0000950103-01-501450.txt : 20011026
0000950103-01-501450.hdr.sgml : 20011026
ACCESSION NUMBER: 0000950103-01-501450
CONFORMED SUBMISSION TYPE: S-3
PUBLIC DOCUMENT COUNT: 8
FILED AS OF DATE: 20011019
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: LABORATORY CORP OF AMERICA HOLDINGS
CENTRAL INDEX KEY: 0000920148
STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MEDICAL LABORATORIES [8071]
IRS NUMBER: 133757370
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: S-3
SEC ACT: 1933 Act
SEC FILE NUMBER: 333-71896
FILM NUMBER: 1762500
BUSINESS ADDRESS:
STREET 1: 358 S MAIN ST
CITY: BURLINGTON
STATE: NC
ZIP: 27215
BUSINESS PHONE: 3362291127
MAIL ADDRESS:
STREET 1: 358 S MAIN ST
CITY: BURLINGTON
STATE: NC
ZIP: 27215
FORMER COMPANY:
FORMER CONFORMED NAME: NATIONAL HEALTH LABORATORIES HOLDINGS INC
DATE OF NAME CHANGE: 19940314
S-3
1
oct1901_s3.txt
As filed with the Securities and Exchange Commission on October 19, 2001
Registration No. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------
LABORATORY CORPORATION OF AMERICA HOLDINGS
(Exact Name of Registrant as Specified in Its Charter)
Delaware 13-3757370
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
358 South Main Street
Burlington, NC 27215
(336) 229-1127
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
Bradford T. Smith
Executive Vice President,
Chief Legal Counsel and Secretary
Laboratory Corporation of America Holdings
358 South Main Street
Burlington, NC 27215
(336) 229-1127
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copy to:
Deanna Kirkpatrick
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
(212) 450-4000
Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities 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 Amount to be Offering Price Aggregate Offering Amount of
of Securities to be Registered Registered(1) Per Unit(2) Price(2) Registration Fee
------------------------------------------------------------------------------------------------------------------------------------
Liquid Yield Option(TM)Notes
due 2021 ("LYONs") (Zero Coupon
- Subordinated)....................... $744,000,000 $731.88 $544,518,720 $136,130
------------------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $0.10 per share (3) (3) (3) (4)
====================================================================================================================================
(TM) Trademark of Merrill Lynch & Co., Inc.
(1) The LYONs were issued at an original price of $671.65 per $1,000
principal amount at maturity, representing an aggregate initial issue
price of $436,572,500 and an aggregate principal amount at maturity of
$650,000,000. An additional $94,000,000 aggregate principal amount at
maturity of the LYONs was issued pursuant to the exercise in full by
Merrill Lynch, Pierce, Fenner & Smith Incorporated of its over-allotment
option.
(2) This estimate is made pursuant to Rule 457(c) of the Securities Act
solely for the purpose of calculating the registration fee. The above
calculation is based on the average of the bid and asked prices for the
LYONs in the PORTAL System on October 17, 2001.
(3) This includes 4,988,817 shares of common stock issuable upon conversion
of the LYONs at the conversion rate of 6.7054 shares per $1,000 principal
amount at maturity. Pursuant to Rule 416 of the Securities Act, such
number of shares of common stock registered hereby shall include an
indeterminate number of shares of common stock that may be issued in
connection with a stock split, stock dividend, recapitalization or
similar event.
(4) Pursuant to Rule 457(i) of the Securities Act, there is no additional
filing fee with respect to the shares of common stock issuable upon
conversion of the LYONs because no additional consideration will be
received in connection with the exercise of the conversion privilege.
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.
===============================================================================
The information in this prospectus is not complete and may be changed. The
selling securityholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
SUBJECT TO COMPLETION, DATED OCTOBER 19, 2001
PROSPECTUS
LABORATORY CORPORATION OF AMERICA HOLDINGS
$744,000,000
Aggregate Principal Amount at Maturity of
Liquid Yield Option(TM) Notes due 2021
(Zero Coupon - Subordinated) and
Common Stock issuable upon
Conversion or Purchase of the LYONs
-----------------------
The Offering:
We issued $650,000,000 aggregate principal amount at maturity of the LYONs
in a private placement in September 2001 at an issue price of $671.65 per LYON
(67.165% of the principal amount at maturity). An additional $94,000,000
aggregate principal amount at maturity of the LYONs was issued in October 2001
pursuant to the exercise in full by the initial purchaser of its over-allotment
option. Selling securityholders will use this prospectus to resell their LYONs
and the shares of common stock issuable upon conversion or purchase by us of
their LYONs. We will not pay interest on the LYONs prior to maturity unless
contingent cash interest becomes payable as described below. Instead, on
September 11, 2021, the maturity date of the LYONs, for each LYON, a holder
will receive $1,000 plus contingent additional principal (and accrued original
issue discount thereon), if any, as described below. The issue price of the
LYONs represents a yield to maturity of 2.0% per year, calculated from
September 11, 2001, assuming contingent cash interest is not paid and
contingent additional principal does not accrue. The LYONs are subordinated in
right of payment to all of our existing and future senior indebtedness and will
be effectively subordinated to all existing and future liabilities of our
subsidiaries.
Convertibility of LYONs:
Holders may convert each LYON into 6.7054 shares of our common stock,
subject to adjustment, which we refer to as the conversion rate, only (1) if
the sale price of our common stock reaches specified thresholds, (2) during any
period in which the credit rating assigned to the LYONs by Standard & Poor's
Ratings Services is at or below a specified level, (3) if the LYONs are called
for redemption, or (4) if specified corporate transactions have occurred. Our
common stock is listed on the New York Stock Exchange under the symbol "LH." On
October 17, 2001, the last reported sale price of our common stock on the NYSE
was $83.75 per share.
Contingent Cash Interest:
We will pay contingent cash interest on the LYONs for the six-month period
commencing after September 11, 2006 and for any six-month period thereafter if
the average market price of a LYON for a five trading day measurement period
preceding the applicable six-month period equals 120% or more of the sum of the
issue price, accrued original issue discount and contingent additional
principal, if any, for such LYON. The contingent cash interest payable per LYON
in respect of any quarterly period will equal the greater of 0.0625% of the
average market price of a LYON for the five trading day measurement period or
any regular cash dividends paid by us per share on our common stock during that
quarterly period multiplied by the then applicable conversion rate, provided
that if we do not pay cash dividends during a semi-annual period, we will pay
contingent cash interest semi-annually at a rate of 0.125% of the average
market price of a LYON for the five trading day measurement period. For U.S.
federal income tax purposes, we intend to treat the LYONs as contingent payment
debt instruments. You should read the discussion of selected U.S. federal
income tax considerations relevant to the LYONs beginning on page 30.
Contingent Additional Principal:
On September 11, 2004, if our stock price factor is at or below specified
thresholds based on a measurement period prior to that date, then contingent
additional principal and original issue discount will accrue at an aggregate
adjusted rate of accrual determined as set forth in this prospectus. No
contingent additional principal will accrue after September 11, 2006, but
thereafter original issue discount will continue to accrue at a rate of 2.0%
per year.
Purchase of LYONs by LabCorp at the Option of the Holder:
Holders may require us to purchase all or a portion of their LYONs on
September 11, 2004, 2006 and 2011 at the prices set forth in "Description of
LYONs--Purchase of LYONs by LabCorp at the Option of the Holder." These prices
would be increased by accrued contingent additional principal (and accrued
original issue discount thereon), if any. We may choose to pay the purchase
price in cash or common stock or a combination of cash and common stock. In
addition, if a change in control occurs on or before September 11, 2006,
holders may require us to purchase for cash all or a portion of their LYONs.
Redemption of LYONs at the Option of LabCorp:
We may redeem for cash all or a portion of the LYONs at any time on or
after September 11, 2006, at the prices set forth in "Description of
LYONs--Redemption of LYONs at the Option of LabCorp." These prices would be
increased by accrued contingent additional principal (and accrued original
issue discount thereon), if any.
-----------------------
Investing in the LYONs involves risks that are described in "Risk Factors
Relating to the LYONs" beginning on page 8 of this prospectus.
-----------------------
We will not receive any of the proceeds from the sale of the LYONs or the
underlying shares of common stock by any of the selling securityholders. The
LYONs and shares of common stock may be offered in negotiated transactions or
otherwise, at market prices prevailing at the time of sale or at negotiated
prices. In addition, shares of common stock may be offered from time to time
through ordinary brokerage transactions on the New York Stock Exchange.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is , 2001
(TM)Trademark of Merrill Lynch & Co., Inc.
-----------------------
TABLE OF CONTENTS
-----------------------
Page
----
Summary...............................................................1
Risk Factors Relating to the LYONs....................................8
Special Note Regarding Forward Looking Statements.....................9
Use of Proceeds......................................................10
Ratio of Earnings to Fixed Charges...................................10
Price Range of Common Stock and Dividend History.....................10
Description of Credit Agreement......................................11
Description of LYONs.................................................12
Description of Capital Stock.........................................29
Certain U.S. Federal Income Tax Considerations.......................30
Selling Securityholders..............................................35
Plan of Distribution.................................................37
Legal Matters........................................................39
Experts..............................................................39
Where You Can Find More Information..................................39
-----------------------
References in this prospectus to "LabCorp," "we," "us" and "our" refer to
Laboratory Corporation of America Holdings and its consolidated subsidiaries,
except in "Summary--The Offering" and "Description of LYONs," where such terms
refer only to Laboratory Corporation of America Holdings, unless otherwise
specified.
ii
SUMMARY
The following summary is qualified in its entirety by the more detailed
information included elsewhere or incorporated by reference in this prospectus.
Because this is a summary, it may not contain all the information that may be
important to you. You should read the entire prospectus, as well as the
information incorporated by reference, before making an investment decision.
LabCorp
We are the second largest independent clinical laboratory company in the
United States, based on 2000 net revenues. Through a national network of
laboratories, we offer more than 4,000 different clinical laboratory tests
which are used by the medical profession in routine testing, patient diagnosis,
and in the monitoring and treatment of disease. We have developed specialty and
niche businesses based on certain types of specialized testing capabilities and
client requirements, such as HIV genotyping and phenotyping, diagnostic
genetics, clinical research trials and oncology testing.
Since our founding in 1971, we have grown into a network of 24 primary
testing facilities and approximately 1,200 service sites, consisting of
branches, patient service centers and STAT laboratories, which are laboratories
that have the ability to perform certain routine tests quickly and report the
results to the physician immediately. With over 18,000 employees, we processed
tests on more than 260,000 patient specimens daily in 2000 and provided
clinical laboratory testing services to clients in 50 states. Our clients
include physicians, hospitals, HMOs and other managed care organizations,
governmental agencies, large employers and other independent clinical
laboratories that do not have the breadth of our testing capabilities. Several
hundred of our 4,000 tests are frequently used in general patient care by
physicians to establish or support a diagnosis, to monitor treatment, or to
search for an otherwise undiagnosed condition. The most frequently requested of
these routine tests include blood chemistry analyses, urinalyses, blood cell
counts, pap smears and HIV tests. We perform this core group of routine tests,
which constitutes a majority of the testing conducted, in each of our major
laboratories using sophisticated and computerized instruments, with most
results reported within 24 hours.
We continually seek new and improved technologies for early diagnosis. For
example, our Center for Molecular Biology and Pathology is a leader in
molecular diagnostics and polymerase chain reaction, or PCR, technologies which
are often able to provide earlier and more reliable information regarding HIV,
genetic diseases, cancer and many other viral and bacterial diseases. We
believe these technologies may represent a significant savings to managed care
organizations by increasing the detection of early stage (treatable) diseases.
In June 2001, we acquired Viro-Med Inc., a national leader in high-end
virologic infectious disease testing, based in Minneapolis, Minnesota. With its
centralized location, proprietary molecular technologies and state-of-the-art
facility, Viro-Med provides significant, additional capacity to support the
continued expansion of our esoteric and genomic testing business. In April
2001, we acquired Path Lab Holdings, a regional esoteric lab company serving
the New England area. We believe this acquisition will leverage our expertise
in the area of esoteric testing and will enable us to expand our presence in
New England. In August 2000, we acquired Los Angeles-based National Genetics
Institute, Inc., a leader in the development of PCR assays for Hepatitis C. As
part of our strategic approach, we plan to continue to evaluate appropriate
acquisition candidates.
One of our primary growth strategies is the continued expansion of our
specialty and niche businesses. In general, the specialty and niche businesses
are designed to serve two market segments: (i) markets which are not served by
the routine clinical testing laboratory and therefore are often subject to less
stringent regulatory and reimbursement constraints; and (ii) markets which are
served by the routine testing laboratory and offer the possibility of adding
related services from the same supplier.
Another of our primary growth strategies is to develop an increasing
number of hospital and other provider alliances. These alliances can take
several different forms, including laboratory technical support (management)
contracts, reference agreements and cooperative testing arrangements. We have
and will continue to focus on developing cooperative testing relationships that
capitalize on hospitals' ability to perform rapid response testing and our
ability to provide high quality routine and esoteric testing.
Our principal executive office is located at 358 South Main Street,
Burlington, North Carolina 27215 and our telephone number at that location is
(336) 229-1127. Our website is located at www.labcorp.com. The information
contained on our website is not part of this prospectus.
1
The Offering
LYONs............................... $744,000,000 aggregate principal amount
at maturity of LYONs due September 11,
2021. We will not pay any interest on
the LYONs prior to maturity unless
contingent cash interest becomes
payable. Each $1,000 principal amount at
maturity of LYONs (which we refer to in
this prospectus as a "LYON"), will pay
the principal amount at maturity of
$1,000 plus any accrued contingent
additional principal (and accrued
original issue discount thereon) at
maturity.
Maturity of LYONs.................... September 11, 2021.
Yield to Maturity of LYONs........... 2.0% per year, computed on a semi-annual
bond equivalent basis and calculated
from September 11, 2001, assuming no
contingent cash interest is paid and
contingent additional principal does not
accrue.
Subordination........................ The LYONs are subordinated in right of
payment to all of our existing and
future senior indebtedness. As of June
30, 2001, we had approximately $474.1
million of senior indebtedness
outstanding. The LYONs are also
effectively subordinated to all of our
subsidiaries' liabilities, including
trade payables. The term "senior
indebtedness" is defined in the
"Description of LYONs--Subordination"
section of this prospectus.
Original Issue Discount.............. We issued the LYONs at an issue price
significantly below the principal amount
at maturity of the LYONs. This original
issue discount accrues daily at a rate
of 2.0% per year beginning on September
11, 2001, calculated on a semi-annual
bond equivalent basis, using a 360-day
year comprised of twelve 30-day months.
Original issue discount also accrues at
that rate on any accrued contingent
additional principal.
The accrual of imputed interest income,
also referred to as tax original issue
discount, as calculated for U.S. federal
income tax purposes, will exceed the
initial yield to maturity of 2.0% and
any adjusted yield resulting from the
accrual of contingent additional
principal. See "Certain U.S. Federal
Income Tax Considerations."
Conversion Rights.................... For each LYON surrendered for
conversion, if the conditions for
conversion are satisfied, a holder will
receive 6.7054 shares of our common
stock. This conversion rate will be
adjusted for the reasons specified in
the indenture but will not be adjusted
for accrued original issue discount or
contingent additional principal, if any.
Holders may surrender LYONs for
conversion in any calendar quarter
commencing after December 31, 2001, if
the closing sale price of our common
stock for at least 20 trading days in a
period of 30 consecutive trading days
ending on the last trading day of the
preceding calendar quarter is more than
a specified percentage, beginning at
2
120% and declining 0.1282% per calendar
quarter thereafter until it reaches 110%
for the calendar quarter beginning July
1, 2021, of the accreted conversion
price per share of common stock on the
last trading day of such preceding
calendar quarter. The accreted
conversion price per share as of any day
will equal the issue price of a LYON
plus accrued original discount and any
accrued contingent additional principal
as of such day, divided by the
conversion rate on that day. Upon
conversion, the holder will not receive
any cash payment representing accrued
original issue discount or contingent
additional principal, if any; accrued
original issue discount and contingent
additional principal, if any, will be
deemed paid by the shares of common
stock received by the holder of LYONs on
conversion.
Holders may also surrender a LYON for
conversion during any period in which
the rating assigned to the LYONs by
Standard & Poor's Ratings Services is
BB- or lower.
LYONs or portions of LYONs in integral
multiples of $1,000 principal amount at
maturity called for redemption may also
be surrendered for conversion until the
close of business on the second business
day prior to the redemption date. In
addition, if we make certain
distributions to our stockholders or if
we are a party to certain
consolidations, mergers, transfers of
all or substantially all of our assets
or binding share exchanges, LYONs may be
surrendered for conversion, as provided
in "Description of LYONs--Conversion
Rights." The ability to surrender LYONs
for conversion expires at the close of
business on September 11, 2021.
Contingent Cash Interest............. We will pay contingent cash interest to
the holders of LYONs during any
six-month period from September 12 to
March 11, and from March 12 to September
11, with the initial six-month period
commencing after September 11, 2006, if
the average market price of a LYON for
the five trading days ending on the
third trading day immediately preceding
the first day of the applicable
six-month period equals 120% or more of
the sum of the issue price, accrued
original issue discount and contingent
additional principal, if any, for a LYON
as of the day immediately preceding the
relevant six-month period.
The contingent cash interest payable per
LYON in respect of any quarterly period
will equal the greater of 0.0625% of the
average market price of a LYON for the
five trading day measurement period or
any regular cash dividends paid by us
per share on our common stock during
that quarterly period multiplied by the
then applicable conversion rate,
provided that if we do not pay cash
dividends during a semi- annual period,
we will pay contingent cash interest
semi- annually at a rate of 0.125% of
the average market price of a LYON for
the five trading day measurement period.
Notwithstanding the above, if we declare
a dividend for which the record date
falls prior to the first day of a six-
3
month period but the payment date falls
within that six- month period, then the
five trading day period for determining
the average market price of a LYON will
be the five trading days ending on the
third trading day immediately preceding
such record date.
Contingent cash interest, if any, will
accrue and be payable to holders of
LYONs as of the 15th day preceding the
last day of the relevant six-month
period, or, if we pay a regular cash
dividend on our common stock during a
quarter within the relevant six-month
period, to holders of LYONs as of the
record date for the related common stock
dividend. If we only pay a regular cash
dividend on our common stock during one
quarter within the relevant six-month
period, the remaining contingent cash
interest, if any, will accrue and be
payable as of the 15th day preceding the
last day of the relevant six-month
period. We will make contingent cash
interest payments on the last day of the
relevant six-month period or, if we pay
a regular cash dividend on our common
stock during the relevant six-month
period, on the payment date for the
related common stock dividend. The
payment of contingent cash interest will
not affect the accrual of original issue
discount.
Contingent Additional Principal...... On September 11, 2004, the rate of
accrual on the LYONs will be reset for
two years if our stock price factor is
at or below the thresholds set forth in
the table below. We refer to the amount
that accrues as a result of the adjusted
rate of accrual on the LYONs, other than
original issue discount, as contingent
additional principal. If contingent
additional principal accrues, the
adjusted rate of accrual will be
calculated by deducting from our two
year unsecured subordinated debt rate at
that time an amount set forth in the
table below, except that the adjusted
rate of accrual may not be greater than
9.0% or less than the initial yield to
maturity of 2.0%. Contingent additional
principal will accrue on a semi-annual
bond equivalent basis for a period of
two years. No contingent additional
principal will accrue after September
11, 2006, but thereafter original issue
discount will continue to accrue at a
rate of 2.0% per year.
Our stock price factor is the average of
the closing prices of our common stock
for the 20 consecutive trading days
ending on the third trading day prior to
September 11, 2004, expressed as a
percentage of the accreted conversion
price of the LYONs as of September 11,
2004.
The table below shows the amount to be
deducted from our applicable two year
unsecured subordinated debt rate, as
determined by our bid solicitation agent
prior to September 11, 2004. The
resulting percentage is the aggregate
adjusted rate of accrual at which
original issue discount and contingent
additional principal will accrue on the
LYONs during the two years commencing
September 11, 2004.
4
Stock Price Factor Threshold
If Two Year Unsecured Subordinated Debt Rate at September 11, 2004 is:
-----------------------------------------------------------------------------------------
Amount to be Deducted from
Two Year Unsecured 4.50% >5.00% >5.50% >6.00% >6.50% >7.00% 7.50% >8.00%
Subordinated Debt Rate to to to to to to to to to
Determine the Adjusted Rate: <=4.50% 5.00% 5.50% 6.00% 6.50% 7.00% 7.50% 8.00% 8.50% >8.50%
---------------------------- ------- ------ ------ ------ ------ ------ ------ ------ ------ ------
-6.00% <=74%
-5.50% <=73% <=71%
-5.00% <=72% <=70% <=69%
-4.50% <=69% <=69% <=68% <=66%
-4.00% <=67% <=67% <=67% <=65% <=64%
-3.50% <=66% <=65% <=64% <=64% <=63% <=62%
-3.00% <=64% <=64% <=63% <=61% <=61% <=61% <=59%
-2.50% <=62% <=61% <=60% <=60% <=59% <=58% <=58% <=57%
-2.00% <=59% <=58% <=58% <=57% <=56% <=55% <=55% <=54% <=53%
-1.50% <=56% <=55% <=54% <=54% <=53% <=53% <=53% <=52% <=51% <=51%
-1.00% <=52% <=51% <=51% <=51% <=50% <=49% <=49% <=48% <=48% <=48%
-0.50% <=47% <=46% <=45% <=45% <=44% <=44% <=44% <=43% <=43% <=43%
0.00% <=40% <=40% <=39% <=38% <=38% <=38% <=37% <=37% <=37% <=36%
U.S. Federal Income Taxation......... Under the indenture, we and every holder
are required to agree (in the absence of
an administrative pronouncement or
judicial ruling to the contrary), for
U.S. federal income tax purposes, to
treat the LYONs as contingent payment
debt instruments that are subject to the
special regulations that govern such
instruments. Under these regulations,
even if we do not pay any contingent
cash interest on the LYONs, you are
required to include interest at the rate
described below in your gross income for
U.S. federal income tax purposes. This
imputed interest, also referred to as
tax original issue discount, accrues at
a rate equal to 8.68% per year, computed
on a semi-annual bond equivalent basis,
which represents the yield on our
non-contingent, non- convertible,
fixed-rate debt with terms otherwise
similar to the LYONs. The rate at which
the tax original issue discount accrues
for U.S. federal income tax purposes
exceeds the initial yield to maturity of
2.0% and any adjusted yield to maturity
resulting from the accrual of contingent
additional principal.
You will also recognize gain or loss on
the sale, exchange, conversion or
retirement of a LYON in an amount equal
to the difference between the amount
realized on the sale, exchange,
conversion or retirement, including the
fair market value of any common stock
received upon conversion or otherwise,
and your adjusted tax basis in the LYON.
Any gain recognized by you on the sale,
exchange, conversion or retirement of a
LYON generally will be ordinary interest
income; any loss will be ordinary loss
to the extent of the interest previously
included in income, and thereafter,
capital loss. See "Certain U.S. Federal
Income Tax Considerations."
Sinking Fund......................... None.
5
Redemption of LYONs at the
Option of LabCorp............... We may redeem for cash all or a portion
of the LYONs at any time on or after
September 11, 2006, at specified
redemption prices. These prices would be
increased by accrued contingent
additional principal (and accrued
original issue discount thereon), if
any. See "Description of
LYONs--Redemption of LYONs at the Option
of LabCorp."
Purchase of LYONs by LabCorp at the
Option of the Holder............ Holders may require us to purchase all
or a portion of their LYONs on each of
the following dates at the following
prices (these prices would be increased
by accrued contingent additional
principal (and accrued original issue
discount thereon), if any):
o on September 11, 2004 at a price of
$712.97 per LYON;
o on September 11, 2006 at a price of
$741.92 per LYON; and
o on September 11, 2011 at a price of
$819.54 per LYON.
We may pay the purchase price in cash or
shares of our common stock (based on the
prevailing market price thereof) or in a
combination of cash and shares of our
common stock. See "Description of
LYONs--Purchase of LYONs by LabCorp at
the Option of the Holder."
Change in Control.................... Upon a change in control of LabCorp
occurring on or before September 11,
2006, each holder may require us to
purchase for cash all or a portion of
such holder's LYONs at a price equal to
the sum of the issue price plus accrued
original issue discount and contingent
additional principal, if any, for the
LYONs to the date of purchase.
Use of Proceeds...................... We will not receive any of the proceeds
from the sale by the selling
securityholders of the LYONs or the
underlying common stock. See "Use of
Proceeds."
DTC Eligibility...................... The LYONs have been issued in fully
registered book-entry form and are
represented by permanent global LYONs
without coupons deposited with a
custodian for and registered in the name
of a nominee of The Depository Trust
Company in New York, New York.
Beneficial interests in global LYONs are
shown on, and transfers thereof are
effected only through, records
maintained by DTC and its direct and
indirect participants, and your interest
in any global LYON may not be exchanged
for certificated LYONs, except in
limited circumstances described herein.
6
Trading.............................. The LYONs issued in the initial private
placement are eligible for trading in
the PORTAL system. LYONs resold using
this prospectus, however, will no longer
be eligible for trading in the PORTAL
system. We do not intend to list the
LYONs on any national securities
exchange. Our common stock is traded on
the NYSE under the symbol "LH."
Ratio of Earnings to Fixed Charges... The ratios of earnings to fixed charges
for fiscal 1998, 1999, 2000 and the six
months ended June 30, 2001 were 2.14,
2.65, 4.33 and 7.01, respectively.
7
RISK FACTORS RELATING TO THE LYONs
Prospective investors should carefully consider the following information
with the other information contained, or incorporated by reference in this
prospectus, before purchasing the LYONs.
An active trading market for LYONs may not develop.
Despite the fact that resales of the LYONs will be registered transactions
under the Securities Act, we cannot assure you that an active trading market
for the LYONs will develop or as to the liquidity or sustainability of any such
market, your ability to sell your LYONs or the price at which you will be able
to sell your LYONs. Future trading prices of the LYONs will depend on many
factors, including, among other things, prevailing interest rates, our
operating results, the market price of our common stock and the market for
similar securities in general. In addition, a holder's right to convert LYONs
into shares of our common stock is subject to conditions which, if not
satisfied, could result in a holder receiving less than the value of the common
stock into which a LYON is otherwise convertible. These features could
adversely affect the value and the trading prices for the LYONs.
We may not have the ability to raise the funds necessary to finance the
purchase of LYONs at the option of the holders.
On September 11, 2004, 2006 and 2011 and upon the occurrence of specific
kinds of change in control events occurring on or before September 11, 2006,
holders of LYONs may require us to purchase their LYONs. However, it is
possible that we would not have sufficient funds at that time to make the
required purchase of LYONs. In addition, certain important corporate events,
such as leveraged recapitalizations that would increase the level of our
indebtedness, would not constitute a change in control under the indenture. See
"Description of LYONs--Purchase of LYONs by LabCorp at the Option of the
Holder" and "--Change in Control Permits Purchase of LYONs at the Option of the
Holder."
You should consider the U.S. federal income tax consequences of owning LYONs.
Under the indenture, every holder is required to agree with us to treat
its LYONs as contingent payment debt instruments for U.S. federal income tax
purposes. As a result, despite some uncertainty as to the proper application of
the applicable Treasury regulations, you are required to include in your gross
income each year amounts of interest in excess of the initial yield to maturity
of the LYONs and any adjusted yield to maturity resulting from accrued
contingent additional principal. You will recognize gain or loss upon the sale,
exchange, conversion or retirement of a LYON in an amount equal to the
difference between the amount realized on the sale, exchange, conversion or
retirement, including the fair market value of any of our common stock
received, and your adjusted tax basis in the LYON. Any gain recognized by you
on the sale, exchange, conversion or retirement of a LYON generally will be
ordinary interest income; any loss will be ordinary loss to the extent of the
interest previously included in income, and capital loss thereafter. See
"Certain U.S. Federal Income Tax Considerations."
The LYONs are subordinated in right of payment to other indebtedness.
The LYONs are unsecured obligations subordinated in right of payment to
all of our existing and future senior indebtedness. As a result, our assets are
available to pay obligations on the LYONs only after all senior indebtedness
has been paid in full, and we may not have sufficient assets remaining to repay
in full all of the LYONs then outstanding if we become insolvent or are forced
to liquidate our assets, we default on our senior indebtedness, or the LYONs
are accelerated due to any other event of default. The LYONs are also
effectively subordinated in right of payment to all of our subsidiaries'
indebtedness and other liabilities, including trade payables. The LYONs are
exclusively obligations of LabCorp. Our subsidiaries have no obligation to pay
any amounts due on the LYONs. Our subsidiaries are not required to provide us
with funds for our payment obligations, whether by dividends, distributions,
loans or other payments. In addition, any payment of dividends, distributions,
loans or advances by our subsidiaries to us could be subject to statutory or
contractual restrictions. Payments to us by our subsidiaries are also
contingent upon our subsidiaries' earnings and business considerations. The
incurrence of additional indebtedness and other liabilities could materially
and adversely affect our ability to pay our obligations on the LYONs. The terms
of the LYONs do not limit our ability to incur senior indebtedness, and do not
limit our ability or the ability of our subsidiaries to incur other
indebtedness or other liabilities. As of June 30, 2001, we had senior
indebtedness outstanding (including a $412.5 million term loan under our credit
agreement) of approximately $474.1 million. See "Description of
LYONs--Subordination."
7
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
We have made or incorporated by reference in this prospectus forward
looking statements concerning our operations, performance and financial
condition, as well as our strategic objectives. Some of these forward looking
statements can be identified by the use of forward looking words such as
"believe", "expect", "may", "will", "should", "seek", "approximately",
"intend", "plan", "estimate" or "anticipate" or the negative of those words or
other comparable terminology. Such forward looking statements are subject to
various risks and uncertainties and we claim the protection afforded by the
safe harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995. Actual results could differ materially from
those currently anticipated due to a number of factors in addition to those
discussed elsewhere or incorporated by reference in this prospectus, including:
o future changes in federal, state, local and third-party payor
regulations or policies (or in the interpretation of current
regulations) affecting governmental and third-party reimbursement for
clinical laboratory testing.
o adverse results from investigations of clinical laboratories by the
government, which may include significant monetary damages and/or
exclusion from the Medicare and Medicaid programs.
o loss or suspension of a license or imposition of a fine or penalties
under, or future changes in, the law or regulations of the Clinical
Laboratory Improvement Act of 1967, and the Clinical Laboratory
Improvement Amendments of 1988, or those of Medicare, Medicaid or
other federal, state or local agencies.
o failure to comply with the Federal Occupational Safety and Health
Administration requirements and the recently passed Needlestick
Safety and Prevention Act which may result in penalties and loss of
licensure.
o increased competition, including price competition.
o changes in payor mix, including an increase in capitated managed-cost
health care.
o our failure to obtain and retain new customers and alliance partners,
or a reduction in tests ordered or specimens submitted by existing
customers.
o our failure to integrate newly acquired businesses and the cost
related to such integration.
o adverse results in litigation matters.
o our ability to attract and retain experienced and qualified
personnel.
o failure to maintain our days sales outstanding levels.
9
USE OF PROCEEDS
We will not receive any of the proceeds from the resale of the LYONs by
the selling securityholders or from the common stock issuable upon conversion
or purchase of the LYONs.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratio of earnings to fixed charges for
each of the calendar periods indicated:
Fiscal Years Ended December 31,
-------------------------------- Six-Months-Ended
1996 1997 1998 1999 2000 June 30, 2001
---- ---- ---- ---- ---- -------------
Ratio of earnings
to fixed charges... N/A N/A 2.14 2.65 4.33 7.01
These computations include us and our consolidated subsidiaries. For
purposes of calculating the ratio of earnings to fixed charges, earnings
consist of income before provision for income taxes, plus fixed charges. Fixed
charges include interest expense on debt and one-third of rental expense which
is deemed representative of the interest factor. After giving effect to the
offering of the LYONs and the application of the net proceeds from the
offering, the pro forma ratios of earnings to fixed charges for the year ended
December 31, 2000 and the six months ended June 30, 2001 would have been 6.11
and 10.56.
For the years ended December 31, 1997 and 1996, earnings were insufficient
to cover fixed charges by $161.3 million and $188.3 million, respectively.
PRICE RANGE OF COMMON STOCK AND DIVIDEND HISTORY
Our common stock trades on the New York Stock Exchange under the symbol
"LH."
The following table sets forth for the calendar periods indicated the high
and low intraday sales prices for our common stock reported on the NYSE
Composite Tape:
High Low
---- ---
1999
1st Quarter................................................... $11.56 $6.25
2nd Quarter................................................... 14.69 8.44
3rd Quarter................................................... 16.25 11.25
4th Quarter................................................... 19.38 12.19
2000
1st Quarter................................................... 23.44 15.63
2nd Quarter................................................... 40.50 19.69
3rd Quarter................................................... 66.25 38.13
4th Quarter................................................... 91.50 54.13
2001
1st Quarter................................................... 87.50 49.75
2nd Quarter................................................... 82.50 56.45
3rd Quarter................................................... 91.35 66.84
4th Quarter (through October 17, 2001)........................ 84.41 78.30
The last reported sale price on the New York Stock Exchange for our common
stock was $83.75 per share on October 17, 2001.
During May 2000, our stockholders approved a 1-for-10 reverse stock split.
Our stockholders subsequently approved a 2-for-1 stock split in May 2001 which
was paid in the form of a stock dividend on June 11, 2001. The reported sales
prices reflect such reverse stock split and 2-for-1 stock split. On July 31,
2001 there were 663 holders of record of our common stock.
It is currently our policy not to pay dividends on our common stock in
order to increase our flexibility with respect to our acquisition strategy. In
addition, our revolving credit facility places certain restrictions on the
payment of dividends.
10
DESCRIPTION OF CREDIT AGREEMENT
The following summary of the material provisions of our credit agreement
is subject to, and is qualified in its entirety by reference to, the terms of
our credit agreement.
We are a party to an Amended and Restated Credit Agreement dated as of
March 31, 1997, as amended, with the banks named therein and Credit Suisse
First Boston, as Administrative Agent. The terms of the credit agreement
provided for a term loan of $693.8 million and a revolving credit facility
commitment of up to $450 million. As of June 30, 2001 there was $412.5 million
outstanding under the term loan and $50.0 million drawn under the revolving
credit facility. We used the net proceeds from the private placement of the
LYONs to repay the then outstanding term loan in full.
Amounts under the revolving credit facility may be borrowed, prepaid and
reborrowed from time to time. The weighted average interest rate on our
revolving credit facility as of June 30, 2001 was approximately 5.0%. The
revolving credit facility expires on March 31, 2002. While there can be no
assurance that we will be successful, we plan to renegotiate the credit
agreement later this year to, among other things, reduce our cost of borrowing.
The credit agreement contains negative covenants limiting our ability to,
among other things:
o create liens;
o engage in sale leaseback transactions;
o engage in mergers or acquisitions;
o sell assets;
o declare or pay dividends, or make distributions on, or repurchase or
redeem capital stock or options, warrants or rights to receive
capital stock;
o issue capital stock or options, warrants or rights to receive capital
stock;
o make investments;
o change the nature of our business;
o incur debt;
o prepay, redeem or repurchase debt;
o limit our subsidiaries ability to pay dividends or create liens on
their assets; and
o make capital expenditures.
We amended our credit agreement to amend the limitation on our ability to
incur debt and the limitation on our ability to issue capital stock, options,
warrants or rights to receive capital stock to expressly permit us to issue the
LYONs and the shares of common stock issuable upon conversion or repurchase of
the LYONs.
The credit agreement requires us to comply with certain financial ratios
and tests relating to leverage, interest coverage, minimum stockholders' equity
and certain other affirmative covenants relating to, among other things,
reporting requirements and transactions with affiliates.
The credit agreement also requires all of our material subsidiaries to
guarantee amounts outstanding thereunder. Laboratory Corporation of America is
currently the only guarantor under the credit agreement.
11
DESCRIPTION OF LYONs
We issued the LYONs under an indenture, dated as of September 11, 2001,
between us and The Bank of New York, as trustee. The following summary does not
purport to be complete and is subject to, and qualified by reference to, all of
the provisions of the indenture, which we urge you to read because they define
your rights as a LYONs holder. As used in this description of LYONs, the words
"we," "us," "our" or "LabCorp" refer only to LabCorp and do not include any
current or future subsidiary of LabCorp.
General
We issued $650,000,000 aggregate principal amount at maturity of the LYONs
in a private placement in September 2001, and an additional $94,000,000
aggregate principal amount at maturity of the LYONs pursuant to the exercise in
full by the initial purchaser of its over-allotment option in October 2001. The
LYONs will mature on September 11, 2021. Each $1,000 principal amount at
maturity of LYONs (a "LYON") will pay the principal amount at maturity of
$1,000 plus contingent additional principal (and accrued original issue
discount thereon), if any, at maturity. When used herein, principal amount at
maturity means the amount payable on the LYONs at maturity as determined on
September 11, 2001 and consequently does not include any contingent additional
principal (and accrued original issue discount thereon) that may become payable
at maturity as described below under "--Contingent Additional Principal." The
LYONs will be payable at the principal corporate trust office of the paying
agent, which initially will be an office or agency of the trustee, or an office
or agency maintained by us for such purpose, in the Borough of Manhattan, The
City of New York.
Each LYON was issued at a substantial discount from its principal amount
at maturity. Except as described below under "Contingent Cash Interest," we
will not make periodic payments of interest on the LYONs. The LYONs accrue
original issue discount while they remain outstanding. Original issue discount
accrues on a semi-annual bond equivalent basis at the initial yield to maturity
of the LYONs of 2.0% using a 360-day year composed of twelve 30-day months.
Original issue discount also accrues at that rate on any accrued contingent
additional principal. The commencement date for the accrual of original issue
discount is September 11, 2001.
We are treating the LYONs as debt instruments subject to the Treasury
regulations that provide special rules for contingent payment debt instruments.
The LYONs are issued with original issue discount for U.S. federal income tax
purposes. You agree in the indenture to treat your LYONs as contingent payment
debt instruments for U.S. federal income tax purposes and to be bound by our
application of the Treasury regulations that govern contingent payment debt
instruments, including our determination of the rate at which interest, also
referred to herein as tax original issue discount, is considered to accrue for
U.S. federal income tax purposes. Under the contingent payment debt
regulations, even if we do not pay any contingent cash interest on the LYONs,
holders are required to include accrued tax original issue discount in their
gross income for U.S. federal income tax purposes. The rate at which the tax
original issue discount accrues exceeds the initial yield to maturity and any
adjusted yield to maturity resulting from the accrual of contingent additional
principal. See "Certain U.S. Federal Income Tax Considerations."
Original issue discount, contingent cash interest, if any, and contingent
additional principal, if any, ceases to accrue on a LYON upon its maturity,
conversion, purchase by us at the option of a holder or redemption. We may not
reissue a LYON that has matured or been converted, purchased by us at your
option, redeemed or otherwise cancelled, except for registration of transfer,
exchange or replacement of such LYON.
LYONs may be presented for conversion at the office of the conversion
agent and for exchange or registration of transfer at the office of the
registrar. The conversion agent and the registrar shall initially be the
trustee. No service charge will be made for any registration of transfer or
exchange of LYONs. However, we may require the holder to pay any tax,
assessment or other governmental charge payable as a result of such transfer or
exchange.
Subordination
Payment on the LYONs is, to the extent provided in the indenture,
subordinated in right of payment to the prior payment in full of all of our
existing and future senior indebtedness. Payment on the LYONs is also
effectively subordinated to all of our subsidiaries' existing and future
indebtedness and other liabilities, including trade payables.
12
Upon any payment or distribution of assets of LabCorp to its creditors
upon any dissolution, winding up, liquidation or reorganization, whether
voluntary or involuntary, or in bankruptcy, insolvency, receivership or other
similar proceedings, the holders of all senior indebtedness shall first be
entitled to receive payment in full of all amounts due or to become due
thereon, or payment of such amounts shall have been provided for, before the
holders of the LYONs shall be entitled to receive any payment or distribution
with respect to any LYONs.
By reason of this subordination, in the event of our bankruptcy,
dissolution or reorganization, holders of senior indebtedness may receive more,
ratably, and holders of the LYONs may receive less, ratably, than our other
creditors.
In addition, no payment of the principal amount at the maturity of the
LYONs, issue price, accrued original issue discount, redemption price, change
in control purchase price, contingent cash interest, if any, and contingent
additional principal, if any, with respect to any LYONs may be made by us, nor
may we pay cash with respect to the purchase price of any LYONs (other than for
fractional shares) or acquire any LYONs for cash or property (except as set
forth in the indenture) if:
(1) any payment default on any senior indebtedness has occurred and is
continuing beyond any applicable grace period; or
(2) any default, other than a payment default with respect to senior
indebtedness, occurs and is continuing that permits the acceleration of the
maturity thereof and such default is either the subject of judicial proceedings
or we receive a written notice of such default from the holders of such senior
indebtedness.
Notwithstanding the foregoing, the payment blockage period shall end and
we may resume payments with respect to the LYONs and may acquire LYONs:
o when the default with respect to the senior indebtedness is cured or
waived; or
o in the case of a default described in (2) above, 179 or more days
pass after we receive notice of the default, provided that the terms
of the indenture otherwise permit the payment or acquisition of the
LYONs at that time.
No new period of payment blockage may be commenced pursuant to a similar notice
relating to the same default on the same issue of senior indebtedness unless
nine months have elapsed since we received the notice of default as provided
above.
In addition, no payment may be made on the LYONs if any LYONs are declared
due and payable prior to their stated maturity by reason of the occurrence of
an event of default until the earlier of 120 days after the date of such
acceleration or the payment in full of all senior indebtedness, but only if
such payment is then otherwise permitted under the terms of the indenture.
Notwithstanding the foregoing, upon the expiration of any payment blockage
period described above, holders of the LYONs are required to pay over any
amounts collected by such holders to the holders of senior indebtedness to the
extent necessary to pay all holders of senior indebtedness in full.
The term "senior indebtedness" of LabCorp means the principal, premium (if
any) and unpaid interest on all present and future:
(1) indebtedness of LabCorp for borrowed money;
(2) obligations of LabCorp evidenced by bonds, debentures, notes or
similar instruments;
(3) obligations of LabCorp under (a) interest rate swaps, caps, collars,
options, and similar arrangements, (b) any foreign exchange contract,
currency swap contract, futures contract, currency option contract,
or other foreign currency hedge, and (c) credit swaps, caps, floors,
collars and similar arrangements;
(4) indebtedness incurred, assumed or guaranteed by LabCorp in connection
with the acquisition by it or a subsidiary of LabCorp of any
business, properties or assets (except purchase money indebtedness
classified as accounts payable under generally accepted accounting
principles);
13
(5) all obligations and liabilities, contingent or otherwise, in respect
of leases of LabCorp required, in conformity with generally accepted
accounting principles, to be accounted for as capitalized lease
obligations on the balance sheet of LabCorp and all obligations and
liabilities, contingent or otherwise, under any lease or related
document, including a purchase agreement, in connection with the
lease of real property which provides that LabCorp is contractually
obligated to purchase or cause a third party to purchase the leased
property and thereby guarantee a minimum residual value of the leased
property to the lessor and the obligations of LabCorp under such
lease or related document to purchase or to cause a third party to
purchase such leased property;
(6) reimbursement obligations of LabCorp in respect of letters of credit
relating to indebtedness or other obligations of LabCorp that qualify
as indebtedness or obligations of the kind referred to in clauses (1)
through (5) above; and
(7) obligations of LabCorp under direct or indirect guaranties in respect
of, and obligations (contingent or otherwise) to purchase or
otherwise acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of others of the kinds
referred to in clauses (1) through (6) above,
in each case unless in the instrument creating or evidencing the indebtedness
or obligation or pursuant to which the same is outstanding it is provided that
such indebtedness or obligation is not senior in right of payment to the LYONs
or that such indebtedness or obligation is subordinated to any other
indebtedness or obligation of LabCorp, unless such indebtedness or obligation
expressly provides that such indebtedness or obligations are to be senior in
right of payment to the LYONs. At June 30, 2001, LabCorp had approximately
$474.1 million of senior indebtedness outstanding.
The LYONs are effectively subordinated to all existing and future
liabilities of LabCorp's subsidiaries. Any right of LabCorp to participate in
any distribution of the assets of any of its subsidiaries upon the liquidation,
reorganization or insolvency of such subsidiary (and the consequent right of
the holders of the LYONs to participate in those assets) will be subject to the
claims of the creditors (including trade creditors) of such subsidiary, except
to the extent that claims of LabCorp itself as a creditor of such subsidiary
may be recognized, in which case the claims of LabCorp would still be
subordinate to any security interest in the assets of such subsidiary and any
indebtedness of such subsidiary senior to that held by LabCorp. The indenture
does not restrict LabCorp from incurring additional indebtedness, including
senior indebtedness.
Conversion Rights
Holders may surrender LYONs for conversion into shares of our common stock
only if at least one of the conditions described below is satisfied. In
addition, a LYON for which a holder has delivered a purchase notice or a change
in control purchase notice requiring us to purchase the LYONs may be
surrendered for conversion only if such notice is withdrawn in accordance with
the indenture.
The initial conversion rate is 6.7054 shares of common stock per LYON,
subject to adjustment upon the occurrence of certain events described below. A
holder of a LYON otherwise entitled to a fractional share will receive cash
equal to the applicable portion of the then current sale price of our common
stock on the trading day immediately preceding the conversion date.
The ability to surrender LYONs for conversion will expire at the close of
business on September 11, 2021.
The conversion agent will, on our behalf, determine if the LYONs are
convertible and notify the trustee and us accordingly. If one or more of the
conditions to the conversion of the LYONs has been satisfied, we will promptly
notify the holders of the LYONs thereof and use our reasonable best efforts to
post this information on our website or otherwise publicly disclose this
information.
Conversion Based on Common Stock Price. Holders may surrender LYONs for
conversion in any calendar quarter commencing after December 31, 2001, if the
sale price (as defined below) of our common stock for at least 20 trading days
in a period of 30 consecutive trading days ending on the last trading day of
the preceding calendar quarter is more than a specified percentage, beginning
at 120% and declining 0.1282% per calendar quarter thereafter until it reaches
approximately 110% for the calendar quarter beginning July 1, 2021, of the
accreted conversion price per share of common stock on the last day of such
preceding calendar quarter. The accreted conversion price per share as of any
day
14
will equal the issue price of a LYON plus the accrued original issue discount
and any accrued contingent additional principal as of such day, divided by the
number of shares of common stock issuable upon conversion of a LYON on that
day.
The table below shows the conversion trigger price per share of our common
stock in respect of each of the first 20 calendar quarters following September
11, 2001. These conversion trigger prices reflect the accreted conversion price
per share of common stock multiplied by the applicable percentage for the
respective calendar quarter. Thereafter, the accreted conversion price per
share of common stock increases each calendar quarter by the accreted original
issue discount and any contingent additional principal for the calendar quarter
and the applicable percentage declines by 0.1282% per calendar quarter. The
conversion trigger price for the calendar quarter beginning July 1, 2021 is
$163.42 assuming no contingent additional principal accrues.
(1) (3)
Accreted (2) Conversion
Conversion Applicable Trigger-Price
Price Percentage (1) x (2)
---------- ---------- --------------
Quarter*
2002
1st Quarter....................... 100.78 120.0000% 120.93
2nd Quarter....................... 101.28 119.8718% 121.41
3rd Quarter....................... 101.79 119.7436% 121.88
4th Quarter....................... 102.29 119.6154% 122.36
2003
1st Quarter....................... 102.80 119.4872% 122.84
2nd Quarter....................... 103.32 119.3590% 123.32
3rd Quarter....................... 103.83 119.2308% 123.80
4th Quarter....................... 104.35 119.1026% 124.28
2004
1st Quarter....................... 104.87 118.9744% 124.77
2nd Quarter....................... 105.39 118.8462% 125.25
3rd Quarter....................... 105.92 118.7180% 125.74
4th Quarter....................... 106.45 118.5898% 126.23
2005
1st Quarter....................... 106.98 118.4616% 126.73
2nd Quarter....................... 107.51 118.3334% 127.22
3rd Quarter....................... 108.05 118.2052% 127.72
4th Quarter....................... 108.59 118.0770% 128.21
2006
1st Quarter....................... 109.13 117.9488% 128.72
2nd Quarter....................... 109.67 117.8206% 129.22
3rd Quarter....................... 110.22 117.6924% 129.72
4th Quarter....................... 110.77 117.5642% 130.22
-------------------
* This table assumes no events have occurred that would require an
adjustment to the conversion rate. This table also assumes that no
contingent additional principal has accrued.
Conversion Based on Credit Rating Downgrade. Holders may also surrender a
LYON for conversion during any period that the rating assigned to the LYONs by
Standard & Poor's Ratings Services is BB- or lower.
Conversion Based upon Notice of Redemption. A holder may surrender for
conversion a LYON called for redemption at any time prior to the close of
business on the second business day immediately preceding the redemption date,
even if it is not otherwise convertible at such time. A LYON for which a holder
has delivered a purchase notice or a change in control purchase notice, as
described below, requiring us to purchase such LYON, may be surrendered for
conversion only if such notice is withdrawn in accordance with the indenture.
A "business day" is any weekday that is not a day on which banking
institutions in The City of New York are authorized or obligated to close. A
"trading day" is any day on which the NYSE is open for trading or, if the
applicable
15
security is quoted on the Nasdaq National Market, a day on which trades may be
made on such market or, if the applicable security is not so listed, admitted
for trading or quoted, any business day.
Conversion Upon Occurrence of Certain Corporate Transactions. If we are
party to a consolidation, merger or binding share exchange or a transfer of all
or substantially all of our assets, a LYON may be surrendered for conversion at
any time from and after the date which is 15 days prior to the anticipated
effective date of the transaction until 15 days after the actual effective date
of such transaction, and at the effective date, the right to convert a LYON
into common stock will be changed into a right to convert it into the kind and
amount of securities, cash or other assets of LabCorp or another person which
the holder would have received if the holder had converted the holder's LYONs
immediately prior to the transaction. If such transaction also constitutes a
change in control of LabCorp, as defined in the indenture, the holder will be
able to require us to purchase all or a portion of such holder's LYONs as
described under "--Change in Control Permits Purchase of LYONs at the Option of
the Holder."
Conversion Adjustments and Delivery of Common Stock. On conversion of a
LYON, a holder will not receive any cash payment representing accrued original
issue discount, contingent additional principal, if any, or, except as
described below, contingent cash interest. Delivery to the holder of the full
number of shares of common stock into which the LYON is convertible, together
with any cash payment of such holder's fractional shares, will be deemed:
o to satisfy our obligation to pay the principal amount at maturity of
the LYON; and
o to satisfy our obligation to pay accrued original issue discount and
contingent additional principal, if any, attributable to the period
from September 11, 2001 through the conversion date.
As a result, accrued original issue discount and contingent additional
principal, if any, are deemed paid in full rather than cancelled, extinguished
or forfeited.
We and each holder of a LYON also agree that delivery to the holder of the
full number of shares of common stock into which the LYON is convertible,
together with any cash payment of such holder's fractional shares will be
treated as a payment (in an amount equal to the sum of the then fair market
value of such shares and such cash payment, if any) on the LYON for purposes of
the Treasury regulations applicable to debt instruments with contingent
payments. See "Certain U.S. Federal Income Tax Considerations."
If contingent cash interest is payable to holders of LYONs during any
particular six-month period, and such LYONs are converted after the applicable
record date therefor and prior to the next succeeding interest payment date,
holders of such LYONs at the close of business on the record date will receive
the contingent cash interest payable on such LYONs on the corresponding
interest payment date notwithstanding the conversion. Such LYONs, upon
surrender for conversion, must be accompanied by funds equal to the amount of
contingent cash interest payable on the LYONs so converted, unless such LYONs
have been called for redemption, in which case no such payment shall be
required.
The conversion rate will not be adjusted for accrued original issue
discount, or contingent additional principal, if any, or any contingent cash
interest. A certificate for the number of full shares of common stock into
which any LYON is converted, together with any cash payment for fractional
shares, will be delivered through the conversion agent as soon as practicable
following the conversion date. For a discussion of the tax treatment of a
holder receiving shares of our common stock upon surrendering LYONs for
conversion, see "Certain U.S. Federal Income Tax Considerations--Tax
Consequences to United States Holders--Sale, Exchange, Conversion or Retirement
of LYONs."
We will adjust the conversion rate for:
o dividends or distributions on our common stock payable in our common
stock or our other capital stock;
o subdivisions, combinations or certain reclassifications of our common
stock;
o distributions to all holders of our common stock of certain rights to
purchase our common stock for a period expiring within 60 days at
less than the then current sale price; and
o distributions to the holders of our common stock of our assets
(including shares of capital stock of a subsidiary) or debt
securities or certain rights to purchase our securities (excluding
cash dividends or other
16
cash distributions from current or retained earnings, unless the
amount thereof, together with all other cash dividends paid in the
preceding 12 month period, per share exceeds the sum of (i) 5% of the
sale price of our common stock on the day preceding the date of
declaration of such dividend or other distribution and (ii) the
quotient of the amount of any contingent interest paid during such
period divided by the number of shares of common stock issuable upon
conversion of a LYON at the conversion rate in effect on the
contingent interest payment date).
In the event that we pay a dividend or make a distribution on shares of
our common stock consisting of capital stock of, or similar equity interests
in, a subsidiary or other business unit of ours, the conversion rate will be
adjusted based on the market value of the securities so distributed relative to
the market value of our common stock, in each case based on the average closing
prices of those securities for the 10 trading days commencing on and including
the fifth trading day after the date on which "ex-dividend trading"commences
for such dividend or distribution on the NYSE or such other national or
regional securities exchange or market on which the securities are then listed
or quoted.
In the event we elect to make a distribution described in the third or
fourth bullet of the preceding paragraph which, in the case of the fourth
bullet, has a per share value equal to more than 15% of the sale price of our
shares of common stock on the day preceding the declaration date for such
distribution, we will be required to give notice to the holders of LYONs at
least 20 days prior to the ex-dividend date for such distribution and, upon the
giving of such notice, the LYONs may be surrendered for conversion at any time
until the close of business on the business day prior to the ex- dividend date
or until we announce that such distribution will not take place.
No adjustment to the conversion rate need be made if holders of the LYONs
may participate in the transaction or in certain other cases.
If we were to implement a stockholders' rights plan providing that, upon
conversion of the LYONs, the holders of such LYONs will receive, in addition to
the shares of common stock issuable upon such conversion, the rights related to
such common stock, there shall not be any adjustment to the conversion
privilege or conversion rate as a result of:
o the issuance of the rights;
o the distribution of separate certificates representing the rights;
o the exercise or redemption of such rights in accordance with any
rights agreement; or
o the termination or invalidation of the rights.
The indenture permits us to increase the conversion rate from time to
time. We are not required to adjust the conversion rate until adjustments
greater than 1% have occurred.
Holders of the LYONs may, in certain circumstances, be deemed to have
received a distribution subject to federal income tax as a dividend upon:
o a taxable distribution to holders of common stock which results in an
adjustment of the conversion rate;
o an increase in the conversion rate at our discretion; or
o failure to adjust the conversion rate in some instances.
See "Certain U.S. Federal Income Tax Considerations--Tax Consequences to
United States Holders--Constructive Dividends."
Contingent Cash Interest
Subject to the record date provisions described below, we will pay
contingent cash interest to the holders of LYONs during any six-month period
from September 12 to March 11 and from March 12 to September 11, with the
initial six- month period commencing after September 11, 2006, if the average
market price of a LYON for the five trading days ending on the third trading
day immediately preceding the first day of the applicable six-month period
equals 120% or
17
more of the sum of the issue price, accrued original issue discount and
contingent additional principal, if any, for such LYON as of the day
immediately preceding the first day of the applicable six-month period. See
"--Redemption of LYONs at the Option of LabCorp" for some of these values.
Notwithstanding the above, if we declare a dividend for which the record date
falls prior to the first day of a six-month period but the payment date falls
within such six-month period, then the five trading day period for determining
the average market price of a LYON will be the five trading days ending on the
third trading day immediately preceding such record date.
During any period when contingent cash interest shall be payable, the
contingent cash interest payable per LYON in respect of any quarterly period
will equal the greater of 0.0625% of the average market price of a LYON for the
five trading day measurement period or any regular cash dividends paid by us
per share on our common stock during that quarterly period multiplied by the
then applicable conversion rate, provided that if we do not pay cash dividends
during a semi-annual period, we will pay contingent cash interest semi-annually
at a rate of 0.125% of the average market price of a LYON for the measurement
period.
Contingent cash interest, if any, will accrue and be payable to holders of
LYONs as of the record date, which shall be the 15th day preceding the last day
of the relevant six-month period, or, if we pay a regular cash dividend on our
common stock during a quarter within the relevant six-month period, to holders
of LYONs as of the record date for the related common stock dividend. If we
only pay a regular cash dividend on our common stock during one quarter within
the relevant six-month period, the remaining contingent cash interest, if any,
will accrue and be payable as of the 15th day preceding the last day of the
relevant six-month period. We will make contingent cash interest payments on
the last day of the relevant six-month period or, if we pay a regular cash
dividend on our common stock during the relevant six- month period, on the
payment date for the related common stock dividend. The payment of contingent
cash interest will not affect the accrual of original issue discount.
Regular cash dividends mean quarterly or other periodic cash dividends on
our common stock as declared by our Board of Directors as part of its cash
dividend payment practices and that are not designated by it as extraordinary
or special or other nonrecurring dividends.
The market price of a LYON on any date of determination means the average
of the secondary market bid quotations per LYON obtained by the bid
solicitation agent for $10 million principal amount at maturity of LYONs at
approximately 4:00 p.m., New York City time, on such determination date from
three independent nationally recognized securities dealers we select, provided
that if:
o At least three such bids are not obtained by the bid solicitation
agent; or
o In our reasonable judgment, the bid quotations are not indicative of
the secondary market value of the LYONs.
then the market price of a LYON will equal (a) the then applicable conversion
rate of the LYONs multiplied by (b) the average sale price of our common stock
on the five trading days ending on such determination date, appropriately
adjusted.
The bid solicitation agent will initially be The Bank of New York. We may
change the bid solicitation agent, but the bid solicitation agent will not be
our affiliate. The bid solicitation agent will solicit bids from securities
dealers that are believed by us to be willing to bid for the LYONs.
Upon determination that LYON holders will be entitled to receive
contingent cash interest during a relevant six- month period, we will issue a
press release and publish such information on our website or through such other
public medium as we may use at that time as soon as practicable.
Contingent Additional Principal
On September 11, 2004, the rate of accrual on the LYONs will be reset for
two years if our stock price factor is at or below the thresholds set forth in
the table below. We refer to the amount that accrues as a result of the
adjusted rate of accrual on the LYONs, other than original issue discount, as
contingent additional principal. If contingent additional principal accrues,
the adjusted rate of accrual will be calculated by deducting from our two year
unsecured subordinated debt rate at that time an amount set forth in the table
below, except that the adjusted rate of accrual may not be greater than 9.0% or
less than the initial yield to maturity of 2.0%. Contingent additional
principal will accrue
18
on a semi-annual bond equivalent basis for a period of two years. No contingent
additional principal will accrue after September 11 , 2006, but thereafter
original issue discount will continue to accrue at a rate of 2.0% per year. If
our stock price factor is above the highest stock price factor threshold in the
applicable column set forth in the table below, then no contingent additional
principal will accrue on the LYONs and only original issue discount will
continue to accrue. Where we refer to "subordinated debt" in this prospectus,
we mean our current or future indebtedness with subordination provisions
substantially similar to those contained in the LYONs.
Our stock price factor is the average of the closing prices of our common
stock for the 20 consecutive trading days ending on the third trading day prior
to September 11, 2004 expressed as a percentage of the accreted conversion
price as of September 11, 2004.
Our "subordinated debt rate" means the average of the interest rate
quotations for a new issuance of our two year semi-annual cash-pay unsecured
subordinated debt obtained by the rate solicitation agent for an issuance in an
amount equal to the issue price of the LYONs plus any accrued original issue
discount through September 11, 2004 at approximately 4:00 p.m., New York City
time, on the day three trading days prior to September 11, 2004 from three
independent nationally recognized securities dealers we select. If three such
quotations are not obtained by the rate solicitation agent, then we will use
the average of two quotations obtained. If only one such quotation is obtained,
we will use such quotation. In the event that no quotations are obtained, our
subordinated debt rate will be determined by the good faith determination of
our board of directors. The rate solicitation agent will initially be The Bank
of New York. We may change the rate solicitation agent, but the rate
solicitation agent will not be our affiliate. The rate solicitation agent will
solicit rate quotations from securities dealers that are believed by us to be
willing to provide a quote for our subordinated debt.
The table below shows the amount to be deducted from our applicable
subordinated debt rate to determine the aggregate adjusted rate of accrual at
which original issue discount and contingent additional principal will accrue
on the LYONs during the two years commencing September 11, 2004.
Stock Price Factor Threshold
If Two Year Unsecured Subordinated Debt Rate at September 11, 2004 is:
-----------------------------------------------------------------------------------------
Amount to be Deducted from
Two Year Unsecured 4.50% >5.00% >5.50% >6.00% >6.50% >7.00% 7.50% >8.00%
Subordinated Debt Rate to to to to to to to to to
Determine the Adjusted Rate: <=4.50% 5.00% 5.50% 6.00% 6.50% 7.00% 7.50% 8.00% 8.50% >8.50%
---------------------------- ------- ------ ------ ------ ------ ------ ------ ------ ------ ------
-6.00% <=74%
-5.50% <=73% <=71%
-5.00% <=72% <=70% <=69%
-4.50% <=69% <=69% <=68% <=66%
-4.00% <=67% <=67% <=67% <=65% <=64%
-3.50% <=66% <=65% <=64% <=64% <=63% <=62%
-3.00% <=64% <=64% <=63% <=61% <=61% <=61% <=59%
-2.50% <=62% <=61% <=60% <=60% <=59% <=58% <=58% <=57%
-2.00% <=59% <=58% <=58% <=57% <=56% <=55% <=55% <=54% <=53%
-1.50% <=56% <=55% <=54% <=54% <=53% <=53% <=53% <=52% <=51% <=51%
-1.00% <=52% <=51% <=51% <=51% <=50% <=49% <=49% <=48% <=48% <=48%
-0.50% <=47% <=46% <=45% <=45% <=44% <=44% <=44% <=43% <=43% <=43%
0.00% <=40% <=40% <=39% <=38% <=38% <=38% <=37% <=37% <=37% <=36%
To determine the adjusted rate of accrual on the LYONs, once our two year
subordinated debt rate and stock price factor have been determined, identify
the column in the table above that corresponds to our two year subordinated
debt rate. Then, identify the row in that column of the table that corresponds
to our stock price factor. Locate the percentage in the left most column of the
table in that row. Our two year subordinated debt rate minus that percentage
equals the adjusted rate of accrual.
For example, if, according to the procedures described above, our
subordinated debt rate is determined to be 6.25% and the average of the closing
prices of our common stock for the 20 consecutive trading days ending on the
third trading day prior to September 11, 2004 is $66.99, which is 63% of
$106.33, the accreted conversion price (assuming no adjustments) of the LYONs,
then we will deduct 3.00% from 6.25% to determine the adjusted rate of accrual
for the two year period ending September 11, 2006 of 3.25%. In the event that
any contingent additional principal accrues on
19
the LYONs, the amount we will pay at maturity of the LYONs will equal the
principal amount at maturity of $1,000 per LYON plus contingent additional
principal (and accrued original issue discount thereon). Contingent additional
principal will accrue on a semi-annual bond equivalent basis, using a 360-day
year composed of twelve 30-day months. The prices and percentages in the
example above are for illustration only. There can be no assurance that the
actual prices and percentages will correspond to the range of prices and
percentages shown.
In the event that any contingent additional principal accrues on the
LYONs, we will disseminate a press release containing this information,
including the aggregate adjusted rate of accrual at which original issue
discount and contingent additional principal will accrue, revised redemption
prices, revised prices at which we will purchase the LYONs at the option of the
holders and the amount payable upon maturity of the LYONs. In addition, we will
publish this information on our website or through such other public medium as
we may use at that time. We will also notify the trustee under the indenture of
any accrual of contingent additional principal (and accrued original issue
discount thereon) on a periodic basis. Following receipt of such notice, the
trustee will provide such information to The Depository Trust Company for
dissemination to its participants.
Redemption of LYONs at the Option of LabCorp
No sinking fund is provided for the LYONs. Prior to September 11, 2006, we
cannot redeem the LYONs at our option. Beginning on September 11, 2006, we may
redeem the LYONs for cash, as a whole at any time or from time to time in part.
We will give not less than 30 days' or more than 60 days' notice of redemption
by mail to holders of LYONs.
If redeemed at our option, the LYONs will be redeemed at a price equal to
the sum of the issue price plus accrued original issue discount and contingent
additional principal, if any, on such LYONs as of the applicable redemption
date. The table below shows the redemption prices (assuming no contingent
additional principal accrues) of a LYON on September 11, 2006, on each
September 11 thereafter prior to maturity and at maturity on September 11,
2021. In addition, the redemption price of a LYON that is redeemed between the
dates listed below would include an amount reflecting the additional accrued
original issue discount that has accrued on such LYON since the immediately
preceding date in the table below. In addition, if contingent additional
principal accrues, these prices will be increased to include such contingent
additional principal (and any original issue discount accrued thereon).
(2)
(1) Accrued (3)
LYON Original Redemption
Issue Issue Price
Redemption Date Price Price (1)+(2)
--------------- ----- ----- -------
September 11,
2006................................... 671.65 70.27 741.92
2007................................... 671.65 85.18 756.83
2008................................... 671.65 100.40 772.05
2009................................... 671.65 115.91 787.56
2010................................... 671.65 131.74 803.39
2011................................... 671.65 147.89 819.54
2012................................... 671.65 164.37 836.02
2013................................... 671.65 181.17 852.82
2014................................... 671.65 198.31 869.96
2015................................... 671.65 215.80 887.45
2016................................... 671.65 233.64 905.29
2017................................... 671.65 251.83 923.48
2018................................... 671.65 270.39 942.04
2019................................... 671.65 289.33 960.98
2020................................... 671.65 308.65 980.30
At stated maturity..................... 671.65 328.35 1,000.00
If less than all of the outstanding LYONs are to be redeemed, the trustee
will select the LYONs to be redeemed in principal amounts at maturity of $1,000
or integral multiples of $1,000. In this case, the trustee may select the LYONs
by lot, pro rata or by any other method the trustee considers fair and
appropriate. If a portion of a holder's LYONs is
20
selected for partial redemption and the holder converts a portion of the LYONs,
the converted portion will be deemed to be the portion selected for redemption.
Purchase of LYONs by LabCorp at the Option of the Holder
On September 11, 2004, September 11, 2006 and September 11, 2011, we may,
at the option of the holder, be required to purchase any outstanding LYON for
which a written purchase notice has been properly delivered by the holder and
not withdrawn, subject to certain additional conditions. Holders may submit
their LYONs for purchase to the paying agent at any time from the opening of
business on the date that is 20 business days prior to such purchase date until
the close of business on the first business day immediately preceding the
purchase date.
The purchase price of a LYON will be as set forth below, plus, if
applicable, accrued contingent additional principal (and any accrued original
discount thereon):
o $712.97 per LYON on September 11, 2004;
o $741.92 per LYON on September 11, 2006; and
o $819.54 per LYON on September 11, 2011.
The above purchase prices reflect a price equal to the sum of the issue
price and accrued original issue discount on such LYONs as of the applicable
purchase date.
We may, at our option, elect to pay the purchase price in cash or shares
of common stock, or any combination thereof. For a discussion of the tax
treatment of a holder receiving cash, common stock or any combination thereof,
see "Certain U.S. Federal Income Tax Considerations--Tax Consequences to United
States Holders--Sale, Exchange, Conversion or Retirement of the LYONs."
We are required to give notice on a date not less than 20 business days
prior to each purchase date to all holders at their addresses shown in the
register of the registrar, and to beneficial owners as required by applicable
law, stating among other things:
o the amount of the purchase price;
o whether we will pay the purchase price of LYONs in cash or common
stock or any combination thereof, specifying the percentages of each;
o if we elect to pay in common stock, the method of calculating the
market price of the common stock; and
o the procedures that holders must follow to require us to purchase
their LYONs.
The purchase notice given by each holder electing to require us to
purchase LYONs shall state:
o the certificate numbers of the holder's LYONs to be delivered for
purchase;
o the portion of the principal amount at maturity of LYONs to be
purchased, which must be $1,000 or an integral multiple of $1,000;
o that the LYONs are to be purchased by us pursuant to the applicable
provisions of the LYONs; and
o in the event we elect, pursuant to the notice that we are required to
give, to pay the purchase price in common stock, in whole or in part,
but the purchase price is ultimately to be paid to the holder
entirely in cash because any of the conditions to payment of the
purchase price or a portion of the purchase price in common stock is
not satisfied prior to the close of business on the purchase date, as
described below, whether the holder elects:
(1) to withdraw the purchase notice as to some or all of the LYONs
to which it relates, or
21
(2) to receive cash in respect of the entire purchase price for all
LYONs or portions of LYONs subject to such purchase notice.
If the purchase price for the LYONs subject to the purchase notice is
ultimately to be paid to a holder entirely in cash because we have not
satisfied one or more of the conditions to payment of the purchase price in
common stock prior to the close of business on the purchase date, a holder
shall be deemed to have elected to receive cash in respect of the entire
purchase price for all such LYONs unless such holder has properly notified us
of its election to withdraw the purchase notice. For a discussion of the tax
treatment of a holder receiving cash instead of common stock, see "Certain U.S.
Federal Income Tax Considerations--Tax Consequences to United States
Holders--Sale, Exchange, Conversion or Retirement of the LYONs."
Any purchase notice may be withdrawn by the holder by a written notice of
withdrawal delivered to the paying agent prior to the close of business on the
first business day immediately preceding the purchase date.
o The notice of withdrawal shall state:
o the principal amount at maturity being withdrawn;
o if certificated LYONs have been issued, the certificate numbers of
the LYONs being withdrawn, or if not certificated, such notice must
comply with appropriate DTC procedures; and
o the principal amount at maturity, if any, of the LYONs that remains
subject to the purchase notice.
If we elect to pay the purchase price, in whole or in part, in shares of
our common stock, the number of such shares we deliver shall be equal to the
portion of the purchase price to be paid in common stock divided by the market
price of a share of common stock.
We will pay cash based on the market price for all fractional shares of
common stock in the event we elect to deliver common stock in payment, in whole
or in part, of the purchase price. See "Certain U.S. Federal Income Tax
Considerations--Tax Consequences to United States Holders--Sale, Exchange,
Conversion or Retirement of LYONs."
The market price of our common stock shall be an amount equal to the
average of the sale prices of our common stock for the five-trading-day period
ending on the third business day prior to the applicable purchase date, or, if
such business day is not a trading day, then on the last trading day prior to
such business day, appropriately adjusted to take into account the occurrence,
during the period commencing on the first of the trading days during the five
day trading period and ending on the purchase date, of events that would result
in an adjustment of the conversion rate with respect to the common stock. See
"--Conversion Rights" for a description of the manner in which the sales price
of our common stock is determined.
The sale price of our common stock on any date means the closing per share
sale price (or if no closing sale price is reported, the average of the bid and
ask prices or, if more than one in either case, the average of the average bid
and the average ask prices) on such date as reported in composite transactions
for the principal United States securities exchange on which the common stock
is traded or, if the common stock is not listed on a United States national or
regional securities exchange, as reported by the National Association of
Securities Dealers Automated Quotation System or by the National Quotation
Bureau Incorporated. In the absence of a quotation, we will determine the sale
price on the basis of such quotations as we consider appropriate.
Because the market price of our common stock is determined prior to the
applicable purchase date, holders of LYONs bear the market risk with respect to
the value of the common stock to be received from the date such market price is
determined to such purchase date. We may pay the purchase price or any portion
of the purchase price in common stock only if the information necessary to
calculate the market price is published in a daily newspaper of national
circulation.
Upon determination of the actual number of shares of common stock in
accordance with the foregoing provisions, we will promptly issue a press
release and publish such information on our website or through such other
public medium as we may use at that time.
21
Our right to purchase LYONs, in whole or in part, with common stock is
subject to our satisfying various conditions, including:
o listing the common stock on the principal United States securities
exchange on which our common stock is then listed or, if not so
listed, on Nasdaq;
o the registration of the common stock under the Securities Act and the
Exchange Act, if required; and
o any necessary qualification or registration under applicable state
securities law or the availability of an exemption from such
qualification and registration.
If such conditions are not satisfied with respect to a holder prior to the
close of business on the purchase date, we will pay the purchase price of the
LYONs of the holder entirely in cash. See "Certain U.S. Federal Income Tax
Considerations--Tax Consequences to United States Holders--Sale, Exchange,
Conversion or Retirement of the LYONs." We may not change the form or
components or percentages of components of consideration to be paid for the
LYONs once we have given the notice that we are required to give to holders of
LYONs, except as described in the first sentence of this paragraph.
In connection with any purchase offer, we will:
o comply with the provisions of Rule 13e-4, Rule 14e-1 and any other
tender offer rules under the Exchange Act which may then be
applicable; and
o file Schedule TO or any other required schedule under the Exchange
Act.
Payment of the purchase price for a LYON for which a purchase notice has
been delivered and not validly withdrawn is conditioned upon delivery of the
LYON, together with necessary endorsements, to the paying agent at any time
after delivery of the purchase notice. Payment of the purchase price for the
LYON will be made as soon as practicable following the later of the purchase
date or the time of delivery of the LYON.
If the paying agent holds money or securities sufficient to pay the
purchase price of the LYON on the business day following the purchase date in
accordance with the terms of the indenture, then, immediately after the
purchase date, the LYON will cease to be outstanding and accrued original issue
discount on such LYON will cease to accrue, whether or not the LYON is
delivered to the paying agent. Thereafter, all other rights of the holder shall
terminate, other than the right to receive the purchase price upon delivery of
the LYON.
No LYONs may be purchased for cash at the option of holders if there has
occurred and is continuing an event of default with respect to the LYONs, other
than a default in the payment of the purchase price with respect to such LYONs.
Change in Control Permits Purchase of LYONs at the Option of the Holder
In the event of a change in control (as defined below) occurring on or
prior to September 11, 2006 with respect to LabCorp, each holder will have the
right, at the holder's option, subject to the terms and conditions of the
indenture, to require us to purchase for cash all or any portion of the
holder's LYONs in integral multiples of $1,000 principal amount at maturity, at
a price for each $1,000 principal amount at maturity of such LYONs equal to the
issue price plus accrued original issue discount and contingent additional
principal, if any, to the purchase date. We are required to purchase the LYONs
as of a date no later than 35 business days after the occurrence of such change
in control, but in no event prior to the date on which such change in control
occurs. We refer to this date in this prospectus as the "change in control
purchase date."
Within 15 days after the occurrence of a change in control, we are
obligated to mail to the trustee and to all holders of LYONs at their addresses
shown in the register of the registrar and to beneficial owners as required by
applicable law a notice regarding the change in control, which notice shall
state, among other things:
o the events causing a change in control;
23
o the date of such change in control;
o the last date on which the purchase right may be exercised;
o the change in control purchase price;
o the change in control purchase date;
o the name and address of the paying agent and the conversion agent;
o the conversion rate and any adjustments to the conversion rate
resulting from such change in control;
o that LYONs with respect to which a change in control purchase notice
is given by the holder may be converted only if the change in control
purchase notice has been withdrawn in accordance with the terms of
the indenture; and
o the procedures that holders must follow to exercise these rights.
To exercise this right, the holder must deliver a written notice to the
paying agent prior to the close of business on the business day prior to the
change in control purchase date. The required purchase notice upon a change in
control shall state:
o the certificate numbers of the LYONs to be delivered by the holder;
o the portion of the principal amount at maturity of LYONs to be
purchased, which portion must be $1,000 or an integral multiple of
$1,000; and
o that we are to purchase such LYONs pursuant to the applicable
provisions of the LYONs.
Any such change in control purchase notice may be withdrawn by the holder
by a written notice of withdrawal delivered to the paying agent prior to the
close of business on the business day prior to the change in control purchase
date.
The notice of withdrawal shall state:
o the principal amount at maturity of the LYONs being withdrawn;
o the certificate numbers of the LYONs being withdrawn; and
o the principal amount at maturity, if any, of the LYONs that remains
subject to a change in control purchase notice.
Payment of the change in control purchase price for a LYON for which a
change in control purchase notice has been delivered and not validly withdrawn
is conditioned upon delivery of the LYON, together with necessary endorsements,
to the paying agent at any time after the delivery of such change in control
purchase notice. Payment of the change in control purchase price for such LYON
will be made promptly following the later of the change in control purchase
date or the time of delivery of such LYON.
If the paying agent holds money sufficient to pay the change in control
purchase price of the LYON on the business day following the change in control
purchase date in accordance with the terms of the indenture, then, immediately
after the change in control purchase date, accrued original issue discount,
contingent additional principal and contingent cash interest, if any, on the
LYON will cease to accrue, whether or not the LYON is delivered to the paying
agent. Thereafter, all other rights of the holder shall terminate, other than
the right to receive the change in control purchase price upon delivery of the
LYON.
Under the indenture, a "change in control" of LabCorp is deemed to have
occurred at such time as:
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o any person, including its affiliates and associates, other than
LabCorp or its subsidiaries, files a Schedule 13D or Schedule TO (or
any successor schedule, form or report under the Exchange Act)
disclosing that such person has become the beneficial owner of 50% or
more of the aggregate voting power of our common stock and other
capital stock with equivalent voting rights, or other capital stock
into which the common stock is reclassified or changed, with certain
exceptions; or
o there shall be consummated any share exchange, consolidation or
merger of LabCorp pursuant to which the common stock would be
converted into cash, securities or other property, in each case other
than a share exchange, consolidation or merger of LabCorp in which
the holders of the common stock and other capital stock with
equivalent voting rights, immediately prior to the share exchange,
consolidation or merger have, directly or indirectly, at least a
majority of the total voting power in the aggregate of all classes of
capital stock of the continuing or surviving corporation immediately
after the share exchange, consolidation or merger.
The indenture does not permit our board of directors to waive our
obligation to purchase LYONs at the option of holders in the event of a change
in control.
In connection with any purchase offer in the event of a change in control,
we will:
o comply with the provisions of Rule 13e-4, Rule 14e-1 and any other
tender offer rules under the Exchange Act which may then be
applicable; and
o file Schedule TO or any other required schedule under the Exchange
Act.
The change in control purchase feature of the LYONs may, in certain
circumstances, make more difficult or discourage a takeover of LabCorp. The
change in control purchase feature, however, is not the result of our knowledge
of any specific effort:
o to accumulate shares of common stock;
o to obtain control of us by means of a merger, tender offer,
solicitation or otherwise; or
o part of a plan by management to adopt a series of anti-takeover
provisions.
Instead, the change in control purchase feature is a standard term
contained in other LYONs offerings that have been marketed by Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch"). The terms of the change
in control purchase feature resulted from negotiations between Merrill Lynch
and us.
We could, in the future, enter into certain transactions, including
certain recapitalizations, that would not constitute a change in control with
respect to the change in control purchase feature of the LYONs but that would
increase the amount of our or our subsidiaries' outstanding indebtedness.
No LYONs may be purchased at the option of holders upon a change in
control if there has occurred and is continuing an event of default with
respect to the LYONs, other than a default in the payment of the change in
control purchase price with respect to the LYONs.
Events of Default and Acceleration
The following are events of default under the indenture:
o default in the payment of any principal amount at maturity, accrued
original issue discount, any contingent additional principal,
redemption price, purchase price and change in control purchase
price, if any, with respect to the LYONs, whether or not such payment
is prohibited by the provisions of the indenture;
o default in payment of any contingent cash interest, which default
continues for 30 days;
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o default in the performance or breach of any covenant or warranty of
LabCorp in the indenture, which default continues uncured for a
period of 60 days after written notice to LabCorp by the trustee or
to LabCorp and the trustee by the holders of at least 25% in
principal amount at maturity of the outstanding LYONs;
o (A) our failure to make any payment by the end of any applicable
grace period after maturity of indebtedness, which term as used in
the indenture means obligations (other than nonrecourse obligations)
of LabCorp for borrowed money or evidenced by bonds, debentures,
notes or similar instruments in an aggregate principal amount in
excess of $25 million ("Indebtedness") and continuance of such
failure, or (B) the acceleration of Indebtedness because of a default
with respect to such Indebtedness without such Indebtedness having
been discharged or such acceleration having been cured, waived,
rescinded or annulled in case of (A) above, for a period of 30 days
after written notice to us by the trustee or to us and the trustee by
the holders of not less than 25% in aggregate principal amount at
maturity of the LYONs then outstanding. However, if such failure or
acceleration referred to in (A) or (B) above shall cease or be cured,
waived, rescinded or annulled, then the event of default by reason
thereof shall be deemed not to have occurred; or
o our failure to comply with any of our other agreements in the LYONs
or the indenture upon our receipt of notice of such default from the
trustee or from holders of not less than 25% in aggregate principal
amount at maturity of the LYONs, and our failure to cure (or obtain a
waiver of) such default within 60 days after we receive such notice;
or
o certain events of bankruptcy, insolvency or reorganization affecting
LabCorp or our significant subsidiaries.
If an event of default shall have occurred and be continuing, either the
trustee or the holders of not less than 25% in aggregate principal amount at
maturity of the LYONs then outstanding may declare the issue price of the LYONs
plus the original issue discount on the LYONs accrued through the date of such
declaration, and any accrued and unpaid contingent cash interest through the
date of such declaration and any accrued contingent additional principal
through the date of such declaration, to be immediately due and payable. In the
case of certain events of bankruptcy or insolvency of LabCorp, the issue price
of the LYONs plus the original issue discount, any contingent cash interest and
any accrued contingent additional principal through the occurrence of such
event shall automatically become and be immediately due and payable.
Mergers and Sales of Assets
The indenture provides that we may not consolidate with or merge into any
person or convey, transfer or lease our properties and assets substantially as
an entirety to another person, unless, among other items:
o the resulting, surviving or transferee person is a corporation
organized and existing under the laws of the United States, any state
thereof or the District of Columbia and such corporation (if other
than us) assumes all our obligations under the LYONs and the
indenture; and
o we or such successor corporation shall not immediately thereafter be
in default under the indenture.
Upon the assumption of our obligations by such corporation in such
circumstances, subject to certain exceptions, we shall be discharged from all
obligations under the LYONs and the indenture. Although such transactions are
permitted under the indenture, certain of the foregoing transactions occurring
on or prior to September 11, 2006 could constitute a change in control in
LabCorp, permitting each holder to require us to purchase the LYONs of such
holder as described above.
Modification
We and the trustee may modify or amend the indenture or the LYONs with the
consent of the holders of not less than a majority in aggregate principal
amount at maturity of the LYONs then outstanding. However, the consent of the
holders of each outstanding LYON would be required to:
o alter the manner of calculation or rate of accrual of original issue
discount, contingent cash interest or contingent additional principal
on any LYON or extend the time of payment;
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o make any LYON payable in money or securities other than that stated
in the LYON;
o change the stated maturity of any LYON;
o reduce the amount of principal payable upon acceleration of maturity
of the LYONs following a default;
o make any change that adversely affects the rights of a holder to
convert any LYON;
o make any change that adversely affects the right to require us to
purchase a LYON;
o impair the right to institute suit for the enforcement of any payment
with respect to, or conversion of, the LYONs; and
o change the provisions in the indenture that relate to modifying or
amending the indenture.
Without the consent of any holder of LYONs, we and the trustee may enter
into supplemental indentures for any of the following purposes:
o to evidence a successor to us and the assumption by that successor of
our obligations under the indenture and the LYONs;
o to add to our covenants for the benefit of the holders of the LYONs
or to surrender any right or power conferred upon us;
o to secure our obligations in respect of the LYONs;
o to make any changes or modifications to the indenture necessary in
connection with the registration of the LYONs under the Securities
Act and the qualifications of the LYONs under the Trust Indenture Act
as contemplated by the indenture;
o to cure any ambiguity or inconsistency in the indenture; provided,
however, that such amendment does not materially adversely affect the
rights of any holder of the LYONs; or
o to make any change that does not adversely affect the rights of any
holder of the LYONs.
The holders of a majority in principal amount at maturity of the
outstanding LYONs may, on behalf of all the holders of all LYONs:
o waive compliance by us with restrictive provisions of the indenture,
as detailed in the indenture; and
o waive any past default under the indenture and its consequences,
except a default in the payment of the principal amount at maturity,
issue price, accrued and unpaid interest, accrued original issue
discount, redemption price, purchase price or change in control
purchase price or obligation to deliver common stock upon conversion
with respect to any LYON or in respect of any provision which under
the indenture cannot be modified or amended without the consent of
the holder of each outstanding LYON affected.
Discharge of the Indenture
We may satisfy and discharge our obligations under the indenture by
delivering to the trustee for cancellation all outstanding LYONs or by
depositing with the trustee, the paying agent or the conversion agent, if
applicable, after the LYONs have become due and payable, whether at stated
maturity or any redemption date, or any purchase date, or a change in control
purchase date, or upon conversion or otherwise, cash or shares of common stock
(as applicable under the terms of the indenture) sufficient to pay all of the
outstanding LYONs and paying all other sums payable under the indenture.
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Calculations in Respect of LYONs
We are responsible for making all calculations called for under the LYONs.
These calculations include, but are not limited to, determination of the market
prices of our common stock. We will make all these calculations in good faith
and, absent manifest error, our calculations will be final and binding on
holders of LYONs. We will provide a schedule of our calculations to the
trustee, and the trustee is entitled to rely upon the accuracy of our
calculations without independent verification.
Limitations of Claims in Bankruptcy
If a bankruptcy proceeding is commenced in respect of LabCorp, the claim
of the holder of a LYON is, under Title 11 of the United States Code, limited
to the issue price of the LYON plus the portion of the accrued original issue
discount, any contingent cash interest and any contingent additional principal
that has accrued from September 11, 2001 to the commencement of the proceeding.
In addition, the holders of the LYONs will be subordinated in right of payment
to senior indebtedness and effectively subordinated to the indebtedness and
other liabilities of our subsidiaries.
Governing Law
The indenture and the LYONs are governed by, and construed in accordance
with, the laws of the State of New York.
Information Concerning the Trustee
The Bank of New York is the trustee, registrar, paying agent and
conversion agent under the indenture for the LYONs.
Book-Entry System
The LYONs have been issued only in the form of global securities held in
book-entry form. DTC or its nominee is the sole registered holder of the LYONs
for all purposes under the indenture. Owners of beneficial interests in the
LYONs represented by the global securities hold their interests pursuant to the
procedures and practices of DTC. As a result, beneficial interests in any such
securities are shown on, and may only be transferred through, records
maintained by DTC and its direct and indirect participants and any such
interest may not be exchanged for certificated securities, except in limited
circumstances. Owners of beneficial interests must exercise any rights in
respect of their interests, including any right to convert or require purchase
of their interests in the LYONs, in accordance with the procedures and
practices of DTC. Beneficial owners are not holders and are not entitled to any
rights under the global securities or the indenture. LabCorp and the trustee,
and any of their respective agents, may treat DTC as the sole holder and
registered owner of the global securities.
Exchange of Global Securities
LYONs represented by a global security are exchangeable for certificated
securities with the same terms only if:
o DTC is unwilling or unable to continue as depositary or if DTC ceases
to be a clearing agency registered under the Exchange Act and a
successor depositary is not appointed by us within 90 days;
o we decide to discontinue use of the system of book-entry transfer
through DTC (or any successor depositary); or
o a default under the indenture occurs and is continuing.
DTC has advised us as follows: DTC is a limited-purpose trust company
organized under the New York Banking Law, a "banking organization" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
facilitates the settlement of transactions among its participants through
electronic computerized book-entry changes in participants' accounts,
eliminating the need for physical movement of securities certificates. DTC's
participants include securities brokers and dealers, including Merrill Lynch,
banks, trust companies, clearing corporations and other organizations, some of
whom and/or whose representatives, own DTC. Access to DTC's book-entry system
is also 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.
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DESCRIPTION OF CAPITAL STOCK
The following description of our capital stock is not complete and is
qualified in its entirety by reference to our amended and restated certificate
of incorporation.
Our authorized capital stock consists of 265,000,000 shares of common
stock, par value $0.10 per share, and 30,000,000 shares of preferred stock, par
value $0.10 per share. As of October 16, 2001, 70,242,018 shares of common
stock and no shares of preferred stock were issued and outstanding.
Common Stock
Each holder of common stock is entitled to one vote for each share held on
all matters to be voted upon by the stockholders. The holders of outstanding
shares of common stock, subject to any preferences that may be applicable to
any outstanding series of preferred stock, are entitled to receive ratably such
dividends out of assets legally available therefor at such times and in such
amounts as our board of directors may from time to time determine. Upon our
liquidation or dissolution, the holders of our common stock will be entitled to
share ratably in our assets legally available for distribution to shareholders
after payment of liabilities and subject to the prior rights of any holders of
preferred stock then outstanding. Holders of common stock generally have no
conversion, sinking funds, redemption, preemptive or subscription rights. In
addition, the common stock does not have cumulative voting rights. Shares of
common stock are not liable to further calls or assessments by us and holders
of common stock are not liable for any of our liabilities.
The transfer agent and registrar for the common stock is American Stock
Transfer & Trust Company.
Preferred Stock
On June 6, 2000, we called for redemption all of our outstanding Series A
Convertible Exchangeable Preferred Stock and Series B Convertible Pay-in-Kind
Preferred Stock. Conversion of these shares into common stock following such
announcement resulted in the issuance of approximately 21.2 million additional
shares of common stock.
By resolution of our board of directors and without any further vote or
action by our shareholders, we have the authority to issue preferred stock in
one or more series and to fix from time to time the number of shares to be
included in each such series and the designations, preferences, qualifications,
limitations, restrictions and special or relative rights of the shares of each
such series. Our ability to issue preferred stock, while providing flexibility
in connection with possible acquisitions and other corporate purposes, could
adversely affect the voting power of the holders of the common stock and could
have the effect of making it more difficult for a person to acquire, or of
discouraging a person from attempting to acquire, control of us.
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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following discussion describes the material U.S. federal income tax
consequences of the ownership and disposition of the LYONs and, to the extent
described below, our common stock received upon conversion or repurchase of the
LYONs. This discussion applies only to LYONs or shares of our common stock that
are held as capital assets within the meaning of Section 1221 of the Code.
This discussion does not address the U.S. federal income tax consequences
of the ownership or disposition of our common stock, nor does it describe all
of the tax consequences that may be relevant to a holder in light of its
particular circumstances or to holders subject to special rules, such as:
o certain financial institutions;
o insurance companies;
o dealers in securities or foreign currencies;
o persons holding LYONs as part of a "straddle," "hedge," "conversion"
or other integrated transaction;
o United States Holders (as defined below) whose functional currency is
not the U.S. dollar;
o certain former citizens or residents of the United States;
o partnerships or other entities classified as partnerships for U.S.
federal income tax purposes; or
o persons subject to the alternative minimum tax.
This discussion is based on the Internal Revenue Code of 1986, as amended
(the "Code"), administrative pronouncements, judicial decisions and existing
and proposed Treasury regulations, changes to any of which subsequent to the
date of this prospectus may affect the tax consequences described herein,
possibly with retroactive effect.
Prospective purchasers of LYONs should consult their tax advisers with
regard to the application of the U.S. federal income tax laws to their
particular situations as well as the tax consequences arising under the laws of
any state, local or foreign taxing jurisdiction.
Classification of the LYONs
We are treating the LYONs as indebtedness of LabCorp that is subject to
the Treasury regulations governing contingent payment debt instruments (the
"contingent debt regulations"). Pursuant to the terms of the indenture, we and
every holder agree (in the absence of an administrative pronouncement or
judicial ruling to the contrary) to treat the LYONs as debt instruments that
are subject to the contingent debt regulations and to be bound by our
application of the contingent debt regulations to the LYONs, including
generally our determination of the rate at which interest will be deemed to
accrue on the LYONs (and the related "projected payment schedule" determined by
us as described below) for U.S. federal income tax purposes.
However, the proper application of the contingent debt regulations to the
LYONs is uncertain in a number of respects, and no assurance can be given that
the Internal Revenue Service ("IRS") will not assert that the LYONs should be
treated differently. A different treatment from that described below could
affect the amount, timing, source and character of income, gain or loss with
respect to an investment in the LYONs. In particular, it might be determined
that a holder should not accrue interest income in excess of the initial yield
to maturity, should not recognize income or gain upon the conversion of a LYON
and should recognize capital gain or loss upon a taxable disposition of a LYON.
Accordingly, holders are urged to consult their tax advisors regarding the U.S.
federal income tax consequences of an investment in the LYONs (including
alternative characterizations of the LYONs) and with respect to any tax
consequences arising under the laws of any state, local or foreign taxing
jurisdiction.
The remainder of this discussion assumes that the LYONs are treated as
indebtedness subject to the contingent debt regulations.
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Tax Consequences to United States Holders
As used herein, the term "United States Holder" means a beneficial owner
of a LYON that is for U.S. federal income tax purposes:
o a citizen or resident of the United States;
o a corporation, or other entity taxable as a corporation for U.S.
federal income tax purposes, created or organized in or under the
laws of the United States or of any political subdivision thereof; or
o an estate or trust the income of which is subject to U.S. federal
income taxation regardless of its source.
Interest Accruals on the LYONs
Under the contingent debt regulations, a United States Holder, regardless
of its method of accounting for U.S. federal income tax purposes, is required
to accrue interest income on the LYONs on a constant yield basis at an assumed
yield (the "comparable yield") determined on September 11, 2001, subject to
certain adjustments as described below. The comparable yield is based on the
yield at which we could issue a non-convertible, fixed-rate debt instrument
with no contingent payments, but with terms similar to those of the LYONs. We
have determined the comparable yield to be 8.68% compounded semi-annually,
which is higher than the initial yield to maturity of the LYONs. Accordingly,
in each year, United States Holders are required to include in income an amount
of interest in excess of accruals based on the initial yield to maturity of the
LYONs and in excess of any contingent cash interest payments actually received
in that year.
Solely for purposes of determining the amount of interest income that a
United States Holder is required to accrue, we are required to construct a
"projected payment schedule" in respect of the LYONs representing a series of
payments the amount and timing of which would produce a yield to maturity on
the LYONs equal to the comparable yield. The projected payment schedule for the
LYONs includes estimates for payments of contingent interest and an estimate
for a payment at maturity taking into account the conversion feature. United
States Holders may obtain the projected payment schedule by submitting a
request for it to us at: 358 South Main Street, Burlington, North Carolina
27215. Attention: Bradford T. Smith, Executive Vice President, Chief Legal
Counsel and Secretary.
Neither the comparable yield nor the projected payment schedule
constitutes a representation by us regarding the actual amounts that the LYONs
will pay, or the value at any time of the common stock into which the LYONs may
be converted.
Based on the comparable yield and the issue price of the LYONs, a United
States Holder of a LYON (regardless of its accounting method) is required to
accrue as interest the sum of the daily portions of interest on the LYON for
each day in the taxable year on which the holder holds the LYON, adjusted
upward or downward to reflect the difference, if any, between the actual and
the projected amount of any contingent payments on the LYON (as described
below).
The daily portions of interest in respect of a LYON are determined by
allocating to each day in an accrual period the ratable portion of interest on
the LYON that accrues in the accrual period. The amount of interest on a LYON
that accrues in an accrual period is the product of the comparable yield on the
LYON (adjusted to reflect the length of the accrual period) and the adjusted
issue price of the LYON. The adjusted issue price of a LYON at the beginning of
the first accrual period equals its issue price. For any accrual periods
thereafter, the adjusted issue price will equal (x) the sum of the issue price
of such LYON and any interest previously accrued thereon by a holder
(disregarding any positive or negative adjustments, both as defined below)
minus (y) the amount of any projected payments on the LYONs for previous
accrual periods.
In addition to the interest accrual discussed above, a United States
Holder is required to recognize interest income equal to the amount of the
excess of actual payments over projected payments (a "positive adjustment") in
respect of a LYON for a taxable year. For this purpose, the payments in a
taxable year include the fair market value of property received (including, as
discussed below, common stock received upon conversion or repurchase of a LYON)
in that year. If a United States Holder receives actual payments that are less
than the projected payments in respect of a LYON for a taxable year, the United
States Holder will incur a "negative adjustment" equal to the amount of the
difference. This negative adjustment will (i) first reduce the amount of
interest in respect of the LYON that a United States Holder would otherwise be
required to include in the taxable year and (ii) to the extent of any excess,
will give rise to an ordinary loss equal to that portion of such excess as does
not exceed the excess of (x) the amount of all previous inclusions under the
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LYON over (y) the total amount of the United States Holder's negative
adjustments treated as ordinary loss on the LYON in prior taxable years. A
negative adjustment is not subject to the two percent floor limitation imposed
on miscellaneous deductions under Section 67 of the Code. Any negative
adjustment in excess of the amounts described in (i) and (ii) will be carried
forward to offset future interest income in respect of the LYONs or to reduce
the amount realized on a sale, exchange, conversion or retirement of the LYONs.
A United States Holder that purchases LYONs for more or less than the
adjusted issue price of the LYONs on the acquisition date must, upon acquiring
the debt instrument, reasonably allocate the difference between the Holder's
tax basis and the adjusted issue price to daily portions of interest or
projected payments over the remaining term of the LYONs. United States Holders
should consult their tax advisors regarding these allocations.
If a United States Holder's basis is greater than the adjusted issue
price, the amount of the difference allocated to a daily portion of interest or
to a projected payment is treated as a negative adjustment on the date the
daily portion accrues or the payment is made. On the date of the adjustment,
the Holder's adjusted basis in the debt instrument is reduced by the amount the
Holder treats as a negative adjustment.
If a United States Holder's basis is less than the adjusted issue price,
the amount of the difference allocated to a daily portion of interest or to a
projected payment is treated as a positive adjustment on the date the daily
portion accrues or the payment is made. On the date of the adjustment, the
Holder's adjusted basis in the debt instrument is increased by the amount the
Holder treats as a positive adjustment.
Sale, Exchange, Conversion or Retirement of the LYONs
Upon a sale, exchange or retirement of a LYON for cash, a United States
Holder will generally recognize gain or loss equal to the difference between
the amount realized on the sale, exchange or retirement and such holder's
adjusted tax basis in the LYON. A holder's adjusted tax basis in a LYON will
generally be equal to the holder's original purchase price for the LYON,
increased by any interest income previously accrued by the United States Holder
(determined without regard to any adjustments to interest accruals described
above) and decreased by the amount of any projected payments on the LYON for
previous accrual periods. A United States Holder generally will treat any gain
as interest income and any loss as ordinary loss to the extent of the excess of
previous interest inclusions over the total negative adjustments previously
taken into account as ordinary loss, and the balance as capital loss. The
deductibility of capital losses is subject to limitations.
In addition, as described above, our calculation of the comparable yield
and the projected payment schedule for the LYONs includes the receipt of stock
upon conversion of a LYON as a contingent payment in respect of the LYON.
Accordingly, we intend to treat the receipt of common stock upon conversion of
a LYON as a contingent payment. As described above, holder's are generally
bound by our determination of the comparable yield and the projected payment
schedule. Under this treatment, a conversion of a LYON into common stock, or a
repurchase where we elect to pay in common stock, will also result in taxable
gain or loss to the United States Holder under the rules described in the
previous paragraph. For this purpose, the amount realized by a United States
Holder will equal the fair market value of the common stock received upon
conversion or repurchase, plus any cash received.
A United States Holder's tax basis in common stock received upon a
conversion of a LYON or upon the holder's exercise of a repurchase option that
we elect to satisfy in common stock will equal the then current fair market
value of such common stock. The United States Holder's holding period for the
common stock received will commence on the day immediately following the date
of conversion or repurchase.
Constructive Dividends
If at any time we make a distribution of property to our stockholders that
would be taxable to stockholders as a dividend for U.S. federal income tax
purposes and, in accordance with the anti-dilution provisions of the LYONs, the
conversion rate of the LYONs is increased, such increase may be deemed to be
the payment of a taxable dividend to the United States Holders of the LYONs to
the extent of our current or accumulated earnings and profits. For example, an
increase in the conversion rate in the event of distributions of our evidences
of indebtedness or our assets will generally result in deemed dividend
treatment to United States Holders of the LYONs. In general, an increase in the
conversion rate in the event of stock dividends or distributions of rights to
subscribe for common stock will not be a taxable dividend.
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Backup Withholding and Information Reporting
Information returns may be filed with the IRS in connection with payments
on the LYONs and the proceeds from a sale or other disposition of the LYONs. A
United States Holder may be subject to U.S. backup withholding tax at the rates
specified in the Code on these payments if it fails to provide its taxpayer
identification number to the paying agent and comply with certain certification
procedures or otherwise establish an exemption from backup withholding. The
amount of any backup withholding from a payment will be allowed as a credit
against the holder's U.S. federal income tax liability and may entitle the
holder to a refund, provided that the required information is furnished to the
IRS.
Tax Consequences to Non-United States Holders
As used herein, the term "Non-United States Holder" means a beneficial
owner of a LYON that is, for U.S. federal income tax purposes:
o an individual who is classified as a nonresident for U.S. federal
income tax purposes;
o a foreign corporation; or
o a nonresident alien fiduciary of a foreign estate or trust.
LYONs
We are treating payments of contingent interest made to a Non-United
States Holder (other than (i) the receipt of common stock upon conversion or
repurchase of a LYON and (ii) any payment of contingent cash interest made in
any period where such payment is based on the average market price of the LYON)
as subject to U.S. federal withholding tax. Therefore, Non-United States
Holders are subject to withholding on such payments of contingent interest at a
rate of 30%, subject to reduction by an applicable treaty or upon the receipt
of a Form W-8ECI from a Non-United States Holder claiming that the payments are
effectively connected with the conduct of a U.S. trade or business. A
Non-United States Holder that is subject to withholding tax should consult its
own tax advisors as to whether it can obtain a refund for all or a portion of
the withholding tax.
Assuming that the common stock and the LYONs continue to be actively
traded, all other payments on the LYONs made to a Non-United States Holder,
including a payment in our common stock pursuant to a conversion or repurchase,
and any gain realized on a sale or exchange of the LYONs (other than gain
attributable to accrued contingent interest payments), will be exempt from U.S.
federal income or withholding tax, provided that: (i) the Non-United States
Holder does not own, actually or constructively, 10 percent or more of the
total combined voting power of all classes of our stock entitled to vote and is
not a controlled foreign corporation related, directly or indirectly, to us
through stock ownership and is not a bank receiving certain types of interest,
(ii) the certification requirement described below has been fulfilled with
respect to the Non-United States Holder and (iii) such payments and gain are
not effectively connected with the conduct by such Non-United States Holder of
a trade or business in the United States. However, if a Non-United States
Holder were deemed to have received a constructive dividend (see "Tax
Consequences to United States Holders--Constructive Dividends" above), the
Non-United States holder will generally be subject to U.S. withholding tax at a
30% rate, subject to a reduction by an applicable treaty, on the taxable amount
of such dividend.
The certification requirement referred to in the preceding paragraph will
be fulfilled if the beneficial owner of a LYON certifies on IRS Form W-8BEN,
under penalties of perjury, that it is not a U.S. person and provides its name
and address.
If a Non-United States Holder of a LYON is engaged in a trade or business
in the United States, and if payments on the LYON are effectively connected
with the conduct of this trade or business, the Non-United States Holder,
although exempt from the withholding tax discussed above, will generally be
taxed in the same manner as a United States Holder (see "Tax Consequences to
United States Holders" above), except that the Non-United States Holder will be
required to provide to us or our paying agent a properly executed IRS Form
W-8ECI in order to claim an exemption from withholding tax. These holders
should consult their own tax advisors with respect to other U.S. tax
consequences of the ownership and disposition of LYONs including the possible
imposition of a 30% branch profits tax.
33
Common Stock
Dividends paid to a Non-United States Holder of our common stock generally
will be subject to withholding tax at a 30% rate or a reduced rate specified by
an applicable income tax treaty. In order to obtain a reduced rate of
withholding, a Non-United States Holder will be required to provide an IRS Form
W-8BEN certifying its entitlement to benefits under a treaty. In addition,
where dividends are paid to a Non-United States Holder that is a partnership or
other pass-through entity, persons holding an interest in the entity may need
to provide the certification.
The withholding tax does not apply to dividends paid to a Non-United
States Holder who provides a Form W-8ECI, certifying that the dividends are
effectively connected with the Non-United States Holder's conduct of a trade or
business within the United States. Instead, the effectively connected dividends
will be subject to regular U.S. income tax as if the Non-United States Holder
were a U.S. resident. A non-U.S. corporation receiving effectively connected
dividends may also be subject to an additional "branch profits tax" imposed at
a rate of 30% (or a lower treaty rate) on an earnings amount that is net of the
regular tax.
A Non-United States Holder generally will not be subject to U.S. federal
income tax on gain realized on a sale or other disposition of our common stock
unless:
o the gain is effectively connected with a trade or business of the
Non-United States Holder in the United States,
o in the case of a Non-United States Holder who is a non-resident alien
individual, the individual is present in the United States for 183 or
more days in the taxable year of the disposition and certain other
conditions are met, or
o we are or have been a U.S. real property holding corporation at any
time within the five-year period preceding the disposition or the
Non-United States Holder's holding period, whichever period is
shorter.
We believe that we are not, and do not anticipate becoming, a U.S. real
property holding corporation for United States federal income tax purposes.
Backup Withholding and Information Reporting
Information returns may be filed with the IRS in connection with payments
on the LYONs or our common stock and the proceeds from their sale or other
disposition. A Non-United States Holder may be subject to U.S. backup
withholding tax on these payments unless the Non-United States Holder complies
with certification procedures to establish that it is not a U.S. person. The
amount of any backup withholding from a payment to the Non-United States Holder
will be allowed as a credit against the Non-United States Holder's U.S. federal
income tax liability and may entitle the Non-United States Holder to a refund,
provided that the required information is furnished to the IRS.
34
SELLING SECURITYHOLDERS
The LYONs were originally issued to, and resold by, Merrill Lynch in
transactions exempt from the registration requirements of the Securities Act to
persons reasonably believed by Merrill Lynch to be "qualified institutional
buyers" as defined in Rule 144A of the Securities Act. The selling
securityholders may from time to time offer and sell pursuant to this
prospectus any or all of the LYONs listed below and shares of common stock
issued upon conversion or purchase of such LYONs. When we refer to the "selling
securityholders" in this prospectus, we mean those persons listed in the table
below, as well as the pledgees, donees, assignees, transferees, successors and
others who later hold any of the selling securityholders' interests.
We are filing this registration statement pursuant to a registration
rights agreement that we entered into with Merrill Lynch whereby we agreed, at
our expense, and for the benefit of the holders of the LYONs, to file a shelf
registration statement covering resale of the LYONs and the shares of common
stock issuable upon conversion or purchase of the LYONs within 90 days after
September 11, 2001 and to cause the registration statement to become effective
within 180 days after September 11, 2001. We are also generally required to
keep the registration statement effective until September 11, 2003, subject to
certain black-out periods upon certain corporate events.
The table below sets forth the name of each selling securityholder, the
aggregate principal amount at maturity of LYONs held by each selling
securityholder and the number of shares of common stock into which such LYONs
are convertible, each of which may be offered pursuant to this prospectus.
Unless set forth below, none of the selling securityholders has, or within the
past three years has had, any material relationship with us or any of our
predecessors or affiliates.
We have prepared the table below based on information given to us by the
selling securityholders on or prior to October 18, 2001. However, any or all of
the LYONs or shares of common stock listed below may be offered for sale
pursuant to this prospectus by the selling securityholders from time to time.
Accordingly, no estimate can be given as to the amounts of LYONs or shares of
common stock that will be held by the selling securityholders upon consummation
of any such sales. In addition, the selling securityholders listed in the table
below may have acquired, sold or transferred, in transactions exempt from the
registration requirements of the Securities Act, some or all of their LYONs
since the date as of which the information in the table is presented.
Information about the selling securityholders may change over time. Any
changed information will be set forth in prospectus supplements.
Aggregate Percentage of Percentage of
Principal Amount LYONs Number of Shares Common Stock
at Maturity of Outstanding of Common Stock Outstanding
LYONs Owned and Prior to the Owned and that Prior to the
Name that May be Sold Offering May be Sold(1) Offering(2)
--------------------------------------------- ---------------- -------- -------------- -----------
Black Diamond Capital I, Ltd. $ 524,000 * 3,513 *
Black Diamond Offshore Ltd. 1,873,000 * 12,559 *
Double Black Diamond Offshore LDC 9,647,000 1.30% 64,686 *
First Union Securities Inc. 19,850,000 2.67% 133,102 *
Lincoln National Convertible Securities Fund 2,500,000 * 16,763 *
MLQA Convertible Securities Arbitrage Ltd. 25,000,000 3.36% 167,635 *
Susquehanna Capital Group 21,000,000 2.82% 140,813 *
UBS AG London Branch 30,500,000 4.10% 204,514 *
Worldwide Transactions Ltd. 456,000 * 3,057 *
All Other Holders of LYONs or Future
Transferees, Pledgees, Donees, Assignees or
Successors of any such Holders(3)(4) $ 632,650,000 85.03% 4,242,171 6.04%
------------------------------------------------------------------------------------------------------------------
35
Aggregate Percentage of Percentage of
Principal Amount LYONs Number of Shares Common Stock
at Maturity of Outstanding of Common Stock Outstanding
LYONs Owned and Prior to the Owned and that Prior to the
Name that May be Sold Offering May be Sold(1) Offering(2)
--------------------------------------------- ---------------- -------- -------------- -----------
Total (5) $ 744,000,000 100% 4,988,817 7.10%
---------
* Less than 1%.
(1) Assumes conversion of all of the holder's LYONs at a conversion rate of
6.7054 shares of common stock per $1,000 principal amount at maturity of
the LYONs. This conversion rate is subject to adjustment, however, as
described under "Description of LYONs--Conversion Rights--Conversion
Adjustments and Delivery of Common Stock." As a result, the number of
shares of common stock issuable upon conversion of the LYONs may increase
or decrease in the future.
(2) Calculated based on Rule 13d-3(d)(1)(i) of the Exchange Act using
70,242,018 shares of common stock outstanding as of October 16, 2001. In
calculating this amount for each holder, we treated as outstanding the
number of shares of common stock issuable upon conversion of all of that
holder's LYONs, but we did not assume conversion of any other holder's
LYONs.
(3) Information about other selling securityholders will be set forth in
prospectus supplements, as required.
(4) Assumes that any other holders of LYONs, or any future pledgees, donees,
assignees, transferees or successors of or from any such other holders of
LYONs, do not beneficially own any shares of common stock other than the
shares of common stock issuable upon conversion of the LYONs at the
initial conversion rate.
(5) Total number of shares of common stock that may be sold and the related
percentage of common stock outstanding assumes the conversion in full of
all LYONs outstanding. However, as described under "Description of
LYONs--Conversion Rights", a holder of a LYON otherwise entitled to a
fractional share of our common stock will receive cash equal to the then
current sale price of the fractional share.
36
PLAN OF DISTRIBUTION
We are registering the LYONs and the underlying shares of common stock
covered by this prospectus to permit holders to conduct public secondary
trading of these securities from time to time after the date of this
prospectus. We have agreed, among other things, to bear all expenses, other
than underwriting discounts and selling commissions, in connection with the
registration and sale of the LYONs and shares of common stock covered by this
prospectus.
We will not receive any of the proceeds from the resale of the LYONs by
the selling securityholders or any common stock issuable upon conversion or
purchase of the LYONs. We have been advised by the selling securityholders that
the selling securityholders may sell all or a portion of the LYONs and the
underlying shares of common stock beneficially owned by them and offered hereby
from time to time:
o directly; or
o through underwriters, broker-dealers or agents, who may receive
compensation in the form of discounts, commissions or concessions
from the selling securityholders or from the purchasers of the LYONs
and shares of common stock for whom they may act as agent.
The LYONs and the underlying shares of common stock may be sold from time
to time in one or more transactions at:
o fixed prices, which may be changed;
o prevailing market prices at the time of sale;
o varying prices determined at the time of sale; or
o negotiated prices.
These prices will be determined by the holders of the securities or by
agreement between these holders and underwriters or dealers who may receive
fees or commissions in connection with the sale. The aggregate proceeds to the
selling securityholders from the sale of the LYONs or the underlying shares of
common stock offered by them hereby will be the purchase price of the LYONs or
the underlying shares of common stock less discounts and commissions, if any.
The sales described in the preceding paragraph may be effected in
transactions:
o on any national securities exchange or quotation service on which the
LYONs and shares of common stock may be listed or quoted at the time
of sale, including the New York Stock Exchange in the case of shares
of common stock;
o in the over-the-counter market;
o in transactions otherwise than on such exchanges or services or in
the over-the-counter market; or
o through the writing of options.
These transactions may include block transactions or crosses. Crosses are
transactions in which the same broker acts as an agent on both sides of the
trade.
In connection with sales of the LYONs and the underlying shares of common
stock, the selling securityholders may enter into hedging transactions with
broker-dealers. These broker-dealers may in turn engage in short sales of the
LYONs and the underlying shares of common stock in the course of hedging their
positions. The selling securityholders may also sell the LYONs and the
underlying shares of common stock short and deliver such LYONs and shares of
common stock to close out short positions, or loan or pledge the LYONs and
shares of common stock to broker-dealers that in turn may sell the LYONs and
shares of common stock.
37
To our knowledge, there are currently no plans, arrangements or
understandings between any selling securityholders and any underwriter,
broker-dealer or agent regarding the sale of the LYONs and the underlying
shares of common stock by the selling securityholders. Selling securityholders
may not sell any, or may not sell all, of the LYONs and the underlying shares
of common stock offered by them pursuant to this prospectus. In addition, we
cannot assure you that the selling securityholder will not transfer, devise or
gift the LYONs and the underlying shares of common stock by other means not
described in this prospectus. In addition, any securities covered by this
prospectus that qualify for sale pursuant to Rule 144 or Rule 144A of the
Securities Act may be sold under Rule 144 or Rule 144A rather than pursuant to
this prospectus.
Our outstanding shares of common stock are listed for trading on the New
York Stock Exchange under the symbol "LH".
The selling securityholders and any broker-dealers, agents or underwriters
that participate with the selling securityholders in the distribution of the
LYONs or the underlying shares of common stock may be deemed to be
"underwriters" within the meaning of the Securities Act. In this case, any
commissions received by these broker-dealers, agents or underwriters and any
profit on the resale of the LYONs or the underlying shares of common stock
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. In addition, any profits realized by the selling
securityholders may be deemed to be underwriting commissions.
The LYONs were issued and sold in transactions exempt from the
registration requirements of the Securities Act to persons reasonably believed
by Merrill Lynch to be "qualified institutional buyers", as defined in Rule
144A of the Securities Act. We have agreed to indemnify Merrill Lynch and each
selling securityholder, and each selling securityholder has agreed to indemnify
us, Merrill Lynch and each other selling securityholder against specified
liabilities arising under the Securities Act.
The selling securityholders and any other person participating in such
distribution will be subject to the Exchange Act. The Exchange Act rules
include, without limitation, Regulation M, which may limit the timing of the
purchases and sales of any of the LYONs and the underlying shares of common
stock by the selling securityholders and any such other person. In addition,
Regulation M of the Exchange Act may restrict the ability of any person engaged
in the distribution of the LYONs and the underlying shares of common stock to
engage in market-making activities with respect to the particular LYONs and the
underlying shares of common stock being distributed for a period of up to five
business days prior to the commencement of the distribution. This may affect
the marketability of the LYONs and the underlying shares of common stock and
the ability of any person or entity to engage in market-making activities with
respect to the LYONs and the underlying shares of common stock.
We will use our reasonable efforts to keep the registration statement to
which this prospectus relates effective until the earlier of:
o the sale, pursuant to the registration statement to which this
prospectus relates, of all the securities registered thereunder; and
o the expiration of the holding period applicable to such securities
held by persons that are not our affiliates under Rule 144(k) of the
Securities Act or any successor provision.
Our obligation to keep the registration statement to which this prospectus
relates effective is subject to specified, permitted exceptions. In these
cases, we may prohibit offers and sales of the LYONs and the underlying shares
of common stock pursuant to the registration statement to which this prospectus
relates.
38
LEGAL MATTERS
Certain legal matters regarding the LYONs and the shares of common stock
issuable upon conversion or purchase of the LYONs are being passed upon for us
by Davis Polk & Wardwell, New York, New York.
EXPERTS
The consolidated financial statements and financial statement schedule
incorporated in this registration statement on Form S-3 by reference to the
Annual Report on Form 10-K of Laboratory Corporation of America Holdings as of
December 31, 2000 and December 31, 1999 and for each of the three years in the
period ended December 31, 2000 have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC under the Exchange Act. You may read and copy this
information at the following locations of the SEC:
Public Reference Room Northeast Regional Office Midwest Regional Office
450 Fifth Street, N.W. 233 Broadway 500 West Madison Street
Room 1024 New York, NY 10279 Suite 1400
Washington, D.C. 20549 Chicago, IL 60661
You may obtain information on the operation of the Public Reference Room
and the above regional offices by calling the SEC at 1-800-SEC-0330. You may
also obtain copies of the information by mail from the Public Reference Section
of the SEC, 450 Fifth Street, N.W., Room 1024, Washington, DC 20549, at
prescribed rates.
The SEC also maintains a website that contains reports, proxy statements
and other information about issuers, like LabCorp, who file electronically with
the SEC. The address of the site is www.sec.gov.
You can also inspect reports, proxy statements and other information about
LabCorp at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
We are "incorporating by reference" into this prospectus certain
information we file with the SEC, which means that we are disclosing important
information to you by referring you to those documents. The information
incorporated by reference is deemed to be part of this prospectus, except for
any information superseded by information contained directly in this prospectus
or in subsequently filed documents incorporated by reference in this
prospectus. This prospectus incorporates by reference the documents set forth
below that we have previously filed with the SEC. These documents contain
important information about us.
LabCorp SEC Filings (File No. 1-11353) Period
-------------------------------------- ------
Annual Report on Form 10-K............... Fiscal year ended December 31, 2000
Quarterly Report on Form 10-Q............ Quarter ended March 31, 2001
Quarterly Report on Form 10-Q............ Quarter ended June 30, 2001
Current Report on Form 8-K............... Filed February 14, 2001 containing the
press release regarding results for
the quarter and year ended December
31, 2000
Current Report on Form 8-K............... Filed March 26, 2001
Current Report on Form 8-K............... Filed April 23, 2001 containing the
press release regarding results for
the quarter ended March 31, 2001
Current Report on Form 8-K............... Filed May 1, 2001
Current Report on Form 8-K............... Filed May 11, 2001
Current Report on Form 8-K............... Filed June 4, 2001
Current Report on Form 8-K............... Filed June 12, 2001 containing the
amended and restated certificate
of incorporation
Current Report on Form 8-K............... Filed July 11, 2001
39
Current Report on Form 8-K............... Filed July 23, 2001 containing the
press release regarding results for
the quarter ended June 30, 2001
Current Report on Form 8-K............... Filed September 4, 2001
Current Report on Form 8-K............... Filed September 5, 2001
Current Reports on Form 8-K.............. Filed September 6, 2001 and each
containing the press release
regarding the private placement of
the LYONs
Current Report on Form 8-K............... Filed September 19, 2001
Current Report on Form 8-K............... Filed September 21, 2001
Registration Statement on Form 8-B, as
amended on April 27, 1995.............. Filed July 1, 1994
The information required by Part III,
Items 10 through 13, of Form 10-K is
incorporated by reference to our
definitive proxy statement for our
2000 annual meeting of stockholders.... Filed May 24, 2001
All documents we file with the SEC pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act from the date of this prospectus to the end of the
offering of the LYONs and common stock under this prospectus shall also be
deemed to be incorporated herein by reference and will automatically update
information in this prospectus.
You may request a copy of these filings at no cost by writing or calling
LabCorp at the following address or telephone number:
Laboratory Corporation of America Holdings
358 South Main Street
Burlington, NC 27215
Tel. (336) 229-1127
Attn: Bradford T. Smith
Exhibits to the filings will not be sent, however, unless those exhibits
have specifically been incorporated by reference in this document.
40
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
We are paying all of the selling securityholders' expenses related to this
offering, except that the selling securityholders will pay any applicable
broker's commissions and expenses. The following table sets forth the
approximate amount of fees and expenses payable by us in connection with this
registration statement and the distribution of the LYONs and the underlying
shares of common stock registered hereby. Except for the SEC registration fee,
all of these fees and expenses have been estimated.
Amount to be
Paid
------------
SEC registration fee............................................ $136,130
Legal fees and expenses......................................... 150,000
Accounting fees and expenses.................................... 10,000
Miscellaneous................................................... 3,870
--------
TOTAL........................................................ $300,000
========
Item 15. Indemnification of Directors and Officers
As authorized by Section 145 of the General Corporation Law of the State
of Delaware ("Delaware Corporation Law"), each of our directors and officers
may be indemnified by us against expenses (including attorney's fees,
judgments, fines and amounts paid in settlement) actually and reasonably
incurred in connection with the defense or settlement of any threatened,
pending or completed legal proceedings in which he or she is involved by reason
of the fact that he or she is or was our director or officer; provided that he
or she acted in good faith and in a manner that he or she reasonably believed
to be in or not opposed to the best interest of LabCorp; and, with respect to
any criminal action or proceeding, that he or she had no reasonable cause to
believe that his/her conduct was unlawful. If the legal proceeding, however, is
by or in the right of LabCorp, the director or officer may not be indemnified
in respect of any claim, issue, or matter as to which he or she shall have been
adjudged to be liable for negligence or misconduct in the performance of
his/her duty to us unless a court determines otherwise.
Article FIFTH (4) of our Amended and Restated Certificate of Incorporation
provides that no director shall be personally liable to us or our stockholders
for monetary damages for any breach of his or her fiduciary duty as director;
provided, however, that such clause shall not apply to any liability of a
director (i) for any breach of such director's duty of loyalty to LabCorp or
our stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) pursuant to Section
174 of the Delaware Corporation Law or (iv) for any transaction from which the
director derived an improper personal benefit. In addition, the provisions of
Article VII of our By-laws provide that it shall indemnify persons entitled to
be indemnified to the fullest extent permitted by the Delaware Corporation Law.
We maintain policies of officers' and directors' liability insurance in
respect of acts or omissions of (i) our current and former officers and
directors, (ii) our subsidiaries and (iii) "constituent" companies that have
been merged with LabCorp.
II-1
Item 16. Exhibits and Financial Statement Schedules
(a) The following exhibits are filed as part of this registration
statement:
Exhibit No. Document
----------- --------
3.1 Amended and Restated Certificate of Incorporation of LabCorp
dated as of May 24, 2001.
3.2 By-Laws of LabCorp dated as of April 28, 1995 (incorporated by
reference to Form 8-K filed on May 12, 1995).
4.1 Indenture dated as of September 11, 2001 between us and
The Bank of New York, as trustee.
4.2 Registration Rights Agreement dated as of September 11, 2001
between us and Merrill Lynch, Pierce Fenner & Smith Incorporated.
4.3 Form of Liquid Yield Option(TM)Notes due 2021 (included in
Exhibit 4.1).
5.1 Opinion of Davis Polk & Wardwell.
8.1 Opinion regarding tax matters (included in Exhibit 5.1).
12.1 Statement regarding computation of Ratio of Earnings to
Fixed Charges.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Davis Polk & Wardwell (included in Exhibit 5.1).
24.1 Power of Attorney (included on the signature page of this
registration statement).
25.1 Form T-1 Statement of Eligibility of The Bank of New York pursuant
to the Trust Indenture Act of 1939 relating to Exhibit 4.1.
Item 17. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made of securities registered hereby, a post-effective amendment to this
registration statement:
(i) to include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of this registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in this registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the SEC pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a
20 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration statement;
(iii) 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;
provided, however, that paragraphs (i) and (ii) above do not apply if
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
registrant pursuant to Section 13 or Section 15(d) of the Exchange
Act that are incorporated by reference in this registration
statement.
II-2
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby understands that, for purposes of
determining any liability under the Securities Act, each filing of
the registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Exchange Act (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of
the Exchange Act) that is incorporated by reference in this
registration statement shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering
of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Burlington, State of North Carolina, on October
19, 2001.
LABORATORY CORPORATION OF AMERICA HOLDINGS
By: /s/ Bradford T. Smith
---------------------------------------
Name: Bradford T. Smith
Title: Executive Vice President, Chief
Legal Counsel and Secretary
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Bradford T. Smith and Wesley R. Elingburg, and
each of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this registration statement
and to file the same, with all exhibits thereto, and all other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto each said attorney-in-fact and agents full power and authority to do and
perform each and every act in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents or any of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities indicated
on October 19, 2001.
Signature Title
--------- -----
Chairman of the Board, President,
/s/ Thomas P. MacMahon Chief Executive Officer and Director
-----------------------------------------
Thomas P. Mac Mahon
Executive Vice President,
/s/ Bradford T. Smith Chief Legal Counsel and Secretary
-----------------------------------------
Bradford T. Smith
Executive Vice President,
/s/ Wesley R. Elingburg Chief Financial Officer and Treasurer
-----------------------------------------
Wesley R. Elingburg
/s/ Jean-Luc Belingard Director
-----------------------------------------
Jean-Luc Belingard
/s/ Wendy E. Lane Director
-----------------------------------------
Wendy E. Lane
II-4
Signature Title
--------- -----
/s/ Robert E. Mittelstaedt, Jr. Director
-----------------------------------------
Robert E. Mittelstaedt, Jr.
/s/ James B. Powell Director
------------------------------------------
James B. Powell
/s/ David B. Skinner Director
-----------------------------------------
David B. Skinner
/s/ Andrew G. Wallace Director
-----------------------------------------
Andrew G. Wallace
II-5
EXHIBIT INDEX
Exhibit No. Document
----------- --------
3.1 Amended and Restated Certificate of Incorporation of LabCorp
dated as of May 24, 2001.
3.2 By-Laws of LabCorp dated as of April 28, 1995 (incorporated by
reference to Form 8-K filed on May 12, 1995).
4.1 Indenture dated as of September 11, 2001 between us and
The Bank of New York, as trustee.
4.2 Registration Rights Agreement dated as of September 11, 2001
between us and Merrill Lynch, Pierce Fenner & Smith Incorporated.
4.3 Form of Liquid Yield Option(TM)Notes due 2021 (included in
Exhibit 4.1).
5.1 Opinion of Davis Polk & Wardwell.
8.1 Opinion regarding tax matters (included in Exhibit 5.1).
12.1 Statement regarding computation of Ratio of Earnings to
Fixed Charges.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Davis Polk & Wardwell (included in Exhibit 5.1).
24.1 Power of Attorney (included on the signature page of this
registration statement).
25.1 Form T-1 Statement of Eligibility of The Bank of New York pursuant
to the Trust Indenture Act of 1939 relating to Exhibit 4.1.
II-6
EX-3.1
3
oct1901_x0301.txt
EXHIBIT 3.1
AMENDED AND RESTATED CERTIFICATE
OF INCORPORATION
LABORATORY CORPORATION OF AMERICA HOLDINGS
Pursuant to Sections 242 and 245 of the General
Corporation Law of the State of Delaware
* * * * *
The undersigned Thomas P. Mac Mahon and Bradford T. Smith, of
Laboratory Corporation of America Holdings (the "Corporation"), do hereby
certify as follows:
1. (a) The present name of the Corporation is Laboratory Corporation of
America Holdings.
(b) The name under which the Corporation was originally incorporated
is National Health Laboratories Holdings Inc.; and the date of filing the
original Certificate of Incorporation of the Corporation with the Secretary of
State of the State of Delaware is March 8, 1994.
2. The Certificate of Incorporation of the Corporation is hereby
amended by striking out Article FOURTH thereof and by substituting in lieu
thereof new Article FOURTH which is set forth in the Restated Certificate of
Incorporation hereinafter provided for.
3. The provisions of the Certificate of Incorporation of the
Corporation as heretofore amended and/or supplemented, are hereby restated and
integrated into the single instrument which is hereinafter set forth, and which
is entitled Restated Certificate of Incorporation of Laboratory Corporation of
America Holdings, without further amendment other than the amendment herein
certified and without any discrepancy between the provisions of the Certificate
of Incorporation as heretofore amended and supplemented and the provisions of
the said single instrument hereinafter set forth.
4. The amendment and the restatement of the Restated Certificate of
Incorporation herein certified have been duly adopted by the stockholders in
accordance with the provisions of Section 242 and Section 245 of the General
Corporation Law of the State of Delaware in the form set forth as follows:
RESTATED CERTIFICATE OF INCORPORATION
OF
LABORATORY CORPORATION OF AMERICA HOLDINGS
FIRST: The name of the Corporation is Laboratory Corporation of
America Holdings (hereinafter the "Corporation").
SECOND: The address of the registered office of the Corporation in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, County of New Castle. The name of its registered agent at that
address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which a corporation may be organized under the General
Corporation Law of the State of Delaware as set forth in Title 8 of the
Delaware Code (the "GCL").
FOURTH: The total number of shares of stock which the Corporation has
authority to issue is two hundred and ninety-five million shares (295,000,000)
shares of which two hundred and sixty-five million (265,000,000) will be shares
of Common Stock, each having a par value of $0.10, and thirty million
(30,000,000) will be shares of Preferred Stock, each having a par value of
$0.10.
The Board of Directors is expressly authorized to provide for the
issuance of all or any shares of the Preferred Stock in one or more classes or
series, and to fix for each such class or series such voting powers, full or
limited, or no voting powers, and such distinctive designations, preferences
and relative, participating, optional or other special rights and such
qualifications, limitations or restrictions thereof, as shall be stated and
expressed in the resolution or resolutions adopted by the Board of Directors
providing for the issuance of such class or series and as may be permitted by
the GCL, including without limitation, the authority to provide that any such
class or series may be (i) subject to redemption at such time or times and at
such price or prices; (ii) entitled to receive dividends (which may be
cumulative or non-cumulative at such rates, on such conditions, and at such
times, and payable in preference to or in such relation to, the dividends
payable on any other class or classes or to any other series); (iii) entitled
to such rights upon the dissolution of, or upon any distribution of the assets
of, the Corporation; or (iv) other class or classes of stock, or of any other
series of the same or any other class or classes of stock, of the Corporation
at such price or prices or at such rates
2
of exchange and with such adjustments; all as may be stated in such resolution
or resolutions.
FIFTH: The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
(1) The business and affairs of the Corporation shall be managed
by or under the direction of the Board of Directors,
(2) The directors shall have concurrent power with the stockholders
to make, alter, amend, change, add to or repeal the By-Laws of the
Corporation.
(3) The number of directors of the corporation shall be as from time
to time fixed by, or in the manner provided in, the By-Laws of the
Corporation. Election of directors need not be by written ballot
unless the By-Laws so provide.
(4) No director shall be personally liable to the Corporation or any
of its stockholders for monetary damages for breach of fiduciary duty
as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) pursuant
to Section 174 of the Delaware General Corporation Law or (iv) for any
transaction from which the director derived an improper personal
benefit. Any repeal or modification of this Article SIXTH by the
stockholders of the Corporation shall not adversely affect any right
or protection of a director of the corporation existing at the time of
such repeal or modification with respect to acts or omissions
occurring prior to such repeal or modification.
(5) In addition to the powers and authority hereinbefore or by
statute expressly conferred upon them, the directors are hereby
empowered to exercise all such powers and do all such acts and things
as may be exercised or done by the Corporation, subject, nevertheless,
to the provisions of the GCL, this Certificate of Incorporation, and
any By-Laws adopted by the stockholders; provided, however, that no
By-Laws hereafter adopted by the stockholders shall invalidate any
prior act of the directors which would have been valid if such By-Laws
had not been adopted.
3
SIXTH: Meetings of stockholders may be held within or without the
State of Delaware, as the By-Laws may provide. The books of the Corporation may
be kept (subject to any provision contained in the GCL) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the By-Laws of the Corporation.
SEVENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
4
IN WITNESS WHEREOF, the Corporation has caused this certificate to be signed by
Thomas P. Mac Mahon, President, Chief Executive Officer and Director, and
Bradford T. Smith, Secretary and Executive Vice President, on this 24th day of
May, 2001.
LABORATORY CORPORATION OF AMERICA HOLDINGS
By: /s/Thomas P. MacMahon
---------------------------------------------
Thomas P. Mac Mahon
President, Chief Executive Officer
and Director
By:/s/Bradford T. Smith
---------------------------------------------
Bradford T. Smith
Secretary and Executive Vice
President
5
EX-4.1
4
oct1901_x0401.txt
EXHIBIT 4.1
Execution Copy
LABORATORY CORPORATION OF AMERICA HOLDINGS
Liquid Yield Option(TM) Notes
due 2021
(Zero Coupon - Subordinated)
----------------------------------------------------------
INDENTURE
Dated as of September 11, 2001
----------------------------------------------------------
THE BANK OF NEW YORK
TRUSTEE
----------------------------------------------------------
(TM)Merrill Lynch & Co., Inc.
CROSS REFERENCE TABLE*
TIA Section............................................ Indenture Section
310(a)(1).............................................. 7.10
(a)(2)............................................ N.A.
(a)(3)............................................ N.A.
(a)(4)............................................ N.A.
(b)............................................... 7.10
(c)............................................... N.A.
311(a)................................................. 7.11
(b)............................................... 7.11
(c)............................................... N.A.
312(a)................................................. N.A.
(b)............................................... 15.03
(c)............................................... 15.03
313(a)................................................. 7.06
(b)............................................... 7.06
(c)............................................... N.A.
(d)............................................... 7.06
314(a)................................................. 4.02
(b)............................................... N.A.
(c)............................................... N.A.
(d)............................................... N.A.
(e)............................................... N.A.
(f)............................................... N.A.
315(a)................................................. 7.01
(b)............................................... 7.05
(c)............................................... N.A.
(d)............................................... 7.01
(e)............................................... 6.11
316(a)(1)(A)........................................... 6.05
(a)(1)(B)......................................... 6.04
(a)(2)............................................ N.A.
(b)............................................... N.A.
N.A. means Not Applicable.
---------
* Note: This Cross Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
TABLE OF CONTENTS*
Page
Table of Contents
Page
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01 Definitions....................................................1
Section 1.02 Other Definitions..............................................5
Section 1.03 Incorporation by Reference of Trust Indenture Act..............7
Section 1.04 Rules of Construction..........................................7
Section 1.05 Acts of Holders................................................7
ARTICLE 2
THE SECURITIES
Section 2.01 Form and Dating................................................9
Section 2.02 Execution and Authentication..................................10
Section 2.03 Registrar, Paying Agent, Conversion Agent, Bid
Solicitation Agent and Rate Solicitation Agent................11
Section 2.04 Paying Agent to Hold Money and Securities in Trust............11
Section 2.05 Securityholder Lists..........................................11
Section 2.06 Transfer and Exchange.........................................12
Section 2.07 Replacement Securities........................................13
Section 2.08 Outstanding Securities; Determinations of Holders' Action.....14
Section 2.09 Temporary Securities..........................................15
Section 2.10 Cancellation..................................................15
Section 2.11 Persons Deemed Owners.........................................15
Section 2.12 Global Securities.............................................16
Section 2.13 CUSIP Numbers.................................................18
ARTICLE 3
REDEMPTION AND PURCHASES
Section 3.01 Right to Redeem; Notices to Trustee...........................18
Section 3.02 Selection of Securities to Be Redeemed........................18
Section 3.03 Notice of Redemption..........................................19
Section 3.04 Effect of Notice of Redemption................................19
Section 3.05 Deposit of Redemption Price...................................20
Section 3.06 Securities Redeemed in Part...................................20
Section 3.07 Conversion Arrangement on Call for Redemption.................20
---------
*Note: This Table of Contents shall not, for any purpose, be deemed to be
part of the Indenture.
i
Section 3.08 Purchase of Securities at Option of the Holder................21
Section 3.09 Purchase of Securities at Option of the Holder
upon Change in Control........................................27
Section 3.10 Effect of Purchase Notice or Change in Control
Purchase Notice...............................................30
Section 3.11 Deposit of Purchase Price or Change in Control Purchase
Price.........................................................31
Section 3.12 Securities Purchased in Part..................................31
Section 3.13 Covenant to Comply with Securities Laws upon Purchase
of Securities.................................................31
Section 3.14 Repayment to the Company......................................32
ARTICLE 4
COVENANTS
Section 4.01 Payment of Securities.........................................32
Section 4.02 SEC and Other Reports.........................................33
Section 4.03 Compliance Certificate........................................33
Section 4.04 Further Instruments and Acts..................................33
Section 4.05 Maintenance of Office or Agency...............................33
Section 4.06 Delivery of Certain Information...............................34
Section 4.07 Tax Matters...................................................34
ARTICLE 5
SUCCESSOR CORPORATION
Section 5.01 When Company May Merge or Transfer Assets.....................35
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01 Events of Default.............................................36
Section 6.02 Acceleration..................................................37
Section 6.03 Other Remedies................................................38
Section 6.04 Waiver of Past Defaults.......................................38
Section 6.05 Control by Majority...........................................38
Section 6.06 Limitation on Suits...........................................39
Section 6.07 Rights of Holders to Receive Payment..........................39
Section 6.08 Collection Suit by Trustee....................................39
Section 6.09 Trustee May File Proofs of Claim..............................39
Section 6.10 Priorities....................................................40
Section 6.11 Undertaking for Costs.........................................41
Section 6.12 Waiver of Stay, Extension or Usury Laws.......................41
ARTICLE 7
TRUSTEE
Section 7.01 Duties of Trustee.............................................41
Section 7.02 Rights of Trustee.............................................42
Section 7.03 Individual Rights of Trustee..................................44
Section 7.04 Trustee's Disclaimer..........................................44
ii
Section 7.05 Notice of Defaults............................................44
Section 7.06 Reports by Trustee to Holders.................................44
Section 7.07 Compensation and Indemnity....................................44
Section 7.08 Replacement of Trustee........................................45
Section 7.09 Successor Trustee by Merger...................................46
Section 7.10 Eligibility; Disqualification.................................46
Section 7.11 Preferential Collection of Claims Against Company.............46
ARTICLE 8
DISCHARGE OF INDENTURE
Section 8.01 Discharge of Liability on Securities..........................46
Section 8.02 Repayment to the Company......................................46
ARTICLE 9
AMENDMENTS
Section 9.01 Without Consent of Holders....................................47
Section 9.02 With Consent of Holders.......................................47
Section 9.03 Compliance with Trust Indenture Act...........................48
Section 9.04 Revocation and Effect of Consents, Waivers and Actions........48
Section 9.05 Notation on or Exchange of Securities.........................48
Section 9.06 Trustee to Sign Supplemental Indentures.......................49
Section 9.07 Effect of Supplemental Indentures.............................49
ARTICLE 10
CONVERSION
Section 10.01 Conversion Privilege.........................................49
Section 10.02 Conversion Procedure.........................................50
Section 10.03 Fractional Shares............................................51
Section 10.04 Taxes on Conversion..........................................52
Section 10.05 Company to Provide Stock.....................................52
Section 10.06 Adjustment for Change in Capital Stock.......................52
Section 10.07 Adjustment for Rights Issue..................................53
Section 10.08 Adjustment for Other Distributions...........................54
Section 10.09 When Adjustment May Be Deferred..............................57
Section 10.10 When No Adjustment Required..................................57
Section 10.11 Notice of Adjustment.........................................57
Section 10.12 Voluntary Increase...........................................57
Section 10.13 Notice of Certain Transactions...............................58
Section 10.14 Reorganization of Company; Special Distributions.............58
Section 10.15 Company Determination Final..................................59
Section 10.16 Trustee's Adjustment Disclaimer..............................59
Section 10.17 Simultaneous Adjustments.....................................59
Section 10.18 Successive Adjustments.......................................59
Section 10.19 Rights Issued in Respect of Common Stock Issued
Upon Conversion..............................................59
iii
ARTICLE 11
SUBORDINATION
Section 11.01 Securities Subordinate to Senior Indebtedness................60
Section 11.02 Payment over of Proceeds upon Dissolution, Etc...............60
Section 11.03 Acceleration of Securities...................................61
Section 11.04 Default on Senior Indebtedness...............................62
Section 11.05 Payment Permitted if No Default..............................63
Section 11.06 Subrogation to Rights of Holders of Senior Indebtedness......63
Section 11.07 Provisions Solely to Define Relative Rights..................63
Section 11.08 Trustee to Effectuate Subordination..........................64
Section 11.09 No Waiver of Subordination Provisions........................64
Section 11.10 Notice to Trustee............................................64
Section 11.11 Reliance on Judicial Order or Certificate of
Liquidating Agent............................................65
Section 11.12 Trustee Not Fiduciary for Holders of Senior Indebtedness.....65
Section 11.13 Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights.............................65
Section 11.14 Article 11 Applicable to Paying Agents.......................66
ARTICLE 12
PAYMENT OF INTEREST
Section 12.01 Interest Payments............................................66
Section 12.02 Defaulted Interest...........................................66
Section 12.03 Interest Rights Preserved....................................67
ARTICLE 13
CONTINGENT CASH INTEREST
Section 13.01 Contingent Cash Interest.....................................67
Section 13.02 Payment of Contingent Cash Interest; Contingent Cash
Interest Rights Preserved....................................68
Section 13.03 Bid Solicitation Agent.......................................69
ARTICLE 14
CONTINGENT ADDITIONAL PRINCIPAL
Section 14.01 Contingent Additional Principal..............................69
Section 14.02 Payment of Contingent Additional Principal...................71
Section 14.03 Notice.......................................................71
Section 14.04 Rate Solicitation Agent......................................71
ARTICLE 15
MISCELLANEOUS
Section 15.01 Trust Indenture Act Controls.................................72
iv
Section 15.02 Notices......................................................72
Section 15.03 Communication by Holders with Other Holders..................73
Section 15.04 Certificate and Opinion as to Conditions Precedent...........73
Section 15.05 Statements Required in Certificate or Opinion................73
Section 15.06 Separability Clause..........................................73
Section 15.07 Rules by Trustee, Paying Agent, Conversion Agent and
Registrar....................................................73
Section 15.08 Calculations.................................................74
Section 15.09 Legal Holidays...............................................74
Section 15.10 GOVERNING LAW................................................74
Section 15.11 No Recourse Against Others...................................74
Section 15.12 Successors...................................................74
Section 15.13 Multiple Originals...........................................74
v
INDENTURE dated as of September 11, 2001 between LABORATORY
CORPORATION OF AMERICA HOLDINGS, a Delaware corporation ("Company"), and THE
BANK OF NEW YORK, a New York banking corporation ("Trustee").
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders of the Company's Liquid Yield
Option(TM) Notes due 2021 (Zero Coupon - Subordinated) (each a "Security" and,
collectively, the "Securities"):
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01 Definitions.
"144A Global Security" means a permanent Global Security in the form
of the Security attached hereto as Exhibit A-1, and that is deposited with and
registered in the name of the Depositary, representing Securities sold in
reliance on Rule 144A under the Securities Act.
"Accrued Original Issue Discount" of any Security represents the
accrued portion of Original Issue Discount, including the accrued portion of
CAP-OID.
"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 specified person means the power to
direct or cause the direction of 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.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest therein, the
rules and procedures of the Depositary for such Security, in each case to the
extent applicable to such transaction and as in effect from time to time.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of such board.
"Business Day" means each day of the year other than a Saturday or a
Sunday or other day on which banking institutions in The City of New York are
required or authorized to close.
"Capital Stock" for any corporation means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) stock or other equity
issued by that corporation.
"CAP-OID" means Original Issue Discount in respect of Contingent
Additional Principal.
"Cash" or "cash" means such coin or currency of The United States of
America as at any time of payment is legal tender for the payment of public and
private debts.
"Common Stock" means the shares of Common Stock, $0.10 par value, as
it exists on the date of this Indenture of the Company or any other shares of
Capital Stock of the Company into which the Common Stock shall be reclassified
or changed.
"Company" means the party named as the "Company" in the first
paragraph of this Indenture until a successor replaces it pursuant to the
applicable provisions of this Indenture and, thereafter, shall mean such
successor. The foregoing sentence shall likewise apply to any subsequent such
successor or successors.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by any two Officers.
"Contingent Additional Principal" means such additional principal
payable on the Securities, if any, as described in Section 14.01.
"Contingent Cash Interest" means such cash interest payable as
described in Section 13.01.
"Corporate Trust Office" means the principal office of the Trustee at
which at any time its corporate trust business shall be administered, which
office at the date hereof is located at 101 Barclay Street, Floor 21 West, New
York, New York 10286, Attention: Corporate Trust Administration, or such other
address as the Trustee may designate from time to time by notice to the
Company, or the principal corporate trust office of any successor Trustee (or
such other address as a successor Trustee may designate from time to time by
notice to the Company).
"Debt" means with respect to the Company at any date, without
duplication, obligations (other than nonrecourse obligations) for borrowed
money or evidenced by bonds, debentures, notes or similar instruments.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Exchange Act" means the Exchange Act of 1934, as amended from time to
time.
"Global Securities" means Securities that are in the form of the
Securities attached hereto as Exhibit A-1, and to the extent that such
Securities are required to bear the Legend required by Section 2.06, such
Securities will be in the form of a 144A Global Security.
"Holder" or "Securityholder" means a person in whose name a Security
is registered on the Registrar's books.
"Indenture" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof, including the provisions of the
TIA that are deemed to be a part hereof.
"Issue Date" of any Security means the date on which the Security was
originally issued or deemed issued as set forth on the face of the Security.
2
"Issue Price" of any Security means, in connection with the original
issuance of such Security, the initial issue price at which the Security is
sold as set forth on the face of the Security.
"Officer" means the Chairman of the Board, the Vice Chairman, the
Chief Executive Officer, the President, any Executive Vice President, any
Senior Vice President, any Vice President, the Treasurer or the Secretary or
any Assistant Treasurer or Assistant Secretary of the Company.
"Officers' Certificate" means a written certificate containing the
information specified in Sections 15.04 and 15.05, signed in the name of the
Company by any two Officers, and delivered to the Trustee. An Officers'
Certificate given pursuant to Section 3.08 shall be signed by the principal
executive financial or accounting Officer of the Company but need not contain
the information specified in Sections 15.04 and 15.05.
"Opinion of Counsel" means a written opinion containing the
information specified in Sections 15.04 and 15.05, from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of, or counsel to,
the Company or the Trustee.
"Original Issue Discount" of any Security means the amount that
accrues in respect of such Security daily at a rate of 2.0% per year on the
Issue Price plus any previously accrued amounts beginning on the Issue Date,
together with the amount that accrues on any accrued Contingent Additional
Principal daily at such rate. Original Issue Discount will be calculated on a
semi-annual bond equivalent basis, using a 360-day year comprised of twelve
30-day months.
"person" or "Person" means any individual, corporation, limited
liability company, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, or government or any agency or
political subdivision thereof.
"Principal Amount at Maturity" of a Security means the principal
amount at maturity as set forth on the face of the Security.
"Redemption Date" or "redemption date" means the date specified for
redemption of the Securities in accordance with the terms of the Securities and
this Indenture.
"Redemption Price" or "redemption price" has the meaning set forth in
paragraph 6 of the Securities.
"Responsible Officer" means, when used with respect to the Trustee,
any officer within the corporate trust department of the Trustee, including any
vice president, assistant vice president, assistant secretary, trust officer or
any other officer of the Trustee who customarily performs functions similar to
those performed by the Persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred because of such
person's knowledge of and familiarity with the particular subject and who, in
each case, shall have direct responsibility for the administration of this
Indenture.
"Restricted Security" means a Security required to bear the
restrictive Legend set forth in the form of Securities set forth in Exhibit A-1
of this Indenture.
3
"Rule 144A" means Rule 144A under the Securities Act (or any successor
provision), as it may be amended from time to time.
"Sale Price" of Capital Stock on any date means the closing per share
sale price (or, if no closing sale price is reported, the average of the bid
and ask prices or, if more than one in either case, the average of the average
bid and the average ask prices) on such date as reported in composite
transactions for the principal United States securities exchange on which the
Capital Stock is traded or, if the Capital Stock is not listed on a United
States national or regional securities exchange, as reported by the National
Association of Securities Dealers Automated Quotation System or by the National
Quotation Bureau Incorporated. In the absence of such quotation, the Company
shall be entitled to determine the Sale Price on the basis of such quotations
as it considers appropriate.
"SEC" means the Securities and Exchange Commission.
"Securities" means any of the Company's Liquid Yield Option(TM) Notes
due 2021 (Zero Coupon-Subordinated), as amended or supplemented from time to
time, issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Securityholder" or "Holder" means a person in whose name a Security
is registered on the Registrar's books.
"Senior Indebtedness" means the principal, premium (if any) and unpaid
interest on all present and future (i) indebtedness of the Company for borrowed
money; (ii) obligations of the Company evidenced by bonds, debentures, notes or
similar instruments; (iii) obligations of the Company under (a) interest rate
swaps, caps, collars, options and similar arrangements, (b) any foreign
exchange contract, currency swap contract, futures contract, currency option
contract, or other foreign currency hedge and (c) credit swaps, caps, floors,
collars and similar arrangements; (iv) indebtedness incurred, assumed or
guaranteed by the Company in connection with the acquisition by it or a
subsidiary of the Company of any business, properties or assets (except
purchase-money indebtedness classified as accounts payable under U.S. generally
accepted accounting principles); (v) all obligations and liabilities
(contingent or otherwise) in respect of leases of the Company required, in
conformity with U.S. generally accepted accounting principles, to be accounted
for as capitalized lease obligations on the balance sheet of the Company and
all obligations and liabilities (contingent or otherwise) under any lease or
related document (including a purchase agreement) in connection with the lease
or real property which provides that the Company is contractually obligated to
purchase or cause a third party to purchase the leased property and thereby
guarantee a minimum residual value of the leased property to the lessor and the
obligations of the Company under such lease or related document to purchase or
to cause a third party to purchase such leased property; (vi) reimbursement
obligations of the Company in respect of letters of credit relating to
indebtedness or other obligations of the Company that qualify as indebtedness
or obligations of the kind referred to in clauses (i) through (v) above; and
(vii) obligations of the Company under direct or indirect guaranties in respect
of, and obligations (contingent or otherwise) to purchase or otherwise acquire,
or otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of
4
others of the kinds referred to in clauses (i) through (vi) above, in each case
unless in the instrument creating or evidencing the indebtedness or obligation
or pursuant to which the same is outstanding it is provided that (x) such
indebtedness or obligation is not senior in right of payment to the Securities
or (y) such indebtedness or obligation is subordinated to any other
indebtedness or obligation of the Company, unless such indebtedness or
obligation expressly provides that such indebtedness or obligations be senior
in right of payment to the Securities.
"Significant Subsidiary", has the meaning set forth in Rule 1-02 of
Regulation S-X under the Securities Act.
"Special Record Date" means for the payment of any Defaulted Interest,
the date fixed by the Trustee pursuant to Section 12.02.
"Stated Maturity", when used with respect to any Security, means the
date specified in such Security as the fixed date on which an amount equal to
the Principal Amount at Maturity and any Contingent Additional Principal (and
CAP-OID) thereon, if any, of such Security is due and payable.
"Subsidiary" means (i) a corporation, a majority of whose Capital
Stock with voting power, under ordinary circumstances, to elect directors is,
at the date of determination, directly or indirectly owned by the Company, by
one or more Subsidiaries of the Company or by the Company and one or more
Subsidiaries of the Company, (ii) a partnership in which the Company or a
Subsidiary of the Company holds a majority interest in the equity capital or
profits of such partnership, or (iii) any other person (other than a
corporation or a partnership) in which the Company, a Subsidiary of the Company
or the Company and one or more Subsidiaries of the Company, directly or
indirectly, at the date of determination, has (x) at least a majority ownership
interest or (y) the power to elect or direct the election of a majority of the
directors or other governing body of such person.
"TIA" means the Trust Indenture Act of 1939 as in effect on the date
of this Indenture, provided, however, that in the event the TIA is amended
after such date, TIA means, to the extent required by any such amendment, the
TIA as so amended.
"trading day" means a day during which trading in securities generally
occurs on the New York Stock Exchange or, if the Common Stock is not listed on
the New York Stock Exchange, on the principal other national or regional
securities exchange on which the Common Stock is then listed or, if the Common
Stock is not listed on a national or regional securities exchange, on the
National Association of Securities Dealers Automated Quotation System or, if
the Common Stock is not quoted on the National Association of Securities
Dealers Automated Quotation System, on the principal other market on which the
Common Stock is then traded.
"Trustee" means the party named as the "Trustee" in the first
paragraph of this Indenture until a successor replaces it pursuant to the
applicable provisions of this Indenture and, thereafter, shall mean such
successor. The foregoing sentence shall likewise apply to any subsequent such
successor or successors.
Section 1.02 Other Definitions.
5
Term Defined in Section
---- ------------------
"Adjusted Rate"............................................................14.01
"Act"....................................................................1.05(a)
"Agent Members"..........................................................2.12(e)
"Associate"..............................................................3.09(a)
"Average Sale Price".......................................................10.01
"Bankruptcy Law"............................................................6.01
"beneficial owner".......................................................3.09(a)
"Bid Solicitation Agent"....................................................2.03
"Change in Control"......................................................3.09(a)
"Change in Control Purchase Date"........................................3.09(a)
"Change in Control Purchase Notice"......................................3.09(c)
"Change in Control Purchase Price".......................................3.09(a)
"Common Stock Record Date" ................................................13.01
"Company Notice".........................................................3.08(e)
"Company Notice Date"....................................................3.08(c)
"Contingent Cash Interest Payment Date"....................................13.02
"Contingent Cash Interest Record Date".....................................13.02
"Conversion Agent"..........................................................2.03
"Conversion Date"..........................................................10.02
"Conversion Rate"..........................................................10.01
"Custodian".................................................................6.01
"Defaulted Interest".......................................................12.02
"Depositary".............................................................2.01(a)
"DTC"....................................................................2.01(a)
"Event of Default"..........................................................6.01
"Ex-Dividend Date"......................................................10.08(b)
"Ex-Dividend Time".........................................................10.01
"Extraordinary Cash Dividend"...........................................10.08(a)
"Five-Trading-Day Measurement Period"......................................13.01
"Institutional Accredited Investors".....................................2.01(b)
"Legal Holiday"............................................................15.09
"Legend".................................................................2.06(f)
"LYONs Market Price".......................................................13.01
"Market Price"...........................................................3.08(d)
"Measurement Period"....................................................10.08(a)
"Notice of Default".........................................................6.01
"Paying Agent"..............................................................2.03
"Post-Distribution Price"...............................................10.08(b)
"Purchase Date"..........................................................3.08(a)
"Purchase Notice"........................................................3.08(a)
"Purchase Price".........................................................3.08(a)
"QIBs"...................................................................2.01(a)
"Rate Solicitation Agent"...................................................2.03
"Registrar".................................................................2.03
"Relevant Cash Dividends"...............................................10.08(a)
6
"Relevant Value"...........................................................13.01
"Rights"...................................................................10.19
"Rights Agreement".........................................................10.19
"Rule 144A Information".....................................................4.06
"Subordinated Debt Rate"...................................................14.01
"Stock Price Factor".......................................................14.01
"Time of Determination"....................................................10.01
Section 1.03 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"Indenture securities" means the Securities.
"Indenture 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.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have
the meanings assigned to them by such definitions.
Section 1.04 Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with United States generally accepted accounting
principles as in effect from time to time;
(3) "or" is not exclusive;
(4) "including" means including, without limitation; and
(5) words in the singular include the plural, and words in the plural
include the singular.
Section 1.05 Acts of Holders. (a) Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture
to be given or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by agent duly appointed in writing; and, except as herein
7
otherwise expressly provided, such action shall become effective when such
instrument or instruments are delivered to the Trustee and, where it is hereby
expressly required, to the Company. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and conclusive in favor
of the Trustee and the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to such officer the execution thereof.
Where such execution is by a signer acting in a capacity other than such
signer's individual capacity, such certificate or affidavit shall also
constitute sufficient proof of such signer's authority. The fact and date of
the execution of any such instrument or writing, or the authority of the Person
executing the same, may also be proved in any other manner, which the Trustee
deems sufficient.
(c) The ownership of Securities shall be proved by the register
maintained by the Registrar.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future
Holder of the same Security and the holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made
upon such Security.
(e) If the Company shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, the Company
may, at its option, by or pursuant to a resolution of the Board of Directors,
fix in advance a record date for the determination of Holders entitled to give
such request, demand, authorization, direction, notice, consent, waiver or
other Act, but the Company shall have no obligation to do so. If such a record
date is fixed, such request, demand, authorization, direction, notice, consent,
waiver or other Act may be given before or after such record date, but only the
Holders of record at the close of business on such record date shall be deemed
to be Holders for the purposes of determining whether Holders of the requisite
proportion of outstanding Securities have authorized or agreed or consented to
such request, demand, authorization, direction, notice, consent, waiver or
other Act, and for that purpose the outstanding Securities shall be computed as
of such record date; provided that no such authorization, agreement or consent
by the Holders on such record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Indenture not later than
six months after the record date.
8
ARTICLE 2
THE SECURITIES
Section 2.01 Form and Dating. The Securities and the Trustee's
certificate of authentication shall be substantially in the form of Exhibits
A-1, which is a part of this Indenture. The Securities may have notations,
legends or endorsements required by law, stock exchange rule or usage (provided
that any such notation, legend or endorsement required by usage is in a form
acceptable to the Company). The Company shall provide any such notations,
legends or endorsements to the Trustee in writing. Each Security shall be dated
the date of its authentication.
(a) 144A Global Securities. Securities offered and sold within the
United States to "qualified institutional buyers" as defined in Rule 144A
("QIBs") in reliance on Rule 144A shall be issued, initially in the form of a
144A Global Security, which shall be deposited with the Trustee at its
Corporate Trust Office, as custodian for the Depositary and registered in the
name of The Depository Trust Company ("DTC") or the nominee thereof (such
depositary, or any successor thereto, and any such nominee being hereinafter
referred to as the "Depositary"), duly executed by the Company and
authenticated by the Trustee as hereinafter provided. The aggregate Principal
Amount at Maturity of the 144A Global Securities may from time to time be
increased or decreased by adjustments made on the records of the Trustee and
the Depositary as hereinafter provided.
(b) Certificated Securities. Except as provided in Section 2.12,
owners of beneficial interests in Global Securities will not be entitled to
receive physical delivery of Securities in definitive form.
(c) Global Securities in General. Each Global Security shall represent
such of the outstanding Securities as shall be specified therein and each shall
provide that it shall represent the aggregate Principal Amount at Maturity of
outstanding Securities from time to time endorsed thereon and that the
aggregate Principal Amount at Maturity of outstanding Securities represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges, redemptions and conversions.
Any adjustment of the aggregate Principal Amount at Maturity of a
Global Security to reflect the amount of any increase or decrease in the
Principal Amount at Maturity of outstanding Securities represented thereby
shall be made by the Trustee in accordance with instructions given by the
Holder thereof as required by Section 2.12 hereof and shall be made on the
records of the Trustee and the Depositary.
(d) Book-Entry Provisions. This Section 2.01(d) shall apply only to
Global Securities deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with
this Section 2.01(d), authenticate and deliver initially one or more Global
Securities that (a) shall be registered in the name of the Depositary, (b)
shall be delivered by the Trustee to the Depositary or pursuant to the
Depositary's instructions and (c) shall bear legends substantially to the
following effect:
9
"UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS, IN
WHOLE BUT NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY OR
TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF
PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN
ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN ARTICLE TWO OF THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF."
Section 2.02 Execution and Authentication. The Securities shall be
executed on behalf of the Company by any Officer. The signature of the Officer
on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of an individual
who was at the time of the execution of the Securities the proper Officer of
the Company shall bind the Company, notwithstanding that such individual has
ceased to hold such office prior to the authentication and delivery of such
Securities or did not hold such office at the date of authentication of such
Securities.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
duly executed by the Trustee by manual signature of an authorized Officer, and
such certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder.
The Trustee shall authenticate and deliver Securities for original
issue in an aggregate Principal Amount at Maturity of up to $650,000,000
(744,000,000 aggregate Principal Amount at Maturity, if the over-allotment
option granted to the initial purchaser of the Securities is exercised in full)
upon a Company Order without any further action by the Company. The aggregate
Principal Amount at Maturity of Securities outstanding at any time may not
exceed the amount set forth in the foregoing sentence, except as provided in
Section 2.07.
The Securities shall be issued only in registered form without coupons
and only in denominations of $1,000 of Principal Amount at Maturity and any
integral multiple thereof.
10
Section 2.03 Registrar, Paying Agent, Conversion Agent, Bid
Solicitation Agent and Rate Solicitation Agent. The Company shall maintain an
office or agency where Securities may be presented for registration of transfer
or for exchange ("Registrar"), an office or agency where Securities may be
presented for purchase or payment ("Paying Agent") and an office or agency
where Securities may be presented for conversion ("Conversion Agent"). The
Company shall also appoint a bid solicitation agent (the "Bid Solicitation
Agent") to act pursuant to Section 13.03 hereof and paragraph 3 of the
Securities and a rate solicitation agent ("Rate Solicitation Agent") to act
pursuant to Section 14.04 and paragraph 5.B of the Securities. 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 Paying Agent
includes any additional paying agent, including any named pursuant to Section
4.05. The term Conversion Agent includes any additional conversion agent,
including any named pursuant to Section 4.05.
The Company shall enter into an appropriate agency agreement with any
Registrar or co-registrar, Paying Agent, Conversion Agent, Bid Solicitation
Agent or Rate Solicitation Agent (other than the Trustee). 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 such agent. If
the Company fails to maintain a Registrar, Paying Agent, Conversion Agent, Rate
Solicitation Agent, or Bid Solicitation Agent, the Trustee shall act as such
and shall be entitled to appropriate compensation therefor pursuant to Section
7.07. The Company or any Subsidiary or an Affiliate of either of them may act
as Paying Agent, Registrar, Conversion Agent or co-registrar. None of the
Company or any Subsidiary or any Affiliate of any of them may act as Bid
Solicitation Agent or Rate Solicitation Agent.
The Company initially appoints the Trustee as Registrar, Conversion
Agent, Paying Agent, Rate Solicitation Agent and Bid Solicitation Agent in
connection with the Securities.
Section 2.04 Paying Agent to Hold Money and Securities in Trust.
Except as otherwise provided herein, not later than 10:00 a.m., New York City
time, on each due date of payments in respect of any Security, the Company
shall deposit with the Paying Agent a sum of money (in immediately available
funds if deposited on the due date) or Common Stock sufficient to make such
payments when so becoming due. The Company shall require each Paying Agent
(other than the Trustee) to agree in writing that the Paying Agent shall hold
in trust for the benefit of Securityholders or the Trustee all money and Common
Stock held by the Paying Agent for the making of payments in respect of the
Securities and shall notify the Trustee of any default by the Company in making
any such payment. At any time during the continuance of any such default, the
Paying Agent shall, upon the written request of the Trustee, forthwith pay to
the Trustee all money and Common Stock so held in trust. If the Company, a
Subsidiary or an Affiliate of either of them acts as Paying Agent, it shall
segregate the money and Common Stock held by it as Paying Agent and hold it as
a separate trust fund. The Company at any time may require a Paying Agent to
pay all money and Common Stock held by it to the Trustee and to account for any
funds and Common Stock disbursed by it. Upon doing so, the Paying Agent shall
have no further liability for the money or Common Stock.
Section 2.05 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
11
Securityholders. If the Trustee is not the Registrar, the Company shall cause
to be furnished to the Trustee at least semi-annually on September 1 and March
1 a listing of Securityholders dated within 15 days of the date on which the
list is furnished and at such other times as the Trustee may request in writing
a list in such form and as of such date as the Trustee may reasonably require
of the names and addresses of Securityholders.
Section 2.06 Transfer and Exchange. Subject to Section 2.12 hereof,
(a) Upon surrender for registration of transfer of any Security,
together with a written instrument of transfer satisfactory to the Registrar
duly executed by the Securityholder or such Securityholder's attorney duly
authorized in writing, at the office or agency of the Company designated as
Registrar or co-registrar pursuant to Section 2.03, the Company shall execute,
and the Trustee upon receipt of a Company Order shall authenticate and deliver,
in the name of the designated transferee or transferees, one or more new
Securities of any authorized denomination or denominations, of a like aggregate
Principal Amount at Maturity. The Company shall not charge a service charge for
any registration of transfer or exchange, but the Company may require payment
of a sum sufficient to pay all taxes, assessments or other governmental charges
that may be imposed in connection with the registration of transfer or exchange
of the Securities from the Securityholder requesting such registration of
transfer or exchange.
At the option of the Holder, Certificated Securities may be exchanged
for other Securities of any authorized denomination or denominations, of a like
aggregate Principal Amount at Maturity, upon surrender of the Securities to be
exchanged, together with a written instrument of transfer satisfactory to the
Registrar duly executed by the Securityholder or such Securityholder's attorney
duly authorized in writing, at such office or agency. Whenever any Securities
are so surrendered for exchange, the Company shall execute, and the Trustee
upon receipt of a Company Order shall authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive.
The Company shall not be required to make, and the Registrar need not
register, transfers or exchanges of Securities selected for redemption (except,
in the case of Securities to be redeemed in part, the portion thereof not to be
redeemed) or any Securities in respect of which a Purchase Notice or Change in
Control Purchase Notice has been given and not withdrawn by the Holder thereof
in accordance with the terms of this Indenture (except, in the case of
Securities to be purchased in part, the portion thereof not to be purchased) or
any Securities for a period of 15 days before the mailing of a notice of
redemption of Securities to be redeemed.
(b) Notwithstanding any provision to the contrary herein, so long as a
Global Security remains outstanding and is held by or on behalf of the
Depositary, transfers of a Global Security, in whole or in part, shall be made
only in accordance with Section 2.12 and this Section 2.06(b). Transfers of a
Global Security shall be limited to transfers of such Global Security in whole,
or in part, to nominees of the Depositary or to a successor of the Depositary
or such successor's nominee.
(c) Successive registrations and registrations of transfers and
exchanges as aforesaid may be made from time to time as desired, and each such
registration shall be noted on the register for the Securities.
12
(d) Any Registrar appointed pursuant to Section 2.03 hereof shall
provide to the Trustee such information as the Trustee may reasonably require
in connection with the delivery by such Registrar of Securities upon
registration of transfer or exchange of Securities.
(e) No Registrar shall be required to make registrations of transfer
or exchange of Securities during any periods designated in the text of the
Securities or in this Indenture as periods during which such registration of
transfers and exchanges need not be made.
(f) If Securities are issued upon the registration of transfer,
exchange or replacement of Securities subject to restrictions on transfer and
bearing the legends set forth on the form of Security attached hereto as
Exhibits A-1 setting forth such restrictions (collectively, the "Legend"), or
if a request is made to remove the Legend on a Security, the Securities so
issued shall bear the Legend, or the Legend shall not be removed, as the case
may be, unless there is delivered to the Company and the Registrar such
satisfactory evidence, which shall include an Opinion of Counsel, as may be
reasonably required by the Company and the Registrar, that neither the Legend
nor the restrictions on transfer set forth therein are required to ensure that
transfers thereof comply with the provisions of Rule 144A or Rule 144 under the
Securities Act or that such Securities are not "restricted" within the meaning
of Rule 144 under the Securities Act. Upon (i) provision of such satisfactory
evidence, or (ii) notification by the Company to the Trustee and Registrar of
the sale of such Security pursuant to a registration statement that is
effective at the time of such sale, the Trustee, at the written direction of
the Company, shall authenticate and deliver a Security that does not bear the
Legend.
The Trustee and the Registrar shall have no obligation or duty to
monitor, determine or inquire as to compliance with any restrictions on
transfer imposed under this Indenture or under applicable law with respect to
any transfer of any interest in any Security (including any transfers between
or among Depositary participants or beneficial owners of interests in any
Global Security) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if and
when expressly required by the terms of, this Indenture, and to examine the
same to determine substantial compliance as to form with the express
requirements hereof.
Section 2.07 Replacement Securities. If (a) any mutilated Security is
surrendered to the Trustee, or (b) 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 at Maturity, 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 purchased by
the Company pursuant to Article 3 hereof, the Company in its discretion may,
instead of issuing a new Security, pay or purchase such Security, as the case
may be.
13
Upon the issuance of any new Securities under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
mutilated, 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 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 2.08 Outstanding Securities; Determinations of Holders'
Action. Securities outstanding at any time are all the Securities authenticated
by the Trustee, except for those cancelled by it, those paid pursuant to
Section 2.07 delivered to it for cancellation and those described in this
Section 2.08 as not outstanding. A Security does not cease to be outstanding
because the Company or an Affiliate thereof holds the Security; provided,
however, that in determining whether the Holders of the requisite Principal
Amount at Maturity of Securities have given or concurred in any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Securities owned by the Company or any other obligor upon the Securities or any
Affiliate of the Company or such other obligor shall be disregarded and deemed
not to be outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Securities which a Responsible Officer of the
Trustee actually knows to be so owned shall be so disregarded. Subject to the
foregoing, only Securities outstanding at the time of such determination shall
be considered in any such determination (including, without limitation,
determinations pursuant to Articles 6 and 9).
If a Security is replaced pursuant to Section 2.07, the replaced
Security 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 holds, in accordance with this Indenture, on a
Redemption Date, or on the Business Day following the Purchase Date or a Change
in Control Purchase Date, or on Stated Maturity, money or securities, if
permitted hereunder, sufficient to pay Securities payable on that date, then
immediately after such Redemption Date, Purchase Date, Change in Control
Purchase Date or Stated Maturity, as the case may be, such Securities shall
cease to be outstanding and Original Issue Discount, Contingent Cash Interest
and Contingent Additional Principal, if applicable, on such Securities shall
cease to accrue; provided, that if such Securities are to be redeemed, notice
of such redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been given pursuant to this Indenture.
If a Security is converted in accordance with Article 10, then from
and after the time of conversion on the Conversion Date, such Security shall
cease to be outstanding and Original
14
Issue Discount, Contingent Cash Interest, if any, and Contingent Additional
Principal, if any, shall cease to accrue on such Security.
Section 2.09 Temporary Securities. Subject to Article 12 hereof,
pending the preparation of definitive Securities, the Company may execute, and
upon Company Order the Trustee shall authenticate and deliver, temporary
Securities which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the tenor
of the definitive Securities in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Securities may determine, as conclusively evidenced by
their execution of such Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at the office
or agency of the Company designated for such purpose pursuant to Section 2.03,
without charge to the Holder. Upon surrender for cancellation of any one or
more temporary Securities the Company shall execute and upon Company Order the
Trustee shall authenticate and deliver in exchange therefor a like Principal
Amount at Maturity of definitive Securities of authorized denominations. Until
so exchanged the temporary Securities shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities.
Section 2.10 Cancellation. All Securities surrendered for payment,
purchase by the Company pursuant to Article 3, conversion, redemption or
registration of transfer or exchange shall, if surrendered to any person other
than the Trustee, be delivered to the Trustee and shall be promptly cancelled
by it. The Company may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder which the Company
may have acquired in any manner whatsoever, and all Securities so delivered
shall be promptly cancelled by the Trustee. The Company may not issue new
Securities to replace Securities it has paid or delivered to the Trustee for
cancellation or that any Holder has converted pursuant to Article 10. No
Securities shall be authenticated in lieu of or in exchange for any Securities
cancelled as provided in this Section, except as expressly permitted by this
Indenture. All cancelled Securities held by the Trustee shall be disposed of by
the Trustee in accordance with the Trustee's customary procedure.
Section 2.11 Persons Deemed Owners. Prior to due presentment of a
Security for registration of transfer, the Company, the Trustee and any agent
of the Company or the Trustee may treat the Person in whose name such Security
is registered as the owner of such Security for the purpose of receiving
payment of principal of the Security or the payment of any Redemption Price,
Purchase Price or Change in Control Purchase Price, Contingent Cash Interest,
if any, and Contingent Additional Principal and CAP-OID thereon, if any, for
the purpose of conversion and for all other purposes whatsoever, whether or not
such Security be overdue, and neither the Company, the Trustee nor any agent of
the Company or the Trustee shall be affected by notice to the contrary.
15
Section 2.12 Global Securities.
(a) Transfer of Global Security. Notwithstanding any other provisions
of this Indenture or the Securities, transfers of a Global Security, in whole
or in part, shall be made only in accordance with Section 2.06 and Section
2.12(a)(i). A Global Security may not be transferred, in whole or in part, to
any Person other than the Depositary or a nominee or any successor thereof, and
no such transfer to any such other Person may be registered; provided that this
clause (a) shall not prohibit any transfer of a Security that is issued in
exchange for a Global Security but is not itself a Global Security. No transfer
of a Security to any Person shall be effective under this Indenture or the
Securities unless and until such Security has been registered in the name of
such Person.
(b) Subject to the succeeding paragraph, every Security shall be
subject to the restrictions on transfer provided in the Legend including the
delivery of an Opinion of Counsel, if so provided.
(c) The restrictions imposed by the Legend upon the transferability of
any Security shall cease and terminate when such Security has been sold
pursuant to an effective registration statement under the Securities Act or
transferred in compliance with Rule 144 under the Securities Act (or any
successor provision thereto) or, if earlier, upon the expiration of the holding
period applicable to sales thereof under Rule 144(k) under the Securities Act
(or any successor provision). Any Security as to which such restrictions on
transfer shall have expired in accordance with their terms or shall have
terminated may, upon a surrender of such Security for exchange to the Registrar
in accordance with the provisions of this Section 2.12 (accompanied, in the
event that such restrictions on transfer have terminated by reason of a
transfer in compliance with Rule 144 or any successor provision, by an Opinion
of Counsel from legal counsel having substantial experience in practice under
the Securities Act and otherwise reasonably acceptable to the Company,
addressed to the Company, the Trustee and the Registrar and in form acceptable
to the Company, to the effect that the transfer of such Security has been made
in compliance with Rule 144 or such successor provision), be exchanged for a
new Security, of like tenor and aggregate Principal Amount at Maturity, which
shall not bear the restrictive Legend. The Company shall inform the Trustee of
the effective date of any registration statement registering the transfer or
sale of the Securities under the Securities Act. The Trustee and the Registrar
shall not be liable for any action taken or omitted to be taken by it in good
faith in accordance with the aforementioned Opinion of Counsel or registration
statement.
(d) As used in the preceding two paragraphs of this Section 2.12, the
term "transfer" encompasses any sale, pledge, transfer, hypothecation or other
disposition of any Security.
(e) The provisions of clauses (1), (2), (3) and (4) below shall apply
only to Global Securities:
(1) Notwithstanding any other provisions of this Indenture or the
Securities, except as provided in Section 2.12(a)(ii), a Global Security
shall not be exchanged in whole or in part for a Security registered in
the name of any Person other than the
16
Depositary or one or more nominees thereof, provided that a Global
Security may be exchanged for Securities registered in the names of any
person designated by the Depositary in the event that (i) the Depositary
has notified the Company that it is unwilling or unable to continue as
Depositary for such Global Security or such Depositary has ceased to be a
"clearing agency" registered under the Exchange Act, and a successor
Depositary is not appointed by the Company within 90 days, (ii) an Event
of Default has occurred and is continuing with respect to the Securities
or (iii) the Company discontinues the use of a book entry transfer through
DTC (or a successor thereof). Any Global Security exchanged pursuant to
clause (i) above shall be so exchanged in whole and not in part, and any
Global Security exchanged pursuant to clause (ii) above may be exchanged
in whole or from time to time in part as directed by the Depositary. Any
Security issued in exchange for a Global Security or any portion thereof
shall be a Global Security; provided that any such Security so issued that
is registered in the name of a Person other than the Depository or a
Nominee thereof shall not be a Global Security.
(2) Securities issued in exchange for a Global Security or any
portion thereof shall be issued in definitive, fully registered form,
without interest coupons, shall have an aggregate Principal Amount at
Maturity equal to that of such Global Security or portion thereof to be so
exchanged, shall be registered in such names and be in such authorized
denominations as the Depositary shall designate and shall bear the
applicable legends provided for herein. Any Global Security to be
exchanged in whole shall be surrendered by the Depositary to the Trustee,
as Registrar. With regard to any Global Security to be exchanged in part,
either such Global Security shall be so surrendered for exchange or, if
the Trustee is acting as custodian for the Depositary or its nominee with
respect to such Global Security, the Principal Amount at Maturity thereof
shall be reduced, by an amount equal to the portion thereof to be so
exchanged, by means of an appropriate adjustment made on the records of
the Trustee. Upon any such surrender or adjustment, the Trustee shall
authenticate and deliver the Security issuable on such exchange to or upon
the order of the Depositary or an authorized representative thereof.
(3) Subject to the provisions of clause (5) below, the registered
Holder may grant proxies and otherwise authorize any Person, including
Agent Members (as defined below) and persons that may hold interests
through Agent Members, to take any action which a holder is entitled to
take under this Indenture or the Securities.
(4) In the event of the occurrence of any of the events specified in
clause (1) above, the Company will promptly make available to the Trustee
a reasonable supply of Certificated Securities in definitive, fully
registered form, without interest coupons.
(5) Neither any members of, or participants in, the Depositary
(collectively, the "Agent Members") nor any other Persons on whose behalf
Agent Members may act shall have any rights under this Indenture with
respect to any Global Security registered in the name of the Depositary or
any nominee thereof, or under any such Global Security, and the Depositary
or such nominee, as the case may be, may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the absolute owner
and holder of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company,
the Trustee or any agent of the
17
Company or the Trustee from giving effect to any written certification,
proxy or other authorization furnished by the Depositary or such nominee,
as the case may be, or impair, as between the Depositary, its Agent
Members and any other person on whose behalf an Agent Member may act, the
operation of customary practices of such Persons governing the exercise of
the rights of a holder of any Security.
Section 2.13 CUSIP Numbers. The Company in issuing the Securities may
use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall
use "CUSIP" numbers in notices of redemption as a convenience to Holders;
provided that any such notice may state that no representation is made as to
the correctness of such numbers either as printed on the Securities or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Securities, and any such
redemption shall not be affected by any defect in or omission of such numbers.
The Company will promptly notify the Trustee of any change in the CUSIP
numbers.
ARTICLE 3
REDEMPTION AND PURCHASES
Section 3.01 Right to Redeem; Notices to Trustee. The Company, at its
option, may at any time on or after September 11, 2006 redeem the Securities in
accordance with the provisions of paragraphs 6 and 8 of the Securities. If the
Company elects to redeem Securities pursuant to paragraph 6 of the Securities,
it shall notify the Trustee in writing of the Redemption Date, the Principal
Amount at Maturity of Securities to be redeemed and the Redemption Price.
The Company shall give the notice to the Trustee provided for in this
Section 3.01 by a Company Order, at least 35 days before the Redemption Date
(unless a shorter notice shall be satisfactory to the Trustee).
Section 3.02 Selection of Securities to Be Redeemed. If less than all
the Securities are to be redeemed, the Trustee shall select the Securities to
be redeemed pro rata or by lot or by any other method the Trustee considers
fair and appropriate (so long as such method is not prohibited by the rules of
any stock exchange or quotation system on which the Securities are then listed
or quoted). The Trustee shall make the selection at least 30 days but not more
than 60 days before the Redemption Date from outstanding Securities not
previously called for redemption. The Trustee may select for redemption
portions of the Principal Amount at Maturity of Securities that have
denominations larger than $1,000.
Securities and portions of them the Trustee selects shall be in
Principal Amounts at Maturity of $1,000 or an integral multiple of $1,000.
Provisions of this Indenture that apply to Securities called for redemption
also apply to portions of Securities called for redemption. The Trustee shall
notify the Company promptly of the Securities or portions of Securities to be
redeemed.
If any Security selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of the
Security so selected, the converted portion of such Security shall be deemed
(so far as may be) to be the portion selected for redemption.
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Securities which have been converted during a selection of Securities to be
redeemed may be treated by the Trustee as outstanding for the purpose of such
selection.
Section 3.03 Notice of Redemption. At least 30 days but not more than
60 days before a Redemption Date, the Company shall mail a notice of redemption
by first-class mail, postage prepaid, to each Holder of Securities to be
redeemed.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the Conversion Rate;
(4) the name and address of the Paying Agent and Conversion Agent;
(5) that Securities called for redemption may be converted at any
time before the close of business on the second Business Day immediately
preceding the Redemption Date;
(6) that Holders who want to convert Securities must satisfy the
requirements set forth in paragraph 9 of the Securities;
(7) that Securities called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price;
(8) if fewer than all the outstanding Securities are to be redeemed,
the certificate number and Principal Amounts at Maturity of the particular
Securities to be redeemed;
(9) that, unless the Company defaults in making payment of such
Redemption Price or Securities called for redemption, Original Issue
Discount, Contingent Cash Interest, if any, and Contingent Additional
Principal, if any, on Securities called for redemption will cease to
accrue on and after the Redemption Date;
(10) the CUSIP number of the Securities; and
(11) any other information the Company wants to present.
At the Company's request, the Trustee shall give the notice of
redemption to Holders in the Company's name and at the Company's expense,
provided that the Company makes such request at least five Business Days
(unless a shorter period shall be satisfactory to the Trustee) prior to the
date such notice of redemption must be mailed.
Section 3.04 Effect of Notice of Redemption. Once notice of redemption
is given, Securities called for redemption become due and payable on the
Redemption Date and at the Redemption Price stated in the notice except for
Securities which are converted in accordance
19
with the terms of this Indenture. Upon surrender to the Paying Agent, such
Securities shall be paid at the Redemption Price stated in the notice.
Section 3.05 Deposit of Redemption Price. Prior to 10:00 a.m. (New
York City time), on the Redemption Date, the Company shall deposit with the
Paying Agent (or if the Company or a Subsidiary or an Affiliate of either of
them is the Paying Agent, shall segregate and hold in trust) money sufficient
to pay the Redemption Price for all Securities to be redeemed on that date
other than Securities or portions of Securities called for redemption which on
or prior thereto have been delivered by the Company to the Trustee for
cancellation or have been converted. The Paying Agent shall as promptly as
practicable return to the Company any money not required for that purpose
because of conversion of Securities pursuant to Article 10. If such money is
then held by the Company in trust and is not required for such purpose it shall
be discharged from such trust.
Section 3.06 Securities Redeemed in Part. Upon surrender of a Security
that is redeemed in part, the Company shall execute and the Trustee shall
authenticate and deliver to the Holder a new Security in an authorized
denomination equal in Principal Amount at Maturity to the unredeemed portion of
the Security surrendered.
Section 3.07 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 banks or other purchasers to purchase such
Securities by paying to the Trustee in trust for the Securityholders, on or
prior to 10:00 a.m. New York City time on the Redemption Date, an amount that,
together with any amounts deposited with the Trustee by the Company for the
redemption of such Securities, is not less than the Redemption Price 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
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 11) surrendered by such purchasers for conversion, all as
of immediately prior to the close of business on the Business Day prior to the
Redemption Date, subject to payment of the above amount as aforesaid. The
Trustee shall hold and pay to the Holders whose Securities are selected for
redemption any such amount paid to it for purchase and conversion in the same
manner as it would moneys deposited with it by the Company for the redemption
of Securities. Without the Trustee's prior written consent, 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 as set forth in this Indenture,
and the Company agrees to indemnify the Trustee 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 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.
20
Section 3.08 Purchase of Securities at Option of the Holder. (a)
General. Securities shall be purchased by the Company, at the option of the
Holder thereof, pursuant to paragraph 7 of the Securities on September 11,
2004, September 11, 2006 and September 11, 2011 (each, a "Purchase Date"), at
the purchase prices of $712.97, $741.92 and $819.54, respectively, per $1,000
of Principal Amount at Maturity plus, in each case, if applicable, Contingent
Additional Principal accrued thereon (and any accrued CAP-OID thereon) (each in
the aggregate, a "Purchase Price"), upon:
(1) delivery to the Paying Agent, by the Holder of a written notice
of purchase (a "Purchase Notice") at any time from the opening of business
on the date that is 20 Business Days prior to a Purchase Date until the
close of business on the first business day immediately preceding such
Purchase Date stating:
(A) the certificate numbers of the Security which the Holder
will deliver to be purchased,
(B) the portion of the Principal Amount at Maturity of the
Security which the Holder will deliver to be purchased, which portion
must be a Principal Amount at Maturity of $1,000 or an integral
multiple thereof,
(C) that such Security shall be purchased as of the Purchase
Date pursuant to the terms and conditions specified in paragraph 7 of
the Securities and in this Indenture, and
(D) in the event the Company elects, pursuant to Section
3.08(b), to pay the Purchase Price to be paid as of such Purchase
Date, in whole or in part, in shares of Common Stock but such portion
of the Purchase Price shall ultimately be payable to such Holder
entirely in cash because any of the conditions to payment of the
Purchase Price in Common Stock is not satisfied prior to the close of
business on such Purchase Date, as set forth in Section 3.08(d),
whether such Holder elects (i) to withdraw such Purchase Notice as to
some or all of the Securities to which such Purchase Notice relates
(stating the Principal Amount at Maturity and certificate numbers of
the Securities as to which such withdrawal shall relate), or (ii) to
receive cash in respect of the entire Purchase Price for all
Securities (or portions thereof) to which such Purchase Notice
relates; and
(2) delivery of such Security to the Paying Agent prior to, on or
after the Purchase Date (together with all necessary endorsements) at the
offices of the Paying Agent, such delivery being a condition to receipt by
the Holder of the Purchase Price therefor; provided, however, that such
Purchase Price shall be so paid pursuant to this Section 3.08 only if the
Security so delivered to the Paying Agent shall conform in all respects to
the description thereof in the related Purchase Notice, as determined by
the Company.
If a Holder, in such Holder's Purchase Notice and in any written
notice of withdrawal delivered by such Holder pursuant to the terms of Section
3.10, fails to indicate such Holder's choice with respect to the election set
forth in clause (D) of Section 3.08(a)(1), such Holder shall
21
be deemed to have elected to receive cash in respect of the Purchase Price for
all Securities subject to such Purchase Notice in the circumstances set forth
in such clause (D).
The Company shall purchase from the Holder thereof, pursuant to this
Section 3.08, a portion of a Security if the Principal Amount at Maturity of
such portion is $1,000 or an integral multiple of $1,000. Provisions of this
Indenture that apply to the purchase of all of a Security also apply to the
purchase of such portion of such Security.
Any purchase by the Company contemplated pursuant to the provisions of
this Section 3.08 shall be consummated by the delivery of the consideration to
be received by the Holder promptly following the later of the Purchase Date and
the time of delivery of the Security.
Notwithstanding anything herein to the contrary, any Holder delivering
to the Paying Agent the Purchase Notice contemplated by this Section 3.08(a)
shall have the right to withdraw such Purchase Notice at any time prior to the
close of business on the first business day immediately preceding the Purchase
Date by delivery of a written notice of withdrawal to the Paying Agent in
accordance with Section 3.10.
The Paying Agent shall promptly notify the Company of the receipt by
it of any Purchase Notice or written notice of withdrawal thereof.
(b) Company's Right to Elect Manner of Payment of Purchase Price. The
Securities to be purchased pursuant to Section 3.08(a) may be paid for, at the
election of the Company, in cash or Common Stock, or in any combination of cash
and Common Stock, subject to the conditions set forth in Sections 3.08(c) and
(d). The Company shall designate, in the Company Notice delivered pursuant to
Section 3.08(e), whether the Company will purchase the Securities for cash or
Common Stock, or, if a combination thereof, the percentages or amounts of the
Purchase Price of Securities in respect of which it will pay in cash or Common
Stock; provided that the Company will pay cash for fractional interests in
Common Stock. For purposes of determining the existence of potential fractional
interests, all Securities subject to purchase by the Company held by a Holder
shall be considered together (no matter how many separate certificates are to
be presented). Each Holder whose Securities are purchased pursuant to this
Section 3.08 shall receive the same percentage of cash or Common Stock in
payment of the Purchase Price for such Securities, except (i) as provided in
Section 3.08(d) with regard to the payment of cash in lieu of fractional shares
of Common Stock and (ii) in the event that the Company is unable to purchase
the Securities of a Holder or Holders for Common Stock because any necessary
qualifications or registrations of the Common Stock under applicable state
securities laws cannot be obtained, the Company may purchase the Securities of
such Holder or Holders for cash. The Company may not change its election with
respect to the consideration (or components or percentages of components
thereof) to be paid once the Company has given its Company Notice to
Securityholders except pursuant to this Section 3.08(b) or pursuant to Section
3.08(d) in the event of a failure to satisfy, prior to the close of business on
the Purchase Date, any condition to the payment of the Purchase Price, in whole
or in part, in Common Stock.
22
At least one Business Day before the Company Notice Date, the Company
shall deliver an Officers' Certificate to the Trustee specifying:
(i) the manner of payment selected by the Company,
(ii) the information required by Section 3.08(e),
(iii) if the Company elects to pay the Purchase Price, or a specified
percentage thereof, in Common Stock, that the conditions to such manner of
payment set forth in Section 3.08(d) have been or will be complied with,
and
(iv) whether the Company desires the Trustee to give the Company
Notice required by Section 3.08(e).
(c) Purchase with Cash. On each Purchase Date, at the option of the
Company, the Purchase Price of Securities in respect of which a Purchase Notice
pursuant to Section 3.08(a) has been given, or a specified percentage thereof,
may be paid by the Company with cash equal to the aggregate Purchase Price of
such Securities. If the Company elects to purchase Securities with cash, the
Company Notice, as provided in Section 3.08(e), shall be sent to Holders (and
to beneficial owners as required by applicable law) not less than 20 Business
Days prior to such Purchase Date (the "Company Notice Date").
(d) Payment by Issuance of Common Stock. On each Purchase Date, at the
option of the Company, the Purchase Price of Securities in respect of which a
Purchase Notice pursuant to Section 3.08(a) has been given, or a specified
percentage thereof, may be paid by the Company by the issuance of a number of
shares of Common Stock equal to the quotient obtained by dividing (i) the
amount of cash to which the Securityholders would have been entitled had the
Company elected to pay all or such specified percentage, as the case may be, of
the Purchase Price of such Securities in cash by (ii) the Market Price of a
share of Common Stock, subject to the next succeeding paragraph.
The Company will not issue a fractional share of Common Stock in
payment of the Purchase Price. Instead the Company will pay cash for the
current market value of the fractional share. The current market value of a
fraction of a share shall be determined by multiplying the Market Price by such
fraction and rounding the product to the nearest whole cent. It is understood
that if a Holder elects to have more than one Security purchased, the number of
shares of Common Stock shall be based on the aggregate amount of Securities to
be purchased.
Upon a payment by Common Stock pursuant to the terms hereof, that
portion of Accrued Original Issue Discount, accrued Contingent Additional
Principal, if any, and accrued unpaid Contingent Cash Interest, if any,
attributable to the period from the Issue Date to the Purchase Date with
respect to the purchased Security shall not be cancelled, extinguished or
forfeited but rather shall be deemed paid in full to the Holder through the
delivery of the Common Stock in exchange for the Security being purchased
pursuant to the terms hereof, and the fair market value of such Common Stock
(together with any cash payments in lieu of fractional shares of Common Stock)
shall be treated as issued, to the extent thereof, first in exchange for the
Accrued Original Issue Discount, Contingent Cash Interest, if any, and accrued
Contingent Additional Principal, through, but not including, the Purchase Date,
and the balance, if any, of the fair market value of
23
such shares of Common Stock shall be treated as issued in exchange for the
Issue Price of the Security being purchased pursuant to the provisions hereof.
If the Company elects to purchase the Securities by the issuance of
shares of Common Stock, the Company Notice, as provided in Section 3.08(e),
shall be sent to the Holders (and to beneficial owners as required by
applicable law) not later than the Company Notice Date.
The Company's right to exercise its election to purchase the
Securities pursuant to Section 3.08 through the issuance of shares of Common
Stock shall be conditioned upon:
(i) the Company's not having given its Company Notice of an election
to pay entirely in cash and its giving of timely Company Notice of
election to purchase all or a specified percentage of the Securities with
Common Stock as provided herein;
(ii) the shares of Common Stock having been admitted for listing or
admitted for listing subject to notice of issuance on the principal United
States securities exchange on which the Common Stock is then listed or, if
the Common Stock is not then listed on a national or regional securities
exchange, as quoted on the National Association of Securities Dealers
Automated Quotation System;
(iii) the registration of the shares of Common Stock to be issued in
respect of the payment of the Purchase Price under the Securities Act or
the Exchange Act, in each case, if required;
(iv) any necessary qualification or registration under applicable
state securities laws or the availability of an exemption from such
qualification and registration; and
(v) the receipt by the Trustee of an Officers' Certificate and an
Opinion of Counsel each stating that (A) the terms of the issuance of the
Common Stock are in conformity with this Indenture and (B) the shares of
Common Stock to be issued by the Company in payment of the Purchase Price
in respect of Securities have been duly authorized and, when issued and
delivered pursuant to the terms of this Indenture in payment of the
Purchase Price in respect of the Securities, will be validly issued, fully
paid and non-assessable and, to the such counsel's knowledge after due
inquiry, free from preemptive rights under law or material contracts, and,
in the case of such Officers' Certificate, stating that conditions (i),
(ii), (iii) and (iv) above and the condition set forth in the second
sentence following this sentence have been satisfied and, in the case of
such Opinion of Counsel, stating that conditions (ii) and (iii) above have
been satisfied.
Such Officers' Certificate shall also set forth the number of shares of Common
Stock to be issued for each $1,000 Principal Amount at Maturity of Securities
and the Sale Price of a share of Common Stock on each trading day during the
period for which the Market Price is calculated. The Company may pay the
Purchase Price (or any portion thereof) in Common Stock only if the information
necessary to calculate the Market Price is published in a daily newspaper of
national circulation. If the foregoing conditions are not satisfied with
respect to a Holder or Holders prior to the close of business on the Purchase
Date and the Company has elected to purchase the Securities pursuant to this
Section 3.08 through the issuance of shares of Common Stock, the
24
Company shall pay the entire Purchase Price of the Securities of such Holder or
Holders to be purchased in cash.
The "Market Price" of the Common Stock means the average of the Sale
Prices of the Common Stock for the five trading day period ending on the third
Business Day (if the third Business Day prior to the applicable Purchase Date
is a trading day or, if not, then on the last trading day) prior to the
applicable Purchase Date, appropriately adjusted to take into account the
occurrence, during the period commencing on the first of such trading days
during such five trading day period and ending on such Purchase Date, of any
events described in Section 10.06, 10.07 or 10.08; subject, however, to the
conditions set forth in Sections 10.09 and 10.10.
(e) Notice of Election. The Company's notice of election to purchase
with cash or Common Stock or any combination thereof shall be sent to the
Holders (and to beneficial owners as required by applicable law) in the manner
provided in Section 15.02 at the time specified in Section 3.08(c) or (d), as
applicable (the "Company Notice"). Such Company Notice shall state the manner
of payment elected and shall contain the following information:
In the event the Company has elected to pay the Purchase Price (or a
specified percentage thereof) with Common Stock, the Company Notice shall:
(1) state that each Holder will receive Common Stock with a Market
Price determined as of a specified date prior to the Purchase Date equal
to such specified percentage of the Purchase Price of the Securities held
by such Holder (except any cash amount to be paid in lieu of fractional
shares);
(2) set forth the method of calculating the Market Price of the
Common Stock; and
(3) state that because the Market Price of Common Stock will be
determined prior to the Purchase Date, Holders will bear the market risk
with respect to the value of the Common Stock to be received from the date
such Market Price is determined to the Purchase Date.
In any case, each Company Notice shall include a form of Purchase
Notice to be completed by a Securityholder and shall state:
(i) the Purchase Price and the Conversion Rate as of the Purchase
Date;
(ii) the name and address of the Paying Agent and the Conversion
Agent;
(iii) that Securities as to which a Purchase Notice has been given
may be converted pursuant to Article 10 hereof only if the applicable
Purchase Notice has been withdrawn in accordance with the terms of this
Indenture;
(iv) that Securities must be surrendered to the Paying Agent to
collect payment of the Purchase Price and accrued and unpaid Contingent
Interest, if any;
25
(v) that the Purchase Price for any Security as to which a Purchase
Notice has been given and not withdrawn will be paid promptly following
the later of the Purchase Date and the time of surrender of such Security
as described in (iv);
(vi) the procedures the Holder must follow to exercise rights under
Section 3.08 and a brief description of those rights;
(vii) briefly, the conversion rights of the Securities;
(viii) the procedures for withdrawing a Purchase Notice (including,
without limitation, for a conditional withdrawal pursuant to the terms of
Section 3.08(a)(1)(D) or Section 3.10);
(ix) that, unless the Company defaults in making payment of such
Purchase Price, Original Issue Discount, Contingent Cash Interest, if
applicable, and Contingent Additional Principal, if applicable, on
Securities surrendered for purchase will cease to accrue on and after the
Purchase Date; and
(x) the CUSIP number of the Securities.
At the Company's request, the Trustee shall give such Company Notice
in the Company's name and at the Company's expense; provided, however, that, in
all cases, the text of such Company Notice shall be prepared by the Company.
Upon determination of the actual number of shares of Common Stock to
be issued for each $1,000 Principal Amount at Maturity of Securities, the
Company will issue a press release and publish such determination on the
Company's Web site or otherwise through such other public medium as the Company
may use at that time.
(f) Covenants of the Company. All shares of Common Stock delivered
upon purchase of the Securities shall be newly issued shares or treasury
shares, shall be duly authorized, validly issued, fully paid and nonassessable
and shall be free from preemptive rights and free of any lien or adverse claim
created by the Company.
As a condition to the Company's right to purchase LYONs, it shall list
or cause to have quoted any shares of Common Stock to be issued to purchase
Securities on each national securities exchange or over-the-counter or other
domestic market on which the Common Stock is then listed or quoted.
(g) Procedure upon Purchase. The Company shall deposit cash (in
respect of a cash purchase under Section 3.08(c) or for fractional interests,
as applicable) or shares of Common Stock, or a combination thereof, as
applicable, at the time and in the manner as provided in Section 3.11,
sufficient to pay the aggregate Purchase Price of, all Securities to be
purchased pursuant to this Section 3.08. As soon as practicable after the
Purchase Date, the Company shall deliver to each Holder entitled to receive
Common Stock through the Paying Agent, a certificate for the number of full
shares of Common Stock issuable in payment of the Purchase Price and cash in
lieu of any fractional interests. The person in whose name the certificate for
Common Stock is registered shall be treated as a holder of record of shares of
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Common Stock on the Business Day following the Purchase Date. Subject to
Section 3.08(d), no payment or adjustment will be made for dividends on the
Common Stock the record date for which occurred on or prior to the Purchase
Date.
(h) Taxes. If a Holder of a Security is paid in Common Stock, the
Company shall pay any documentary, stamp or similar issue or transfer tax due
on such issue of shares of Common Stock. However, the Holder shall pay any such
tax which is due because the Holder requests the shares of Common Stock to be
issued in a name other than the Holder's name. The Paying Agent may refuse to
deliver the certificates representing the Common Stock being issued in a name
other than the Holder's name until the Paying Agent receives a sum sufficient
to pay any tax which will be due because the shares of Common Stock are to be
issued in a name other than the Holder's name. Nothing herein shall preclude
any income tax withholding required by law or regulations.
Section 3.09 Purchase of Securities at Option of the Holder upon
Change in Control. (a) If on or prior to September 11, 2006 there shall have
occurred a Change in Control, Securities shall be purchased by the Company, at
the option of the Holder thereof, at a purchase price specified in paragraph 7
of the Securities (the "Change in Control Purchase Price"), as of the date that
is no later than 35 Business Days after the occurrence of the Change in Control
but in no event prior to the date on which such Change in Control occurs (the
"Change in Control Purchase Date"), subject to satisfaction by or on behalf of
the Holder of the requirements set forth in Section 3.09(c).
A "Change in Control" shall be deemed to have occurred at such time as
either of the following events shall occur:
(i) Any person, including its Affiliates and Associates, other than
the Company or its subsidiaries, files on Schedule 13D or Schedule TO (or
any successor schedule, form or report) pursuant to the Exchange Act,
disclosing that such person (for the purposes of this Section 3.09 only,
as the term "person" is used in Section 13(d)(3) or Section 14(d)(2) of
the Exchange Act) has become the beneficial owner (as the term "beneficial
owner" is defined under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of 50% or more of the aggregate voting
power of the Common Stock and other Capital Stock of the Company with
equivalent voting rights then outstanding; provided, however, that a
person shall not be deemed beneficial owner of, or to own beneficially,
(A) any securities tendered pursuant to a tender or exchange offer made by
or on behalf of such person or any of such person's Affiliates or
Associates until such tendered securities are accepted for purchase or
exchange thereunder, or (B) any securities if such beneficial ownership
(1) arises solely as a result of a revocable proxy delivered in response
to a proxy or consent solicitation made pursuant to the applicable rules
and regulations under the Exchange Act, and (2) is not also then
reportable on Schedule 13D (or any successor schedule) under the Exchange
Act; or
(ii) There shall be consummated any share exchange, consolidation or
merger of the Company pursuant to which the Common Stock would be
converted into cash, securities or other property, in each case other than
a share exchange, consolidation or merger of the Company in which the
holders of the Common Stock and other capital
27
stock with equivalent voting rights, immediately prior to the share
exchange, consolidation or merger have, directly or indirectly, at least a
majority of the total voting power in the aggregate of all classes of
Capital Stock of the continuing or surviving corporation immediately after
the share exchange, consolidation or merger.
Notwithstanding the foregoing provisions of this Section 3.09, a Change in
Control shall not be deemed to have occurred by virtue of the Company or any
Subsidiary, any employee stock ownership plan or any other employee benefit
plan of the Company or any Subsidiary, or any person holding Common Stock for
or pursuant to the terms of any such employee benefit plan, filing or becoming
obligated to file a report under or in response to Schedule 13D or Schedule TO
(or any successor schedule, form or report) under the Exchange Act disclosing
beneficial ownership by it of shares of Common Stock, whether in excess of 50%
or otherwise.
"Associate" shall have the meaning ascribed to such term in Rule 12b-2
of the General Rules and Regulations under the Exchange Act, as in effect on
the date hereof.
(b) Within 15 days after a Change in Control, the Company shall mail a
written notice, which notice may be delivered in anticipation of a Change of
Control, of Change in Control by first-class mail to the Trustee and to each
Holder (and to beneficial owners as required by applicable law). The notice
shall include a form of Change in Control Purchase Notice to be completed by
the Securityholder and shall state:
(1) briefly, the events causing a Change in Control and the date of
such Change in Control;
(2) the date by which the Change in Control Purchase Notice pursuant
to this Section 3.09 must be given;
(3) the Change in Control Purchase Date;
(4) the Change in Control Purchase Price;
(5) the name and address of the Paying Agent and the Conversion
Agent;
(6) the Conversion Rate and any adjustments thereto;
(7) that Securities as to which a Change in Control Purchase Notice
has been given may be converted pursuant to Article 10 hereof only if the
Change in Control Purchase Notice has been withdrawn in accordance with
the terms of this Indenture;
(8) that Securities must be surrendered to the Paying Agent to
collect payment of the Change in Control Purchase Price;
(9) that the Change in Control Purchase Price for any Security as to
which a Change in Control Purchase Notice has been duly given and not
withdrawn, will be paid promptly following the later of the Change in
Control Purchase Date and the time of surrender of such Security as
described in (8);
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(10) briefly, the procedures the Holder must follow to exercise
rights under this Section 3.09;
(11) briefly, the conversion rights of the Securities;
(12) the procedures for withdrawing a Change in Control Purchase
Notice;
(13) that, unless the Company defaults in making payment of such
Change in Control Purchase Price, on Securities surrendered for purchase
will cease to accrue Original Issue Discount and Contingent Additional
Principal on and after the Change in Control Purchase Date; and
(14) the CUSIP number of the Securities.
(c) A Holder may exercise its rights specified in Section 3.09(a) upon
delivery of a written notice of purchase (a "Change in Control Purchase
Notice") to the Paying Agent at any time prior to the close of business on the
Business Day prior to the Change in Control Purchase Date, stating:
(1) the certificate numbers of the Securities which the Holder will
deliver to be purchased;
(2) the portion of the Principal Amount at Maturity of the Securities
which the Holder will deliver to be purchased, which portion must be
$1,000 or an integral multiple thereof; and
(3) that such Securities shall be purchased pursuant to the terms and
conditions specified in paragraph 7 of the Securities.
The delivery of such Securities to the Paying Agent prior to, on or
after the Change in Control Purchase Date (together with all necessary
endorsements) at the offices of the Paying Agent shall be a condition to the
receipt by the Holder of the Change in Control Purchase Price therefor;
provided, however, that such Change in Control Purchase Price shall be so paid
pursuant to this Section 3.09 only if the Securities so delivered to the Paying
Agent shall conform in all respects to the description thereof set forth in the
related Change in Control Purchase Notice.
The Company shall purchase from the Holder thereof, pursuant to this
Section 3.09, a portion of a Security if the Principal Amount at Maturity of
such portion is $1,000 or an integral multiple of $1,000. Provisions of this
Indenture that apply to the purchase of all of a Security also apply to the
purchase of such portion of such Security.
Any purchase by the Company contemplated pursuant to the provisions of
this Section 3.09 shall be consummated by the delivery of the consideration to
be received by the Holder promptly following the later of the Change in Control
Purchase Date and the time of delivery of the Security to the Paying Agent in
accordance with this Section 3.09.
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Notwithstanding anything herein to the contrary, any Holder delivering
to the Paying Agent the Change in Control Purchase Notice contemplated by this
Section 3.09(c) shall have the right to withdraw such Change in Control
Purchase Notice at any time prior to the close of business on the Business Day
prior to the Change in Control Purchase Date by delivery of a written notice of
withdrawal to the Paying Agent in accordance with Section 3.10.
The Paying Agent shall promptly notify the Company of the receipt by
it of any Change in Control Purchase Notice or written withdrawal thereof.
The Company shall not be required to comply with this Section 3.09 if
a third party mails a written notice of Change in Control in the manner, at the
times and otherwise in compliance with this Section 3.09 and repurchases all
Securities for which a Change in Control Purchase Notice shall be delivered and
not withdrawn.
Section 3.10 Effect of Purchase Notice or Change in Control Purchase
Notice. Upon receipt by the Paying Agent of the Purchase Notice or Change in
Control Purchase Notice specified in Section 3.08(a) or Section 3.09(c), as
applicable, the Holder of the Security in respect of which such Purchase Notice
or Change in Control Purchase Notice, as the case may be, was given shall
(unless such Purchase Notice or Change in Control Purchase Notice is withdrawn
as specified in the following two paragraphs) thereafter be entitled to receive
solely the Purchase Price or Change in Control Purchase Price, as the case may
be, together with accrued and unpaid contingent interest, if any. Such amounts
shall be paid to such Holder, subject to receipts of funds and/or securities by
the Paying Agent, promptly following the later of (x) the Purchase Date or the
Change in Control Purchase Date, as the case may be, with respect to such
Security (provided the conditions in Section 3.08(a) or Section 3.09(c), as
applicable, have been satisfied) and (y) the time of delivery of such Security
to the Paying Agent by the Holder thereof in the manner required by Section
3.08(a) or Section 3.09(c), as applicable. Securities in respect of which a
Purchase Notice or Change in Control Purchase Notice, as the case may be, has
been given by the Holder thereof may not be converted pursuant to Article 10
hereof on or after the date of the delivery of such Purchase Notice or Change
in Control Purchase Notice, as the case may be, unless such Purchase Notice or
Change in Control Purchase Notice, as the case may be, has first been validly
withdrawn as specified in the following two paragraphs.
A Purchase Notice or Change in Control Purchase Notice, as the case
may be, may be withdrawn by means of a written notice of withdrawal delivered
to the office of the Paying Agent in accordance with the Purchase Notice or
Change in Control Purchase Notice, as the case may be, at any time prior to the
close of business on the Business Day prior to the Purchase Date or the Change
in Control Purchase Date, as the case may be, specifying:
(1) the certificate number of the Securities in respect of which such
notice of withdrawal is being submitted,
(2) the Principal Amount at Maturity of the Securities with respect
to which such notice of withdrawal is being submitted, and
30
(3) the Principal Amount at Maturity, if any, of such Securities
which remains subject to the original Purchase Notice or Change in Control
Purchase Notice, as the case may be, and which has been or will be
delivered for purchase by the Company.
A written notice of withdrawal of a Purchase Notice may be in the form
set forth in the preceding paragraph or may be in the form of (i) a conditional
withdrawal contained in a Purchase Notice pursuant to the terms of Section
3.08(a)(1)(D) or (ii) a conditional withdrawal containing the information set
forth in Section 3.08(a)(1)(D) and the preceding paragraph and contained in a
written notice of withdrawal delivered to the Paying Agent as set forth in the
preceding paragraph.
There shall be no purchase of any Securities pursuant to Section 3.08
(other than through the issuance of Common Stock in payment of the Purchase
Price, including cash in lieu of fractional shares) or 3.09 if there has
occurred (prior to, on or after, as the case may be, the giving, by the Holders
of such Securities, of the required Purchase Notice or Change in Control
Purchase Notice, as the case may be) and is continuing an Event of Default
(other than a default in the payment of the Purchase Price or Change in Control
Purchase Price, as the case may be). The Paying Agent will promptly return to
the respective Holders thereof any Securities (x) with respect to which a
Purchase Notice or Change in Control Purchase Notice, as the case may be, has
been withdrawn in compliance with this Indenture, or (y) held by it during the
continuance of an Event of Default (other than a default in the payment of the
Purchase Price or Change in Control Purchase Price, as the case may be, with
respect to the Securities in which case), upon such return, the Purchase Notice
or Change in Control Purchase Notice with respect thereto shall be deemed to
have been withdrawn.
Section 3.11 Deposit of Purchase Price or Change in Control Purchase
Price. Prior to 10:00 a.m., New York City time, on the Business Day following
the Purchase Date or the Change in Control Purchase Date, as the case may be,
the Company shall deposit with the Trustee or with the Paying Agent (or, if the
Company or a Subsidiary or an Affiliate of either of them is acting as the
Paying Agent, shall segregate and hold in trust as provided in Section 2.04) an
amount of money (in immediately available funds if deposited on such Business
Day) or Common Stock, if permitted hereunder, sufficient to pay the aggregate
Purchase Price or Change in Control Purchase Price, as the case may be, of all
the Securities or portions thereof which are to be purchased as of the Purchase
Date or Change in Control Purchase Date, as the case may be.
Section 3.12 Securities Purchased in Part. Any Security which is to be
purchased 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, of any authorized denomination as
requested by such Holder in aggregate Principal Amount at Maturity equal to,
and in exchange for, the portion of the Principal Amount at Maturity of the
Security so surrendered which is not purchased.
Section 3.13 Covenant to Comply with Securities Laws upon Purchase of
Securities. In connection with any offer to purchase or purchase of Securities
under Section 3.08 or 3.09 hereof
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(provided that such offer or purchase constitutes an "issuer tender offer" for
purposes of Rule 13e-4 (which term, as used herein, includes any successor
provision thereto) under the Exchange Act at the time of such offer or purchase
or is otherwise subject to tender offer or other rules under the Federal or
state securities laws), the Company shall (i) comply with Rule 13e-4, Rule
14e-1 and any other tender offer rules under the Exchange Act which may then be
applicable, (ii) file the related Schedule TO (or any successor schedule, form
or report) or any other schedule required under the Exchange Act, and (iii)
otherwise comply with all Federal and state securities laws so as to permit the
rights and obligations under Sections 3.08 and 3.09 to be exercised in the time
and in the manner specified in Sections 3.08 and 3.09.
Section 3.14 Repayment to the Company. The Trustee and the Paying
Agent shall promptly return to the Company any cash or shares of Common Stock
that remain unclaimed as provided in paragraph 17 of the Securities, together
with interest or dividends, if any, thereon (subject to the provisions of
Section 7.01(f)), held by them for the payment of the Purchase Price or Change
in Control Purchase Price, as the case may be; provided, however, that to the
extent that the aggregate amount of cash or shares of Common Stock deposited by
the Company pursuant to Section 3.11 exceeds the aggregate Purchase Price or
Change in Control Purchase Price, as the case may be, of, the Securities or
portions thereof which the Company is obligated to purchase as of the Purchase
Date or Change in Control Purchase Date, as the case may be, whether as a
result of withdrawal or otherwise, then promptly after the Business Day
following the Purchase Date or Change in Control Purchase Date, as the case may
be, the Trustee shall return any such excess to the Company together with
interest or dividends, if any, thereon (subject to the provisions of Section
7.01(f)).
ARTICLE 4
COVENANTS
Section 4.01 Payment of Securities. The Company shall promptly make
all payments in respect of the Securities on the dates and in the manner
provided in the Securities or pursuant to this Indenture. Any amounts to be
given to the Trustee or Paying Agent, shall be deposited with the Trustee or
Paying Agent by 10:00 a.m., New York City time, by the Company. Principal
Amount at Maturity, Issue Price plus Accrued Original Issue Discount,
Redemption Price, Purchase Price, Change in Control Purchase Price, Contingent
Cash Interest, if any, and Contingent Additional Principal, if any, shall be
considered paid on the applicable date due if on such date (or, in the case of
a Purchase Price or Change in Control Purchase Price, on the Business Day
following the applicable Purchase Date or Change in Control Purchase Date, as
the case may be) the Trustee or the Paying Agent holds, in accordance with this
Indenture, money or securities, if permitted hereunder, sufficient to pay all
such amounts then due.
The Company shall, to the extent permitted by law, pay interest on
overdue amounts at the rate per annum set forth in paragraph 1 of the
Securities, compounded Semi-annually, which interest shall accrue from the date
such overdue amount was originally due to the date payment of such amount,
including interest thereon, has been made or duly provided for. All such
interest shall be payable on demand. The accrual of such interest on overdue
amounts shall be in lieu of, and not in addition to, the continued accrual of
Original Issue Discount, Contingent Cash Interest, if any, and Contingent
Additional Principal, if any.
32
Section 4.02 SEC and Other Reports. If requested by the Trustee, the
Company shall deliver to the Trustee, within 15 days after it files such annual
and quarterly reports, information, documents and other reports with the SEC,
copies of its annual report and of the information, documents and other reports
(or copies of such portions of any of the foregoing as the SEC may by rules and
regulations prescribe) which the Company is required to file with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act. The Company shall send to
the Trustee all reports required pursuant to the provisions of TIA Section
314(a). Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of the same shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
Section 4.03 Compliance Certificate. The Company shall deliver to the
Trustee within 120 days after the end of each fiscal year of the Company
(beginning with the fiscal year ending on December 31, 2001) an Officers'
Certificate, stating whether or not to the best knowledge of the signers
thereof the Company is in default in the performance and observance of any of
the terms, provisions and conditions of this Indenture (without regard to any
period of grace or requirement of notice provided hereunder) and if the Company
shall be in default, specifying all such defaults and the nature and status
thereof of which they may have knowledge.
Section 4.04 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.
Section 4.05 Maintenance of Office or Agency. The Company will
maintain in the Borough of Manhattan, The City of New York, an office or agency
of the Trustee, Registrar, Paying Agent and Conversion Agent where Securities
may be presented or surrendered for payment, where Securities may be
surrendered for registration of transfer, exchange, purchase, redemption or
conversion 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 Bank of New
York, located at 101 Barclay Street, Floor 21 West, New York, New York 10286
(Attention: Corporate Trust Administration-Trustee Administration), shall
initially be such office or agency for all of the aforesaid purposes. The
Company shall give prompt written notice to the Trustee of the location, and of
any change in the location, of any such office or agency (other than a change
in the location of the office of the Trustee). 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 address of the Trustee set forth in
Section 15.02.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York, for such purposes.
33
Section 4.06 Delivery of Certain Information. 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 any beneficial holder of Securities or shares of Common
Stock which are restricted securities issued upon conversion thereof, the
Company will promptly furnish or cause to be furnished Rule 144A Information
(as defined below) to such Holder or any beneficial holder of Securities or
holder of shares of Common Stock issued upon conversion of Securities, or to a
prospective purchaser of any such security designated by any such holder, as
the case may be, to the extent required to permit compliance by such Holder or
holder with Rule 144A under the Securities Act in connection with the resale of
any such security. "Rule 144A Information" shall be such information as is
specified pursuant to Rule 144A(d)(4) under the Securities Act.
Section 4.07 Tax Matters. The parties hereto hereby agree, and each
Holder (or other person that acquires a beneficial interest in a Security) by
its purchase of a Security (or a beneficial interest therein) hereby agrees:
(1) to treat the Securities as indebtedness of the Company for all tax
purposes;
(2) to treat the Securities as indebtedness that is subject to the
special regulations governing contingent payment debt instruments
that are contained in U.S. Treasury Regulation Section 1.1275-4;
(3) to treat any payment to and receipt by a holder of shares of Common
Stock (or of any cash in lieu of fractional shares) upon the
conversion of a Security as a contingent payment under U.S. Treasury
Regulation Section 1.1275-4(b) that will result in an adjustment
under U.S. Treasury Regulation Section 1.1275-4(b)(3)(iv) and U.S.
Treasury Regulation Section 1.1275-4(b)(6);
(4) solely for U.S. federal income tax purposes, the Company shall accrue
interest with respect to outstanding Securities as original issue
discount according to the "noncontingent bond method," as set forth
in U.S. Treasury Regulation Section 1.1275-4(b);
(5) the Company has determined that the comparable yield, as defined in
U.S. Treasury Regulation Section 1.1275-4(b)(4)(i), for the
Securities is 8.68%, compounded semiannually;
(6) (i) the comparable yield and the projected payment schedule are not
determined for any purpose other than for the purpose of applying
U.S. Treasury Regulation Section 1.1275-4(b)(4) to the Securities and
(ii) the comparable yield and the projected payment schedule do not
constitute a projection or representation regarding the actual
amounts payable on the Securities; and
(7) the projected payment schedule, as defined in U.S. Treasury
Regulation Section 1.1275-4(b)(4)(ii) for the Securities is as set
forth in Annex C hereto.
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ARTICLE 5
SUCCESSOR CORPORATION
Section 5.01 When Company May Merge or Transfer Assets. The Company
shall not consolidate with or merge with or into any other person or convey,
transfer or lease all or substantially all of its properties and assets as an
entirety to any person, unless:
(a) either (1) the Company shall be the continuing corporation or (2)
the person (if other than the Company) formed by such consolidation or
into which the Company is merged or the person which acquires by
conveyance, transfer or lease the properties and assets of the Company
substantially as an entirety (i) shall be a corporation organized and
validly existing under the laws of the United States or any State thereof
or the District of Columbia and (ii) shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in
form reasonably satisfactory to the Trustee, all of the obligations of the
Company under the Securities and this Indenture;
(b) immediately after giving effect to such transaction, no Default
shall have occurred and be continuing; and
(c) the Company shall have 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 5 and that all
conditions precedent herein provided for relating to such transaction have
been satisfied.
For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise) of the properties and assets of one or more Subsidiaries
(other than to the Company or another Subsidiary), which, if such assets were
owned by the Company, would constitute all or substantially all of the
properties and assets of the Company, shall be deemed to be the transfer of all
or substantially all of the properties and assets of the Company.
The successor person formed by such consolidation or into which the
Company is merged or the successor person 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 had been named as the Company herein; and thereafter, except in
the case of a lease and any obligations the Company may have under a
supplemental indenture pursuant to Section 10.14, the Company shall be
discharged from all obligations and covenants under this Indenture and the
Securities. Subject to Section 9.06, the Company, the Trustee and the successor
person shall enter into a supplemental indenture to evidence the succession and
substitution of such successor person and such discharge and release of the
Company.
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ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01 Events of Default. An "Event of Default" means the
occurrence of any one of the following events:
(1) the Company defaults in the payment of the Principal Amount at
Maturity, Issue Price plus Accrued Original Issue Discount, Contingent
Additional Principal, Redemption Price, Purchase Price, or Change in
Control Purchase Price on any Security when the same becomes due and
payable at its Stated Maturity, upon redemption, upon declaration, when
due for purchase by the Company or otherwise, whether or not such payment
is prohibited by the provisions of this Indenture;
(2) failure by the Company to pay any Contingent Cash Interest on any
Security when the same becomes due and payable, and such failure continues
unremedied for a period of 30 or more days, whether or not such payment is
prohibited by the provisions of this Indenture;
(3) the failure of the Company to comply with any of its agreements
in the Notes or this Indenture (other than those referred to in clauses
(1) or (2) above) upon the receipt of notice of such default from the
Trustee or from Holders of not less than 25% in aggregate Principal Amount
at Maturity of the Securities then outstanding (a "Notice of Default") and
such failure (or the failure to obtain a waiver thereof) continues uncured
for 60 days after receipt by the Company of a Notice of Default;
(4) (a) failure of the Company to make any payment by the end of any
applicable grace period after maturity of Debt in an amount (taken
together with amounts in (b) below) in excess of $25,000,000 and
continuance of such failure, or (b) the acceleration of Debt in an amount
in excess of $25,000,000 because of a default with respect to such Debt
without such Debt having been discharged or such acceleration having been
cured, waived, rescinded or annulled, in the case of (a) above, for a
period of 30 days after receipt by the Company of a Notice of Default from
the Trustee or to the Company and Trustee from the holders of not less
than 25% in Aggregate Principal Amount at Maturity of the Securities then
outstanding; provided, however, that if any such failure or acceleration
referred to in (a) or (b) above shall cease or be cured, waived, rescinded
or annulled, then the Event of Default by reason thereof shall be deemed
not to have occurred;
(5) the Company or any Significant Subsidiary pursuant to or under or
within the meaning of any Bankruptcy Law:
(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 or the commencement of any case
against it;
(C) consents to the appointment of a Custodian of it or for any
substantial part of its property;
36
(D) makes a general assignment for the benefit of its creditors;
(E) files a petition in bankruptcy or answer or consent seeking
reorganization or relief; or
(F) consents to the filing of such petition or the appointment
of or taking possession by a Custodian; or
(6) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against the Company or any Significant
Subsidiary in an involuntary case or proceeding, or adjudicates the
Company or any Significant Subsidiary insolvent or bankrupt;
(B) appoints a Custodian of the Company or any Significant
Subsidiary or for any substantial part of its property; or
(C) orders the winding-up or liquidation of the Company or any
Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 days.
"Bankruptcy Law" means Title 11, United States Code, or any similar
federal or state law for the relief of debtors.
"Custodian" means any receiver, trustee, assignee, liquidator,
custodian or similar official under any Bankruptcy Law.
A Default under clause (3) or clause (4) above is not an Event of
Default until the Trustee notifies the Company, or the Holders of at least 25%
in aggregate Principal Amount at Maturity of the Securities at the time
outstanding notify the Company and the Trustee, of the Default and the Company
does not cure such Default (and such Default is not waived) within the time
specified in clause (3) or clause (4) above after actual receipt of such
notice. Any such notice must specify the Default, demand that it be remedied
and state that such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days after it
becomes aware of the occurrence thereof, written notice of any event which with
the giving of notice or the lapse of time, or both, would become an Event of
Default under clause (3) or clause (4) above, its status and what action the
Company is taking or proposes to take with respect thereto.
Section 6.02 Acceleration . If an Event of Default (other than an
Event of Default specified in Section 6.01(5) or (6) in respect of the Company)
occurs and is continuing, the Trustee by Notice to the Company, or the Holders
of at least 25% in aggregate Principal Amount at Maturity of the Securities at
the time outstanding by notice to the Company and the Trustee, may declare the
Issue Price plus Accrued Original Issue Discount, accrued and unpaid Contingent
Cash Interest, if any, and Contingent Additional Principal, if any, through the
date of
37
such declaration, on all the Securities to be immediately due and payable. Upon
such a declaration, such Issue Price plus Accrued Original Issue Discount,
accrued and unpaid Contingent Cash Interest, if any, and accrued Contingent
Additional Principal, if any, shall be due and payable immediately. If an Event
of Default specified in Section 6.01(4) or (5) occurs in respect of the Company
and is continuing, the Issue Price plus Accrued Original Issue Discount,
accrued and unpaid Contingent Cash Interest, if any, and accrued Contingent
Additional Principal, if any, on all the Securities shall become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Securityholders. The Holders of a majority in aggregate
Principal Amount at Maturity of the Securities at the time outstanding, by
notice to the Trustee (and without notice to any other Securityholder) may
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default have
been cured or waived except nonpayment of the Issue Price plus Accrued Original
Issue Discount and accrued Contingent Additional Principal, if any, plus
accrued and unpaid Contingent Cash Interest that have become due solely as a
result of acceleration and if all amounts due to the Trustee under Section 7.07
have been paid. No such rescission shall affect any subsequent Default or
impair any right consequent thereto.
Section 6.03 Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of the Issue Price plus Accrued Original Issue Discount, accrued and unpaid
Contingent Cash Interest and Contingent Additional Principal, if any, on the
Securities or to enforce the performance of any provision of the Securities or
this Indenture.
The Trustee may maintain a proceeding even if the Trustee does not
possess any of the Securities or does not produce any of the Securities 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.
Section 6.04 Waiver of Past Defaults. Subject to Section 6.02, the
Holders of a majority in aggregate Principal Amount at Maturity of the
Securities at the time outstanding, by notice to the Trustee (and without
notice to any other Securityholder), may waive an existing Default and its
consequences except (a) an Event of Default described in Section 6.01(1) or
Section 6.01(2), a Default in respect of a provision that under Section 9.02
cannot be amended without the consent of each Securityholder affected or (b) a
Default which constitutes a failure to convert any Security in accordance with
the terms of Article 10. When a Default is waived, it is deemed cured, but no
such waiver shall extend to any subsequent or other Default or impair any
consequent right. This Section 6.04 shall be in lieu of Section 316(a)1(B) of
the TIA and such Section 316(a)1(B) is hereby expressly excluded from this
Indenture, as permitted by the TIA.
Section 6.05 Control by Majority. The Holders of a majority in
aggregate Principal Amount at Maturity of the Securities at the time
outstanding may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or of exercising any trust or power
conferred on the Trustee. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture or that the Trustee
determines in good faith is unduly prejudicial to the rights of other
Securityholders or would involve the Trustee in personal
38
liability unless the Trustee is offered indemnity satisfactory to it. This
Section 6.05 shall be in lieu of Section 316(a)1(A) of the TIA and such Section
316(a)1(A) is hereby expressly excluded from this Indenture, as permitted by
the TIA.
Section 6.06 Limitation on Suits. A Securityholder may not pursue any
remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(2) the Holders of at least 25% in aggregate Principal Amount at
Maturity of the Securities at the time outstanding make a written request
to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee security or indemnity
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 such notice, request and offer of security or indemnity; and
(5) the Holders of a majority in aggregate Principal Amount at
Maturity of the Securities at the time outstanding do not give the Trustee
a direction inconsistent with the request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the rights of
any other Securityholder or to obtain a preference or priority over any other
Securityholder.
Section 6.07 Rights of Holders to Receive Payment. Notwithstanding any
other provision of this Indenture, the right of any Holder to receive payment
of the Principal Amount at Maturity, Issue Price, Accrued Original Issue
Discount, Redemption Price, Purchase Price, Change in Control Purchase Price,
Contingent Cash Interest, if any, and accrued Contingent Additional Principal,
if any, in respect of the Securities held by such Holder, on or after the
respective due dates expressed in the Securities or any Redemption Date, and to
convert the Securities in accordance with Article 10, or to bring suit for the
enforcement of any such payment on or after such respective dates or the right
to convert, shall not be impaired or affected adversely without the consent of
such Holder.
Section 6.08 Collection Suit by Trustee. If an Event of Default
described in Section 6.01(1) or Section 6.01(2) occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company for the whole amount owing with respect to the Securities
and the amounts provided for in Section 7.07.
Section 6.09 Trustee May File Proofs of Claim. In case of the pendency
of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Company or any other obligor upon the Securities or the property of the
Company or of such other obligor or their creditors, the Trustee (irrespective
of whether the Principal Amount at Maturity, Issue Price, Accrued Original
Issue Discount, Redemption Price, Purchase Price, Change in Control Purchase
Price, Contingent Cash
39
Interest, if any, or Contingent Additional Principal, if any, in respect of the
Securities shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Trustee shall have made any demand
on the Company for the payment of any such amount) shall be entitled and
empowered, by intervention in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of the Principal
Amount at Maturity, Issue Price, Accrued Original Issue Discount,
Redemption Price, Purchase Price, Change in Control Purchase Price,
Contingent Cash Interest, if any, or accrued Contingent Additional
Principal, if any, as the case may be, and to file such other papers or
documents as may be necessary or advisable in order to have the claims of
the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and
counsel or any other amounts due the Trustee under Section 7.07) and of
the Holders allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay
the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 7.07.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
Section 6.10 Priorities. If the Trustee collects any money pursuant to
this Article 6, it shall pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for the Principal Amount at Maturity, Issue Price, Accrued
Original Issue Discount, Redemption Price, Purchase Price, Change in
Control Purchase Price, Contingent Cash Interest, if any, and accrued
Contingent Additional Principal, if any, as the case may be, ratably,
without preference or priority of any kind, according to such amounts due
and payable on the Securities; and
THIRD: the balance, if any, to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section 6.10. At least 15 days before such
record date, the Trustee shall mail to each Securityholder and the Company a
notice that states the record date, the payment date and the amount to be paid.
40
Section 6.11 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 (other than the Trustee) 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 and expenses,
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
6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to
Section 6.07 or a suit by Holders of more than 25% in aggregate Principal
Amount at Maturity of the Securities at the time outstanding. This Section 6.11
shall be in lieu of Section 315(e) of the TIA and such Section 315(e) is hereby
expressly excluded from this Indenture, as permitted by the TIA.
Section 6.12 Waiver of Stay, Extension or Usury Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury or other law
wherever enacted, now or at any time hereafter in force, which would prohibit
or forgive the Company from paying all or any portion of the Principal Amount
at Maturity, Issue Price, Accrued Original Issue Discount, Redemption Price,
Purchase Price, Change in Control Purchase Price, Contingent Cash Interest, if
any, and accrued Contingent Additional Principal, if any, in respect of
Securities, or any interest on such amounts, as contemplated herein, or which
may affect the covenants or the performance of this Indenture; and the Company
(to the extent that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law had
been enacted.
ARTICLE 7
TRUSTEE
Section 7.01 Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in its
exercise as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee need perform only those duties that 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, but
in case of any such certificates or opinions which by any provision hereof
are specifically required to be furnished to the Trustee, the Trustee
shall examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture, but need not confirm
or investigate the accuracy of mathematical calculations or other facts
stated therein.
41
This Section 7.01(b) shall be in lieu of Section 315(a) of the TIA and
such Section 315(a) is hereby expressly excluded from this Indenture, as
permitted by the TIA.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) this paragraph (c) does not limit the effect of paragraph (b) of
this Section 7.01;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible 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 6.05.
Subparagraphs (c)(1), (2) and (3) shall be in lieu of Sections 315(d)(1),
315(d)(2) and 315(d)(3) of the TIA and such Sections 315(d)(1), 315(d)(2) and
315(d)(3) are hereby expressly excluded from this Indenture, as permitted by
the TIA.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section 7.01.
(e) The Trustee may refuse to perform any duty or exercise any right
or power or extend or risk its own funds or otherwise incur any financial
liability unless it receives indemnity satisfactory to it against any loss,
liability or expense.
(f) Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
(acting in any capacity hereunder) shall be under no liability for interest on
any money received by it hereunder unless otherwise agreed in writing with the
Company.
Section 7.02 Rights of Trustee. Subject to its duties and
responsibilities under the provisions of Section 7.01, and, except as expressly
excluded from this Indenture pursuant to said Section 7.01, under the TIA:
(a) the Trustee may conclusively rely and shall be protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(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, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, conclusively rely upon an Officers' Certificate;
42
(c) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder;
(d) the Trustee shall not be liable for any action taken, suffered,
or omitted to be taken by it in good faith which it believes to be
authorized or within its rights or powers conferred under this Indenture;
(e) the Trustee may consult with counsel selected by it and any
advice or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such advice or Opinion of
Counsel;
(f) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders, pursuant to the provisions of this
Indenture, unless such Holders shall have offered to the Trustee security
or indemnity satisfactory to it against the costs, expenses and
liabilities which may be incurred therein or thereby;
(g) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
resolution of the Board of Directors;
(h) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney at the sole
cost of the Company and shall incur no liability or additional liability
of any kind by reason of such inquiry or investigation;
(i) the Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact
such a default is received by the Trustee at the Corporate Trust Office of
the Trustee, and such notice references the Securities and this Indenture;
(j) the rights, privileges, protections, immunities and benefits
given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in
each of its capacities hereunder, and to each agent, custodian and other
Person employed to act hereunder; and
(k) the Trustee may request that the Company deliver an Officers'
Certificate setting forth the names of individuals and/or titles of
officers authorized at such time to
43
take specified actions pursuant to this Indenture, which Officers'
Certificate may be signed by any person authorized to sign an Officers'
Certificate, including any person specified as so authorized in any such
certificate previously delivered and not superseded.
Section 7.03 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 its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, Conversion
Agent or co-registrar may do the same with like rights. However, the Trustee
must comply with Sections 7.10 and 7.11.
Section 7.04 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 or application of the proceeds from
the Securities, it shall not be responsible for any statement in the
registration statement for the Securities under the Securities Act or in the
Indenture or the Securities (other than its certificate of authentication), or
the determination as to which beneficial owners are entitled to receive any
notices hereunder.
Section 7.05 Notice of Defaults. If a Default occurs and if it is
known to the Trustee, the Trustee shall give to each Securityholder notice of
the Default within 90 days after it occurs unless such Default shall have been
cured or waived before the giving of such notice. Except in the case of a
Default described in Section 6.01(1) or 6.01(2), the Trustee may withhold the
notice if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of Securityholders.
The second sentence of this Section 7.05 shall be in lieu of the proviso to
Section 315(b) of the TIA and such proviso is hereby expressly excluded from
this Indenture, as permitted by the TIA. The Trustee shall not be deemed to
have knowledge of a Default unless a Responsible Officer of the Trustee has
received written notice of such Default.
Section 7.06 Reports by Trustee to Holders. 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 Section 313(a), if required by such Section 313(a).
The Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each securities exchange, if any, on which the
Securities are listed. The Company agrees to promptly notify the Trustee
whenever the Securities become listed on any securities exchange and of any
delisting thereof.
Section 7.07 Compensation and Indemnity. The Company agrees:
(a) to pay to the Trustee from time to time such compensation as the
Company and the Trustee shall from time to time agree in writing for all
services rendered by it hereunder (which compensation shall not be limited (to
the extent permitted by law) by any provision of law in regard to the
compensation of a trustee of an express trust);
(b) to reimburse the Trustee upon its request for all expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Indenture (including the compensation and the expenses,
advances and disbursements of its agents and
44
counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
(c) to indemnify the Trustee or any predecessor, Trustee and their
agents for, and to hold them harmless against, any loss, damage, claim,
liability, cost or expense (including attorney's fees and taxes (other than
taxes based upon, measured by or determined by the income of the Trustee))
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of this trust, including the
reasonable costs and expenses of defending itself against any claim (whether
asserted by the Company or any Holder or any other Person) or liability in
connection with the exercise or performance of any of its powers or duties
hereunder.
To secure the Company's payment obligations in this Section 7.07, the
Holders shall have been deemed to have granted to the Trustee a lien prior to
the Securities on all money or property held or collected by the Trustee,
except that held in trust to pay the Principal Amount at Maturity, Issue Price,
Accrued Original Issue Discount, Redemption Price, Purchase Price, Change in
Control Purchase Price, Contingent Cash Interest, if any, and Contingent
Additional Principal, if any, as the case may be, on particular Securities.
The Company's payment obligations pursuant to this Section 7.07 shall
survive the discharge of this Indenture and the resignation or removal of the
Trustee. When the Trustee incurs expenses after the occurrence of a Default
specified in Section 6.01(4) or (5), the expenses including the reasonable
charges and expenses of its counsel, are intended to constitute expenses of
administration under any Bankruptcy Law.
Section 7.08 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 7.08. The Holders of a majority in aggregate Principal Amount at
Maturity of the Securities at the time outstanding may remove the Trustee by so
notifying the Trustee and the Company. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or public officer takes charge of the Trustee or its
property; or
(4) the Trustee otherwise becomes incapable of acting.
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, by
resolution of its Board of Directors, a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company satisfactory in form and
substance to the retiring Trustee and the Company. Thereupon 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. The successor Trustee shall mail a notice of its succession to
Securityholders. The
45
retiring Trustee shall promptly transfer all property held by it as Trustee to
the successor Trustee, subject to the lien provided for in Section 7.07.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or
the Holders of a majority in aggregate Principal Amount at Maturity of the
Securities at the time outstanding may petition any court of competent
jurisdiction at the expense of the Company for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Section 7.09 Successor Trustee by Merger. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation, the resulting,
surviving or transferee corporation without any further act shall be the
successor Trustee.
Section 7.10 Eligibility; Disqualification. The Trustee shall at all
times satisfy the requirements of TIA Sections 310(a)(1) and 310(b). The
Trustee (or its parent holding company) shall have a combined capital and
surplus of at least $50,000,000 as set forth in its most recent published
annual report of condition. Nothing herein contained shall prevent the Trustee
from filing with the Commission the application referred to in the penultimate
paragraph of TIA Section 310(b).
Section 7.11 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 8
DISCHARGE OF INDENTURE
Section 8.01 Discharge of Liability on Securities. When (i) the
Company delivers to the Trustee all outstanding Securities (other than
Securities replaced pursuant to Section 2.07) for cancellation or (ii) all
outstanding Securities have become due and payable and the Company deposits
with the Trustee cash or, if expressly permitted by the terms of the Securities
or the Indenture, Common Stock (as applicable in accordance with the terms
hereof) sufficient to pay all amounts due and owing on all outstanding
Securities (other than Securities replaced pursuant to Section 2.07), and if in
either case the Company pays all other sums payable hereunder by the Company,
then this Indenture shall, subject to Section 7.07, cease to be of further
effect. The Trustee shall join in the execution of a document prepared by the
Company acknowledging satisfaction and discharge of this Indenture on demand of
the Company accompanied by an Officers' Certificate and Opinion of Counsel and
at the cost and expense of the Company.
Section 8.02 Repayment to the Company. The Trustee and the Paying
Agent shall return to the Company upon written request any money or securities
held by them for the payment of any amount with respect to the Securities that
remains unclaimed for two years,
46
subject to applicable unclaimed property law. After return to the Company,
Holders entitled to the money or securities must look to the Company for
payment as general creditors unless an applicable abandoned property law
designates another person and the Trustee and the Paying Agent shall have no
further liability to the Securityholders with respect to such money or
securities for that period commencing after the return thereof.
ARTICLE 9
AMENDMENTS
Section 9.01 Without Consent of Holders. The Company and the Trustee
may amend this Indenture or the Securities without the consent of any
Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
provided, however, that such amendment does not materially adversely
affect the rights of any Securityholder;
(2) to comply with Article 5 or Section 10.14;
(3) to secure the Company's obligations under the Securities and this
Indenture;
(4) to add to the Company's covenants for the benefit of the
Securityholders or to surrender any right or power conferred upon the
Company;
(5) to make any change to comply with the TIA, or any amendment
thereto, or to comply with any requirement of the SEC in connection with
the qualification of the Indenture under the TIA, or as necessary in
connection with the registration of the Securities under the Securities
Act; or
(6) to make any change that does not adversely affect the rights of
any Holders.
Section 9.02 With Consent of Holders. With the written consent of the
Holders of at least a majority in aggregate Principal Amount at Maturity of the
Securities at the time outstanding, the Company and the Trustee may amend this
Indenture or the Securities. However, without the consent of each
Securityholder affected, an amendment to this Indenture or the Securities may
not:
(1) change the provisions of this Indenture that relate to modifying
or amending this Indenture;
(2) make any change in the manner of calculation or rate of accrual
of Original Issue Discount and Contingent Additional Principal, make any
change in the manner of calculation or rate of accrual of, or that
adversely affects the right to receive, Contingent Cash Interest, reduce
the rate of interest referred to in paragraph 1 of the Securities, or
extend the time for payment of Original Issue Discount, Contingent Cash
Interest, Contingent Additional Principal (including CAP-OID thereon) or
interest, if any, on any Security;
47
(3) reduce the Principal Amount at Maturity, the Issue Price, Accrued
Original Issue Discount, Contingent Cash Interest, if any, or accrued
Contingent Additional Principal or CAP-OID, if any, on, or change the
Stated Maturity of, any Security;
(4) reduce the Redemption Price, Purchase Price or Change in Control
Purchase Price of any Security;
(5) make any Security payable in money or securities other than that
stated in the Security;
(6) make any change in Section 6.04, Section 6.07 or this Section
9.02, except to increase any percentage set forth therein;
(7) make any change that adversely affects the right to convert any
Security;
(8) make any change that adversely affects the right to require the
Company to purchase the Securities in accordance with the terms thereof
and this Indenture;
(9) impair the right to institute suit for the enforcement of any
payment with respect to, or conversion of, the Securities;
(10) reduce the amount of principal payable upon acceleration of
maturity of the Securities following a Default.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section 9.02 becomes effective, the
Company shall mail to each Holder a notice briefly describing the amendment.
Section 9.03 Compliance with Trust Indenture Act. Every supplemental
indenture executed pursuant to this Article shall comply with the TIA.
Section 9.04 Revocation and Effect of Consents, Waivers and Actions.
Until an amendment, waiver or other action by Holders becomes effective, a
consent thereto by a Holder of a Security hereunder is a continuing consent by
the Holder and every subsequent Holder of that Security or portion of the
Security that evidences the same obligation as the consenting Holder's
Security, even if notation of the amendment, waiver or other action is not made
on the Security. However, any such Holder or subsequent Holder may revoke the
consent as to such Holder's Security or portion of the Security if the Trustee
receives the notice of revocation before the date as of which the amendment,
waiver or action is made effective. After an amendment, waiver or action
becomes effective, it shall bind every Securityholder.
Section 9.05 Notation on or Exchange of Securities. Securities
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article may, and shall if required by the Trustee, bear a
notation in form approved by the Trustee as to any matter
48
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Board of
Directors, to any such supplemental indenture may be prepared and executed by
the Company and authenticated and delivered by the Trustee in exchange for
outstanding Securities.
Section 9.06 Trustee to Sign Supplemental Indentures. The Trustee
shall sign any supplemental indenture authorized pursuant to this Article 9 if
the amendment contained therein does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may, but need
not, sign such supplemental indenture. In signing such supplemental indenture
the Trustee shall receive, and (subject to the provisions of Section 7.01)
shall be fully protected in relying upon, in addition to the documents required
by Section 15.04, an Officers' Certificate and an Opinion of Counsel stating
that such amendment is authorized or permitted by this Indenture.
Section 9.07 Effect of Supplemental Indentures. Upon the execution of
any supplemental indenture under this Article, this Indenture shall be modified
in accordance therewith, and such supplemental indenture shall form a part of
this Indenture for all purposes; and every Holder of Securities theretofore or
thereafter authenticated and delivered hereunder shall be bound thereby.
ARTICLE 10
CONVERSION
Section 10.01 Conversion Privilege. A Holder of a Security may convert
such Security into shares of Common Stock at any time during the period stated
in paragraph 9 of the Securities, subject to the provisions of this Article 10.
The number of shares of Common Stock issuable upon conversion of a Security per
$1,000 of Principal Amount at Maturity thereof (the "Conversion Rate") shall be
that set forth in paragraph 9 in the Securities, subject to adjustment as
herein set forth.
A Holder may convert a portion of the Principal Amount at Maturity of
a Security if the portion is $1,000 or an integral multiple of $1,000.
Provisions of this Indenture that apply to conversion of all of a Security also
apply to conversion of a portion of a Security.
"Average Sale Price" means the average of the Sale Prices of the
Common Stock for the shorter of
(i) 30 consecutive trading days ending on the last full trading day
prior to the Time of Determination with respect to the rights, warrants or
options or distribution in respect of which the Average Sale Price is
being calculated, or
(ii) the period (x) commencing on the date next succeeding the first
public announcement of (a) the issuance of rights, warrants or options or
(b) the distribution, in each case, in respect of which the Average Sale
Price is being calculated and (y) proceeding through the last full trading
day prior to the Time of Determination with respect to the rights,
warrants or options or distribution in respect of which the Average Sale
Price is being calculated (excluding days within such period, if any,
which are not trading days), or
49
(iii) the period, if any, (x) commencing on the date next succeeding
the Ex-Dividend Time with respect to the next preceding (a) issuance of
rights, warrants or options or (b) distribution, in each case, for which
an adjustment is required by the provisions of Section 10.05(4), 10.06 or
10.07 and (y) proceeding through the last full trading day prior to the
Time of Determination with respect to the rights, warrants or options or
distribution in respect of which the Average Sale Price is being
calculated (excluding days within such period, if any, which are not
trading days).
In the event that the Ex-Dividend Time (or in the case of a subdivision,
combination or reclassification, the effective date with respect thereto) with
respect to a dividend, subdivision, combination or reclassification to which
Section 10.05(1), (2), (3) or (5) applies occurs during the period applicable
for calculating Average Sale Price pursuant to the definition in the preceding
sentence, Average Sale Price shall be calculated for such period in a manner
determined by the Board of Directors to reflect the impact of such dividend,
subdivision, combination or reclassification on the Sale Price of the Common
Stock during such period.
"Time of Determination" means the time and date of the earlier of (i)
the determination of stockholders entitled to receive rights, warrants or
options or a distribution, in each case, to which Section 10.07 or 10.08
applies and (ii) the time ("Ex-Dividend Time") immediately prior to the
commencement of "ex-dividend" trading for such rights, warrants or options or
distribution on the New York Stock Exchange or such other national or regional
exchange or market on which the Common Stock is then listed or quoted.
Section 10.02 Conversion Procedure. To convert a Security, a Holder
must satisfy the requirements in paragraph 9 of the Securities. The date on
which the Holder satisfies all those requirements is the conversion date (the
"Conversion Date"). The Conversion Agent shall notify the Company of the
Conversion Date within one Business Day of the Conversion Date. The Company
shall deliver to the Holder, through the Conversion Agent, no later than the
fifth Business Day following the Conversion Date, a certificate for the number
of full shares of Common Stock issuable upon the conversion and cash in lieu of
any fractional share determined pursuant to Section 10.03. The Person in whose
name the certificate representing such shares is registered shall be treated as
a stockholder of record on and after 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; such conversion shall be at the Conversion
Rate 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 or
dividends on, or other distributions with respect to, any Common Stock except
as provided in this Article 10. On conversion of a Security, that portion of
Accrued Original Issue Discount and original issue discount, as imputed for
United States federal income tax purposes pursuant to
50
Section 1.275-4(b) of the Treasury Regulations and Contingent Additional
Principal, if any, attributable to the period from the Issue Date to, but
excluding, the Conversion Date and (except as provided below) that portion of
accrued Contingent Cash Interest attributable to the period from the last
Contingent Cash Interest Payment Date (or Issue Date, if such date has not
occurred) ("Contingent Cash Interest Payment Date") to but excluding the
Conversion Date with respect to the converted Security shall not be cancelled,
extinguished or forfeited, but rather shall be deemed to be paid in full to the
Holder thereof through delivery of the Common Stock (together with the cash
payment, if any, in lieu of fractional shares) in exchange for the Security
being converted pursuant to the provisions hereof; and the fair market value of
such shares of Common Stock (together with any such cash payment in lieu of
fractional shares) shall be treated as delivered pro rata, to the extent
thereof, first in exchange for Accrued Original Issue Discount and original
issue discount, as imputed for United States federal income tax purposes
pursuant to Section 1.275-4(b) of the Treasury Regulations and accrued
Contingent Additional Principal, if any, to, but excluding the Conversion Date
and accrued Contingent Cash Interest to, but excluding, the Conversion Date,
and the balance, if any, of such cash and/or the fair market value of such
Common Stock (together with any such cash payment in lieu of fractional shares)
shall be treated as delivered in exchange for the Issue Price of the Security
being converted pursuant to the provisions hereof. Notwithstanding the
foregoing, accrued but unpaid Contingent Cash interest will be payable upon
conversion of Securities made concurrently with or after acceleration of
Securities following an Event of Default.
If the 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 total Principal Amount at Maturity of the Securities converted.
A Security surrendered for conversion by a Holder during the period
from the close of business on any Common Stock Record Date to the opening of
business on the next Contingent Cash Interest Payment Date must be accompanied
by payment of an amount equal to the Contingent Cash Interest that the Holder
is to receive on the Securities surrendered for conversion, unless the Company
has provided such Holder with a notice of redemption with respect to such
Securities pursuant to Section 3.03 herein, in which case no such payment shall
be made.
If the last day on which a Security may be converted is a Legal
Holiday, the Security may be surrendered on the next succeeding day that is not
a Legal Holiday.
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 in an authorized denomination equal in Principal Amount at
Maturity to the unconverted portion of the Security surrendered.
Section 10.03 Fractional Shares. The Company will not issue a
fractional share of Common Stock upon conversion of a Security. Instead, the
Company will deliver cash for the current market value of the fractional share.
The current market value of a fractional share shall be determined, to the
nearest 1/1,000th of a share, by multiplying the Sale Price of the Common
Stock, on the last trading day prior to the Conversion Date, of a full share by
the fractional amount and rounding the product to the nearest whole cent.
51
Section 10.04 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 the 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 10.05 Company to Provide Stock. The Company shall, prior to
issuance of any Securities under this Article 10, 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 the
Securities.
All shares of Common Stock delivered upon conversion of the Securities
shall be newly issued shares or treasury shares, shall be duly and validly
issued and fully paid and nonassessable 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 10.06 Adjustment for Change in Capital Stock. If, after the
Issue Date of the Securities, the Company:
(1) pays a dividend or makes a distribution on its Common Stock in
shares of its Common Stock;
(2) subdivides its outstanding shares of Common Stock into a greater
number of shares;
(3) combines its outstanding shares of Common Stock into a smaller
number of shares;
(4) pays a dividend or makes a distribution on its Common Stock in
shares of its Capital Stock (other than Common Stock or rights, warrants
or options for its Capital Stock); or
(5) issues by reclassification of its Common Stock any shares of its
Capital Stock (other than rights, warrants or options for its Capital
Stock),
then the conversion privilege and the Conversion Rate in effect immediately
prior to such action shall be adjusted so that the Holder of a Security
thereafter converted may receive the number of shares of Capital Stock of the
Company which such Holder would have owned immediately
52
following such action if such Holder had converted the Security immediately
prior to such action.
The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
If after an adjustment a Holder of a Security upon conversion of such
Security may receive shares of two or more classes of Capital Stock of the
Company, the Conversion Rate shall thereafter be subject to adjustment upon the
occurrence of an action taken with respect to any such class of Capital Stock
as is contemplated by this Article 10 with respect to the Common Stock, on
terms comparable to those applicable to Common Stock in this Article 10.
Section 10.07 Adjustment for Rights Issue. If after the Issue Date of the
Securities, the Company distributes any rights, warrants or options to all
holders of its Common Stock entitling them, for a period expiring within 60
days after the record date for such distribution, to purchase shares of Common
Stock at a price per share less than the Sale Price of the Common Stock as of
the Time of Determination, the Conversion Rate shall be adjusted in accordance
with the formula:
(O + N)
R' = R x ---------------
O + (N x P)/M
where:
R' = the adjusted Conversion Rate.
R = the current Conversion Rate.
O = the number of shares of Common Stock outstanding on the
record date for the distribution to which this Section 10.07 is
being applied.
N = the number of additional shares of Common Stock offered pursuant
to the distribution.
P = the offering price per share of the additional shares.
M = the Average Sale Price, minus, in the case of (i) a
distribution to which Section 10.06(4) applies or (ii) a
distribution to which Section 10.08 applies, for which, in
each case, (x) the record date shall occur on or before the
record date for the distribution to which this Section 10.07
applies and (y) the Ex-Dividend Time shall occur on or after
the date of the Time of Determination for the distribution to
which this Section 10.07 applies, the fair market value (on
the record date for the distribution to which this Section
10.07 applies) of the:
(1) Capital Stock of the Company distributed in respect of each share
of Common Stock in such Section 10.06(4) distribution; and
53
(2) assets of the Company or Debt securities or any rights, warrants
or options to purchase securities of the Company distributed in respect of
each share of Common Stock in such Section 10.08 distribution.
The Board of Directors shall determine fair market values for the
purposes of this Section 10.07.
The adjustment shall become effective immediately after the record
date for the determination of shareholders entitled to receive the rights,
warrants or options to which this Section 10.07 applies. If all of the shares
of Common Stock subject to such rights, warrants or options have not been
issued when such rights, warrants or options expire, then the Conversion Rate
shall promptly be readjusted to the Conversion Rate which would then be in
effect had the adjustment upon the issuance of such rights, warrants or options
been made on the basis of the actual number of shares of Common Stock issued
upon the exercise of such rights, warrants or options.
No adjustment shall be made under this Section 10.07 if the
application of the formula stated above in this Section 10.07 would result in a
value of R' that is equal to or less than the value of R.
Section 10.08 Adjustment for Other Distributions. (a) If, after the
Issue Date of the Securities, the Company distributes to all holders of its
Common Stock any of its assets excluding distributions of Capital Stock or
equity interests referred to in Section 10.08(b), or evidences of indebtedness
of the Company or any rights, warrants or options to purchase securities of the
Company (including securities or cash, but excluding (x) distributions of
Capital Stock referred to in Section 10.06 and distributions of rights,
warrants or options referred to in Section 10.07 and (y) cash dividends or
other cash distributions that are paid out of consolidated current net earnings
or earnings retained in the business as shown on the books of the Company,
unless such cash dividends or other cash distributions are Extraordinary Cash
Dividends (as defined below)) (except for the above restrictions, "Regular Cash
Dividends") the Conversion Rate shall be adjusted, subject to the provisions of
Section 10.08(c), in accordance with the formula:
R' = R x M
-------
M - F
where:
R' = the adjusted Conversion Rate.
R = the current Conversion Rate.
M = the Average Sale Price, minus, in the case of a distribution
to which Section 10.06(4) applies, for which (i) the record
date shall occur on or before the record date for the
distribution to which this Section 10.08(a) applies and (ii)
the Ex-Dividend Time shall occur on or after the date of the
Time of Determination for the distribution to which this
Section 10.08(a) applies, the fair market value (on the record
date for the distribution to which this Section 10.08(a)
applies) of any
54
Capital Stock of the Company distributed in respect of each
share of Common Stock in such Section 10.06(4) distribution.
F = the fair market value (on the record date for the
distribution to which this Section 10.08(a) applies) of the
assets, securities, rights, warrants or options to be
distributed in respect of each share of Common Stock in the
distribution to which this Section 10.08(a) is being applied
(including, in the case of cash dividends or other cash
distributions giving rise to an adjustment, all such cash
distributed concurrently).
The Board of Directors shall determine fair market values for the
purposes of this Section 10.08(a).
The adjustment shall become effective immediately after the record
date for the determination of shareholders entitled to receive the distribution
to which this Section 10.09(a) applies.
For purposes of this Section 10.08(a), the term "Extraordinary Cash
Dividend" shall mean any cash dividend with respect to the Common Stock the
amount of which, together with the aggregate amount of cash dividends on the
Common Stock to be aggregated with such cash dividend in accordance with the
provisions of this paragraph, equals or exceeds the threshold percentage set
forth in item (i) below. For purposes of item (i) below, the "Measurement
Period" with respect to a cash dividend on the Common Stock shall mean the 365
consecutive day period ending on the date prior to the Ex-Dividend Time with
respect to such cash dividend, and the "Relevant Cash Dividends" with respect
to a cash dividend on the Common Stock shall mean the cash dividends on the
Common Stock with Ex-Dividend Times occurring in the Measurement Period.
(i) If, upon the date prior to the Ex-Dividend Time with respect to a
cash dividend on the Common Stock, the aggregate amount of such cash
dividend together with the amounts of all Relevant Cash Dividends equals
or exceeds on a per share basis the sum of (a) 5% of the Sale Price of the
Common Stock on the last Trading Day preceding the date of declaration by
the Board of Directors of the cash dividend or distribution with respect
to which this provision is being applied, and (b) the quotient of the
amount of any contingent interest paid on a Security during the
Ex-Dividend Measurement Period and divided by the conversion rate in
effect on the payment date of such relevant Contingent Interest Payment
Date, then such cash dividend together with all Relevant Cash Dividends,
shall be deemed to be an Extraordinary Cash Dividend and for purposes of
applying the formula set forth above in this Section 10.08(a), the value
of "F" shall be equal to (y) the aggregate amount of such cash dividend
together with the amount of all Relevant Cash Dividends, minus (z) the
aggregate amount of all Relevant Cash Dividends for which a prior
adjustment in the Conversion Rate was previously made under this Section
10.08(a).
In making the determinations required by item (i) above, the amount of
cash dividends paid on a per share basis and the amount of any Relevant
Cash Dividends specified in
55
item (i) above, shall be appropriately adjusted to reflect the occurrence
during such period of any event described in Section 10.06.
(b) If, after the Issue Date of the Securities, the Company pays a
dividend or makes a distribution to all holders of its Common Stock consisting
of Capital Stock of any class or series, or similar equity interests, of or
relating to a Subsidiary or other business unit of the Company, the Conversion
Rate shall be adjusted in accordance with the formula:
R' = R x (1 + F/M)
where:
R' = the adjusted Conversion Rate.
R = the current Conversion Rate.
M = the average of the Post-Distribution Prices of the Common Stock
for the 10 trading days commencing on and including the fifth trading day after
the date on which "ex-dividend trading" commences for such dividend or
distribution on the principal United States exchange or market which such
securities are then listed or quoted (the "Ex-Dividend Date").
F = the fair market value of the securities distributed in respect of
each share of Common Stock for which this Section 10.08(b) shall mean the
number of securities distributed in respect of each share of Common Stock
multiplied by the average of the Post-Distribution Prices of those securities
distributed for the 10 trading days commencing on and including the fifth
trading day after the Ex-Dividend Date.
(c) "Post-Distribution Price" of Capital Stock or any similar equity
interest on any date means the closing per unit sale price (or, if no closing
sale price is reported, the average of the bid and ask prices or, if more than
one in either case, the average of the average bid and the average ask prices)
on such date for trading of such units on a "when issued" basis without due
bills (or similar concept) as reported in the composite transactions for the
principal United States securities exchange on which such Capital Stock or
equity interest is traded or, if the Capital Stock or equity interest, as the
case may be, is not listed on a United States national or regional securities
exchange, as reported by the National Association of Securities Dealers
Automated Quotation System or by the National Quotation Bureau Incorporated;
provided that if on any date such units have not traded on a "when issued"
basis, the Post-Distribution Price shall be the closing per unit sale price
(or, if no closing sale price is reported, the average of the bid and ask
prices or, if more than one in either case, the average of the average bid and
the average ask prices) on such date for trading of such units on a "regular
way" basis without due bills (or similar concept) as reported in the composite
transactions for the principal United States securities exchange on which such
Capital Stock or equity interest is traded or, if the Capital Stock or equity
interest, as the case may be, is not listed on a United States national or
regional securities exchange, as reported by the National Association of
Securities Dealers Automated Quotation System or by the National Quotation
Bureau Incorporated. In the absence of such quotation, the Company shall be
entitled to determine the Post-Distribution Price on the basis of such
quotations, which reflect the post-distribution value of the Capital Stock or
equity interests, as it considers appropriate.
56
Section 10.09 When Adjustment May Be Deferred. No adjustment in the
Conversion Rate need be made unless the adjustment would require an increase or
decrease of at least 1% in the Conversion Rate. Any adjustments that are not
made shall be carried forward and taken into account in any subsequent
adjustment.
All calculations under this Article 10 shall be made to the nearest
cent or to the nearest 1/1,000th of a share, as the case may be (with one-half
of a cent and 5/10,000ths of a share being rounded upward).
Section 10.10 When No Adjustment Required. No adjustment need be made
for a transaction referred to in Section 10.06, 10.07, 10.08, 10.14 or 10.19 if
Securityholders are to participate in the transaction on a basis and with
notice that the Board of Directors determines to be fair and appropriate in
light of the basis and notice on which holders of Common Stock participate in
the transaction. Such participation by Securityholders may include
participation upon conversion provided that an adjustment shall be made at such
time as the Securityholders are no longer entitled to participate.
No adjustment need be made for rights to purchase 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 no par
value of the Common Stock.
The Company is not required to make an adjustment until adjustments
greater 1% have occurred.
To the extent the Securities become convertible pursuant to this
Article 10 into cash, no adjustment need be made thereafter as to the cash.
Interest will not accrue on the cash. The Conversion Rate shall not be adjusted
for any Accrued Original Issue Discount, Contingent Additional Principal, if
any, or Contingent Cash Interest.
Section 10.11 Notice of Adjustment. Whenever the Conversion Rate is
adjusted, the Company shall promptly mail to Securityholders a notice of the
adjustment. The Company shall file with the Trustee and the Conversion Agent
such notice and a certificate from the Company's independent public accountants
briefly stating the facts requiring the adjustment and the manner of computing
it. The certificate shall be conclusive evidence that the adjustment is
correct. Neither the Trustee nor any Conversion Agent shall be under any duty
or responsibility with respect to any such certificate except to exhibit the
same to any Holder desiring inspection thereof.
Section 10.12 Voluntary Increase. The Company from time to time may
increase the Conversion Rate by any amount for any period of time. Whenever the
Conversion Rate is increased, the Company shall mail to Securityholders and
file with the Trustee and the Conversion Agent a notice of the increase. The
Company shall mail the notice at least 15 days before the date the increased
Conversion Rate takes effect. The notice shall state the increased Conversion
Rate and the period it will be in effect.
57
A voluntary increase of the Conversion Rate does not change or adjust
the Conversion Rate otherwise in effect for purposes of Section 10.06, 10.07 or
10.08.
Section 10.13 Notice of Certain Transactions. If:
(1) the Company takes any action that would require an adjustment in
the Conversion Rate pursuant to Section 10.06, 10.07 or 10.08 (unless no
adjustment is to occur pursuant to Section 10.10); or
(2) the Company takes any action that would require a supplemental
indenture pursuant to Section 10.14; or
(3) there is a liquidation or dissolution of the Company;
then the Company shall mail to Securityholders and file with the Trustee and
the Conversion Agent a notice stating the proposed record date for a dividend
or distribution or the proposed effective date of a subdivision, combination,
reclassification, consolidation, merger, binding share exchange, transfer,
liquidation or dissolution. The Company shall file and mail the notice at least
20 days before such date. Failure to file or mail the notice or any defect in
it shall not affect the validity of the transaction.
Section 10.14 Reorganization of Company; Special Distributions. If the
Company is a party to a transaction subject to Section 5.01 (other than a sale
of all or substantially all of the assets of the Company in a transaction in
which the holders of Common Stock immediately prior to such transaction do not
receive securities, cash or other assets of the Company or any other person) or
a merger or binding share exchange which reclassifies or changes the
outstanding Common Stock, the person obligated to deliver securities, cash or
other assets upon conversion of Securities shall enter into a supplemental
indenture. If the issuer of securities deliverable upon conversion of
Securities is an Affiliate of the successor Company, that issuer shall join in
the supplemental indenture.
The supplemental indenture shall provide that the Holder of a Security
may convert it into the kind and amount of securities, cash or other assets
which such Holder would have received immediately after the consolidation,
merger, binding share exchange or transfer if such Holder had converted the
Security immediately before the effective date of the transaction, assuming (to
the extent applicable) that such Holder (i) was not a constituent person or an
Affiliate of a constituent person to such transaction; (ii) made no election
with respect thereto; and (iii) was treated alike with the plurality of
non-electing Holders. The supplemental indenture shall provide for adjustments
which shall be as nearly equivalent as may be practical to the adjustments
provided for in this Article 10. The successor Company shall mail to
Securityholders a notice briefly describing the supplemental indenture.
If this Section applies, neither Section 10.06 nor 10.07 applies.
If the Company makes a distribution to all holders of its Common Stock
of any of its assets, or Debt securities or any rights, warrants or options to
purchase securities of the Company that, but for the provisions of Section
10.08(c), would otherwise result in an adjustment in the Conversion Rate
pursuant to the provisions of Section 10.08, then, from and after the record
date
58
for determining the holders of Common Stock entitled to receive the
distribution, a Holder of a Security that converts such Security in accordance
with the provisions of this Indenture shall upon such conversion be entitled to
receive, in addition to the shares of Common Stock into which the Security is
convertible, the kind and amount of securities, cash or other assets comprising
the distribution that such Holder would have received if such Holder had
converted the Security immediately prior to the record date for determining the
holders of Common Stock entitled to receive the distribution.
Section 10.15 Company Determination Final. Any determination that the
Company or the Board of Directors must make pursuant to Section 10.03, 10.06,
10.07, 10.08, 10.09, 10.10, 10.14 or 10.17 is conclusive.
Section 10.16 Trustee's Adjustment Disclaimer. The Trustee has no duty
to determine when an adjustment under this Article 10 should be made, how it
should be made or what it should be. The Trustee has no duty to determine
whether a supplemental indenture under Section 10.14 need be entered into or
whether any provisions of any supplemental indenture are correct. The Trustee
shall not be accountable for and makes no representation as to the validity or
value of any securities or assets issued upon conversion of Securities. The
Trustee shall not be responsible for the Company's failure to comply with this
Article 10. Each Conversion Agent shall have the same protection under this
Section 10.16 as the Trustee.
Section 10.17 Simultaneous Adjustments. In the event that this Article
10 requires adjustments to the Conversion Rate under more than one of Sections
10.06(4), 10.07 or 10.08, and the record dates for the distributions giving
rise to such adjustments shall occur on the same date, then such adjustments
shall be made by applying, first, the provisions of Section 10.06, second, the
provisions of Section 10.08 and, third, the provisions of Section 10.07.
Section 10.18 Successive Adjustments. After an adjustment to the
Conversion Rate under this Article 10, any subsequent event requiring an
adjustment under this Article 10 shall cause an adjustment to the Conversion
Rate as so adjusted.
Section 10.19 Rights Issued in Respect of Common Stock Issued Upon
Conversion. Each share of Common Stock issued upon conversion of Securities
pursuant to this Article 10 shall be entitled to receive the appropriate number
of rights ("Rights"), if any, and the certificates representing the Common
Stock issued upon such conversion shall bear such legends, if any, in each case
as may be provided by the terms of any shareholder rights agreement adopted by
the Company, as the same may be amended from time to time (in each case, a
"Rights Agreement"). Provided that such Rights Agreement requires that each
share of Common Stock issued upon conversion of Securities at any time prior to
the distribution of separate certificates representing the Rights be entitled
to receive such Rights, then, notwithstanding anything else to the contrary in
this Article 10, there shall not be any adjustment to the conversion privilege
or Conversion Rate as a result of the issuance of Rights, the distribution of
separate certificates representing the Rights, the exercise or redemption of
such Rights in accordance with any such Rights Agreement, or the termination or
invalidation of such Rights.
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ARTICLE 11
SUBORDINATION
Section 11.01 Securities Subordinate to Senior Indebtedness. The
Company covenants and agrees, and each Holder of a Security, by his acceptance
thereof, likewise covenants and agrees, that, to the extent and in the manner
hereinafter set forth in this Article 11, the indebtedness represented by the
Securities and the payment of the Principal Amount at Maturity, Issue Price,
Accrued Original Issue Discount, Redemption Price, Purchase Price, Change in
Control Purchase Price, Contingent Cash Interest and Contingent Additional
Principal, if any, in respect of each and all of the Securities are hereby
expressly made subordinate and subject in right of payment to the prior payment
in full of all Senior Indebtedness of the Company, as the case may be.
Section 11.02 Payment over of Proceeds upon Dissolution, Etc. Upon any
distribution of assets of the Company in the event of:
(a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding
in connection therewith, relative to the Company or to its respective
creditors, as such, or to its respective assets, or
(b) any liquidation, dissolution or other winding-up of the Company,
whether voluntary or involuntary and whether or not involving insolvency or
bankruptcy, or
(c) any assignment for the benefit of creditors or any other
marshalling of assets and liabilities of the Company, or
(d) any other event that would constitute an Event of Default
specified in Section 6.01(5) or 6.01(6),
then, and in any such event, the holders of Senior Indebtedness shall be
entitled to receive:
(1) payment in full in cash of all amounts due or to become due on or
in respect of all Senior Indebtedness in cash or cash equivalents, or
provision shall be made for such payment, before the Holders of the
Securities are entitled to receive any payment on account of the Principal
Amount at Maturity, Issue Price, Accrued Original Issue Discount,
Redemption Price, Purchase Price, Change of Control Purchase Price
Contingent Cash Interest and Contingent Additional Principal, if any, in
respect of the Securities, and
(2) any payment or distribution of any kind or character, whether in
cash, property or securities, which may be payable or deliverable in
respect of the Securities in any such case, proceeding, dissolution,
liquidation or other winding-up or event, including any such payment or
distribution which may be payable or deliverable by reason of the payment
of any other indebtedness of the Company being subordinated to the payment
of the Securities.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received any
payment or distribution of assets of the
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Company of any kind or character, whether in cash, property or securities,
including any such payment or distribution which may be payable or deliverable
by reason of the payment of any other indebtedness of the Company being
subordinated to the payment of the Securities, before all Senior Indebtedness
is paid in full in cash or payment thereof provided for, and if such fact
shall, at or prior to the time of such payment or distribution, have been made
known to the Trustee or, as the case may be, such Holder, then, in such event,
such payment or distribution shall be paid over or delivered forthwith to the
trustee in bankruptcy, receiver, liquidating trustee, Custodian, assignee,
agent or other Person making payment or distribution of assets of the Company
for application to the payment of all Senior Indebtedness remaining unpaid, to
the extent necessary to pay all Senior Indebtedness in full in cash or as
payment thereof is otherwise provided for (as such phrase is defined below),
after giving effect to any concurrent payment or distribution to or for the
holders of Senior Indebtedness.
For purposes of this Article 11 only, the words "cash, property or
securities" shall not be deemed to include shares of Capital Stock of the
Company, as reorganized or readjusted, or securities of the Company or any
other corporation provided for by a plan or reorganization or readjustment the
payment of which is subordinated, at least to the extent provided in this
Article 11 with respect to the Securities, to the payment of all Senior
Indebtedness which may at the time be outstanding; provided, however, that (i)
Senior Indebtedness is assumed by the new corporation, if any, resulting from
any such reorganization or readjustment, and (ii) the rights of the holders of
the Senior Indebtedness are not, without the consent of such holders, altered
by such reorganization or readjustment.
The consolidation or share exchange of the Company with, or the merger
of the Company into, another person or the liquidation or dissolution of the
Company following the conveyance or transfer of its properties and assets
substantially as an entirety to another person upon the terms and conditions
set forth in Article 5 shall not be deemed a dissolution, winding-up,
liquidation, reorganization, assignment for the benefit of creditors or
marshalling of assets and liabilities of the Company for the purposes of this
Section if the person formed by such consolidation or share exchange or into
which the Company is merged or the person which acquires by conveyance or
transfer such properties and assets of the Company, as the case may be,
substantially as an entirety, as the case may be, shall; as part of such
consolidation, share exchange, merger, conveyance or transfer, comply with the
conditions set forth in Article 5.
Section 11.03 Acceleration of Securities. In the event that any
Securities are declared due and payable before their Stated Maturity pursuant
to Section 6.02, then and in such event the Company shall promptly notify
holders of Senior Indebtedness of such acceleration. The Company may not pay
the Securities until the earlier of (i) 120 days after the date of such
acceleration or (ii) the payment in full of all Senior Indebtedness or as
payment thereof is otherwise provided for (as such phrase is defined below),
and may thereafter pay the Securities if this Indenture permits the payment at
that time.
In the event that, notwithstanding the foregoing, (a) the Company
shall make any payment to the Trustee or the Holder of any Securities
prohibited by the foregoing provisions of this Section 11.03, and (b) with
respect to any payment made before 120 days after the date of such
acceleration, if such facts shall, at or prior to the time of such payment,
have been made known to the Trustee or, as the case may be, such Holder, then
and in such event such payment
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shall be paid over and delivered forthwith to the Company by or on behalf of
the person holding such payment for the benefit of the holders of Senior
Indebtedness.
The provisions of this Section 11.03 shall not apply to any payment
with respect to which Section 11.04 would be applicable.
Section 11.04 Default on Senior Indebtedness. The Company may not make
any payment of the Principal Amount at Maturity, Issue Price, Accrued Original
Issue Discount, Redemption Price, Change of Control Purchase Price, Contingent
Cash Interest or Contingent Additional Principal, if any, in respect of the
Securities and may not pay cash with respect to the Purchase Price of any
Security (other than for fractional shares) or otherwise acquire any Securities
for cash or property (except as set forth in this Indenture) if:
(1) any payment default on any Senior Indebtedness has occurred and
is continuing beyond any applicable grace period with respect thereto; or
(2) a default (other than a default referred to in the preceding
clause (1)) on any Senior Indebtedness occurs and is continuing that
permits holders of such Senior Indebtedness to accelerate the maturity
thereof and the default is the subject of judicial proceedings or the
Company receives a notice of default thereof from any person who may give
such notice pursuant to the instrument evidencing or document governing
such Senior Indebtedness.
If the Company receives any such notice, then a similar notice received within
nine months thereafter relating to the same default on the same issue of Senior
Indebtedness shall not be effective for purposes of this Section 11.04.
Notwithstanding the foregoing, the Company may resume payment on the
Securities and may acquire Securities if and when:
(a) the default referred to above is cured or waived as provided or
permitted in accordance with the terms of the applicable Senior Indebtedness;
or
(b) in the case of a default referred to in clause (2) of the
preceding paragraph, 179 or more days pass after the receipt by the Company of
the notice described in clause (2) above; and
this Indenture otherwise permits the payment or acquisition at that time;
provided, however, that with respect to payments made after the 179-day period
referred to in clause (b) of this Section 11.04, the Trustee or the Holder of
any Securities shall pay over and deliver forthwith to the Company for the
benefit of the holders of Senior Indebtedness any amounts received by the
Trustee or any such Holder to the extent necessary to pay all holders of Senior
Indebtedness in full in cash or otherwise provide for such payment thereof (as
such phrase is defined above).
In the event that, notwithstanding the foregoing, (a) the Company
shall make any payment to the Trustee or the Holder of any Security prohibited
by the foregoing provisions of this Section, and (b) with respect to any
payment made after the expiration of the 179-day period if such fact shall
then have been made known to the Trustee or, as the case may be, such Holder,
62
then and in such event such payment shall (to the extent permitted by law) be
paid over and delivered forthwith to the Company by or on behalf of the person
holding such payment for the benefit of the holders of the Senior Indebtedness.
The provisions of this Section shall not apply to any payment with
respect to which Section 11.02 would be applicable.
Section 11.05 Payment Permitted if No Default. Nothing contained in
this Article 11 or elsewhere in this Indenture or in any of the Securities
shall prevent (a) the Company at any time except during the pendency of any
case, proceeding, dissolution, liquidation or other winding-up, assignment for
the benefit of creditors or other marshalling of assets and liabilities of the
Company referred to in Section 11.02 or under the conditions described in
Section 11.03 or 11.04, from making payments at any time of Principal Amount at
Maturity, Issue Price, Accrued Original Issue Discount, Redemption Price,
Purchase Price, Change of Control Purchase Price, Contingent Cash Interest or
Contingent Additional Principal, if any, as the case may be, in respect of the
Securities if the Trustee did not, at the time of such application, have actual
knowledge that such payment would have been prohibited by the provisions of
this Article 11 or (b) the application by the Trustee of any money deposited
with it hereunder to payment of or on account of the Principal Amount at
Maturity, Issue Price, Accrued Original Issue Discount, Redemption Price,
Purchase Price, Change in Control Purchase Price, Contingent Cash Interest or
Contingent Additional Principal, if any, as the case may be, in respect of the
Securities, or the retention of such payment by the Holders of the Securities,
if, at the time of such application by the Trustee, the Trustee did not have
actual knowledge that such payment would have been prohibited by the provisions
of this Article 11.
Section 11.06 Subrogation to Rights of Holders of Senior Indebtedness.
Subject to payment in full of all Senior Indebtedness to the extent and in the
manner set forth in this Article 11, the Holders of the Securities shall be
subrogated to the extent of the payments or distributions made to the holders
of such Senior Indebtedness pursuant to the provisions of this Article 11
(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 such
Senior Indebtedness to receive payments or distributions of cash, property and
securities applicable to the Senior Indebtedness until the Principal Amount at
Maturity, Issue Price, Accrued Original Issue Discount, Redemption Price,
Purchase Price, Change of Control Purchase Price, Contingent Cash Interest or
Contingent Additional Principal, if any, as the case may be, in respect of the
Securities shall be paid in full. For purposes of such subrogation, no payments
or distributions to the holders of the Senior Indebtedness of any cash,
property or securities to which the Holders of the Securities or the Trustee
would be entitled except for the provisions of this Article 11, and no payments
over pursuant to the provisions of this Article 11 to the holders of Senior
Indebtedness by Holders of the Securities or the Trustee, shall, as among the
Company, the creditors of the Company, other than holders of Senior
Indebtedness and the Holders of the Securities, be deemed to be a payment or
distribution by the Company to or on account of the Senior Indebtedness.
Section 11.07 Provisions Solely to Define Relative Rights. The
provisions of this Article 11 are intended solely for the purpose of defining
the relative rights of the Holders of the
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Securities, on the one hand, and the holders of Senior Indebtedness, on the
other hand. Nothing contained in this Article 11 or elsewhere in this Indenture
or in the Securities is intended to or shall (a) impair, as among the Company,
the creditors of the Company other than holders of Senior Indebtedness and the
Holders of the Securities, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders of the Securities the Principal Amount at
Maturity, Issue Price, Accrued Original Issue Discount, Redemption Price,
Purchase Price, Change of Control Purchase Price, Contingent Cash Interest or
Contingent Additional Principal (or CAP-OID thereon), if any, as the case may
be, in respect of the Securities as and when the same shall become due and
payable in accordance with the terms of the Securities and this Indenture; or
(b) affect the relative rights against the Company of the Holders of the
Securities and creditors of the Company other than the holders of Senior
Indebtedness; or (c) prevent the Trustee or the Holder of any Security from
exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article 11 of
the holders of Senior Indebtedness to receive cash, property and securities
otherwise payable or deliverable to the Trustee or such Holder.
Section 11.08 Trustee to Effectuate Subordination. Each Holder of a
Security by his acceptance thereof authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article 11 and appoints the Trustee his
attorney-in-fact for any and all such purposes.
Section 11.09 No Waiver of Subordination Provisions. No right of any
present or future holder 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 by any such holder, or by any non-compliance by the Company with the terms,
provisions and covenants of this Indenture, regardless of any knowledge thereof
any such holder may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article
11 or the obligations hereunder of the Holders of the Securities to the holders
of Senior Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew,
increase or alter, Senior Indebtedness, or otherwise amend or supplement in any
manner Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Indebtedness; (iii) release any person liable in any manner for
the collection of Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
Section 11.10 Notice to Trustee. The Company shall give prompt written
notice to a Responsible Officer of the Trustee of any facts 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 11 or
any other provision of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts which would prohibit the making of any
payment to or by the Trustee in respect of the Securities, unless and until the
Trustee shall have
64
received written notice thereof from the Company, or a holder of Senior
Indebtedness or from any trustee therefor; and, prior to the receipt of any
such written notice, the Trustee shall be entitled in all respects to assume
that no such facts exist.
The Trustee shall be entitled to conclusively rely on the delivery to
it of a written notice by a person representing himself to be a holder of
Senior Indebtedness (or a trustee therefor) to establish that such notice has
been given by a holder of Senior Indebtedness (or a trustee therefor). 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 11, 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
such person under this Article 11, 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 11.11 Reliance on Judicial Order or Certificate of Liquidating
Agent. Upon any payment or distribution of assets of the Company referred to in
this Article 11, the Trustee and the Holders of the Securities shall be
entitled to rely upon any final, nonappealable order or decree entered by any
court of competent jurisdiction in which such insolvency, bankruptcy,
receivership, liquidation, reorganization, dissolution, winding-up or similar
case or proceeding is pending, or a certificate of the trustee in bankruptcy,
liquidating trustee, Custodian, receiver, assignee for the benefit of
creditors, agent or other Person making such payment or distribution, delivered
to the Trustee or to the Holders of Securities, for the purpose of ascertaining
the persons entitled to participate in such payment or 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 11.
Section 11.12 Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if
it shall in good faith mistakenly pay over or distribute to Holders of
Securities or to the Company or to any other person cash, property or
securities to which any holders of Senior Indebtedness shall be entitled by
virtue of this Article 11 or otherwise. The Trustee shall not be charged with
knowledge of the existence of Senior Indebtedness or of any facts that would
prohibit any payment hereunder or that would permit the resumption of any such
payment unless a Responsible Officer of the Trustee shall have received notice
to that effect at the address of the Trustee set forth in Section 15.02. With
respect to the holders of Senior Indebtedness, the Trustee undertakes to
perform or to observe only such of its covenants or obligations as are
specifically set forth in this Article 11 and no implied covenants or
obligations with respect to holders of Senior Indebtedness shall be read into
this Indenture against the Trustee.
Section 11.13 Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights. The Trustee in its individual capacity shall
be entitled to all the rights set forth in this Article 11 with respect to any
Senior Indebtedness which may at any time be held by it, to
65
the same extent as any other holder of Senior Indebtedness, and nothing in this
Indenture shall deprive the Trustee of any of its rights as such holder.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 7.07.
Section 11.14 Article 11 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 11 shall in such case (unless the context otherwise requires) 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 11 in addition to or in place of the Trustee; provided, however, that
Sections 11.10 and 11.12 shall not apply to the Company or an Affiliate of the
Company if the Company or any such Affiliate acts as Paying Agent.
ARTICLE 12
PAYMENT OF INTEREST
Section 12.01 Interest Payments. If applicable Contingent Cash
Interest, if any, on any Security that is payable in cash, and is punctually
paid or duly provided for, on the Contingent Cash Interest Payment Date shall
be paid to the person in whose name that Security is registered at the close of
business on the Common Stock Record Date or Contingent Cash Interest Payment
Date, as the case may be, for such interest at the office or agency of the
Company maintained for such purpose. Contingent Cash Interest, if any, on any
Security shall be paid in same-day funds by transfer to an account maintained
by the payee located inside the United States, if the Trustee shall have
received proper wire transfer instructions from such payee not later than the
related Common Stock Record Date or Contingent Cash Interest Record Date
accrual date, as the case may be, or, if no such instructions have been
received, by check drawn on a bank in New York City mailed to the payee at its
address set forth on the Registrar's books. In the case of a permanent Global
Security, Contingent Cash Interest, if any, payable on any applicable payment
date will be paid to the Depositary, with respect to that portion of such
permanent Global Security held for its account by Cede & Co. for the purpose of
permitting such party to credit the interest received by it in respect of such
permanent Global Security to the accounts of the beneficial owners thereof
Section 12.02 Defaulted Interest. Except as otherwise specified with
respect to the Securities, any Contingent Cash Interest on any Security that is
payable, but is not punctually paid or duly provided for, within 30 days
following any applicable Contingent Cash Interest Payment Date (herein called
"Defaulted Interest", which term shall include any accrued and unpaid interest
that has accrued on such defaulted amount in accordance with paragraph 1 of the
Securities), shall forthwith cease to be payable to the registered Holder
thereof on the relevant Common Stock Record Date or Contingent Cash Interest
Record Date, as the case may be, by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the persons in whose names the Securities are registered at the close
of business on a special
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record date for the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Security and the date of the proposed payment (which shall not be less
than 20 days after such notice is received by the Trustee), and at the
same time the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit on or prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the persons
entitled to such Defaulted Interest as in this clause provided. Thereupon
the Trustee shall fix a special record date (the "Special Record Date")
for the payment of such Defaulted Interest which shall be not more than 15
days and not less than 10 days prior to the date of the proposed payment
and not less than 10 days after the receipt by the Trustee of the notice
of the proposed payment. The Trustee shall promptly notify the Company of
such Special Record Date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed, first-class
postage prepaid, to each Holder of Securities at his address as it appears
on the list of Securityholders maintained pursuant to Section 2.05 not
less than 10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefore having been mailed as aforesaid, such Defaulted Interest shall
be paid to the persons in whose names the Securities are registered at the
close of business on such Special Record Date and shall no longer be
payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest on the
Securities in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Securities may be
listed, and upon such notice as may be required by such exchange, if,
after notice given by the Company to the Trustee of the proposed payment
pursuant to this clause, such manner of payment shall be deemed
practicable by the Trustee.
Section 12.03 Interest Rights Preserved. Subject to the foregoing
provisions of this Article 12 and Section 2.06, each Security delivered under
this Indenture upon registration of transfer of or in exchange for or in lieu
of any other Security shall carry the rights to Contingent Cash Interest
accrued and unpaid and Contingent Additional Principal which were carried by
such other Security.
ARTICLE 13
CONTINGENT CASH INTEREST
Section 13.01 Contingent Cash Interest. Commencing after September 11,
2006, the Company shall make payments of additional interest to the Holders of
Securities ("Contingent Cash Interest"), as set forth in Section 13.02 below,
during any six month period from September 12 to March 11 and from March 12 to
September 11 (each a "Semi-annual Period") if, but only if, the average LYONs
Market Price of a Security with $1,000 Principal Amount at Maturity for the
five trading days in the relevant Five-Trading-Day Measurement Period (as
defined below) equals 120% or more of the Relevant Value of such Security.
During any Semi-annual Period when Contingent Cash Interest is payable pursuant
to this section, each Contingent
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Cash Interest payment due and payable on each $1,000 Principal Amount at
Maturity of Security shall be calculated for any quarterly period of the
applicable Semi-annual Period, and in each instance shall equal the greater of
(i) 0.0625% of the average LYONs Market Price for the relevant Five-Trading-Day
Measurement Period or (ii) the sum of all Regular Cash Dividends paid by the
Company per share on the Common Stock during the applicable quarter of such
Semi-annual Period multiplied by the then applicable Conversion Rate, provided,
however, that if Regular Cash Dividends are not paid in such Semi-annual
Period, the Contingent Cash Interest shall be paid semi-annually at a rate of
0.125% of the average LYONs Market Price for the Semi-annual Period. Contingent
Cash Interest shall accrue and be payable as of the record date, which shall be
the 15th day preceding the last day of the relevant Semi-annual Period or if
the Company pays a regular cash dividend on its Common Stock during a quarter
within the relevant Semi-annual Period, to holders of Securities as of the
record date for such Common Stock dividend.
As used in this Article 13, "Five-Trading-Day Measurement Period"
means the five trading days ending on the third trading day immediately
preceding the first day of the applicable Semi-annual Period; provided,
however, that if the Company declares a dividend on its Common Stock for which
the record date for such dividend (the "Common Stock Record Date") falls prior
to the first day of the next Semi-annual Period, but the payment date for such
dividend falls within such Semi-annual Period, then, the "Five-Trading-Day
Measurement Period" shall mean the five trading days ending on the third
trading day immediately preceding such Common Stock Record Date. "Relevant
Value" means the sum of the Issue Price, the Accrued Original Issue Discount
and accrued Contingent Additional Principal, if any, on such Security as of the
day immediately preceding the first day of the applicable Semi-annual Period.
"LYONs Market Price" means, as of any date of determination, the average of the
secondary market bid quotations per $1,000 Principal Amount at Maturity of
Securities obtained by the Bid Solicitation Agent for $10 million Principal
Amount at Maturity of Securities at approximately 4:00 p.m., New York City
time, on such determination date from three independent nationally recognized
securities dealers (none of which shall be an Affiliate of the Company)
selected by the Company; provided, however, that if (a) at least three such
bids are not obtained by the Bid Solicitation Agent or (b) in the Company's
reasonable judgment, the bid quotations are not indicative of the secondary
market value of the Securities as of such determination date, then the LYONs
Market Price for such determination date shall equal the product of (i) the
Conversion Rate in effect as of such determination date multiplied by (ii) the
average Sale Price of the Common Stock for the five trading days ending on such
determination date, appropriately adjusted to take into account the occurrence,
during the period commencing on the first of such trading days during such five
trading day period and ending on such determination date, of any event
described in Section 10.06, 10.07 or 10.08 (subject to the conditions set forth
in Sections 10.09 and 10.10).
The Original Issue Discount of the Securities will continue to accrue
whether or not Contingent Cash Interest payments are made or are payable.
Section 13.02 Payment of Contingent Cash Interest; Contingent Cash
Interest Rights Preserved. If payable, Contingent Cash Interest shall be
payable as of the record date, which shall be the 15th day preceding the last
day of the relevant Semi-annual Period (in each case, a "Contingent Cash
Interest Payment Date") or, if the Company pays a Regular Cash Dividend on
68
the Common Stock during a quarter within a Semi-annual Period, on the record
date for the related Common Stock dividend. Contingent Cash Interest payments
on any Security that are payable, and are punctually paid or duly provided for,
on any Contingent Cash Interest Payment Date shall be paid to the Person who is
the Holder of that Security on the 15th day preceding the last day of such
Semi-annual Period (the "Contingent Cash Interest Record Date") or, if the
Company pays regular cash dividends on the Common Stock during one quarter
within such Semi-annual Period, the Common Stock Record Date. Each payment of
Contingent Cash Interest on any Security shall be paid (A) if such Security is
held in the form of a Global Security, in same-day funds by transfer to an
account maintained by the payee located inside the United States, or (B) if
such Security is held in the form of a Certificated Note, by check, mailed to
the address of such Holder as set forth in the Security Register. In the case
of a Global Security, interest payable on any Contingent Cash Interest Payment
Date will be paid to the Depositary for the purpose of permitting DTC to credit
the interest received by it in respect of such Global Security to the accounts
of the beneficial owners thereof. If the Company only pays a Regular Cash
Dividend on the Common Stock during one quarter within such Semi-annual Period,
the remaining Contingent Cash Interest payments, if any, will accrue and be
payable as of the 15th day preceding the last day of such Semi-annual Period.
Upon determination that Holders of Securities will be entitled to
receive Contingent Cash Interest during a Semi-annual Period, prior to the
start of such Semi-annual Period, the Company will issue a press release and
publish such information on its Web site or through such other public medium as
the Company may use at that time.
Section 13.03 Bid Solicitation Agent. The Bid Solicitation Agent shall
solicit bids from securities dealers, which the Company indicates that it
believes are willing to bid for the Securities. The Company initially appoints
the Trustee to act as the Bid Solicitation Agent. The Company may change the
Bid Solicitation Agent at its discretion; provided, however, that the Bid
Solicitation Agent may not be an Affiliate of the Company.
ARTICLE 14
CONTINGENT ADDITIONAL PRINCIPAL
Section 14.01 Contingent Additional Principal. On September 11, 2004,
the rate of accrual on the LYONs will be reset for a period of two years (the
"Adjusted Rate"), if the Company's Stock Price Factor (as defined below) is at
or below the Stock Price Factor thresholds set forth in the table below. The
amount that accrues as a result of the Adjusted Rate of accrual on the LYONs,
other than Original Issue Discount, is referred to herein as "Contingent
Additional Principal". If Contingent Additional Principal accrues, the Adjusted
Rate on the Securities shall accrue commencing on September 11, 2004. If the
Stock Price Factor is greater than the highest Stock Price Factor threshold in
the applicable column set forth in the table below, no Contingent Additional
Principal shall accrue and Original Issue Discount only shall accrue as
provided herein.
If Contingent Additional Principal accrues, the Adjusted Rate of
accrual per Security will be the rate which results from deducting an amount in
accordance with the left hand column of the table below, from the Company's
Subordinated Debt Rate (as defined below), provided that in no event shall the
Adjusted Rate be greater than 9.0% or less than the initial yield to maturity
69
of 2.0%. In determining the appropriate row in the column in the table below
containing the amount to be deducted from the Company's Subordinated Debt Rate,
reference shall be made only to that corresponding row containing the highest
Stock Price Factor threshold (within the appropriate Subordinated Debt Rate
column), that the actual Stock Price Factor at September 11, 2001 is closest
to, but not greater than, and to no other row.
"Stock Price Factor" is the average of the Sale Prices of the
Company's Common Stock for the 20 consecutive trading days ending on the third
trading day prior to September 11, 2004, expressed as a percentage of $106.33,
subject to adjustment in accordance with Article 10 hereof.
"Subordinated Debt Rate" means the average of the interest rate
quotations for a new issuance of the Company's two-year semi-annual cash-pay
unsecured subordinated debt obtained by the Rate Solicitation Agent for an
issuance in an amount equal to the aggregate Issue Price of the Securities plus
any Accrued Original Issue Discount through September 11, 2004 at approximately
4:00 p.m., New York City time, on the day three Trading Days prior to September
11, 2004 from three independent nationally recognized securities dealers, (each
of which shall be an Affiliate of the Company) selected by the Company;
provided, however, that (a) if the three such quotations cannot be obtained,
then the average of two quotations shall be used in lieu thereof, and (b) if
only one such quotation can be obtained, such quotation shall be used. In the
event that no quotations can be obtained, the Company's Subordinated Debt Rate
will be determined by the good faith determination of the Board of Directors.
70
The table below shows the amount to be deducted from the applicable
Subordinated Debt Rate to determine the aggregate Adjusted Rate of accrual at
which Original Issue Discount and Contingent Additional Principal will accrue
on the LYONs during the two years commencing September 11:
Stock Price Factor Threshold
If Two Year Unsecured Subordinated Debt Rate at September 11, 2004 is:
----------------------------------------------------------------------------------------
Amount to be Deducted from >4.50% >5.00% >5.50% >6.00% >6.50% >7.00% >7.50% >8.00%
Two Year Unsecured to to to to to to to to
Subordinated Debt Rate to >4.50% 5.00% 5.50% 6.00% 6.50% 7.00% 7.50% 8.00% 8.50% >8.50%
Determine the Adjusted Rate: -
--------------------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
- 6.00%.................. < 74%
-
- 5.50%.................. < 73% < 71%
- -
- 5.00%.................. < 72% < 70% < 69%
- - -
- 4.50%.................. < 69% < 69% < 68% < 66%
- - - -
- 4.00%.................. < 67% < 67% < 67% < 65% < 64%
- - - - -
- 3.50%.................. < 66% < 65% < 64% < 64% < 63% < 62%
- - - - - -
- 3.00%.................. < 64% < 64% < 63% < 61% < 61% < 61% < 59%
- - - - - - -
- 2.50%.................. 62% < 61% < 60% < 60% < 59% < 58% < 58% < 57%
- - - - - - -
- 2.00%.................. < 59% < 58% < 58% < 57% < 56% < 55% < 55% < 54% < 53%
- - - - - - - - -
- 1.50%.................. < 56% < 55% < 54% < 54% < 53% < 53% < 53% < 52% < 51% < 51%
- - - - - - - - - -
- 1.00%.................. < 52% < 51% < 51% < 51% < 50% < 49% < 49% < 48% < 48% < 48%
- - - - - - - - - -
- 0.50%.................. < 47% < 46% < 45% < 45% < 44% < 44% < 44% < 43% < 43% < 43%
- - - - - - - - - -
0.00%.................. < 40% < 40% < 39% < 38% < 38% < 38% < 37% < 37% < 37% < 36%
- - - - - - - - - -
No Contingent Additional Principal will accrue after September 11,
2006, but thereafter Original Issue Discount, including CAP-OID, shall continue
to accrue.
Section 14.02 Payment of Contingent Additional Principal. Contingent
Additional Principal shall be paid on the Stated Maturity of the Securities, or
earlier, as provided herein. Contingent Additional Principal shall accrue on a
Semi-annual bond equivalent basis, using a 360-day year consisting of twelve
30-day months.
Section 14.03 Notice. In the event that any Contingent Additional
Principal accrues on the Securities, the Company shall issue a press release to
that effect which shall include with respect to a Security, the Adjusted Rate,
the amount of Contingent Additional Principal, the revised Redemption Price,
the revised Purchase Price, the revised change in control Purchase Price and
the amount payable at the Stated Maturity. In addition, the Company shall
publish such information on its Web site or through such other public medium as
it may use at that time. The Company shall also notify the Trustee annually in
writing, at such time that the Company files with the Trustee its annual
reports or other information or documents, of any accrual of Contingent
Additional Principal (and CAP-OID thereon). Following its receipt of such
notice, the Trustee shall provide such information to DTC for dissemination to
the participants of DTC.
Section 14.04 Rate Solicitation Agent. The Rate Solicitation Agent
shall solicit quotes from securities dealers, which the Company indicates that
it believes are able to provide quotes for the Company's subordinated debt. The
Company initially appoints the Trustee to act as the Rate Solicitation Agent.
The Company may change the Rate Solicitation Agent at its discretion; provided,
however, that the Rate Solicitation Agent may not be an Affiliate of the
Company.
71
ARTICLE 15
MISCELLANEOUS
Section 15.01 Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies, or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
Section 15.02 Notices. Any request, demand, authorization, notice,
waiver, consent or communication shall be in writing and delivered in person or
delivery by courier guaranteeing overnight delivery or mailed by first-class
mail, postage prepaid, addressed as follows or transmitted by facsimile
transmission (confirmed by guaranteed overnight courier) to the following
facsimile numbers:
if to the Company:
Laboratory Corporation of America Holdings
358 South Main Street
Burlington, NC 27215
Telephone No.: (336) (584-5171)
Facsimile No.: (336) 229-1127
Attention: Bradford T. Smith
if to the Trustee:
The Bank of New York
101 Barclay Street,
Floor 21 West
New York, New York 10286
Telephone No.: (212) 815-2745
Facsimile No.: (212) 815-5915
Attention: Corporate Trust Administration
with a copy of any notice given pursuant to Article 6 to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Telephone No.: (212) 450-4000
Facsimile No.: (212) 450-4800
Attention: Deanna L. Kirkpatrick, Esq.
The Company or the Trustee by notice given to the other in the manner
provided above may designate additional or different addresses for subsequent
notices or communications.
Any notice or communication given to a Securityholder shall be mailed
to the Securityholder, by first-class mail, postage prepaid, at the
Securityholder's address as it appears on the registration books of the
Registrar and shall be sufficiently given if so mailed within the time
prescribed.
72
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 is mailed in the manner provided
above, it is duly given, whether or not received by the addressee.
If the Company mails a notice or communication to the Securityholders,
it shall mail a copy to the Trustee and each Registrar, Paying Agent,
Conversion Agent or co-registrar.
Section 15.03 Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar, the Paying Agent, the
Conversion Agent and anyone else shall have the protection of TIA Section
312(c).
Section 15.04 Certificate and Opinion as to Conditions Precedent. 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:
(1) an Officers' Certificate stating that, in the opinion of the
signers, all conditions 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 have been complied with.
Section 15.05 Statements Required in Certificate or Opinion. Each
Officers' Certificate or Opinion of Counsel with respect to compliance with a
covenant or condition provided for in this Indenture shall include:
(1) a statement that each person making such Officers' Certificate or
Opinion of Counsel 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
Officers' Certificate or Opinion of Counsel are based;
(3) a statement that, in the opinion of each such person, he has made
such examination or investigation as is necessary to enable such person to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement that, in the opinion of such person, such covenant or
condition has been complied with.
Section 15.06 Separability Clause. 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 15.07 Rules by Trustee, Paying Agent, Conversion Agent and
Registrar. The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar,
73
Conversion Agent and the Paying Agent may also make reasonable rules for their
respective functions.
Section 15.08 Calculations. The calculation of the Purchase Price,
Change in Control Purchase Price, Conversion Rate, Market Price, Sale Price of
the Common Stock and each other calculation to be made hereunder (other than
the LYONs Market Price) shall be the obligation of the Company. All
calculations made by the Company as contemplated pursuant to this Section 15.08
shall be final and binding on the Company and the Holders absent manifest
error. The Trustee, Paying Agent, Conversion Agent, Bid Solicitation Agent and
Rate Solicitation Agent shall not be obligated to recalculate, recompute or
confirm any such calculations.
Section 15.09 Legal Holidays. A "Legal Holiday" is any day other than
a Business Day. If any specified date (including a date for giving notice) is a
Legal Holiday, the action shall be taken on the next succeeding day that is not
a Legal Holiday, and, if the action to be taken on such date is a payment in
respect of the Securities, no Original Issue Discount, Contingent Cash
Interest, or Contingent Additional Principal, if any, shall accrue for the
intervening period.
Section 15.10 GOVERNING LAW. THIS INDENTURE AND THE SECURITIES WILL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
Section 15.11 No Recourse Against Others. A director, officer,
employee, agent, representative, stockholder or equity holder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Securities or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder shall waive and release all such liability. The waiver and
release shall be part of the consideration for the issue of the Securities.
Section 15.12 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 15.13 Multiple Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement. One signed copy is enough to prove
this Indenture.
74
IN WITNESS WHEREOF, the undersigned, being duly authorized, have
executed this Indenture on behalf of the respective parties hereto as of the
date first above written.
LABORATORY CORPORATION OF
AMERICA HOLDINGS
By: /s/ Bradford T. Smith
---------------------------------------
Name: Bradford T. Smith
Title: Executive Vice President,
General Counsel, Corporate
Compliance Officer and Secretary
THE BANK OF NEW YORK, as Trustee
By: /s/ Ming J. Shiang
---------------------------------------
Name: Ming J. Shiang
Title: Vice President
EXHIBIT A-1
[FORM OF FACE OF GLOBAL SECURITY]
THIS SECURITY WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR U.S. FEDERAL
INCOME TAX PURPOSES. THE HOLDER OF THIS SECURITY MAY CONTACT BRADFORD T. SMITH,
LABORATORY CORPORATION OF AMERICA HOLDINGS, 358 SOUTH MAIN STREET, BURLINGTON,
NC 27215 FOR INFORMATION REGARDING THE ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE
DISCOUNT, ISSUE DATE, YIELD TO MATURITY, COMPARABLE YIELD AND PROJECTED PAYMENT
SCHEDULE OF THIS SECURITY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN ARTICLE TWO OF THE INDENTURE REFERRED TO ON THE
REVERSE HEREOF.
THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION
OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY, THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY
NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO
OFFER, SELL, OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE"), WHICH IS TWO YEARS AFTER THE LATER OF
THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH LABORATORY
CORPORATION OF AMERICA HOLDINGS (THE "COMPANY" OR THE "ISSUER") OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF
A-1-1
THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) ONLY (A) TO THE COMPANY OR
ANY SUBSIDIARY THEREOF, (B) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (C) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT OR (D) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER PURSUANT TO CLAUSE (D) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM,
AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE
HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
THE FOREGOING LEGEND MAY BE REMOVED FROM THIS SECURITY ON SATISFACTION
OF THE CONDITIONS SPECIFIED IN THE INDENTURE.
A-1-2
LABORATORY CORPORATION OF AMERICA HOLDINGS
Liquid Yield Option(TM) Note due 2021
(Zero Coupon - Subordinated)
No. R- CUSIP: 5055OR AB 8
Issue Date: September 11, 2001 Original Issue Discount
Issue Price: $671.65 (excluding any CAP-OID): $328.35
(for each $1,000 Principal (for each $1,000 Principal
Amount at Maturity) Amount at Maturity)
LABORATORY CORPORATION OF AMERICA HOLDINGS, a Delaware corporation,
promises to pay to Cede & Co. or registered assigns, the Principal Amount at
Maturity of _________________________________________________ DOLLARS
($________________________) on September 11, 2021.
This Security shall not bear interest except as specified on the other
side of this Security. Original Issue Discount will accrue as specified on the
other side of this Security. This Security is convertible as specified on the
other side of this Security.
Additional provisions of this Security are set forth on the other side
of this Security.
Dated: LABORATORY CORPORATION OF
AMERICA HOLDINGS
By:
---------------------------------
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK, as Trustee,
certifies that this is one of
the Securities referred to in the
within-mentioned Indenture.
By:
---------------------------------
Authorized Officer
Dated:
A-1-3
[FORM OF REVERSE SIDE OF LYON]
Liquid Yield Option(TM) Note due 2021
(Zero Coupon - Subordinated)
1. Interest.
This Security shall not bear interest, except as specified in this
paragraph or in paragraph 5. If the Principal Amount at Maturity hereof or any
portion of such Principal Amount at Maturity is not paid when due, or if
Contingent Additional Principal together with CAP-OID thereon, if any, is not
paid when due or any portion of such Contingent Additional Principal, together
with CAP-OID thereon is not paid when due in accordance with paragraph 5.B
hereof, (whether upon acceleration pursuant to Section 6.02 of the Indenture,
upon the date set for payment of the Redemption Price pursuant to paragraph 6
hereof, upon the date set for payment of the Purchase Price or Change in
Control Purchase Price pursuant to paragraph 7 hereof or upon the Stated
Maturity of this Security) or if Contingent Cash Interest, if any, due hereon
or any portion of such interest is not paid when due in accordance with
paragraph 5.A hereof, then in each such case the overdue amount shall, to the
extent permitted by law, bear interest at the rate of 2.0% per annum,
compounded semiannually, which interest shall accrue from the date such overdue
amount was originally due to the date payment of such amount, including
interest thereon, has been made or duly provided for. All such interest shall
be payable on demand. The accrual of such interest on overdue amounts shall be
in lieu of, and not in addition to, the continued accrual of Original Issue
Discount and Contingent Additional Principal.
Original Issue Discount of any Security means the amount that accrues
in respect of such Security daily at a rate of 2.0% per year on the Issue Price
plus any previously accrued amounts beginning on the Issue Date, together with
the amount that accrues on any accrued Contingent Additional Principal daily at
such rate. Original Issue Discount will be calculated on a semi-annual bond
equivalent basis, using a 360-day year comprised of twelve 30-day months
Original Issue Discount will be calculated on a semi-annual bond equivalent
basis, using a 360-day year comprised of twelve 30-day months.
2. Method of Payment.
Subject to the terms and conditions of the Indenture, the Company will
make payments in respect of Redemption Prices, Purchase Prices, Change in
Control Purchase Prices and at Stated Maturity to Holders who surrender
Securities to a Paying Agent to collect such payments in respect of the
Securities. In addition, the Company will pay Contingent Cash Interest and
Contingent Additional Principal (and CAP-OID thereon), if any to the extent not
already included in the calculation of such other amounts. The Company will pay
any cash amounts in Cash. However, the Company may make such cash payments by
check payable in such money.
A-1-4
3. Paying Agent, Conversion Agent, Registrar, Bid Solicitation Agent
and Rate Solicitation Agent.
Initially, The Bank of New York, a New York banking corporation (the
"Trustee"), will act as Paying Agent, Conversion Agent, Registrar, Bid
Solicitation Agent and Rate Solicitation Agent. The Company may appoint and
change any Paying Agent, Conversion Agent, Registrar or co-registrar or Bid
Solicitation Agent or Rate Solicitation Agent without notice, other than notice
to the Trustee except that the Company will maintain at least one Paying Agent
in the State of New York, Borough of Manhattan, which shall initially be an
office or agency of the Trustee. The Company or any of its Subsidiaries or any
of their Affiliates may act as Paying Agent, Conversion Agent, Registrar or
co-registrar. None of the Company, any of its Subsidiaries or any of their
Affiliates shall act as Bid Solicitation Agent or Rate Solicitation Agent.
4. Indenture.
The Company issued the Securities under an Indenture dated as of
September 11, 2001 (the "Indenture"), between the Company and the Trustee. The
terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939, as in
effect from time to time (the "TIA"). Capitalized terms used herein and not
defined herein have the meanings ascribed thereto in the Indenture. The
Securities are subject to all such terms, and Securityholders are referred to
the Indenture and the TIA for a statement of those terms.
The Securities are general unsecured and subordinated obligations of
the Company limited to $650,000,000 aggregate Principal Amount at Maturity
($744,000,000 aggregate Principal Amount at Maturity, if the over-allotment
option granted to the initial purchaser of the Securities is exercised in full)
(not including Contingent Additional Principal, if any, or CAP-OID thereon and
subject to Section 2.07 of the Indenture). The Indenture does not limit other
indebtedness of the Company, secured or unsecured.
5. Contingent Payments.
A. Contingent Cash Interest. Subject to the conditions of the
Indenture and the record date provisions specified in this paragraph 5.A, the
Company shall pay Contingent Cash Interest to the Holders during any six-month
period (a "Contingent Cash Interest Period") from September 12 to March 11 and
from March 12 to September 11, with the initial six-month period commencing
after September 11, 2006, if the average LYONs Market Price for the
Five-Trading-Day Measurement Period preceding the first day of the Contingent
Cash Interest Period equals 120% or more of the sum of the Issue Price of a
Security, Original Issue Discount accrued thereon and Contingent Additional
Principal, if any, for such Security as of the day immediately preceding the
first day of the applicable six-month period; provided, however, that if the
Company declares a Common Stock dividend for which the record date for such
dividend (the "Common Stock Record Date") falls prior to the first day of a
Semiannual Period, but the payment date for such dividend falls within such
Semiannual Period, then the "Five-Trading Day Measurement Period" shall mean
the five Trading Days ending on the third Trading Day immediately preceding
such Common Stock Record Date.
A-1-5
Contingent Cash Interest, if any, will accrue and be payable to
holders of this Security as of the record date, which shall be the 15th day
preceding the last day of the applicable six-month period. Original Issue
Discount will continue to accrue whether or not Contingent Cash Interest is
paid.
During any period when Contingent Cash Interest shall be payable, the
amount of Contingent Cash Interest payable per $1,000 Principal Amount at
Maturity hereof in respect of any quarterly period of the applicable Contingent
Cash Interest Period shall equal the greater of (x) 0.0625% of the average
LYONs Market Price for the relevant Five-Trading-Day Measurement Period and (y)
the sum of all Regular Cash Dividends paid by the Company per share on its
Common Stock during that quarterly period of the applicable Contingent Cash
Interest Period multiplied by the number of shares of Common Stock into which
$1,000 Principal Amount at Maturity hereof is convertible pursuant to paragraph
9 hereof as of the accrual date for such Contingent Cash Interest; provided
that if the Company does not pay cash dividends during a Semiannual Period, the
Company will pay contingent cash interest semi-annually at a rate of 0.125% of
the LYONs Market Price for the Five-Trading-Day Measurement Period.
Upon determination that Holders will be entitled to receive Contingent
Cash Interest during a Contingent Cash Interest Period the Company shall issue
a press release and publish such information on its Web site or through such
other public medium as the Company may use at that time.
B. Contingent Additional Principal. Subject to the conditions set
forth in the Indenture, on September 11, 2004 the rate of accrual on the LYONs
will be reset for a period of two years to the Adjusted Rate if the Company's
Stock Price Factor is at or below the Stock Price Factor threshold (as set
forth in Article 14 of the Indenture) on that date. Contingent Additional
Principal shall be the amount that accrues as a result of the Adjusted Rate,
other than Original Issue Discount. If the Stock Price Factor exceeds the
highest Stock Price Factor threshold in the applicable column (as set forth in
Article 14 of the Indenture), no Contingent Additional Principal (and CAP-OID
thereon) shall accrue and Original Issue Discount shall accrue as provided in
the Indenture.
The rate of accrual of Contingent Additional Principal per Security
will be the rate which results from deducting an amount in accordance with the
table set forth in Section 14.01 of the Indenture, from the Company's
Subordinated Debt Rate, provided that in no event will such rate be greater
than 9.0% or less than 2.0%.
Contingent Additional Principal, if any, shall be payable on the
Stated Maturity date of the Securities. Contingent Additional Principal shall
be calculated on a Semi-annual bond equivalent basis, using a 360-day year
consisting of twelve 30-day months. No Contingent Additional Principal will
accrue after September 11, 2006.
In the event that any Contingent Additional Principal accrues on the
Securities, the Company shall issue a press release to that effect which shall
include with respect to a Security the aggregate adjusted rate at which
Original Issue Discount and Contingent Additional Principal will accrue, the
revised Redemption Prices, the revised Purchase Prices, the revised Change in
A-1-6
Control Purchase Price and the amount payable at the Stated Maturity. In
addition, the Company shall publish such information on its Web site or through
such other public medium it may use at that time. The Company shall also notify
the Trustee on a periodic basis in writing of any accrual of Contingent
Additional Principal. Following its receipt of such notice, the Trustee shall
provide such information to DTC for dissemination to the participants of DTC.
6. Redemption at the Option of the Company.
No sinking fund is provided for the Securities. The Securities are
redeemable as a whole, or from time to time in part, at any time at the option
of the Company in accordance with Article 3 of the Indenture at the Redemption
Prices set forth below, provided that the Securities are not redeemable prior
to September 11, 2006.
The table below shows Redemption Prices of a Security per $1,000
Principal Amount at Maturity on the dates shown below and at Stated Maturity,
which prices reflect the Issue Price plus Accrued Original Issue Discount
calculated to each such date and assumes that no Contingent Additional
Principal has accrued. In addition to the Redemption Price payable with respect
to all Securities or portions thereof to be redeemed as of a Redemption Date,
the Holders of such Securities (or portions thereof) shall be entitled to
receive, and the Redemption Price shall include, any Contingent Additional
Principal accrued on the Securities and any CAP-OID thereon and any Accrued
Original Issue Discount in respect thereof, to the Redemption Date.
(1) (2) (3)
LYON Accrued Original Redemption Price
Redemption Date Issue Price Issue Discount (1) + (2)
--------------- ----------- -------------- ----------------
September 11,
2006..................................... $671.65 $ 70.27 $741.92
2007..................................... 671.65 85.18 756.83
2008..................................... 671.65 100.40 772.05
2009..................................... 671.65 115.91 787.56
2010..................................... 671.65 131.74 803.39
2011..................................... 671.65 147.89 819.54
2012..................................... 671.65 164.37 836.02
2013..................................... 671.65 181.17 852.82
2014..................................... 671.65 198.31 869.96
2015..................................... 671.65 215.80 887.45
2016..................................... 671.65 233.64 905.29
2017..................................... 671.65 251.83 923.48
2018..................................... 671.65 270.39 942.04
2019..................................... 671.65 289.33 960.98
2020..................................... 671.65 308.65 980.30
At Stated Maturity....................... $671.65 $328.35 $1000.00
A-1-7
7. Purchase by the Company at the Option of the Holder.
Subject to the terms and conditions of the Indenture, the Company
shall become obligated to purchase, at the option of the Holder, the Securities
held by such Holder on the following Purchase Dates and at the following
Purchase Prices per $1,000 Principal Amount at Maturity, upon delivery of a
Purchase Notice containing the information set forth in the Indenture, at any
time from the opening of business on the date that is 20 Business Days prior to
such Purchase Date until the close of business on the first business day
immediately preceding such Purchase Date and upon delivery of the Securities to
the Paying Agent by the Holder as set forth in the Indenture:
Purchase Date Purchase Price
------------- --------------
September 11, 2004 $712.97
September 11, 2006 $741.92
September 11, 2011 $819.54
The Purchase Price (equal to the Issue Price plus Accrued Original
Issue Discount for the Purchase Date noted in the above table plus Contingent
Additional Principal, if any, and accrued CAP-OID thereon to the Purchase Date)
may be paid, at the option of the Company, in cash or by the issuance and
delivery of shares of Common Stock of the Company, or in any combination
thereof in accordance with the Indenture.
At the option of the Holder and subject to the terms and conditions of
the Indenture, the Company shall become obligated to purchase the Securities
held by such Holder no later than 35 Business Days after the occurrence of a
Change in Control of the Company on or prior to September 11, 2006, but in no
event prior to the date on which such Change in Control occurs, for a Change in
Control Purchase Price equal to the Issue Price, plus Accrued Original Issue
Discount and, if applicable, Contingent Additional Principal (and accrued
CAP-OID thereon) to but not including the Change in Control Purchase Date,
which Change in Control Purchase Price shall be paid in cash.
A third party may make the offer and purchase of the Securities in
lieu of the Company in accordance with the Indenture.
In addition to the Purchase Price or Change in Control Purchase Price,
as the case may be, payable with respect to all Securities or portions thereof
to be purchased as of the Purchase Date or the Change in Control Purchase Date,
as the case may be, the Holders of such Securities (or portions thereof) shall
be entitled to receive accrued and unpaid Contingent Cash Interest, if any,
with respect thereto, which Contingent Cash Interest shall be paid in cash
promptly following the later of the Purchase Date or the Change in Control
Purchase Date, as the case may be, and the time of delivery of such Securities
to the Paying Agent pursuant to the Indenture.
Holders have the right to withdraw any Purchase Notice or Change in
Control Purchase Notice, as the case may be, by delivering to the Paying Agent
a written notice of withdrawal in accordance with the provisions of the
Indenture.
A-1-8
If cash (and/or securities if permitted under the Indenture)
sufficient to pay the Purchase Price or Change in Control Purchase Price, as
the case may be, of, together with any accrued and unpaid Contingent Cash
Interest with respect to, all Securities or portions thereof to be purchased as
of the Purchase Date or the Change in Control Purchase Date, as the case may
be, is deposited with the Paying Agent on the Business Day following the
Purchase Date or the Change in Control Purchase Date, as the case may be,
Original Issue Discount, Contingent Cash Interest, if any, and Contingent
Additional Principal (and CAP-OID thereon), if any, shall cease to accrue on
such Securities (or portions thereof) on such Purchase Date or Change in
Control Purchase Date, as the case may be, and the Holder thereof shall have no
other rights as such (other than the right to receive the Purchase Price or
Change in Control Purchase Price, as the case may be, and accrued and unpaid
Contingent Cash Interest, if any, upon surrender of such Security).
8. Notice of Redemption.
Notice of redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each Holder of Securities to be redeemed
at the Holder's registered address. If money sufficient to pay the Redemption
Price of, and accrued and unpaid Contingent Cash Interest, if any, with respect
to, all Securities (or portions thereof) to be redeemed on the Redemption Date
is deposited with the Paying Agent prior to or on the Redemption Date, on such
Redemption Date, Original Issue Discount, Contingent Cash Interest, if any, and
Contingent Additional Principal (and CAP-OID thereon) shall cease to accrue on
such Securities or portions thereof. Securities in denominations larger than
$1,000 of Principal Amount at Maturity may be redeemed in part but only in
integral multiples of $1,000 of Principal Amount at Maturity.
9. Conversion.
(a) Conversion Based on Common Stock Price. Subject to the
provisions of this paragraph 9, Holders may convert the Securities into Common
Stock on a Conversion Date in any calendar quarter commencing after December
31, 2001, if, as of the last day of the preceding calendar quarter, the Sale
Price of the Common Stock for at least 20 trading days in a period of 30
consecutive trading days ending on the last trading day of such preceding
calendar quarter is greater than the conversion trigger price. The "conversion
trigger price" for any calendar quarter shall be a reference percentage,
beginning at 120%, and declining 0.1282% per calendar quarter thereafter until
it reaches 110.000% for the calendar quarter beginning July 1, 2021, of the
accreted conversion price per share of Common Stock on the last day of such
preceding calendar quarter.
The "accreted conversion price" per share of Common Stock as of any
day equals the quotient of:
o the Issue Price and Accrued Original Issue Discount and any
accrued Contingent Additional Principal (and CAP-OID thereon) to
that day, divided by
o the number of shares of Common Stock issuable upon conversion of
$1,000 Principal Amount at Maturity of Securities on that day.
A-1-9
(b) Conversion Based on Credit Rating. Subject to the provisions
of this paragraph 9, Holders may convert the Securities into Common Stock on a
Conversion Date during any period in which the credit rating assigned to the
Securities by a Rating Agency is at or below the Applicable Rating. "Rating
Agency" means Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies Inc., and its successors ("Standard & Poor's") or if Standard &
Poor's is not making ratings of the Securities publicly available, a nationally
recognized U.S. rating agency or agencies, as the case may be, selected by the
Company, which will be substituted for Standard & Poor's, as the case may be.
"Applicable Rating" means, in the case of Standard & Poor's, BB- (or its
equivalent, under any successor ratings categories of Standard & Poor's) or the
equivalent in respect of ratings categories of any Rating Agencies substituted
for Standard & Poor's.
(c) Conversion Based on Redemption. Subject to the provisions of
this paragraph 9, a Holder may convert into Common Stock a Security or portion
of a Security which has been called for redemption pursuant to paragraph 6
hereof, even if the LYONs are not otherwise convertible at such time, but such
Securities may be surrendered for conversion until the close of business on the
second Business Day immediately preceding the Redemption Date.
(d) Conversion Upon Occurrence of Certain Corporate Transactions.
Subject to the provisions of this paragraph 9, in the event that the Company
declares a dividend or distribution described in Section 10.07 of the
Indenture, or a dividend or a distribution described in Section 10.08 of the
Indenture where the fair market value of such dividend or distribution per
share of Common Stock, as determined in the Indenture, exceeds 15% of the Sale
Price of the Common Stock on the day immediately preceding the date of
declaration for such dividend or distribution, the Securities may be
surrendered for conversion beginning on the date the Company gives notice to
the Holders of such right, which shall not be less than 20 days prior to the
Ex-Dividend Time for such dividend or distribution, and Securities may be
surrendered for conversion at any time thereafter until the close of business
on the Business Day prior to the Ex-Dividend Time or until the Company
announces that such dividend or distribution will not take place.
Subject to the provisions of this paragraph 9, in the event the
Company is a party to a consolidation, merger or binding share exchange or a
transfer of all or substantially all assets of the Company pursuant to which
the Common Stock would be converted into cash, securities or other property as
set forth in Section 10.14 of the Indenture, the Securities may be surrendered
for conversion at any time from and after the date which is 15 days prior to
the anticipated effective date until 15 days after the actual effective date of
such transaction, and at the effective date of such transaction the right to
convert a Security into Common Stock will be deemed to have changed into a
right to convert it into the kind and amount of cash, securities or other
assets of the Company or another person which the holder would have received if
the holder had converted its Security immediately prior to the transaction.
(e) Conversion Formula and Procedures. Subject to the next two
succeeding sentences, a Holder of a Security may convert it into Common Stock
of the Company at any time before the close of business on September 11, 2021.
If the Security is called for redemption, the Holder may convert it only until
the close of business on the second business day immediately preceding the
Redemption Date. A Security in respect of which a Holder has delivered a
Purchase Notice or Change in Control Purchase Notice exercising the option of
such Holder to
A-1-10
require the Company to purchase such Security may be converted only if such
notice of exercise is withdrawn in accordance with the terms of the Indenture.
The initial Conversion Rate is 6.7054 shares of Common Stock per
$1,000 Principal Amount at Maturity, subject to adjustment upon occurrence of
certain events described in the Indenture. The Company will deliver cash in
lieu of any fractional share of Common Stock.
A Security surrendered for conversion by a Holder during the period
from the close of business on any Common Stock Record Date to the opening of
business on the next Contingent Cash Interest Payment Date must be accompanied
by payment of an amount equal to the Contingent Cash Interest, if any, that the
Holder is to receive on the Securities surrendered for conversion, unless the
Company has provided such Holder with a notice of redemption with respect to
such Securities pursuant to Section 3.03 of the Indenture, in which case no
such payment shall be made.
To convert a Security, a Holder must (1) complete and manually sign
the conversion notice below (or complete and manually sign a facsimile of such
notice) and deliver such notice to the Conversion Agent, (2) surrender the
Security to the Conversion Agent, (3) furnish appropriate endorsements and
transfer documents if required by the Conversion Agent, the Company or the
Trustee and (4) pay any transfer or similar tax, if required.
A Holder may convert a portion of a Security if the Principal Amount
at Maturity of such portion is $1,000 or an integral multiple of $1,000. No
payment or adjustment will be made for dividends on the Common Stock except as
provided in the Indenture.
The Conversion Rate will be adjusted for dividends or distributions on
Common Stock payable in Common Stock or other Capital Stock; subdivisions,
combinations or certain reclassifications of Common Stock; distributions to all
holders of Common Stock of certain rights to purchase Common Stock for a period
expiring within 60 days at less than the Sale Price at the Time of
Determination; and distributions to such holders of assets or Debt securities
of the Company or certain rights to purchase securities of the Company
(excluding certain cash dividends or distributions). However, no adjustment
need be made if Securityholders may participate in the transaction or in
certain other cases. The Company from time to time may voluntarily increase the
Conversion Rate.
In the event that the Company declares a dividend or distribution
described in Section 10.07 of the Indenture, or a dividend or a distribution
described in Section 10.08 of the Indenture where the fair market value of such
dividend or distribution per share of Common Stock, as determined in the
Indenture, exceeds 15% of the Sale Price of the Common Stock on the day
preceding the date of declaration for such dividend or distribution, the
Company shall give notice to the Holders, which shall not be less than 20 days
prior to the Ex-Dividend Date for such dividend or distribution.
If the Company is a party to a consolidation, merger or binding share
exchange or a transfer of all or substantially all of its assets, or upon
certain distributions described in the Indenture, the right to convert a
Security into Common Stock may be changed into a right to convert it into the
kind and amount of securities, cash or other assets of the Company or another
A-1-11
person which the Holder would have received if the Holder had converted its
Securities immediately prior to the transaction.
The Conversion Rate will not be adjusted for any accrued Contingent
Cash Interest, if any, or Contingent Additional Principal (and CAP-OID
thereon), if any.
10. Conversion Arrangement on Call for Redemption.
Any Securities called for redemption, unless surrendered for
conversion before the close of business on the Redemption Date, may be deemed
to be purchased from the Holders of such Securities at an amount not less than
the Redemption Price, by one or more investment banks or other purchasers who
may agree with the Company to purchase such Securities from the Holders, to
convert them into Common Stock and to make payment for such Securities to the
Trustee in trust for such Holders.
11. Subordination.
The Securities are subordinated to the Senior Indebtedness of the
Company. To the extent provided in the Indenture, Senior Indebtedness of the
Company must be paid before the Securities may be paid. The Company and each
Holder of Securities, by accepting a Security, agrees to the subordination
provisions contained in the Indenture and authorizes the Trustee to give it
effect and appoints the Trustee as attorney-in-fact for such purpose.
12. Defaulted Interest.
Except as otherwise specified with respect to the Securities, any
Defaulted Interest on any Security shall forthwith cease to be payable to the
registered Holder thereof on the relevant record date therefor by virtue of
having been such Holder, and such Defaulted Interest may be paid by the Company
as provided for in Section 10.01 of the Indenture.
13. Denominations; Transfer; Exchange.
The Securities are in fully registered form, without coupons, in
denominations of $1,000 of Principal Amount at Maturity and integral multiples
of $1,000. A Holder may transfer or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not transfer
or exchange any Securities selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security not to be
redeemed) or any Securities in respect of which a Purchase Notice or Change in
Control Purchase Notice has been given and not withdrawn (except, in the case
of a Security to be purchased in part, the portion of the Security not to be
purchased) or any Securities for a period of 15 days before the mailing of a
notice of redemption of Securities to be redeemed.
14. Persons Deemed Owners.
The registered Holder of this Security may be treated as the owner of
this Security for all purposes.
A-1-12
15. Unclaimed Money or Securities.
The Trustee and the Paying Agent shall return to the Company upon
written request any money or securities held by them for the payment of any
amount with respect to the Securities that remains unclaimed for two years,
subject to applicable unclaimed property laws. After return to the Company,
Holders entitled to the money or securities must look to the Company for
payment as general creditors unless an applicable abandoned property law
designates another person.
16. Amendment; Waiver.
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in aggregate Principal Amount at Maturity of the
Securities at the time outstanding and (ii) certain Defaults may be waived with
the written consent of the Holders of a majority in aggregate Principal Amount
at Maturity of the Securities at the time outstanding. Subject to certain
exceptions set forth in the Indenture, without the consent of any
Securityholder, the Company and the Trustee may amend the Indenture or the
Securities to cure any ambiguity, omission, defect or inconsistency, to comply
with Article 5 or Section 10.14 of the Indenture, to secure the Company's
obligations under this Security, to add to the Company's covenants for the
benefit of the Securityholders or to surrender any right or power conferred, to
comply with any requirement of the SEC in connection with the qualification of
the Indenture under the TIA, or as necessary in connection with the
registration of the Securities under the Securities Act or to make any change
that does not adversely affect the rights of any Holders.
17. Defaults and Remedies.
Securityholders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture
or the Securities unless it receives indemnity or security reasonably
satisfactory to it. Subject to certain limitations, Holders of a majority in
aggregate Principal Amount at Maturity of the Securities at the time
outstanding may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Securityholders notice of any continuing Default
(except a Default in payment of amounts specified in Sections 6.01(1) and (2)
of the Indenture if it determines that withholding notice is in their
interests.
18. Trustee Dealings with the Company.
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
19. No Recourse Against Others.
A director, officer, employee, agent, representative, stockholder or
equity holder, as such, of the Company shall not have any liability for any
obligations of the Company under the
A-1-13
Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
20. Authentication.
This Security shall not be valid until an authorized signatory of the
Trustee manually signs the Trustee's Certificate of Authentication on the other
side of this Security.
21. Abbreviations.
Customary abbreviations may be used in the name of a Securityholder 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 Gift to Minors
Act).
22. GOVERNING LAW.
THIS INDENTURE AND THE SECURITIES WILL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
----------------------
A-1-14
The Company will furnish to any Securityholder upon written request
and without charge a copy of the Indenture which has in it the text of this
Security in larger type. Requests may be made to:
LABORATORY CORPORATION OF AMERICA HOLDINGS
358 South Main Street
Burlington, NC 27215
Attention: General Counsel
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
________________________________________________________
________________________________________________________
(Insert assignee's soc. sec. or tax ID no.)
________________________________________________________
________________________________________________________
________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint
_____________________ agent to transfer this Security on the books of the
Company. The agent may substitute another to act for him.
CONVERSION NOTICE
To convert this Security into Common Stock of the Company, check the box:
[ ]
To convert only part of this Security, state the Principal Amount at Maturity
to be converted (which must be $1,000 or an integral multiple of $1,000):
$___________________
If you want the stock certificate made out in another person's name, fill in
the form below:
________________________________________________________
________________________________________________________
(Insert other person's soc. sec. or tax ID no.)
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
(Print or type other person's name, address and zip code)
_______________________________________________________________________________
Date: _____________________ Your Signature:__________________________________
_______________________________________________________________________________
(Sign exactly as your name appears on the other side of this Security)
A-1-15
EXHIBIT B-1
Transfer Certificate
In connection with any transfer of any of the Securities within the
period prior to the expiration of the holding period applicable to the sales
thereof under Rule 144(k) under the Securities Act of 1933, as amended (the
"Securities Act") (or any successor provision), the undersigned registered
owner of this Security hereby certifies with respect to $____________ Principal
Amount at Maturity of the above-captioned securities presented or surrendered
on the date hereof (the "Surrendered Securities") for registration of transfer,
or for exchange or conversion where the securities issuable upon such exchange
or conversion are to be registered in a name other than that of the undersigned
registered owner (each such transaction being a "transfer"), that such transfer
complies with the restrictive legend set forth on the face of the Surrendered
Securities for the reason checked below:
[ ] A transfer of the Surrendered Securities is made to the
Company or any of its subsidiaries; or
[ ] The transfer of the Surrendered Securities complies with
Rule 144A under the Securities Act; or
[ ] The transfer of the Surrendered Securities is pursuant to an
effective registration statement under the Securities Act; or
[ ] The transfer of the Surrendered Securities is pursuant to
another available exemption from the registration requirement
of the Securities Act.
and unless the box below is checked, the undersigned confirms that, to
the undersigned's knowledge, such Securities are not being transferred to an
"affiliate" of the Company as defined in Rule 144 under the Securities Act (an
"Affiliate").
[ ] The transferee is an Affiliate of the Company.
DATE:________________________ _______________________________________
Signature(s)
(If the registered owner is a corporation, partnership or
fiduciary, the title of the Person signing on behalf of
such registered owner must be stated.)
B-1-1
ANNEX C
Projected Payment Schedule*
Semi-annual Period Ending Projected Payment per LYON
------------------------- --------------------------
March 11, 2002 --
September 11, 2002
March 11, 2003 --
September 11, 2003
March 11, 2004 --
September 11, 2004
March 11, 2005 --
September 11, 2005
March 11, 2006 --
September 11, 2006
March 11, 2007 --
September 11, 2007
March 11, 2008
September 11, 2008 $1.24
March 11, 2009 1.31
September 11, 2009 1.37
March 11, 2010 1.44
September 11, 2010 1.51
March 11, 2011 1.59
September 11, 2011 1.67
March 11, 2012 1.75
September 11, 2012 1.84
March 11, 2013 1.94
September 11, 2013 2.03
March 11, 2014 2.13
September 11, 2014 2.24
March 11, 2015 2.35
September 11, 2015 2.47
March 11, 2016 2.60
September 11, 2016 2.73
March 11, 2017 2.86
September 11, 2017 3.01
March 11, 2018 3.16
September 11, 2018 3.32
---------
* The comparable yield and the schedule of projected payments are determined
on the basis of an assumption of linear growth of the stock price and a
constant dividend yield and are not determined for any purpose other than
for the determination of interest accruals and adjustments thereof in
respect of the Securities for United States federal income tax purposes.
The comparable yield and the schedule of projected payments do not
constitute a projected or representation regarding the amounts payable on
Securities.
C-1
Semi-annual Period Ending Projected Payment per LYON
------------------------- --------------------------
March 11, 2019 3.49
September 11, 2019 3.66
March 11, 2020 3.84
September 11, 2020 4.04
March 11, 2021 4.24
September 11, 2021 $3,567.85
C-2
EX-4.2
5
oct1901_x0402.txt
EXHIBIT 4.2
Execution Copy
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made and entered into as of
September 11, 2001 by and between Laboratory Corporation of America Holdings, a
Delaware corporation (the "Company"), and Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, (the "Initial Purchaser") pursuant to the
Purchase Agreement, dated September 5, 2001 (the "Purchase Agreement"), between
the Company and the Initial Purchaser. In order to induce the Initial Purchaser
to enter into the Purchase 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 Purchase Agreement.
The Company agrees with the Initial Purchaser, (i) for its benefit as
Initial Purchaser and (ii) for the benefit of the beneficial owners (including
the Initial Purchaser) from time to time of the LYONs (as defined herein) and
the beneficial owners from time to time of the Underlying Common Stock (as
defined herein) issued upon conversion of the LYONs (each of the foregoing a
"Holder" and together the "Holders"), as follows:
Section 1. Definitions. Capitalized terms used herein without definition
shall have their respective meanings set forth in the Purchase Agreement. As
used in this Agreement, the following terms shall have the following meanings:
"Affiliate" means, with respect to any specified person, an "affiliate,"
as defined in Rule 144, of such person.
"Amendment Effectiveness Deadline Date" has the meaning specified in
Section 2(d) hereof.
"Applicable Conversion Price" means, as of any date, the Applicable
Principal Amount per $1,000 principal amount at maturity of LYONs as of such
date of determination divided by the Conversion Rate in effect as of such date
of determination or, if no LYONs are then outstanding, the Conversion Rate that
would be in effect were LYONs then outstanding.
"Applicable Principal Amount" with respect to each $1,000 principal amount
at maturity of LYONs means, as of any date, the sum of the initial issue price
of such LYONs ($671.65) plus accrued original issue discount, and contingent
additional principal (and accrued original issued discount thereon), if any,
with respect to such LYON through such date of determination or, if no LYONs
are then outstanding, such sum calculated as if such LYONs were then
outstanding.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in The City of New York are
authorized or obligated by law or executive order to close.
"Common Stock" means the shares of Common Stock, $0.10 par value, of the
Company and any other shares of common stock as may constitute "Common Stock"
for purposes of the Indenture, including the Underlying Common Stock.
"Conversion Rate" has the meaning assigned to that term in the Indenture.
"Damages Accrual Period" has the meaning specified in Section 2(e) hereof.
"Damages Payment Date" means each September 11 and March 11 in the case of
LYONs and the Underlying Common Stock.
"Deferral Notice" has the meaning specified in Section 3(i) hereof.
"Deferral Period" has the meaning specified in Section 3(i) hereof.
"Effectiveness Deadline Date" has the meaning specified in Section 2(a)
hereof.
"Effectiveness Period" means the period of two years from (1) the later of
(a) the Issue Date or (b) the last date of original issuance of the LYONs or
(2) such shorter period ending on the date that all Registrable Securities have
ceased to be Registrable Securities.
"Event" has the meaning specified in Section 2(e) hereof.
"Event Termination Date" has the meaning specified in Section 2(e) hereof.
"Event Date" has the meaning specified in Section 2(e) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"Filing Deadline Date" has the meaning specified in Section 2(a) hereof.
"Holder" has the meaning specified in the second paragraph of this
Agreement.
"Indenture" means the Indenture dated as of the date hereof between the
Company and The Bank of New York, as trustee, pursuant to which the LYONs are
being issued.
"Initial Purchaser" means Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated.
"Initial Shelf Registration Statement" has the meaning specified in
Section 2(a) hereof.
"Issue Date" means September 11, 2001.
"Liquidated Damages Amount" has the meaning specified in Section 2(e)
hereof.
"Losses" has the meaning specified in Section 6 hereof.
"LYONs" means the Liquid Yield Option(TM) Notes due 2021 of the Company to
be purchased pursuant to the Purchase Agreement.
"Material Event" has the meaning specified in Section 3(i) hereof.
2
"Notice and Questionnaire" means a written notice delivered to the Company
containing substantially the information called for by the Selling
Securityholder Notice and Questionnaire attached as Annex A to the Offering
Memorandum of the Company dated September 5, 2001 relating to the LYONs.
"Notice Holder" means, on any date, any Holder that has delivered a Notice
and Questionnaire to the Company on or prior to such date.
"Prospectus" means the prospectus included in any Registration Statement,
as amended or supplemented by any amendment or prospectus supplement, including
post-effective amendments, and all materials incorporated by reference or
explicitly deemed to be incorporated by reference in such Prospectus.
"Purchase Agreement" has the meaning specified in the first paragraph of
this Agreement.
"Record Holder" means, with respect to any Damages Payment Date relating
to any LYON or any share of Underlying Common Stock as to which any Liquidated
Damages Amount has accrued, the registered holder of such LYON or any share of
Underlying Common Stock, as the case may be, 15 days prior to such Damages
Payment Date.
"Registrable Securities" means the LYONs and the Underlying Common Stock
until such securities have been converted or exchanged, and, at all times
subsequent to any such conversion or exchange, any securities into or for which
such securities have been converted or exchanged, and any security issued with
respect thereto upon any stock dividend, split or similar event until, in the
case of any such security, the earliest of (i) its effective registration under
the Securities Act and resale in accordance with the Registration Statement
covering it, (ii) expiration of the holding period that would be applicable
thereto under Rule 144(k) were it not held by an Affiliate of the Company or
(iii) its sale to the public pursuant to Rule 144.
"Registration Expenses" has the meaning specified in Section 5 hereof.
"Registration Statement" means any registration statement of the Company
that covers any of the Registrable Securities pursuant to the provisions of
this Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all materials incorporated by reference or explicitly deemed to be incorporated
by reference in such registration statement.
"Restricted Securities" has the meaning assigned to that term in Rule 144.
"Rule 144" means 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.
"Rule 144A" means 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.
"SEC" means the U.S. Securities and Exchange Commission and any successor
agency.
3
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated by the SEC thereunder.
"Shelf Registration Statement" has the meaning specified in Section 2(a)
hereof.
"Subsequent Shelf Registration Statement" has the meaning specified in
Section 2(b) hereof.
"TIA" means the Trust Indenture Act of 1939, as amended.
"Trustee" means The Bank of New York (or any successor entity), the
Trustee under the Indenture.
"Underlying Common Stock" The Common Stock into which the LYONs are
convertible or issued upon any such conversion.
Section 2. Shelf Registration. (a) The Company shall prepare and file or
cause to be prepared and filed with the SEC, as soon as practicable but in any
event by the date (the "Filing Deadline Date") ninety (90) days after the Issue
Date, a Registration Statement for an offering to be made on a delayed or
continuous basis pursuant to Rule 415 of the Securities Act (a "Shelf
Registration Statement") registering the resale from time to time by Holders
thereof of all of the Registrable Securities (the "Initial Shelf Registration
Statement"). The Initial Shelf Registration Statement shall be on Form S-3 or
another appropriate form permitting registration of such Registrable Securities
for resale by such Holders in accordance with the methods of distribution
reasonably elected by the Holders and set forth in the Initial Shelf
Registration Statement, provided that in no event will such method(s) of
distribution take the form of an underwritten offering of the Registrable
Securities without the prior agreement of the Company. The Company shall use
reasonable efforts to cause the Initial Shelf Registration Statement to be
declared effective under the Securities Act as promptly as is practicable but
in any event by the date (the "Effectiveness Deadline Date") that is one
hundred and eighty (180) days after the Issue Date, and to keep the Initial
Shelf Registration Statement (or any Subsequent Shelf Registration Statement)
continuously effective under the Securities Act until the expiration of the
Effectiveness Period; provided, however, that no Holder shall be entitled to
have the Registrable Securities held by it covered by such Shelf Registration
Statement unless such Holder shall have provided a Notice and Questionnaire in
accordance with Section 2(d) and is in compliance with Section 4. None of the
Company's security holders (other than the Holders of Registrable Securities)
shall have the right to include any of the Company's securities in the Shelf
Registration Statement.
(b) If the Initial Shelf Registration Statement or any Subsequent Shelf
Registration Statement ceases to be effective for any reason at any time during
the Effectiveness Period (other than as permitted in Section 3(i) hereof or
because all Registrable Securities registered thereunder shall have been resold
pursuant thereto or shall have otherwise ceased to be Registrable Securities),
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
thirty (30) days of such cessation of effectiveness amend the Shelf
Registration Statement in a manner reasonably expected to obtain the withdrawal
of the order suspending the effectiveness thereof,
4
or file an additional Shelf Registration Statement covering all of the
securities that as of the date of such filing are Registrable Securities (a
"Subsequent Shelf Registration Statement"). If a Subsequent Shelf Registration
Statement is filed, the Company shall use all reasonable efforts to cause the
Subsequent Shelf Registration Statement to become effective as promptly as is
practicable after such filing and to keep such Subsequent Shelf Registration
Statement continuously effective (subject to Section 3(i) hereof) until the end
of the Effectiveness Period.
(c) The Company shall supplement and amend the Shelf Registration
Statement if required by the rules, regulations or instructions applicable to
the registration form used by the Company for such Shelf Registration
Statement, if required by the Securities Act or, to the extent to which the
Company does not reasonably object, as reasonably requested by the Initial
Purchaser or by the Trustee on behalf of the registered Holders.
(d) Each Holder of Registrable Securities agrees that if such Holder
wishes to sell Registrable Securities pursuant to a Shelf Registration
Statement and related Prospectus (whether or not such Holder was a Notice
Holder at the time the Registration Statement was declared effective), it will
do so only in accordance with this Section 2(d) and Section 3(i). Each Holder
of Registrable Securities wishing to sell Registrable Securities pursuant to a
Shelf Registration Statement and related Prospectus agrees to deliver a Notice
and Questionnaire to the Company at least three (3) Business Days prior to any
intended distribution of Registrable Securities under the Shelf Registration
Statement. From and after the date the Initial Shelf Registration Statement is
declared effective, the Company shall, as promptly as is reasonably practicable
after the date a Notice and Questionnaire is delivered, and in any event within
five (5) Business Days after such date, (i) if required by applicable law, file
with the SEC a post-effective amendment to the Shelf Registration Statement or
prepare and, if required by applicable law, file a supplement to the related
Prospectus or a supplement or amendment to any document incorporated therein by
reference or file any other required document so that the Holder delivering
such Notice and Questionnaire is named as a selling security holder in the
Shelf Registration Statement and the related Prospectus in such a manner as to
permit such Holder to deliver such Prospectus to purchasers of the Registrable
Securities in accordance with applicable law and, if the Company shall file a
post-effective amendment to the Shelf Registration Statement, use reasonable
efforts to cause such post-effective amendment to be declared effective under
the Securities Act as promptly as is practicable, but in any event by the date
(the "Amendment Effectiveness Deadline Date") that is forty-five (45) days
after the date such post-effective amendment is required by this clause to be
filed; (ii) provide such Holder copies of any documents filed pursuant to
Section 2(d)(i); and (iii) notify such Holder as promptly as reasonably
practicable after the effectiveness under the Securities Act of any
post-effective amendment filed pursuant to Section 2(d)(i); provided that if
such Notice and Questionnaire is delivered during a Deferral Period, the
Company shall so inform the Holder delivering such Notice and Questionnaire and
shall take the actions set forth in clauses (i), (ii) and (iii) above upon
expiration of the Deferral Period in accordance with Section 3(i).
Notwithstanding anything contained herein to the contrary, the Company shall be
under no obligation to name any Holder that is not a Notice Holder as a selling
security holder in any Registration Statement or related Prospectus.
(e) 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
5
precision, if (i) the Initial Shelf Registration Statement has not been filed
on or prior to the Filing Deadline Date, (ii) the Initial Shelf Registration
Statement has not been declared effective under the Securities Act on or prior
to the Effectiveness Deadline Date, (iii) the Company has failed to perform its
obligations set forth in Section 2(d) hereof within the time period required
therein, (iv) the aggregate duration of Deferral Periods in any period exceeds
the number of days permitted in respect of such period pursuant to Section 3(i)
hereof or (v) the number of Deferral Periods in any period exceeds the number
permitted in respect of such period pursuant to Section 3(i) (each of the
events of a type described in any of the foregoing clauses (i) through (v) are
individually referred to herein as an "Event," and the Filing Deadline Date in
the case of clause (i), the Effectiveness Deadline Date in the case of clause
(ii), the date by which the Company is required to perform its obligations set
forth in Section 2(d) in the case of clause (iii) (including the filing of any
post-effective amendment prior to the Amendment Effectiveness Deadline Date),
the date on which the aggregate duration of Deferral Periods in any period
exceeds the number of days permitted by Section 3(i) hereof in the case of
clause (iv), and the date of the commencement of a Deferral Period that causes
the limit on the number of Deferral Periods in any period under Section 3(i)
hereof to be exceeded in the case of clause (v), being referred to herein as an
"Event Date"). Events shall be deemed to continue until the "Event Termination
Date," which shall be the following dates with respect to the respective types
of Events: the date the Initial Shelf Registration Statement is filed in the
case of an Event of the type described in clause (i), the date the Initial
Shelf Registration Statement is declared effective under the Securities Act in
the case of an Event of the type described in clause (ii), the date the Company
performs its obligations set forth in Section 2(d) in the case of an Event of
the type described in clause (iii) (including, without limitation, the date the
relevant post-effective amendment to the Shelf Registration Statement is
declared effective under the Securities Act), termination of the Deferral
Period that caused the limit on the aggregate duration of Deferral Periods in a
period set forth in Section 3(i) to be exceeded in the case of the commencement
of an Event of the type described in clause (iv), and termination of the
Deferral Period the commencement of which caused the number of Deferral Periods
in a period permitted by Section 3(i) to be exceeded in the case of an Event of
the type described in clause (v).
Accordingly, commencing on (and including) any Event Date and ending on
(but excluding) the next date on which there are no Events that have occurred
and are continuing (a "Damages Accrual Period"), the Company agrees to pay, as
liquidated damages and not as a penalty, an amount (the "Liquidated Damages
Amount"), payable on the Damages Payment Dates to Record Holders of then
outstanding LYONs that are Registrable Securities and of then outstanding
shares of Underlying Common Stock issued upon conversion of LYONs that are
Registrable Securities, as the case may be, accruing, for each portion of such
Damages Accrual Period beginning on and including a Damages Payment Date (or,
in respect of the first time that the Liquidation Damages Amount is to be paid
to Holders on a Damages Payment Date as a result of the occurrence of any
particular Event, from the Event Date) and ending on but excluding the first to
occur of (A) the date of the end of the Damages Accrual Period or (B) the Next
Damages Payment Date, at a rate per annum equal to one-quarter of one percent
(0.25%) for the first 90-day period from the Event Date, and thereafter at a
rate per annum equal to one-half of one percent (0.5%) of the aggregate
Applicable Principal Amount of such LYONs, or, in the case of LYONs that have
been converted into or exchanged for Underlying Common Stock, the Applicable
Conversion Price of such shares of Underlying Common Stock, as the case may be,
in each case determined as of the Business Day immediately preceding the next
Damages
6
Payment Date; provided, that any Liquidated Damages Amount accrued with
respect to any LYON or portion thereof called for redemption on a redemption
date or converted into Underlying Common Stock on a conversion date prior to
the Damages Payment Date, shall, in any such event, be paid instead to the
Holder who submitted such LYON or portion thereof for redemption or conversion
on the applicable redemption date or conversion date, as the case may be, on
such date (or promptly following the conversion date, in the case of
conversion). Notwithstanding the foregoing, no Liquidated Damages Amounts shall
accrue as to any Registrable Security from and after the earlier of (x) the
date such security is no longer a Registrable Security and (y) expiration of
the Effectiveness Period. The rate of accrual of the Liquidated Damages Amount
with respect to any period shall not exceed the rate provided for in this
paragraph notwithstanding the occurrence of multiple concurrent Events.
Following the cure of all Events requiring the payment by the Company of
Liquidated Damages Amounts to the Holders of Registrable Securities pursuant to
this Section, the accrual of Liquidated Damages Amounts will cease (without in
any way limiting the effect of any subsequent Event requiring the payment of
Liquidated Damages Amount by the Company).
The Trustee shall be entitled, on behalf of Holders of LYONs or Underlying
Common Stock, to seek any available remedy for the enforcement of this
Agreement, including for the payment of any Liquidated Damages Amount.
Notwithstanding the foregoing, the parties agree that the sole monetary damages
payable for a violation of the terms of this Agreement with respect to which
Liquidated Damages are expressly provided shall be such Liquidated Damages.
Nothing shall preclude a Notice Holder or Holder of Registrable Securities from
pursuing or obtaining specific performance or other equitable relief with
respect to this Agreement.
All of the Company's obligations set forth in this Section 2(e) that are
outstanding with respect to any Registrable Security 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 this Agreement pursuant to Section 8(k)).
The parties hereto agree that the liquidated damages provided for in this
Section 2(e) constitute a reasonable estimate of the damages that may be
incurred by Holders of Registrable Securities by reason of the failure of the
Shelf Registration Statement to be filed or declared effective or available for
effecting resales of Registrable Securities in accordance with the provisions
hereof.
Section 3. Registration Procedures. In connection with the registration
obligations of the Company under Section 2 hereof, the Company shall:
(a) Before filing any Registration Statement or Prospectus or any
amendments or supplements thereto with the SEC, furnish to the Initial
Purchaser copies of all such documents proposed to be filed and use
reasonable efforts to reflect in each such document when so filed with the
SEC such comments as the Initial Purchaser reasonably shall propose within
three (3) Business Days of the delivery of such copies to the Initial
Purchaser.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
7
Registration Statement continuously effective for the applicable period
specified in Section 2(a); 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 use all reasonable efforts to comply with the
provisions of the Securities Act applicable to it with respect to the
disposition of all securities covered by such Registration Statement
during the Effectiveness Period in accordance with the intended methods of
disposition by the sellers thereof set forth in such Registration
Statement as so amended or such Prospectus as so supplemented.
(c) As promptly as practicable give notice to the Notice Holders and
the Initial Purchaser (i) when any Prospectus, Prospectus supplement,
Registration Statement or post-effective amendment to a Registration
Statement has been filed with the SEC and, with respect to a Registration
Statement or any post-effective amendment, when the same has been declared
effective, (ii) of any request, following the effectiveness of the Initial
Shelf Registration Statement under the Securities Act, by the SEC or any
other federal or state governmental authority for amendments or
supplements to any 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 any Registration Statement or the initiation or
threatening 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 occurrence of (but not the
nature of or details concerning) a Material Event (provided, however, that
no notice by the Company shall be required pursuant to this clause (v) in
the event that the Company either promptly files a Prospectus supplement
to update the Prospectus or a Form 8-K or other appropriate Exchange Act
report that is incorporated by reference into the Registration Statement,
which, in either case, contains the requisite information with respect to
such Material Event that results in such Registration Statement no longer
containing any untrue statement of material fact or omitting to state a
material fact necessary to make the statements contained therein not
misleading) and (vi) of the determination by the Company that a
post-effective amendment to a Registration Statement will be filed with
the SEC, which notice may, at the discretion of the Company (or as
required pursuant to Section 3(i)), state that it constitutes a Deferral
Notice, in which event the provisions of Section 3(i) shall apply.
(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 in which
they have been qualified for sale, in either case at the earliest possible
moment.
(e) If reasonably requested by the Initial Purchaser or any Notice
Holder, promptly as reasonably practicable incorporate in a Prospectus
supplement or post-effective amendment to a Registration Statement such
information as the Initial Purchaser or such Notice Holder shall, on the
basis of an opinion of nationally-recognized counsel
8
experienced in such matters, determine to be required to be included
therein by applicable law and make any required filings of such Prospectus
supplement or such post-effective amendment; provided, that the Company
shall not be required to take any actions under this Section 3(e) that are
not, in the reasonable opinion of counsel for the Company, in compliance
with applicable law.
(f) As promptly as reasonably practicable furnish to each Notice
Holder and the Initial Purchaser, upon their request and without charge,
at least one (1) conformed copy of the Registration Statement and any
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 to the Company by
such Notice Holder or the Initial Purchaser, as the case may be).
(g) During the Effectiveness Period, deliver to each Notice Holder in
connection with any sale of Registrable Securities pursuant to a
Registration Statement, 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
Notice Holder may reasonably request; and the Company hereby consents
(except during such periods that a Deferral Notice is outstanding and has
not been revoked) to the use of such Prospectus or each amendment or
supplement thereto by each Notice Holder in connection with any offering
and sale of the Registrable Securities covered by such Prospectus or any
amendment or supplement thereto in the manner set forth therein.
(h) Prior to any public offering of the Registrable Securities
pursuant to the Shelf Registration Statement, use all reasonable efforts
to register or qualify or cooperate with the Notice Holders in connection
with the registration or qualification (or exemption from such
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 Notice Holder reasonably requests in
writing (which request may be included in the Notice and Questionnaire),
it being agreed that no such registration or qualification will be
required unless so requested; prior to any public offering of the
Registrable Securities pursuant to the Shelf Registration Statement, use
all reasonable efforts to keep each such registration or qualification (or
exemption therefrom) effective during the Effectiveness Period in
connection with such Notice Holder's offer and sale of Registrable
Securities pursuant to such registration or qualification (or exemption
therefrom) and do any and all other acts or things necessary or advisable
to enable the disposition in such jurisdictions of such Registrable
Securities in the manner set forth in the relevant Registration Statement
and the related Prospectus; provided, that the Company will not be
required to (i) qualify as a foreign corporation or as a dealer in
securities in any jurisdiction where it would not otherwise be required to
qualify but for this Agreement or (ii) take any action that would subject
it to general service of process in suits or to taxation in any such
jurisdiction where it is not then so subject.
(i) Upon (A) the issuance by the SEC of a stop order suspending the
effectiveness of the Shelf Registration Statement or the initiation of
proceedings with respect to the Shelf Registration Statement under Section
8(d) or 8(e) of the Securities
9
Act, (B) the occurrence of any event or the existence of any fact (a
"Material Event") as a result of which any Registration Statement shall
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, or any Prospectus shall 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, or (C) the occurrence or existence of any pending corporate
development that, in the discretion of the Company, makes it appropriate
to suspend the availability of the Shelf Registration Statement and the
related Prospectus, (i) in the case of clause (B) above, subject to the
next sentence, as promptly as practicable prepare and file a
post-effective amendment to such Registration Statement or a supplement to
the related Prospectus or any document incorporated therein by reference
or file any other required document that would be incorporated by
reference into such Registration Statement and Prospectus so that such
Registration Statement does 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 such
Prospectus does 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, as thereafter delivered to the
purchasers of the Registrable Securities being sold thereunder, and, in
the case of a post-effective amendment to a Registration Statement,
subject to the next sentence, use all reasonable efforts to cause it to be
declared effective as promptly as is reasonably practicable, and (ii) give
notice to the Notice Holders that the availability of the Shelf
Registration Statement is suspended (a "Deferral Notice") and, upon
receipt of any Deferral Notice, each Notice Holder agrees not to sell any
Registrable Securities pursuant to the Registration Statement until such
Notice Holder's receipt of copies of the supplemented or amended
Prospectus provided for in clause (i) above, or until it is advised in
writing by the Company that the Prospectus may be used, and has received
copies of any additional or supplemental filings that are incorporated or
deemed incorporated by reference in such Prospectus. The Company will use
all reasonable efforts to ensure that the use of the Prospectus may be
resumed (x) in the case of clause (A) above, as promptly as is
practicable, (y) in the case of clause (B) above, as soon as, in the sole
judgment of the Company, public disclosure of such Material Event would
not be prejudicial to or contrary to the interests of the Company or, if
necessary to avoid unreasonable burden or expense, as soon as reasonably
practicable thereafter and (z) in the case of clause (C) above, as soon
as, in the discretion of the Company, such suspension is no longer
appropriate. The period during which the availability of the Registration
Statement and any Prospectus is suspended (the "Deferral Period") shall,
without the Company incurring any obligation to pay liquidated damages
pursuant to Section 2(e), not exceed forty-five (45) days in any three (3)
month period or ninety (90) days in any twelve (12) month period.
(j) If reasonably requested in writing in connection with a
disposition of Registrable Securities pursuant to a Registration
Statement, make reasonably available for inspection during normal business
hours by a representative for the Notice Holders of such Registrable
Securities and any broker-dealers, attorneys and accountants retained by
such Notice Holders, all relevant financial and other records, pertinent
corporate
10
documents and properties of the Company and its subsidiaries,
and cause the appropriate executive officers, directors and designated
employees of the Company and its subsidiaries to make reasonably available
for inspection during normal business hours all relevant information
reasonably requested by such representative for the Notice Holders or any
such broker-dealers, attorneys or accountants in connection with such
disposition, in each case as is customary for similar "due diligence"
examinations; provided, however, that such persons shall first agree in
writing with the Company that any information that is reasonably and in
good faith designated by the Company in writing as confidential at the
time of delivery of such information shall be kept confidential by such
persons and shall be used solely for the purposes of exercising rights
under this Agreement, unless (i) disclosure of such information is
required by court or administrative order or is necessary to respond to
inquiries of regulatory authorities, (ii) disclosure of such information
is required by law (including any disclosure requirements pursuant to
federal securities laws in connection with the filing of any Registration
Statement or the use of any Prospectus referred to in this Agreement),
(iii) such information becomes generally available to the public other
than as a result of a disclosure or failure to safeguard by any such
person or (iv) such information becomes available to any such person from
a source other than the Company and such source is not bound by a
confidentiality agreement; and provided further, that the foregoing
inspection and information gathering shall, to the greatest extent
possible, be coordinated on behalf of all the Notice Holders and the other
parties entitled thereto by the counsel referred to in Section 5.
(k) Comply with all applicable rules and regulations of the SEC and
make generally available to its securityholders earning statements (which
need not be audited) 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
3-month period (or 120 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 commencing after the effective date of a
Registration Statement, which statements shall cover said periods.
(l) Cooperate with each Notice Holder to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities sold pursuant to a Registration Statement, and cause such
Registrable Securities to be in such denominations as are permitted by the
Indenture and registered in such names as such Notice Holder may request
in writing at least one Business Day prior to any sale of such Registrable
Securities.
(m) Provide a CUSIP number for all Registrable Securities covered by
each Registration Statement not later than the effective date of such
Registration Statement and provide the Trustee for the LYONs and the
transfer agent for the Common Stock with printed certificates for the
Registrable Securities that are in a form eligible for deposit with The
Depository Trust Company.
(n) Make a reasonable effort to provide such information as is
required for any filings required to be made with the National Association
of Securities Dealers, Inc., if any.
11
(o) Upon (i) the filing of the Initial Shelf Registration Statement
and (ii) the effectiveness of the Initial Shelf Registration Statement,
announce the same, in each case by release to Reuters Economic Services
and Bloomberg Business News.
(p) If the Company agrees to the underwritten offering of Registrable
Securities pursuant to Section 2(a) hereof, enter into such customary
agreements and take all such other reasonable necessary actions in
connection therewith (including those reasonably requested by the holders
of a majority of the Registrable Securities being sold) in order to
expedite or facilitate disposition of such Registrable Securities.
(q) Cause the Indenture to be qualified under the TIA not later than
the effective date of any Registration Statement; and in connection
therewith, cooperate with the Trustee to effect such changes to the
Indenture as may be required for the Indenture to be so qualified in
accordance with the terms of the TIA and execute, and use all reasonable
efforts to cause the 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.
Section 4. Holder's Obligations. Each Holder agrees, by acquisition of the
Registrable Securities, that no Holder of Registrable Securities shall be
entitled to sell any of such Registrable Securities pursuant to a Registration
Statement or to receive a Prospectus relating thereto, unless such Holder has
furnished the Company with a Notice and Questionnaire as required pursuant to
Section 2(d) hereof (including the information required to be included in such
Notice and Questionnaire) and the information set forth in the next sentence.
Each Notice Holder 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 Notice Holder not misleading and any other information
regarding such Notice Holder and the distribution of such Registrable
Securities as may be required to be disclosed in the Registration Statement
under applicable law or pursuant to SEC comment or as may otherwise be required
by the Company to comply with applicable laws or regulations.
Section 5. Registration Expenses. The Company shall bear all fees and
expenses incurred in connection with the performance by the Company of its
obligations under Sections 2 and 3 of this Agreement whether or not any of the
Registration Statements are declared effective. Such fees and expenses shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (x) with respect to filings required to
be made with the National Association of Securities Dealers, Inc., if any, and
(y) of compliance with federal and state securities or Blue Sky laws
(including, without limitation, reasonable fees and disbursements of the
counsel specified in the next sentence in connection with Blue Sky
qualifications of the Registrable Securities under the laws of such
jurisdictions as the Notice Holders of a majority of the Registrable Securities
being sold pursuant to a Registration Statement 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), (iii) duplication expenses relating to copies of any Registration
Statement or Prospectus delivered to any Holders hereunder, (iv) fees and
disbursements of counsel for the Company in connection with the Shelf
Registration Statement, and (v) reasonable fees and disbursements of the
Trustee and its counsel and of the registrar and transfer agent for the
12
Common Stock. In addition, the Company shall bear or reimburse the Notice
Holders for the reasonable fees and disbursements of one firm of legal counsel
for the Holders, which shall initially be Shearman & Sterling, but which may,
upon the written consent of the Initial Purchaser (which shall not be
unreasonably withheld), be another nationally recognized law firm experienced
in securities law matters designated by the Company. In addition, the Company
shall pay the internal expenses of the Company (including, without limitation,
all salaries and expenses of 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
securities exchange on which similar securities of the Company are then listed
and the fees and expenses of any person, including special experts, retained by
the Company.
Section 6. Indemnification; Contribution. (a) The Company agrees to
indemnify and hold harmless the Initial Purchaser and each holder of
Registrable Securities and each person, if any, who controls the Initial
Purchaser or any holder of Registrable Securities within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact included in any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto), or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, provided that (subject to Section
6(d) below) any such settlement is effected with the prior written consent
of the Company; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission,
to the extent that any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity shall not apply to any loss, liability,
claim, damage or expense to the extent arising out of any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished to the Company by the Initial
Purchaser or Notice Holder expressly for use in the Registration
13
Statement (or any amendment thereto), or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto); provided, further, that
this indemnity agreement shall not apply to any loss, liability, claim, damage
or expense (1) arising from an offer or sale of Registrable Securities
occurring during a Deferral Period, if a Deferral Notice was given to such
Notice Holder in accordance with Section 8(c), or (2) if the Holder fails to
deliver at or prior to the written confirmation of sale, the most recent
Prospectus, as amended or supplemented, and such Prospectus, as amended or
supplemented, corrected such untrue statement or omission or alleged untrue
statement or omission of a material fact and the delivery thereof was required
by law and would have constituted a complete defense to the claim in respect of
such untrue statement or omission or alleged untrue statement or omission.
(b) Each Notice Holder agrees, severally and not jointly, to indemnify and
hold harmless the Initial Purchaser and each person, if any, who controls the
Initial Purchaser within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act and the Company, and each person, if any, who
controls the Company within the meaning of either such Section, against any and
all loss, liability, claim, damage and expense described in the indemnity
contained in subsection (a) of this Section, as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or omissions,
made in the Registration Statement (or any amendment thereto), or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by such holder of Registrable Securities (which also
acknowledges the indemnity provisions herein) and each person, if any, who
controls any such holder of Registrable Securities expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
The Initial Purchaser agrees to indemnify and hold harmless the Company,
the holders of Registrable Securities, and each person, if any, who controls
the Company or any holder of Registrable Securities within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act
against any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto), or
any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by the Initial Purchaser expressly for use in the Registration
Statement (or any amendment thereto) or such preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
(c) In case any action or proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to the foregoing provisions, such person (the
"indemnified party") shall give notice as promptly as reasonably practicable to
the person against whom such indemnity may be sought (the "indemnifying party")
in writing, but failure to so notify an indemnifying party shall not relieve
such indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this
indemnity agreement. An indemnifying party may participate at its own expense
in the defense of any such action; provided, however, that counsel
14
to the indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could
be sought under this Section 6 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from
all liability arising out of such litigation, investigation, proceeding or
claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 6(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of aforesaid request, (ii) such indemnifying
party shall have received notice of the terms of such settlement at least 30
days prior to such settlement being entered into and (iii) such indemnifying
party shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.
(e) If the indemnification provided for in this Section 6 is for any
reason unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, liabilities, claims, damages or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate amount
of such losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, in such proportion as is appropriate to reflect
the relative fault of the indemnifying party or parties on the one hand and of
the indemnified party on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative fault of the Company on the one hand and the holders of the
Registrable Securities or the Initial Purchaser on the other hand shall be
determined by reference to, among other things, whether any such untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company or by the
holder of the Registrable Securities or the Initial Purchaser and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(e) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 6(e). The
aggregate amount of losses, liabilities, claims, damages, and expenses incurred
by an indemnified party and referred to above in this Section 6(e) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing
15
or defending against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission or alleged
omission.
Notwithstanding the provisions of this Section 6, neither the holder of
any Registrable Securities nor the Initial Purchaser, shall be required to
indemnify or contribute any amount in excess of the amount by which the total
price at which the Registrable Securities sold by such holder of Registrable
Securities or unwritten by the Initial Purchaser, as the case may be, and
distributed to the public were offered to the public exceeds the amount of any
damages that such holder of Registrable Securities or the Initial Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 6(e), each person, if any, who controls the
Initial Purchaser or any holder of Registrable Securities within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act shall have
the same rights to contribution as the Initial Purchaser or such holder, and
each person, if any, who controls the Company within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act shall have the same
rights to contribution as the Company.
Section 7. Information Requirements. The Company covenants that, if at any
time before the end of the Effectiveness Period the Company is not subject to
the reporting requirements of the Exchange Act, it will cooperate with any
Holder of Registrable Securities and take such further reasonable action as any
Holder of Registrable Securities may reasonably request in writing (including,
without limitation, making such reasonable 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 and customarily taken in connection with
sales pursuant to such exemptions. Upon the written 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, unless
such a statement has been included in the Company's most recent report required
to be filed and filed pursuant to Section 13 or Section 15(d) of Exchange Act.
Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to
require the Company to register any of its securities (other than Common Stock)
under any section of the Exchange Act.
16
Section 8. Miscellaneous. (a) No Conflicting Agreements. The Company is
not, as of the date hereof, a party to, nor shall it, on or after the date of
this Agreement, enter into, any agreement with respect to its securities that
conflicts with the rights granted to the Holders of Registrable Securities in
this Agreement. The Company represents and warrants that the rights granted to
the Holders of Registrable Securities hereunder do not in any way conflict with
the rights granted to the holders of the Company's securities under any other
agreements.
(b) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, 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 Holders of a
majority of the then outstanding Underlying Common Stock constituting
Registrable Securities (with Holders of LYONs deemed to be the Holders, for
purposes of this Section, of the number of outstanding shares of Underlying
Common Stock into which such LYONs are or would be convertible or exchangeable
as of the date on which such consent is requested). 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
pursuant to such Registration Statement; 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. Each Holder of
Registrable Securities outstanding at the time of any such amendment,
modification, supplement, waiver or consent or thereafter shall be bound by any
such amendment, modification, supplement, waiver or consent effected pursuant
to this Section 8(b), whether or not any notice, writing or marking indicating
such amendment, modification, supplement, waiver or consent appears on the
Registrable Securities or is delivered to such Holder.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, by telecopier,
by courier guaranteeing overnight delivery or by first-class mail, return
receipt requested, and shall be deemed given (i) when made, if made by hand
delivery, (ii) upon confirmation, if made by telecopier, (iii) one (1) Business
Day after being deposited with such courier, if made by overnight courier or
(iv) on the date indicated on the notice of receipt, if made by first-class
mail, to the parties as follows:
(w) if to a Holder of Registrable Securities that is not a Notice
Holder, at the address for such Holder then appearing in the Registrar (as
defined in the Indenture);
(x) if to a Notice Holder, at the most current address given by such
Holder to the Company in a Notice and Questionnaire or any amendment
thereto;
(y) if to the Company, to:
Laboratory Corporation of America Holdings
358 South Main Street
Burlington, NC 27215
Attention: Bradford T. Smith, Executive Vice President,
General Counsel,
17
Corporate Compliance Officer and Secretary
Telecopy No.: (336) 226-3835
and
(z) if to the Initial Purchaser, to:
Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated
4 World Financial Center
North Tower
250 Vesey Street
New York, New York 10080
Attention: Syndicate Department
Telecopy No.: (212) 449-1000
or to such other address as such person may have furnished to the other persons
identified in this Section 8(c) in writing in accordance herewith.
(d) Approval of Holders. Whenever the consent or approval of Holders of a
specified percentage of Registrable Securities is required hereunder, the
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 Purchaser
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.
(e) Successors and Assigns. Any person who purchases any Registrable
Securities from the Initial Purchaser shall be deemed, for purposes of this
Agreement, to be an assignee of the Initial Purchaser. This Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties and shall inure to the benefit of and be binding upon each
Holder of any Registrable Securities.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be original and all of which taken together
shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning
hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
(i) Severability. If any term, provision, covenant or restriction of this
Agreement is held to be invalid, illegal, 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 thereby, and the parties hereto shall use their
18
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 being intended that all of the rights and
privileges of the parties shall be enforceable to the fullest extent permitted
by law.
(j) 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 Registrable Securities. Except as provided in
the Purchase 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 Registrable
Securities. This Agreement supersedes all prior agreements and undertakings
among the parties with respect to such registration rights.
(k) Termination. This Agreement and the obligations of the parties
hereunder shall terminate upon the expiration of the Effectiveness Period,
except for any liabilities or obligations under Sections 4, 5 or 6 hereof and
the obligations to make payments of and provide for liquidated damages under
Section 2(e) 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
its terms.
[Remainder of this page intentionally left blank]
19
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
LABORATORY CORPORATION OF AMERICA
HOLDINGS
By: /s/ Bradford T. Smith
-----------------------------
Name: Bradford T. Smith
Title: Executive Vice President,
General Counsel, Corporate
Compliance Officer and
Secretary
Confirmed and accepted as
of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
By: /s/ James Jackson
---------------------------------------------------
Name: James Jackson
Title: Director
EX-5.1
6
oct1901_x0501.txt
EXHIBIT 5.1
October 18, 2001
Laboratory Corporation of America Holdings
358 South Main Street
Burlington, NC 27215
Ladies and Gentlemen:
We have acted as counsel to Laboratory Corporation of America Holdings, a
Delaware corporation (the "Company"), in connection with the filing of a
Registration Statement on Form S-3 (the "Registration Statement") with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended, for the registration of the sale from time to time of (i) up to
$744,000,000 aggregate principal amount at maturity of the Company's Liquid
Yield Option Notes due 2021 (the "Debt Securities") issued pursuant to the
Indenture dated as of September 11, 2001 (the "Indenture") between the Company
and The Bank of New York, as trustee (the "Trustee") and (ii) such
indeterminate number of shares of the Company's common stock, par value $0.10
per share (the "Underlying Securities"), as may be issuable upon conversion of
the Debt Securities. The Debt Securities and the Underlying Securities are
collectively referred to herein as the "Securities". The Company issued the
Debt Securities pursuant to the Purchase Agreement dated as of September 5,
2001 between the Company and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner
& Smith Incorporated. The Securities are to be offered and sold by certain
securityholders of the Company.
We have examined originals or copies, certified or otherwise identified to
our satisfaction, of such documents, corporate records, certificates of public
officials and other instruments as we have deemed necessary for the purposes of
rendering this opinion.
On the basis of the foregoing, we are of the opinion that:
1. The Debt Securities are in the form contemplated by the Indenture,
have been duly authorized by the Company, constitute valid and binding
obligations of the Company, enforceable against the Company in accordance
with their terms, and are entitled to the benefits of the Indenture,
subject to the effect of applicable bankruptcy, insolvency and similar
laws affecting creditors' rights generally and equitable principles of
general applicability.
2. The Debt Securities are convertible at the option of the holder
thereof into Underlying Securities in accordance with the terms of the
Debt Securities and the Indenture; the Underlying Securities have been
duly authorized and reserved for issuance upon such conversion by all
necessary corporate action; such Underlying Securities, when issued upon
such conversion, will be validly issued and will be fully paid and
non-assessable and no holder of such Underlying Securities will be subject
to personal liability by reason of being such a holder.
3. The statements in the prospectus which forms a part of the
Registration Statement under the caption "Certain U.S. Federal Income Tax
Considerations", subject to the limitations and qualifications described
therein and insofar as such statements constitute a summary of legal
matters referred to therein, set forth the material U.S. federal income
tax consequences of the ownership and disposition of the Securities.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York, the federal laws of
the United States of America and the General Corporation Law of the State of
Delaware.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In addition, we consent to the reference to us under
the caption "Legal Matters" in the prospectus which forms a part of the
Registration Statement.
This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
relied upon by or furnished to any other person without our prior written
consent.
Very truly yours,
/s/ Davis Polk & Wardwell
EX-12.1
7
oct1901_x1201.txt
EXHIBIT 12.1
RATIO OF EARNINGS TO FIXED CHARGES
Fiscal Years Ended December 31, Six Months
-------------------------------------------- Ended
1996 1997 1998 1999 2000 June 30, 2001
---- ---- ---- ---- ---- -------------
Income (loss) from continuing operations
before income taxes (188.3) (161.3) 81.5 105.5 207.6 173.9
Fixed Charges:
Interest on long-term and
short-term debt including
amortization of debt expense 71.7 71.7 48.7 41.6 38.5 16.3
Portion of rental expense as can be
demonstrated to be representative
of the interest factor 23.5 22.6 22.5 22.3 23.8 12.6
----- ----- ----- ----- ----- -----
Total fixed charges 95.2 94.3 71.2 63.9 62.3 28.9
----- ----- ----- ----- ----- -----
Earnings before income taxes
and fixed charges (93.1) (67.0) 152.7 169.4 269.9 202.8
----- ----- ----- ----- ----- -----
Ratio of earnings to fixed charges N/A N/A 2.14 2.65 4.33 7.01
===== ===== ===== ===== ===== =====
EX-23.1
8
oct1901_x2301.txt
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this registration
statement on Form S-3 of our report dated February 9, 2001 relating to the
consolidated financial statements and financial statement schedule which
appears in Laboratory Corporation of America Holdings' Annual Report on Form
10-K for the year ended December 31, 2000. We also consent to the reference to
us under the heading "Experts" in such registration statement.
/s/ PricewaterhouseCoopers LLP
Charlotte, North Carolina
October 18, 2001
EX-25.1
9
oct1901_x2501.txt
EXHIBIT 25.1
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
---------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
---------------------------
LABORATORY CORPORATION OF AMERICA HOLDINGS
(Exact name of obligor as specified in its charter)
Delaware 13-3757370
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
358 South Main Street
Burlington, NC 27215
(Address of principal executive offices) (Zip code)
Liquid Yield Option Notes due 2021 ("LYONS")
(Title of the indenture securities)
================================================================================
1. General information. Furnish the following information as to the
Trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
--------------------------------------------------------------------------------
Name Address
--------------------------------------------------------------------------------
Superintendent of Banks of 2 Rector Street, New York, N.Y.
the State of New York 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y.
10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the
Commission, are incorporated herein by reference as an exhibit
hereto, pursuant to Rule 7a-29 under the Trust Indenture Act of 1939
(the "Act") and 17 C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of
powers to exercise corporate trust powers. (Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration Statement
No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1
filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)
7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority.
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 11th day of October, 2001.
THE BANK OF NEW YORK
By: /s/ STACEY POINDEXTER
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Name: STACEY POINDEXTER
Title: ASSISTANT TREASURER
EXHIBIT 7
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Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business March 31, 2001,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS In Thousands
Cash and balances due from depository
institutions:
Noninterest-bearing balances and currency and coin.. $2,811,275
Interest-bearing balances........................... 3,133,222
Securities:
Held-to-maturity securities......................... 147,185
Available-for-sale securities....................... 5,403,923
Federal funds sold and Securities purchased under
agreements to resell................................ 3,378,526
Loans and lease financing receivables:
Loans and leases held for sale................ 74,702
Loans and leases, net of unearned
income...............37,471,621
LESS: Allowance for loan and
lease losses............599,061
Loans and leases, net of unearned
income and allowance.............................. 36,872,560
Trading Assets......................................... 11,757,036
Premises and fixed assets (including capitalized
leases)............................................. 768,795
Other real estate owned................................ 1,078
Investments in unconsolidated subsidiaries and
associated companies................................ 193,126
Customers' liability to this bank on acceptances
outstanding......................................... 592,118
Intangible assets......................................
Goodwill............................................ 1,300,295
Other intangible assets............................. 122,143
Other assets........................................... 3,676,375
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Total assets........................................... $70,232,359
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LIABILITIES
Deposits:
In domestic offices................................. $25,962,242
Noninterest-bearing.......................10,586,346
Interest-bearing..........................15,395,896
In foreign offices, Edge and Agreement
subsidiaries, and IBFs............................ 24,862,377
Noninterest-bearing..........................373,085
Interest-bearing..........................24,489,292
Federal funds purchased and securities sold under
agreements to repurchase............................ 1,446,874
Trading liabilities.................................... 2,373,361
Other borrowed money:
(includes mortgage indebtedness and obligations
under capitalized leases)....... ................... 1,381,512
Bank's liability on acceptances executed and
outstanding......................................... 592,804
Subordinated notes and debentures...................... 1,646,000
Other liabilities...................................... 5,373,065
Total liabilities...................................... $63,658,235
EQUITY CAPITAL
Common stock........................................... 1,135,284
Surplus................................................ 1,008,773
Retained earnings...................................... 4,426,033
Accumulated other comprehensive income......... ....... 4,034
Other equity capital components........................ 0
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Total equity capital................................... 6,574,124
Total liabilities and equity capital................... $70,232,359
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Thomas J. Mastro,
Senior Vice President and Comptroller
We, the undersigned directors, attest to the correctness of this Report
of Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true and correct.
Thomas A. Renyi
Gerald L. Hassell Directors
Alan R. Griffith
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