Exhibit 4.1
PacifiCare Health Systems, Inc.,
Issuer;
the Subsidiary Guarantors named herein;
and
State Street Bank and Trust Company of California, N.A.,
Trustee
Indenture
Dated as of May 21, 2002
10 3/4% Senior Notes due 2009
CROSS-REFERENCE TABLE
TIA Sections Indenture Sections
------------ ------------------
Section 310(a)(1) 7.10
(a)(2) 7.10
(b) 7.03; 7.08
Section 311(a) 7.03
(b) 7.03
Section 312(a) 2.04
(b) 11.02
(c) 11.02
Section 313(a) 7.06
(b)(2) 7.07
(c) 7.05; 7.06; 11.02
(d) 7.06
Section 314(a) 4.17; 4,18; 7.05; 11.02
(a)(4) 4.17; 11.02
(c)(1) 2.03; 10.03; 11.03
(c)(2) 2.03; 10.03; 11.03
(e) 11.04
Section 315(a) 7.01
(b) 7.05; 11.02
(c) 7.01
(d) 7.01
(e) 6.11
Section 316(a)(1)(A) 6.05
(a)(1)(B) 6.04
(b) 6.07
(c) 9.03
Section 317(a)(1) 6.08
(a)(2) 6.09
(b) 2.05
Section 318(a) 11.01
(c) 11.01
Note: The Cross-Reference Table shall not for any purpose be deemed to be a
part of this Indenture.
TABLE OF CONTENTS
Page
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ARTICLE ONE
SECTION 1.01. Definitions............................................. 1
SECTION 1.02. Incorporation by Reference of Trust Indenture Act....... 24
SECTION 1.03. Rules of Construction................................... 25
ARTICLE TWO
SECTION 2.01. Form and Dating......................................... 25
SECTION 2.02. Restrictive Legends..................................... 26
SECTION 2.03. Execution, Authentication and Denominations............. 28
SECTION 2.04. Registrar and Paying Agent.............................. 29
SECTION 2.05. Paying Agent to Hold Money in Trust..................... 29
SECTION 2.06. Transfer and Exchange................................... 30
SECTION 2.07. Book-Entry Provisions for Global Notes.................. 31
SECTION 2.08. Special Transfer Provisions............................. 32
SECTION 2.09. Replacement Notes....................................... 35
SECTION 2.10. Outstanding Notes....................................... 35
SECTION 2.11. Temporary Notes......................................... 36
SECTION 2.12. Cancellation............................................ 36
SECTION 2.13. CUSIP Numbers........................................... 36
SECTION 2.14. Defaulted Interest...................................... 37
SECTION 2.15. Issuance of Additional Notes............................ 37
SECTION 2.16. Registration Default.................................... 37
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Note: The Table of Contents shall not for any purposes be deemed to be a part
of the Indenture.
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ARTICLE THREE
SECTION 3.01. Right of Redemption..................................... 37
SECTION 3.02. Notices to Trustee...................................... 38
SECTION 3.03. Selection of Notes to Be Redeemed....................... 38
SECTION 3.04. Notice of Redemption.................................... 39
SECTION 3.05. Effect of Notice of Redemption.......................... 39
SECTION 3.06. Deposit of Redemption Price............................. 40
SECTION 3.07. Payment of Notes Called for Redemption.................. 40
SECTION 3.08. Notes Redeemed in Part.................................. 40
ARTICLE FOUR
SECTION 4.01. Payment of Notes........................................ 40
SECTION 4.02. Maintenance of Office or Agency......................... 41
SECTION 4.03. Limitation on Indebtedness.............................. 41
SECTION 4.04. Limitation on Restricted Payments....................... 44
SECTION 4.05. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries....................... 48
SECTION 4.06. Limitation on the Issuance and Sale of Capital Stock of
Restricted Subsidiaries.............................. 50
SECTION 4.07. Limitation on Issuances of Guarantees by Restricted
Subsidiaries............................................ 51
SECTION 4.08. Limitation on Transactions with Stockholders and
Affiliates.............................................. 52
SECTION 4.09. Limitation on Liens..................................... 53
SECTION 4.10. Limitation on Sale-Leaseback Transactions............... 54
SECTION 4.11. Limitation on Asset Sales............................... 55
SECTION 4.12. Repurchase of Notes upon a Change of Control............ 56
SECTION 4.13. Existence............................................... 56
SECTION 4.14. Payment of Taxes and Other Claims....................... 57
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SECTION 4.15. Maintenance of Properties and Insurance................. 57
SECTION 4.16. Notice of Defaults...................................... 57
SECTION 4.17. Compliance Certificates................................. 57
SECTION 4.18. Commission Reports and Reports to Holders............... 58
SECTION 4.19. Waiver of Stay, Extension or Usury Laws................. 58
ARTICLE FIVE
SECTION 5.01. When Company May Merge, Etc............................. 59
SECTION 5.02. Successor Substituted................................... 60
ARTICLE SIX
SECTION 6.01. Events of Default....................................... 61
SECTION 6.02. Acceleration............................................ 62
SECTION 6.03. Other Remedies.......................................... 63
SECTION 6.04. Waiver of Past Defaults................................. 63
SECTION 6.05. Control by Majority..................................... 63
SECTION 6.06. Limitation on Suits..................................... 63
SECTION 6.07. Rights of Holders to Receive Payment.................... 64
SECTION 6.08. Collection Suit by Trustee.............................. 64
SECTION 6.09. Trustee May File Proofs of Claim........................ 64
SECTION 6.10. Priorities.............................................. 65
SECTION 6.11. Undertaking for Costs................................... 65
SECTION 6.12. Restoration of Rights and Remedies...................... 65
SECTION 6.13. Rights and Remedies Cumulative.......................... 65
SECTION 6.14. Delay or Omission Not Waiver............................ 66
ARTICLE SEVEN
SECTION 7.01. General................................................. 66
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SECTION 7.02. Certain Rights of Trustee............................... 67
SECTION 7.03. Individual Rights of Trustee............................ 68
SECTION 7.04. Trustee's Disclaimer.................................... 68
SECTION 7.05. Notice of Default....................................... 68
SECTION 7.06. Reports by Trustee to Holders........................... 68
SECTION 7.07. Compensation and Indemnity.............................. 68
SECTION 7.08. Replacement of Trustee.................................. 69
SECTION 7.09. Successor Trustee by Xxxxxx, Etc........................ 70
SECTION 7.10. Eligibility............................................. 70
SECTION 7.11. Money Held in Trust..................................... 70
ARTICLE EIGHT
SECTION 8.01. Termination of Company's Obligations.................... 71
SECTION 8.02. Defeasance and Discharge of Indenture................... 71
SECTION 8.03. Defeasance of Certain Obligations....................... 74
SECTION 8.04. Defeasance and Certain Other Events of Default.......... 75
SECTION 8.04. Application of Trust Money.............................. 75
SECTION 8.05. Repayment to Company.................................... 76
SECTION 8.06. Reinstatement........................................... 76
ARTICLE NINE
SECTION 9.01. Without Consent of Holders.............................. 76
SECTION 9.02. With Consent of Holders................................. 77
SECTION 9.03. Revocation and Effect of Consent........................ 78
SECTION 9.04. Notation on or Exchange of Notes........................ 78
SECTION 9.05. Trustee to Sign Amendments, Etc......................... 78
SECTION 9.06. Conformity with Trust Indenture Act..................... 79
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ARTICLE TEN
SECTION 10.01. Note Guarantees........................................ 79
SECTION 10.02. Limitation on Subsidiary Guarantor Liability........... 80
SECTION 10.03. Releases Following Certain Events...................... 80
ARTICLE ELEVEN
SECTION 11.01. Trust Indenture Act of 1939............................ 81
SECTION 11.02. Notices................................................ 81
SECTION 11.03. Certificate and Opinion as to Conditions Precedent..... 82
SECTION 11.04. Statements Required in Certificate or Opinion.......... 82
SECTION 11.05. Rules by Trustee, Paying Agent or Registrar............ 83
SECTION 10.06. Payment Date Other Than a Business Day................. 83
SECTION 11.07. No Personal Liability of Directors, Officers, Employees
and Stockholders....................................... 83
SECTION 11.08. Governing Law.......................................... 83
SECTION 11.09. No Adverse Interpretation of Other Agreements.......... 83
SECTION 11.10. No Recourse Against Others............................. 83
SECTION 11.11. Successors............................................. 84
SECTION 11.12. Duplicate Originals.................................... 84
SECTION 10.13. Separability........................................... 84
SECTION 11.14. Table of Contents, Headings, Etc....................... 84
EXHIBIT A Form of Note..................................................... A-1
EXHIBIT B Form of Certificate.............................................. B-1
EXHIBIT C Form of Certificate to Be Delivered in Connection with
Transfers to Non-QIB Accredited Investors........................ C-1
EXHIBIT D Form of Certificate to Be Delivered in Connection with Transfers
Pursuant to Regulation S......................................... D-1
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INDENTURE, dated as of May 21, 2002 among PacifiCare Health
Systems, Inc., a Delaware corporation (the "Company"); PacifiCare Health Plan
Administrators, Inc., an Indiana corporation; PacifiCare eHoldings, Inc., a
California corporation; Rx-Connect, Inc., a California corporation and SeniorCo,
Inc., a Delaware corporation (collectively, the "Initial Subsidiary
Guarantors"); and State Street Bank and Trust Company of California, N.A., a
national banking association, trustee (the "Trustee").
RECITALS
The Company and the Subsidiary Guarantors have duly authorized
the execution and delivery of this Indenture to provide for the issuance
initially of up to $500 million aggregate principal amount of the Company's 10
3/4% Senior Notes due 2009 (the "Notes") issuable as provided in this Indenture.
All things necessary to make this Indenture a valid agreement of the Company and
the Subsidiary Guarantors, in accordance with its terms, have been done, and the
Company and the Subsidiary Guarantors have done all things necessary to make the
Notes and the Note Guarantees (as defined herein), when executed by the Company
and the Subsidiary Guarantors, as applicable, and authenticated and delivered by
the Trustee hereunder and duly issued by the Company, valid obligations of the
Company and each Subsidiary Guarantor as hereinafter provided.
This Indenture is subject to, and shall be governed by, the
provisions of the Trust Indenture Act of 1939, as amended, that are required to
be a part of and to govern indentures qualified under the Trust Indenture Act of
1939, as amended.
AND THIS INDENTURE FURTHER WITNESSETH
For and in consideration of the premises and the purchase of the
Notes by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders, as follows.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acquired Indebtedness" means Indebtedness of a Person existing
at the time such Person becomes a Restricted Subsidiary or Indebtedness of a
Restricted Subsidiary assumed in connection with an Asset Acquisition by such
Restricted Subsidiary; provided such Indebtedness was not Incurred in connection
with or in contemplation of such Person becoming a Restricted Subsidiary or such
Asset Acquisition.
"Adjusted Consolidated Net Income" means, for any period, the
aggregate net income (or loss) of the Company and its Restricted Subsidiaries
for such period determined in conformity with GAAP; provided that the following
items shall be excluded in computing Adjusted Consolidated Net Income (without
duplication):
1
(1) the net income (or loss) of any Person that is not a
Restricted Subsidiary, except to the extent of the amount of dividends
or other distributions actually paid to the Company or any of its
Restricted Subsidiaries by such Person;
(2) the net income (or loss) of any Person accrued prior to the
date it becomes a Restricted Subsidiary or is merged into or
consolidated with the Company or any of its Restricted Subsidiaries or
all or substantially all of the property and assets of such Person are
acquired by the Company or any of its Restricted Subsidiaries;
(3) the net income of any Restricted Subsidiary (other than a
Subsidiary Guarantor) to the extent that the declaration or payment of
dividends or similar distributions by such Restricted Subsidiary of such
net income is not at the time permitted by the operation of the terms of
its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to such Restricted
Subsidiary;
(4) any gains or losses (on an after-tax basis) attributable to
sales of assets outside the ordinary course of business of the Company
and its Restricted Subsidiaries;
(5) solely for purposes of calculating the amount of Restricted
Payments that may be made pursuant to clause (C) of the first paragraph
of Section 4.04, any amount paid or accrued as dividends on Preferred
Stock of the Company owned by Persons other than the Company and any of
its Restricted Subsidiaries;
(6) all non-cash long lived asset impairment charges; and
(7) all extraordinary gains and, solely for purposes of
calculating the Interest Coverage Ratio, extraordinary losses.
"Adjusted Consolidated Net Tangible Assets" means the total
amount of assets of the Company and its Restricted Subsidiaries (less applicable
depreciation, amortization and other valuation reserves), except to the extent
resulting from write-ups of capital assets (excluding write-ups in connection
with accounting for acquisitions in conformity with GAAP), after deducting
therefrom (1) all current liabilities of the Company and its Restricted
Subsidiaries (excluding intercompany items) and (2) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles, all as set forth on the most recent quarterly or annual
consolidated balance sheet of the Company and its Restricted Subsidiaries,
prepared in conformity with GAAP and filed with the Commission or provided to
the Trustee.
"Affiliate" means, as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
2
"Agent" means any Registrar, Co-Registrar, Paying Agent or
authenticating agent.
"Agent Members" has the meaning provided in Section 2.07(a).
"Applicable Premium" means, with respect to any Note on any
Redemption Date, the greater of (i) 1.0% of the principal amount of such Note or
(ii) the excess of (A) the present value at such Redemption Date of (1) the
Redemption Price of such Note at June 1, 2006 (such Redemption Price being set
forth in Section 3.01(a)) plus (2) all required interest payments due on such
Note through June 1, 2006 (excluding accrued but unpaid interest), computed
using a discount rate equal to the Treasury Rate on such Redemption Date plus 50
basis points over (B) the principal amount of such Note.
"Asset Acquisition" means (1) an investment by the Company or any
of its Restricted Subsidiaries in any other Person pursuant to which such Person
shall become a Restricted Subsidiary or shall be merged into or consolidated
with the Company or any of its Restricted Subsidiaries; provided that such
Person's primary business is related, ancillary or complementary (including any
reasonable extension, development or expansion) to the businesses of the Company
and its Restricted Subsidiaries on the date of such investment, including
consumer services or (2) an acquisition by the Company or any of its Restricted
Subsidiaries of the property and assets of any Person other than the Company or
any of its Restricted Subsidiaries that constitute substantially all of a
division or line of business of such Person; provided that the property and
assets acquired are related, ancillary or complementary (including any
reasonable extension, development or expansion) to the businesses of the Company
and its Restricted Subsidiaries on the date of such acquisition, including
consumer services.
"Asset Disposition" means (a) the sale or other disposition by
the Company or any of its Restricted Subsidiaries (other than to the Company or
another Restricted Subsidiary) of (1) all or substantially all of the Capital
Stock of any Restricted Subsidiary or (2) all or substantially all of the assets
that constitute a division or line of business of the Company or any of its
Restricted Subsidiaries or (b) the cessation of operations of any division or
line of business of the Company or any of its Restricted Subsidiaries.
"Asset Sale" means any sale, transfer or other disposition
(including by way of merger, consolidation or sale-leaseback transaction) in one
transaction or a series of related transactions by the Company or any of its
Restricted Subsidiaries to any Person other than the Company or any of its
Restricted Subsidiaries of:
(1) all or any of the Capital Stock of any Restricted Subsidiary,
(2) all or substantially all of the property and assets of an
operating unit or business of the Company or any of its Restricted
Subsidiaries, or
(3) any other property and assets of the Company or any of its
Restricted Subsidiaries outside the ordinary course of business of the
Company or such Restricted Subsidiary, and,
3
in each case, that is not governed by Article Five of this Indenture;
provided that "Asset Sale" shall not include:
(a) sales or other dispositions of inventory, receivables and
other current assets,
(b) sales, transfers or other dispositions of assets constituting
a Permitted Investment or Restricted Payment permitted to be made
pursuant to Section 4.04,
(c) sales, transfers or other dispositions of assets with a fair
market value not in excess of $5.0 million in any transaction or series
of related transactions,
(d) any sale, transfer, assignment or other disposition of any
property or equipment that has become damaged, worn out, obsolete or
otherwise unsuitable for use in connection with the business of the
Company or its Restricted Subsidiaries, or
(e) a Lien on any property or assets permitted by this Indenture.
"Average Life" means, at any date of determination with respect
to any debt security, the quotient obtained by dividing (1) the sum of the
products of (a) the number of years from such date of determination to the dates
of each successive scheduled principal payment of such debt security and (b) the
amount of such principal payment by (2) the sum of all such principal payments.
"Board of Directors" means the Board of Directors of the Company
or any committee of such Board of Directors duly authorized to act under this
Indenture.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means any day except a Saturday, Sunday or other
day on which commercial banks in The City of New York, or in the city of the
Corporate Trust Office of the Trustee, are authorized by law to close.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's equity, whether outstanding on
the Closing Date or issued thereafter, including, without limitation, all Common
Stock and Preferred Stock.
"Capitalized Lease" means, as applied to any Person, any lease of
any property (whether real, personal or mixed) of which the discounted present
value of the rental obligations of such Person as lessee, in conformity with
GAAP, is required to be capitalized on the balance sheet of such Person.
"Capitalized Lease Obligations" means the discounted present
value of the rental obligations under a Capitalized Lease.
4
"Change of Control" means such time as:
(1) a "person" or "group" (within the meaning of Sections 13(d)
and 14(d)(2) of the Exchange Act) becomes the ultimate "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act) of more than
40% of the total voting power of the Voting Stock of the Company on a
fully diluted basis; or
(2) individuals who on the Closing Date constitute the Board of
Directors (together with any new directors whose election by the Board
of Directors or whose nomination by the Board of Directors for election
by the Company's stockholders was approved by a vote of at least a
majority of the members of the Board of Directors then in office who
either were members of the Board of Directors on the Closing Date or
whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the members of the
Board of Directors then in office.
"Closing Date" means the date on which the Notes are originally
issued under this Indenture.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the TIA, then the body performing
such duties at such time.
"Commodity Agreement" means any futures or forward contract,
commodity swap agreement, commodity option agreement or other similar agreement
or arrangement.
"Common Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's equity, other than Preferred
Stock of such Person, whether outstanding on the Closing Date or issued
thereafter, including, without limitation, all series and classes of such common
stock.
"Company" means the party named as such in the first paragraph of
this Indenture until a successor replaces it pursuant to Article Five of this
Indenture and thereafter means the successor.
"Company Order" means a written request or order signed in the
name of the Company by its Chairman, a Vice Chairman, its President, Executive
Vice President or a Vice President, its Chief Financial Officer, its Controller,
an Assistant Controller, by its Treasurer, an Assistant Treasurer, its Secretary
or an Assistant Secretary and delivered to the Trustee.
"Consolidated EBITDA" means, for any period, Adjusted
Consolidated Net Income for such period plus, to the extent such amount was
deducted in calculating such Adjusted Consolidated Net Income:
(1) Consolidated Interest Expense,
(2) income taxes,
5
(3) depreciation expense,
(4) amortization expense, and
(5) all other non-cash items reducing Adjusted Consolidated Net
Income (other than items that will require cash payments and for which
an accrual or reserve is, or is required by GAAP to be, made), less all
non-cash items increasing Adjusted Consolidated Net Income, all as
determined on a consolidated basis for the Company and its Restricted
Subsidiaries in conformity with GAAP;
provided that, if any Restricted Subsidiary is not a Wholly Owned Restricted
Subsidiary, Consolidated EBITDA shall be reduced (to the extent not otherwise
reduced in accordance with GAAP) by an amount equal to (A) the amount of the
Adjusted Consolidated Net Income attributable to such Restricted Subsidiary
multiplied by (B) the percentage ownership interest in the income of such
Restricted Subsidiary not owned on the last day of such period by the Company or
any of its Restricted Subsidiaries.
"Consolidated Interest Expense" means, (without duplication) for
any period, the aggregate amount of interest in respect of Indebtedness
(including, without limitation, amortization of original issue discount on any
Indebtedness and the interest portion of any deferred payment obligation,
calculated in accordance with the effective interest method of accounting; all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing; the net costs associated with
Interest Rate Agreements; and Indebtedness that is Guaranteed or secured by the
Company or any of its Restricted Subsidiaries) and all but the principal
component of rentals in respect of Capitalized Lease Obligations paid, accrued
or scheduled to be paid or to be accrued by the Company and its Restricted
Subsidiaries during such period; excluding, however, (1) any amount of such
interest of any Restricted Subsidiary if the net income of such Restricted
Subsidiary is excluded in the calculation of Adjusted Consolidated Net Income
pursuant to clause (3) of the definition thereof (but only in the same
proportion as the net income of such Restricted Subsidiary is excluded from the
calculation of Adjusted Consolidated Net Income pursuant to clause (3) of the
definition thereof) and (2) any premiums, fees and expenses (and any
amortization thereof) payable in connection with the Transaction, all as
determined on a consolidated basis (without taking into account Unrestricted
Subsidiaries) in conformity with GAAP.
"Consolidated Net Worth" means, at any date of determination,
stockholders' equity as set forth on the most recently available quarterly or
annual consolidated balance sheet of the Company and its Restricted Subsidiaries
(which shall be as of a date not more than 120 days prior to the date of such
computation, and which shall not take into account Unrestricted Subsidiaries),
plus, to the extent not included, any Preferred Stock of the Company, less any
amounts attributable to Disqualified Stock or any equity security convertible
into or exchangeable for Indebtedness, the cost of treasury stock and the
principal amount of any promissory notes receivable from the sale of the Capital
Stock of the Company or any of its Restricted Subsidiaries, each item to be
determined in conformity with GAAP (excluding the effects of foreign currency
exchange adjustments under Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 52).
6
"Corporate Trust Office" means the office of the Trustee at which
the corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date of this Indenture,
located at 000 Xxxx 0xx Xxxxxx, 00xx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000;
Attention: Corporate Trust Department.
"Credit Agreement" means the Amended and Restated Credit
Agreement dated as of August 20, 2001, among the Company, the Subsidiaries of
the Company party thereto, and the lenders party thereto, together with any
agreements, instruments and documents executed or delivered pursuant to or in
connection with such credit agreement, as such credit agreement or such
agreements, instruments or documents may be amended, supplemented, extended,
restated, renewed or otherwise modified from time to time and any refinancing,
replacement or substitution thereof or therefor, or of or for any previous
refinancing, replacement or substitution.
"Currency Agreement" means any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement.
"Default" means any event that is, or after notice or passage of
time or both would be, an Event of Default.
"Depositary" means The Depository Trust Company, its nominees,
and their respective successors.
"Disqualified Stock" means any class or series of Capital Stock
of any Person that by its terms or otherwise is (1) required to be redeemed
prior to the Stated Maturity of the Notes, (2) redeemable at the option of the
holder of such class or series of Capital Stock at any time prior to the Stated
Maturity of the Notes or (3) convertible into or exchangeable for Capital Stock
referred to in clause (1) or (2) above or Indebtedness having a scheduled
maturity prior to the Stated Maturity of the Notes; provided that any Capital
Stock that would not constitute Disqualified Stock but for provisions thereof
giving holders thereof the right to require such Person to repurchase or redeem
such Capital Stock upon the occurrence of an "asset sale" or "change of control"
occurring prior to the Stated Maturity of the Notes shall not constitute
Disqualified Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are no more favorable to the holders of such
Capital Stock than the provisions contained in Sections 4.11 and 4.12 and such
Capital Stock specifically provides that such Person will not repurchase or
redeem any such stock pursuant to such provision prior to the Company's
repurchase of such Notes as are required to be repurchased pursuant to Sections
4.11 and 4.12.
"Event of Default" has the meaning provided in Section 6.01.
"Excess Proceeds" has the meaning provided in Section 4.11.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" means any securities of the Company containing
terms identical to the Notes (except that such Exchange Notes shall be
registered under the Securities Act) that are issued and exchanged for the Notes
pursuant to the Registration Rights Agreement and this Indenture.
7
"fair market value" means the price that would be paid in an
arm's-length transaction between an informed and willing seller under no
compulsion to sell and an informed and willing buyer under no compulsion to buy;
provided that with respect to any asset or assets in any related transaction
with a fair market value in excess of $5 million in the aggregate, the fair
market value shall be determined in good faith by the Board of Directors, whose
determination shall be conclusive if evidenced by a Board Resolution.
"Foreign Subsidiary" means any Subsidiary of the Company that is
an entity which is a controlled foreign corporation under Section 957 of the
Internal Revenue Code.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the Closing Date, including, without
limitation, those set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as approved by a significant segment
of the accounting profession. All ratios and computations contained or referred
to in this Indenture shall be computed in conformity with GAAP applied on a
consistent basis, except that calculations made for purposes of determining
compliance with the terms of the covenants and with other provisions of this
Indenture shall be made without giving effect to (1) the amortization of any
expenses incurred in connection with the Transaction and (2) except as otherwise
provided, the amortization of any amounts required or permitted by Accounting
Principles Board Opinion Nos. 16 and 17.
"Global Notes" has the meaning provided in Section 2.01.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any other Person
and, without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (1) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness of
such other Person (whether arising by virtue of partnership arrangements, or by
agreements to keep-well, to purchase assets, goods, securities or services
(unless such purchase arrangements are on arm's-length terms and are entered
into in the ordinary course of business), to take-or-pay, or to maintain
financial statement conditions or otherwise) or (2) entered into for purposes of
assuring in any other manner the obligee of such Indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Guaranteed Indebtedness" has the meaning provided in Section
4.07.
"Holder" or "Noteholder" means the registered holder of any Note.
"Incur" means, with respect to any Indebtedness, to incur,
create, issue, assume, Guarantee or otherwise become liable for or with respect
to, or become responsible for, the payment of, contingently or otherwise, such
Indebtedness; provided that (1) any Indebtedness of a Person existing at the
time such Person becomes a Restricted Subsidiary will be deemed to be incurred
by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary and
(2)
8
neither the accrual of interest nor the accretion of original issue discount nor
the payment of interest in the form of additional Indebtedness shall be
considered an Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person at any date of
determination (without duplication):
(1) all indebtedness of such Person for borrowed money;
(2) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments;
(3) all obligations of such Person in respect of bankers'
acceptances, letters of credit or other similar instruments (including
reimbursement obligations with respect thereto, but excluding
obligations with respect to letters of credit (including trade letters
of credit and letters of credit in respect of workers' compensation,
self insurance or banker's acceptance) securing obligations (other than
obligations described in (1) or (2) above or (5), (6) or (7) below)
entered into in the ordinary course of business of such Person to the
extent such letters of credit are not drawn upon or, if drawn upon, to
the extent such drawing is reimbursed no later than the third Business
Day following receipt by such Person of a demand for reimbursement);
(4) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services, which purchase price is due more
than six months after the date of placing such property in service or
taking delivery and title thereto or the completion of such services,
except Trade Payables;
(5) all Capitalized Lease Obligations;
(6) all Indebtedness of other Persons secured by a Lien on any
asset of such Person, whether or not such Indebtedness is assumed by
such Person; provided that the amount of such Indebtedness shall be the
lesser of (A) the fair market value of such asset at such date of
determination and (B) the amount of such Indebtedness;
(7) all Indebtedness of other Persons Guaranteed by such Person
to the extent such Indebtedness is Guaranteed by such Person; and
(8) to the extent not otherwise included in this definition,
obligations under Commodity Agreements, Currency Agreements and Interest
Rate Agreements (other than Commodity Agreements, Currency Agreements
and Interest Rate Agreements entered into solely to protect the Company
or its Restricted Subsidiaries against fluctuations in commodity prices,
foreign currency exchange rates or interest rates and that do not
increase the Indebtedness of the obligor outstanding at any time other
than as a result of fluctuations in commodity prices, foreign currency
exchange rates or interest rates or by reason of fees, indemnities and
compensation payable thereunder), in each case above (except clauses
(3), (6), (7) and (8)) to the extent such item would appear as a
liability on a balance sheet of such Person prepared in accordance with
GAAP.
9
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and,
with respect to contingent obligations, the maximum liability upon the
occurrence of the contingency giving rise to the obligation, provided
(A) that the amount outstanding at any time of any Indebtedness
issued with original issue discount is the face amount of such
Indebtedness less the remaining unamortized portion of the
original issue discount of such Indebtedness at such time as
determined in conformity with GAAP,
(B) that money borrowed and set aside at the time of the Incurrence
of any Indebtedness in order to prefund the payment of the
interest on such Indebtedness shall not be deemed to be
"Indebtedness" so long as such money is held to secure the
payment of such interest and
(C) that Indebtedness shall not include:
(v) any liability for federal, state, local or other
taxes,
(w) performance, surety or appeal bonds, completion
guarantees or warranty or contractual service obligations
provided in the ordinary course of business,
(x) obligations resulting from the endorsement of
negotiable instruments for collection in the ordinary course of
business,
(y) any liability resulting from the honoring by a bank or
other financial institution of a check, draft or similar
instrument inadvertently drawn against insufficient funds in the
ordinary course of business; provided, however, such liability is
extinguished within 5 Business Days, or
(z) agreements providing for indemnification, adjustment
of purchase price or similar obligations, or Guarantees or
letters of credit, surety bonds or performance bonds securing any
obligations of the Company or any of its Restricted Subsidiaries
pursuant to such agreements, in any case Incurred in connection
with the disposition of any business, assets or Restricted
Subsidiary (other than Guarantees of Indebtedness Incurred by any
Person acquiring all or any portion of such business, assets or
Restricted Subsidiary for the purpose of financing such
acquisition), so long as the principal amount does not exceed the
gross proceeds actually received by the Company or any Restricted
Subsidiary in connection with such disposition.
"Indenture" means this Indenture as originally executed or as it
may be amended or supplemented from time to time by one or more indentures
supplemental to this Indenture entered into pursuant to the applicable
provisions of this Indenture.
"Initial Subsidiary Guarantors" means PacifiCare Health Plan
Administrators, Inc., PacifiCare eHoldings, Inc., SeniorCo, Inc. and Rx-Connect,
Inc.
10
"Institutional Accredited Investor" means an institution that is
an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act.
"Interest Coverage Ratio" means, on any Transaction Date, the
ratio of (1) the aggregate amount of Consolidated EBITDA for the then most
recent four fiscal quarters prior to such Transaction Date for which reports
have been filed with the Commission or provided to the Trustee (the "Four
Quarter Period") to (2) the aggregate Consolidated Interest Expense during such
Four Quarter Period. In making the foregoing calculation:
(A) pro forma effect shall be given to any Indebtedness Incurred
or repaid during the period (the "Reference Period") commencing on the
first day of the Four Quarter Period and ending on the Transaction Date
(other than Indebtedness Incurred or repaid under a revolving credit or
similar arrangement to the extent of the commitment thereunder (or under
any predecessor revolving credit or similar arrangement) in effect on
the last day of such Four Quarter Period, in each case as if such
Indebtedness had been Incurred or repaid on the first day of such
Reference Period;
(B) Consolidated Interest Expense attributable to interest on any
Indebtedness (whether existing or being Incurred) computed on a pro
forma basis and bearing a floating interest rate shall be computed as if
the rate in effect on the Transaction Date (taking into account any
Interest Rate Agreement applicable to such Indebtedness if such Interest
Rate Agreement has a remaining term in excess of 12 months or, if
shorter, at least equal to the remaining term of such Indebtedness) had
been the applicable rate for the entire period;
(C) pro forma effect shall be given to Asset Dispositions and
Asset Acquisitions (including giving pro forma effect to the application
of proceeds of any Asset Disposition and any increase or decrease, as
the case may be, in the Consolidated EBITDA or Consolidated Interest
Expense attributable to such Asset Acquisition or Asset Disposition, as
the case may be) that occur during such Reference Period as if they had
occurred and such proceeds had been applied on the first day of such
Reference Period; and
(D) pro forma effect shall be given to asset dispositions and
asset acquisitions (including giving pro forma effect to the application
of proceeds of any asset disposition) that have been made by any Person
that has become a Restricted Subsidiary or has been merged with or into
the Company or any Restricted Subsidiary during such Reference Period
and that would have constituted Asset Dispositions or Asset Acquisitions
had such transactions occurred when such Person was a Restricted
Subsidiary as if such asset dispositions or asset acquisitions were
Asset Dispositions or Asset Acquisitions that occurred on the first day
of such Reference Period; provided that to the extent that clause (C) or
(D) of this sentence requires that pro forma effect be given to an Asset
Acquisition or Asset Disposition, such pro forma calculation shall be
based upon the four full fiscal quarters immediately preceding the
Transaction Date of the Person, or division or line of business of the
Person, that is acquired or disposed for which financial information is
available.
11
For purposes of this definition, whenever pro forma effect is to
be given to a transaction, the pro forma calculations shall be made in good
faith by a responsible financial or accounting officer of the Company. Interest
on Indebtedness that may be optionally determined at an interest rate based upon
a factor of prime or similar rate, eurocurrency interbank offered rate, or other
rate, shall be deemed to have been based upon the rate actually chosen, or, if
none, then based upon such optional rate chosen as the Company may designate.
"Interest Payment Date" means each semiannual interest payment
date on June 1 and December 1 of each year, commencing December 1, 2002.
"Interest Rate Agreement" means any interest rate protection
agreement, interest rate future agreement, interest rate option agreement,
interest rate swap agreement, interest rate cap agreement, interest rate collar
agreement, interest rate floor agreement, interest rate hedge agreement, option
or future contract or other similar agreement or arrangement.
"Investment" in any Person means any direct or indirect advance,
loan or other extension of credit (including, without limitation, by way of
Guarantee or similar arrangement; but excluding advances to customers or
suppliers in the ordinary course of business that are, in conformity with GAAP,
recorded as accounts receivable, prepaid expenses or deposits on the balance
sheet of the Company or its Restricted Subsidiaries and endorsements for
collection or deposit arising in the ordinary course of business) or capital
contribution to (by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others), or any
purchase or acquisition of Capital Stock, bonds, notes, debentures or other
similar instruments issued by, such Person and shall include (1) the designation
of a Restricted Subsidiary as an Unrestricted Subsidiary and (2) the retention
of the Capital Stock (or any other Investment) by the Company or any of its
Restricted Subsidiaries, of (or in) any Person that has ceased to be a
Restricted Subsidiary, including without limitation, by reason of any
transaction permitted by clause (3) or (4) of Section 4.06. For purposes of the
definition of "Unrestricted Subsidiary" and Section 4.04, (a) the amount of or a
reduction in an Investment shall be equal to the fair market value thereof at
the time such Investment is made or reduced or deemed made or reduced and (b) in
the event the Company or a Restricted Subsidiary makes an Investment by
transferring assets to any Person and as part of such transaction receives Net
Cash Proceeds, the amount of such Investment shall be the fair market value of
the assets less the amount of Net Cash Proceeds so received, provided the Net
Cash Proceeds are applied in accordance with clause (A), (B) or (C) of Section
4.11.
"Legended Offshore Global Notes" has the meaning provided in
Section 2.01.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including, without limitation, any
conditional sale or other title retention agreement or lease in the nature
thereof or any agreement to give any security interest).
"Moody's" means Xxxxx'x Investors Service, Inc. and its
successors.
"Net Cash Proceeds" means:
(a) with respect to any Asset Sale, the proceeds of such Asset
Sale in the form of cash or cash equivalents, including payments in
respect of deferred payment
12
obligations (to the extent corresponding to the principal, but not
interest, component thereof) when received in the form of cash or cash
equivalents and proceeds from the conversion of other property received
when converted to cash or cash equivalents, net of
(1) brokerage commissions and other fees and expenses
(including fees and expenses of accountants, counsel, investment
bankers and other professionals) related to such Asset Sale;
(2) provisions for all taxes (whether or not such taxes
will actually be paid or are payable) as a result of such Asset
Sale without regard to the consolidated results of operations of
the Company and its Restricted Subsidiaries, taken as a whole;
(3) payments made to repay Indebtedness or any other
obligation outstanding at the time of such Asset Sale that either
(x) is secured by a Lien on the property or assets sold or (y) is
required to be paid as a result of such sale; and
(4) appropriate amounts to be provided by the Company or
any Restricted Subsidiary as a reserve against any liabilities
associated with such Asset Sale, including, without limitation,
pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities
under any indemnification obligations associated with such Asset
Sale, all as determined in conformity with GAAP; and
(b) with respect to any issuance or sale of Capital Stock, the
proceeds of such issuance or sale in the form of cash or cash
equivalents, including payments in respect of deferred payment
obligations (to the extent corresponding to the principal, but not
interest, component thereof) when received in the form of cash or cash
equivalents and proceeds from the conversion of other property received
when converted to cash or cash equivalents, net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees incurred in
connection with such issuance or sale and net of taxes paid or payable
as a result thereof.
"Non-U.S. Person" means a person who is not a "U.S. person" (as
defined in Regulation S).
"Note Guarantee" means any Guarantee of the obligations of the
Company under this Indenture and the Notes by any Subsidiary Guarantor.
"Notes" means any of the securities, as defined in the first
paragraph of the recitals hereof, that are authenticated and delivered under
this Indenture. For all purposes of this Indenture, the term "Notes" shall
include the Notes initially issued on the Closing Date, any Exchange Notes to be
issued and exchanged for any Notes pursuant to the Registration Rights Agreement
and this Indenture and any other Notes issued after the Closing Date under this
Indenture. For purposes of this Indenture, all Notes shall vote together as one
series of Notes under this Indenture.
13
"Offer to Purchase" means an offer to purchase Notes by the
Company from the Holders commenced by mailing a notice to the Trustee and each
Holder stating:
(1) the covenant pursuant to which the offer is being made and
that all Notes validly tendered will be accepted for payment on a pro
rata basis;
(2) the purchase price and the date of purchase (which shall be a
Business Day no earlier than 30 days nor later than 60 days from the
date such notice is mailed) (the "Payment Date");
(3) that any Note not tendered will continue to accrue interest
pursuant to its terms;
(4) that, unless the Company defaults in the payment of the
purchase price, any Note accepted for payment pursuant to the Offer to
Purchase shall cease to accrue interest on and after the Payment Date;
(5) that Holders electing to have a Note purchased pursuant to
the Offer to Purchase will be required to surrender the Note, together
with the form entitled "Option of the Holder to Elect Purchase" on the
reverse side of the Note completed, to the Paying Agent at the address
specified in the notice prior to the close of business on the Business
Day immediately preceding the Payment Date;
(6) that Holders will be entitled to withdraw their election if
the Paying Agent receives, not later than the close of business on the
third Business Day immediately preceding the Payment Date, a telegram,
facsimile transmission or letter setting forth the name of such Holder,
the principal amount of Notes delivered for purchase and a statement
that such Xxxxxx is withdrawing his election to have such Notes
purchased; and
(7) that Holders whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered; provided that each Note purchased and
each new Note issued shall be in a principal amount of $1,000 or
integral multiples of $1,000.
On the Payment Date, the Company shall (a) accept for payment on
a pro rata basis Notes or portions thereof tendered pursuant to an Offer to
Purchase; (b) deposit with the Paying Agent money sufficient to pay the purchase
price of all Notes or portions thereof so accepted; and (c) deliver, or cause to
be delivered, to the Trustee all Notes or portions thereof so accepted together
with an Officers' Certificate specifying the Notes or portions thereof accepted
for payment by the Company. The Paying Agent shall promptly mail to the Holders
of Notes so accepted payment in an amount equal to the purchase price, and the
Trustee shall promptly authenticate and mail to such Holders a new Note equal in
principal amount to any unpurchased portion of the Note surrendered; provided
that each Note purchased and each new Note issued shall be in a principal amount
of $1,000 or integral multiples of $1,000. The Company will publicly announce
the results of an Offer to Purchase as soon as practicable after the Payment
Date. The Trustee shall act as the Paying Agent for an Offer to Purchase. The
Company will comply with Rule 14e-1 under the Exchange Act and any other
securities laws and regulations
14
thereunder to the extent such laws and regulations are applicable, in the event
that the Company is required to repurchase Notes pursuant to an Offer to
Purchase.
"Officer" means, with respect to the Company, (i) the Chairman of
the Board, the Chief Executive Officer, the President, any Executive Vice
President, any Vice President or the Chief Financial Officer, and (ii) the
Controller or any Assistant Controller the Treasurer or any Assistant Treasurer,
or the Secretary or any Assistant Secretary.
"Officers' Certificate" means a certificate signed by one Officer
listed in clause (i) of the definition thereof and one Officer listed in clause
(ii) of the definition thereof or two officers listed in clause (i) of the
definition thereof. Each Officers' Certificate (other than certificates provided
pursuant to TIA Section 314(a)(4)) shall include the statements provided for in
TIA Section 314(e).
"Offshore Global Note" has the meaning provided in Section 2.01.
"Offshore Physical Notes" has the meaning provided in Section
2.01.
"Opinion of Counsel" means a written opinion signed by legal
counsel reasonably acceptable to the Trustee, who may be an employee of or
counsel to the Company, that meets the requirements of Section 11.04 hereof.
Each such Opinion of Counsel shall include the statements provided for in TIA
Section 314(e).
"Paying Agent" has the meaning provided in Section 2.04, except
that, for the purposes of Article Eight, the Paying Agent shall not be the
Company or a Subsidiary of the Company or an Affiliate of any of them. The term
"Paying Agent" includes any additional Paying Agent.
"Payment Date" has the meaning provided in the definition of
Offer to Purchase.
"Permitted Business" means any business conducted by the Company
and its Restricted Subsidiaries and any other business related, ancillary or
complementary (including any reasonable extension, development or expansion) to
any such business, including consumer services.
"Permitted Investment" means:
(1) an Investment in the Company or a Restricted Subsidiary or a
Person which will, upon the making of such Investment, become a
Restricted Subsidiary or be merged or consolidated with or into or
transfer or convey all or substantially all its assets to, the Company
or a Restricted Subsidiary; provided that such person's primary business
is related, ancillary or complementary (including any reasonable
extension, development or expansion) to the businesses of the Company
and its Restricted Subsidiaries on the date of such Investment,
including consumer services;
(2) Temporary Cash Investments;
15
(3) commission, entertainment, relocation, payroll, travel and
similar advances to cover matters that are expected at the time of such
advances ultimately to be treated as expenses in accordance with GAAP;
(4) stock, obligations or securities received in satisfaction of
judgments;
(5) an Investment in an Unrestricted Subsidiary consisting solely
of an Investment in another Unrestricted Subsidiary;
(6) Commodity Agreements, Interest Rate Agreements and Currency
Agreements entered into solely to protect the Company or its Restricted
Subsidiaries against fluctuations in commodity prices, interest rates or
foreign currency exchange rates;
(7) loans, guarantees of loans and advances to employees or
consultants of the Company or its Restricted Subsidiaries made in the
ordinary course of business in an aggregate amount outstanding at any
time not to exceed $10 million;
(8) Investments outstanding on the Closing Date;
(9) Permitted Market Investments;
(10) repurchase agreements and reverse repurchase agreements with
any lender or any primary dealer of United States government securities
relating to Investment Grade Securities maturing within 1 year from the
date of acquisition thereof;
(11) the endorsements of negotiable instruments for collection or
deposit in the ordinary course of business;
(12) Investments in securities of trade creditors, healthcare
providers or customers received in settlement of obligations to the
Company or its Restricted Subsidiaries that arose in the ordinary course
of business or pursuant to any plan of reorganization or similar
arrangement upon the bankruptcy or insolvency of such trade creditors,
healthcare providers or customers in satisfaction of obligations of such
trade creditors, healthcare providers or customers to the Company or its
Restricted Subsidiaries that arose in the ordinary course of business;
(13) Investments in MedUnite, Inc. in an aggregate amount not to
exceed $15 million, plus the net reduction in any such Investments
resulting from distributions on or repayments of such Investments or
from the Net Cash Proceeds or Temporary Cash Investments from the sale
or other disposition of any such Investment (except, in each case, to
the extent any such payment or proceeds are included in the calculation
of Adjusted Consolidated Net Income); provided that such reduction does
not exceed the amount of such Investment;
(14) Investments in any Person engaged in a Permitted Business in
an aggregate amount not to exceed $60 million, plus the net reduction in
any such Investments resulting from distributions on or repayments of
such Investments or from
16
the Net Cash Proceeds or Temporary Cash Investments from the sale or
other disposition of any such Investment (except, in each case, to the
extent any such payment or proceeds are included in the calculation of
Adjusted Consolidated Net Income); provided that such reduction does not
exceed the amount of such Investment;
(15) loans or advances in the ordinary course of business to
physicians, hospitals or other providers of health care services; and
(16) Investments received as consideration in connection with an
Asset Sale made in compliance with Section 4.11.
"Permitted Liens" means:
(1) Liens for taxes, assessments, governmental charges or claims
that are not yet delinquent or being contested in good faith by
appropriate legal proceedings promptly instituted and diligently
conducted and for which a reserve or other appropriate provision, if
any, as shall be required in conformity with GAAP shall have been made;
(2) statutory and common law Liens of landlords and carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen or other
similar Liens arising in the ordinary course of business and with
respect to amounts not yet delinquent or being contested in good faith
by appropriate legal proceedings promptly instituted and diligently
conducted and for which a reserve or other appropriate provision, if
any, as shall be required in conformity with GAAP shall have been made;
(3) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security, including any Lien
securing letters of credit issued in and deposits required by insurance
companies or health maintenance organizations under contracts entered
into the ordinary course of business;
(4) Liens incurred or deposits made to secure the performance of
tenders, bids, leases, statutory or regulatory obligations, warranty
requirements, bankers' acceptances, surety and appeal bonds, government
contracts, performance and return-of-money bonds and other obligations
of a similar nature incurred in the ordinary course of business
(exclusive of obligations for the payment of borrowed money), including
rights of offset and set-off;
(5) easements, rights-of-way, municipal and zoning and building
ordinances and similar charges, encumbrances, title defects or other
irregularities or other governmental restrictions on the use of
property, that do not materially interfere with the ordinary course of
business of the Company or any of its Restricted Subsidiaries;
(6) licenses, sublicenses, leases or subleases granted to others
that do not materially interfere with the ordinary course of business of
the Company and its Restricted Subsidiaries, taken as a whole;
17
(7) Liens encumbering property or assets under construction (and
proceeds or products thereof) arising from progress or partial payments
by a customer of the Company or its Restricted Subsidiaries relating to
such property or assets;
(8) any interest or title of a lessor in the property (and the
proceeds and products thereof) subject to any Capitalized Lease or
operating lease;
(9) Liens arising from filing Uniform Commercial Code financing
statements regarding leases;
(10) Liens on property of, or on shares of Capital Stock or
Indebtedness of, any Person and the proceeds and products thereof
existing at the time such Person becomes, or becomes a part of, any
Restricted Subsidiary; provided that such Liens do not extend to or
cover any property or assets of the Company or any Restricted Subsidiary
other than the property or assets acquired and the proceeds and products
thereof;
(11) Liens in favor of the Company or any Restricted Subsidiary;
(12) Liens arising from the rendering of a final judgment or
order against the Company or any Restricted Subsidiary that does not
give rise to an Event of Default;
(13) Liens securing reimbursement obligations with respect to
letters of credit that encumber documents and other property relating to
such letters of credit and the products and proceeds thereof;
(14) Liens in favor of customs and revenue authorities arising as
a matter of law to secure payment of customs duties in connection with
the importation of goods;
(15) Liens encumbering customary initial deposits and margin
deposits, and other Liens that are within the general parameters
customary in the industry and incurred in the ordinary course of
business, in each case, securing Indebtedness or other obligations under
Commodity Agreements, Interest Rate Agreements and Currency Agreements
entered into solely to protect the Company or any of its Restricted
Subsidiaries from fluctuations in interest rates, currencies or the
price of commodities or securities accounts;
(16) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into
by the Company or any of its Restricted Subsidiaries in the ordinary
course of business in accordance with the past practices of the Company
and its Restricted Subsidiaries prior to the Closing Date;
(17) Liens on shares of Capital Stock of any Unrestricted
Subsidiary to secure Indebtedness of such Unrestricted Subsidiary;
(18) Liens securing obligations that do not in the aggregate
exceed $30 million;
(19) Liens on or sales of receivables (and the proceeds thereof);
18
(20) Liens on assets or stock of a Restricted Subsidiary that is
not a Subsidiary Guarantor to secure Indebtedness of such Restricted
Subsidiary in an aggregate amount not to exceed $30 million; and
(21) Liens required by any regulation, or order of or arrangement
with any regulatory body or agency, so long as such Liens do not secure
Indebtedness.
"Permitted Market Investments" shall mean any security that (a)
is of a type traded or quoted on any exchange or recognized financial market,
(b) can be readily liquidated or disposed of on such exchanges or markets, (c)
other than in the case of an equity security, is rated by, and has no lower than
an, "investment grade," rating from any nationally recognized rating agency, and
(d) satisfies the Company's investment guidelines as approved by the Board of
Directors; provided that the aggregate amount of Permitted Market Investments
consisting of Common Stock shall not exceed 10% at any time.
"Person" means an individual, a corporation, a partnership, a
limited liability company, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"PHPA Subsidiary Guarantors" means Rx Solutions, Inc., PacifiCare
Behavioral Health, Inc. and SecureHorizons USA, Inc.
"Physical Notes" has the meaning provided in Section 2.01.
"Preferred Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's preferred or preference equity,
whether outstanding on the Closing Date or issued thereafter, including, without
limitation, all series and classes of such preferred or preference stock.
"principal" of a debt security, including the Notes, means the
principal amount due on the Stated Maturity as shown on such debt security.
"Private Placement Legend" means the legend initially set forth
on the Notes in the form set forth in Section 2.02.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"Redemption Date" means, when used with respect to any Note to be
redeemed, the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price" means, when used with respect to any Note to
be redeemed, the price at which such Note is to be redeemed pursuant to this
Indenture.
"Registrar" has the meaning provided in Section 2.04.
19
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of May 21, 2002 between the Company, each Initial Subsidiary
Guarantor and Xxxxxx Xxxxxxx & Co. Incorporated, and UBS Warburg LLC and certain
permitted assigns specified therein.
"Registration Statement" means the Registration Statement as
defined and described in the Registration Rights Agreement.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the May 15 or November 15 (whether or not a Business Day), as
the case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
"Replacement Assets" means, on any date, property or assets
(other than current assets) of a nature or type or that are used in a business
(or an Investment in a Person having property or assets of a nature or type, or
engaged in a business) similar or related to the nature or type of the property
and assets of, or the business of, the Company, and its Restricted Subsidiaries
existing on such date.
"Responsible Officer", when used with respect to the Trustee,
means any officer within the Corporate Trust Department of the Trustee,
including any vice president, any assistant vice president, any assistant
secretary, any assistant treasurer, any trust officer or assistant trust officer
or any other officer of the Trustee in its corporate trust department
customarily performing functions similar to those performed by any of the
above-designated officers and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred because of his
or her knowledge of and familiarity with the particular subject.
"Restricted Payments" has the meaning provided in Section 4.04.
"Restricted Subsidiary" means any Subsidiary of the Company other
than an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"7% Senior Notes due 2003" means the 7% Senior Notes due 2003
issued by FHP International Corporation (and subsequently renamed PacifiCare
Health Plan Administrators, Inc.) pursuant to the terms of that certain
indenture dated as of September 22, 1993 between FHP International Corporation
and The Chase Manhattan Bank, N.A. and maturing on September 15, 2003, as
supplemented from time to time.
"S&P means Standard and Poor's Ratings Group, a division of The
XxXxxx-Xxxx Companies, and its successors.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Register" has the meaning provided in Section 2.04.
20
"Shelf Registration Statement" means the Shelf Registration
Statement as defined in the Registration Rights Agreement.
"Significant Subsidiary" means, at any date of determination, any
Restricted Subsidiary that, together with its Subsidiaries, would be a
"Significant Subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"Stated Maturity" means, (1) with respect to any debt security,
the date specified in such debt security as the fixed date on which the final
installment of principal of such debt security is due and payable and (2) with
respect to any scheduled installment of principal of or interest on any debt
security, the date specified in such debt security as the fixed date on which
such installment is due and payable.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the voting power
of the outstanding Voting Stock is owned, directly or indirectly, by such Person
and one or more other Subsidiaries of such Person.
"Subsidiary Guarantee" has the meaning provided in Section 4.07.
"Subsidiary Guarantor" means each Initial Subsidiary Guarantor
and (i) each PHPA Subsidiary Guarantor and (ii) any other Restricted Subsidiary
that, in each case under clauses (i) and (ii), provides a Note Guarantee of the
Company's obligations under this Indenture and the Notes by executing and
delivering a supplemental indenture, until (a) a successor replaces it pursuant
to the terms of this Indenture and thereafter means the successor or (b) it is
released from its Note Guarantee pursuant to the terms of this Indenture.
"Temporary Cash Investment" means any of the following:
(1) direct obligations of the United States of America or any
agency thereof or obligations fully and unconditionally guaranteed by
the United States of America or the federal government of Canada or any
agency or instrumentality thereof;
(2) time deposit accounts, certificates of deposit and money
market deposits maturing within one year of the date of acquisition
thereof and demand accounts or deposits, in each case issued by a bank
or trust company which is organized under the laws of the United States
of America, any state thereof or any foreign country recognized by the
United States of America, and which bank or trust company has capital,
surplus and undivided profits aggregating in excess of $100 million (or
the foreign currency equivalent thereof) and has outstanding debt which
is rated "A" (or such similar equivalent rating) or higher by at least
one nationally recognized statistical rating organization (as defined in
Rule 436 under the Securities Act) or any money market fund sponsored by
a registered broker dealer or mutual fund distributor;
(3) repurchase obligations and reverse repurchase agreements with
a term of not more than 30 days for underlying securities of the types
described in clause (1) above
21
entered into with a bank or trust company meeting the qualifications
described in clause (2) above;
(4) commercial paper, maturing not more than one year after the
date of acquisition, issued by a corporation (other than an Affiliate of
the Company) organized and in existence under the laws of the United
States of America, any state thereof or any foreign country recognized
by the United States of America with a rating at the time as of which
any investment therein is made of "P-1" (or higher) according to Xxxxx'x
or "A--1" (or higher) according to S&P;
(5) securities with maturities of one year or less from the date
of acquisition issued or fully and unconditionally guaranteed by any
state, commonwealth or territory of the United States of America or
Canada, or by any political subdivision or taxing authority thereof, and
rated at least "A" by S&P or Xxxxx'x;
(6) any security, maturing not more than 180 days after the date
of acquisition, backed by a letter of credit issued by a bank meeting
the qualifications described in (2) above;
(7) any other debt security or debt instruments with a rating of
"BBB-" or higher by S&P, "Baa3" or higher by Xxxxx'x or if neither S&P
or Xxxxx'x shall then exist, the equivalent of such rating by another
nationally recognized securities rating agency; and
(8) any mutual fund that has at least 95% of its assets
continuously invested in investments of the types described in clauses
(1) through (7) above.
"TIA" or "Trust Indenture Act" means the Trust Indenture Act of
1939 (15 U.S. Code Sections 77aaa-77bbbb), as in effect on the date this
Indenture was executed, except as provided in Section 9.06.
"Trade Payables" means, with respect to any Person, any accounts
payable or any other indebtedness or monetary obligation to trade creditors,
physicians, hospitals, health maintenance organizations or other health care
providers created, assumed or Guaranteed by such Person or any of its
Subsidiaries arising in the ordinary course of business in connection with the
acquisition of goods or services.
"Transaction" shall mean the issuance and sale of the Notes.
"Transaction Date" means, with respect to the Incurrence of any
Indebtedness, the date such Indebtedness is to be Incurred and, with respect to
any Restricted Payment, the date such Restricted Payment is to be made.
"Treasury Rate" means, as of any Redemption Date, the yield to
maturity as of such Redemption Date of United States Treasury securities with a
constant maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least two
Business Days prior to the Redemption Date (or, if such statistical release is
no longer published, any publicly available source of similar market data)) most
nearly
22
equal to the period from the Redemption Date to June 1, 2006; provided, however,
that if the period from the Redemption Date to June 1, 2006 is not equal to the
constant maturity of the United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the period from such date of redemption to June 1, 2006 is
less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
"Trustee" means the party named as such in the first paragraph of
this Indenture until a successor replaces it in accordance with the provisions
of Article Seven of this Indenture and thereafter means such successor.
"United States Bankruptcy Code" means the Bankruptcy Reform Act
of 1978, as amended and as codified in Title 11 of the United States Code, as
amended from time to time hereafter, or any successor federal bankruptcy law.
"Unlegended Offshore Global Notes" has the meaning provided in
Section 2.01.
"Unrestricted Subsidiary" means (1) any Subsidiary of the Company
that at the time of determination shall be designated an Unrestricted Subsidiary
by the Board of Directors in the manner provided below; and (2) any Subsidiary
of an Unrestricted Subsidiary. The Board of Directors may designate any
Restricted Subsidiary (including any newly acquired or newly formed Subsidiary
of the Company) to be an Unrestricted Subsidiary unless such Subsidiary owns any
Capital Stock of, or owns or holds any Lien on any property of, the Company or
any Restricted Subsidiary; provided that (A) any Guarantee by the Company or any
Restricted Subsidiary of any Indebtedness of the Subsidiary being so designated
shall be deemed an "Incurrence" of such Indebtedness and an "Investment" by the
Company or such Restricted Subsidiary (or both, if applicable) at the time of
such designation; (B) either (I) the Subsidiary to be so designated has total
assets of $1,000 or less or (II) if such Subsidiary has assets greater than
$1,000, such designation would be permitted under Section 4.04 and (C) if
applicable, the Incurrence of Indebtedness and the Investment referred to in
clause (A) of this proviso would be permitted under Sections 4.03 and 4.04. The
Board of Directors may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that (a) no Default or Event of Default shall have occurred
and be continuing at the time of or after giving effect to such designation and
(b) all Liens and Indebtedness of such Unrestricted Subsidiary outstanding
immediately after such designation would, if Incurred at such time, have been
permitted to be Incurred (and shall be deemed to have been Incurred) for all
purposes of this Indenture. Any such designation by the Board of Directors shall
be evidenced to the Trustee by promptly filing with the Trustee a copy of the
Board Resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.
"U.S. Global Notes" has the meaning provided in Section 2.01.
"U.S. Government Obligations" means securities that are (i)
direct obligations of the United States of America for the payment of which its
full faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality
23
of the United States of America the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America, which, in either case, are not callable or redeemable at the option of
the issuer thereof at any time prior to the Stated Maturity of the Notes, and
shall also include a depository receipt issued by a bank or trust company as
custodian with respect to any such U.S. Government Obligation or a specific
payment of interest on or principal of any such U.S. Government Obligation held
by such custodian for the account of the holder of a depository receipt;
provided that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of interest on or principal of the
U.S. Government Obligation evidenced by such depository receipt.
"U.S. Physical Notes" means the Notes issued in the form of
permanent certificated Notes in registered form in substantially the form set
forth in Exhibit A to Institutional Accredited Investors which are not QIBs
(excluding Non-U.S. Persons).
"Voting Stock" means with respect to any Person, Capital Stock of
any class or kind ordinarily having the power to vote for the election of
directors, managers or other voting members of the governing body of such
Person.
"Wholly Owned" means, with respect to any Subsidiary of any
Person, the ownership of all of the outstanding Capital Stock of such Subsidiary
(other than any director's qualifying shares, Investments by foreign nationals
mandated by applicable law and Investments not to exceed 1% of the outstanding
Capital Stock required by law or regulatory authority) by such Person or one or
more Wholly Owned Subsidiaries of such Person.
SECTION 1.02. 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:
"indenture securities" means the Notes;
"indenture security holder" means a Holder or a Noteholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
and
"obligor" on the indenture securities means the Company or any
other obligor on the Notes.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by a rule of the
Commission and not otherwise defined herein have the meanings assigned to them
therein.
24
SECTION 1.03. Rules of Construction. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and words in the
plural include the singular;
(v) provisions apply to successive events and transactions;
(vi) "herein," "hereof" and other words of similar import refer
to this Indenture as a whole and not to any particular Article, Section
or other subdivision;
(vii) all ratios and computations based on GAAP contained in this
Indenture shall be computed in accordance with the definition of GAAP
set forth in Section 1.01; and
(viii) all references to Sections or Articles refer to Sections
or Articles of this Indenture unless otherwise indicated.
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating. The Notes and the Trustee's
certificate of authentication shall be substantially in the form annexed hereto
as Exhibit A with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture. The Notes may
have notations, legends or endorsements required by law, stock exchange
agreements to which the Company is subject or usage. The Company shall approve
the form of the Notes and any notation, legend or endorsement on the Notes. Each
Note shall be dated the date of its authentication.
The terms and provisions contained in the form of the Notes
annexed hereto as Exhibit A shall constitute, and are hereby expressly made, a
part of this Indenture. To the extent applicable, the Company, the Subsidiary
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.
Notes offered and sold in reliance on Rule 144A shall be issued
initially in the form of one or more permanent global Notes in registered form,
substantially in the form set forth in Exhibit A (the "U.S. Global Notes"),
registered in the name of the nominee of the Depositary, deposited with the
Trustee, as custodian for the Depositary, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. The aggregate principal
amount of the U.S. Global Notes may from time to time be increased or decreased
by
25
adjustments made on the records of the Trustee, as custodian for the Depositary
or its nominee, in accordance with the instructions given by the Holder thereof,
as hereinafter provided.
Notes offered and sold in offshore transactions in reliance on
Regulation S shall be issued initially in the form of one or more legended
global Notes in registered form substantially in the form set forth in Exhibit A
(the "Legended Offshore Global Notes"), registered in the name of the nominee of
the Depositary, deposited with the Trustee, as custodian for the Depositary,
duly executed by the Company and authenticated by the Trustee as hereinafter
provided. At any time on or after July 1, 2002, upon receipt by the Trustee and
the Company of a certificate substantially in the form of Exhibit B hereto, one
or more unlegended global Notes in registered form substantially in the form set
forth in Exhibit A (the "Unlegended Offshore Global Notes"; and together with
the Legended Offshore Global Notes, the "Offshore Global Notes") duly executed
by the Company and authenticated by the Trustee as hereinafter provided shall be
deposited with the Trustee, as custodian for the Depositary or its nominee, and
the Registrar shall reflect on its books and records the date and a decrease in
the principal amount of the Legended Offshore Global Notes in an amount equal to
the principal amount of the beneficial interest in the Legended Offshore Global
Notes transferred.
Notes issued pursuant to Section 2.07 in exchange for interests
in the Offshore Global Notes shall be in the form of permanent certificated
Notes in registered form substantially in the form set forth in Exhibit A (the
"Offshore Physical Notes").
The Offshore Physical Notes and U.S. Physical Notes are sometimes
collectively herein referred to as the "Physical Notes." The U.S. Global Notes
and the Offshore Global Notes are sometimes referred to herein as the "Global
Notes."
The definitive Notes shall be typed, printed, lithographed or
engraved or produced by any combination of these methods or may be produced in
any other manner permitted by the rules of any securities exchange on which the
Notes may be listed, all as determined by the Officers executing such Notes, as
evidenced by their execution of such Notes.
SECTION 2.02. Restrictive Legends. Unless and until a Note is
exchanged for an Exchange Note or sold in connection with an effective
Registration Statement pursuant to the Registration Rights Agreement, (i) the
U.S. Global Notes and U.S. Physical Notes shall bear the legend set forth below
on the face thereof and (ii) the Offshore Physical Notes, until at least the
41st day after the Closing Date and receipt by the Company and the Trustee of a
certificate substantially in the form of Exhibit B hereto, and the Legended
Offshore Global Notes shall bear the legend set forth below on the face thereof.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF,
U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1),
26
(2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND
IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT,
WITHIN THE TIME PERIOD REFERRED TO UNDER RULE 144(k) UNDER THE
SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS NOTE,
RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO PACIFICARE HEALTH
SYSTEMS, INC. OR ANY OF ITS SUBSIDIARIES, (B) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM THE TRUSTEE), AND, IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT OF NOTES OF LESS THAN $100,000, AN OPINION OF
COUNSEL ACCEPTABLE TO PACIFICARE HEALTH SYSTEMS, INC. THAT SUCH TRANSFER
IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES
IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED
BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3)
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN THE TIME PERIOD
REFERRED TO IN RULE 144(k), THE HOLDER MUST CHECK THE APPROPRIATE BOX
SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER
AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE
IS AN INSTITUTIONAL ACCREDITED INVESTOR OR NON-U.S. PERSON, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND PACIFICARE
HEALTH SYSTEMS, INC. SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT
SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION",
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS PROVISIONS
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN
VIOLATION OF THE FOREGOING RESTRICTION.
Each Global Note, whether or not an Exchange Note, shall also
bear the following legend on the face thereof:
27
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, TO PACIFICARE HEALTH SYSTEMS, INC. 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 ENTITY 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 NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN SECTION 2.08 OF THE INDENTURE.
SECTION 2.03. Execution, Authentication and Denominations.
Subject to Article Four and applicable law, the aggregate principal amount of
Notes which may be authenticated and delivered under this Indenture is
unlimited. The Notes shall be executed by two Officers of the Company. The
signature of these Officers on the Notes may be by facsimile or manual signature
in the name and on behalf of the Company.
If an Officer whose signature is on a Note no longer holds that
office at the time the Trustee or authenticating agent authenticates the Note,
the Note shall be valid nevertheless.
A Note shall not be valid until the Trustee or authenticating
agent manually signs the certificate of authentication on the Note. The
signature shall be conclusive evidence that the Note has been authenticated
under this Indenture.
At any time and from time to time after the execution of this
Indenture, the Trustee or an authenticating agent shall upon receipt of a
Company Order authenticate for original issue Notes in the aggregate principal
amount specified in such Company Order; provided that the Trustee shall be
entitled to receive an Officers' Certificate and an Opinion of Counsel of the
Company in connection with such authentication of Notes. Such Company Order
shall specify the amount of Notes to be authenticated and the date on which the
original issue of Notes is to be authenticated and, in case of an issuance of
Notes pursuant to Section 2.15, shall certify that such issuance is in
compliance with Article Four.
The Trustee may appoint an authenticating agent to authenticate
the Notes. An authenticating agent may authenticate the Notes whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such authenticating agent. An authenticating
agent has the same rights as an Agent to deal with the Company or an Affiliate
of the Company.
28
The Notes shall be issuable only in registered form without
coupons and only in denominations of $1,000 in principal amount and any integral
multiple thereof.
SECTION 2.04. Registrar and Paying Agent. The Company shall
maintain an office or agency where Notes may be presented for registration of
transfer or for exchange (the "Registrar"), an office or agency where Notes may
be presented for payment (the "Paying Agent") and an office or agency where
notices and demands to or upon the Company in respect of the Notes and this
Indenture may be served, which shall be in the Borough of Manhattan, The City of
New York. The Company shall cause the Registrar to keep a register of the Notes
and of their transfer and exchange (the "Security Register"). The Security
Register shall be in written form or any other form capable of being converted
into written form within a reasonable time. The Company may have one or more
co-Registrars and one or more additional Paying Agents.
The Company shall enter into an appropriate agency agreement with
any Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall give
prompt written notice to the Trustee of the name and address of any such Agent
and any change in the address of such Agent. If the Company fails to maintain a
Registrar, Paying Agent and/or agent for service of notices and demands, the
Trustee shall act as such Registrar, Paying Agent and/or agent for service of
notices and demands. The Company may remove any Agent upon written notice to
such Agent and the Trustee; provided that no such removal shall become effective
until (i) the acceptance of an appointment by a successor Agent to such Agent as
evidenced by an appropriate agency agreement entered into by the Company and
such successor Agent and delivered to the Trustee or (ii) notification to the
Trustee that the Trustee shall serve as such Agent until the appointment of a
successor Agent in accordance with clause (i) of this proviso. The Company, any
Subsidiary of the Company, or any Affiliate of any of them may act as Paying
Agent, Registrar or co-Registrar, and/or agent for service of notice and
demands.
The Company initially appoints the Trustee as Registrar, Paying
Agent, authenticating agent and agent for service of notice and demands. The
Trustee shall preserve in as current a form as is reasonably practicable the
most recent list available to it of the names and addresses of Holders and shall
otherwise comply with TIA Section 312(a). If the Trustee is not the Registrar,
the Company shall furnish to the Trustee as of each Regular Record Date and at
such other times as the Trustee may reasonably request the names and addresses
of Holders as they appear in the Security Register, including the aggregate
principal amount of Notes held by each Holder.
SECTION 2.05. Paying Agent to Hold Money in Trust. Not later than
11:00 a.m. (New York City time) each due date of the principal, premium, if any,
and interest on any Notes, the Company shall deposit with the Paying Agent money
in immediately available funds sufficient to pay such principal, premium, if
any, and interest so becoming due. The Company shall require each Paying Agent
other than the Trustee to agree in writing that such Paying Agent shall hold in
trust for the benefit of the Holders or the Trustee all money held by the Paying
Agent for the payment of principal of, premium, if any, and interest on the
Notes (whether such money has been paid to it by the Company or any other
obligor on the Notes), and such Paying Agent shall promptly notify the Trustee
of any default by the Company (or any other obligor on the Notes) in making any
such payment. The Company at any time may require a Paying Agent
29
to pay all money held by it to the Trustee and account for any funds disbursed,
and the Trustee may at any time during the continuance of any payment default,
upon written request to a Paying Agent, require such Paying Agent to pay all
money held by it to the Trustee and to account for any funds disbursed. Upon
doing so, the Paying Agent shall have no further liability for the money so paid
over to the Trustee. If the Company or any Subsidiary of the Company or any
Affiliate of any of them acts as Paying Agent, it will, on or before each due
date of any principal of, premium, if any, or interest on the Notes, segregate
and hold in a separate trust fund for the benefit of the Holders a sum of money
sufficient to pay such principal, premium, if any, or interest so becoming due
until such sum of money shall be paid to such Holders or otherwise disposed of
as provided in this Indenture, and will promptly notify the Trustee of its
action or failure to act.
SECTION 2.06. Transfer and Exchange. The Notes are issuable only
in registered form. A Holder may transfer a Note only by written application to
the Registrar stating the name of the proposed transferee and otherwise
complying with the terms of this Indenture. No such transfer shall be effected
until, and such transferee shall succeed to the rights of a Holder only upon,
final acceptance and registration of the transfer by the Registrar in the
Security Register. Prior to the registration of any transfer by a Holder as
provided herein, the Company, the Trustee, and any agent of the Company shall
treat the person in whose name the Note is registered as the owner thereof for
all purposes whether or not the Note shall be overdue, and neither the Company,
the Trustee, nor any such agent shall be affected by notice to the contrary.
Furthermore, any Holder of a Global Note shall, by acceptance of such Global
Note, agree that transfers of beneficial interests in such Global Note may be
effected only through a book entry system maintained by the Holder of such
Global Note (or its agent) and that ownership of a beneficial interest in the
Note shall be required to be reflected in a book entry. When Notes are presented
to the Registrar or a co-Registrar with a request to register the transfer or to
exchange them for an equal principal amount of Notes of other authorized
denominations (including an exchange of Notes for Exchange Notes), the Registrar
shall register the transfer or make the exchange as requested if its
requirements for such transactions are met (including that such Notes are duly
endorsed or accompanied by a written instrument of transfer in form satisfactory
to the Trustee and Registrar duly executed by the Holder thereof or by an
attorney who is authorized in writing to act on behalf of the Holder); provided
that no exchanges of Notes for Exchange Notes shall occur until a Registration
Statement shall have been declared effective by the Commission and that any
Notes that are exchanged for Exchange Notes shall be cancelled by the Trustee.
To permit registrations of transfers and exchanges, the Company shall execute
and the Trustee shall authenticate Notes at the Registrar's request. No service
charge shall be made for any registration of transfer or exchange or redemption
of the Notes, but the Company may require payment of a sum sufficient to cover
any transfer tax or similar governmental charge payable in connection therewith
(other than any such transfer taxes or other similar governmental charge payable
upon exchanges pursuant to Section 2.11, 3.08 or 9.04).
The Registrar shall not be required (i) to issue, register the
transfer of or exchange any Note during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Notes selected for redemption under Section 3.03 and ending at the close of
business on the day of such mailing, or (ii) to register the transfer of or
exchange any Note so selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part.
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SECTION 2.07. Book-Entry Provisions for Global Notes. (a) The
U.S. Global Notes and Offshore Global Notes initially shall (i) be registered in
the name of the Depositary for such Global Notes or the nominee of such
Depositary, (ii) be delivered to the Trustee as custodian for such Depositary
and (iii) bear legends as set forth in Section 2.02.
Members of, or participants in, the Depositary ("Agent Members")
shall have no rights under this Indenture with respect to any Global Note held
on their behalf by the Depositary, or the Trustee as its custodian, or under
such Global Note, and the Depositary may be treated by the Company, the Trustee
and any agent of the Company or the Trustee as the absolute owner of such Global
Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein
shall prevent the Company, the Trustee or any agent of the Company or the
Trustee, from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or impair, as between the Depositary
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a holder of any Note.
(b) Transfers of a Global Note shall be limited to transfers of
such Global Note in whole, but not in part, to the Depositary, its successors or
their respective nominees. Interests of beneficial owners in Global Notes may be
transferred in accordance with the rules and procedures of the Depositary and
the provisions of Section 2.08. In addition, U.S. Physical Notes and Offshore
Physical Notes shall be transferred to all beneficial owners in exchange for
their beneficial interests in the U.S. Global Notes or the Offshore Global
Notes, as the case may be, if (i) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for the U.S. Global Notes or the
Offshore Global Notes, as the case may be, and a successor depositary is not
appointed by the Company within 90 days of such notice, (ii) an Event of Default
has occurred and is continuing and the Registrar has received a request from the
Depositary or (iii) in accordance with the rules and procedures of the
Depositary and the provisions of Section 2.08.
(c) Any beneficial interest in one of the Global Notes that is
transferred to a person who takes delivery in the form of an interest in another
Global Note will, upon transfer, cease to be an interest in such Global Note and
become an interest in such other Global Note and, accordingly, will thereafter
be subject to all transfer restrictions, if any, and other procedures applicable
to beneficial interests in such other Global Note for as long as it remains such
an interest.
(d) In connection with any transfer of a portion of the
beneficial interests in a Global Note to beneficial owners pursuant to paragraph
(b) of this Section 2.07, the Registrar shall reflect on its books and records
the date and a decrease in the principal amount of such Global Note in an amount
equal to the principal amount of the beneficial interest in such Global Note to
be transferred, and the Company shall execute, and the Trustee shall
authenticate and deliver, one or more U.S. Physical Notes or Offshore Physical
Notes, as the case may be, of like tenor and amount.
(e) In connection with the transfer of the U.S. Global Notes or
the Offshore Global Notes, in whole, to beneficial owners pursuant to paragraph
(b) of this Section 2.07, the U.S. Global Notes or Offshore Global Notes, as the
case may be, shall be deemed to be surrendered to the Trustee for cancellation,
and the Company shall execute, and the Trustee shall
31
authenticate and deliver, to each beneficial owner identified by the Depositary
in exchange for its beneficial interest in the U.S. Global Notes or Offshore
Global Notes, as the case may be, an equal aggregate principal amount of U.S.
Physical Notes or Offshore Physical Notes, as the case may be, of authorized
denominations.
(f) Any U.S. Physical Note delivered in exchange for an interest
in the U.S. Global Notes pursuant to paragraph (b), (d) or (e) of this Section
2.07 shall, except as otherwise provided by paragraph (f) of Section 2.08, bear
the legend regarding transfer restrictions applicable to the U.S. Physical Note
set forth in Section 2.02.
(g) Any Offshore Physical Note delivered in exchange for an
interest in the Offshore Global Notes pursuant to paragraph (b), (d) or (e) of
this Section 2.07 shall, except as otherwise provided by paragraph (f) of
Section 2.08, bear the legend regarding transfer restrictions applicable to the
Offshore Physical Note set forth in Section 2.02.
(h) The registered holder of a Global Note may grant proxies and
otherwise authorize any person, including Agent Members 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 Notes.
SECTION 2.08. Special Transfer Provisions. Unless and until a
Note is exchanged for an Exchange Note or sold in connection with an effective
Registration Statement pursuant to the Registration Rights Agreement, the
following provisions shall apply:
(a) Transfers to Non-QIB Institutional Accredited Investors. The
following provisions shall apply with respect to the registration of any
proposed transfer of a Note to any Institutional Accredited Investor which is
not a QIB (excluding Non-U.S. Persons):
(i) The Registrar shall register the transfer of any Note,
whether or not such Note bears the Private Placement Legend, if (x) the
requested transfer is after the time period referred to in Rule 144(k)
under the Securities Act or (y) the proposed transferee has delivered to
the Registrar (A) a certificate substantially in the form of Exhibit C
hereto and (B) if the aggregate principal amount of the Notes being
transferred is less than $100,000, an opinion of counsel acceptable to
the Company that such transfer is in compliance with the Securities Act.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Notes, upon receipt by the
Registrar of (x) the documents, if any, required by paragraph (i) above
and (y) instructions given in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and a decrease in the principal amount of the U.S.
Global Notes in an amount equal to the principal amount of the
beneficial interest in the U.S. Global Notes to be transferred, and the
Company shall execute, and the Trustee shall authenticate and deliver,
one or more U.S. Physical Notes of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of a Note to a QIB
(excluding Non-U.S. Persons):
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(i) If the Note to be transferred consists of (x) either Offshore
Physical Notes prior to the removal of the Private Placement Legend or
U.S. Physical Notes, the Registrar shall register the transfer if such
transfer is being made by a proposed transferor who has checked the box
provided for on the form of Note stating, or has otherwise advised the
Company and the Registrar in writing, that the sale has been made in
compliance with the provisions of Rule 144A to a transferee who has
signed the certification provided for on the form of Note stating, or
has otherwise advised the Company and the Registrar in writing, that it
is purchasing the Note for its own account or an account with respect to
which it exercises sole investment discretion and that it and any such
account is a QIB within the meaning of Rule 144A and is aware that the
sale to it is being made in reliance on Rule 144A and acknowledges that
it has received such information regarding the Company as it has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon its
foregoing representations in order to claim the exemption from
registration provided by Rule 144A or (y) an interest in the U.S. Global
Notes, the transfer of such interest may be effected only through the
book entry system maintained by the Depositary.
(ii) If the proposed transferee is an Agent Member, and the Note
to be transferred consists of U.S. Physical Notes, upon receipt by the
Registrar of the documents referred to in paragraph (i) above and
instructions given in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and an increase in the principal amount of U.S. Global
Notes in an amount equal to the principal amount of the U.S. Physical
Notes to be transferred, and the Trustee shall cancel the U.S. Physical
Notes so transferred.
(c) Transfers of Interests in the Legended Offshore Global Notes.
The following provisions shall apply with respect to registration of any
proposed transfer of an interest in the Legended Offshore Global Notes:
(i) The Registrar shall register the transfer of any Note (x) if
the proposed transferee is a Non-U.S. Person and the proposed transferor
has delivered to the Registrar a certificate substantially in the form
of Exhibit D hereto or (y) if the proposed transferee is a QIB and the
proposed transferor has checked the box provided for on the form of Note
stating, or has otherwise advised the Company and the Registrar in
writing, that the sale has been made in compliance with the provisions
of Rule 144A to a transferee who has signed the certification provided
for on the form of Note stating, or has otherwise advised the Company
and the Registrar in writing, that it is purchasing the Note for its own
account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a QIB within the meaning
of Rule 144A, and is aware that the sale to it is being made in reliance
on Rule 144A and acknowledges that it has received such information
regarding the Company as it has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule 144A.
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(ii) If the proposed transferee is an Agent Member, upon receipt
by the Registrar of the documents referred to in clause (i)(y) above and
instructions given in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and an increase in the principal amount of the U.S.
Global Notes in an amount equal to the principal amount of the Legended
Offshore Global Notes to be transferred, and the Trustee shall decrease
the amount of the Legended Offshore Global Notes.
(d) Transfers of Interests in the Unlegended Offshore Global
Notes or Unlegended Offshore Physical Notes. The following provision shall apply
with respect to any transfer of interests in Unlegended Offshore Global Notes or
unlegended Offshore Physical Notes: The Registrar shall register the transfer of
any such Note without requiring any additional certification.
(e) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any transfer of a Note to a Non-U.S.
Person:
(i) Prior to July 1, 2002, the Registrar shall register any
proposed transfer of a Note to a Non-U.S. Person upon receipt of a
certificate substantially in the form of Exhibit D hereto from the
proposed transferor.
(ii) On and after July 1, 2002, the Registrar shall register any
proposed transfer to any Non-U.S. Person if the Note to be transferred
is a U.S. Physical Note or an interest in U.S. Global Notes, upon
receipt of a certificate substantially in the form of Exhibit D hereto
from the proposed transferor.
(iii) (a) If the proposed transferor is an Agent Member holding
a beneficial interest in the U.S. Global Notes, upon receipt by the
Registrar of (x) the documents, if any, required by paragraph (ii) and
(y) instructions in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and records the
date and a decrease in the principal amount of the U.S. Global Notes in
an amount equal to the principal amount of the beneficial interest in
the U.S. Global Notes to be transferred, and (b) if the proposed
transferee is an Agent Member, upon receipt by the Registrar of
instructions given in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and an increase in the principal amount of the Offshore
Global Notes in an amount equal to the principal amount of the U.S.
Physical Notes or the U.S. Global Notes, as the case may be, to be
transferred, and the Trustee shall cancel the Physical Note, if any, so
transferred or decrease the amount of the U.S. Global Notes.
(f) Private Placement Legend. Upon the transfer, exchange or
replacement of Notes not bearing the Private Placement Legend, the Registrar
shall deliver Notes that do not bear the Private Placement Legend. Upon the
transfer, exchange or replacement of Notes bearing the Private Placement Legend,
the Registrar shall deliver only Notes that bear the Private Placement Legend
unless (i) the Private Placement Legend is no longer required by Section 2.02,
(ii) the circumstances contemplated by paragraph (a)(i)(x) of this Section 2.08
exist or (iii) there is delivered to the Registrar an Opinion of Counsel
reasonably satisfactory to the Company and
34
the Trustee to the effect that neither such legend nor the related restrictions
on transfer are required in order to maintain compliance with the provisions of
the Securities Act.
(g) General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture. The Registrar shall not register a transfer of any Note unless such
transfer complies with the restrictions on transfer of such Note set forth in
this Indenture. In connection with any transfer of Notes, each Holder agrees by
its acceptance of the Notes to furnish the Registrar or the Company such
certifications, legal opinions or other information as either of them may
reasonably require to confirm that such transfer is being made pursuant to an
exemption from, or a transaction not subject to, the registration requirements
of the Securities Act; provided that 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 transfers of any interest in any Note (including any transfers between or
among DTC participants, members or beneficial owners in any Global Note) 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 thereof.
The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 2.07 or this Section
2.08. The Company shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time upon the
giving of reasonable written notice to the Registrar.
SECTION 2.09. Replacement Notes. If a mutilated Note is
surrendered to the Trustee or if the Holder claims that the Note has been lost,
destroyed or wrongfully taken, then, in the absence of notice to the Company or
the Trustee that such Note has been acquired by a bona fide purchaser, the
Company shall issue and the Trustee shall authenticate a replacement Note of
like tenor and principal amount and bearing a number not contemporaneously
outstanding; provided that the requirements of this Section 2.09 are met. If
required by the Trustee or the Company, an indemnity bond must be furnished that
is sufficient in the judgment of both the Trustee and the Company to protect the
Company, the Trustee or any Agent from any loss that any of them may suffer if a
Note is replaced. The Company may charge such Holder for its expenses and the
expenses of the Trustee in replacing a Note. In case any such mutilated, lost,
destroyed or wrongfully taken Note has become or is about to become due and
payable, the Company in its discretion may pay such Note instead of issuing a
new Note in replacement thereof.
Every replacement Note is an additional obligation of the Company
and shall be entitled to the benefits of this Indenture.
SECTION 2.10. Outstanding Notes. Notes outstanding at any time
are all Notes that have been authenticated by the Trustee except for those
cancelled by it, those delivered to it for cancellation and those described in
this Section 2.10 as not outstanding.
35
If a Note is replaced pursuant to Section 2.09, it ceases to be
outstanding unless and until the Trustee and the Company receive proof
satisfactory to them that the replaced Note is held by a bona fide purchaser.
If the Paying Agent (other than the Company or an Affiliate of
the Company) holds on the maturity date money sufficient to pay Notes payable on
that date, then on and after that date such Notes cease to be outstanding and
interest on them shall cease to accrue.
A Note does not cease to be outstanding because the Company or
one of its Affiliates holds such Note, provided, however, that in determining
whether the Holders of the requisite principal amount of the outstanding Notes
have given any request, demand, authorization, direction, notice, consent or
waiver hereunder, Notes owned by the Company or any other obligor upon the Notes
or any Affiliate of the Company or of 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 Notes which a
Responsible Officer of the Trustee has actual knowledge to be so owned shall be
so disregarded. Notes so owned which have been pledged in good faith may be
regarded as outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Company or any other obligor upon the Notes or any Affiliate
of the Company or of such other obligor.
SECTION 2.11. Temporary Notes. Until definitive Notes are ready
for delivery, the Company may prepare and execute and the Trustee shall
authenticate temporary Notes. Temporary Notes shall be substantially in the form
of definitive Notes but may have insertions, substitutions, omissions and other
variations determined to be appropriate by the Officers executing the temporary
Notes, as evidenced by their execution of such temporary Notes. If temporary
Notes are issued, the Company will cause definitive Notes to be prepared without
unreasonable delay. After the preparation of definitive Notes, the temporary
Notes shall be exchangeable for definitive Notes upon surrender of the temporary
Notes at the office or agency of the Company designated for such purpose
pursuant to Section 4.02, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Notes the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefore a like
principal amount of definitive Notes of authorized denominations. Until so
exchanged, the temporary Notes shall be entitled to the same benefits under this
Indenture as definitive Notes.
SECTION 2.12. Cancellation. The Company at any time may deliver
to the Trustee for cancellation any Notes previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and may
deliver to the Trustee for cancellation any Notes previously authenticated
hereunder which the Company has not issued and sold. The Registrar and the
Paying Agent shall forward to the Trustee any Notes surrendered to them for
transfer, exchange or payment. The Trustee shall cancel all Notes surrendered
for transfer, exchange, payment or cancellation and shall destroy them in
accordance with its normal procedure.
SECTION 2.13. CUSIP Numbers. The Company in issuing the Notes may
use "CUSIP", "CINS" or "ISIN" numbers (if then generally in use), and the
Company and the Trustee shall use CUSIP, CINS or ISIN numbers, as the case may
be, in notices of redemption or
36
exchange as a convenience to Holders; provided that no representation is made
and any such notice shall state that no representation is made, as to the
correctness of such numbers either as printed on the Notes or as contained in
any notice of redemption or exchange and that reliance may be placed only on the
other identification numbers printed on the Notes. The Company shall promptly
notify the Trustee of any change in "CUSIP", "CINS" or "ISIN" numbers for the
Notes.
SECTION 2.14. Defaulted Interest. If the Company defaults in a
payment of interest on the Notes, it shall pay, or shall deposit with the Paying
Agent money in immediately available funds sufficient to pay, the defaulted
interest, plus (to the extent lawful) any interest payable on the defaulted
interest, to the Persons who are Holders on a subsequent special record date. A
special record date, as used in this Section 2.14 with respect to the payment of
any defaulted interest, shall mean the 15th day next preceding the date fixed by
the Company for the payment of defaulted interest, whether or not such day is a
Business Day. At least 15 days before the subsequent special record date, the
Company shall mail to each Holder and to the Trustee a notice that states the
subsequent special record date, the payment date and the amount of defaulted
interest to be paid.
SECTION 2.15. Issuance of Additional Notes. The Company may,
subject to Article Four of this Indenture and applicable law, issue additional
Notes under this Indenture. The Notes issued on the Closing Date and any
additional Notes subsequently issued shall be treated as a single class for all
purposes under this Indenture.
SECTION 2.16. Registration Default. The interest rate borne by
the Notes may be increased as provided in the Notes. If such an increase occurs,
the Company shall provide prompt written notice to the Trustee stating (i) the
increase in the interest rate, (ii) when such increase is effective, and (iii)
when such additional interest is payable. Unless and until the Trustee shall
receive such a certificate, the Trustee may assume without inquiry that the
interest rate has not been increased.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Right of Redemption. (a) The Notes are redeemable,
at the Company's option, in whole or in part, at any time or from time to time,
on or after June 1, 2006 and prior to maturity, at the following Redemption
Prices (expressed in percentages of principal amount), plus accrued and unpaid
interest to the Redemption Date (subject to the right of Holders of record on
the relevant Regular Record Date that is prior to the Redemption Date to receive
interest due on an Interest Payment Date), if redeemed during the 12-month
period commencing June 1 of the years set forth below:
Redemption
Year Price
---- ----------
2006......................... 105.375%
2007......................... 102.688%
2008 and thereafter.......... 100.000%
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(b) In addition, at any time prior to June 1, 2005, the Company
may redeem up to 35% of the aggregate principal amount of the Notes with the Net
Cash Proceeds of one or more sales of its Capital Stock (other than Disqualified
Stock), at any time as a whole or from time to time in part, at a Redemption
Price (expressed as a percentage of principal amount) of 110.750%, plus accrued
and unpaid interest to the Redemption Date (subject to the rights of Holders of
record on the relevant Regular Record Date that is prior to the Redemption Date
to receive interest due on an Interest Payment Date); provided that (i) at least
65% of the aggregate principal amount of Notes originally issued on the Closing
Date remains outstanding after each such redemption and (ii) notice of such
redemption is mailed within 60 days of each such sale of Capital Stock.
(c) At any time on or prior to June 1, 2006, the Notes may be
redeemed, in whole but not in part, at the option of the Company upon the
occurrence of a Change of Control (but in no event more than 90 days after the
occurrence of such Change of Control), at a redemption price equal to 100% of
the principal amount thereof plus the Applicable Premium as of, and accrued and
unpaid interest, to, the Redemption Date. The Company shall calculate the
Applicable Premium and provide notice of such amount to the Trustee not later
than one Business Day prior to the Redemption Date. The Trustee shall be
entitled to rely on such calculation.
SECTION 3.02. Notices to Trustee. If the Company elects to redeem
Notes pursuant to Section 3.01, it shall notify the Trustee in writing of the
Redemption Date and the principal amount of Notes to be redeemed and the clause
of this Indenture pursuant to which redemption shall occur.
The Company shall give the Trustee notice of any redemption
pursuant to this Section 3.02 in an Officers' Certificate at least 45 days
before the Redemption Date (unless a shorter period shall be satisfactory to the
Trustee).
SECTION 3.03. Selection of Notes to Be Redeemed. If less than all
of the Notes are to be redeemed at any time, the Trustee shall select the Notes
to be redeemed in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes are listed or, if the Notes are
not listed on a national securities exchange or automated quotation system, by
lot or by such other customary method as the Trustee in its sole discretion
shall deem fair and appropriate; provided that no Note of $1,000 in principal
amount or less shall be redeemed in part.
The Trustee shall make the selection from the Notes outstanding
and not previously called for redemption. Notes in denominations of $1,000 in
principal amount may only be redeemed in whole. The Trustee may select for
redemption portions (equal to $1,000 in principal amount or any integral
multiple thereof) of Notes that have denominations larger than $1,000 in
principal amount. Provisions of this Indenture that apply to Notes called for
redemption also apply to portions of Notes called for redemption. The Trustee
shall notify the Company and the Registrar promptly in writing of the Notes or
portions of Notes to be called for redemption.
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SECTION 3.04. Notice of Redemption. With respect to any
redemption of Notes pursuant to Section 3.01, 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 to each Holder whose Notes are to be redeemed.
The notice shall identify the Notes to be redeemed and shall
state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the name and address of the Paying Agent;
(iv) that Notes called for redemption must be surrendered to the
Paying Agent in order to collect the Redemption Price;
(v) that, unless the Company defaults in making the redemption
payment, interest on Notes called for redemption ceases to accrue on and
after the Redemption Date and the only remaining right of the Holders is
to receive payment of the Redemption Price plus accrued interest to the
Redemption Date upon surrender of the Notes to the Paying Agent;
(vi) that, if any Note is being redeemed in part, the portion of
the principal amount (equal to $1,000 in principal amount or any
integral multiple thereof) of such Note to be redeemed and that, on and
after the Redemption Date, upon surrender of such Note, a new Note or
Notes in principal amount equal to the unredeemed portion thereof will
be reissued; and
(vii) that, if any Note contains a CUSIP, CINS or ISIN number as
provided in Section 2.13, no representation is being made as to the
correctness of the CUSIP, CINS or ISIN number either as printed on the
Notes or as contained in the notice of redemption and that reliance may
be placed only on the other identification numbers printed on the Notes.
At the Company's request (which request may be revoked by the
Company at any time prior to the time at which the Trustee shall have given such
notice to the Holders), made in writing to the Trustee at least 45 days (or such
shorter period as shall be satisfactory to the Trustee) before a Redemption
Date, the Trustee shall give the notice of redemption in the name and at the
expense of the Company. If, however, the Company gives such notice to the
Holders, the Company shall concurrently deliver to the Trustee an Officers'
Certificate stating that such notice has been given.
SECTION 3.05. Effect of Notice of Redemption. Once notice of
redemption is mailed, Notes called for redemption become due and payable on the
Redemption Date and at the Redemption Price. Upon surrender of any Notes to the
Paying Agent, such Notes shall be paid at the Redemption Price, plus accrued
interest, if any, to the Redemption Date.
39
Notice of redemption shall be deemed to be given when mailed,
whether or not the Holder receives the notice. In any event, failure to give
such notice, or any defect therein, shall not affect the validity of the
proceedings for the redemption of Notes held by Holders to whom such notice was
properly given.
SECTION 3.06. Deposit of Redemption Price. No later than 11:00
a.m. (New York time) on any Redemption Date, the Company shall deposit with the
Paying Agent (or, if the Company is acting as its own Paying Agent, shall
segregate and hold in trust as provided in Section 2.05) money sufficient to pay
the Redemption Price of and accrued interest on all Notes to be redeemed on that
date other than Notes or portions thereof called for redemption on that date
that have been delivered by the Company to the Trustee for cancellation.
SECTION 3.07. Payment of Notes Called for Redemption. If notice
of redemption has been given in the manner provided above, the Notes or portion
of Notes specified in such notice to be redeemed shall become due and payable on
the Redemption Date at the Redemption Price stated therein, together with
accrued interest to such Redemption Date, and on and after such date (unless the
Company shall default in the payment of such Notes at the Redemption Price and
accrued interest to the Redemption Date, in which case the principal, until
paid, shall bear interest from the Redemption Date at the rate prescribed in the
Notes), such Notes shall cease to accrue interest. Upon surrender of any Note
for redemption in accordance with a notice of redemption, such Note shall be
paid and redeemed by the Company at the Redemption Price, together with accrued
interest, if any, to the Redemption Date; provided that installments of interest
whose Stated Maturity is on or prior to the Redemption Date shall be payable to
the Holders registered as such at the close of business on the relevant Regular
Record Date.
SECTION 3.08. Notes Redeemed in Part. Upon surrender of any Note
that is redeemed in part, the Company shall execute and the Trustee shall
authenticate and deliver to the Holder without service charge, a new Note equal
in principal amount to the unredeemed portion of such surrendered Note.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes. The Company shall pay the
principal of, premium, if any, and interest on the Notes on the dates and in the
manner provided in the Notes and this Indenture. An installment of principal,
premium, if any, or interest shall be considered paid on the date due if the
Trustee or Paying Agent (other than the Company, a Subsidiary of the Company, or
any Affiliate of any of them) holds at 11:00 a.m. New York time on that date
money designated for and sufficient to pay the installment. If the Company or
any Subsidiary of the Company or any Affiliate of any of them acts as Paying
Agent, an installment of principal, premium, if any, or interest shall be
considered paid on the due date if the entity acting as Paying Agent complies
with the last sentence of Section 2.05. As provided in Section 6.09, upon any
bankruptcy or reorganization procedure relative to the Company, the Trustee
shall serve as the Paying Agent, if any, for the Notes.
40
The Company shall pay interest on overdue principal and premium,
if any, and interest on overdue installments of interest, to the extent lawful,
at the rate per annum specified in the Notes.
SECTION 4.02. Maintenance of Office or Agency. The Company will
maintain in the Borough of Manhattan, The City of New York an office or agency
where Notes may be surrendered for registration of transfer or exchange or for
presentation for payment and where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Company will give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the address of the Trustee set forth in Section 11.02.
The Company may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided 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. The Company shall give
prompt written notice to the Trustee of any such designation or rescission and
of any change in the location of any such other office or agency.
The Company hereby initially designates the office of State
Street Bank and Trust Company, N.A., an Affiliate of the Trustee, 00 Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 as such office of the Company in accordance with
Section 2.04.
SECTION 4.03. Limitation on Indebtedness.
(a) The Company will not, and will not permit any of its
Restricted Subsidiaries to, Incur any Indebtedness (other than the Notes, the
Note Guarantees, the 7% Senior Notes due 2003 and other Indebtedness existing on
the Closing Date); provided that the Company or any Subsidiary Guarantor may
Incur Indebtedness, and any Restricted Subsidiary may Incur Acquired
Indebtedness, if, after giving effect to the Incurrence of such Indebtedness and
the receipt and application of the proceeds therefrom, the Interest Coverage
Ratio would be greater than 2.00 to 1.00.
Notwithstanding the foregoing, the Company and any Restricted
Subsidiary (except as specified below) may Incur each and all of the following:
(1) Indebtedness of the Company or any Restricted Subsidiary
under the Credit Agreement outstanding at any time in an aggregate
principal amount (together with refinancings thereof) not to exceed the
greater of (x) $375 million, less any amount of such Indebtedness
permanently repaid as provided in Section 4.11 and (y) 70% of Adjusted
Consolidated Net Tangible Assets (determined as of the date of the most
recent consolidated balance sheet of the Company and its Subsidiaries
filed with the Commission or provided to the Trustee);
41
(2) Indebtedness owed (A) to the Company or any Subsidiary
Guarantor evidenced by a promissory note or (B) to any other Restricted
Subsidiary; provided that (x) any event which results in any such
Restricted Subsidiary ceasing to be a Restricted Subsidiary or any
subsequent transfer of such Indebtedness (other than to the Company or
another Restricted Subsidiary) shall be deemed, in each case, to
constitute an Incurrence of such Indebtedness not permitted by this
clause (2) and (y) if the Company or any Subsidiary Guarantor is the
obligor on such Indebtedness, such Indebtedness must be expressly
subordinated in right of payment to the Notes except to the extent not
permitted by applicable law or any regulation or order of, or
arrangement with, any regulatory body or agency, in the case of the
Company or the Note Guarantee, in the case of a Subsidiary Guarantor;
(3) Indebtedness issued in exchange for, or the net proceeds of
which are used to extend, renew, replace, defease, refinance or refund,
then outstanding Indebtedness (other than Indebtedness outstanding under
clause (2) or (6)) and any refinancings thereof in an amount not to
exceed the amount so refinanced or refunded (plus penalties, premiums,
including redemption premiums and any premiums reasonably determined by
the Company as necessary to accomplish such exchange, extension,
renewal, replacement, defeasance, refinancing or refund by means of a
tender offer or privately negotiated repurchase, accrued interest, fees
and expenses); provided that (a) Indebtedness the proceeds of which are
used to refinance or refund the Notes or Indebtedness that is pari passu
with, or subordinated in right of payment to, the Notes or a Note
Guarantee shall only be permitted under this clause (3) if (x) in case
the Notes are refinanced in part or the Indebtedness to be refinanced is
pari passu with the Notes or a Note Guarantee, such new Indebtedness, by
its terms or by the terms of any agreement or instrument pursuant to
which such new Indebtedness is outstanding, is expressly made pari passu
with, or subordinate in right of payment to, the remaining Notes or the
Note Guarantee, or (y) in case the Indebtedness to be refinanced is
subordinated in right of payment to the Notes or a Note Guarantee, such
new Indebtedness, by its terms or by the terms of any agreement or
instrument pursuant to which such new Indebtedness is issued or remains
outstanding, is expressly made subordinate in right of payment to the
Notes or the Note Guarantee at least to the extent that the Indebtedness
to be refinanced is subordinated to the Notes or the Note Guarantee, (b)
such new Indebtedness, determined as of the date of Incurrence of such
new Indebtedness, does not mature prior to the Stated Maturity of the
Indebtedness to be extended, renewed, replaced, defeased, refinanced or
refunded, and the Average Life of such new Indebtedness is at least
equal to the remaining Average Life of the Indebtedness to be extended,
renewed, replaced, defeased, refinanced or refunded and (c) such new
Indebtedness is Incurred by the Company or a Subsidiary Guarantor or by
the Restricted Subsidiary who is the obligor on the Indebtedness to be
extended, renewed, replaced, defeased, refinanced or refunded;
(4) Indebtedness issued in exchange for, or the net proceeds of
which are used to prepay, redeem, purchase, defease or otherwise satisfy
in full the 7% Senior Notes due 2003 or deposited in a cash collateral
account or escrow account for the purpose of prepaying, redeeming,
purchasing, defeasing or satisfying in full the 7% Senior Notes due
2003, provided, however, such Indebtedness is an obligation of
PacifiCare and such
42
Indebtedness is pari passu with, or subordinated in right of payment to,
the Notes or a Note Guarantee;
(5) Indebtedness of the Company, to the extent the net proceeds
thereof are promptly (A) used to purchase Notes tendered in an Offer to
Purchase made as a result of a Change in Control or (B) deposited to
defease the Notes as provided in Article Eight;
(6) Guarantees of the Notes and Guarantees of Indebtedness of the
Company or any Subsidiary Guarantor by any Restricted Subsidiary;
provided the Guarantee of such Indebtedness is permitted by and made in
accordance with Section 4.07;
(7) Indebtedness representing Capital Lease Obligations, purchase
money obligations to finance all or any part of the purchase price or
cost of installation, construction or improvement of property or assets,
mortgage financings or similar financing transactions in an aggregate
principal amount (together with refinancings thereof) not to exceed $35
million; provided, however, that the aggregate principal amount of
Indebtedness that may be Incurred under this clause (7) by Restricted
Subsidiaries that are not Subsidiary Guarantors shall not exceed $20
million;
(8) Acquired Indebtedness of any Restricted Subsidiary in an
aggregate principal amount (together with refinancings thereof) not to
exceed $100 million; provided, however, that the aggregate principal
amount of Indebtedness that may be Incurred under this clause (8) by
Restricted Subsidiaries that are not Subsidiary Guarantors shall not
exceed $30 million;
(9) Indebtedness of the Company or any Subsidiary Guarantor
arising in connection with any information technology outsourcing and
related sale, transfer or other disposition of assets in connection with
such outsourcing in an aggregate principal amount (together with
refinancings thereof) not to exceed $50 million; and
(10) Indebtedness (in addition to Indebtedness permitted under
clauses (1) through (9) above) in an aggregate principal amount
outstanding at any time (together with refinancings thereof) not to
exceed 5% of Adjusted Consolidated Net Tangible Assets (determined as of
the date of the most recent consolidated balance sheet of the Company
and its Subsidiaries filed with the Commission or provided to the
Trustee); provided, however, that the aggregate amount of Indebtedness
that may be Incurred under this clause (10) by Restricted Subsidiaries
that are not Subsidiary Guarantors shall not exceed $25 million.
(b) Notwithstanding any other provision of this Section 4.03, the
maximum amount of Indebtedness that may be Incurred pursuant to this Section
4.03 will not be deemed to be exceeded, with respect to any outstanding
Indebtedness due solely to the result of fluctuations in the exchange rates of
currencies.
(c) For purposes of determining any particular amount of
Indebtedness under this Section 4.03, (x) Indebtedness Incurred under the Credit
Agreement on or prior to the Closing Date shall be treated as Incurred pursuant
to clause (1) of the second paragraph of clause (a) of this Section 4.03, (y)
Guarantees, Liens or obligations with respect to letters of
43
credit supporting Indebtedness otherwise included in the determination of such
particular amount shall not be included and (z) any Liens granted pursuant to
the equal and ratable provisions referred to in Section 4.09 shall not be
treated as Indebtedness. For purposes of determining compliance with this
Section 4.03, in the event that an item of Indebtedness meets the criteria of
more than one of the types of Indebtedness described above (other than
Indebtedness referred to in clause (x) of the preceding sentence), including
under the first paragraph of part (a), the Company, in its sole discretion,
shall classify, and from time to time may reclassify, such item of Indebtedness.
(d) The Company will not, and will not permit any Subsidiary
Guarantor to, Incur any Indebtedness if such Indebtedness is subordinate in
right of payment to any other Indebtedness unless such Indebtedness is also
subordinate in right of payment to the Notes or the Notes Guarantees to the same
extent.
SECTION 4.04. Limitation on Restricted Payments.
The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, (1) declare or pay any dividend or make
any distribution on or with respect to its Capital Stock (other than (x)
dividends or distributions payable solely in shares of its Capital Stock (other
than Disqualified Stock) or in options, warrants or other rights to acquire
shares of such Capital Stock and (y) pro rata dividends or distributions on
Common Stock of Restricted Subsidiaries (other than Subsidiary Guarantors) held
by minority stockholders) held by Persons other than the Company or any of its
Restricted Subsidiaries, (2) purchase, call for redemption or redeem, retire or
otherwise acquire for value any shares of Capital Stock of (A) the Company or
any Subsidiary Guarantor (including options, warrants or other rights to acquire
such shares of Capital Stock) held by any Person or (B) a Restricted Subsidiary
other than a Subsidiary Guarantor (including options, warrants or other rights
to acquire such shares of Capital Stock) held by any Affiliate of the Company
(other than a Restricted Subsidiary) or any holder (or any Affiliate of such
holder) of 5% or more of the Capital Stock of the Company, (3) make any
voluntary or optional principal payment, or voluntary or optional redemption,
repurchase, defeasance, or other acquisition or retirement for value, of
Indebtedness of the Company that is subordinated in right of payment to the
Notes or any Indebtedness of a Subsidiary Guarantor that is subordinated in
right of payment to a Note Guarantee or (4) make any Investment, other than a
Permitted Investment, in any Person (such payments or any other actions
described in clauses (1) through (4) above being collectively "Restricted
Payments") if, at the time of, and after giving effect to, the proposed
Restricted Payment:
(A) a Default or Event of Default shall have occurred and be
continuing,
(B) the Company could not Incur at least $1.00 of Indebtedness
under the first paragraph of Section 4.03(a) or
(C) the aggregate amount of all Restricted Payments made after
the Closing Date shall exceed the sum of
(1) 50% of the aggregate amount of the Adjusted
Consolidated Net Income (or, if the Adjusted Consolidated Net
Income is a loss, minus 100% of the
44
amount of such loss) accrued on a cumulative basis during the
period (taken as one accounting period) beginning on the first
day of the fiscal quarter immediately following the Closing Date
and ending on the last day of the last fiscal quarter preceding
the Transaction Date for which reports have been filed with the
Commission or provided to the Trustee plus
(2) the aggregate Net Cash Proceeds and the fair market
value of Temporary Cash Investments received by the Company after
the Closing Date as a capital contribution or from the issuance
and sale of its Capital Stock (other than Disqualified Stock) to
a Person who is not a Subsidiary of the Company, including an
issuance or sale permitted by this Indenture of Indebtedness of
the Company for cash or Temporary Cash Investments subsequent to
the Closing Date upon the conversion of such Indebtedness into
Capital Stock (other than Disqualified Stock) of the Company and
including any additional cash proceeds received by the Company
upon such conversion, or from the issuance to a Person who is not
a Subsidiary of the Company of any options, warrants or other
rights to acquire Capital Stock of the Company (in each case,
exclusive of any Disqualified Stock or any options, warrants or
other rights that are redeemable at the option of the holder, or
are required to be redeemed, prior to the Stated Maturity of the
Notes) plus
(3) an amount equal to the net reduction in Investments
(other than Permitted Investments and Investments made pursuant
to clause (10) or (16) of the next paragraph of this Section
4.04) in any Person resulting from payments of interest on
Indebtedness, dividends, repayments of loans or advances, or
other transfers of assets, in each case to the Company or any
Restricted Subsidiary or from the Net Cash Proceeds or Temporary
Cash Investments from the sale or other disposition of any such
Investment (except, in each case, to the extent any such payment
or proceeds are included in the calculation of Adjusted
Consolidated Net Income), from the release of any Guarantee or
from redesignations of Unrestricted Subsidiaries as Restricted
Subsidiaries (valued in each case as provided in the definition
of "Investments"), not to exceed, in each case, the amount of
Investments previously made by the Company or any Restricted
Subsidiary in such Person or Unrestricted Subsidiary plus
(4) $90 million.
The foregoing provision shall not be violated by reason of:
(1) the payment of any dividend or redemption of any Capital
Stock within 60 days after the related date of declaration or call for
redemption if, at said date of declaration or call for redemption, such
payment or redemption would comply with the preceding paragraph;
(2) the redemption, repurchase, defeasance or other acquisition
or retirement for value of Indebtedness that is subordinated in right of
payment to the Notes or any Note Guarantee including premium, if any,
and accrued interest, with the proceeds of, or
45
in exchange for, Indebtedness Incurred under clause (3) of the second
paragraph of Section 4.03(a);
(3) the repurchase, redemption or other acquisition of Capital
Stock of the Company or a Subsidiary Guarantor (or options, warrants or
other rights to acquire such Capital Stock) in exchange for, or out of
the proceeds of a capital contribution or a substantially concurrent
offering of, shares of Capital Stock (other than Disqualified Stock) of
the Company (or options, warrants or other rights to acquire such
Capital Stock); provided that such options, warrants or other rights are
not redeemable at the option of the holder or required to be redeemed
prior to the Stated Maturity of the Notes;
(4) the making of any principal payment or the repurchase,
redemption, retirement, defeasance or other acquisition for value of
Indebtedness which is subordinated in right of payment to the Notes or
any Note Guarantee in exchange for, or out of the proceeds of, a
substantially concurrent offering of, shares of the Capital Stock (other
than Disqualified Stock) of the Company (or options, warrants or other
rights to acquire such Capital Stock); provided that such options,
warrants or other rights are not redeemable at the option of the holder
or required to be redeemed prior to the Stated Maturity of the Notes;
(5) payments or distributions, to dissenting stockholders
pursuant to applicable law, pursuant to or in connection with a
consolidation, merger or transfer of assets of the Company that complies
with Article Five of this Indenture;
(6) Investments acquired as a capital contribution to, or in
exchange for, or out of the proceeds of a substantially concurrent
offering of, Capital Stock (other than Disqualified Stock) of the
Company;
(7) the repurchase of Capital Stock deemed to occur upon the
exercise of options or warrants if such Capital Stock represents all or
a portion of the exercise price thereof;
(8) the purchase, repurchase, acquisition, cancellation or other
retirement for value by the Company or any Restricted Subsidiary of
Capital Stock (or options, warrants or other rights to acquire such
Capital Stock) of the Company or any Restricted Subsidiary from future,
present or former employees, officers, directors or consultants (or
their estates or beneficiaries under their estates) of the Company or
any Restricted Subsidiary upon the death, disability, retirement or
termination of employment or service of such employees, officers,
directors or consultants or to the extent required pursuant to employee
benefit plans, employment agreements or other arrangements with such
employees, officers, directors or consultants (or their estates or
beneficiaries under their estates), in an aggregate amount not to exceed
$2.5 million in any calendar year, with unused amounts in any calendar
year being carried over to succeeding years, with an aggregate amount
not to exceed $5.0 million;
(9) the repurchase, redemption or other acquisition of
Disqualified Stock of the Company in exchange for or out of the proceeds
of a capital contribution or a
46
substantially concurrent offering of Capital Stock of the Company;
provided that any such new Capital Stock that is Disqualified Stock does
not mature earlier than and is not required to be redeemed, including a
redemption at the option of the holder, sooner than the Disqualified
Stock being repurchased, redeemed or acquired;
(10) Investments in any Person in an aggregate amount not to
exceed $50 million, plus the net reduction in any such Investments
resulting from distributions on or repayments of such Investments or
from the Net Cash Proceeds or fair market value of Temporary Cash
Investments from the sale or other disposition of any such Investment
(except, in each case, to the extent any such payment or proceeds are
included in the calculation of Adjusted Consolidated Net Income);
provided that such reduction does not exceed the amount of such
Investment;
(11) the distribution of all or a portion of the Capital Stock of
any Subsidiary of the Company; provided that, prior to such
distribution, (a) the Notes are rated both Baa3 or better by Xxxxx'x
Investors Service, Inc. and BBB- or better by Standard & Poor's Ratings
Group (or, in any case, if such person ceases to rate the Notes for
reasons outside of the control of the Company, the equivalent investment
grade credit rating from any other "nationally recognized statistical
rating organization" (within the meaning of Rule 15c3-1(c)(2)(vi)(F)
under the Exchange Act) selected by the Company as a replacement agency)
and (b) the Company has received a certificate from such rating agencies
stating that the rating of the Notes will not be downgraded as a result
of such distribution;
(12) the designation of any Restricted Subsidiary as an
Unrestricted Subsidiary in connection with an initial public offering of
the Capital Stock of such Subsidiary and the planned distribution of the
remaining Capital Stock of such Subsidiary; provided that, prior to such
distribution, (a) the Notes are rated both Baa3 or better by Xxxxx'x
Investors Service, Inc. and BBB- or better by Standard & Poor's Ratings
Group (or, in any case, if such person ceases to rate the Notes for
reasons outside of the control of the Company, the equivalent investment
grade credit rating from any other "nationally recognized statistical
rating organization" (within the meaning of Rule 15c3-1(c)(2)(vi)(F)
under the Exchange Act) selected by the Company as a replacement agency)
and (b) the Company has received a certificate from such rating agencies
stating that the rating of the Notes will not be downgraded as a result
of such designation, initial public offering and distribution;
(13) the declaration or payment of dividends on the Capital Stock
(other than Disqualified Stock) of the Company in an aggregate annual
amount not to exceed 6% of the Net Cash Proceeds received by the Company
after the Closing Date from the sale of such Capital Stock;
(14) payments of cash in lieu of the issuance of fractional
shares upon the exercise of warrants or upon the conversion or exchange
of, or issuance of Capital Stock in lieu of cash dividends on, any
Capital Stock of the Company, which in the aggregate do not exceed $3.0
million;
47
(15) redemption of rights issued pursuant to the Company's Rights
Plan in an aggregate amount not to exceed $1.5 million; or
(16) Restricted Payments in an aggregate amount not to exceed $20
million, plus the net reduction in any Investments made pursuant to this
clause resulting from distributions on or repayments of such Investments
or from the Net Cash Proceeds or Temporary Cash Investments from the
sale or other disposition of any such Investment (except, in each case,
to the extent any such payment or proceeds are included in the
calculation of Adjusted Consolidated Net Income); provided that such
reduction does not exceed the amount of such Investment;
provided that, except in the case of clauses (1) and (3), no Default or Event of
Default shall have occurred and be continuing or occur as a consequence of the
actions or payments set forth therein.
Each Restricted Payment permitted pursuant to the preceding
paragraph (other than the Restricted Payments referred to in clauses (2), (7),
(8), (9), (12), (14) and (15) thereof, an exchange of Capital Stock for Capital
Stock or Indebtedness referred to in clause (3) or (4) thereof and an Investment
acquired as a capital contribution or in exchange for Capital Stock referred to
in clause (6) thereof), and the Net Cash Proceeds from any issuance of Capital
Stock referred to in clauses (3), (4) or (6), shall be included in calculating
whether the conditions of clause (C) of the first paragraph of this Section 4.04
have been met with respect to any subsequent Restricted Payments. In the event
the proceeds of an issuance of Capital Stock of the Company are used for the
redemption, repurchase or other acquisition of the Notes, or Indebtedness that
is pari passu with the Notes or any Note Guarantee, then the Net Cash Proceeds
of such issuance shall be included in clause (C) of the first paragraph of this
Section 4.04 only to the extent such proceeds are not used for such redemption,
repurchase or other acquisition of Indebtedness.
For purposes of determining compliance with this Section 4.04,
(x) the amount, if other than in cash, of any Restricted Payment shall be
determined in good faith by the Board of Directors, whose determination shall be
conclusive and evidenced by a Board Resolution and (y) in the event that a
Restricted Payment meets the criteria of more than one of the types of
Restricted Payments described in the above clauses, including the first
paragraph of this Section 4.04, the Company, in its sole discretion, may order
and classify, and from time to time may reclassify, such Restricted Payment if
it would have been permitted at the time such Restricted Payment was made and at
the time of such reclassification.
SECTION 4.05. Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries.
The Company will not, and will not permit any Restricted
Subsidiary to, create or otherwise cause or suffer to exist or become effective
any consensual encumbrance or restriction of any kind on the ability of any
Restricted Subsidiary to (1) pay dividends or make any other distributions
permitted by applicable law on any Capital Stock of such Restricted Subsidiary
owned by the Company or any other Restricted Subsidiary, (2) pay any
Indebtedness owed to the Company or any other Restricted Subsidiary, (3) make
loans or advances to the Company or any
48
other Restricted Subsidiary or (4) transfer any of its property or assets to the
Company or any other Restricted Subsidiary.
The foregoing provisions shall not restrict any encumbrances or
restrictions:
(1) existing on the Closing Date in the Credit Agreement, the
indenture for the 7% Senior Notes due 2003, this Indenture or any other
agreements in effect on the Closing Date, and any amendments,
modifications, restatements, supplements, refundings, extensions,
refinancings, renewals or replacements of such agreements; provided that
the encumbrances and restrictions in any such amendments, modifications,
restatements, supplements, refundings, extensions, refinancings,
renewals or replacements taken as a whole are no less favorable in any
material respect to the Holders than those encumbrances or restrictions
that are then in effect and that are being amended, modified, restated,
supplemented, refunded, extended, refinanced, renewed or replaced;
(2) existing under or by reason of applicable law or any
applicable rule, regulation or order of, or arrangement with, any
regulatory body or agency;
(3) existing with respect to any Person or the property or assets
of such Person acquired by the Company or any Restricted Subsidiary,
under agreements existing at the time of such acquisition and not
incurred in contemplation thereof, which encumbrances or restrictions
are not applicable to any Person or the property or assets of any Person
other than such Person or the property or assets of such Person so
acquired and any amendments, modifications, restatements, supplements,
refundings, extensions, refinancings, renewals or replacements of such
agreements; provided that the encumbrances and restrictions in any such
amendments, modifications, restatements, supplements, refundings,
extensions, refinancings, renewals or replacements taken as a whole are
no less favorable in any material respect to the Holders than those
encumbrances or restrictions that are then in effect and that are being
amended, modified, restated, supplemented, refunded, extended,
refinanced, renewed or replaced;
(4) in the case of clause (4) of the first paragraph of this
Section 4.05:
(A) that restrict in a customary manner the subletting,
assignment or transfer of any property or asset that is, or is
subject to, a lease, license, right, conveyance or contract or
similar property or asset, including, without limitation,
customary non-assignment provisions in leases, purchase money
obligations and other similar agreements, in each case with
respect to the property or assets subject thereto,
(B) existing by virtue of any sale, disposition, transfer
of, agreement to sell, dispose or transfer, option or right with
respect to, or Lien on, any property or assets of the Company or
any Restricted Subsidiary not otherwise prohibited by this
Indenture,
(C) arising or agreed to in the ordinary course of
business, not relating to any Indebtedness, and that do not,
individually or in the aggregate, detract from
49
the value of property or assets of the Company or any Restricted
Subsidiary in any manner material to the Company or any
Restricted Subsidiary, or
(D) restrictions on cash or deposits required by insurance
companies or health maintenance organizations under contracts
entered into in the ordinary course of business;
(5) with respect to a Restricted Subsidiary and imposed pursuant
to an agreement that has been entered into for the sale or disposition
of all or substantially all of the Capital Stock of, or property and
assets of, such Restricted Subsidiary;
(6) imposed by customary provisions in joint venture agreements
and similar agreements that restrict the transfer of the interest in the
joint venture; or
(7) with respect to a Subsidiary Guarantor, contained in the
terms of any Indebtedness or any agreement pursuant to which such
Indebtedness was issued if the encumbrance or restriction is not
materially more disadvantageous to the Holders than is customary in
comparable financings and the Company determines that any such
encumbrance or restriction will not materially affect the Company's
ability to make principal or interest payments on the Notes.
Nothing contained in this Section 4.05 shall prevent the Company
or any Restricted Subsidiary from (1) creating, incurring, assuming or suffering
to exist any Liens otherwise permitted in Section 4.09 or (2) restricting the
sale or other disposition of property or assets of the Company or any of its
Restricted Subsidiaries that secure Indebtedness of the Company or any of its
Restricted Subsidiaries.
SECTION 4.06. Limitation on the Issuance and Sale of Capital
Stock of Restricted Subsidiaries.
The Company will not sell, and will not permit any Restricted
Subsidiary, directly or indirectly, to issue or sell, any shares of Capital
Stock of a Restricted Subsidiary (including options, warrants or other rights to
purchase shares of such Capital Stock) except:
(1) to the Company or a Wholly Owned Restricted Subsidiary;
(2) issuances of director's qualifying shares or sales to foreign
nationals of shares of Capital Stock of foreign Restricted Subsidiaries,
to the extent required by applicable law;
(3) if, immediately after giving effect to such issuance or sale,
such Restricted Subsidiary would no longer constitute a Restricted
Subsidiary and any Investment in such Person remaining after giving
effect to such issuance or sale would have been permitted to be made
under Section 4.04 if made on the date of such issuance or sale; or
(4) sales of Common Stock (including options, warrants or other
rights to purchase shares of such Common Stock) of a Restricted
Subsidiary, provided that the
50
Company or such Restricted Subsidiary applies the Net Cash Proceeds of
any such sale in accordance with clause (A), (B) or (C) of Section 4.11.
SECTION 4.07. Limitation on Issuances of Guarantees by Restricted
Subsidiaries.
The Company will cause each Restricted Subsidiary (other than the
PHPA Subsidiary Guarantors) that would be permitted to guarantee payment of the
Notes without obtaining the approval of governmental or regulatory agencies or
authorities or incurring regulatory restrictions on the operations of such
subsidiary (other than any Foreign Subsidiary) to execute and deliver a
supplemental indenture to this Indenture providing for an unsubordinated
Guarantee (a "Subsidiary Guarantee") of payment of the Notes by such Restricted
Subsidiary. Immediately upon the prepayment, redemption, purchase, defeasance or
other satisfaction in full of the 7% Senior Notes due 2003, or upon any waiver,
modification or amendment of the provisions in the documents governing the 7%
Senior Notes due 2003 so that such documents no longer restrict the ability of
the PHPA Subsidiary Guarantors to guarantee the payment of the Notes, PacifiCare
will cause each PHPA Subsidiary Guarantor to fully and unconditionally
Guarantee, jointly and severally, on an unsecured unsubordinated basis the
payment of principal, premium, if any, and interest on the Notes by the
execution and delivery of a supplemental indenture to the Indenture (such
Guarantee shall for all purposes herein be deemed a Subsidiary Guarantee).
The Company will not permit any Restricted Subsidiary which is
not a Subsidiary Guarantor, directly or indirectly, to Guarantee any
Indebtedness ("Guaranteed Indebtedness") (other than Indebtedness outstanding
under the Credit Agreement) of the Company or any other Restricted Subsidiary
(other than a Foreign Subsidiary), unless (a) such Restricted Subsidiary
simultaneously executes and delivers a supplemental indenture to this Indenture
providing for a Subsidiary Guarantee and (b) such Restricted Subsidiary waives
and will not in any manner whatsoever claim or take the benefit or advantage of,
any rights of reimbursement, indemnity or subrogation or any other rights
against the Company or any other Restricted Subsidiary as a result of any
payment by such Restricted Subsidiary under its Subsidiary Guarantee until the
Notes have been paid in full.
If the Guaranteed Indebtedness is (A) pari passu in right of
payment with the Notes or any Notes Guarantee, then the Guarantee of such
Guaranteed Indebtedness shall be pari passu in right of payment with, or
subordinated to, the Subsidiary Guarantee or (B) subordinated in right of
payment to the Notes or any Note Guarantee, then the Guarantee of such
Guaranteed Indebtedness shall be subordinated in right of payment to the
Subsidiary Guarantee at least to the extent that the Guaranteed Indebtedness is
subordinated to the Notes or the Notes Guarantee.
Notwithstanding the foregoing, any Subsidiary Guarantee by a
Restricted Subsidiary may provide by its terms that it shall be automatically
and unconditionally released and discharged without any further action required
on the part of the Trustee or any Holder, upon:
(1) the sale, exchange, transfer or other disposition, to any
Person not an Affiliate of the Company, of all of the Company's and each
Restricted Subsidiary's
51
Capital Stock in, or all or substantially all the assets of, such
Restricted Subsidiary (which sale, exchange or transfer is not
prohibited by this Indenture) or upon the designation of such Restricted
Subsidiary as an Unrestricted Subsidiary in accordance with the terms of
this Indenture; or
(2) the release or discharge of the Guarantee which resulted in
the creation of such Subsidiary Guarantee (as well as the release or
discharge of any subsequently created Guarantees which would have
resulted in the creation of such Subsidiary Guarantee if same did not
already exist), except a discharge or release by or as a result of
payment under such Guarantee.
SECTION 4.08. Limitation on Transactions with Stockholders and
Affiliates.
The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, enter into, renew or extend any
transaction (including, without limitation, the purchase, sale, lease or
exchange of property or assets, or the rendering of any service) with any holder
(or any Affiliate of such holder) of 10% or more of any class of Capital Stock
of the Company or with any Affiliate of the Company or any Restricted
Subsidiary, except upon fair and reasonable terms no less favorable to the
Company or such Restricted Subsidiary than could be obtained, at the time of
such transaction or, if such transaction is pursuant to a written agreement, at
the time of the execution of the agreement providing therefor, in a comparable
arm's-length transaction with a Person that is not such a holder or an
Affiliate.
The foregoing limitation does not limit, and shall not apply to:
(1) transactions (A) approved by a majority of the disinterested
members of the Board of Directors or (B) for which the Company or a
Restricted Subsidiary delivers to the Trustee a written opinion of a
nationally recognized investment banking, accounting, valuation or
appraisal firm stating that the transaction is fair to the Company or
such Restricted Subsidiary from a financial point of view;
(2) any transaction solely between (a) the Company and any of its
Wholly Owned Restricted Subsidiaries or solely among Wholly Owned
Restricted Subsidiaries or (b) the Company and any of its other
Restricted Subsidiaries or solely among such other Restricted
Subsidiaries; provided, for purposes of this clause (b), no holder (or
Affiliate of such holder) of 10% or more of any class of Capital Stock
of the Company or any Affiliate of the Company (other than its
Restricted Subsidiaries) owns any Capital Stock of any such Restricted
Subsidiary;
(3) the payment of reasonable fees and compensation to officers
and directors of the Company or any Restricted Subsidiary and reasonable
indemnification arrangements entered into by the Company or any
Restricted Subsidiary, including any issuance of securities, or other
payments, awards or grants in cash, securities or otherwise pursuant to,
or the funding of, employment arrangements, employee stock options and
employee stock ownership plans approved by the Board of Directors;
52
(4) any payments or other transactions pursuant to any
tax-sharing agreement between the Company and any other Person with
which the Company files a consolidated tax return or with which the
Company is part of a consolidated group for tax purposes;
(5) purchases of services from physicians, hospitals, claims
management or processing companies, pharmacy benefit management
companies and other health care or service providers in the ordinary
course of business on fair and reasonable terms as determined in good
faith by the Company;
(6) any sale of shares of Capital Stock (other than Disqualified
Stock) of the Company or any options, warrants or other rights to
acquire such Capital Stock; or
(7) any Permitted Investments or any Restricted Payments not
prohibited by Section 4.04.
Notwithstanding the foregoing, any transaction or series of
related transactions covered by the first paragraph of this Section 4.08 and not
covered by clauses (2) through (7) of this paragraph, (a) the aggregate amount
of which exceeds $7.5 million in value, must be approved or determined to be
fair in the manner provided for in clause (1)(A) or (B) above and (b) the
aggregate amount of which exceeds $10 million in value, must be determined to be
fair in the manner provided for in clause (1)(B) above.
SECTION 4.09. Limitation on Liens.
The Company will not, and will not permit any Restricted
Subsidiary to, create, incur, assume or suffer to exist any Lien on any of its
assets or properties of any character, or any shares of Capital Stock or
Indebtedness of any Restricted Subsidiary, without making effective provision
for all of the Notes and all other amounts due under this Indenture to be
directly secured equally and ratably with (or, if the obligation or liability to
be secured by such Lien is subordinated in right of payment to the Notes, prior
to) the obligation or liability secured by such Lien for so long as such
Indebtedness is secured by such Lien; provided that the Trustee shall release
any such equal and ratable or prior Lien hereunder, at such time (A) the Lien on
such assets or properties, shares or Indebtedness is released, or (B) the assets
or properties or shares subject to such Lien are sold in accordance with Section
4.11.
The foregoing limitation does not apply to:
(1) Liens existing on the Closing Date;
(2) Liens granted after the Closing Date on any assets or Capital
Stock of the Company or its Restricted Subsidiaries created in favor of
the Holders;
(3) Liens with respect to the assets of a Restricted Subsidiary
granted by such Restricted Subsidiary to the Company or a Wholly Owned
Restricted Subsidiary to secure Indebtedness owing to the Company or
such other Restricted Subsidiary;
(4) Liens securing Indebtedness which is Incurred to refinance
secured Indebtedness which is permitted to be Incurred under clause (3)
of the second paragraph
53
of Section 4.03(a); provided that such Liens do not extend to, or cover
any, property or assets of the Company or any Restricted Subsidiary
other than the property or assets securing the Indebtedness being
refinanced;
(5) Liens to secure Indebtedness Incurred under clause (1) of the
second paragraph of Section 4.03(a) and Liens to secure the 7% Senior
Notes due 2003 incurred pursuant to Section 1009 of the indenture for
the 7% Senior Notes due 2003;
(6) Liens (including extensions and renewals thereof) upon real
or personal property acquired after the Closing Date; provided that (a)
such Lien is created solely for the purpose of securing Indebtedness
Incurred, in accordance with Section 4.03, to finance the cost
(including the cost of improvement, installation or construction) of the
property or assets subject thereto and such Lien is created prior to, at
the time of or within six months after the later of the acquisition, the
installation, the completion of construction or the commencement of full
operation of such property, (b) the principal amount of the Indebtedness
secured by such Lien does not exceed 100% of such cost and (c) any such
Lien shall not extend to or cover any property or assets other than such
property or assets and any improvements on such item;
(7) Liens on cash set aside at the time of the Incurrence of any
Indebtedness, or government securities purchased with such cash, in
either case to the extent that such cash or government securities
pre-fund the payment of interest on such Indebtedness and are held in a
collateral or escrow account or similar arrangement to be applied for
such purpose; or
(8) Permitted Liens.
SECTION 4.10. Limitation on Sale-Leaseback Transactions.
The Company will not, and will not permit any Restricted
Subsidiary to, enter into any sale-leaseback transaction involving any of its
assets or properties whether now owned or hereafter acquired, whereby the
Company or a Restricted Subsidiary sells or transfers such assets or properties
and then or thereafter leases such assets or properties, or any part thereof, or
any other assets or properties which the Company or such Restricted Subsidiary,
as the case may be, intends to use for substantially the same purpose or
purposes as the assets or properties sold or transferred.
The foregoing restriction does not apply to any sale-leaseback
transaction if:
(1) the lease is for a period, including renewal rights, of not
in excess of three years;
(2) the lease secures or relates to industrial revenue or
pollution control bonds;
(3) the transaction is solely between the Company and any Wholly
Owned Restricted Subsidiary or solely between Wholly Owned Restricted
Subsidiaries; or
54
(4) the Company or such Restricted Subsidiary, within 12 months
after the sale or transfer of any assets or properties is completed,
applies an amount not less than the Net Cash Proceeds received from such
sale in accordance with clause (A), (B) or (C) of the third paragraph of
Section 4.11.
SECTION 4.11. Limitation on Asset Sales.
The Company will not, and will not permit any Restricted
Subsidiary to, consummate any Asset Sale, unless (1) the consideration received
by the Company or such Restricted Subsidiary is at least equal to the fair
market value of the assets sold or disposed of; provided that this clause (1)
shall not apply to any sale, transfer or other disposition arising from
foreclosure, condemnation or similar action with respect to any assets or any
dispositions required by law or regulatory authority, and (2) at least 75% of
the consideration received consists of (a) cash or Temporary Cash Investments,
(b) the assumption of unsubordinated Indebtedness or liabilities (other than
contingent liabilities and liabilities that are subordinated to the Notes or any
Subsidiary Guarantee) of the Company or any Subsidiary Guarantor or Indebtedness
or liabilities (other than contingent liabilities) of any other Restricted
Subsidiary (in each case, other than Indebtedness or liabilities owed to the
Company or any Affiliate of the Company) or (c) Replacement Assets (other than
Investments in any Person), provided that the Company, such Subsidiary Guarantor
or such other Restricted Subsidiary is irrevocably and unconditionally released
from all liability under such Indebtedness or liabilities; provided that the
Company and its Restricted Subsidiaries may receive consideration in amounts in
excess of that permitted in clause (2) (the "Excess Non-Liquid Consideration"),
to the extent that the aggregate fair market value of all Excess Non-Liquid
Consideration received by the Company and its Restricted Subsidiaries from
previous Asset Sales since the Closing Date that has not yet converted into cash
or Temporary Cash Investments does not exceed $25 million.
For purposes of this provision, any securities, notes, mortgages
or other obligations received by the Company or any Restricted Subsidiary in any
Asset Sale that are converted, sold or exchanged by the Company or such
Restricted Subsidiary into cash within 90 days of the related Asset Sale (to the
extent of the cash received in that conversion, sale or exchange) shall be
deemed to be cash.
In the event and to the extent that the Net Cash Proceeds
received by the Company or any of its Restricted Subsidiaries from one or more
Asset Sales occurring on or after the Closing Date in any period of 12
consecutive months exceed 10% of Adjusted Consolidated Net Tangible Assets
(determined as of the date closest to the commencement of such 12-month period
for which a consolidated balance sheet of the Company and its Subsidiaries has
been filed with the Commission or provided to the Trustee), then the Company
shall or shall cause the relevant Restricted Subsidiary to:
(1) within twelve months after the date Net Cash Proceeds so
received exceed 10% of Adjusted Consolidated Net Tangible Assets,
(A) to make capital contributions to Restricted
Subsidiaries which are required by law or requested in writing to
be made by the appropriate state
55
regulatory authorities or retain any Net Cash Proceeds as capital
of any Restricted Subsidiary to the extent distribution is not
permitted by regulatory authorities,
(B) apply an amount equal to such excess Net Cash Proceeds
to permanently repay unsubordinated Indebtedness of the Company
or any Subsidiary Guarantor or Indebtedness of any other
Restricted Subsidiary, in each case owing to a Person other than
the Company or any Affiliate of the Company,
(C) invest an equal amount, or the amount not so applied
pursuant to clause (A) (or enter into a definitive agreement
committing to so invest within 12 months after the date of such
agreement), in Replacement Assets, or
(D) any combination of prepayment or investment permitted
by the foregoing clauses (1)(A), (1)(B) and (1)(C), and
(2) apply (no later than the end of the 12-month period referred
to in clause (1)) such excess Net Cash Proceeds (to the extent not
applied pursuant to clause (1)) as provided in the following paragraphs
of this Section 4.11.
The amount of such excess Net Cash Proceeds required to be applied (or to be
committed to be applied) during such 12-month period as set forth in clause (1)
of the preceding sentence and not applied as so required by the end of such
period shall constitute "Excess Proceeds."
If, as of the first day of any calendar month, the aggregate
amount of Excess Proceeds not theretofore subject to an Offer to Purchase
pursuant to this Section 4.11 totals at least $15 million, the Company must
commence, not later than the fifteenth Business Day of such month, and
consummate an Offer to Purchase from the Holders (and if required by the terms
of any Indebtedness that is pari passu with the Notes ("Pari Passu
Indebtedness"), from the holders of such Pari Passu Indebtedness) on a pro rata
basis an aggregate principal amount of Notes (and Pari Passu Indebtedness) equal
to the Excess Proceeds on such date, at a purchase price equal to 100% of their
principal amount, plus, in each case, accrued interest (if any) to the Payment
Date. If any Excess Proceeds remain after consummation of an Offer to Purchase,
the Company or any Restricted Subsidiary may use such Excess Proceeds for any
purpose not otherwise prohibited by this Indenture.
SECTION 4.12. Repurchase of Notes upon a Change of Control. The
Company shall commence, within 30 days of the occurrence of a Change of Control,
and consummate an Offer to Purchase for all Notes then outstanding, at a
purchase price equal to 101% of the principal amount thereof, plus accrued
interest, if any, to the Payment Date.
The Company shall not be required to make an Offer to Purchase
upon the occurrence of a Change of Control, if a third party makes an offer to
purchase the Notes in the manner, at the times and price and otherwise in
compliance with the requirements of this Indenture applicable to an Offer to
Purchase for a Change of Control and purchases all Notes validly tendered and
not withdrawn in such offer to purchase.
SECTION 4.13. Existence. Subject to Articles Four and Five of
this Indenture, the Company will do or cause to be done all things necessary to
preserve and keep in full force
56
and effect its existence and the existence of each of its Restricted
Subsidiaries in accordance with the respective organizational documents of the
Company and each Restricted Subsidiary and the rights (whether pursuant to
charter, partnership certificate, agreement, statute or otherwise), licenses and
franchises of the Company and each Restricted Subsidiary; provided that the
Company shall not be required to preserve any such right, license or franchise,
or the existence of any Restricted Subsidiary, if the maintenance or
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Restricted Subsidiaries taken as a whole.
SECTION 4.14. Payment of Taxes and Other Claims. The Company will
pay or discharge and shall cause each of its Subsidiaries to pay or discharge,
or cause to be paid or discharged, before the same shall become delinquent (i)
all material taxes, assessments and governmental charges levied or imposed upon
(a) the Company or any such Subsidiary, (b) the income or profits of any such
Subsidiary which is a corporation or (c) the property of the Company or any such
Subsidiary and (ii) all material lawful claims for labor, materials and supplies
that, if unpaid, might by law become a lien upon the property of the Company or
any Restricted Subsidiary; provided that the Company shall not be required to
pay or discharge, or cause to be paid or discharged, any such tax, assessment,
charge or claim the amount, applicability or validity of which is being
contested in good faith by appropriate proceedings and for which adequate
reserves have been established.
SECTION 4.15. Maintenance of Properties and Insurance. The
Company will cause all properties used or useful in the conduct of its business
or the business of any of its Restricted Subsidiaries to be maintained and kept
in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided
that nothing in this Section 4.15 shall prevent the Company or any Restricted
Subsidiary from discontinuing the use, operation or maintenance of any of such
properties or disposing of any of them, if such discontinuance or disposal is,
in the judgment of the Company, desirable in the conduct of the business of the
Company or such Restricted Subsidiary.
The Company will provide or cause to be provided, for itself and
its Restricted Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds customarily insured against by corporations
similarly situated and owning like properties, including, but not limited to,
products liability insurance and public liability insurance, with reputable
insurers or with the government of the United States of America, or an agency or
instrumentality thereof, in such amounts, with such deductibles and by such
methods as shall be customary for corporations similarly situated in the
industry in which the Company or any such Restricted Subsidiary, as the case may
be, is then conducting business.
SECTION 4.16. Notice of Defaults. In the event that any Officer
becomes aware of any Default or Event of Default, the Company shall promptly
deliver to the Trustee an Officers' Certificate specifying such Default or Event
of Default.
SECTION 4.17. Compliance Certificates. (a) The Company and each
Subsidiary Guarantor (to the extent that such Subsidiary Guarantor is required
under the Trust
57
Indenture Act of 1939, as amended) shall deliver to the Trustee, within 120 days
after the end of each fiscal year, an Officers' Certificate stating whether or
not the signers know of any Default or Event of Default that occurred during
such fiscal year. Such certificate shall contain a certification from the
principal executive officer, principal financial officer or principal accounting
officer of the Company that a review has been conducted of the activities of the
Company and its Restricted Subsidiaries and the Company's and its Restricted
Subsidiaries' performance under this Indenture and that the Company has complied
with all conditions and covenants under this Indenture. For purposes of this
Section 4.17, such compliance shall be determined without regard to any period
of grace or requirement of notice provided under this Indenture. If any of the
officers of the Company signing such certificate has knowledge of such a Default
or Event of Default, the certificate shall describe any such Default or Event of
Default and its status.
(b) So long as not contrary to the then current recommendations
of the American Institute of Certified Public Accountants, the Company shall
deliver to the Trustee, within 120 days after the end of each fiscal year,
beginning with the fiscal year in which this Indenture was executed, a
certificate signed by the Company's independent certified public accountants
stating (i) that their audit examination has included a review of the terms of
this Indenture and the Notes as they relate to accounting matters, (ii) that
they have read the most recent Officers' Certificate delivered to the Trustee
pursuant to paragraph (a) of this Section 4.17 and (iii) whether, in connection
with their audit examination, anything came to their attention that caused them
to believe that the Company was not in compliance with any of the terms,
covenants, provisions or conditions of Article Four and Section 5.01 of this
Indenture as they pertain to accounting matters and, if any Default or Event of
Default has come to their attention, specifying the nature and period of
existence thereof; provided that such independent certified public accountants
shall not be liable in respect of such statement by reason of any failure to
obtain knowledge of any such Default or Event of Default that would not be
disclosed in the course of an audit examination conducted in accordance with
generally accepted auditing standards in effect at the date of such examination.
SECTION 4.18. Commission Reports and Reports to Holders. Whether
or not the Company is then required to file reports with the Commission, the
Company shall file with the Commission all such reports and other information as
it would be required to file with the Commission by Sections 13(a) or 15(d)
under the Exchange Act if it were subject thereto. The Company shall supply the
Trustee and each Holder who so requests or shall supply to the Trustee for
forwarding to each such Holder, without cost to such Holder, copies of such
reports and other information within 15 days after the date it would have been
required to file such reports or other information with the Commission had it
been subject to such Sections. The Company also shall comply with the other
provisions of TIA Section 314(a).
SECTION 4.19. Waiver of Stay, Extension or Usury Laws. The
Company and each of the Subsidiary Guarantors 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 law or other law that would prohibit or forgive the
Company from paying all or any portion of the principal of, premium, if any, or
interest on the Notes as contemplated herein, wherever enacted, now or at any
time hereafter in force, or that may affect the covenants or the performance of
this Indenture; and (to the extent
58
that it may lawfully do so) the Company and each of the Subsidiary Guarantors
(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 FIVE
SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, Etc.
The Company will not consolidate with, merge with or into, or
sell, convey, transfer, lease or otherwise dispose of all or substantially all
of its property and assets (as an entirety or substantially an entirety in one
transaction or a series of related transactions) to, any Person or permit any
Person to merge with or into it unless:
(1) it shall be the continuing Person, or the Person (if other
than it) formed by such consolidation or into which it is merged or that
acquired or leased such property and assets of (the "Surviving Person")
shall be a corporation organized and validly existing under the laws of
the United States of America or any jurisdiction thereof and shall
expressly assume, by a supplemental indenture, executed and delivered to
the Trustee, all of the Company's obligations under this Indenture and
the Notes;
(2) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(3) immediately after giving effect to such transaction on a pro
forma basis, the Company or the Surviving Person, as the case may be,
shall have a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of the Company immediately prior to such
transaction;
(4) immediately after giving effect to such transaction on a pro
forma basis the Company, or the Surviving Person, as the case may be,
could Incur at least $1.00 of Indebtedness under the first paragraph of
Section 4.03(a); provided that this clause (4) shall not apply to a
consolidation, merger or sale of all (but not less than all) of the
assets of the Company if all Liens and Indebtedness of the Company or
the Surviving Person, as the case may be, and its Restricted
Subsidiaries outstanding immediately after such transaction would have
been permitted (and all such Liens and Indebtedness, other than Liens
and Indebtedness of the Company and its Restricted Subsidiaries
outstanding immediately prior to the transaction, shall be deemed to
have been Incurred) for all purposes of this Indenture;
(5) it delivers to the Trustee an Officers' Certificate
(attaching the arithmetic computations to demonstrate compliance with
clauses (3) and (4)) and Opinion of Counsel, in each case stating that
such consolidation, merger or transfer and such supplemental indenture
complies with this provision and that all conditions precedent provided
for herein relating to such transaction have been complied with; and
59
(6) each Subsidiary Guarantor, unless such Subsidiary Guarantor
is the Person with which the Company has entered into a transaction
under this Section 5.01 shall have by amendment to its Note Guarantee
confirmed that its Note Guarantee shall apply to the obligations of the
Company or the Surviving Person in accordance with the Notes and this
Indenture;
provided, however, that clauses (3) and (4) above do not apply if, in the good
faith determination of the Board of Directors of the Company, whose
determination shall be evidenced by a Board Resolution, the principal purpose of
such transaction is to change the state of incorporation of the Company and any
such transaction shall not have as one of its purposes the evasion of the
foregoing limitations.
Each Subsidiary Guarantor (other than any Subsidiary Guarantor
whose Note Guarantee is to be released in accordance with the terms of its Note
Guarantee and this Indenture in connection with any transaction complying with
the provisions of Section 4.11) will not, and the Company will not cause or
permit any Subsidiary Guarantor to, consolidate with or merge with or into any
Person other than the Company or any other Subsidiary Guarantor unless:
(1) such Subsidiary Guarantor is the surviving corporation or the
Person formed by or surviving any such consolidation or merger (if other
than the Subsidiary Guarantor) is a corporation organized and existing
under the laws of the United States or any State thereof or the District
of Columbia and such Person assumes by supplemental indenture all of the
obligations of the Subsidiary Guarantor on its Note Guarantee;
(2) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing; and
(3) immediately after giving effect to such transaction and the
use of any net proceeds therefrom on a pro forma basis, the Company
could satisfy the provisions of clause (3) of the first paragraph of
this Section 5.01.
Any merger or consolidation of a Subsidiary Guarantor with and
into the Company (with the Company being the surviving entity) or another
Subsidiary Guarantor need only comply with clause (5) of the first paragraph of
this Section 5.01.
SECTION 5.02. Successor Substituted. Upon any consolidation or
merger, or any sale, conveyance, transfer, lease or other disposition of all or
substantially all of the property and assets of the Company or a Subsidiary
Guarantor in accordance with Section 5.01 of this Indenture, the successor
Person formed by such consolidation or into which the Company or such Subsidiary
Guarantor is merged or to which such sale, conveyance, transfer, lease or other
disposition is made shall succeed to, and be substituted for, and may exercise
every right and power of, the Company or such Subsidiary Guarantor under this
Indenture with the same effect as if such successor Person had been named as the
Company or such Subsidiary Guarantor herein; provided that the Company shall not
be released from its obligation to pay the principal of, premium, if any, or
interest on the Notes, and a Subsidiary Guarantor shall not be released from its
Note Guarantee, in the case of a lease of all or substantially all of its
property and assets.
ARTICLE SIX
60
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default. Any of the following events
shall constitute an "Event of Default" hereunder:
(a) default in the payment of principal of (or premium, if any,
on) any Note when the same becomes due and payable at maturity, upon
acceleration, redemption or otherwise;
(b) default in the payment of interest on any Note when the same
becomes due and payable, and such default continues for a period of 30
days;
(c) default in the performance or breach of Article Five of this
Indenture or the failure by the Company to make or consummate an Offer
to Purchase in accordance with Sections 4.11 and 4.12;
(d) the Company or any Subsidiary Guarantor defaults in the
performance of or breaches any other covenant or agreement in this
Indenture or under the Notes (other than a default specified in clause
(a), (b) or (c) above) and such default or breach continues for a period
of 30 consecutive days after written notice by the Trustee or the
Holders of 25% or more in aggregate principal amount of the Notes;
(e) there occurs with respect to any issue or issues of
Indebtedness of the Company, any Subsidiary Guarantor or any Significant
Subsidiary having an outstanding principal amount of $35 million or more
in the aggregate for all such issues of all such Persons, whether such
Indebtedness now exists or shall hereafter be created, (I) an event of
default that has caused the holder thereof to declare such Indebtedness
to be due and payable prior to its Stated Maturity and such Indebtedness
has not been discharged in full or such acceleration has not been
rescinded or annulled within 30 days of such acceleration and/or (II)
the failure to make a principal payment at the final (but not any
interim) fixed maturity and such defaulted payment shall not have been
made, waived or extended within 30 days of such payment default;
(f) any final judgment or order (not covered by insurance) for
the payment of money in excess of $35 million in the aggregate for all
such final judgments or orders against all such Persons (treating any
deductibles, self-insurance or retention as not so covered) shall be
rendered against the Company, any Subsidiary Guarantor or any
Significant Subsidiary and shall not be paid or discharged, and there
shall be any period of 60 consecutive days following entry of the final
judgment or order that causes the aggregate amount for all such final
judgments or orders outstanding and not paid or discharged against all
such Persons to exceed $35 million during which a stay of enforcement of
such final judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect;
(g) a court having jurisdiction in the premises enters a decree
or order for (A) relief in respect of the Company, any Subsidiary
Guarantor or any Significant Subsidiary in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, (B) appointment of a receiver, liquidator, assignee,
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custodian, trustee, sequestrator or similar official of the Company, any
Subsidiary Guarantor or any Significant Subsidiary or for all or
substantially all of the property and assets of the Company, any
Subsidiary Guarantor or any Significant Subsidiary or (C) the winding up
or liquidation of the affairs of the Company, any Subsidiary Guarantor
or any Significant Subsidiary and, in each case, such decree or order
shall remain unstayed and in effect for a period of 60 consecutive days;
(h) the Company, any Subsidiary Guarantor or any Significant
Subsidiary (A) commences a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect,
or consents to the entry of an order for relief in an involuntary case
under any such law, (B) consents to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Company, any Subsidiary
Guarantor or any Significant Subsidiary or for all or substantially all
of the property and assets of the Company, any Subsidiary Guarantor or
any Significant Subsidiary or (C) effects any general assignment for the
benefit of creditors; or
(i) any Subsidiary Guarantor repudiates its obligations under its
Note Guarantee or, except as permitted by this Indenture, any Note
Guarantee is determined to be unenforceable or invalid or shall for any
reason cease to be in full force and effect.
SECTION 6.02. Acceleration. If an Event of Default (other than an
Event of Default specified in clause (g) or (h) of Section 6.01 that occurs with
respect to the Company or any Subsidiary Guarantor) occurs and is continuing
under this Indenture, the Trustee or the Holders of at least 25% in aggregate
principal amount of the Notes then outstanding, by written notice to the Company
(and to the Trustee if such notice is given by the Holders), may, and the
Trustee at the request of such Holders shall, declare the principal of, premium,
if any, and accrued interest on the Notes to be immediately due and payable.
Upon a declaration of acceleration, such principal of, premium, if any, and
accrued interest shall be immediately due and payable. In the event of a
declaration of acceleration because an Event of Default set forth in clause (e)
of Section 6.01 has occurred and is continuing, such declaration of acceleration
shall be automatically rescinded and annulled if the event of default triggering
such Event of Default pursuant to clause (e) shall be remedied or cured by the
Company or the relevant Significant Subsidiary or waived by the holders of the
relevant Indebtedness within 60 days after the declaration of acceleration with
respect thereto. If an Event of Default specified in clause (g) or (h) of
Section 6.01 occurs with respect to the Company or any Subsidiary Guarantor, the
principal of, premium, if any, and accrued interest on the Notes then
outstanding shall ipso facto become and be immediately due and payable without
any declaration or other act on the part of the Trustee or any Holder.
At any time after such declaration of acceleration, but before a
judgment or decree for the payment of the money due has been obtained by the
Trustee, the Holders of at least a majority in principal amount of the
outstanding Notes by written notice to the Company and to the Trustee, may waive
all past Defaults and rescind and annul a declaration of acceleration and its
consequences if (a) the Company has paid or deposited with the Trustee a sum
sufficient to pay (i) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, (ii) all overdue
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interest on all Notes, (iii) the principal of and premium, if any, on any Notes
that have become due otherwise than by such declaration or occurrence of
acceleration and interest thereon at the rate prescribed therefore by such
Notes, and (iv) to the extent that payment of such interest is lawful, interest
upon overdue interest, if any, at the rate prescribed therefore by such Notes,
(b) all existing Events of Default, other than the non-payment of the principal
of, premium, if any, and accrued interest on the Notes that have become due
solely by such declaration of acceleration, have been cured or waived and (c)
the rescission would not conflict with any judgment or decree of a court of
competent jurisdiction.
SECTION 6.03. Other Remedies. If an Event of Default occurs and
is continuing, the Trustee may, and at the direction of the Holders of at least
a majority in principal amount of the outstanding Notes shall, pursue any
available remedy by proceeding at law or in equity to collect the payment of
principal of, premium, if any, or interest on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding.
SECTION 6.04. Waiver of Past Defaults. Subject to Sections 6.02,
6.07 and 9.02, the Holders of at least a majority in principal amount of the
outstanding Notes, by notice to the Trustee, may waive an existing Default or
Event of Default and its consequences, except a Default in the payment of
principal of, premium, if any, or interest on any Note as specified in clause
(a) or (b) of Section 6.01 or in respect of a covenant or provision of this
Indenture which cannot be modified or amended without the consent of the Holder
of each outstanding Note affected. Upon any such waiver, such Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured, for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other Default or Event of Default or impair any
right consequent thereto.
SECTION 6.05. Control by Majority. The Holders of at least a
majority in aggregate principal amount of the outstanding Notes may direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or exercising any trust or power conferred on the Trustee; provided
that the Trustee may refuse to follow any direction that conflicts with law or
this Indenture, that may involve the Trustee in personal liability, or that the
Trustee determines in good faith may be unduly prejudicial to the rights of
Holders of Notes not joining in the giving of such direction; and provided
further that the Trustee may take any other action it deems proper that is not
inconsistent with any such direction received from Holders of Notes.
SECTION 6.06. Limitation on Suits. A Holder may not institute any
proceeding, judicial or otherwise, with respect to this Indenture or the Notes,
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless:
(i) the Holder has previously given the Trustee written notice of
a continuing Event of Default;
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(ii) the Holders of at least 25% in aggregate principal amount of
outstanding Notes shall have made a written request to the Trustee to
pursue such remedy;
(iii) such Holder or Holders offer the Trustee indemnity
reasonably satisfactory to the Trustee against any costs, liability or
expense;
(iv) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of indemnity; and
(v) during such 60-day period, the Holders of a majority in
aggregate principal amount of the outstanding Notes do not give the
Trustee a direction that is inconsistent with the request.
For purposes of Section 6.05 of this Indenture and this Section
6.06, the Trustee shall comply with TIA Section 316(a) in making any
determination of whether the Holders of the required aggregate principal amount
of outstanding Notes have concurred in any request or direction of the Trustee
to pursue any remedy available to the Trustee or the Holders with respect to
this Indenture or the Notes or otherwise under the law.
A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over such other Holder.
SECTION 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
of a Note to receive payment of the principal of, premium, if any, or interest
on, such Note or to bring suit for the enforcement of any such payment, on or
after the due date expressed in the Notes, shall not be impaired or affected
without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default
in payment of principal, premium or interest specified in clause (a), (b) or (c)
of Section 6.01 occurs and is continuing, the Trustee may recover judgment in
its own name and as trustee of an express trust against the Company or any other
obligor of the Notes for the whole amount of principal, premium, if any, and
accrued interest remaining unpaid, together with interest on overdue principal,
premium, if any, and, to the extent that payment of such interest is lawful,
interest on overdue installments of interest, in each case at the rate specified
in the Notes, and such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may
file such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07) and the Holders allowed in any judicial proceedings relative to
the Company (or any other obligor of the Notes), its creditors or its property
and shall be entitled and empowered to collect and receive any monies,
securities or other property payable or deliverable upon conversion or exchange
of the Notes or upon any such claims and to distribute the same, and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar
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official in any such judicial proceeding is hereby authorized by each Holder to
make such payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07. Nothing herein contained shall be
deemed to empower 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 Notes 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 Six, it shall pay out the money in the following order:
First: to the Trustee for all amounts due under Section 7.07;
Second: to Holders for amounts then due and unpaid for principal
of, premium, if any, and interest on the Notes in respect of which or for the
benefit of which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on such Notes for
principal, premium, if any, and interest, respectively; and
Third: to the Company or any other obligors of the Notes, as
their interests may appear, or as a court of competent jurisdiction may direct.
The Trustee, upon prior written notice to the Company, may fix a
record date and payment date for any payment to Holders pursuant to this Section
6.10.
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 may
require any party litigant in such suit to file an undertaking to pay the costs
of the suit, and the court may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit having due regard to the
merits and good faith of the claims or defenses made by the party litigant. This
Section 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 10% in principal
amount of the outstanding Notes.
SECTION 6.12. Restoration of Rights and Remedies. If the Trustee
or any Holder has instituted any proceeding to enforce any right or remedy under
this Indenture and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to such Holder, then,
and in every such case, subject to any determination in such proceeding, the
Company, the Trustee and the Holders shall be restored severally and
respectively to their former positions hereunder and thereafter all rights and
remedies of the Company, Trustee and the Holders shall continue as though no
such proceeding had been instituted.
SECTION 6.13. Rights and Remedies Cumulative. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or wrongfully taken Notes in Section 2.09, no right or remedy herein
conferred upon or reserved to the Trustee or to
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the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 6.14. Delay or Omission Not Waiver. No delay or omission
of the Trustee or of any Holder to exercise any right or remedy accruing upon
any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein. Every right and
remedy given by this Article Six or by law to the Trustee or to the Holders may
be exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. General. The Trustee, prior to the occurrence of an
Event of Default hereunder and after the curing or waiving of all such Events of
Default which may have occurred, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture. In case an Event of
Default hereunder has occurred (which has not been cured or waived), the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that prior to the occurrence of an
Event of Default hereunder and after the curing or waiving of all such Events of
Default which may have occurred:
(a) the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Indenture, and the Trustee
shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Indenture, and no
implied covenants of obligations shall be read into this Indenture
against the Trustee; and
(b) in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any statements,
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of any such statements,
certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a
duty to examine the same to determine whether or not they conform to the
requirements of this Indenture.
The duties and responsibilities of the Trustee shall be as
provided by the TIA and as set forth herein. Notwithstanding the foregoing, no
provision of this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its duties hereunder, or in the exercise of any of its rights or powers, if it
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shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it. Whether or not herein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Article
Seven.
SECTION 7.02. Certain Rights of Trustee. Subject to TIA Sections
315(a) through (d) and Section 7.01 of this Indenture:
(i) the Trustee may 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 person;
(ii) before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel, which shall
conform to Section 11.04. The Trustee shall not be liable for any action
it takes or omits to take in good faith in reliance on such certificate
or opinion;
(iii) the Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any
attorney or agent appointed with due care by it hereunder;
(iv) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders, unless such Holders shall have offered
to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities that might be incurred by it in compliance with
such request or direction;
(v) the Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within
its rights or powers, provided that the Trustee's conduct does not
constitute negligence or bad faith;
(vi) 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, rely upon an Officers' Certificate; and
(vii) 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.
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SECTION 7.03. Individual Rights of Trustee. The Trustee, in its
individual or any other capacity, may become the owner or pledgee of Notes and
may otherwise deal with the Company or its Affiliates with the same rights it
would have if it were not the Trustee. Any Agent may do the same with like
rights. However, the Trustee is subject to TIA Sections 310(b) and 311.
SECTION 7.04. Trustee's Disclaimer. The Trustee (i) makes no
representation as to the validity or adequacy of this Indenture or the Notes,
(ii) shall not be accountable for the Company's use or application of the
proceeds from the Notes and (iii) shall not be responsible for any statement in
the Notes other than its certificate of authentication.
SECTION 7.05. Notice of Default. If any Default or any Event of
Default occurs and is continuing and if such Default or Event of Default is
known to a Responsible Officer of the Trustee, the Trustee shall mail to each
Holder in the manner and to the extent provided in TIA Section 313(c) notice of
the Default or Event of Default within 45 days after it occurs, unless such
Default or Event of Default has been cured; provided, however, that, except in
the case of a default in the payment of the principal of, premium, if any, or
interest on any Note, the Trustee shall be protected in withholding such notice
if and so long as the board of directors, the executive committee or a trust
committee of directors and/or Responsible Officers of the Trustee in good faith
determine that the withholding of such notice is in the interest of the Holders.
SECTION 7.06. Reports by Trustee to Holders. Within 60 days after
each May 15, beginning with May 15, 2003, the Trustee shall mail to each Holder
as provided in TIA Section 313(c) a brief report dated as of such May 15, if
required by TIA Section 313(a).
A copy of each report at the time of its mailing to the Holders
of Securities shall be mailed to the Company and filed with the Commission and
each stock exchange on which the Securities are listed in accordance with TIA
Section 313(d). The Company shall promptly notify the Trustee when the
Securities are listed on any stock exchange or of any delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Company and the
Subsidiary Guarantors shall pay to the Trustee such compensation as shall be
agreed upon in writing for its services hereunder. The compensation of the
Trustee shall not be limited by any law on compensation of a trustee of an
express trust. The Company and the Subsidiary Guarantors shall reimburse the
Trustee upon request for all reasonable disbursements, expenses and advances
incurred or made by the Trustee without negligence or bad faith on its part.
Such expenses shall include the reasonable compensation and expenses of the
Trustee's agents and counsel.
The Company and the Subsidiary Guarantors shall indemnify the
Trustee for, and hold it harmless against, any loss or liability or expense
incurred by it without negligence, bad faith, willful misconduct or recklessness
on its part in connection with the acceptance or administration of this
Indenture and its duties under this Indenture and the Notes, including but not
limited to the reasonable costs and expenses of defending itself against any
claim or liability and of complying with any process served upon it or any of
its officers in connection with the exercise or performance of any of its powers
or duties under this Indenture and the Notes. The Trustee shall notify the
Company and the Subsidiary Guarantors promptly of any claim for which it may
seek indemnity. Failure by the Trustee to so notify the Company shall not
relieve
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the Company of its obligations hereunder, unless the Company is materially
prejudiced thereby. The Company and the Subsidiary Guarantors shall defend the
claim and the Trustee shall cooperate in the defense. Unless otherwise set forth
herein, the Trustee may have separate counsel and the Company and the Subsidiary
Guarantors shall pay the reasonable fees and expenses of such counsel. The
Company and the Subsidiary Guarantors need not pay for any settlement made
without their consent, which consent shall not be unreasonably withheld. Neither
the Company nor any Subsidiary Guarantor need reimburse any expense or indemnify
against any loss or liability incurred by the Trustee through willful
misconduct, recklessness negligence or bad faith on the part of the Trustee.
To secure the Company's and the Subsidiary Guarantors' payment
obligations in this Section 7.07, the Trustee shall have a lien prior to the
Notes on all money or property held or collected by the Trustee, in its capacity
as Trustee, except money or property held in trust to pay principal of, premium,
if any, and interest on particular Notes.
If the Trustee incurs expenses or renders services after the
occurrence of an Event of Default specified in clause (g) or (h) of Section
6.01, the expenses and the compensation for the services will be intended to
constitute expenses of administration under Title 11 of the United States
Bankruptcy Code or any applicable federal or state law for the relief of
debtors.
The provisions of this Section 7.07 shall survive the termination
of this Indenture.
The Trustee shall comply with the provisions of TIA Section
313(b) to the extent applicable. The obligations of the Company and each
Subsidiary Guarantor under this Section 7.07 shall be joint and several.
SECTION 7.08. Replacement of Trustee. A resignation or removal of
the Trustee and appointment of a successor Trustee shall become effective only
upon the successor Trustee's acceptance of appointment as provided in this
Section 7.08.
The Trustee may resign at any time by so notifying the Company in
writing at least 30 days prior to the date of the proposed resignation. The
Holders of a majority in principal amount of the outstanding Notes may remove
the Trustee by so notifying the Trustee in writing and may appoint a successor
Trustee with the consent of the Company. The Company may remove the Trustee if:
(i) the Trustee is no longer eligible under Section 7.10; (ii) the Trustee is
adjudged a bankrupt or an insolvent; (iii) a receiver or other public officer
takes charge of the Trustee or its property; or (iv) the Trustee 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 a
successor Trustee. Within one year after the successor Trustee takes office, the
Holders of a majority in principal amount of the outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company. If
the successor Trustee does not deliver its written acceptance required by the
next succeeding paragraph of this Section 7.08 within 30 days after the retiring
Trustee resigns or is removed, the retiring Trustee, the Company or the Holders
of a majority in principal amount of the outstanding Notes may, at the expense
of the Company, petition any court of competent jurisdiction for the appointment
of a successor Trustee.
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A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after the
delivery of such written acceptance, subject to the lien provided in Section
7.07, (i) the retiring Trustee shall transfer all property held by it as Trustee
to the successor Trustee, (ii) the resignation or removal of the retiring
Trustee shall become effective and (iii) the successor Trustee shall have all
the rights, powers and duties of the Trustee under this Indenture. A successor
Trustee shall mail notice of its succession to each Holder. No successor Trustee
shall accept its appointment unless at the time of such acceptance such
successor Trustee shall be qualified and eligible under this Article.
If the Trustee is no longer eligible under Section 7.10 or shall
fail to comply with TIA Section 310(b), any Holder who satisfies the
requirements of TIA Section 310(b) may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section 7.08, the Trustee shall resign immediately
in the manner and with the effect provided in this Section.
The Company shall give notice of any resignation and any removal
of the Trustee and each appointment of a successor Trustee to all Holders. Each
notice shall include the name of the successor Trustee and the address of its
Corporate Trust Office.
Notwithstanding replacement of the Trustee pursuant to this
Section 7.08, the Company's obligation under Section 7.07 shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Xxxxxx, Etc. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business (including the administration of the trust
created by this Indenture) to, another corporation or national banking
association, the resulting, surviving or transferee corporation or national
banking association without any further act shall be the successor Trustee with
the same effect as if the successor Trustee had been named as the Trustee
herein, provided such corporation shall be otherwise qualified and eligible
under this Article.
SECTION 7.10. Eligibility. This Indenture shall always have a
Trustee who satisfies the requirements of TIA Section 310(a)(1). The Trustee (or
in the case of a subsidiary of a bank holding company its holding company
parent) shall have a combined capital and surplus of at least $25 million as set
forth in its most recent published annual report of condition that is subject to
the requirements of applicable Federal or state supervising or examining
authority. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, the Trustee shall resign immediately in the
manner and with the effect specified in this Article.
SECTION 7.11. Money Held in Trust. The Trustee shall not be
liable for interest on any money received by it except as the Trustee may agree
with the Company. Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law and except for money held in
trust under Article Eight of this Indenture.
ARTICLE EIGHT
DISCHARGE OF INDENTURE
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SECTION 8.01. Termination of Company's Obligations. Except as
otherwise provided in this Section 8.01, the Company may terminate its
obligations under the Notes and this Indenture if:
(i) all Notes previously authenticated and delivered (other than
destroyed, lost or stolen Notes that have been replaced or Notes that
are paid pursuant to Section 4.01 or Notes for whose payment money or
securities have theretofore been held in trust and thereafter repaid to
the Company, as provided in Section 8.05) have been delivered to the
Trustee for cancellation and the Company has paid all sums payable by it
hereunder; or
(ii) (A) the Notes mature within one year or all of them are to
be called for redemption within one year under arrangements satisfactory
to the Trustee for giving the notice of redemption, (B) the Company
irrevocably deposits in trust with the Trustee during such one-year
period, under the terms of an irrevocable trust agreement in form and
substance satisfactory to the Trustee, as trust funds solely for the
benefit of the Holders for that purpose, (x) money in an amount, (y)
U.S. Government obligations that, through the payment of interest,
premium, if any, and principal in respect thereof in accordance with
their terms, will provide, not later than one day before the due date of
any payment referred to in this clause (y), money in an amount or (z) a
combination thereof in an amount sufficient (in the opinion of a
nationally recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee), without
consideration of any reinvestment of any interest thereon, to pay
principal, premium, if, any, and interest on the Notes to maturity or
redemption, as the case may be, and to pay all other sums payable by it
hereunder, (C) no Default or Event of Default with respect to the Notes
shall have occurred and be continuing on the date of such deposit, (D)
such deposit will not result in a breach or violation of, or constitute
a default under, this Indenture or any other agreement or instrument to
which the Company is a party or by which it is bound and (E) the Company
has delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel, in each case stating that all conditions precedent provided for
herein relating to the satisfaction and discharge of this Indenture have
been complied with.
With respect to the foregoing clause (i), the Company's
obligations under Section 7.07 shall survive. With respect to the foregoing
clause (ii), the Company's obligations in Sections 2.02, 2.03, 2.04, 2.05, 2.06,
2.07, 2.08, 2.09, 2.14, 4.01, 4.02, 7.07, 7.08, 8.04, 8.05 and 8.06 shall
survive until the Notes are no longer outstanding. Thereafter, only the
Company's obligations in Sections 7.07, 8.04, 8.05 and 8.06 shall survive. After
any such irrevocable deposit, the Trustee upon request shall acknowledge in
writing the discharge of the Company's obligations under the Notes and this
Indenture except for those surviving obligations specified above.
SECTION 8.02. Defeasance and Discharge of Indenture. The Company
will be deemed to have paid and will be discharged from any and all obligations
in respect of the Notes on the 91st day after the date of the deposit (or such
other applicable period of time as provided by the United States Bankruptcy Code
or the New York Debtor and Creditor Law) referred to in clause (A) of this
Section 8.02, and the provisions of this Indenture will no longer be in effect
with respect to the Notes (except for, among other matters, certain obligations
to register the
71
transfer or exchange of the Notes, to replace stolen, lost or mutilated Notes,
to maintain paying agencies and to hold monies for payment in trust), and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging the same if:
(A) with reference to this Section 8.02, the Company has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee (or another trustee satisfying the requirements of Section 7.10)
and conveyed all right, title and interest to the Trustee for the
benefit of the Holders, under the terms of an irrevocable trust
agreement in form and substance satisfactory to the Trustee as trust
funds in trust, specifically pledged to the Trustee for the benefit of
the Holders as security for payment of the principal of, premium, if
any, and interest, if any, on the Notes, and dedicated solely to, the
benefit of the Holders, in and to (1) money in an amount, (2) U.S.
Government Obligations that, through the payment of interest, premium,
if any, and principal in respect thereof in accordance with their terms,
will provide, not later than one day before the due date of any payment
referred to in this clause (A), money in an amount or (3) a combination
thereof in an amount sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and discharge,
without consideration of the reinvestment of such interest and after
payment of all federal, state and local taxes or other charges and
assessments in respect thereof payable by the Trustee, the principal of,
premium, if any, and interest on the outstanding Notes on the Stated
Maturity of such principal or interest or on any earlier Redemption
Date; provided that the Trustee shall have been irrevocably instructed
to apply such money or the proceeds of such U.S. Government Obligations
to the payment of such principal, premium, if any, and interest with
respect to the Notes, and with respect to any Redemption Date, the
Company shall have provided the Trustee with irrevocable instructions to
redeem all Notes on such Redemption Date;
(B) the Company has delivered to the Trustee (1) either (x) an
Opinion of Counsel to the effect that Holders will not recognize income,
gain or loss for federal income tax purposes as a result of the
Company's exercise of its option under this Section 8.02 and will be
subject to federal income tax on the same amount and in the same manner
and at the same times as would have been the case if such option had not
been exercised, which Opinion of Counsel shall be based upon (and
accompanied by a copy of) a ruling of the Internal Revenue Service to
the same effect unless there has been a change in applicable federal
income tax law after the Closing Date such that a ruling is no longer
required or (y) a ruling directed to the Trustee received from the
Internal Revenue Service to the same effect as the aforementioned
Opinion of Counsel and (2) an Opinion of Counsel to the effect that the
creation of the defeasance trust does not violate the Investment Company
Act of 1940 and that after the passage of 91 days (or such other
applicable period of time as provided by the United States Bankruptcy
Code or the New York Debtor and Creditor Law) following the deposit
(except, with respect to any trust funds for the account of any Holder
who may be deemed to be an "insider" for purposes of the United States
Bankruptcy Code, after one year following the deposit), the trust funds
will not be subject to the effect of Section 547 of the United States
Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law in
a case commenced by or against the Company under either such statute,
and either (I) the trust funds will no
72
longer remain the property of the Company (and therefore will not be
subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally) or
(II) if a court were to rule under any such law in any case or
proceeding that the trust funds remained property of the Company, (a)
assuming such trust funds remained in the possession of the Trustee
prior to such court ruling to the extent not paid to the Holders, the
Trustee will hold, for the benefit of the Holders, a valid and perfected
security interest in such trust funds that is not avoidable in
bankruptcy or otherwise except for the effect of Section 552(b) of the
United States Bankruptcy Code on interest on the trust funds accruing
after the commencement of a case under such statute and (b) the Holders
will be entitled to receive adequate protection of their interests in
such trust funds if such trust funds are used in such case or
proceeding;
(C) immediately after giving effect to such deposit, on a pro
forma basis, no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or during the period ending on
the 91st day after such date of such deposit (or such other applicable
period of time as provided by the United States Bankruptcy Code or the
New York Debtor and Creditor Law), and such deposit shall not result in
a breach or violation of, or constitute a default under, this Indenture
or any other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(D) if the Notes are then listed on a national securities
exchange, the Company has delivered to the Trustee an Opinion of Counsel
to the effect that the Notes will not be delisted as a result of such
deposit, defeasance and discharge; and
(E) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all
conditions precedent provided for herein relating to the defeasance
contemplated by this Section 8.02 have been complied with.
Notwithstanding the foregoing, prior to the end of the 91-day (or
one year) period referred to in clause (B)(2) of this Section 8.02, none of the
Company's obligations under this Indenture shall be discharged. Subsequent to
the end of such 91-day (or one year) period with respect to this Section 8.02,
the Company's obligations in Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08,
2.09, 2.14, 4.01, 4.02, 8.04, 8.05, 8.06 and the rights, powers, trusts, duties
and immunities of the Trustee hereunder shall survive until the Notes are no
longer outstanding. Thereafter, only the Company's obligations in Sections 7.07,
8.04, 8.05 and 8.06 shall survive. If and when a ruling from the Internal
Revenue Service or an Opinion of Counsel referred to in clause (B)(1) of this
Section 8.02 is able to be provided specifically without regard to, and not in
reliance upon, the continuance of the Company's obligations under Section 4.01,
then the Company's obligations under such Section 4.01 shall cease upon delivery
to the Trustee of such ruling or Opinion of Counsel and compliance with the
other conditions precedent provided for herein relating to the defeasance
contemplated by this Section 8.02.
After any such irrevocable deposit, the Trustee upon request
shall acknowledge in writing the discharge of the Company's obligations under
the Notes and this Indenture except for those surviving obligations in the
immediately preceding paragraph.
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SECTION 8.03. Defeasance of Certain Obligations. The Company may
omit to comply with any term, provision or condition set forth in clauses (3)
and (4) of Section 5.01 and Sections 4.03 through 4.18 and clause (c) of Section
6.01 with respect to clauses (3) and (4) of Section 5.01, clause (d) of Section
6.01 with respect to Sections 4.03 through 4.18 and clauses (e) and (f) of
Section 6.01 shall be deemed not to be Events of Default in each case with
respect to the outstanding Notes if:
(i) with reference to this Section 8.03, the Company has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee (or another trustee satisfying the requirements of Section 7.10)
and conveyed all right, title and interest to the Trustee for the
benefit of the Holders, under the terms of an irrevocable trust
agreement in form and substance satisfactory to the Trustee as trust
funds in trust, specifically pledged to the Trustee for the benefit of
the Holders as security for payment of the principal of, premium, if
any, and interest, if any, on the Notes, and dedicated solely to, the
benefit of the Holders, in and to (A) money in an amount, (B) U.S.
Government Obligations that, through the payment of interest, premium,
if any, and principal in respect thereof in accordance with their terms,
will provide, not later than one day before the due date of any payment
referred to in this clause (i), money in an amount or (C) a combination
thereof in an amount sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and discharge,
without consideration of the reinvestment of such interest and after
payment of all federal, state and local taxes or other charges and
assessments in respect thereof payable by the Trustee, the principal of,
premium, if any, and interest on the outstanding Notes on the Stated
Maturity of such principal or interest or on any earlier Redemption
Date; provided that the Trustee shall have been irrevocably instructed
to apply such money or the proceeds of such U.S. Government Obligations
to the payment of such principal, premium, if any, and interest with
respect to the Notes, and with respect to any Redemption Date, the
Company shall have provided the Trustee with irrevocable instructions to
redeem all Notes on such Redemption Date;
(ii) the Company has delivered to the Trustee an Opinion of
Counsel to the effect that (A) the creation of the defeasance trust does
not violate the Investment Company Act of 1940, (B) after the passage of
91 days (or such other applicable period of time as provided by the
United States Bankruptcy Code or the New York Debtor and Creditor Law)
following the deposit (except, with respect to any trust funds for the
account of any Holder who may be deemed to be an "insider" for purposes
of the United States Bankruptcy Code, after one year following the
deposit), the trust funds will not be subject to the effect of Section
547 of the United States Bankruptcy Code or Section 15 of the New York
Debtor and Creditor Law in a case commenced by or against the Company
under either such statute, and either (1) the trust funds will no longer
remain the property of the Company (and therefore will not be subject to
the effect of any applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally) or (2) if a court
were to rule under any such law in any case or proceeding that the trust
funds remained property of the Company, (x) assuming such trust funds
remained in the possession of the Trustee prior to such court ruling to
the extent not paid to the Holders, the Trustee will hold, for the
benefit of the Holders, a valid
74
and perfected security interest in such trust funds that is not
avoidable in bankruptcy or otherwise (except for the effect of Section
552(b) of the United States Bankruptcy Code on interest on the trust
funds accruing after the commencement of a case under such statute) and
(y) the Holders will be entitled to receive adequate protection of their
interests in such trust funds if such trust funds are used in such case
or proceeding, (C) the Holders will not recognize income, gain or loss
for federal income tax purposes as a result of such deposit and
defeasance of certain covenants and Events of Default and will be
subject to federal income tax on the same amount and in the same manner
and at the same times as would have been the case if such deposit and
defeasance had not occurred and (D) the Trustee, for the benefit of the
Holders, has a valid first-priority security interest in the trust
funds;
(iii) immediately after giving effect to such deposit on a pro
forma basis, no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or during the period ending on
the 91st day after such date of such deposit (or such other applicable
period of time as provided by the United States Bankruptcy Code or the
New York Debtor and Creditor Law), and such deposit shall not result in
a breach or violation of, or constitute a default under, this Indenture
or any other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(iv) if the Notes are then listed on a national securities
exchange, the Company has delivered to the Trustee an Opinion of Counsel
to the effect that the Notes will not be delisted as a result of such
deposit, defeasance and discharge; and
(v) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all
conditions precedent provided for herein relating to the defeasance
contemplated by this Section 8.03 have been complied with.
SECTION 8.04. Defeasance and Certain Other Events of Default. In
the event the Company exercises its option to omit compliance with certain
covenants and provisions of this Indenture with respect to the Notes as
described in Section 8.03 and the Notes are declared due and payable because of
the occurrence of an Event of Default that remains applicable, the amount of
money and/or U.S. Government Obligations on deposit with the Trustee will be
sufficient to pay amounts due on the Notes at the time of their Stated Maturity
or any earlier Redemption Date, but may not be sufficient to pay amounts due on
the Notes at the time of the acceleration resulting from such Event of Default.
However, the Company will remain liable for such payments and any Subsidiary
Note Guarantor's Note Guarantee with respect to such payments will remain in
effect.
SECTION 8.05. Application of Trust Money. Subject to Section
8.07, the Trustee or Paying Agent shall hold in trust money or U.S. Government
Obligations deposited with it pursuant to Section 8.01, 8.02, 8.03 or 8.04, as
the case may be, and shall apply the deposited money and the money from U.S.
Government Obligations in accordance with the Notes and this Indenture to the
payment of principal of, premium, if any, and interest on the Notes; but such
money need not be segregated from other funds except to the extent required by
law.
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SECTION 8.06. Repayment to Company. Subject to Sections 7.07,
8.01, 8.02, 8.03 and 8.04, the Trustee and the Paying Agent shall promptly pay
to the Company upon request set forth in an Officers' Certificate any excess
money held by them at any time and thereupon shall be relieved from all
liability with respect to such money. The Trustee and the Paying Agent shall pay
to the Company upon request any money held by them for the payment of principal,
premium, if any, or interest that remains unclaimed for two years; provided that
the Trustee or Paying Agent before being required to make any payment may cause
to be published at the expense of the Company once in a newspaper of general
circulation in The City of New York or mail to each Holder entitled to such
money at such Holder's address (as set forth in the Security Register) notice
that such money remains unclaimed and that after a date specified therein (which
shall be at least 30 days from the date of such publication or mailing) any
unclaimed balance of such money then remaining will be repaid to the Company.
After payment to the Company, Holders entitled to such money must look to the
Company for payment as general creditors unless an applicable law designates
another Person, and all liability of the Trustee and such Paying Agent with
respect to such money shall cease.
SECTION 8.07. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with
Section 8.01, 8.02, 8.03 or 8.04, as the case may be, by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Notes shall be revived and
reinstated as though no deposit had occurred pursuant to Section 8.01, 8.02,
8.03 or 8.04, as the case may be, until such time as the Trustee or Paying Agent
is permitted to apply all such money or U.S. Government Obligations in
accordance with Section 8.01, 8.02, 8.03 or 8.04, as the case may be; provided
that, if the Company has made any payment of principal of, premium, if any, or
interest on any Notes because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money or U.S. Government Obligations held by the
Trustee or Paying Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders. The Company, when
authorized by a resolution of its Board of Directors (as evidenced by a Board
Resolution delivered to the Trustee), the Subsidiary Guarantors and the Trustee
may amend or supplement this Indenture, the Note Guarantees or the Notes without
notice to or the consent of any Holder:
(1) to cure any ambiguity, defect or inconsistency in this
Indenture;
(2) to comply with Section 4.07 and Article Five of this
Indenture;
(3) to comply with any requirements of the Commission in
connection with the qualification of this Indenture under the TIA;
(4) to evidence and provide for the acceptance of appointment
hereunder by a successor Xxxxxxx; or
76
(5) to make any change that, in the good faith opinion of the
Board of Directors as evidenced by a Board Resolution, does not
materially and adversely affect the rights of any Holder.
SECTION 9.02. With Consent of Holders. Subject to Sections 6.04
and 6.07 and without prior notice to the Holders, the Company, the Subsidiary
Guarantors when authorized by its Board of Directors (as evidenced by a Board
Resolution delivered to the Trustee), and the Trustee may amend this Indenture,
the Note Guarantees and the Notes with the written consent of the Holders of a
majority in aggregate principal amount of the Notes then outstanding, and the
Holders of a majority in aggregate principal amount of the Notes then
outstanding by written notice to the Trustee may waive future compliance by the
Company with any provision of this Indenture, the Note Guarantees or the Notes.
Notwithstanding the provisions of this Section 9.02, without the
consent of each Holder affected, an amendment or waiver, including a waiver
pursuant to Section 6.04, may not:
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Note;
(2) reduce the principal amount of, premium, if any, or interest
on any Note;
(3) change the optional redemption dates or optional redemption
prices of the Notes from that stated in Section 3.01;
(4) change any place or currency of payment of principal of,
premium, if any, or interest on, any Note;
(5) impair the right to institute suit for the enforcement of any
payment on or after the Stated Maturity (or, in the case of redemption,
on or after the Redemption Date) on any Note;
(6) reduce the percentage or aggregate principal amount of
outstanding Notes the consent of whose Holders is necessary to modify or
amend this Indenture or to waive compliance with certain provisions of
or certain Defaults under this Indenture;
(7) release any Subsidiary Guarantor from its Note Guarantee,
other than in accordance with the terms of this Indenture;
(8) waive a default in the payment of principal of, premium, if
any, or interest on, any Note; or
(9) modify any of the provisions of this Section 9.02, except to
increase any such percentage or to provide that certain other provisions
of this Indenture cannot be modified or waived without the consent of
the Holder of each outstanding Note affected thereby.
77
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,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. The Company will
mail supplemental indentures to Holders upon request. Any failure of the Company
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture or waiver.
SECTION 9.03. Revocation and Effect of Consent. Until an
amendment or waiver becomes effective, a consent to it by a Holder is a
continuing consent by the Holder and every subsequent Holder of a Note or
portion of a Note that evidences the same debt as the Note of the consenting
Holder, even if notation of the consent is not made on any Note. However, any
such Holder or subsequent Holder may revoke the consent as to its Note or
portion of its Note. Such revocation shall be effective only if the Trustee
receives the notice of revocation before the date the amendment, supplement or
waiver becomes effective. An amendment, supplement or waiver shall become
effective on receipt by the Trustee of written consents from the Holders of the
requisite percentage in principal amount of the outstanding Notes.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then, notwithstanding the last
two sentences of the immediately preceding paragraph, those persons who were
Holders at such record date (or their duly designated proxies) and only those
persons shall be entitled to consent to such amendment, supplement or waiver or
to revoke any consent previously given, whether or not such persons continue to
be Holders after such record date. No such consent shall be valid or effective
for more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it
shall bind every Holder unless it is of the type described in the second
paragraph of Section 9.02. In case of an amendment or waiver of the type
described in the second paragraph of Section 9.02, the amendment or waiver shall
bind each Holder who has consented to it and every subsequent Holder of a Note
that evidences the same indebtedness as the Note of the consenting Holder.
SECTION 9.04. Notation on or Exchange of Notes. If an amendment,
supplement or waiver changes the terms of a Note, the Trustee may require the
Holder to deliver such Note to the Trustee. At the Company's expense, the
Trustee may place an appropriate notation on the Note about the changed terms
and return it to the Holder and the Trustee may place an appropriate notation on
any Note thereafter authenticated. Alternatively, if the Company or the Trustee
so determines, the Company in exchange for the Note shall issue and the Trustee
shall authenticate a new Note that reflects the changed terms. Failure to make
the appropriate notation, or issue a new Note, shall not affect the validity and
effect of such amendment, supplement or waiver.
SECTION 9.05. Trustee to Sign Amendments, Etc. The Trustee shall
be entitled to receive, and shall be fully protected in relying upon, an Opinion
of Counsel stating that the
78
execution of any amendment, supplement or waiver authorized pursuant to this
Article Nine is authorized or permitted by this Indenture and that it will be
valid and binding upon the Company. Subject to the preceding sentence, the
Trustee shall sign such amendment, supplement or waiver if the same does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Trustee may, but shall not be obligated to, execute any such amendment,
supplement or waiver that affects the Trustee's own rights, duties or immunities
under this Indenture or otherwise.
SECTION 9.06. Conformity with Trust Indenture Act. Every
supplemental indenture executed pursuant to this Article Nine shall conform to
the requirements of the TIA as then in effect.
ARTICLE TEN
NOTE GUARANTEES
SECTION 10.01. Note Guarantees.
Subject to this Article Ten, each of the Subsidiary Guarantors
hereby, jointly and severally, unconditionally guarantees to each Holder of a
Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of this
Indenture, the Notes or the obligations of the Company hereunder or thereunder,
that: (a) the principal of, premium, if any, and interest on the Notes will be
promptly paid in full when due, whether at maturity, by acceleration, redemption
or otherwise, and interest on the overdue principal of, premium, if any, and
interest on the Notes, if any, if lawful, and all other obligations of the
Company to the Holders or the Trustee hereunder or thereunder will be promptly
paid in full or performed, all in accordance with the terms hereof and thereof;
and (b) in case of any extension of time of payment or renewal of any Notes or
any of such other obligations, that same will be promptly paid in full when due
or performed in accordance with the terms of the extension or renewal, whether
at stated maturity, by acceleration or otherwise. Failing payment when due of
any amount so guaranteed or any performance so guaranteed for whatever reason,
the Subsidiary Guarantors shall be jointly and severally obligated to pay the
same immediately. Each Subsidiary Guarantor agrees that this is a guarantee of
payment and not a guarantee of collection.
The Subsidiary Guarantors hereby agree that their obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor.
Each Subsidiary Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against the Company,
protest, notice and all demands whatsoever and covenant that the Note Guarantee
shall not be discharged except by complete performance of the obligations
contained in the Notes and this Indenture or pursuant to Section 10.03.
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If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Subsidiary Guarantors or any custodian,
trustee, liquidator or other similar official acting in relation to either the
Company or the Subsidiary Guarantors, any amount paid by either to the Trustee
or such Holder, the Note Guarantee, to the extent theretofore discharged, shall
be reinstated in full force and effect.
Each Subsidiary Guarantor agrees that it shall not be entitled to
any right of subrogation in relation to the Holders in respect of any
obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby. Each Subsidiary Guarantor further agrees that, as between the
Subsidiary Guarantors, on the one hand, and the Holders and the Trustee, on the
other hand, (x) the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article Six for the purposes of the Note Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any declaration of acceleration of such obligations as provided in
Article Six, such obligations (whether or not due and payable) shall forthwith
become due and payable by the Subsidiary Guarantors for the purpose of the Note
Guarantee. The Subsidiary Guarantors shall have the right to seek contribution
from any non-paying Subsidiary Guarantor so long as the exercise of such right
does not impair the rights of the Holders under the Note Guarantee.
SECTION 10.02. Limitation on Subsidiary Guarantor Liability.
Each Subsidiary Guarantor, and by its acceptance of Notes, each
Holder, hereby confirms that it is the intention of all such parties that the
Note Guarantee of such Subsidiary Guarantor not constitute a fraudulent transfer
or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to
the extent applicable to any Note Guarantee. To effectuate the foregoing
intention, the Trustee, the Holders and the Subsidiary Guarantors hereby
irrevocably agree that the obligations of such Subsidiary Guarantor under its
Note Guarantee under this Article Ten shall be limited to the maximum amount as
will, after giving effect to such maximum amount and all other contingent and
fixed liabilities of such Subsidiary Guarantor that are relevant under such
laws, and after giving effect to any collections from, rights to receive
contribution from or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other Subsidiary Guarantor under
this Article Ten, result in the obligations of such Subsidiary Guarantor under
its Note Guarantee not constituting a fraudulent transfer or conveyance.
SECTION 10.03. Releases Following Certain Events.
The Note Guarantee issued by any Subsidiary Guarantor will be
automatically and unconditionally released and discharged upon (1) any sale,
exchange or transfer to any Person (other than an Affiliate of the Company) of
all of the Capital Stock of such Subsidiary Guarantor or all or substantially
all the assets of, such Subsidiary Guarantor, (2) any distribution or transfer
of all of the Capital Stock of such Subsidiary Guarantor to the stockholders of
the Company in compliance with Section 4.04 of this Indenture, or (3) the
designation of such Subsidiary Guarantor as an Unrestricted Subsidiary, in each
case, in accordance with the terms of this Indenture.
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Upon delivery by the Company to the Trustee of an Officers'
Certificate and an Opinion of Counsel to the effect that such sale or other
disposition was made by the Company in accordance with the applicable provisions
of this Indenture, including without limitation Section 4.11, the Trustee shall
execute any documents reasonably required in order to evidence the release of
any Subsidiary Guarantor from its obligations under its Note Guarantee.
Any Subsidiary Guarantor not released from its obligations under
its Note Guarantee shall remain liable for the full amount of principal of and
interest on the Notes and for the other obligations of any Subsidiary Guarantor
under this Indenture as provided in this Article Ten.
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. Trust Indenture Act of 1939. Prior to the
effectiveness of the Registration Statement, this Indenture shall incorporate
and be governed by the provisions of the TIA that are required to be part of and
to govern indentures qualified under the TIA. After the effectiveness of the
Registration Statement, this Indenture shall be subject to the provisions of the
TIA that are required to be a part of this Indenture and shall, to the extent
applicable, be governed by such provisions.
SECTION 11.02. Notices. Any notice or communication shall be
sufficiently given if in writing and delivered in person, mailed by first-class
mail or sent by telecopier transmission addressed as follows:
if to the Company and/or any Subsidiary Guarantor:
PacifiCare Health Systems, Inc.
0000 Xxxx Xxxxxx Xxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: General Counsel
if to the Trustee:
State Street Bank and Trust Company California, N.A.
000 Xxxx 0xx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Corporate Trust Department
PacifiCare Health Systems, Inc.
10 3/4% Senior Notes due 2009
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The Company, or any Subsidiary Guarantor or the Trustee by notice
to the other may designate additional or different addresses for subsequent
notices or communications.
Any notice or communication mailed to a Holder shall be mailed to
it at its address as it appears on the Security Register by first-class mail and
shall be sufficiently given to him if so mailed within the time prescribed. Any
notice or communication shall also be so mailed to any Person described in TIA
Section 313(c), to the extent required by the TIA. Copies of any such
communication or notice to a Holder shall also be mailed to the Trustee and each
Agent at the same time.
Failure to mail a notice or communication to a Holder as provided
herein or any defect in any such notice or communication shall not affect its
sufficiency with respect to other Holders. Except for a notice to the Trustee,
which is deemed given only when received, and except as otherwise provided in
this Indenture, if a notice or communication is mailed in the manner provided in
this Section 11.02, it is duly given, whether or not the addressee receives it.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA Section 312(c).
SECTION 11.03. 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:
(i) 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
(ii) an Opinion of Counsel stating that, in the opinion of such
Counsel, all such conditions precedent have been complied with.
SECTION 11.04. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(i) a statement that each person signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
82
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statement or opinion
contained in such certificate or opinion is based;
(iii) a statement that, in the opinion of each such person, he or
she has made such examination or investigation as is necessary to enable
him or her to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(iv) a statement as to whether or not, in the opinion of each
such person, such condition or covenant has been complied with;
provided, however, that, with respect to matters of fact, an Opinion of
Counsel may rely on an Officers' Certificate or certificates of public
officials.
SECTION 11.05. Rules by Trustee, Paying Agent or Registrar. The
Trustee may make reasonable rules for action by or at a meeting of Holders. The
Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 11.06. Payment Date Other Than a Business Day. If an
Interest Payment Date, Redemption Date, Payment Date, Stated Maturity or date of
maturity of any Note shall not be a Business Day, then payment of principal of,
premium, if any, or interest on such Note, as the case may be, need not be made
on such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on the Interest Payment Date, Payment Date or
Redemption Date, or at the Stated Maturity or date of maturity of such Note;
provided that no interest shall accrue for the period from and after such
Interest Payment Date, Payment Date, Redemption Date, Stated Maturity or date of
maturity, as the case may be.
SECTION 11.07. No Personal Liability of Directors, Officers,
Employees and Stockholders. No past, present or future director, officer,
employee, incorporator or stockholder of the Company or any Subsidiary
Guarantor, as such, shall have any liability for any obligations of the Company
or such Subsidiary Guarantor under the Notes, the Note Guarantees, this
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
SECTION 11.08. Governing Law. This Indenture, the Note Guarantees
and the Notes shall be governed by the laws of the State of New York. The
Trustee, the Company, the Subsidiary Guarantors and the Holders agree to submit
to the jurisdiction of the courts of the State of New York in any action or
proceeding arising out of or relating to this Indenture or the Notes.
SECTION 11.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or any Subsidiary of the Company. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
SECTION 11.10. No Recourse Against Others. No recourse for the
payment of the principal of, premium, if any, or interest on any of the Notes,
or for any claim based thereon
83
or otherwise in respect thereof, and no recourse under or upon any obligation,
covenant or agreement of the Company or any Subsidiary Guarantor contained in
this Indenture or in any of the Notes, or because of the creation of any
Indebtedness represented thereby, shall be had against any incorporator or
against any past, present or future partner, stockholder, other equity holder,
officer, director, employee or controlling person, as such, of the Company, any
Subsidiary Guarantor or of any successor Person of the Company or such
Subsidiary Guarantor, either directly or through the Company or any successor
Person of the Company or such Subsidiary Guarantor, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise; it being expressly understood that all such liability is
hereby expressly waived and released as a condition of, and as a consideration
for, the execution of this Indenture and the issue of the Notes.
SECTION 11.11. Successors. All agreements of the Company in this
Indenture and the Notes shall bind its successors. All agreements of the Trustee
in this Indenture shall bind its successor.
SECTION 11.12. Duplicate 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.
SECTION 11.13. Separability. In case any provision in this
Indenture or in the Notes 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 11.14. Table of Contents, Headings, Etc. The Table of
Contents, Cross-Reference Table and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not to
be considered a part hereof and shall in no way modify or restrict any of the
terms and provisions hereof.
(Signature pages follow)
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IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the date first written above.
PACIFICARE HEALTH SYSTEMS, INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name:
Title:
PACIFICARE HEALTH PLAN
ADMINISTRATORS, INC.
By: /s/ Xxx X. Xxxxx
-----------------------------------
Name:
Title:
PACIFICARE eHOLDINGS, INC.
By: /s/ Xxxx X. Xxxxxx
-----------------------------------
Name:
Title:
RxCONNECT, INC.
By: /s/ Xxxx X. Xxxxxx
-----------------------------------
Name:
Title:
SENIORCO, INC.
By: /s/ Xxxx X. Xxxxxx
-----------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY OF
CALIFORNIA, N.A.
By: /s/ Xxxx Xxxxxx
-----------------------------------
Name:
Title:
EXHIBIT A
[APPLICABLE LEGENDS]
[FACE OF NOTE]
PACIFICARE HEALTH SYSTEMS, INC.
10 3/4% Senior Note due 2009
CUSIP [__________]
No. ____ $_________
PACIFICARE HEALTH SYSTEMS, INC., a Delaware corporation (the
"Company", which term includes any successor under the Indenture hereinafter
referred to), for value received, promises to pay to _____________, or its
registered assigns, the principal sum of ____________ ($____) on June 1, 2009.
Interest Payment Dates: June 1 and December 1, commencing December
1, 2002.
Regular Record Dates: May 15 and November 15.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
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IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officer.
PACIFICARE HEALTH SYSTEMS, INC.
By: ________________________________
Name:
Title:
By: ________________________________
Name:
Title:
(Trustee's Certificate of Authentication)
This is one of the 10 3/4% Senior Notes due 2009 described in the
within-mentioned Indenture.
Date: May _____, 2002 STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A.,
as Trustee
By: ________________________________
Authorized Signatory
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[REVERSE SIDE OF NOTE]
PACIFICARE HEALTH SYSTEMS, INC.
10 3/4% Senior Note due 2009
1. Principal and Interest.
The Company will pay the principal of this Note on June 1, 2009.
The Company promises to pay interest on the principal amount of
this Note on each Interest Payment Date, as set forth below, at the rate per
annum shown above except as provided below.
Interest will be payable semiannually (to the holders of record
of the Notes at the close of business on the May 15 or November 15 immediately
preceding the Interest Payment Date) on each Interest Payment Date, commencing
December 1, 2002.
If an exchange offer (the "Exchange Offer") registered under the
Securities Act is not consummated and a shelf registration statement (the "Shelf
Registration Statement") under the Securities Act with respect to resales of the
Notes is not declared effective by the Commission, on or before February 21,
2003 in accordance with the terms of the Registration Rights Agreement dated May
21, 2002 between the Company, the Initial Subsidiary Guarantors and Xxxxxx
Xxxxxxx & Co. Incorporated and UBS Warburg LLC, the annual interest rate borne
by the Notes shall be increased by 0.5% from the rate shown above accruing from
February 21, 2003 payable in cash semiannually, in arrears, on each Interest
Payment Date, commencing June 1, 2003 until the Exchange Offer is consummated, a
shelf registration statement under the Securities Act with respect to resales of
the Notes is declared effective by the Commission in accordance with the terms
of the Registration Rights Agreement or the Notes become freely tradeable
without registration under the Securities Act. The Holder of this Note is
entitled to the benefits of such Registration Rights Agreement.
Interest on the Notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from May 21,
2002; provided that, if there is no existing default in the payment of interest
and this Note is authenticated between a Regular Record Date referred to on the
face hereof and the next succeeding Interest Payment Date, interest shall accrue
from such Interest Payment Date. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and premium,
if any, and interest on overdue installments of interest, to the extent lawful,
at a rate per annum that is __% in excess of the rate otherwise payable.
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2. Method of Payment.
The Company will pay interest (except defaulted interest) on the
principal amount of the Notes as provided above on each June 1 and December 1,
commencing December 1, 2002 to the persons who are Holders (as reflected in the
Security Register at the close of business on the May 15 or November 15
immediately preceding the Interest Payment Date), in each case, even if the Note
is cancelled on registration of transfer or registration of exchange after such
record date; provided that, with respect to the payment of principal, the
Company will make payment to the Holder that surrenders this Note to a Paying
Agent on or after June 1, 2009.
The Company will pay principal, premium, if any, and as provided
above, interest in money of the United States that at the time of payment is
legal tender for payment of public and private debts. The Company shall pay
principal, premium, if any, and interest by wire transfer to any Holder who has
provided the Company with wire transfer instructions. The Company may pay
principal, premium, if any, and interest by check to any other Holder. It may
mail an interest check to a Holder's registered address (as reflected in the
Security Register). If a payment date is a date other than a Business Day at a
place of payment, payment may be made at that place on the next succeeding day
that is a Business Day and no interest shall accrue for the intervening period.
3. Paying Agent and Registrar.
Initially, the Trustee will act as authenticating agent, Paying
Agent and Registrar. The Company may change any authenticating agent, Paying
Agent or Registrar without notice. The Company, any Subsidiary or any Affiliate
of any of them may act as Paying Agent, Registrar or co-Registrar.
4. Indenture; Limitations.
The Company issued the Notes under an Indenture dated as of May
21, 2002 (the "Indenture"), among the Company, the Subsidiary Guarantors named
therein and State Street Bank and Trust Company of California, N.A., trustee
(the "Trustee"). Capitalized terms herein are used as defined in the Indenture
unless otherwise indicated. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act. The Notes are subject to all such terms, and Holders are referred
to the Indenture and the Trust Indenture Act for a statement of all such terms.
To the extent permitted by applicable law, in the event of any inconsistency
between the terms of this Note and the terms of the Indenture, the terms of the
Indenture shall control.
The Notes are general unsecured obligations of the Company.
The Company's obligations under the Notes are fully and
unconditionally guaranteed on an unsecured unsubordinated basis, to the extent
set forth in the Indenture, by each of the Subsidiary Guarantors.
The Company may, subject to Article Four of the Indenture and
applicable law, issue additional Notes under the Indenture.
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5. Optional Redemption.
The Notes are redeemable, at the Company's option, in whole or in
part, at any time or from time to time, on or after June 1, 2006 and prior to
maturity, upon not less than 30 nor more than 60 days' prior notice mailed by
first class mail to each Holder's last address, as it appears in the Security
Register, at the following Redemption Prices (expressed in percentages of
principal amount), plus accrued and unpaid interest to the Redemption Date
(subject to the right of Holders of record on the relevant Regular Record Date
that is prior to the Redemption Date to receive interest due on an Interest
Payment Date), if redeemed during the 12-month period commencing June 1 of the
years set forth below:
Redemption
Year Price
---- ----------
2006......................... 105.375%
2007......................... 102.688%
2008 and thereafter.......... 100.000%
At any time prior to June 1, 2005 the Company may redeem up to
35% of the aggregate principal amount of the Notes with the Net Cash Proceeds of
one or more sales of its Capital Stock (other than Disqualified Stock), at any
time as a whole or from time to time in part, at a Redemption Price (expressed
as a percentage of principal amount) of 110.750% plus accrued and unpaid
interest to the Redemption Date (subject to the rights of Holders of record on
the relevant Regular Record Date that is prior to the Redemption Date to receive
interest due on an Interest Payment Date)); provided that (i) at least 65% of
the aggregate principal amount of Notes originally issued on the Closing Date
remains outstanding after each such redemption and (ii) notice of such
redemption shall be mailed within 60 days of each such sale of Capital Stock.
At any time on or prior to June 1, 2006, the Notes may be
redeemed, in whole but not in part, at the option of the Company upon the
occurrence of a Change of Control (but in no event more than 90 days after the
occurrence of such Change of Control) at a redemption price equal to 100% of the
principal amount thereof plus the Applicable Premium as of, and accrued and
unpaid interest, to, the Redemption Date.
Notes in original denominations larger than $1,000 may be
redeemed in part. On and after the Redemption Date, interest ceases to accrue on
Notes or portions of Notes called for redemption, unless the Company defaults in
the payment of the Redemption Price.
6. Repurchase upon Change of Control.
Upon the occurrence of any Change of Control, each Holder shall
have the right to require the repurchase of its Notes by the Company in cash
pursuant to the offer described in the Indenture at a purchase price equal to
101% of the principal amount thereof plus accrued and unpaid interest, if any,
to the date of purchase (the "Payment Date").
A notice of such Change of Control will be mailed within 30 days
after any Change of Control occurs to each Holder at its last address as it
appears in the Security Register. Notes in original denominations larger than
$1,000 may be sold to the Company in part. On and
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after the Payment Date, interest ceases to accrue on Notes or portions of Notes
surrendered for purchase by the Company, unless the Company defaults in the
payment of the purchase price.
7. Denominations; Transfer; Exchange.
The Notes are in registered form without coupons in denominations
of $1,000 of principal amount and multiples of $1,000 in excess thereof. A
Holder may register the transfer or exchange of Notes in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not register
the transfer or exchange of any Notes selected for redemption. Also, it need not
register the transfer or exchange of any Notes for a period of 15 days before
the day of mailing of a notice of redemption of Notes selected for redemption.
8. Persons Deemed Owners.
A Holder shall be treated as the owner of a Note for all
purposes.
9. Unclaimed Money.
If money for the payment of principal, premium, if any, or
interest remains unclaimed for two years, the Trustee and the Paying Agent will
pay the money back to the Company at its request. After that, Holders entitled
to the money must look to the Company for payment, unless an abandoned property
law designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
10. Discharge Prior to Redemption or Maturity.
If the Company deposits with the Trustee money and/or U.S.
Government Obligations sufficient to pay the then outstanding principal of,
premium, if any, and accrued interest on the Notes (a) to redemption or
maturity, the Company will be discharged from the Indenture and the Notes,
except in certain circumstances for certain provisions thereof, and (b) to the
Stated Maturity, the Company will be discharged from certain covenants set forth
in the Indenture.
11. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture, the Note Guarantees
or the Notes may be amended or supplemented with the consent of the Holders of
at least a majority in principal amount of the Notes then outstanding, and any
existing default or compliance with any provision may be waived with the consent
of the Holders of at least a majority in principal amount of the Notes then
outstanding. Without notice to or the consent of any Holder, the parties thereto
may amend or supplement the Indenture, the Note Guarantees or the Notes to,
among other things, cure any ambiguity, defect or inconsistency and make any
change that does not materially and adversely affect the rights of any Holder.
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12. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries, among other things, to Incur additional
Indebtedness, make Restricted Payments, suffer to exist restrictions on the
ability of Restricted Subsidiaries to make certain payments to the Company,
issue Capital Stock of Restricted Subsidiaries, Guarantee Indebtedness of the
Company, engage in transactions with Affiliates, suffer to exist or incur Liens,
enter into sale-leaseback transactions, use the proceeds from Asset Sales, or
merge, consolidate or transfer substantially all of its assets. Within 120 days
after the end of each fiscal year, the Company shall deliver to the Trustee an
Officers' Certificate stating whether or not the signers thereof know of any
Default or Event of Default under such restrictive covenants.
13. Successor Persons.
When a successor person or other entity assumes all the
obligations of its predecessor under the Notes or a Note Guarantee and the
Indenture, the predecessor person will be released from those obligations.
14. Defaults and Remedies.
Any of the following events constitutes an "Event of Default"
under the Indenture:
The following events will be defined as "Events of Default" in
the Indenture:
(a) default in the payment of principal of (or premium, if any,
on) any Note when the same becomes due and payable at maturity, upon
acceleration, redemption or otherwise;
(b) default in the payment of interest on any Note when the same
becomes due and payable, and such default continues for a period of 30
days;
(c) default in the performance or breach of Article Five of the
Indenture or the failure by the Company to make or consummate an Offer
to Purchase in accordance with Sections 4.11 or 4.12;
(d) The Company or any Subsidiary Guarantor defaults in the
performance of or breaches any other covenant or agreement in the
Indenture or under the Notes (other than a default specified in clause
(a), (b) or (c) above) and such default or breach continues for a period
of 30 consecutive days after written notice by the Trustee or the
Holders of 25% or more in aggregate principal amount of the Notes;
(e) there occurs with respect to any issue or issues of
Indebtedness of the Company, any Subsidiary Guarantor or any Significant
Subsidiary having an outstanding principal amount of $35 million or more
in the aggregate for all such issues of all such Persons, whether such
Indebtedness now exists or shall hereafter be created, (I) an event of
default that has caused the holder thereof to declare such Indebtedness
to be due and payable prior to its Stated Maturity and such Indebtedness
has not been discharged in full
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or such acceleration has not been rescinded or annulled within 30 days
of such acceleration and/or (II) the failure to make a principal payment
at the final (but not any interim) fixed maturity and such defaulted
payment shall not have been made, waived or extended within 30 days of
such payment default;
(f) any final judgment or order (not covered by insurance) for
the payment of money in excess of $35 million in the aggregate for all
such final judgments or orders against all such Persons (treating any
deductibles, self-insurance or retention as not so covered) shall be
rendered against the Company, any Subsidiary Guarantor or any
Significant Subsidiary and shall not be paid or discharged, and there
shall be any period of 60 consecutive days following entry of the final
judgment or order that causes the aggregate amount for all such final
judgments or orders outstanding and not paid or discharged against all
such Persons to exceed $35 million during which a stay of enforcement of
such final judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect;
(g) a court having jurisdiction in the premises enters a decree
or order for (A) relief in respect of the Company, any Subsidiary
Guarantor or any Significant Subsidiary in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, (B) appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Company, any
Subsidiary Guarantor or any Significant Subsidiary or for all or
substantially all of the property and assets of the Company, any
Subsidiary Guarantor or any Significant Subsidiary or (C) the winding up
or liquidation of the affairs of the Company, any Subsidiary Guarantor
or any Significant Subsidiary and, in each case, such decree or order
shall remain unstayed and in effect for a period of 60 consecutive days;
(h) The Company, any Subsidiary Guarantor or any Significant
Subsidiary (A) commences a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect,
or consents to the entry of an order for relief in an involuntary case
under any such law, (B) consents to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Company, any Subsidiary
Guarantor or any Significant Subsidiary or for all or substantially all
of the property and assets of the Company, any Subsidiary Guarantor or
any Significant Subsidiary or (C) effects any general assignment for the
benefit of creditors; or
(i) any Subsidiary Guarantor repudiates its obligations under its
Note Guarantee or, except as permitted by the Indenture, any Note
Guarantee is determined to be unenforceable or invalid or shall for any
reason cease to be in full force and effect.
If an Event of Default, as defined in the Indenture, occurs and
is continuing, the Trustee may, and at the direction of the Holders of at least
25% in aggregate principal amount of the Notes then outstanding shall, declare
all the Notes to be due and payable. If a bankruptcy or insolvency default with
respect to the Company occurs and is continuing, the Notes automatically become
due and payable. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may require indemnity reasonably
satisfactory
A-8
to it before it enforces the Indenture or the Notes. Subject to certain
limitations, Holders of at least a majority in principal amount of the Notes
then outstanding may direct the Trustee in its exercise of any trust or power.
15. Trustee Dealings with the Company.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from and perform services for the
Company or its Affiliates and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
16. No Recourse Against Others.
No incorporator or any past, present or future partner,
stockholder, other equity holder, officer, director, employee or controlling
person, as such, of the Company or any of the Subsidiary Guarantors or of any
successor Person shall have any liability for any obligations of the Company or
such Subsidiary Guarantor under the Notes, the Note Guarantees or the Indenture
or for any claim based on, in respect of or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
17. Authentication.
This Note shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this Note.
18. Abbreviations.
Customary abbreviations may be used in the name of a Holder or
an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors
Act).
The Company will furnish a copy of the Indenture to any Holder
upon written request and without charge. Requests may be made to PacifiCare
Health Systems, Inc., 0000 Xxxx Xxxxxx Xxxxx, Xxxxx Xxx, Xxxxxxxxxx 00000.
Attention: General Counsel.
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[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby
sell(s), assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
_________________________________________
Please print or typewrite name and address including zip code of assignee
_________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing ________________________________ attorney to transfer said Note on
the books of the Company with full power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL NOTES OTHER THAN EXCHANGE NOTES,
UNLEGENDED OFFSHORE GLOBAL NOTES AND
UNLEGENDED OFFSHORE PHYSICAL NOTES]
In connection with any transfer of this Note occurring prior to
the date which is the earlier of (i) the date the Shelf Registration Statement
is declared effective or (ii) the end of the period referred to in Rule 144(k)
under the Securities Act, the undersigned confirms that without utilizing any
general solicitation or general advertising that:
[Check One]
[] (a) this Note is being transferred in compliance with the exemption from
registration under the Securities Act of 1933 provided by Rule 144A
thereunder.
or
[] (b) this Note is being transferred other than in accordance with (a) above
and documents are being furnished which comply with the conditions of
transfer set forth in this Note and the Indenture.
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If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.
Date: ________________ ___________________________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the face
of the within-mentioned instrument in every
particular, without alteration or any change
whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933 and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Date: ________________ ___________________________________________________
NOTICE: To be executed by an executive officer
A-11
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant
to Section 4.11 or 4.12 of the Indenture, check the Box below.
[ ] Section 4.11 [ ] Section 4.12
If you wish to have a portion of this Note purchased by the
Company pursuant to Section 4.11 or 4.12 of the Indenture, state the amount (in
principal amount):
$-------------------.
Date: ________________
Your Signature: __________________________________________________________
(Sign exactly as your name appears on the other side of this Note)
Signature Guarantee: ______________________________
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
A-12
EXHIBIT B
Form of Certificate
----- , -----
State Street Bank and Trust Company of California, N.A.
000 Xxxx 0xx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Corporate Trust Department
Re: PacifiCare Health Systems, Inc. (the "Company")
10 3/4 %Senior Notes due 2009 (the "Notes")
Dear Sirs:
This letter relates to U.S. $ ________ principal amount of Notes
represented by a Note (the "Legended Note") which bears a legend outlining
restrictions upon transfer of such Legended Note. Pursuant to Section 2.02 of
the Indenture dated as of May 21, 2002 (the "Indenture") relating to the Notes,
we hereby certify that we are (or we will hold such securities on behalf of) a
person outside the United States to whom the Notes could be transferred in
accordance with Rule 904 of Regulation S promulgated under the U.S. Securities
Act of 1933. Accordingly, you are hereby requested to exchange the legended
certificate for an unlegended certificate representing an identical principal
amount of Notes, all in the manner provided for in the Indenture.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Xxxxxx]
By:
--------------------------------
Authorized Signature
B-1
EXHIBIT C
Form of Certificate to Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
----------, -------
State Street Bank and Trust Company of California, N.A.
000 Xxxx 0xx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Corporate Trust Department
Re: PacifiCare Health Systems, Inc. (the "Company")
10 3/4% Senior Notes due 2009 (the "Notes")
Dear Sirs:
In connection with our proposed purchase of $ aggregate principal amount
of the Notes, we confirm that:
1. We understand that any subsequent transfer of the Notes is subject to
certain restrictions and conditions set forth in the Indenture dated as of May
21, 2002 (the "Indenture") relating to the Notes and the undersigned agrees to
be bound by, and not to resell, pledge or otherwise transfer the Notes except in
compliance with such restrictions and conditions and the Securities Act of 1933,
amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes may not be offered or
sold except as permitted in the following sentence. We agree, on our own behalf
and on behalf of any accounts for which we are acting as hereinafter stated,
that if we should sell any Notes within the time period referred to in Rule
144(k) of the Securities Act, we will do so only (A) to the Company or any
subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to
a "qualified institutional buyer" (as defined therein), (C) to an institutional
"accredited investor" (as defined below) that, prior to such transfer, furnishes
(or has furnished on its behalf by a U.S. broker-dealer) to you and to the
Company a signed letter substantially in the form of this letter and, if such
transfer is in respect of an aggregate principal amount of less than $100,000,
an opinion of counsel acceptable to the Company that such transfer is in
compliance with the Securities Act, (D) outside the United States in accordance
with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the
exemption from registration provided by Rule 144 under the Securities Act (if
available) or (F) pursuant to an effective registration statement under the
Securities Act, and we further agree to provide to any person purchasing any of
the Notes from us a notice advising such purchaser that resales of the Notes are
restricted as stated herein.
3. We understand that, on any proposed resale of any Notes, we will be
required to furnish to you and the Company such certifications, legal opinions
and other information as you and the
C-1
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by us
will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Notes purchased by us for our own account or for
one or more accounts (each of which is an institutional "accredited investor")
as to each of which we exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By: __________________________
Authorized Signature
C-2
EXHIBIT D
Form of Certificate to Be Delivered in
Connection with Transfers Pursuant to Regulation S
----- , -----
State Street Bank and Trust Company of California, N.A.
000 Xxxx 0xx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Re: PacifiCare Health Systems, Inc. (the "Company")
10 3/4% Senior Notes due 2009 (the "Notes")
Dear Sirs:
In connection with our proposed sale of U.S.$ ________ aggregate
principal amount of the Notes, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of 1933
and, accordingly, we represent that:
(1) the offer of the Notes was not made to a person in the United
States;
(2) at the time the buy order was originated, the transferee was outside
the United States or we and any person acting on our behalf reasonably believed
that the transferee was outside the United States;
(3) no directed selling efforts have been made by us in the United
States in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the U.S. Securities Act of 1933.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By: _________________________
Authorized Signature
D-1
