. This Regulation S Temporary Global Note is issued in respect of an issue of 5% Convertible Subordinated Notes Due 2001 (the "Notes") of the Company, limited to the aggregate principal amount of U.S. $172,500,000 issued pursuant to an Indenture (the "Indenture") dated as of July 8, 1996, between the Company and State Street Bank and Trust Company as trustee (the "Trustee"), and is governed by the terms and conditions of the Indenture governing the Notes, which terms and conditions are incorporated herein by reference and, except as otherwise provided herein, shall be binding on the Company and the Holder hereof as if fully set forth herein. Unless the context otherwise requires, the terms used herein shall have the meanings specified in the Indenture. 3. Exchange for Permanent Note; Limitations. Until this Regulation S Temporary Global Note is exchanged for Regulation S Permanent Global Notes, the Holder hereof shall not be entitled to receive payments of interest hereon; until so exchanged in full, this Regulation S Temporary Global Note shall in all other respects be entitled to the same benefits as other Notes under the Indenture. This Regulation S Temporary Global Note is exchangeable in whole or in part for one or more Regulation S Permanent Global Notes or Rule 144A Global Notes only (i) on or after the termination of the 40-day restricted period (as defined in Regulation S) and (ii) upon presentation of certificates (accompanied by an Opinion of Counsel, if applicable) required by Article 2 of the Indenture. Upon exchange of this Regulation S Temporary Global Note for one or more Regulation S Permanent Global Notes or Rule 144A Global Notes, the Trustee shall cancel this Regulation S Temporary Global Note. 4. Authentication; Interpretation. This Regulation S Temporary Global Note shall not become valid or obligatory until the certificate of authentication hereon shall have been duly manually signed by the Trustee in accordance with the Indenture. This Regulation S Temporary Global Note shall be governed by and construed in accordance with the laws of the State of the New York. All references to "$," "Dollars," "dollars" or "U.S. $" are to such coin or currency of the United States of America as at the time shall be legal tender for the payment of public and private debts therein. A2-3 83 SCHEDULE OF EXCHANGES FOR REGULATION S TEMPORARY GLOBAL NOTES The following exchanges of a part of this Regulation S Temporary Global Note for other Global Notes have been made:
==================================================================================================================== Principal Amount of Securities by which this Global Security Is to Be Remaining Principal Amount of this Authorized Signature Reduced or Increased, and Reason Global Security of officer of Trustee Date for Reduction or Increase (following increase or decrease) or Note Custodian ==================================================================================================================== - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- ====================================================================================================================
A2-4 84 EXHIBIT B-1 Page 1 FORM OF PURCHASER LETTER FOR INSTITUTIONAL ACCREDITED INVESTORS VIVRA Incorporated 1850 Gateway Drive San Mateo, California 94404-2467 State Street Bank and Trust Company 2 International Place, 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department (VIVRA Incorporated 5% Convertible Subordinated Notes Due 2001) Re: VIVRA Incorporated 5% Convertible Subordinated Notes Due 2001 Dear Ladies and Gentlemen: The undersigned is delivering this letter in connection with the acquisition of one or more of the 5% Convertible Subordinated Notes Due 2001 (the "Notes"), which are convertible into shares of Common Stock of VIVRA Incorporated (the "Company"), $0.01 par value (the "Common Stock"). The undersigned hereby confirms that: (i) the undersigned is an "accredited investor" within the meaning of Rule 501(a)(1), (2) or (3) under the Securities Act of 1933 (the "Securities Act") or an entity in which all of the equity owners are "accredited investors" within the meaning of Rule 501(a)(1), (2) or (3) under the Securities Act (an "Institutional Accredited Investor"); (ii) (A) any purchase of Notes by the undersigned will be for the undersigned's own account or for the account of one or more other Institutional Accredited Investors or as fiduciary for the account of one or more trusts, each of which is an "accredited investor" within the meaning of Rule 501(a)(7) under the Securities Act and for each of which the undersigned exercises sole investment discretion or (B) the undersigned is a "bank," within the meaning of Section 3(a)(2) of the Securities Act, or a savings and loan "association" or other institution described in Section 3(a)(5)(A) of the Securities Act that is acquiring Notes as fiduciary for the account of one or more institutions for which the undersigned exercises sole investment discretion; (iii) in the event that the undersigned purchases any Notes, the undersigned will acquire Notes having a minimum principal amount of not less than $250,000 for its own account or for any separate account for which the undersigned is acting; (iv) the undersigned has such knowledge and experience in financial and business matters that the undersigned is capable of evaluating the merits and risks of purchasing Notes; (v) the undersigned is not acquiring Notes with a view to distribution thereof or with any present intention of offering or selling Notes or the Common Stock issuable upon conversion thereof, except as permitted below; provided, that the disposition of the undersigned's property and B1-1 85 Page 2 property of any accounts for which the undersigned is acting as fiduciary shall remain at all times within its control; and (vi) the undersigned is aware that the sale to its is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is reyling upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. The undersigned understands that the Notes and the shares of Common Stock issuable upon conversion thereof (collectively, the "Securities") have not been registered under the Securities Act or any applicable state securities laws, and the undersigned agrees, on its own behalf and on behalf of each account for which the undersigned acquires any Securities, that if in the future the undersigned decides to resell or otherwise transfer such Securities, such Securities may be resold or otherwise transferred only (a) to the Company or any subsidiary thereof, (b) inside the United States to a person who is a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act) in a transaction meeting the requirements of Rule 144A, (c) inside the United States to an Institutional Accredited Investor that, prior to such transfer, furnishes to the trustee (or transfer agent, as the case may be) for such Securities a signed letter containing certain representations and agreements relating to the restrictions on transfer of such Securities (the form of which letter can be obtained from such trustee, or transfer agent, as the case may be), (d) outside the United States in a transaction meeting the requirements of Rule 904 under the Securities Act, (e) pursuant to the exemption from registration provided by Rule 144 under the Securities Act (if applicable) or (f) pursuant to a registration statement which has been declared effective under the Securities Act. The undersigned agrees that any such transfer of Securities referred to in this paragraph shall be in accordance with applicable securities laws of any State of the United States or any other applicable jurisdiction and in accordance with the legends set forth on the Securities. The undersigned further agrees to provide any person purchasing any of the Securities from the undersigned a notice advising such purchaser that resales of such securities are restricted as stated herein. The undersigned understands that the registrar and transfer agent for the Securities will not be required to accept for registration of transfer any Securities, except upon presentation of evidence satisfactory to the Company that the foregoing restrictions on transfer have been complied with. The undersigned further understands that any Securities will be in the form of definitive physical certificates and that such certificates will bear a legend or legends (unless the sale of the Securities has been registered under the Securities Act) reflecting the substance of this paragraph. The undersigned acknowledges that the Company, the Trustee and others will rely upon the undersigned's confirmations, acknowledgements and agreements set forth herein, and the undersigned agrees to notify you promptly in writing if any of its representations or warranties herein ceases to be accurate and complete. ---------------------------------------- (Name of Purchaser) Dated: ______________, _______ By: ----------------------------------------- Name: ------------------------------ Title: ----------------------------- Address: --------------------------- B1-2 86 EXHIBIT B-2 FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER FROM RULE 144A GLOBAL NOTE TO REGULATION S GLOBAL NOTE (Pursuant to Section 2.6(a)(i) of the Indenture) VIVRA Incorporated 1850 Gateway Drive San Mateo, California 94404-2467 State Street Bank and Trust Company 2 International Place, 4th Floor Boston, Massachusetts 02110 Attention: Corporate Trust Department (VIVRA Incorporated 5% Convertible Subordinated Notes Due 2001) Re: 5% Convertible Subordinated Notes Due 2001 of VIVRA Incorporated Dear Ladies and Gentlemen: Reference is hereby made to the Indenture, dated as of July 8, 1996 (the "Indenture"), between VIVRA Incorporated, as issuer (the "Company") and State Street Bank and Trust Company, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. This letter relates to U.S. $_______ principal amount of Notes which are evidenced by one or more Rule 144A Global Notes (CUSIP No. 92855MAB0) and held with the Depositary in the name of ____________________________ (the "Transferor"). The Transferor has requested a transfer of such beneficial interest in the Notes to a Person who will take delivery thereof in the form of an equal principal amount of Notes evidenced by one or more Regulation S Global Notes (CINS No. U92298AA3), which amount, immediately after such transfer, is to be held with the Depositary through Euroclear or Cedel Bank or both (Common Code 676 1127). In connection with such request and in respect of such Notes, the Transferor hereby certifies that such transfer has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with Rule 903 or Rule 904 under the United States Securities Act of 1933, as amended (the "Securities Act"), and accordingly the Transferor hereby further certifies that: (1) The offer of the Notes was not made to a person in the United States; (2) either: (a) at the time the buy order was originated, the transferee was outside the United States or the Transferor and any person acting on its behalf reasonably believed and believes that the transferee was outside the United States; or (b) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither the Transferor nor any person acting on its behalf knows that the transaction was prearranged with a buyer in the United States; (3) no directed selling efforts have been made in contravention of the requirements of Rule 904(b) of Regulation S; B2-1 87 Page 2 (4) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act; and (5) upon completion of the transaction, the beneficial interest being transferred as described above is to be held with the Depositary through Euroclear or Cedel Bank or both (Common Code 676 1127). (6) With respect to transfers made in reliance on Rule 144, the Notes are being transferred in a transaction permitted by Rule 144 under the Securities Act; and with respect to transfer made in reliance on Rule 144A, that such Notes are being transferred in accordance with Rule 144A under the Securities Act to a transferee that the Transferor reasonably believes is purchasing the Notes for its own account or an account with respect to which the transferee exercises sole investment discretion and the transferee and any such account is a "qualified institutional buyer" within the meaning of Rule 144A, in a transaction meeting the requirements of Rule 144A and in accordance with applicable securities laws of any state of the United States or any other jurisdiction. In addition, if the sale is made during a restricted period and the provisions of Rule 903(c)(2) or (3) or Rule 904(c)(1) of Regulation S are applicable thereto, we confirm that such sale has been made in accordance with the applicable provisions of Rule 903(c)(2) or (3) or Rule 904(c)(1), as the case may be. Upon giving effect to this request to exchange a beneficial interest in a Rule 144A Global Note for a beneficial interest in a Regulation S Global Note, the resulting beneficial interest shall be subject to the restrictions on transfer applicable to Regulation S Global Notes pursuant to the Indenture and the Securities Act and, if such transfer occurs prior to the end of the 40-day restricted period associated with the initial offering of Notes, the additional restrictions applicable to transfers of interest in the Regulation S Temporary Global Note. This certificate and the statements contained herein are made for your benefit and the benefit of the Company and Alex. Brown & Sons Incorporated, Montgomery Securities, Bear, Stearns & Co. Inc., Smith Barney Inc. and UBS Securities LLC, the initial purchasers of such Notes being transferred, and you and each of them is entitled to rely on the contents of this certificate. Terms used in this certificate and not otherwise defined in the Indenture have the meanings set forth in Regulation S under the Securities Act. ---------------------------------------- [Insert Name of Transferor] By: ------------------------------------- Name: Title: Dated: --------------------, -- cc: VIVRA Incorporated Alex. Brown & Sons Incorporated Montgomery Securities Bear, Stearns & Co. Inc. Smith Barney Inc. UBS Securities LLC B2-2 88 EXHIBIT B-3 FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER FROM REGULATION S GLOBAL NOTE TO RULE 144A GLOBAL NOTE (Pursuant to Section 2.6(a)(ii) of the Indenture) VIVRA Incorporated 1850 Gateway Drive San Mateo, California 94404-2467 State Street Bank and Trust Company 2 International Place, 4th Floor Boston, Massachusetts 02110 Attention: Corporate Trust Department (VIVRA Incorporated 5% Convertible Subordinated Notes Due 2001) Re: 5% Convertible Subordinated Notes Due 2001 of VIVRA Incorporated Dear Ladies and Gentlemen: Reference is hereby made to the Indenture, dated as of July 8, 1996 (the "Indenture"), among VIVRA Incorporated, as issuer (the "Company") and State Street Bank and Trust Company, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. This letter relates to U.S. $_______ principal amount of Notes which are evidenced by one or more Regulation S Global Notes (CINS No. U92298AA3) and held with the Depositary through [Euroclear] [Cedel Bank] (Common Code 676 1127) in the name of ____________________________ (the "Transferor"). The Transferor has requested a transfer of such beneficial interest in the Notes to a Person who will take delivery thereof in the form of an equal principal amount of Notes evidenced by one or more Rule 144A Global Notes (CUSIP No. 92855MAB0), to be held with the Depositary. In connection with such request and in respect of such Notes, the Transferor hereby certifies that: [CHECK ONE] / / such transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, the Transferor hereby further certifies that the Notes are being transferred to a Person that the Transferor reasonably believes is purchasing the Notes for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A; or / / such transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act; or B3-1 89 Page 2 / / such transfer is being effected pursuant to an effective registration statement under the Securities Act; or / / such transfer is being effected pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A or Rule 144, and the Transferor hereby further certifies that the Notes are being transferred in compliance with the transfer restrictions applicable to the Global Notes and in accordance with the requirements of the exemption claimed, which certification is supported by an Opinion of Counsel, provided by the transferor or the transferee (a copy of which the Transferor has attached to this certification) in form reasonably acceptable to the Company and to the Registrar, to the effect that such transfer is in compliance with the Securities Act; and such Notes are being transferred in compliance with any applicable blue sky securities laws of any state of the United States. Upon giving effect to this request to exchange a beneficial interest in Regulation S Global Notes for a beneficial interest in Rule 144A Global Notes, the resulting beneficial interest shall be subject to the restrictions on transfer applicable to Rule 144A Global Notes pursuant to the Indenture and the Securities Act. This certificate and the statements contained herein are made for your benefit and the benefit of the Company and Alex. Brown & Sons Incorporated, Montgomery Securities, Bear, Stearns & Co. Inc., Smith Barney Inc. and UBS Securities LLC, the initial purchasers of such Notes being transferred, and you and each of them is entitled to rely on the contents of this certificate. Terms used in this certificate and not otherwise defined in the Indenture have the meanings set forth in Regulation S under the Securities Act. ---------------------------------------- [Insert Name of Transferor] By: ------------------------------------- Name: Title: Dated: -----------------, -- cc: VIVRA Incorporated Alex. Brown & Sons Incorporated Montgomery Securities Bear, Stearns & Co. Inc. Smith Barney Inc. UBS Securities LLC B3-2 90 EXHIBIT B-4 FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER OF CERTIFICATED NOTES (Pursuant to Section 2.6(b) of the Indenture) VIVRA Incorporated 1850 Gateway Drive San Mateo, California 94404-2467 State Street Bank and Trust Company 2 International Place, 4th Floor Boston, Massachusetts 02110 Attention: Corporate Trust Department (VIVRA Incorporated 5% Convertible Subordinated Notes Due 2001) Re: 5% Convertible Subordinated Notes Due 2001 of VIVRA Incorporated Dear Ladies and Gentlemen: Reference is hereby made to the Indenture, dated as of July 8, 1996 (the "Indenture"), among VIVRA Incorporated, as issuer (the "Company") and State Street Bank and Trust Company, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. This certificate relates to U.S. $__________ aggregate principal amount of Notes which are held in Certificated Form (CUSIP No. 92855MAC8) in the name of _________________________ (the "Transferor") and is executed in connection with the exchange or transfer of such securities. In connection with such request and in respect of the Notes surrendered to the Trustee herewith for exchange (the "Surrendered Notes"), the Holder of such Surrendered Notes hereby certifies that: [CHECK ONE] / / the Surrendered Notes are being acquired for the Transferor's own account, without transfer; or / / the Surrendered Notes are being transferred to the Company; or / / the Surrendered Notes are being transferred pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, the Transferor hereby further certifies that the Surrendered Notes are being transferred to a Person that the Transferor reasonably believes is purchasing the Surrendered Notes for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A, in each case in a transaction meeting the requirements of Rule 144A; or B4-1 91 Page 2 / / the Surrendered Notes are being transferred in a transaction permitted by Rule 144 under the Securities Act; or / / the Surrendered Notes are being transferred pursuant to an effective registration statement under the Securities Act; or / / such transfer is being effected pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A or Rule 144, and the Transferor hereby further certifies that the Notes are being transferred in compliance with the transfer restrictions applicable to the Global Notes and in accordance with the requirements of the exemption claimed, which certification is supported by an Opinion of Counsel, provided by the transferor or the transferee (a copy of which the Transferor has attached to this certification) in form reasonably acceptable to the Company and to the Registrar, to the effect that such transfer is in compliance with the Securities Act; and the Surrendered Notes are being transferred in compliance with any applicable blue sky securities laws of any state of the United States. This certificate and the statements contained herein are made for your benefit and the benefit of the Company and Alex. Brown & Sons Incorporated, Montgomery Securities, Bear, Stearns & Co. Inc., Smith Barney Inc. and UBS Securities LLC, the initial purchasers of such Notes being transferred and you and each of them is entitled to rely on the contents of this certificate. Terms used in this certificate and not otherwise defined in the Indenture have the meanings set forth in Regulation S under the Securities Act. ---------------------------------------- [Insert Name of Transferor] By: ------------------------------------- Name: Title: Dated: ----------------------, -- cc: VIVRA Incorporated Alex. Brown & Sons Incorporated Montgomery Securities Bear, Stearns & Co. Inc. Smith Barney Inc. UBS Securities LLC B4-2 92 EXHIBIT B-5 FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER FROM RULE 144A GLOBAL NOTE OR REGULATION S PERMANENT GLOBAL NOTE TO CERTIFICATED NOTE (Pursuant to Section 2.6(c) of the Indenture) VIVRA Incorporated 1850 Gateway Drive San Mateo, California 94404-2467 State Street Bank and Trust Company 2 International Place, 4th Floor Boston, Massachusetts 02110 Attention: Corporate Trust Department (VIVRA Incorporated 5% Convertible Subordinated Notes Due 2001) Re: 5% Convertible Subordinated Notes Due 2001 of VIVRA Incorporated Dear Ladies and Gentlemen: Reference is hereby made to the Indenture, dated as of July 8, 1996 (the "Indenture"), among VIVRA Incorporated, as issuer (the "Company") and State Street Bank and Trust Company, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. This letter relates to U.S. $__________ aggregate principal amount of Convertible Notes which are held [in the form of the [Global] [Regulation S] Security (CUSIP No. 92855MAB0 / CINS No. U92298AA3) with the Depositary](1) in the name of [__________] (the "Transferor") to effect the transfer of the Securities. In connection with such request and in respect of the Notes surrendered to the Trustee herewith for exchange (the "Surrendered Notes"), the Holder of such Surrendered Notes hereby certifies that the Notes are being exchanged or transferred in accordance with the transfer restrictions set forth in the Notes and that: [CHECK ONE] / / the Surrendered Notes are being transferred to the beneficial owner of such Notes; or / / the Surrendered Notes are being transferred pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, the Transferor hereby further certifies that the Surrendered Notes are being transferred to a Person that the Transferor reasonably believes is purchasing the Surrendered Notes for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A, in each case in a transaction meeting the requirements of Rule 144A; or / / the Surrendered Notes are being transferred in a transaction permitted by Rule 144 under the Securities Act; or - -------- (1) Insert, if appropriate. B5-1 93 Page 2 / / the Surrendered Notes are being transferred pursuant to an effective registration statement under the Securities Act; or / / such transfer is being effected pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A or Rule 144, and the Transferor hereby further certifies that the Notes are being transferred in compliance with the transfer restrictions applicable to the Global Notes and in accordance with the requirements of the exemption claimed, which certification is supported by an Opinion of Counsel, provided by the transferor or the transferee (a copy of which the Transferor has attached to this certification) in form reasonably acceptable to the Company and to the Registrar, to the effect that such transfer is in compliance with the Securities Act; and the Surrendered Notes are being transferred in compliance with any applicable blue sky securities laws of any state of the United States. [IF TRANSFER OR EXCHANGE FROM REGULATION S PERMANENT GLOBAL NOTE ALSO INCLUDE: 1. We are either not a U.S. person (as defined below) or we have purchased our beneficial interest in the above referenced Regulation S Permanent Global Note in a transaction that is exempt from the registration requirements under the Securities Act. 2. We are delivering this certificate in connection with obtaining a beneficial interest in Certificated Securities in exchange for our beneficial interest in the Regulation S Permanent Global Note. For purposes of this certificate, "U.S. person" means (i) any individual resident in the United States, (ii) any partnership or corporation organized or incorporated under the laws of the United States, (iii) any estate of which an executor or administrator is a U.S. person (other than an estate governed by foreign law and of which at least one executor or administrator is a non-U.S. person who has sole or shared investment discretion with respect to its assets, (iv) any trust of which any trustee is a U.S. person (other than a trust of which at least one trustee is a non-U.S. person who has sole or shared investment discretion with respect to its assets and no beneficiary of the trust (and no settlor if the trust is revocable) is a U.S. person), (v) any agency or branch of a foreign entity located in the United States, (vi) any non-discretionary or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. person, (vii) any discretionary or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated or (if an individual) resident in the United States (other than such an account held for the benefit or account of a non-U.S. person), (viii) any partnership or corporation organized or incorporated under the laws of a foreign jurisdiction and formed by a U.S. person principally for the purpose of investing in securities not registered under the Securities Act (unless it is organized or incorporated, and owned, by accredited investors within the meaning of Rule 501(a) under the Securities Act who are not natural persons, estates or trusts); provided, however, that the term "U.S. person" shall not include (A) a branch or agency of a U.S. person that is located and operating outside the United States for valid business purposes as a locally regulated branch or agency engaged in the banking or insurance business, (B) any employee benefit plan established and administered in accordance with the law, customary practices and documentation of a foreign country and (C) the international organizations set forth in Section 902(o)(7) of Regulation S under the Securities Act and any other similar international organizations, and their agencies, affiliates and pension plans.] This certificate and the statements contained herein are made for your benefit and the benefit of the Company and Alex. Brown & Sons Incorporated, Montgomery Securities, Bear, Stearns & Co. Inc., Smith Barney Inc. and UBS Securities LLC, the initial purchasers of such Notes being transferred and you and each of B5-2 94 Page 3 them is entitled to rely on the contents of this certificate. Terms used in this certificate and not otherwise defined in the Indenture have the meanings set forth in Regulation S under the Securities Act. ---------------------------------------- [Insert Name of Transferor] By: ------------------------------------- Name: Title: Dated: ------------------, -- B5-3 95 EXHIBIT B-6 FORM OF CERTIFICATE FOR TRANSFERS OF REGULATION S TEMPORARY GLOBAL NOTE FOR REGULATION S PERMANENT GLOBAL NOTE (Pursuant to Section 2.1(a) of the Indenture) (to be executed by Transferor) [MORGAN GUARANTY TRUST COMPANY OF NEW YORK, BRUSSELS OFFICE AS OPERATOR OF THE EUROCLEAR SYSTEM] [CEDEL BANK, SOCIETE ANONYME] Re: 5% Convertible Subordinated Notes Due 2001 of VIVRA Incorporated Reference is hereby made to the Indenture dated as of July 8, 1996 (the "Indenture") between VIVRA Incorporated, as Issuer, and State Street Bank and Trust Company, as Trustee. Capitalized terms used but not defined herein shall have the meanings given them in the Indenture. This certificate relates to U.S. $____________ aggregate principal amount of Notes which are held in the form of the Regulation S Temporary Global Note (CINS No. U92298AA3) with the Depositary in the name of [_________________________] (the "Transferor") to effect the transfer of the beneficial interest in such Regulation S Temporary Global Note for a beneficial interest in an equivalent aggregate principal amount of the Regulation S Permanent Global Note. In connection with such request, and in respect of such Notes we confirm that: 1. We are either not a U.S. person (as defined below) or we have purchased our beneficial interest in the above referenced Regulation S Temporary Global Note in a transaction that is exempt from the registration requirements under the Securities Act; and 2. We are delivering this certificate in connection with obtaining a beneficial interest in the Regulation S Permanent Global Note in exchange for our beneficial interest in the Regulation S Temporary Global Note. For purposes of this certificate, "U.S. person" means (i) any individual resident in the United States, (ii) any partnership or corporation organized or incorporated under the laws of the United States, (iii) any estate of which an executor or administrator is a U.S. person (other than an estate governed by foreign law and of which at least one executor or administrator is a non-U.S. person who has sole or shared investment discretion with respect to its assets), (iv) any trust of which any trustee is a U.S. person (other than a trust of which at least one trustee is a non-U.S. person who has sole or shared investment discretion with respect to its assets and no beneficiary of the trust (and no settlor if the trust is revocable) is a U.S. person), (v) any agency or branch of a foreign entity located in the United States, (vi) any non-discretionary or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. person, (vii) any discretionary or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated or (if an individual) resident in the United States (other than such an account held for the benefit or account of a non-U.S. person), (viii) any partnership or corporation organized or incorporated under the laws of a foreign jurisdiction and formed by a U.S. person principally for the purpose of investing in securities not registered under the Securities Act (unless it is organized or incorporated, and owned, by accredited investors within the meaning of Rule 501(a) under the Securities Act who are not natural persons, estates or trusts); provided, however, that the term "U.S. person" shall not include (A) a branch or agency of a U.S. person that is located and operating outside the United States for valid business purposes as a locally regulated branch or agency engaged in the banking or insurance business, (B) any employee benefit plan established and administered in accordance with the law, customary practices and documentation of a foreign country and (C) the international organizations set forth in Section 902(o)(7) of Regulation S under the Securities Act and any other similar international organizations, and their agencies, affiliates and pension plans. B6-1 96 Page 2 We irrevocably authorize you to produce this certificate or a copy hereof to any interested party in any administrative or other proceedings with respect to the matters covered by this certificate. Very truly yours, [TRANSFEROR] By: ------------------------------------- Name: Title: To be completed by the account holder as, or as agent for, the beneficial owner(s) of the Notes to which this certificate relates. Dated: ------------------ cc: VIVRA Incorporated Alex. Brown & Sons Incorporated Montgomery Securities Bear, Stearns & Co. Inc. Smith Barney Inc. UBS Securities LLC B6-2 97 EXHIBIT B-7 FORM OF CERTIFICATE FOR TRANSFERS OF REGULATION S TEMPORARY GLOBAL NOTE FOR REGULATION S PERMANENT GLOBAL NOTE (Pursuant to Section 2.1(a) of the Indenture) (to be executed by Euroclear or Cedel) State Street Bank & Trust Company 2 International Place, 4th Floor Boston, Massachusetts 02110 Attention: Corporate Trust Department (VIVRA Incorporated 5% Convertible Subordinated Notes Due 2001) Re: 5% Convertible Subordinated Notes Due 2001 of VIVRA Incorporated Reference is hereby made to the Indenture dated as of July 8, 1996 (the "Indenture") between VIVRA Incorporated, as Issuer, and State Street Bank and Trust Company, as Trustee. Capitalized terms used but not defined herein shall have the meanings given them in the Indenture. This certificate relates to U.S. $____________ aggregate principal amount of Convertible Notes which are held in the form of the Regulation S Temporary Global Note (CINS No. U92298AA3) with the Depositary to effect the transfer of the beneficial interest in such Regulation S Temporary Global Note for a beneficial interest in an equivalent aggregate principal amount of the Regulation S Permanent Global Note. In connection with such request, this is to certify that, based solely on certificates we have received in writing, by tested telex or by electronic transmission from member organizations appearing in our records as persons being entitled to a portion of the principal amount of the Regulation S Temporary Global Note set forth above (our "Member Organizations") substantially to the effect set forth in the Indenture, U.S. $_________ aggregate principal amount of the Convertible Notes is owned by persons that are not citizens or residents of the United States, domestic partnerships, domestic corporations or any estate or trust the income of which is subject to United States federal income taxation regardless of its source or any other person deemed a "U.S. person" under Regulation S under the Securities Act of 1933, as amended. We further certify (i) that we are not making available herewith for exercise (or if relevant, exercise of any rights of collection of any interest) any portion of the Regulation S Global Note excepted in such certificates and (ii) that, as of the date hereof, we have not received any notification from any of our Member Organizations to the effect that the statements made by such Member Organizations with respect to any portion of the part submitted herewith for exchange (or, if relevant, exercise or any rights of collection of any interest) are no longer true and cannot be relied upon as of the date hereof. B7-1 98 We understand that this certificate is required in connection with certain laws, and, if applicable, certain securities laws of the United States. In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably authorize you to produce this certification to any interested party in such proceedings. Very truly yours, [MORGAN GUARANTY TRUST COMPANY OF NEW YORK, BRUSSELS OFFICE AS OPERATOR OF THE EUROCLEAR SYSTEM] [CEDEL BANK, SOCIETE ANONYME] By: ------------------------------------- Name: Title: cc: VIVRA Incorporated Alex. Brown & Sons Incorporated Montgomery Securities Bear, Stearns & Co. Inc. Smith Barney Inc. UBS Securities LLC B7-2 EX-4.3 3 REGISTRATION RIGHTS AGREEMENT 1 Exhibit 4.3 REGISTRATION RIGHTS AGREEMENT ----------------------------- This Registration Rights Agreement (the "Agreement") is made and entered into as of July 8, 1996, by and among VIVRA Incorporated, a Delaware corporation (the "Company"), Alex. Brown & Sons Incorporated, Montgomery Securities, Bear, Stearns & Co. Inc., Smith Barney Inc. and UBS Securities LLC (the "Initial Purchasers"). This Agreement is made pursuant to the Placement Agreement, dated July 1, 1996 (the "Placement Agreement"), between the Company and the Initial Purchasers. In order to induce the Initial Purchasers to enter into the Placement Agreement, the Company has agreed to provide the registration rights set forth in this Agreement. The execution of this Agreement is a condition to the Closing under the Placement Agreement. The parties hereby agree as follows: 1. Definitions Capitalized terms used herein without definition shall have their respective meanings set forth in the Placement Agreement. As used in this Agreement, the following terms shall have the following meanings: a. Advice: See Section 4(m) hereof. b. Affiliate: "Affiliate" means, with respect to any specified Person, (i) any other Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, such specified Person or (ii) any officer or director of such other Person. For purposes of this definition, the term "control" (including the terms "controlling," "controlled by" and "under common control with") of a Person means the possession, direct or indirect, of the power (whether or not exercised) to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise. c. Common Stock: The shares of common stock, par value $0.01 per share, of the Company issuable or issued upon conversion of the Notes and any Common Stock issued with respect thereto upon any stock dividend, split or similar stock. d. Effectiveness Date: The date that is 180 days after the date of the Closing under the Placement Agreement. e. Effectiveness Period: See Section 2(a) hereof. 2 f. Exchange Act: The Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder. g. Filing Date: The date that is 90 days after the date of the Closing under the Placement Agreement. h. Indenture: The Indenture, dated as of July 8, 1996, between the Company and State Street Bank and Trust Company, as trustee, pursuant to which the Notes are being issued, as amended or supplemented from time to time in accordance with the terms thereof. i. Initial Shelf Registration: See Section 2(a) hereof. j. Losses: See Section 6(a) hereof. k. Notes: The 5% Convertible Subordinated Notes Due 2001 of the Company being issued and sold pursuant to the Placement Agreement and the Indenture. l. Placement Agreement: See the second paragraph of this Agreement. m. Prospectus: The prospectus included in any Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, including, without limitation, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus. n. Initial Purchasers: Alex. Brown & Sons Incorporated, Montgomery Securities, Bear Stearns & Co. Inc., Smith Barney Inc. and UBS Securities LLC. o. Registrable Securities: The Notes and the Common Stock issuable upon conversion of the Notes, upon original issuance thereof and at all times subsequent thereto, until, in the case of any such Note or share of Common Stock, (i) it is effectively registered under the Securities Act and disposed of in accordance with the Registration Statement covering it, (ii) it is saleable by the holder thereof pursuant to Rule 144 or (iii) it is distributed to the public pursuant to Rule 144. p. Registration Expenses: See Section 5 hereof. q. Registration Statement: Any registration statement of the Company which covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such registration statement, 2 3 including post-effective amendments, all exhibits, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement. r. Rule 144: Rule 144 under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC. s. Rule 144A: Rule 144A under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC. t. SEC: The Securities and Exchange Commission. u. Securities Act: The Securities Act of 1933, as amended, and the rules and regulations promulgated by the SEC thereunder. v. Shelf Registration: See Section 2 hereof. w. Special Counsel: Latham & Watkins, or such other special counsel to the Initial Purchasers or the holders of the Registrable Securities as shall be specified by holders of a majority of the Registrable Securities, the fees and expenses of which will be paid by the Company pursuant to Section 5 hereof. x. Subsequent Shelf Registration: See Section 2(b) hereof. y. TIA: The Trust Indenture Act of 1939, as amended. z. Trustee: State Street Bank and Trust Company, as trustee under the Indenture. aa. Underwritten Offering: A registration in which the Registrable Securities are sold to an underwriter or underwriters for reoffering and sale to the public. 2. Shelf Registration (a) Shelf Registration. The Company shall prepare and file with the SEC on or prior to the Filing Date a Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415 covering the resale from time to time by the holders thereof of all of the Registrable Securities (the "Initial Shelf Registration"). The Initial Shelf Registration shall be on Form S-3 or another appropriate form permitting registration of such Registrable Securities for resale by such holders (including one or more underwritten offerings). The Company shall use all reasonable efforts to cause the Initial Shelf Registration to be declared effective under the Securities Act on or prior to the Effectiveness Date and to keep the Initial Shelf Registration continuously effective under the Securities Act until the date that is three years from the last date of issuance of any of the Notes (the "Effectiveness Period"), or such shorter period ending when (i) all Registrable Securities covered by the Initial Shelf Registration have been sold, or (ii) a Subsequent Shelf 3 4 Registration covering all of the Registrable Securities has been declared effective under the Securities Act or (iii) there cease to be outstanding any Registrable Securities. (b) If the Initial Shelf Registration or any Subsequent Shelf Registration ceases to be effective for any reason at any time during the Effectiveness Period (other than because of the sale of all of the securities registered thereunder), the Company shall use all reasonable efforts to obtain the prompt withdrawal of any order suspending the effectiveness thereof, and in any event shall within 30 days of such cessation of effectiveness amend the Shelf Registration in a manner reasonably expected to obtain the withdrawal of the order suspending the effectiveness thereof, or file an additional "shelf" Registration Statement pursuant to Rule 415 covering all of the Registrable Securities (a "Subsequent Shelf Registration"). If a Subsequent Shelf Registration is filed, the Company shall use all reasonable efforts to cause the Subsequent Shelf Registration to be declared effective as soon as practicable after such filing and to keep such Registration Statement continuously effective until the end of the Effectiveness Period. (c) The Company shall supplement and amend the Shelf Registration or Subsequent Shelf Registration, as the case may be, if required by the rules, regulations or instructions applicable to the registration form used by the Company for such Shelf Registration, if required by the Securities Act, or if reasonably requested by the Initial Purchasers or by the Trustee on behalf of the holders of the Registrable Securities covered by such Registration Statement or by any managing underwriter of such Registrable Securities. 3. Liquidated Damages (a) The parties hereto agree that the holders of Registrable Securities will suffer damages and that it would not be feasible to ascertain the extent of such damages with precision, if (i) the Initial Shelf Registration has not been filed on or prior to the Filing Date, (ii) the Initial Shelf Registration has not become effective on or prior to the Effectiveness Date, (iii) prior to the end of the Effectiveness Period, the SEC shall have issued a stop order suspending the effectiveness of any Shelf Registration or proceedings have been initiated under Section 8(d) or 8(e) of the Securities Act, or (iv) a notice under Section 4(c)(v) hereof is delivered and either (A) such notice is delivered during the period from the effective date of the Initial Shelf Registration until 90 days thereafter (the "Initial Resale Period"), (B) the aggregate number of days since the Initial Resale Period for which all notices delivered pursuant to Section 4(c)(v) hereof have been in effect exceeds 90 days or (C) such notice is either the second such notice in any three-month period or the third such notice in any twelve-month period (individually referred to herein as an "Event;" the Filing Date in the case of clause (i), the Effectiveness Date in the case of clause (ii), the date on which the Registration Statement ceases to be effective or proceedings referred to therein have been commenced in the case of clause (iii), and the date on which such notice is delivered in the case of clause (iv)(A) or the date on which the 90-day limit is exceeded in the case of clause (iv)(B) or the date on which the second or third notice, respectively, is delivered in the case of clause (iv)(C), being referred to herein as an "Event Date"). 4 5 Accordingly, upon the occurrence of each Event, in addition to agreeing to use all reasonable efforts to ensure that the use of the Prospectus may be resumed as quickly as practicable, commencing on the Event Date, the Company agrees to pay, as liquidated damages, and not as a penalty, to each holder of a Registrable Security, an additional amount (the "Liquidated Damages Amount") equal to one-half of one percent per annum (50 basis points) per $1,000 principal amount of Notes held by such holder and one-half of one percent per annum (50 basis points) calculated on an amount equal to the product of (x) the Conversion Price (as defined in the Indenture) times (y) the number of shares of Common Stock held by such holder; provided, that such liquidated damages will, in each case, cease to accrue on and after the date the Shelf Registration is filed, becomes effective or resumes effectiveness, or the notice under clause 4(c)(v) is no longer in effect, as the case may be. (b) The Company shall pay the liquidated damages due on the Registrable Securities by depositing with the Trustee under the Indenture, in trust, for the benefit of the holders thereof, at least one business day prior to the applicable interest payment date, sums sufficient to pay the liquidated damages then due. The liquidated damages amount due shall be payable on each interest payment date to the record holder entitled to receive the interest payment to be made on such date, provided that accrued liquidated damages amounts shall be paid on the applicable redemption date upon the redemption of any Note (to the extent accrued with respect to such Note) and, in the event of redemption of all Notes, shall also be paid on such redemption date to the holders of Common Stock (to the extent accrued with respect to such Common Stock). The Trustee shall be entitled, on behalf of the holders of Registrable Securities, to seek any available remedy for the enforcement of this Agreement, including for the payment of such liquidated damages. All of the Company's obligations set forth in this Section 3 which are outstanding with respect to any Registrable Securities at the time such security ceases to be a Registrable Security shall survive until such time as all such obligations with respect to such security have been satisfied in full (notwithstanding termination of the Agreement pursuant to Section 8(o). (c) The parties hereto agree that the liquidated damages provided for in this Section 3 constitute a reasonable estimate of the damages that may be incurred by holders of Registrable Securities (other than the Initial Purchasers) by reason of the failure of the Shelf Registration to be filed, be declared effective or be available for use, as the case may be, in accordance with the provisions hereof. 4. Registration Procedures In connection with the Company's registration obligations under Section 2 hereof, the Company shall effect such registrations to permit the sale of the Registrable Securities in accordance with the method or methods of disposition thereof intended by the holders of such Registrable Securities (including one or more Underwritten Offerings), and pursuant thereto the Company shall as expeditiously as possible: 5 6 (a) Prepare and file with the SEC a Registration Statement or Registration Statements on any appropriate form under the Securities Act available for the sale of the Registrable Securities by the holders thereof in accordance with the intended method or methods of distribution thereof, and cause each such Registration Statement to become effective and remain effective as provided herein; provided, that before filing any such Registration Statement or Prospectus or any amendments or supplements thereto (other than documents that would be incorporated or deemed to be incorporated therein by reference and that the Company is required by applicable securities laws or stock exchange requirements to file) the Company shall furnish to the holders of the Registrable Securities covered by such Registration Statement, the Initial Purchasers and the Special Counsel, copies of all such documents proposed to be filed, which documents will be subject to the review of such holders and the Special Counsel, and the Company shall not file any such Registration Statement or amendment thereto or any Prospectus or any supplement thereto (other than such documents which, upon filing, would be incorporated or deemed to be incorporated by reference therein and that the Company is required by applicable securities laws or stock exchange requirements to file) to which the holders of a majority in aggregate principal amount of the Registrable Securities covered by such Registration Statement, the Initial Purchasers or the Special Counsel shall reasonably object on a timely basis. (b) Prepare and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary to keep such Registration Statement continuously effective for the applicable period specified in Section 2; cause the related Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) under the Securities Act; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the methods of disposition intended by the holders thereof set forth in such Registration Statement as so amended or to such Prospectus as so supplemented. (c) Notify the selling holders of Registrable Securities, the Initial Purchasers and the Special Counsel promptly, and (if requested by any such Person) confirm such notice in writing, (i) when a Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the SEC or any other federal or state governmental authority during the period of effectiveness of the Registration Statement for amendments or supplements to a Registration Statement or related Prospectus or for additional information, (iii) of the issuance by the SEC or any other federal or state governmental authority of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, (v) of the existence of any fact or the happening of any event which makes any statement made in such Registration Statement or related Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or which requires the making of any 6 7 changes in such Registration Statement, Prospectus or documents so that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the Prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and (vi) of the Company's reasonable determination that a post-effective amendment to a Registration Statement would be appropriate. (d) Use all reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement, or the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest possible moment. (e) Subject to the last paragraph of this Section 4, if reasonably requested by the Initial Purchasers or the holders of a majority in aggregate principal amount of the Registrable Securities being sold, (i) promptly incorporate in a Prospectus supplement or post-effective amendment such information as the Company, the Initial Purchasers or such holders agree should be included therein as required by applicable law, (ii) make all required filings of such Prospectus supplement or such post-effective amendment as soon as practicable after the Company has received notification of the matters to be incorporated in such Prospectus supplement or post-effective amendment, and (iii) supplement or make amendments to any Registration Statement consistent with clause (i) or (ii) above; provided, that the Company shall not be required to take any actions under this Section 4(e) that are not, in the opinion of outside counsel for the Company, in compliance with applicable law. (f) Furnish to each selling holder of Registrable Securities, the Initial Purchasers and the Special Counsel, without charge, at least one conformed copy of the Registration Statement or Statements and any post-effective amendment thereto, including financial statements (but excluding schedules, all documents incorporated or deemed to be incorporated therein by reference and all exhibits, unless requested in writing by such holder, the Initial Purchasers or counsel). (g) Deliver to each selling holder of Registrable Securities, the Initial Purchasers and the Special Counsel, without charge, as many copies of the Prospectus or Prospectuses relating to such Registrable Securities (including each preliminary prospectus) and any amendment or supplement thereto as such Persons may reasonably request; and the Company hereby consents to the use of such Prospectus or each amendment or supplement thereto by each of the selling holders of Registrable Securities in connection with the offering and sale of the Registrable Securities covered by such Prospectus or any amendment or supplement thereto. (h) Prior to any public offering of Registrable Securities, to register or qualify or cooperate with the selling holders of Registrable Securities and their respective counsel in connection with the registration or qualification (or exemption from such 7 8 registration or qualification) of such Registrable Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United States as any seller reasonably requests in writing; keep each such registration or qualification (or exemption therefrom) effective during the period such Registration Statement is required to be kept effective and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by the applicable Registration Statement; provided, that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it is not then so qualified or (ii) take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject. (i) Cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities within the United States, except as may be required solely as a consequence of the nature of such selling holder, in which case the Company will cooperate in all reasonable respects with the filing of such Registration Statement and the granting of such approvals, as may be necessary to enable the seller or sellers thereof to consummate the disposition of such Registrable Securities. (j) Upon the occurrence of any event contemplated by Section 4(c)(v) or 4(c)(vi) above, prepare a supplement or post-effective amendment to each Registration Statement or a supplement to the related Prospectus or any document incorporated therein by reference or file any other required document (such as Current Report on Form 8-K) so that, as thereafter delivered to the purchasers of the Registrable Securities being sold thereunder, such Prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (k) If necessary in connection with a disposition of Registrable Securities, make available for inspection, at the offices where normally kept during reasonable business hours, by a representative of the holders of Registrable Securities being sold or by any Managing Underwriter participating in any disposition of the Registrable Securities, if any, and any attorney or accountant retained by such selling holders or Managing Underwriters, financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries as they may reasonably request, and cause the officers, directors and employees of the Company and its subsidiaries to supply all information reasonably requested by any such representative, managing underwriter, attorney or accountant in connection with such disposition; provided, that any records, information or documents that are designated by the Company in writing as confidential at the time of delivery of such records, information or documents shall be kept confidential by such Persons, and such Persons shall so agree in writing, unless (i) such records, information or documents are in the public domain or otherwise publicly available, (ii) disclosure of such records, information or documents is required by court or administrative order or is necessary to respond to inquiries of regulatory authorities or (iii) disclosure of such records, information or documents is 8 9 otherwise required by law (including, without limitation, pursuant to the requirements of the Securities Act). (l) Cause the Indenture to be qualified under the TIA not later than the effective date of the first Registration Statement relating to the Registrable Securities; and in connection therewith, cooperate with the Trustee and the holders of the Registrable Securities, to effect such changes to the Indenture as may be required for such Indenture to be so qualified in accordance with the terms of the TIA; and execute, and use all reasonable efforts to cause such Trustee to execute, all documents as may be required to effect such changes, and all other forms and documents required to be filed with the SEC to enable the Indenture to be so qualified in a timely manner. (m) Comply with all applicable rules and regulations of the SEC and make generally available to its security holders earning statements satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar rule promulgated under the Securities Act) no later than 45 days after the end of any 12-month period (or 90 days after the end of any 12-month period if such period is a fiscal year) commencing on the first day of the first fiscal quarter of the Company, after the effective date of a Registration Statement, which statements shall cover said 12-month periods. (n) Enter into such agreements (including, in the event of an Underwritten Offering, an underwriting agreement in form, scope and substance as is customary in Underwritten Offerings) and take all such other actions in connection therewith (including, in the event of an underwritten offering, those reasonably requested by the managing underwriters, if any, or the holders of a majority of the Registrable Securities being sold) in order to expedite or facilitate the disposition of such Registrable Securities and in such connection, whether or not an underwriting agreement is entered into, and if the registration is an underwritten registration, (i) make such representations and warranties, subject to the Company's ability to do so, to the holders of such Registrable Securities and the underwriters with respect to the business of the Company and its subsidiaries, the Registration Statement, Prospectus and documents incorporated by reference or deemed incorporated by reference, if any, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings and confirm the same if and when requested; (ii) use its reasonable efforts to obtain opinions of counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the managing underwriters, if any, Special Counsel and the holders of a majority of the Registrable Securities being sold) addressed to each of the underwriters covering the matters customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such Special Counsel and managing underwriters; (iii) use its reasonable efforts to obtain "cold comfort" letters and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other certified public accountants of any subsidiary of the Company or any business acquired or to be acquired by the Company for which financial statements and financial date is, or is required to be, included in the Registration Statement), addressed to each of the managing underwriters, if any, such letters to be in customary form and covering 9 10 matters of the type customarily covered in "cold comfort" letters in connection with Underwritten Offerings; and (iv) deliver such documents and certificates as may be reasonably requested by the holders of a majority of the Registrable Securities being sold, the Special Counsel and the managing underwriters, if any, to evidence the continued validity of the representations and warranties of the Company and its subsidiaries made pursuant to clause (i) above and to evidence compliance with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company. The above shall be done at each closing under such underwriting or similar agreement as and to the extent required thereunder. (o) Unless any Registrable Securities shall be in book-entry only form, cooperate with the selling holders of Registrable Securities to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends; and enable such Registrable Securities to be in such denominations and registered in such names as the holders may request. (p) Provide a CUSIP number for all Registrable Securities no later than the effective date of the Registration Statement and, unless any Registrable Securities shall be in book-entry only form, provide the Trustee under the Indenture and the transfer agent for the Common Stock with printed certificates for the Registrable Securities which are in a form eligible for deposit with The Depository Trust Company. (q) Cause the Common Stock to be listed on each securities exchange or quotation system on which the Company's Common Stock is then listed no later than the date the Registration Statement is declared effective and, in connection therewith, to the extent applicable, to make such filings under the Exchange Act and to have such filings declared effective thereunder. The Company may require each selling holder of Registrable Securities as to which any registration is being effected, and such selling holder of Registrable Securities agrees, to furnish to the Company such information regarding the distribution of such Registrable Securities as the Company may, from time to time, reasonably request in writing and the Company may exclude from such registration the Registrable Securities of any seller who unreasonably fails to furnish such information within a reasonable time after receiving such request. Each Holder of Registrable Securities as to which any Registration Statement is being effected agrees promptly to furnish to the Company all information required to be disclosed in order to make the information previously furnished to the Company by such Holder not misleading. Any sale of any Registrable Securities by any Holder shall constitute a representation and warranty by such Holder that the information relating to such Holder and its plan of distribution is as set forth in the Prospectus delivered by such Holder in connection with such disposition, that such Prospectus does not as of the time of such sale contain any untrue statement of a material fact relating to such Holder or its plan of distribution and that such Prospectus does not as of the time of such sale omit to state any material fact relating to such Holder or its plan of distribution necessary to make the statement in such Prospectus, in light of the circumstances under which they were made, not misleading. 10 11 Each holder of Registrable Securities agrees by acquisition of such Registrable Securities that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 4(c)(ii), 4(c)(iii), 4(c)(iv), 4(c)(v) or 4(c)(vi) hereof, such holder will forthwith discontinue disposition of such Registrable Securities covered by the applicable Registration Statement or Prospectus until such holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 4(j) hereof, or until it is advised in writing (the "Advice") by the Company that the use of the applicable Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus. 5. Registration Expenses All fees and expenses incident to the performance of or compliance with this Agreement by the Company shall be borne by the Company whether or not any of the Registration Statements become effective and whether or not any of the Registrable Securities are transferred pursuant to the Registration Statement. Such fees and expenses shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with the National Association of Securities Dealers, Inc., (B) with respect to designation of the Registrable Securities as eligible for trading on the Private Offerings, Resales and Trading through Automated Linkages ("PORTAL") market or on the New York Stock Exchange, and (C) of compliance with securities or Blue Sky laws (including, without limitation, reasonable fees and disbursements of counsel for selling holders of Registerable Securities in connection with Blue Sky qualifications of the Registrable Securities and determination of the eligibility of the Registrable Securities for investment under the laws of such jurisdictions as the holders of a majority in aggregate principal amount of the Registrable Securities being sold may designate), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities in a form eligible for deposit with The Depository Trust Company and of printing Prospectuses if the printing of Prospectuses is requested by the Special Counsel or the holders of a majority in aggregate principal amount of the Registrable Securities included in any Registration Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company and the Special Counsel for the selling holders of Registrable Securities or the Initial Purchasers in connection with the Shelf Registration (provided that the Company shall not be liable for the reasonable fees and expenses of more than one separate firm for all parties participating in any transaction hereunder), (v) fees and disbursements of all independent certified public accountants, (vi) fees and expenses of any qualified independent underwriter or other independent appraiser participating in an offering pursuant to Section 3 of Schedule E to the Bylaws of the National Association of Securities Dealers, Inc., (vii) rating agency fees in connection with obtaining ratings of the Notes at the time of their original issuance, (viii) Securities Act liability insurance if the Company so desires such insurance, and (ix) fees and expenses of all other Persons retained by the Company. In addition, the Company will, in any event, bear its own internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit, the fees and expenses incurred in connection with the listing of the Registrable Securities on any 11 12 securities exchange on which similar securities issued by the Company are then listed and the fees and expenses of any Person, including special experts, retained by the Company. 6. Indemnification (a) Indemnification by the Company. The Company shall, without limitation as to time, indemnify and hold harmless, to the fullest extent permitted by law, each holder of Registrable Securities, the officers, directors and agents and employees of each of them, each Person who, controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) such holder and the officers, directors, agents and employees of any such controlling person, from and against all losses, claims, damages, liabilities, costs (including, without limitation, the costs of preparation and attorneys' fees) and expenses (collectively, "Losses"), as incurred, arising out of or based upon any untrue or allegedly untrue statement of a material fact contained in any Registration Statement, Prospectus or form of Prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or based upon any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are based solely upon information furnished in writing to the Company by such holder expressly for use therein; provided, that the Company shall not be liable to any holder of Registrable Securities to the extent that any such Losses arise out of or are based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any preliminary prospectus if either (A) (i) such holder failed to send or deliver a copy of the Prospectus with or prior to the delivery of written confirmation of the sale by such holder of a Registrable Security to the person asserting the claim from which such Losses arise and (ii) the Prospectus would have completely corrected such untrue statement or alleged untrue statement or such omission or alleged omission; or (B) (x) such untrue statement or alleged untrue statement, omission or alleged omission is completely corrected in an amendment or supplement to the Prospectus and (y) having previously been furnished by or on behalf of the Company with copies of the Prospectus as so amended or supplemented, such holder thereafter fails to deliver such Prospectus as so amended or supplemented, prior to or concurrently with the sale of a Registrable Security to the person asserting the claim from which such Losses arise. The Company shall also indemnify each selling broker, dealer manager and similar securities industry professional participating in the distribution, and each of their officers, directors, agents and employees and each Person who controls such Persons (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) to the same extent as provided above with respect to the indemnification of the holders of Registrable Securities. (b) Indemnification by Holder of Registrable Securities. In connection with any Registration Statement in which a holder of Registrable Securities is participating, such holder agrees to indemnify, to the fullest extent permitted by law, the Company, its directors and officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling persons, from and against all Losses arising out of or based upon any untrue statement of a material 12 13 fact contained in any Registration Statement, Prospectus or preliminary prospectus or arising out of or based upon any omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, to the extent, but only to the extent, that such untrue statement or omission is contained in information so furnished in writing by such holder to the Company expressly for use in such Registration Statement or Prospectus and that such information was solely relied upon by the Company in preparation of such Registration Statement, Prospectus or preliminary prospectus. In no event shall the liability of any selling holder of Registrable Securities hereunder be greater in amount than the dollar amount of the proceeds (net of payment of all expenses) received by such holder upon the sale of the Registrable Securities giving rise to such indemnification obligation. The Company shall be entitled to receive indemnities from selling brokers, dealer managers and similar securities industry professionals participating in the distribution to the same extent as provided above with respect to information so furnished in writing by such Persons expressly for use in any Prospectus or Registration Statement. (c) Conduct of Indemnification Proceedings. If any Person shall be entitled to indemnity hereunder (an "indemnified party"), such indemnified party shall give prompt notice to the party from which such indemnity is sought (the "indemnifying party") of any claim or of the commencement of any Proceeding with respect to which such indemnified party seeks indemnification or contribution pursuant hereto; and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the reasonable fees and disbursements of such counsel related to such proceeding. The failure to so notify the indemnifying party shall not relieve the indemnifying party from any obligation or liability except and only to the extent that such failure was prejudicial to the indemnifying party and the indemnifying party was actually damaged or suffered any loss incurred any additional expense as a result thereof. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for (a) the fees and expenses of more than one separate firm (in additional to any local counsel) for all Holders and all persons, if any, who control any Holder within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, and (b) the fees and expenses of more than one separate firm (in addition to any local counsel) for the Company, its directors, its officers who sign a Registration Statement and each person, if any, who controls the Company within the meaning of either such Section, and that all such fees and expenses shall be reimbursed as they are incurred. In the case of any such separate firm for the Company, and such directors, officers and control persons of the Company, such firm shall be designated in writing by the Company. The indemnifying party shall not be liable for any settlement of any proceeding 13 14 affected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the indemnifying party agrees that it shall be liable or any settlement of any proceeding affected without its written consent if (i) such settlement is entered into more than 30 days after receipt of such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. The indemnifying party shall not consent to entry of any judgment or enter into any settlement or otherwise seek to terminate any proceeding in which any indemnified party is or could be a party and as to which indemnification or contribution could be sought by such indemnified party under this Section 6, unless such judgment, settlement or other termination includes as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release, in form and substance satisfactory to the indemnified party, from all liability in respect of such claim or litigation for which such indemnified party would be entitled to indemnification hereunder. (d) Contribution. If the indemnification provided for in this Section 6 is unavailable to an indemnified party under Section 6(a) or 6(b) hereof in respect of any Losses or is insufficient to hold such indemnified party harmless, then each applicable indemnifying party, in lieu of indemnifying such indemnified party, shall, jointly and severally, contribute to the amount paid or payable by such indemnified party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the indemnifying party or indemnifying parties, on the one hand, and such indemnified party, on the other hand, in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such indemnifying party or indemnifying parties, on the one hand, and such indemnified party, on the other hand, shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such indemnifying party or indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include any legal or other fees or expenses incurred by such party in connection with any Proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provision of this Section 6(d), an indemnifying party that is a selling holder of Registrable Securities shall not be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities sold by such indemnifying party and distributed to the public 14 15 were offered to the public exceeds the amount of any damages which such indemnifying party has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. The indemnity, contribution and expense reimbursement obligations of the Company hereunder shall be in addition to any liability the Company may otherwise have hereunder, under the Purchase Agreement, the Securities Act or otherwise. The provisions of this Section 6 shall survive so long as Registrable Securities remain outstanding, notwithstanding any transfer of the Registrable Securities by any holder or any termination of this Agreement. 7. Information Requirements (a) The Company shall file in a timely manner the reports required to be filed by it under the Securities Act and the Exchange Act, and if at any time the Company is not required to file such reports, it will, upon the request of any holder of Registrable Securities, make publicly available other information so long as necessary to permit sales pursuant to Rule 144 and Rule 144A under the Securities Act. The Company further covenants that it will cooperate with any holder of Registrable Securities and take such further action as any holder of Registrable Securities may reasonably request (including without limitation making such representations as any such holder may reasonably request), all to the extent required from time to time to enable such holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 and Rule 144A under the Securities Act. Upon the request of any holder of Registrable Securities, the Company shall deliver to such holder a written statement as to whether it has complied with such filing requirements. Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to require the Company to register any of its securities under any section of the Exchange Act. (b) The Company shall file in a timely manner the reports required to be filed by it under the Exchange Act and shall comply with all other requirements set forth in the instructions to Form S-3 in order to allow the Company to be eligible to file registration statements on Form S-3 after July 1, 1996. 8. Miscellaneous (a) Remedies. In the event of a breach by the Company of its obligations under this Agreement, each holder of Registrable Securities, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the 15 16 event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate. (b) No Inconsistent Agreements. The Company has not, as of the date hereof, and shall not, on or after the date of this Agreement, enter into any agreement with respect to its securities which is inconsistent with the rights granted to the holders of Registrable Securities in this Agreement. (c) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended (other than the last sentence of Section 8(g)), modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of the holders of a majority of the then outstanding Common Stock constituting Registrable Securities (with holders of Notes deemed to be the holders for purposes of this Section 8(c), of the number of outstanding shares of Common Stock into which such Notes are then convertible). Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of holders of Registrable Securities whose securities are being sold pursuant to a Registration Statement and that does not directly or indirectly affect the rights of other holders of Registrable Securities may be given by holders of at least a majority of the Registrable Securities being sold by such holders; provided, that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the immediately preceding sentence. (d) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing and shall be deemed given (i) when made, if made by hand delivery, (ii) upon confirmation, if made by telecopier or (iii) one business day after being deposited with a reputable next-day courier, postage prepaid, to the parties as follows: (x) if to a holder of Registrable Securities, at the most current address given by such holder to the Company in accordance with the provisions of this Section 8(d); and (y) if to the Company, to VIVRA Incorporated, 1850 Gateway Drive, Suite 500, San Mateo, California 94404, Attention: Chief Financial Officer. or to such other address as any party may have furnished to the other parties in writing in accordance herewith. (e) Owner of Registrable Securities. The Company will maintain, or will cause its registrar and transfer agent to maintain, a register with respect to the Registrable Securities in which all transfers of Registrable Securities of which the Company has received notice will be recorded. The Company may deem and treat the person in whose name 16 17 Registrable Securities are registered in such register of the Company as the owner thereof for all purposes, including, without limitation, the giving of notices under this Agreement. (f) Approval of Holders. Whenever the consent or approval of holders of a specified percentage of Registrable Securities is required hereunder, Registrable Securities held by the Company or its affiliates (as such term is defined in Rule 405 under the Securities Act) (other than the Initial Purchasers or subsequent holders of Registrable Securities if such subsequent holders are deemed to be such affiliates solely by reason of their holdings of such Registrable Securities) shall not be counted in determining whether such consent or approval was given by the holders of such required percentage. For purposes of calculating the consent or approval of holders of a majority of the then outstanding aggregate principal amount of Registrable Securities, Registrable Securities which have been converted into shares of Common Stock shall be deemed to bear the principal amount at which such securities were converted. (g) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each holder of any Registrable Securities. The Company may not assign its rights or obligations hereunder without the prior written consent of each holder of any Registrable Securities. (h) 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. (i) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (j) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF CALIFORNIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. (k) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such which may be hereafter declared invalid, void or unenforceable. 17 18 (l) Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and is 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 and the registration rights granted by the Company with respect to the Notes sold pursuant to the Placement Agreement and the Common Stock issuable upon conversion of the Notes. Except as provided in the Placement Agreement, there are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein, with respect to the registration rights granted by the Company with respect to the Notes or the Common Stock issuable upon conversion of the Notes. This Agreement supersedes all prior agreements and understandings among the parties with respect to such registration rights. (m) Attorneys' Fees. In any action or proceeding brought to enforce any provision of this Agreement, or where any provision hereof is validly asserted as a defense, the prevailing party, as determined by the court, shall be entitled to recover reasonable attorneys' fees in addition to any other available remedy. (n) Further Assurances. Each of the parties hereto shall use all reasonable efforts to take, or cause to be taken, all appropriate action, do or cause to be done all things reasonably necessary, proper or advisable under applicable law, and execute and deliver such documents and other papers, as may be required to carry out the provisions of this Agreement and the other documents contemplated hereby and consummate and make effective the transactions contemplated hereby. (o) Termination. This Agreement and the obligations of the parties hereunder shall terminate at the end of the Effectiveness Period, except for any liabilities or obligations under Sections 5 or 6 or the proviso of Section 4(k) above, and the obligations to make payments of and provide for liquidated damages under Section 3 hereof to the extent such damages accrue prior to the end of the Effectiveness Period, each of which shall remain in effect in accordance with their terms. 18 19 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. VIVRA INCORPORATED By: /s/ LeAnne Zumwalt --------------------------------------- Name: LeAnne Zumwalt Title: Chief Financial Officer, Treasurer and Secretary ALEX. BROWN & SONS INCORPORATED By: /s/ James P. Scopa --------------------------------------- Title: Managing Director MONTGOMERY SECURITIES By: /s/ Richard A. Smith --------------------------------------- Title: Managing Director BEAR, STEARNS & CO. INC. By: /s/ Robert A. Yedid --------------------------------------- Title: Managing Director SMITH BARNEY INC. By: /s/ Benjamin D. Lorello --------------------------------------- Title: Managing Director UBS SECURITIES LLC By: /s/ Donald M. McGuire --------------------------------------- Title: Vice President 19 EX-5.1 4 OPINION AND CONSENT OF GENERAL COUNSEL 1 EXHIBIT 5.1 October 4, 1996 Vivra Incorporated 1850 Gateway Drive, Suite 500 San Mateo, California 94404 Re: Registration Statement on Form S-3 Ladies and Gentlemen: I am general counsel of Vivra Incorporated, a Delaware corporation (the "Company"), and have advised the Company in connection with the registration under the Securities Act of 1933, as amended, of $158,545,000 aggregate principal amount of 5% Convertible Subordinated Promissory Notes Due 2001 (the "Notes"), together with 4,261,962 shares of Common Stock, par value of $.01 per share, of the Company, into which such Notes are convertible (the "Conversion Shares"), which are to be offered and sold by certain selling securityholders (the "Selling Securityholders"). In this regard I have participated in the preparation of a Registration Statement on Form S-3 relating to the Notes and the Conversion Shares (the "Registration Statement"). I am of the opinion that the Notes have been duly authorized, are binding obligations of the Company and have been legally issued, and are fully paid and nonassessable. I am of the further opinion that the Conversion Shares have been duly authorized, and when issued by the Company in the manner described in the Registration Statement and in accordance with the resolutions adopted by the Board of Directors of the Company, will be legally issued, fully paid and nonassessable. I hereby consent to the filing of this opinion as Exhibit 5.1 to the Registration Statement and to the use of my name under the caption "Legal Matters" in the Prospectus included therein. Very truly yours, Charles W. Ott EX-12 5 COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES 1 EXHIBIT 12 COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
Six Months Year Ended November 30, Ended May 31, -------------------------------------------------------------- ------------------ 1995 1994 1993 1992 1991 1996 1995 ---- ---- ---- ---- ---- ---- ---- Pre-tax earnings.......................... $ 63,244 $ 51,165 $ 42,027 $ 32,182 $ 24,649 $ 38,359 $ 30,643 Interest.................................. 483 606 1,016 872 700 129 354 Interest on rental expense(1)............. 3,540 2,670 2,160 1,410 1,140 1,875 1,947 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Total earnings and fixed charges..... 67,267 54,441 45,203 34,464 26,489 40,363 32,944 Interest.................................. 483 606 1,016 872 700 129 354 Interest on rental expense(1)............. 3,540 2,670 2,160 1,410 1,140 1,875 1,947 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Total fixed charges.................. 4,023 3,276 3,176 2,282 1,840 2,004 2,301 Ratio of Earnings to Fixed Charges........ 16.7 16.6 14.2 15.1 14.4 20.1 14.3 ========== ========== ========== ========== ========== ========== ==========
- ---------- (1) Represents such portion of rental expense which is representative of interest. EX-23.2 6 CONSENT OF INDEPENDENT AUDITORS 1 EXHIBIT 23.2 CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" in the Registration Statement (Form S-3 No. 333-_______) and related Prospectus of Vivra Incorporated for the registration of $158,545,000 aggregate principal amount of 5% Convertible Subordinated Promissory Notes Due 2001, together with 4,261,962 shares of Common Stock, par value $.01 per share, of the Company, into which such Notes are convertible, and to the incorporation by reference therein of our following reports: (1) our report dated June 7, 1996 with respect to the consolidated financial statements and schedule of Vivra Incorporated included in its Current Report on Form 8-K dated June 13, 1996; (2) our report dated September 20, 1996 with respect to the supplemental consolidated financial statements and schedule of Vivra Incorporated included in its Current Report on Form 8-K dated September 24, 1996; (3) our report dated May 9, 1996 with respect to the combined financial statements of Portsmouth Medical Specialists, Inc. and Churchland Renal Center Inc. appearing in the Company's Current Report on Form 8-K dated September 24, 1996; and (4) our report dated May 31, 1996 with respect to the financial statements of Cooper, Moody, Altschuler, Chizner, Dennis and Niederman, P.A. d/b/a The Greater Ft. Lauderdale Heart Group, appearing in the Company's Current Report on Form 8-K dated September 24, 1996. ERNST & YOUNG LLP Los Angeles, California October 2, 1996 EX-23.3 7 CONSENT OF INDEPENDENT AUDITORS 1 EXHIBIT 23.3 CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" and to the incorporation by reference of our report dated April 17, 1996, with respect to the financial statements of Kidney Centers of Charleston, Inc. appearing in the Company's Report on Form 8-K dated May 1, 1996, incorporated by reference in the Registration Statement (Form S-3 No. 333-_____) and related Prospectus of Vivra Incorporated for the registration of $158,545,000 aggregate principal amount of 5% Convertible Subordinated Promissory Notes Due 2001, together with 4,261,962 shares of Common Stock, par value $.01 per share, of the Company, into which such Notes are convertible. PRATT-THOMAS, GUMB & CO., P.A. Charleston, South Carolina October 4, 1996 EX-23.4 8 CONSENT OF INDEPENDENT AUDITORS 1 EXHIBIT 23.4 CONSENT OF INDEPENDENT AUDITORS As independent certified public accountants, we hereby consent to the incorporation by reference in this Form S-3 registration statement of our report dated April 26, 1996 on the combined financial statements of Brennan, Martell and Mirmelli, M.D.'s, P.A. and Allergy and Asthma Institute of South Florida, P.A. for the year ended February 29, 1996 included in Vivra Incorporated's Form 8-K and to all references to our Firm included in this registration statement. ARTHUR ANDERSEN LLP Miami, Florida October 4, 1996 -----END PRIVACY-ENHANCED MESSAGE-----