Exhibit 4.1
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QUEST DIAGNOSTICS INCORPORATED,
as Issuer
THE SUBSIDIARY GUARANTORS NAMED HEREIN,
as Subsidiary Guarantors
and
THE BANK OF NEW YORK,
as Trustee
Second Supplemental Indenture
Dated as of November 26, 2001
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TABLE OF CONTENTS
Page
Article I DEFINITIONS...........................................................................................3
SECTION 1.1 Certain Terms Defined in the Indenture.......................................................3
SECTION 1.2 Definitions..................................................................................3
Article II FORM AND TERMS OF THE DEBENTURES.......................................................................5
SECTION 2.1 Form and Dating..............................................................................5
SECTION 2.2 Terms of the Debentures......................................................................6
SECTION 2.3 Payment of Interest; Interest Rights Reserved...............................................11
SECTION 2.4 Events of Default...........................................................................11
SECTION 2.5 Unconditional Right of Holders to Receive Principal, Premium and Interest...................12
SECTION 2.6 Selection by Trustee of Securities to be Redeemed...........................................12
SECTION 2.7 Conversion Arrangement on Call for Redemption...............................................13
SECTION 2.8 Purchase at the Option of Holders...........................................................14
SECTION 2.9 Application of the Article of the Indenture Regarding Defeasance and Covenant Defeasance....25
SECTION 2.10 Release of Guarantees......................................................................25
SECTION 2.11 Conversions................................................................................25
Article III MISCELLANEOUS........................................................................................40
SECTION 3.1 Governing Law...............................................................................40
SECTION 3.2 Separability................................................................................40
SECTION 3.3 Counterparts................................................................................40
SECTION 3.4 Ratification................................................................................41
SECTION 3.5 Effectiveness...............................................................................41
EXHIBITS
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EXHIBIT A--Form of 1.75% Contingent Convertible Debenture due 2021..............................................A-1
EXHIBIT B--Form of Additional Subsidiary Guarantee..............................................................B-1
SECOND SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Second Supplemental Indenture"),
dated as of November 26, 2001 among QUEST DIAGNOSTICS INCORPORATED, a Delaware
corporation (the "Company"), THE BANK OF NEW YORK, a New York banking
corporation, as Trustee (the "Trustee"), and the Subsidiary Guarantors (as
defined in the First Supplemental Indenture defined below).
RECITALS OF THE COMPANY
WHEREAS, the Company, the Trustee and the Initial Subsidiary
Guarantors executed and delivered an Indenture, dated as of June 27, 2001 (the
"Base Indenture"), as supplemented by the first Supplemental Indenture as of
June 27, 2001 (the "First Supplemental Indenture"), and as further supplemented
by this Second Supplemental Indenture (collectively, the "Indenture"), to
provide for the issuance by the Company from time to time of Securities to be
issued in one or mores series as provided in the Indenture;
WHEREAS, the issuance and sale of $250,000,000 aggregate
principal amount of a new series of the Company's 1.75% Contingent Convertible
Debentures due November 30, 2021 guaranteed by the Subsidiary Guarantors (the
"Debentures") has been authorized by resolutions adopted by the Board of
Directors of the Company and the Subsidiary Guarantors;
WHEREAS, the Company desires to issue and sell $250,000,000
aggregate principal amount of the Debentures on the date hereof;
WHEREAS, Sections 901(2), 901(3), 901(7), and 901(9) of the
Indenture provide that without the consent of Holders of the Securities of any
series issued under the Indenture, the Company and the Subsidiary Guarantors,
when authorized by a Board Resolution, and the Trustee may enter into one or
more indentures supplemental to the Base Indenture to, among other things, (a)
add additional Events of Default for the benefit of the Holders of all or any
series of Securities, (b) establish the form and terms of any series of
Securities and (c) cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or make any
other provisions with respect to matters or questions arising under the Base
Indenture;
WHEREAS, the Company and the Subsidiary Guarantors desire to
(a) add additional Events of Default for the benefit of the Holders of all
series of Securities, including the Debentures (except as may be provided in a
future supplemental indenture to the Indenture (a "Future Supplemental
Indenture")), (b) establish the form and terms of the Debentures and (c) provide
whether certain Articles of the Indenture will apply to all series of
Securities, including the Debentures (except as may be provided in a Future
Supplement Indenture); and
WHEREAS, all things necessary to make this Second Supplemental
Indenture a valid supplement to the Indenture according to its terms and the
terms of the Indenture have been done;
NOW, THEREFORE, for and in consideration of the premises
stated herein and the purchase of the Debentures by the Holders thereof, the
parties hereto herby enter into this Second Supplemental Indenture, for the
equal and proportionate benefit of all Holders of the Debentures, as follows:
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Article I
DEFINITIONS
SECTION 1.1 Certain Terms Defined in the Indenture.
All capitalized terms used but not defined herein shall have
the meanings ascribed to such terms in the Indenture, as amended hereby.
SECTION 1.2 Definitions.
(a) Except as may be provided in a Future Supplemental
Indenture, for the benefit of the Holders of all Securities, including the
Debentures, Section 101 of the Indenture shall be amended by adding the
following new definitions:
"Capital Stock" for any Person means any and all shares,
interests, partnership interests, rights, warrants, options, participations or
other equivalents of or interests in (however designated) equity issued by that
Person.
"Common Stock" shall mean the Common Stock, $0.01 par value
per share, of the Company existing on the date of this Indenture or any other
shares of Capital Stock of the Company into which such Common Stock shall be
reclassified or changed.
"NYSE" means The New York Stock Exchange, Inc.
"Officer" means the Chairman of the Board, the President or
any Vice President, the Treasurer, the Comptroller or an Assistant Comptroller,
or the Secretary or an Assistant Secretary of the Company or any Subsidiary
Guarantor, as the case may be.
"Purchase Date" means the Repayment Date.
"Purchase Price" means the Repayment Price.
"Trading Day" means a day during which trading in securities
generally occurs on the NYSE or, if the Common Stock is not listed on the NYSE,
on the principal other national or regional securities exchange on which the
Common Stock then is listed or, if the Common Stock is not listed on a national
or regional securities exchange, on the National Association of Securities
Dealers Automated Quotation System or, if the Common Stock is not quoted on the
National Association of Securities Dealers Automated Quotation System, on the
principal other market on which the Common Stock is then traded.
(b) Definitions of the following terms in this Second
Supplemental Indenture may be found in the Sections indicated as follows:
Term Defined in Section
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"Applicable Stock" Section 1302(b)
"Base Indenture" Recitals
"beneficial owner" Section 1302(a)
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"Bid Solicitation Agent" Section 2.2(e)
"cash" Section 1303(a)
"Cash Distribution Excess Amount" Section 1703(e)
"Change of Control" Section 1302(a)
"Change of Control Purchase Date" Section 1302(a)
"Change of Control Purchase Notice" Section 1302(b)
"Change of Control Purchase Price" Section 1302(a)
"Company Notice" Section 1303(d)
"Contingent Interest Period" Section 2.2(d)(ii)
"Continuing Director" Section 1302(a)
"Conversion Agent" Section 2.2(e)
"Conversion Price" Section 2.2(i)
"Conversion Rate" Section 1701(b)
"Current Market Price" Section 1703(g)
"Debenture Market Price" Section 2.2(d)(ii)
"Debentures" Recitals
"Depository" Section 2.1(a)
"Ex-dividend Time" Section 1701(b)
"Expiration Time" Section 1703(f)
"Fair Market Value" Section 1703(g)
"First Supplemental Indenture" Recitals
"Five Trading Day Period" Section 2.2(d)(ii)
"Global Debenture" Section 2.1(a)
"Indenture" Recitals
"Market Price" Section 1303(c)
"Non-Electing Share" Section 1704
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"Paying Agent" Section 2.2(e)
"Purchase Date" Section 1301(a)
"Purchase Notice" Section 1301(a)
"Purchase Price" Section 1301(a)
"Record Date" Section 1703(g)
"Reference Period" Section 1703(d)
"Regular Cash Dividend" Section 2.2(d)(ii)
"Sale Price" Section 1303(c)
"Second Supplemental Indenture" Recitals
"Spin-Off" Section 1703(d)
"Tender Offer Excess Amount" Section 1703(f)
"Trigger Event" Section 1703(d)
Article II
FORM AND TERMS OF THE debentures
SECTION 2.1 Form and Dating.
The Debentures, the applicable Subsidiary Guarantees and the
Trustee's certificate of authentication shall be substantially in the form of
Exhibit A attached hereto. The Debentures shall be executed on behalf of the
Company by its Chairman of the Board, its President or one of its Vice
Presidents, under its corporate seal reproduced thereon. The Debentures may have
notations, legends or endorsements required by law, stock exchange rules or
usage. Each Debenture shall be dated the date of its authentication. The
Debentures and any beneficial interest in the Debentures shall be in
denominations of $1,000 and integral multiples thereof.
The terms and notations contained in the Debentures shall
constitute, and are hereby expressly made, a part of this Indenture and 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.
(a) Global Debentures. The Debentures shall be issued
initially in the form of one or more fully registered global debentures
(the "Global Debentures"), which shall be deposited on behalf of the
purchasers of the Debentures represented thereby with The Depository
Trust Company, New York, New York (the "Depository") and registered in
the name of Cede & Co., the Depository's nominee, duly executed by the
Company, authenticated by the Trustee and with guarantees endorsed
thereon as hereinafter provided. The aggregate principal amount of
outstanding Debentures may from time to time be increased or decreased
by adjustments made on the records of the Trustee and the Depository or
its nominee as hereinafter provided.
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The Global Debentures may not be transferred except by the
Depository, in whole and not in part, to another nominee of the
Depository or to a successor of the Depository or its nominee. If at
any time (i) the Depository notifies the Company that the Depository is
unwilling or unable to continue as Depository for the Global Debentures
or if at any time the Depository ceases to be a clearing agency
registered under the Exchange Act and a successor Depository for the
Global Debentures is not appointed by the Company within 90 days after
delivery of such notice, (ii) the Company in its sole discretion
determines that the Global Debentures will be exchangeable or (iii)
there shall have occurred and be continuing an event of default with
respect to the Debentures under the Indenture, then the Company shall
execute, and the Trustee shall, upon receipt of a Company Order for
authentication, authenticate and deliver, definitive Debentures in an
aggregate principal amount equal to the principal amount of the Global
Debentures in exchange for such Global Debentures.
(b) Book-Entry Provisions. This Section 2.1(b) shall apply
only to the Global Debentures deposited with or on behalf of the
Depository.
The Company shall execute and the Trustee shall, in accordance
with this Section 2.1(b), authenticate and deliver the Global
Debentures that shall be registered in the name of the Depository or
the nominee of the Depository and shall be delivered by the Trustee to
the Depository or pursuant to the Depository's instructions.
Depository Participants shall have no rights either under this
Indenture or with respect to any Global Debentures held on their behalf
by the Depository or under such Global Debentures. The Depository shall
be treated by the Company, the Subsidiary Guarantors, the Trustee and
any agent of the Company, the Subsidiary Guarantors or the Trustee as
the absolute owner of such Global Debenture for all purposes under this
Indenture. Notwithstanding the foregoing, nothing herein shall prevent
the Company or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by the Depository
or impair, as between the Depository and the Depository Participants,
the operation of customary practices of such Depository governing the
exercise of the rights of an owner of a beneficial interest in the
Global Debentures.
(c) Definitive Debentures. Debentures issued in certificated
form shall be substantially in the form of Exhibit A attached hereto,
but without including the text referred to therein as applying only to
Global Debentures. Except as provided above in subsection (a), owners
of beneficial interests in the Global Debentures will not be entitled
to receive physical delivery of definitive Debentures.
(d) Transfer and Exchange of the Debentures. The transfer and
exchange of beneficial interests in the Global Debentures shall be
effected through the Depository, in accordance with this Indenture and
the procedures of the Depository therefor. Beneficial interests in the
Global Debentures may be transferred to Persons who take delivery
thereof in the form of a beneficial interest in the Global Debentures.
SECTION 2.2 Terms of the Debentures.
The following terms relating to the Debentures are hereby
established:
(a) Title. The Debentures shall constitute a series of
Securities having the title "1.75% Contingent Convertible Debentures
due 2021."
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(b) Principal Amount. The aggregate principal amount of the
Debentures that may be authenticated and delivered under the Indenture
(except for Debentures authenticated and delivered upon registration
of, transfer of, or in exchange for, or in lieu of, other Debentures
pursuant to Sections 304, 305, 306, 906 or 1107 of the Indenture) shall
be $250,000,000.
(c) Stated Maturity. The entire outstanding principal of the
Debentures shall be due and payable, unless accelerated, redeemed or
required to be repurchased pursuant to the Indenture, on November 30,
2021.
(d) Interest and Contingent Interest
(i) The rate at which the Debentures shall bear
interest shall be 1.75% per annum; the date from which
interest shall accrue on the Debentures shall be November 26,
2001, or the most recent Interest Payment Date to which
interest has been paid or provided for; the Interest Payment
Dates for the Debentures shall be November 30 and May 31 of
each year, beginning May 31, 2002; the interest so payable,
and punctually paid or duly provided for, on any Interest
Payment Date, will be paid, in immediately available funds, to
the Persons in whose names the Debentures (or one or more
Predecessor Securities) are registered at the close of
business on the Regular Record Date for such interest, which
shall be the May 15 or November 15, as the case may be, next
preceding such Interest Payment Date. Any such interest not
punctually paid or duly provided for shall forthwith cease to
be payable to the respective Holders on such Regular Record
Date, and such Defaulted Interest, may be paid to the Persons
in whose names the Debentures (or one or more Predecessor
Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest
to be fixed by the Trustee, notice whereof shall be given to
Holders of Debentures not less than 10 days prior to such
Special Record Date, or may be paid at any time in any other
lawful manner not inconsistent with requirements of any
securities exchange on which the Debentures may be listed, and
upon such notice as may be required by such exchange, all as
more fully provided in said Indenture.
(ii) In addition, subject to the accrual and record
date provisions hereinafter specified, the Company shall pay
contingent interest to the Holders during any six-month period
(a "Contingent Interest Period") from December 1 to May 31 and
from June 1 to November 30, commencing December 1, 2004, if
the average Debenture Market Price of a Debenture for the Five
Trading Day Period with respect to such Contingent Interest
Period equals $1,200 or more.
The amount of contingent interest payable per $1,000
principal amount of Debentures in respect of any Contingent
Interest Period shall equal the greater of (1) 0.25% of the
average Debenture Market Price of a Debenture for the Five
Trading Day Period and (2) the sum of all Regular Cash
Dividends, if any, paid by the Company per share of Common
Stock during that Contingent Interest Period multiplied by the
Conversion Rate in effect on the date on each such payment
date.
Contingent interest, if any, will accrue and be
payable to Holders as of the 15th day preceding the last day
of the relevant Contingent Interest Period or, if the Company
pays a Regular Cash Dividend during the relevant Contingent
Interest Period, to Holders as of the record date for the
related Regular Cash Dividend. Such payments will be paid on
the last day of the relevant Contingent Interest Period or, if
the Company pays a Regular Cash Dividend during the relevant
Contingent Interest Period, on the payment
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date of the related Regular Cash Dividend. Regular cash
interest will continue to accrue at the rate of 1.75% per year
on the principal amount of the Debentures whether or not
contingent interest is paid.
"Five Trading Day Period" means, with respect to any
Contingent Interest Period, the five trading days ending on
the second trading day immediately preceding the first day of
such Contingent Interest Period; provided, however, if the
Company shall have declared a Regular Cash Dividend on its
Common Stock that is payable during such Contingent Interest
Period but for which the record date for determining
stockholders entitled thereto precedes the first day of such
Contingent Interest Period, then "Five Trading Day Period"
shall mean, with respect to such Contingent Interest Period,
the five trading days ending on the second trading day
immediately preceding such record date.
"Regular Cash Dividends" means quarterly or other
periodic cash dividends on the Company's Common Stock as
declared by the Company's Board of Directors as part of its
cash dividend payment practices and that are not designated by
such Board of Directors as extraordinary or special or other
nonrecurring dividends.
"Debenture Market Price" means, as of any date of
determination, the average of the secondary market bid
quotations per $1,000 principal amount of Debentures obtained
by the Bid Solicitation Agent for $10 million principal amount
of Debentures at approximately 4:00 p.m., New York City time,
on such determination date from three recognized securities
dealers in The City of New York (none of which shall be an
Affiliate of the Company) selected by the Company; provided,
however, if (a) at least three such bids are not obtained by
the Bid Solicitation Agent or (b) in the Company's reasonable
judgment, the bid quotations are not indicative of the
secondary market value of the Debentures as of such
determination date, then the Debenture Market Price for such
determination date shall equal (1) the Conversion Rate in
effect as of such determination date multiplied by (2) the
average Sale Price for the five Trading Days ending on such
determination date, appropriately adjusted to take into
account the occurrence, during the period commencing on the
first of such Trading Days during such five trading day period
and ending on such determination date, of any event described
in Section 1703 of the Indenture.
Upon a determination by the Company that Holders will
be entitled to receive contingent interest which will become
payable during a Contingent Interest Period, on or prior to
the first day of such Contingent Interest Period, the Company
shall issue a press release and publish such information on
its web site on the World Wide Web or through such other
public medium as the Company may use at that time.
(iii) If the Company elects to redeem, or the Holders
elect to require the Company to repurchase, the Debentures on
a date that is after the Regular Record Date and prior to the
corresponding Interest Payment Date, the Company will pay
accrued and unpaid interest, including contingent interest, if
any, on the Debentures to, but not including, the applicable
Redemption Date, Purchase Date or Change of Control Purchase
Date, as the case may be, to the same Holder to whom the
Company pays the principal of the Debentures being redeemed or
repurchased, as the case may be.
Except as provided below, if any Debentures are
surrendered for conversion on any date other than an Interest
Payment Date, the Holder of such Debentures will not be
7
entitled to receive any interest, including contingent
interest, if any, that has accrued on such Debentures since
the prior Interest Payment Date. By delivery to the Holder of
the number of shares of Common Stock or other consideration
issuable upon conversion in accordance with Article 17 of the
Indenture, any accrued and unpaid interest on such Debentures
will be deemed to have been paid in full.
If a Holder of Debentures converts on a date after a
Regular Record Date for an interest payment but prior to the
corresponding Interest Payment Date, the Holder of such
Debentures will receive on that Interest Payment Date accrued
and unpaid interest on such Debentures, but, at the time the
Holder surrenders such Debentures for conversion, the Holder
must pay the Company the interest that has accrued and will be
paid on such Interest Payment Date. No such payment need be
made with respect to Debentures that will be redeemed by the
Company after a Regular Record Date but prior to the
corresponding Interest Payment Date.
(iv) If the principal amount of or any portion of
such principal amount of, or any interest, including
contingent interest, if any, on, any Debentures is not paid
when due (whether upon acceleration pursuant to Section 6.2 of
the Indenture or on the Stated Maturity or on Redemption Date,
Repurchase Date or Change of Control Purchase Date), then in
each such case the overdue amount shall, to the extent
permitted by law, bear interest at the applicable Interest
Rate, compounded semi-annually, which interest shall accrue
from the date of such overdue amount was originally due to the
date of payment of such amount, including interest thereon,
has been made or duly provided for. All such interest shall be
payable on demand.
(e) Paying Agent, Conversion Agent and Bid Solicitation Agent.
The Company shall maintain an office or agency where Debentures may be
presented for purchase or payment ("Paying Agent") and an office or
agency where Debentures may be presented for conversion ("Conversion
Agent"). The Company shall also appoint a bid solicitation agent (the
"Bid Solicitation Agent") to act as set forth under the caption
"Contingent Interest" in the Debentures. The Company may have one or
more additional paying agents and one or more additional conversion
agents.
The Company shall enter into an appropriate agency agreement
with any Paying Agent, Conversion Agent or Bid Solicitation Agent
(other than the Trustee). The agreement shall implement the provisions
of this Indenture that relate to such agent. If the Company fails to
maintain a Paying Agent, Conversion Agent or Bid Solicitation Agent,
the Trustee shall act as such and shall be entitled to appropriate
compensation therefor pursuant to Section 606 of the Indenture. The
Company or any Subsidiary or an Affiliate of either of them may act as
Paying Agent or Conversion Agent. None of the Company or any Subsidiary
or any Affiliate of either of them may act as Bid Solicitation Agent.
The Company initially appoints the Trustee as Conversion
Agent, Paying Agent and Bid Solicitation Agent in connection with the
Debentures.
(f) Place of Payment.
(i) The Place of Payment for the Debentures and the
place or places where the Debentures may be surrendered for
registration of transfer, exchange, repurchase, redemption or
conversion and where notices may be given to the Company in
respect of the Debentures is at the Corporate Trust Office of
the Trustee or such other office or
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agency of the Company as may be designated for such purpose.
Payment of principal and interest and contingent interest, if
any, on the Debentures will be in such coin or currency of the
United States of America as at the time of payment is legal
tender for payment of public and private debts.
(ii) The Company will pay principal on (1) Global
Debentures to DTC in immediately available funds and (2) any
definitive Debentures in immediately available funds at the
Company's office or agency in New York City, which initially
will be the Corporate Trust Office of the Trustee.
(iii) The Company will pay interest, including
contingent interest, if any, on (1) Global Debentures to DTC
in immediately available funds, (2) any definitive Debentures
having an aggregate principal amount of $5,000,000 or less by
check mailed to the Holders of these Debentures, and (3) any
definitive Debentures having an aggregate principal amount of
more than $5,000,000 by wire transfer in immediately available
funds if requested by the Holders of these Debentures. At
Stated Maturity the Company will pay interest on any
definitive Debentures at the Company's office or agency in New
York City, which initially will be the Corporate Trust Office
of the Trustee.
(g) Redemption. At any time on or after November 30, 2004, the
Company, at its option, may redeem in principal amounts of $1,000 or
integral multiples of $1,000 the Debentures for cash as a whole, or
from time to time in part, at a Redemption Price equal to 100% of the
principal amount of the Debentures to be redeemed, plus accrued and
unpaid interest, including contingent interest, if any, to, but
excluding, the Redemption Date.
Debentures or portions thereof to be redeemed as of a
Redemption Date will be convertible by the Holders of such Debentures
until the close of business on the second Business Day prior to the
Redemption Date.
(h) Repurchase.
(i) The Debentures shall be repurchased by the
Company in accordance with the provisions and at the
Repurchase Price set forth under the caption "Repurchase by
the Company at the Option of the Holder" in the Debentures and
in accordance with the provisions of the Indenture, including,
without limitation, Article Thirteen, as amended by Section
2.11 hereof.
(ii) The Debentures shall be purchased by the Company
in accordance with the provisions and at the Change of Control
Purchase Price set forth under the caption "Purchase of
Securities at Option of Holder Upon a Change of Control" in
the Debentures and in accordance with the provisions of the
Indenture, including, without limitation, Article Thirteen, as
amended by Section 2.11 hereof.
(i) Conversion. The Debentures shall be convertible in
accordance with the provisions and at the Conversion Rate set forth
under the caption "Conversion" in the Debentures and in accordance with
the provisions of the Indenture, including, without limitation, Article
Seventeen.
"Conversion Price" means initially $87.50, subject to
adjustment as set forth in the Indenture.
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(j) Guarantees. The Debentures shall be guaranteed by the
Subsidiary Guarantors in accordance with Article Sixteen of the
Indenture.
SECTION 2.3 Payment of Interest; Interest Rights Reserved.
Except as may be provided in a Future Supplemental Indenture,
for the sole benefit of the Holders of the Debentures, Section 307(a) of the
Base Indenture, as supplemented by the First Supplemental Indenture, shall be
amended by adding the following paragraph before the final paragraph in Section
307(a) thereof:
In the event Securities of any series or a portion thereof is
surrendered for conversion during a period (1) after the Regular Record
Date immediately preceding any Interest Payment Date and on or prior to
such Interest Payment Date or (2) if contingent interest is payable to
Holders of Securities during any six-month period, after the record
date for such contingent interest and on or prior to the payment date
therefor (unless, in either case, such Securities or portion thereof
which is being surrendered for conversion has been called for
redemption on a Redemption Date within such period), the Company will
pay on such Interest Payment Date or payment date, as the case may be,
interest or contingent interest due and payable on such Interest
Payment Date or payment date, as the case may be, notwithstanding such
conversion, and the Company will pay such interest (whether or not
punctually paid or duly provided for) to the Person in whose name such
Securities (or one or more Predecessor Securities) are registered at
the close of business on such Regular Record Date and will pay such
contingent interest to the Person in whose name such Securities (or one
or more Predecessor Securities) are registered at the close of business
on such record date; provided, however, that such payment of interest
or contingent interest shall be subject to the payment to the Company
by the Holder of such Securities or portion thereof surrendered for
conversion (such payment to accompany such surrender) of an amount
equal to the amount of such interest or contingent interest, in
accordance with Section 1702 hereof. Except as otherwise provided in
the immediately preceding sentence, in the case of any Security which
is converted, interest or contingent interest due and payable after the
date of conversion of such Security shall not be payable.
SECTION 2.4 Events of Default.
Except as may be provided by a Future Supplemental Indenture,
for the benefit of the Holders of all Securities, including the Debentures,
Subsection 501 of the Base Indenture, as supplemented by the First Supplemental
Indenture, shall be amended by deleting Subsections (1), (2) and (9) thereof in
their entirety and replacing such Subsections with new Subsections (1), (2) and
(9) and adding a new Subsection (10) to Section 501 thereof as follows:
(1) default in the payment of any interest, including
contingent interest, if any, upon, or any Additional Amount payable in
respect of, any Security of that series or of any coupon appertaining
thereto, when such interest, including contingent interest, if any, or
coupon becomes due and payable, and continuance of such default for a
period of 30 days; or
(2) default in the payment of the principal of (or premium, if
any, on), or Redemption Price, Repayment Price or Change of Control
Purchase Price of, any Security of that series when it becomes due and
payable at its Maturity; or
(9) failure to convert any Security of that series into shares
of the Company's Common Stock upon exercise of a Holder's conversion
right, unless such failure is cured within five days after written
notice of default is given to the Company by the Trustee; or
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(10) any other Event of Default provided with respect to
Securities of that series.
SECTION 2.5 Unconditional Right of Holders to Receive Principal, Premium and
Interest.
Except as may be provided by a Future Supplemental Indenture,
for the sole benefit of the Holders of the Debentures, Section 508 of the Base
Indenture, as supplemented by the First Supplemental Indenture, shall be amended
by replacing that section with the following:
SECTION 508 Unconditional Right of Holders to Receive
Principal, Premium and Interest.
Notwithstanding any other provision in this Indenture, the
Holder of any Security or coupon shall have the right, which is
absolute and unconditional, to receive payment of the principal of (and
premium, if any) and (subject to Sections 305 and 307 hereof) interest
and contingent interest, if any, and Additional Amounts, if any, on
such Security or payment of such coupon on the respective due dates
expressed in such Security or coupon (or in the case of redemption, to
receive the Redemption Price and accrued interest and contingent
interest, if any, on the Redemption Date, or in the case of a
repurchase, to receive the Purchase Price and accrued interest and
contingent interest, if any, on the Purchase Date, or in the case of a
Change of Control, to receive the Change of Control Purchase Price and
accrued interest and contingent interest, if any, on the Change of
Control Purchase Date) and to institute suit for the enforcement of any
such payment on or after such respective dates, and such rights shall
not be impaired without the consent of such Holder.
SECTION 2.6 Selection by Trustee of Securities to be Redeemed.
Except as may be provided by a Future Supplemental Indenture,
for the sole benefit of the Holders of the Debentures, Section 1103 of the Base
Indenture, as supplemented by the First Supplemental Indenture, shall be amended
as follows:
(a) by deleting the words "by such method" in the fifth line
thereof and, in their place, adding the words "by lot, on a pro rata
basis or such other method;" and
(b) by adding a new sentence at the end thereof as follows:
"If the Trustee selects a portion of a Holder's
Securities of any series for partial redemption and the Holder
converts a portion of the same Securities, the converted
portion will be deemed to be from the portion selected for
redemption."
11
SECTION 2.7 Conversion Arrangement on Call for Redemption.
Except as may be provided by a Future Supplemental Indenture,
for the sole benefit of the Holders of the Debentures, a new Section 1108 shall
be added to the Base Indenture, as supplemented by the First Supplemental
Indenture, as follows:
SECTION 1108 Conversion Arrangement on Call for Redemption.
In connection with the Securities of any series, the Company
may arrange for the purchase and conversion of any Securities called
for redemption and not surrendered for conversion by an agreement with
one or more investment bankers or other purchasers to purchase such
Securities by paying to a Paying Agent (other than the Company or any
of its Affiliates) in trust for the Holders, on or before 11:00 A.M.
New York City time on the Redemption Date, an amount that, together
with any amounts deposited with such Paying Agent by the Company for
the redemption of such Securities, is not less than the Redemption
Price plus any accrued and unpaid interest and contingent interest, if
any, with respect to such Securities. Notwithstanding anything to the
contrary contained in this Article Eleven, the obligation of the
Company to pay the Redemption Price of such Securities, including
accrued interest and contingent interest, if any, shall be deemed to be
satisfied and discharged to the extent such amount is so paid in trust
for the Holders by such investment bankers or other purchasers. If such
an agreement is entered into, any Securities called for redemption and
not surrendered for conversion by the Holders thereof prior to the
close of business on the second Business Day prior to the relevant
Redemption Date may, at the option of the Company upon written notice
to the Trustee, be deemed, to the fullest extent permitted by law,
acquired by such investment bankers or other purchasers from such
Holders and (notwithstanding anything to the contrary contained in
Article Seventeen) surrendered by such investment bankers or other
purchasers for conversion, all as of immediately prior to the close of
business on the Business Day immediately prior to the Redemption Date,
subject to payment of the above amount as aforesaid. The Paying Agent
shall hold and pay to the Holders whose Securities are selected for
redemption any such amount paid to it for purchase in the same manner
as it would money deposited with it by the Company for the redemption
of Securities. Without the Paying Agent's prior written consent, no
arrangement between the Company and such investment bankers or other
purchasers for the purchase and conversion of any Securities shall
increase or otherwise affect any of the powers, duties,
responsibilities or obligations of the Paying Agent as set forth in
this Indenture, and the Company agrees to indemnify the Paying Agent
from, and hold it harmless against, any loss, liability or expense
arising out of or in connection with any such arrangement for the
purchase and conversion of any Securities between the Company and such
investment bankers or other purchasers, including the costs and
expenses incurred by the Paying Agent in the defense of any claim or
liability reasonably incurred without negligence or bad faith on its
part arising out of or in connection with the exercise or performance
of any of its powers, duties, responsibilities or obligations under
this Indenture, in accordance with the indemnity provisions applicable
to the Trustee set forth herein.
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SECTION 2.8 Purchase at the Option of Holders.
Except as may be provided by a Future Supplemental Indenture,
for the sole benefit of the Holders of the Debentures, Article Thirteen of the
Base Indenture, as supplemented by the First Supplemental Indenture, shall be
replaced in its entirety with the following:
ARTICLE THIRTEEN
PURCHASE AT THE OPTION OF HOLDERS
SECTION 1301 Purchase of Debentures by the Company at Option
of the Holder. (a)General. Debentures shall be purchased by the Company pursuant
to Section 6 of the Debentures at the option of the Holder on November 30, 2004,
2005, 2008, 2012 and 2016 (each, a "Purchase Date"), at a purchase price equal
to the principal amount of those Debentures plus accrued and unpaid interest,
including contingent interest, if any, to, but not including, the Purchase Date
(the "Purchase Price"), subject to the provisions of Section 1303 hereof.
Purchases of Debentures hereunder shall be made, at the option of the Holder
thereof, upon:
(1) delivery to the Paying Agent by the Holder of a written
notice of purchase (a "Purchase Notice") during the period beginning at
any time from the opening of business on the date that is 20 Business
Days prior to the relevant Purchase Date until the close of business on
the third Business Day prior to such Purchase Date stating:
(A) the certificate number of the Debenture which the
Holder will deliver to be purchased or the appropriate
Depository procedures if definitive Debentures have not been
issued,
(B) the portion of the principal amount of the
Debenture which the Holder will deliver to be purchased, which
portion must be in principal amounts of $1,000 or a whole
multiple of $1,000,
(C) that such Debenture shall be purchased by the
Company as of the Purchase Date pursuant to the terms and
conditions specified in Section 6 of the Debentures and in
this Indenture, and
(D) in the event the Company elects, pursuant to
Section 1303 hereof, to pay the Purchase Price, in whole or in
part, in shares of Common Stock but such portion of the
Purchase Price shall ultimately be paid to such Holder
entirely in cash because any of the conditions to payment of
the Purchase Price in shares of Common Stock is not satisfied
prior to the close of business on the relevant Purchase Date,
as set forth in Section 1303 hereof, whether such Holder
elects (i) to withdraw such Purchase Notice as to some or all
of the Debentures to which such Purchase Notice relates
(stating the principal amount and certificate numbers, if any,
of the Debentures as to which such withdrawal shall relate) or
(ii) to receive cash in respect of the entire Purchase Price
for all Debentures (or portions thereof) to which such
Purchase Notice relates; and
(2) delivery of such Debenture to the Paying Agent at any time
after delivery of the Purchase Notice (together with all necessary
endorsements) at the offices of the Paying Agent, such delivery being a
condition to receipt by the Holder of the Purchase Price therefor;
provided, however, that such Purchase Price shall be so paid pursuant
to this Section 1301 only if the
13
Debenture so delivered to the Paying Agent shall conform in all
respects to the description thereof in the related Purchase Notice.
If a Holder, in such Holder's Purchase Notice and in any
written notice of withdrawal delivered by such Holder pursuant to the
terms of Section 1303 hereof, fails to indicate such Holder's choice
with respect to the election set forth in Section 1301(a)(1)(D), such
Holder shall be deemed to have elected to receive cash in respect of
the entire Purchase Price for all Debentures subject to such Purchase
Notice in the circumstances set forth in such clause (D).
The Company shall purchase from the Holder thereof, pursuant
to this Section 1301, a portion of a Debenture, if the principal amount
of such portion is $1,000 or a whole multiple of $1,000. Provisions of
this Indenture that apply to the purchase of all of a Debenture also
apply to the purchase of such portion of such Debenture.
Any purchase by the Company contemplated pursuant to the
provisions of this Section 1301 shall be consummated by the delivery of
the consideration to be received by the Holder promptly following the
later of the Purchase Date and the time of delivery of the Debenture.
Notwithstanding anything herein to the contrary, any Holder
delivering to the Paying Agent the Purchase Notice contemplated by this
Section 1301(a) shall have the right to withdraw such Purchase Notice
at any time prior to the close of business on the Purchase Date by
delivery of a written notice of withdrawal to the Paying Agent in
accordance with Section 1304 hereof.
The Paying Agent shall promptly notify the Company of the
receipt by it of any Purchase Notice or written notice of withdrawal
thereof.
SECTION 1302 Purchase of Debentures at Option of the Holder
upon Change of Control. (a)(1) If a Change of Control occurs (subject
to certain exceptions set forth below), the Debentures not previously
purchased by the Company shall be purchased by the Company, at the
option of the Holder thereof, on the date that is 30 days after the
date of the Company Notice with respect to a Change of Control given by
the Company in accordance with Section 1303(d) hereof (the "Change of
Control Purchase Date") at a purchase price equal to the principal
amount of those Debentures plus accrued and unpaid interest, including
contingent interest, if any, to, but not including, the Change of
Control Purchase Date (the "Change of Control Purchase Price"), subject
to satisfaction by or on behalf of the Holder of the requirements set
forth in Section 1302(b) hereof.
A "Change of Control" will be deemed to have occurred at such
time after the Debentures are originally issued when any of the
following events shall occur:
(i) the acquisition by any person, including any
syndicate or group deemed to be a "person" under Section
13(d)(3) of the Exchange Act, of beneficial ownership,
directly or indirectly, through a purchase, merger or other
acquisition transaction, or a series of purchase, merger or
other acquisition transactions, of shares of the Capital Stock
of the Company entitling that person to exercise 50% or more
of the total voting power of all shares of the Capital Stock
of the Company entitled to vote generally in elections of
directors (other than any acquisition by the Company, any of
its subsidiaries or any of its employee benefit plans or any
acquisition by any underwriter temporarily holding shares of
the Capital Stock of the Company pursuant to an offering
thereof), except that any of those persons shall be deemed to
have beneficial ownership of all shares of the Capital
14
Stock of the Company it has the right to acquire, whether the
right is currently exercisable or is exercisable only upon the
occurrence of a subsequent condition; or
(ii) the first day on which a majority of the members
of the board of directors of the Company are not Continuing
Directors; or
(iii) the Company consolidates or merges with or into
any other person, any merger of another person into the
Company, or any conveyance, transfer, sale, lease or other
disposition of all or substantially all of the Company's
properties and assets to another person, other than: (A) any
transaction: (1) that does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of
the Company's Capital Stock; and (2) pursuant to which holders
of the Company's Capital Stock immediately prior to the
transaction have the entitlement to exercise, directly or
indirectly, 50% or more of the total voting power of all
shares of Capital Stock entitled to vote generally in
elections of directors of the continuing or surviving Person
immediately after giving effect to such transaction; and (B)
any merger, share exchange, transfer of assets or similar
transaction solely for the purpose of changing the Company's
jurisdiction of incorporation and resulting in a
reclassification, conversion or exchange of outstanding shares
of Common Stock, if at all, solely into shares of common
stock, ordinary shares, American Depositary Shares or
analogous securities of the surviving Person or a direct or
indirect parent of the surviving corporation.
A "Continuing Director" shall mean:
(i) an individual who was a member of the Board of
Directors of the Company first elected by the stockholders or
by the Board of Directors prior to the date hereof or prior to
the time that any person (other than SmithKline Xxxxxxx plc)
becomes after the date hereof the holder of record of in
excess of 20% of the Capital Stock of the Company entitled to
vote in the election of directors; or
(ii) an individual designated (before such
individual's initial election as a director) as a Continuing
Director by a majority of the then Continuing Directors.
(2) Notwithstanding the provisions of Section 1302(a)(1)
hereof, the Company shall not be required to purchase the Debentures of
the Holders upon a Change of Control pursuant to this Section 1302 if:
(i) the Sale Price per share of Common Stock for any
five Trading Days within (1) the period of 10 consecutive
Trading Days ending immediately after the later of the Change
of Control or the public announcement of the Change of
Control, in the case of a Change of Control under clause (i)
or (ii) of the definition of Change of Control above, or (2)
the period of 10 consecutive Trading Days ending immediately
before the Change of Control, in the case of a Change of
Control under clause (iii) of the definition of Change of
Control above, in each case, equals or exceeds 120% of the
Conversion Price of the Debentures in effect on each of those
five Trading Days; or
(ii) 100% of the consideration in the transaction or
transactions (other than cash payments for fractional shares
and cash payments made in respect of dissenters' appraisal
rights) constituting a Change of Control consists of shares of
common stock, ordinary shares, American Depositary Shares or
analogous securities traded or to be traded immediately
following a Change of Control on a national securities
exchange or
15
the Nasdaq National Market, and, as a result of the
transaction or transactions, the Debentures become convertible
into that common stock, ordinary shares, American Depositary
Shares or analogous securities (and any rights attached
thereto).
For the purposes of this Section 1302, (x) whether a person is
a "beneficial owner" shall be determined in accordance with Rule 13d-3
under the Exchange Act and (y) the term "person" includes any syndicate
or group that would be deemed to be a "person" under Section 13(d)(3)
of the Exchange Act.
(b) A Holder may exercise its rights specified in Section
1302(a) hereof upon delivery of a written notice of purchase (a "Change
of Control Purchase Notice") to the Paying Agent at any time on or
prior to the close of business on the Business Day immediately
preceding the Change of Control Purchase Date stating:
(1) the certificate number of the Debenture which the
Holder will deliver to be purchased or the
appropriate depositary procedures if definitive
Debentures have not been issued;
(2) the portion of the principal amount of the Debenture
which the Holder will deliver to be purchased, which
portion must be $1,000 or a whole multiple of $1,000;
(3) that such Debenture shall be purchased pursuant to
the terms and conditions specified in Section 7 of
the Debentures and in this Indenture; and
(4) in the event the Company elects, pursuant to Section
1303 hereof, to pay the Change of Control Purchase
Price, in whole or in part, in shares of Applicable
Stock but such portion of the Change of Control
Purchase Price shall ultimately be paid to such
Holder entirely in cash because any of the conditions
to payment of the Change of Control Purchase Price in
shares of Applicable Stock is not satisfied prior to
the close of business on the third Business Day prior
to the relevant Change of Control Purchase Date, as
set forth in Section 1303 hereof, whether such Holder
elects (i) to withdraw such Change of Control
Purchase Notice as to some or all of the Debentures
to which such Change of Control Purchase Notice
relates (stating the principal amount and certificate
numbers, if any, of the Debentures as to which such
withdrawal shall relate) or (ii) to receive cash in
respect of the entire Change of Control Purchase
Price for all Debentures (or portions thereof) to
which such Change of Control Purchase Notice relates.
"Applicable Stock" means (i) the Common Stock and (ii) in the
event of a merger, consolidation or other similar transaction involving
the Company that is otherwise permitted hereunder in which the Company
is not the surviving corporation, the common stock, ordinary shares,
American Depositary Shares or analogous securities (and any rights
attached thereto) of such surviving corporation or its direct or
indirect parent corporation.
The delivery of such Debenture to the Paying Agent with the
Change of Control Purchase Notice (together with all necessary
endorsements) at the offices of the Paying Agent shall be a condition
to the receipt by the Holder of the Change of Control Purchase Price
therefor; provided, however, that such Change of Control Purchase Price
shall be so paid pursuant to this Section 1302 and Section 1303 hereof
only if the Debenture so delivered to the Paying Agent
16
shall conform in all respects to the description thereof set forth in
the related Change of Control Purchase Notice.
If a Holder, in such Holder's Change of Control Purchase
Notice and in any written notice of withdrawal delivered by such Holder
pursuant to the terms of Section 1304 hereof, fails to indicate such
Holder's choice with respect to the election set forth in Section
1302(b)(4) hereof, such Holder shall be deemed to have elected to
receive cash in respect of the entire Change of Control Purchase Price
for all Debentures subject to such Change of Control Purchase Notice in
the circumstances set forth in such Section 1302(b)(4).
The Company shall purchase from the Holder thereof, pursuant
to this Section 1302 and Section 1303 hereof, a portion of a Debenture
if the principal amount of such portion is $1,000 or a whole multiple
of $1,000. Provisions of this Indenture that apply to the purchase of
all of a Debenture also apply to the purchase of such portion of such
Debenture.
Any purchase by the Company contemplated pursuant to the
provisions of this Section 1302 and Section 1303 hereof shall be
consummated by the delivery of the consideration to be received by the
Holder on the Change of Control Purchase Date.
Notwithstanding anything herein to the contrary, any Holder
delivering to the Paying Agent the Change of Control Purchase Notice
contemplated by this Section 1302(b) shall have the right to withdraw
such Change of Control Purchase Notice at any time prior to the close
of business on the last Business Day immediately preceding the Change
of Control Purchase Date by delivery of a written notice of withdrawal
to the Paying Agent in accordance with Section 1305 hereof.
The Paying Agent shall promptly notify the Company of the
receipt by it of any Change of Control Purchase Notice or written
withdrawal thereof.
SECTION 1303 Company's Right to Elect Manner of Payment of
Purchase Price and Change of Control Purchase Price for Payment. (a)
The Debentures to be purchased on any Purchase Date or Change of
Control Purchase Date, as the case may be, pursuant to Sections 1301(a)
and 1302(a) hereof, respectively, may be paid for, in whole or in part,
at the election of the Company, in U.S. legal tender ("cash") or
Applicable Stock, or in any combination of cash and Applicable Stock,
subject to the conditions set forth in Sections 1303(c) and (d) hereof.
The Company shall designate, in the Company Notice delivered pursuant
to Section 1303(d) hereof, whether the Company will purchase the
Debentures for cash or Applicable Stock, or, if a combination thereof,
the percentages of the Purchase Price or Change of Control Purchase
Price, as the case may be, of Debentures in respect of which it will
pay in cash or Applicable Stock; provided that the Company will pay
cash for fractional interests in Applicable Stock. For purposes of
determining the existence of potential fractional interests, all
Debentures subject to purchase by the Company held by a Holder shall be
considered together (no matter how many separate certificates are to be
presented). Each Holder whose Debentures are purchased pursuant to
Section 1301 or 1302 hereof, as the case may be, shall receive the same
percentage of cash or Applicable Stock in payment of the Purchase Price
or Change of Control Purchase Price, as the case may be, for such
Debentures, except (i) as provided in this Section 1303(a) with regard
to the payment of cash in lieu of fractional Applicable Stock and (ii)
in the event that the Company is unable to purchase the Debentures of a
Holder or Holders for Applicable Stock because any necessary
qualifications or registrations of the Applicable Stock under
applicable state Debentures laws cannot be obtained, the Company shall
purchase the Debentures of such Holder or Holders for cash. The Company
may not change its election with
17
respect to the consideration (or components or percentages of
components thereof) to be paid once the Company has given its Company
Notice to Holders except pursuant to Section 1303(b) or 1303(d) hereof
in the event of a failure to satisfy, prior to the close of business on
the Business Day immediately preceding the Purchase Date or Change of
Control Purchase Date, as the case may be, any condition to the payment
of the Purchase Price or Change of Control Purchase Price, as the case
may be, in whole or in part, in Applicable Stock.
At least three Business Days before the date of the relevant
Company Notice given pursuant to Section 1303(d) hereof, the Company
shall deliver an Officers' Certificate to the Trustee specifying:
(i) the manner of payment selected by the Company,
(ii) the information required by Section 1303(d) hereof in
the Company Notice,
(iii) if the Company elects to pay the Purchase Price or
Change of Control Purchase Price, as the case may be,
or a specified percentage thereof, in shares of
Applicable Stock, that the conditions to such manner
of payment set forth in Section 1303(c) hereof have
been or will be complied with, and
(iv) whether the Company desires the Trustee to give the
Company Notice required by Section 1303(d) hereof.
(b) Purchase with Cash. At the option of the Company, the
Purchase Price or Change of Control Purchase Price of Debentures in
respect of which a Purchase Notice pursuant to Section 1301(a) hereof
or Change of Control Purchase Notice pursuant to Section 1302(b)
hereof, as the case may be, has been given, or a specified percentage
thereof, may be paid by the Company with cash equal to the aggregate
Purchase Price or Change of Control Purchase Price, as the case may be,
of such Debentures.
(c) Payment by Issuance of Shares of Common Stock. At the
option of the Company, the Purchase Price or Change of Control Purchase
Price of Debentures in respect of which a Purchase Notice pursuant to
Section 1301(a) hereof or Change of Control Purchase Notice pursuant to
Section 1302(b) hereof, as the case may be, has been given, or a
specified percentage thereof, may be paid by the Company by the
issuance of a number of shares of Applicable Stock equal to the
quotient obtained by dividing (i) the portion of the Purchase Price or
Change of Control Purchase Price, as the case may be, to be paid in
Applicable Stock by (ii) 100% of the Market Price with respect to the
applicable Purchase Date or Change of Control Purchase Date, as the
case may be, subject to the next succeeding paragraph.
The Company will not issue a fractional share of Applicable
Stock in payment of the Purchase Price or Change of Control Purchase
Price, as the case may be. Instead, the Company will pay cash based on
the Market Price with respect to the applicable Purchase Date or Change
of Control Purchase Date, as the case may be, of the fractional share.
It is understood that if a Holder elects to have more than one
Debenture purchased, the number of shares of Applicable Stock shall be
based on the aggregate amount of Debentures to be purchased.
The Company's right to exercise its election to purchase
Debentures through the issuance of Applicable Stock shall be
conditioned upon:
18
(i) the Company's not having given its Company Notice
of an election to pay entirely in cash and its giving of
timely Company Notice of an election to purchase all or a
specified percentage of the Debentures with Applicable Stock
as provided herein;
(ii) the registration of such shares of Applicable
Stock under the securities Act and the Exchange Act, in each
case, if required for such shares to be freely tradable;
(iii) the listing of such shares of Applicable Stock
on a United States national securities exchange or the
quotation of such shares of Applicable Stock in an
inter-dealer quotation system of any registered United States
national securities association;
(iv) any necessary qualification or registration of
such shares of Applicable Stock under applicable state
securities laws or the availability of an exemption from such
qualification and registration; and
(v) the receipt by the Trustee of an Officer's
Certificate and an Opinion of Counsel each stating that (A)
the terms of the issuance of the Applicable Stock are in
conformity with this Indenture and (B) the Applicable Stock to
be issued by the Company in payment of the Purchase Price or
Change of Control Purchase Price, as the case may be, in
respect of Debentures have been duly authorized and, when
issued and delivered pursuant to the terms of this Indenture
in payment of the Purchase Price or Change of Control Purchase
Price, as the case may be, in respect of the Debentures, will
be validly issued, fully paid and non-assessable and, to the
best of such counsel's knowledge, free from preemptive rights,
and, in the case of such Officer's Certificate, stating that
the conditions above and the condition set forth in the second
succeeding sentence have been satisfied and, in the case of
such Opinion of Counsel, stating that the conditions in
clauses (i) through (iv) above have been satisfied.
Such Officers' Certificate shall also set forth the number of
shares of Applicable Stock to be issued for each $1,000 principal
amount of Debentures and the Sale Price of a share of Applicable Stock
on each Trading Day during the period commencing on the first Trading
Day of the period during which the Market Price is calculated and
ending on the third day prior to the applicable Purchase Date or Change
of Control Date, as the case may be. If the foregoing conditions are
not satisfied with respect to a Holder or Holders prior to the close of
business on the last day prior to the Purchase Date or Change of
Control Purchase Date, as the case may be, and the Company has elected
to purchase the Debentures pursuant to this Section 1303 through the
issuance of Applicable Stock, the Company shall pay the entire Purchase
Price or Change of Control Purchase Price, as the case may be, of the
Debentures of such Holder or Holders in cash.
The "Market Price" means the average of the Sale Prices of the
Applicable Stock for the five Trading Day period immediately preceding
and including the third day prior to the applicable Purchase Date or
Change of Control Purchase Date, as the case may be, (if the third day
prior to the applicable Purchase Date is a Trading Day, or if not, then
on the last Trading Day prior to the third day), appropriately adjusted
to take into account the occurrence, during the period commencing on
the first of the Trading Days during the five Trading Day period and
ending on the Purchase Date or Change of Control Purchase Date, as the
case may be, of any event described in Section 1703 or 1704 hereof.
The "Sale Price" of the Applicable Stock on any date means the
closing per share sale price (or, if no closing sale price is reported,
the average of the bid and ask prices or, if more than one in either
case, the average of the average bid and the average ask prices) on
such date as
19
reported on the NYSE or, if the Applicable Stock is not listed on the
NYSE, as reported on a national securities exchange, or if not reported
on a national securities exchange, as reported by the Nasdaq system. In
the absence of such quotations, the Company shall be entitled to
determine the Sales Price on the basis of such quotations as it
considers appropriate.
(d) Notice of Election. The Company's notice of election to
repurchase with cash or Applicable Stock or any combination thereof
shall be sent to the Holders in the manner provided in Section 106 of
the Indenture (the "Company Notice"). The Company Notice with respect
to the Purchase Price shall be sent to Holders (and to beneficial
owners as required by applicable law) at least 20 days prior to the
relevant Purchase Date. The Company Notice with respect to the Change
of Control Purchase Price shall be sent to Holders (and to beneficial
owners as required by applicable law) within 30 days after the
occurrence of the relevant Change of Control. Such Company Notice shall
state the manner of payment elected and shall contain the following
information:
In the event the Company has elected to pay the Purchase Price
or Change of Control Purchase Price, as the case may be (or a specified
percentage thereof), with Applicable Stock, the Company Notice shall:
(1) state that each Holder will receive Applicable Stock
with a Market Price equal to such specified
percentage of the Purchase Price or Change of Control
Purchase Price, as the case may be, of the Debentures
held by such Holder (except any cash amount to be
paid in lieu of fractional shares);
(2) set forth the method of calculating the Market Price
of the Applicable Stock; and
(3) state that because the Market Price of Applicable
Stock will be determined prior to the Purchase Date
or Change of Control Purchase Date, as the case may
be, Holders of the Debentures will bear the market
risk with respect to the value of the Applicable
Stock to be received from the date such Market Price
is determined to the Purchase Date or Change of
Control Purchase Date, as the case may be.
In any case, each Company Notice shall include a form of
Purchase Notice or Change of Control Purchase Notice, as the case may
be, to be completed by a Holder and shall state:
(i) the Purchase Date or Change of Control, as the case may
be;
(ii) the Purchase Price or Change of Control Purchase Price,
as the case may be, and the Conversion Rate;
(iii) whether the Purchase Price or the Change of Control
Purchase Price will be paid in cash or Applicable Stock, or a
combination thereof;
(iv) the date by which the Purchase Notice or the Change of
Control Purchase Notice, as the case may be, must be delivered to the
Paying Agent in order for a Holder to exercise the repurchase rights;
(v) briefly, the events causing a Change of Control and the
date of such Change of Control, if any;
20
(vi) the Conversion Rate and any adjustment thereto;
(vii) the name and address of the Paying Agent and the
Conversion Agent;
(viii) that Debentures as to which a Purchase Notice or Change
of Control Purchase Notice, as the case may be, has been given may be
converted if they are otherwise convertible only in accordance with
Article Seventeen hereof and Section 4 of the Debentures if the
applicable Purchase Notice or Change of Control Purchase Notice, as the
case may be, has been withdrawn in accordance with the terms of this
Indenture;
(ix) that Debentures must be surrendered to the Paying Agent
to collect payment;
(x) that the Purchase Price or Change of Control Purchase
Price, as the case may be, for any Debenture as to which a Purchase
Notice or Change of Control Purchase Notice, as the case may be, has
been given and not withdrawn will be paid promptly following the later
of the Purchase Date or Change of Control Purchase Date, as the case
may be, and the time of surrender of such Debenture as described in
(ix);
(xi) the procedures the Holder must follow to exercise its
purchase rights under Section 1301 or 1302 hereof, as the case may be,
and a brief description of those rights;
(xii) briefly, the conversion rights of the Debentures;
(xiii) the procedures for withdrawing a Purchase Notice or
Change of Control Purchase Notice, as the case may be (including,
without limitation, for a conditional withdrawal pursuant to the terms
of Section 1301(a)(1)(D), Section 1302(b)(4) or Section 1304 hereof);
(xiv) that, unless the Company defaults in making payment on
Debentures for which a Purchase Notice or Change of Control Purchase
Notice, as the case may be, has been submitted, interest and contingent
interest, if any, on such Debentures will cease to accrue on the
Purchase Date or Change of Control Purchase Date, as the case may be;
and
(xv) the CUSIP number of the Debentures.
At the Company's request, the Trustee shall give such Company
Notice in the Company's name and at the Company's expense; provided,
however, that, in all cases, the text of such Company Notice shall be
prepared by the Company.
(e) Covenants of the Company. All shares of Common Stock
delivered upon purchase of the Debentures shall be newly issued shares
or treasury shares, shall be duly authorized, validly issued, fully
paid and nonassessable, and shall be free from preemptive rights and
free of any lien or adverse claim.
(f) Taxes. If a Holder of a purchased Debenture is paid in
Applicable Stock, the Company shall pay any documentary, stamp or
similar issue or transfer tax due on such issue of Applicable Stock.
However, the Holder shall pay any such tax which is due because the
Holder requests the Applicable Stock to be issued in a name other than
the Holder's name. The Paying Agent may refuse to deliver the
certificates representing the shares of Applicable Stock being issued
in a name other than the Holder's name until the Paying Agent receives
a sum sufficient to pay any tax which will be due because the shares of
Applicable Stock are to be issued in a name
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other than the Holder's name. Nothing herein shall preclude any income
tax withholding required by law or regulations.
SECTION 1304 Effect of Purchase Notice or Change of Control
Purchase Notice. Upon receipt by the Paying Agent of the Purchase
Notice or Change of Control Purchase Notice specified in Section
1301(a) or Section 1302(b) hereof, as applicable, the Holder of the
Debenture in respect of which such Purchase Notice or Change of Control
Purchase Notice, as the case may be, was given shall (unless such
Purchase Notice or Change of Control Purchase Notice, as the case may
be, is withdrawn as specified in the following three paragraphs)
thereafter be entitled to receive solely the Purchase Price or Change
of Control Purchase Price, as the case may be, with respect to such
Debenture. Such Purchase Price or Change of Control Purchase Price
shall be paid to such Holder, subject to receipts of funds and/or
Debentures by the Paying Agent, promptly following the later of (x) the
Purchase Date or the Change of Control Purchase Date, as the case may
be, with respect to such Debenture (provided the conditions in Section
1301(a) or Section 1302(b) hereof, as applicable, have been satisfied)
and (y) the time of delivery of such Debenture to the Paying Agent by
the Holder thereof in the manner required by Section 1301(a) or Section
1302(b) hereof, as applicable. Debentures in respect of which a
Purchase Notice or Change of Control Purchase Notice has been given by
the Holder thereof may not be converted pursuant to Article Seventeen
hereof on or after the date of the delivery of such Purchase Notice or
Change of Control Purchase Notice unless such Purchase Notice or Change
of Control Purchase Notice has first been validly withdrawn as
specified in the following two paragraphs.
A Purchase Notice or Change of Control Purchase Notice may be
withdrawn by means of a written notice of withdrawal delivered to the
office of the Paying Agent in accordance with the Purchase Notice or
Change of Control Purchase Notice, as the case may be, at any time
prior to the close of business on the Purchase Date or at any time
prior to the close of business on the Business Day immediately
preceding the Change of Control Purchase Date, as the case may be,
specifying:
(1) the certificate number, if any, of the Debenture in
respect of which such notice of withdrawal is being
submitted,
(2) the principal amount of the Debenture with respect to
which such notice of withdrawal is being submitted,
and
(3) the principal amount, if any, of such Debenture which
remains subject to the original Purchase Notice or
Change of Control Purchase Notice, as the case may
be, and which has been or will be delivered for
purchase by the Company.
A written notice of withdrawal of a Purchase Notice may be in
the form set forth in the preceding paragraph or may be in the form of
(i) a conditional withdrawal contained in a Purchase Notice pursuant to
the terms of Section 1301(a)(1)(D) hereof or (ii) a conditional
withdrawal containing the information set forth in Section
1301(a)(1)(D) hereof and the preceding paragraph and contained in a
written notice of withdrawal delivered to the Paying Agent as set forth
in the preceding paragraph.
A written notice of withdrawal of a Change of Control Purchase
Notice may be in the form set forth in the preceding paragraph or may
be in the form of (i) a conditional withdrawal contained in a Purchase
Notice pursuant to the terms of Section 1302(b)(4) hereof or (ii) a
conditional withdrawal containing the information set forth in Section
1302(b)(4) hereof and the
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preceding paragraph and contained in a written notice of withdrawal
delivered to the Paying Agent as set forth in the preceding paragraph.
SECTION 1305 Deposit of Purchase Price or Change of Control
Purchase Price. Prior to 10:00 a.m. (New York City Time) on the
Business Day following the Purchase Date or the Change of Control
Purchase Date, as the case may be, the Company shall deposit with the
Trustee or with the Paying Agent (or, if the Company or a Subsidiary or
an Affiliate of either of them is acting as the Paying Agent, shall
segregate and hold in trust as provided in Section 1003 hereof) an
amount of cash (in immediately available funds if deposited on such
Business Day) and/or Applicable Stock, if permitted hereunder,
sufficient to pay the aggregate Purchase Price or Change of Control
Purchase Price, as the case may be, of all the Debentures or portions
thereof which are to be purchased as of the Purchase Date or Change of
Control Purchase Date, as the case may be.
As soon as practicable after the Purchase Date or Change of
Control Purchase Date, as the case may be, the Company shall deliver to
each Holder entitled to receive Applicable Stock through the Paying
Agent, a certificate for the number of full shares of Applicable Stock
issuable in payment of the Purchase Price or Change of Control Purchase
Price, as the case may be, and cash in lieu of any fractional
interests. The person in whose name the certificate for Applicable
Stock is registered shall be treated as a holder of record of
Applicable Stock on the Business Day following the Purchase Date or
Change of Control Purchase Date, as the case may be. Subject to Section
1303(c) hereof, no payment or adjustment will be made for dividends on
the Applicable Stock the record date for which occurred on or prior to
the Purchase Date or Change of Control Purchase Date, as the case may
be.
If a Paying Agent holds, in accordance with the terms hereof,
money sufficient to pay the Purchase Price or Change of Control
Purchase Price of, and any accrued and unpaid interest, including
contingent interest, if any, with respect to, any Debenture for which a
Purchase Notice or Change of Control Purchase Notice, as the case may
be, has been tendered and not withdrawn in accordance with this
Indenture then, on the Purchase Date or Change of Control Purchase
Date, as the case may be, such Debenture will cease to be Outstanding
and the rights of the Holder in respect thereof shall terminate (other
than the right to receive the Purchase Price or Change of Control
Purchase Price, as the case may be, and any accrued and unpaid
interest, including contingent interest, if any, as aforesaid).
SECTION 1306 Debentures Purchased in Part. Any definitive
Debenture which is to be purchased only in part shall be surrendered at
the office of the Paying Agent (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in
form satisfactory to the Company and the Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in writing)
and the Company shall execute and the Trustee shall authenticate and
deliver to the Holder of such Debenture, without service charge, a new
Debenture or Debentures, of any authorized denomination as requested by
such Holder in aggregate principal amount equal to, and in exchange
for, the portion of the principal amount of the Debenture so
surrendered which is not purchased.
SECTION 1307 Covenant to Comply With Securities Laws Upon
Purchase of Debentures. When complying with the provisions of Section
1301 or 1302 hereof (provided that such offer or purchase constitutes
an "issuer tender offer" for purposes of Rule 13e-4 (which term, as
used herein, includes any successor provision thereto) under the
Exchange Act at the time of such offer or purchase), and subject to any
exemptions available under applicable law, the Company shall (i) comply
with Rule 13e-4 and Rule 14e-1 (or any successor provision) under the
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Exchange Act, (ii) file the related Schedule TO (or any successor
schedule, form or report) under the Exchange Act, and (iii) otherwise
comply with all Federal and state securities laws so as to permit the
rights and obligations under Sections 1301 and 1302 hereof to be
exercised in the time and in the manner specified in Sections 1301 and
1302 hereof.
SECTION 1308 Repayment to the Company. The Trustee and the
Paying Agent shall return to the Company any cash or Applicable Stock
that remain unclaimed as provided in Section 12 of the Debentures,
together with interest or dividends, if any, thereon (subject to the
provisions of Section 605 hereof), held by them for the payment of the
Purchase Price or Change of Control Purchase Price, as the case may be;
provided, however, that to the extent that the aggregate amount of cash
or shares of Applicable Stock deposited by the Company pursuant to
Section 1305 hereof exceeds the aggregate Purchase Price or Change of
Control Purchase Price, as the case may be, of the Debentures or
portions thereof which the Company is obligated to purchase as of the
Purchase Date or Change of Control Purchase Date, as the case may be,
then, unless otherwise agreed in writing with the Company, promptly
after the Business Day following the Purchase Date or Change of Control
Purchase Date, as the case may be, the Trustee shall return any such
excess to the Company together with interest or dividends, if any,
thereon (subject to the provisions of Section 605 hereof).
SECTION 2.9 Application of the Article of the Indenture Regarding Defeasance
and Covenant Defeasance.
The provisions of Article Fourteen of the Base Indenture, as
supplemented by the First Supplemental Indenture, including the provisions
relating to defeasance and covenant defeasance of the Securities under Sections
1402 and 1403 thereof, respectively, shall not apply to the Debentures.
SECTION 2.10 Release of Guarantees.
For the sole benefit of the Holders of the Debentures, Section
1605(b) of the Base Indenture, as supplemented by the First Supplemental
Indenture, shall not apply to the Debentures.
SECTION 2.11 Conversions.
Except as may be provided by a Future Supplemental Indenture,
for the sole benefit of the Holders of the Debentures, a new Article Seventeen
shall be added to the Base Indenture, as supplemented by the First Supplemental
Indenture, as follows:
ARTICLE SEVENTEEN
CONVERSIONS
SECTION 1701 Conversion Privilege. (a) Subject to and upon
compliance with the provisions of this Article Seventeen, a Holder of a
Debenture shall have the right, at such Holder's option, to convert all or any
portion (if the portion to be converted is $1,000 or a whole multiple of $1,000)
of such Debenture into shares of Common Stock at the Conversion Price in effect
on the date of conversion:
(1) at any time during any fiscal quarter if the Sale Price of
the Common Stock was more than 120% of the Conversion Price for at
least 20 Trading Days in the 30 consecutive Trading Days ending on the
last Trading Day of the immediately preceding fiscal quarter;
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(2) on any Business Day after July 1, 2021 if the Sale Price
of the Common Stock was more than 120% of the Conversion Price for at
least one Trading Day after July 1, 2021;
(3) at any time prior to the close of business on the second
Business Day preceding the Redemption Date, if such Debenture has been
called for redemption pursuant to Article Eleven of the Indenture; or
(4) as provided in Section 1701(b) hereof.
The Company, or such other Person the Company may designate
from time to time, shall determine on a daily basis whether the
Debentures shall be convertible as a result of the occurrence of an
event specified in clause (1) or clause (2) above and, if the
Debentures shall be so convertible, the Company or such other Person
shall promptly deliver to the Conversion Agent and the Trustee written
notice thereof. Whenever the Debentures shall become convertible
pursuant to this Section 1701, the Company or, at the Company's
request, the Trustee in the name and at the expense of the Company,
shall notify the Holders of the event triggering such convertibility in
the manner provided in Section 106 hereof, and the Company shall also
publicly announce such information and publish it on the Company's web
site. Any notice so given shall be conclusively presumed to have been
duly given, whether or not the Holder receives such notice.
(b) In addition, in the event that:
(1) (A) the Company distributes to all holders of its Common
Stock rights or warrants entitling them (for a period expiring within
60 days of the Record Date for such distribution) to subscribe for or
purchase Common Stock, at a price per share less than the Sale Price of
the Common Stock on the Business Day immediately preceding the
announcement of such distribution, or (B) the Company distributes to
all holders of its Common Stock, cash or other assets, debt securities
or rights or warrants to purchase its securities, where the Fair Market
Value (as determined by the Board of Directors) of such distribution
per share of Common Stock exceeds 15% of the Sale Price of the Common
Stock on the Business Day immediately preceding the date of declaration
of such distribution, then, in either case, the Debentures may be
surrendered for conversion at any time on and after the date that the
Company gives notice to the Holders of such right, which shall be not
less than 20 days prior to the Ex-Dividend Time for such distribution,
until the earlier of the close of business on the Business Day
immediately preceding the Ex-Dividend Time or the date the Company
announces that such distribution will not take place; provided that, no
adjustment to the Conversion Price or the ability of a Holder of a
Debenture to convert will be made if the Holder will otherwise
participate in such distribution without conversion; or
(2) the Company consolidates with or merges into another
corporation, or is a party to a binding share exchange pursuant to
which the shares of Common Stock would be converted into cash,
securities or other property as set forth in Section 1704 hereof, then
the Debentures may be surrendered for conversion at any time from and
after the date which is 15 days prior to the date announced by the
Company as the anticipated effective date of such transaction until 15
days after the actual effective date of such transaction.
"Ex-Dividend Time" means, with respect to any issuance or
distribution on shares of Common Stock, the first date on which the
shares of Common Stock trade regular way on the principal securities
market on which the shares of Common Stock are then traded without the
right to receive such issuance or distribution.
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The "Conversion Rate," at any time, shall equal (A) $1,000
divided by (B) the Conversion Price at such time, rounded to four
decimal places (rounded up if the fifth decimal place thereof is 5 or
more and otherwise rounded down).
SECTION 1702 Conversion Procedure; Fractional Shares.
(a) Each Debenture shall be convertible at the office of the
Conversion Agent into fully paid and nonassessable shares (calculated
to the nearest 1/100th of a share) of Common Stock. The Debenture will
be converted into shares of Common Stock at the Conversion Price
therefor. No payment or adjustment shall be made in respect of
dividends on the Common Stock or accrued interest on a converted
Debenture, except as described in Section 1709 hereof. The Company
shall not issue any fraction of a share of Common Stock in connection
with any conversion of Debentures, but instead shall, subject to
Section 1703(h) hereof, make a cash payment (calculated to the nearest
cent) equal to such fraction multiplied by the Sale Price of the Common
Stock on the last Trading Day prior to the date of conversion.
Notwithstanding the foregoing, a Debenture in respect of which a Holder
has delivered a Purchase Notice or Change of Control Purchase Notice
exercising such Holder's option to require the Company to repurchase
such Debenture may be converted only if such notice of exercise is
withdrawn in accordance with Section 1304 hereof.
(b) Before any Holder of a Debenture shall be entitled to
convert the same into Common Stock, such Holder shall, in the case of
Debentures issued in global form, comply with the procedures of the
Depository in effect at that time, and in the case of definitive
Debentures, surrender such Debentures, duly endorsed to the Company or
in blank, at the office of the Conversion Agent, and shall give written
notice to the Company at said office or place that such Holder elects
to convert the same and shall state in writing therein the principal
amount of Debentures to be converted and the name or names (with
addresses) in which such Holder wishes the certificate or certificates
for Common Stock to be issued.
Before any such conversion, a Holder also shall pay all funds
required, if any, relating to interest on the Debentures, as provided
in Section 1709 hereof, and all taxes or duties, if any, as provided in
Section 1708 hereof.
If more than one Debenture shall be surrendered for conversion
at one time by the same Holder, the number of full shares of Common
Stock which shall be deliverable upon conversion shall be computed on
the basis of the aggregate principal amount of the Debentures (or
specified portions thereof to the extent permitted thereby) so
surrendered. Subject to the next succeeding sentence, the Company will,
as soon as practicable thereafter, issue and deliver at said office or
place to such Holder of a Debenture, or to such Holder's nominee or
nominees, certificates for the number of full shares of Common Stock to
which such Holder shall be entitled as aforesaid, together, subject to
the penultimate sentence of paragraph (a) above, with cash in lieu of
any fraction of a share to which such Holder would otherwise be
entitled. The Company shall not be required to deliver certificates for
Common Stock while the stock transfer books for such stock or the
security register are duly closed for any purpose, but certificates for
Common Stock shall be issued and delivered as soon as practicable after
the opening of such books or security register.
(c) A Debenture shall be deemed to have been converted
immediately prior to the close of business on the date on which all of
the requirements in paragraph (b) above have been satisfied, and the
person or persons entitled to receive the Common Stock issuable upon
such conversion shall be treated for all purposes as the record Holder
or Holders of such Common Stock as of the close of business on such
date.
26
(d) In case any Debenture shall be surrendered for partial
conversion, the Company shall execute and the Trustee shall
authenticate and deliver to or upon the written order of the Holder of
the Debenture so surrendered, without charge to such Holder (subject to
the provisions of Section 1708 hereof), a new Debenture or Debentures
in authorized denominations in an aggregate principal amount equal to
the unconverted portion of the surrendered Debentures.
SECTION 1703 Adjustment of Conversion Price for Common Stock.
The Conversion Price shall be adjusted from time to time as
follows:
(a) In case the Company shall, at any time or from time to
time while any of the Debentures are outstanding, pay a dividend or
make a distribution in shares of Common Stock to all holders of its
Common Stock, then the Conversion Price in effect immediately prior to
the close of business on the Record Date fixed for the determination of
stockholders entitled to receive such dividend or distribution shall be
adjusted to equal the price determined by multiplying such Conversion
Price by a fraction:
(1) the numerator of which shall be the number of shares
of Common Stock outstanding at the close of business
on the Record Date fixed for such determination; and
(2) the denominator of which shall be the sum of the
numerator and the total number of shares constituting
such dividend or distribution.
Such adjustment shall become effective immediately prior to
the opening of business on the day following the Record Date fixed for
such determination. If any dividend or distribution of the type
described in this Section 1703(a) is declared but not so paid or made,
the Conversion Price shall again be adjusted to the Conversion Price
which would then be in effect if such dividend or distribution had not
been declared.
(b) In case the Company shall, at any time or from time to
time while any of the Debentures are outstanding, subdivide its
outstanding shares of Common Stock into a greater number of shares of
Common Stock, then the Conversion Price in effect immediately prior to
the close of business on the day upon which such subdivision becomes
effective shall be proportionately reduced, and conversely, in case the
Company shall, at any time or from time to time while any of the
Debentures are outstanding, combine its outstanding shares of Common
Stock into a smaller number of shares of Common Stock, then the
Conversion Price in effect immediately prior to the close of business
on the day upon which such combination becomes effective shall be
proportionately increased.
Such reduction or increase, as the case may be, shall become
effective immediately prior to the opening of business on the day
following the day upon which such subdivision or combination becomes
effective.
(c) In case the Company shall, at any time or from time to
time while any of the Debentures are outstanding, issue rights or
warrants (other than any rights or warrants referred to in Section
1703(d) hereof) to all holders of its Common Stock entitling them (for
a period expiring within 60 days after the record date for such
issuance) to subscribe for or purchase Common Stock (or securities
convertible into shares of Common Stock) at a price per share (or
having a conversion price per share) less than the Sale Price of Common
Stock on the Business Day immediately preceding the date of the
announcement of such issuance (treating the
27
conversion price per share of the securities convertible into Common
Stock as equal to (x) the sum of (i) the price for a unit of the
securities convertible into Common Stock and (ii) any additional
consideration initially payable upon the conversion of such security
into Common Stock divided by (y) the number of shares of Common Stock
initially underlying such convertible securities), then the Conversion
Price in effect immediately prior to the close of business on the
Record Date fixed for the determination of stockholders entitled to
receive such rights or warrants shall be adjusted to equal the price
determined by multiplying such Conversion Price by a fraction:
(1) the numerator of which shall be the number of shares
of Common Stock outstanding at the close of business
on the Record Date fixed for such determination, plus
the number of shares of Common Stock which the
aggregate offering price of the total number of
additional shares of Common Stock so offered for
subscription or purchase (or the aggregate conversion
price of the convertible securities so offered) would
purchase at such Sale Price of the Common Stock (as
determined in this paragraph (c) above); and
(2) the denominator of which shall be the number of
shares of Common Stock outstanding at the close of
business on the Record Date fixed for such
determination, plus the total number of additional
shares of Common Stock so offered for subscription or
purchase (or into which the convertible securities so
offered are convertible);
provided that no adjustment for a transaction referred to in this
Section 1703(c) shall be made if the Holders of the Debentures may
participate in the transaction on a basis and with notice that the
Board of Directors determines to be fair and appropriate in light of
the basis and notice on which holders of shares of the Company's Common
Stock may participate in the transaction.
Such adjustment shall become effective immediately prior to
the opening of business on the day following the Record Date fixed for
such determination. To the extent that shares of Common Stock (or
securities convertible into shares of Common Stock) are not delivered
pursuant to such rights or warrants, upon the expiration or termination
of such rights or warrants, the Conversion Price shall be readjusted to
the Conversion Price which would then be in effect had the adjustments
made upon the issuance of such rights or warrants been made on the
basis of the delivery of only the number of shares of Common Stock (or
securities convertible into shares of Common Stock) actually delivered.
In the event that such rights or warrants are not so issued, the
Conversion Price shall again be adjusted to be the Conversion Price
which would then be in effect if the Record Date fixed for the
determination of stockholders entitled to receive such rights or
warrants had not been fixed. In determining whether any rights or
warrants entitle the holders to subscribe for or purchase shares of
Common Stock at less than such Sale Price, and in determining the
aggregate offering price of such shares of Common Stock, there shall be
taken into account any consideration received for such rights or
warrants, the value of such consideration if other than cash, to be
determined by the Board of Directors.
(d) In case the Company shall, at any time or from time to
time while any of the Debentures are outstanding, by dividend or
otherwise, distribute to all holders of its Common Stock (including any
such distribution made in connection with a consolidation or merger in
which the Company is the continuing corporation and the Common Stock is
not changed or exchanged), shares of its capital stock (other than any
dividends or distributions to which Section 1703(a) hereof applies),
evidences of its Indebtedness or other assets, including securities,
but excluding (i) any rights or warrants referred to in Section 1703(c)
hereof, (ii)
28
dividends or distributions of stock, securities or other property or
assets (including cash) in connection with a reclassification, change,
merger, consolidation, statutory share exchange, combination, sale or
conveyance to which Section 1704 hereof applies and (iii) dividends and
distributions paid exclusively in cash (such capital stock, evidence of
its indebtedness, cash, other assets or securities being distributed
hereinafter in this Section 1703(d) called the "distributed assets"),
then, in each such case, subject to the third and fourth succeeding
paragraphs, the Conversion Price in effect immediately prior to the
close of business on the Record Date with respect to such distribution
shall be adjusted to equal the price determined by multiplying such
Conversion Price by a fraction:
(1) the numerator of which shall be the Current Market
Price on the Record Date with respect to such
distribution, less the Fair Market Value on such
Record Date of the portion of the distributed assets
so distributed applicable to one share of Common
Stock (determined on the basis of the number of
shares of Common Stock outstanding on such Record
Date); and
(2) the denominator of which shall be such Current Market
Price;
provided that no adjustment for a transaction referred to in this
Section 1703(d) shall be made if all Holders of the Debentures may
participate in the transaction.
Such adjustment shall become effective immediately prior to
the opening of business on the day following the Record Date for such
distribution. In the event that such dividend or distribution is not so
paid or made, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such dividend or
distribution had not been declared.
Except as provided in the next paragraph, if the Board of
Directors determines the Fair Market Value of any distribution for
purposes of this Section 1703(d) by reference to the actual or when
issued trading market for any distributed assets comprising all or part
of such distribution, it must in doing so consider the prices in such
market over the same period (the "Reference Period") used in computing
the Current Market Price pursuant to Section 1703(g) hereof to the
extent possible, unless the Board of Directors determines in good faith
that determining the Fair Market Value during the Reference Period
would not be in the best interest of the Holders.
In the event any such distribution consists of shares of
capital stock of, or similar equity interests in, one or more of the
Company's Subsidiaries (a "Spin-Off"), the Fair Market Value of the
securities to be distributed shall equal the average of the closing
sale prices of such securities on the principal securities market on
which such securities are traded for the five consecutive Trading Days
commencing on and including the sixth day of trading of those
securities after the effectiveness of the Spin-Off, and the Current
Market Price shall be measured for the same period. In the event,
however, that an underwritten initial public offering of the securities
in the Spin-Off occurs simultaneously with the Spin-Off, the Fair
Market Value of the securities distributed in the Spin-Off shall mean
the initial public offering price of such securities and the Current
Market Price shall mean the Sale Price for the Common Stock on the same
Trading Day.
Rights or warrants distributed by the Company to all holders
of its Common Stock entitling them to subscribe for or purchase shares
of the Company's capital stock (either initially or under certain
circumstances), which rights or warrants, until the occurrence of a
specified event or events ("Trigger Event"), (i) are deemed to be
transferred with such shares of Common Stock, (ii) are not exercisable
and (iii) are also issued in respect of future issuances of shares of
29
Common Stock (including the shares to be issued upon conversion of the
Debentures), shall be deemed not to have been distributed for purposes
of this Section 1703(d) (and no adjustment to the Conversion Price
under this Section 1703(d) will be required) until the occurrence of
the earliest Trigger Event. If such right or warrant is subject to
subsequent events, upon the occurrence of which such right or warrant
shall become exercisable to purchase different distributed assets, or
entitle the holder to purchase a different number or amount of the
foregoing or to purchase any of the foregoing at a different purchase
price, then the occurrence of each such event shall be deemed to be the
date of issuance and Record Date with respect to a new right or warrant
(and a termination or expiration of the existing right or warrant
without exercise by the holder thereof). In addition, in the event of
any distribution (or deemed distribution) of rights or warrants, or any
Trigger Event or other event (of the type described in the preceding
sentence) with respect thereto, that resulted in an adjustment to the
Conversion Price under this Section 1703(d):
(1) in the case of any such rights or warrants which
shall all have been redeemed or repurchased without exercise
by any holders thereof, the Conversion Price shall be
readjusted upon such final redemption or repurchase to give
effect to such distribution or Trigger Event, as the case may
be, as though it were a cash distribution, equal to the per
share redemption or repurchase price received by a holder of
Common Stock with respect to such rights or warrants (assuming
such holder had retained such rights or warrants), made to all
holders of Common Stock as of the date of such redemption or
repurchase; and
(2) in the case of such rights or warrants which
shall have expired or been terminated without exercise, the
Conversion Price shall be readjusted as if such rights and
warrants had never been issued.
For purposes of this Section 1703(d) and Sections 1703(a),
1703(b) and 1703(c) hereof, any dividend or distribution to which this
Section 1703(d) is applicable that also includes (i) shares of Common
Stock to which Section 1703(a) hereof applies, (ii) a subdivision or
combination of shares of Common Stock to which Section 1703(b) hereof
applies or (iii) rights or warrants to subscribe for or purchase shares
of Common Stock to which Section 1703(c) hereof applies (or any
combination thereof), shall be deemed instead to be:
(1) a dividend or distribution of the distributed
assets, other than such shares of Common Stock, such
subdivision or combination or such rights or warrants to which
Sections 1703(a), 1703(b) and 1703(c) hereof apply,
respectively (and any Conversion Price adjustment required by
this Section 1703(d) with respect to such dividend or
distribution shall then be made), immediately followed by
(2) a dividend or distribution of such shares of
Common Stock, such subdivision or combination or such rights
or warrants (and any further Conversion Price adjustment
required by Sections 1703(a), 1703(b) and 1703(c) hereof with
respect to such dividend or distribution shall then be made),
except:
(A) the Record Date of such dividend or
distribution shall be substituted as (i) "the record
date fixed for the determination of stockholders
entitled to receive such dividend or distribution,"
"Record Date fixed for such determination" and
"Record Date" within the meaning of Section 1703(a)
hereof, (ii) "the day upon which such subdivision
becomes effective" and "the day upon which such
combination becomes effective" within the meaning of
30
Section 1703(b) hereof, and (iii) as "the date fixed
for the determination of stockholders entitled to
receive such rights or warrants," "the Record Date
fixed for such determination" and "Record Date"
within the meaning of Section 1703(c) hereof; and
(B) any shares of Common Stock included in
such dividend or distribution shall not be deemed
"outstanding at the close of business on the date
fixed for such determination" within the meaning of
Section 1703(a) hereof and any reduction or increase
in the number of shares of Common Stock resulting
from such subdivision or combination shall be
disregarded in connection with such dividend or
distribution.
(e) In case the Company shall, at any time or from time to
time while any of the Debentures are outstanding, by dividend or
otherwise, distribute to all holders of its Common Stock, cash
(excluding any cash that is distributed upon a reclassification,
change, merger, consolidation, statutory share exchange, combination,
sale or conveyance to which Section 1704 hereof applies or as part of a
distribution referred to in Section 1703(d) hereof), in an aggregate
amount that, combined together with:
(1) the aggregate amount of any other such
distributions to all holders of Common Stock made exclusively
in cash within the 12 months preceding the date of such
distribution, and in respect of which no adjustment pursuant
to this Section 1703(e) has been made; and
(2) the aggregate amount of any cash, plus the Fair
Market Value (as determined by the Board of Directors) of
consideration paid in respect of any tender offer by the
Company or any of its Subsidiaries for all or any portion of
the shares of Common Stock concluded within the 12 months
preceding the date of such distribution, and in respect of
which no adjustment pursuant to Section 1703(f) hereof has
been made;
exceeds 15% of the product of the Current Market Price of the Common
Stock on the Record Date with respect to such distribution times the
number of shares of Common Stock outstanding on such Record Date (such
excess, the "Cash Distribution Excess Amount"), then the Conversion
Price in effect immediately prior to the close of business on the
Record Date with respect to such distribution shall be adjusted to
equal the price determined by multiplying such Conversion Price by a
fraction:
(1) the numerator of which shall be equal to the Current
Market Price of the Common Stock on the Record Date
for such distribution less an amount equal to the
quotient of (x) the Cash Distribution Excess Amount
into (y) the number of shares of Common Stock
outstanding on such Record Date; and
(2) the denominator of which shall be such Current Market
Price.
Such adjustment (if any) shall become effective immediately
prior to the opening of business on the day following the Record Date
for such distribution. In the event that such dividend or distribution
is not so paid or made, the Conversion Price shall again be adjusted to
be the Conversion Price which would then be in effect if such dividend
or distribution had not been declared.
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(f) In case a tender offer made by the Company or any of its
Subsidiaries for all or any portion of the shares of Common Stock shall
expire and such tender offer (as amended upon the expiration thereof)
shall require the payment to all holders of its Common Stock (based on
the acceptance (up to any maximum specified in the terms of the tender
offer) of shares tendered) of an aggregate consideration having a Fair
Market Value (as determined by the Board of Directors as of the
Expiration Time (as defined below)) that combined together with:
(1) the aggregate amount of any cash plus the Fair
Market Value (as determined by the Board of Directors as of
the expiration of the relevant tender offer) of consideration
payable in respect of any other tender offers by the Company
or any of its Subsidiaries for all or any portion of the
shares of Common Stock concluded within the 12 months
preceding the expiration of such tender offer and in respect
of which no adjustment pursuant to this Section 1703(f) has
been made; and
(2) the aggregate amount of any distributions to all
holders of Common Stock made exclusively in cash within the 12
months preceding the expiration of such tender offer and in
respect of which no adjustment pursuant to Section 1703(e)
hereof has been made;
exceeds 15% of the product of the Current Market Price of the Common
Stock as of the last time (the "Expiration Time") tenders could have
been made pursuant to such tender offer (as it may be amended) times
the number of shares of Common Stock outstanding (including any
tendered shares) on the Expiration Time (such excess, the "Tender Offer
Excess Amount"), then the Conversion Price in effect immediately prior
to the close of business on the date of the Expiration Time shall be
adjusted to equal the price determined by multiplying such Conversion
Price by a fraction:
(1) the numerator of which shall equal to the Current
Market Price of the Common Stock at the Expiration Time less
an amount equal to the quotient of (x) the Tender Offer Excess
Amount into (y) the number of shares of Common Stock
outstanding at the Expiration Time; and
(2) the denominator of which shall be such Current
Market Price.
Such adjustment (if any) shall become effective immediately
prior to the opening of business on the day following the Expiration
Time. In the event that the Company is obligated to purchase shares
pursuant to any such tender offer, but the Company is permanently
prevented by applicable law from effecting any such purchases or all or
a portion of such purchases are rescinded, the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in
effect if such (or such portion of the) tender offer had not been made.
If the application of this Section 1703(f) to any tender offer would
result in an increase in the Conversion Price, no adjustment shall be
made for such tender offer under this Section 1703(f).
Pursuant to rights issued under the Company's shareholder
rights plan, if holders of the Debentures exercising the right of
conversion attaching thereto after the date the rights separate from
the underlying Common Stock are not entitled to receive the rights that
would otherwise be attributable (but for the date of conversion) to the
shares of Common Stock received upon conversion, the Conversion Price
will be adjusted as though the rights were being distributed to holders
of Common Stock on the date of such separation. If such an adjustment
is made and the rights are later redeemed, invalidated or terminated,
then a corresponding reversing adjustment will be made to the
conversion price on an equitable basis.
32
(g) For purposes of this Article Seventeen, the following
terms shall have the meanings indicated:
"Current Market Price" on any date means the average of the
daily Sales Price per share of Common Stock for the 10 consecutive
Trading Days immediately prior to such date; provided, however, that
if:
(1) the "ex" date (as hereinafter defined) for any
event (other than the issuance or distribution requiring such
computation) that requires an adjustment to the Conversion
Price pursuant to Section 1703(a), (b), (c), (d), (e) or (f)
hereof occurs during such 10 consecutive Trading Days, the
Sale Price for each Trading Day prior to the "ex" date for
such other event shall be adjusted by dividing such Sale Price
by the same fraction by which the Conversion Price is so
required to be adjusted as a result of such other event;
(2) the "ex" date for any event (other than the
issuance or distribution requiring such computation) that
requires an adjustment to the Conversion Price pursuant to
Section 1703(a), (b), (c), (d), (e) or (f) hereof occurs on or
after the "ex" date for the issuance or distribution requiring
such computation and prior to the day in question, the Sale
Price for each Trading Day on and after the "ex" date for such
other event shall be adjusted by dividing such Sale Price by
the reciprocal of the fraction by which the Conversion Price
is so required to be adjusted as a result of such other event;
and
(3) the "ex" date for the issuance or distribution
requiring such computation is prior to the day in question,
after taking into account any adjustment required pursuant to
clause (1) or (2) of this proviso, the Sale Price for each
Trading Day on or after such "ex" date shall be adjusted by
adding thereto the amount of any cash and the Fair Market
Value (as determined by the Board of Directors in a manner
consistent with any determination of such value for purposes
of Section 1703(d), (e) or (f) hereof) of the evidences of
Indebtedness, shares of capital stock or assets being
distributed applicable to one share of Common Stock as of the
close of business on the day before such "ex" date.
For purposes of any computation under Section 1703(f) hereof,
if the "ex" date for any event (other than the tender offer requiring
such computation) that requires an adjustment to the Conversion Price
pursuant to Section 1703(a), (b), (c), (d), (e) or (f) hereof occurs on
or after the Expiration Time for the tender or exchange offer requiring
such computation and prior to the day in question, the Sale Price for
each Trading Day on and after the "ex" date for such other event shall
be adjusted by dividing such Sale Price by the reciprocal of the
fraction by which the Conversion Price is so required to be adjusted as
a result of such other event. For purposes of this paragraph, the term
"ex" date, when used:
(1) with respect to any issuance or distribution,
means the first date on which the shares of Common Stock trade
regular way on the relevant exchange or in the relevant market
from which the Sale Price was obtained without the right to
receive such issuance or distribution;
(2) with respect to any subdivision or combination of
shares of Common Stock, means the first date on which the
shares of Common Stock trade regular way on such exchange or
in such market after the time at which such subdivision or
combination becomes effective; and
33
(3) with respect to any tender or exchange offer,
means the first date on which the shares of Common Stock trade
regular way on such exchange or in such market after the
Expiration Time of such offer.
Notwithstanding the foregoing, whenever successive adjustments
to the Conversion Price are called for pursuant to this Section 1703,
such adjustments shall be made to the Current Market Price as may be
necessary or appropriate to effectuate the intent of this Section 1703
and to avoid unjust or inequitable results as determined in good faith
by the Board of Directors.
"Fair Market Value" shall mean the amount which a willing
buyer would pay a willing seller in an arm's length transaction (as
determined by the Board of Directors, whose determination shall be
conclusive).
"Record Date" shall mean, with respect to any dividend,
distribution or other transaction or event in which the holders of
Common Stock have the right to receive any cash, securities or other
property or in which the shares of Common Stock (or other applicable
security) is exchanged for or converted into any combination of cash,
securities or other property, the date fixed for determination of
stockholders entitled to receive such cash, securities or other
property (whether such date is fixed by the Board of Directors or by
statute, contract or otherwise).
(h) The Company shall be entitled to make such additional
reduction in the Conversion Price, in addition to those required by
Sections 1703(a), (b), (c), (d), (e) and (f) hereof, as shall be
necessary, as determined by the Board of Directors, in order that any
dividend or distribution of Common Stock, any subdivision,
reclassification or combination of shares of Common Stock or any
issuance of rights or warrants referred to above shall not be taxable
to the holders of Common Stock for United States Federal income tax
purposes.
(i) To the extent permitted by applicable law, the Company
may, from time to time, reduce the Conversion Price by any amount for
any period of time, if such period is at least 20 days and the
reduction is irrevocable during the period. Whenever the Conversion
Price is reduced pursuant to the preceding sentence, the Company shall
mail to the Trustee and each Holder at the address of such Holder as it
appears in the register of the Debentures maintained by the Security
Registrar, at least 10 days prior to the date the reduced Conversion
Price takes effect, a notice of the reduction stating the reduced
Conversion Price and the period during which it will be in effect.
(j) In any case in which this Section 1703 shall require that
any adjustment be made effective as of or retroactively immediately
following a Record Date, the Company may elect to defer (but only for
five Trading Days following the filing of the statement referred to in
Section 1705 hereof) issuing to the Holder of any Debentures converted
after such Record Date the shares of Common Stock issuable upon such
conversion over and above the shares of Common Stock issuable upon such
conversion on the basis of the Conversion Price prior to adjustment;
provided, however, that the Company shall deliver -------- ------- to
such Holder a due xxxx or other appropriate instrument evidencing such
Holder's right to receive such additional shares upon the occurrence of
the event requiring such adjustment.
(k) All calculations under this Section 1703 shall be made to
the nearest cent or one-hundredth of a share, with one-half cent and
0.005 of a share, respectively, being rounded upward. Notwithstanding
any other provision of this Section 1703, the Company shall not be
required to make any adjustment of the Conversion Price unless such
adjustment would require an increase or decrease of at least 1% of such
price. Any lesser adjustment shall be carried
34
forward and shall be made at the time of and together with the next
subsequent adjustment which, together with any adjustment or
adjustments so carried forward, shall amount to an increase or decrease
of at least 1% in such price. Any adjustments under this Section 1703
shall be made successively whenever an event requiring such an
adjustment occurs.
(l) In the event that at any time, as a result of an
adjustment made pursuant to this Section 1703, the Holder of any
Debentures thereafter surrendered for conversion shall become entitled
to receive any shares of stock of the Company other than shares of
Common Stock into which the Debentures originally were convertible, the
Conversion Price of such other shares so receivable upon conversion of
any such Debenture shall be subject to adjustment from time to time in
a manner and on terms as nearly equivalent as practicable to the
provisions with respect to Common Stock contained in subparagraphs (a)
through (k) of this Section 1703, and the provision of Sections 1701,
1702 and 1704 through 1709 hereof with respect to the Common Stock
shall apply on like or similar terms to any such other shares and the
determination of the Board of Directors as to any such adjustment shall
be conclusive.
(m) No adjustment shall be made pursuant to this Section 1703
(i) if the effect thereof would be to reduce the Conversion Price below
the par value (if any) of the Common Stock or (ii) if the Holders of
the Debentures may participate without conversion in the transaction
that would otherwise give rise to an adjustment pursuant to this
Section 1703.
SECTION 1704 Consolidation or Merger of the Company.
If any of the following events occurs, namely:
(1) any reclassification or change of the outstanding Common
Stock (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a
subdivision or combination);
(2) any merger, consolidation, statutory share exchange or
combination of the Company with another corporation as a result of
which holders of Common Stock shall be entitled to receive stock,
securities or other property or assets (including cash) or any
combination thereof with respect to or in exchange for such Common
Stock; or
(3) any sale or conveyance of all or substantially all of the
properties and assets of the Company to any other corporation as a
result of which holders of Common Stock shall be entitled to receive
stock, securities or other property or assets (including cash) or any
combination thereof with respect to or in exchange for such Common
Stock;
then the Company or the successor or purchasing corporation, as the
case may be, shall execute with the Trustee a supplemental indenture
(which shall comply with the Trust Indenture Act as in force at the
date of execution of such supplemental indenture, if such supplemental
indenture is then required to so comply) providing that such Debentures
shall be convertible into the kind and amount of stock, securities or
other property or assets (including cash) or any combination thereof
which such Holder would have been entitled to receive upon such
reclassification, change, merger, consolidation, statutory share
exchange, combination, sale or conveyance had such Debentures been
converted into Common Stock immediately prior to such reclassification,
change, merger, consolidation, statutory share exchange, combination,
sale or conveyance assuming such holder of Common Stock did not
exercise its rights of election, if any, as to the kind or amount of
stock, securities or other property or assets (including cash) or any
combination thereof receivable upon such reclassification, change,
merger, consolidation, statutory share
35
exchange, combination, sale or conveyance (provided, that if the kind
or amount of securities, cash or other property receivable upon such
reclassification, change, merger, consolidation, statutory share
exchange, combination, sale or conveyance is not the same for each
share of Common Stock in respect of which such rights of election shall
not have been exercised ("Non-Electing Share"), then for the purposes
of this Section 1704, the kind and amount of stock, securities or other
property or assets (including cash) or any combination thereof
receivable upon such merger, consolidation, statutory share exchange,
sale or conveyance for each Non-Electing Share shall be deemed to be
the kind and amount so receivable per share by a plurality of the
Non-Electing Shares). Such supplemental indenture shall provide for
adjustments which shall be as nearly equivalent as may be practicable
to the adjustments provided for in this Article Seventeen. If, in the
case of any such reclassification, change, merger, consolidation,
statutory share exchange, combination, sale or conveyance, the stock or
other securities and assets receivable thereupon by a holder of Common
Stock includes stock, securities or other property or assets (including
cash) or any combination thereof of a corporation other than the
successor or purchasing corporation, as the case may be, in such
reclassification, change, merger, consolidation, statutory share
exchange, combination, sale or conveyance, then such supplemental
indenture shall also be executed by such other corporation and shall
contain such additional provisions to protect the interests of the
Holders of the Debentures as the Board of Directors shall reasonably
consider necessary by reason of the foregoing, including to the extent
practicable the provisions providing for the repurchase rights set
forth in Article Thirteen hereof.
The Company shall cause notice of the execution of such
supplemental indenture to be mailed to each Holder, at the address of
such Holder as it appears on the register of the Debentures maintained
by the Security Registrar, within 20 days after execution thereof.
Failure to deliver such notice shall not affect the legality or
validity of such supplemental indenture.
The above provisions of this Section 1704 shall similarly
apply to successive reclassifications, changes, mergers,
consolidations, statutory share exchanges, combinations, sales and
conveyances.
If this Section 1704 applies to any event or occurrence,
Section 1703 hereof shall not apply.
SECTION 1705 Notice of Adjustment.
Whenever an adjustment in the Conversion Price with respect to
the Debentures is required:
(1) the Company shall forthwith place on file with
the Trustee and any Conversion Agent for such Debentures a
certificate of the Treasurer of the Company, stating the
adjusted Conversion Price determined as provided herein and
setting forth in reasonable detail such facts as shall be
necessary to show the reason for and the manner of computing
such adjustment; and
(2) a notice stating that the Conversion Price has
been adjusted and setting forth the adjusted Conversion Price
shall forthwith be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the
Company, to each Holder in the manner provided in Section 106
hereof. Any notice so given shall be conclusively presumed to
have been duly given, whether or not the Holder receives such
notice.
36
SECTION 1706 Notice in Certain Events.
In case:
(1) of a consolidation or merger to which the Company
is a party and for which approval of any stockholders of the
Company is required, or of the sale or conveyance to another
Person or entity or group of Persons or entities acting in
concert as a partnership, limited partnership, syndicate or
other group (within the meaning of Rule 13d-3 under the
Exchange Act) of all or substantially all of the property and
assets of the Company; or
(2) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company; or
(3) of any action triggering an adjustment of the
Conversion Price referred to in clauses (x) or (y) below;
then, in each case, the Company shall cause to be filed with the
Trustee and the Conversion Agent, and shall cause to be given, to the
Holders of the Debentures in the manner provided in Section 106 hereof,
at least 15 days prior to the applicable date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for the
purpose of any distribution or grant of rights or warrants triggering
an adjustment to the Conversion Price pursuant to this Article
Seventeen, or, if a record is not to be taken, the date as of which the
holders of record of Common Stock entitled to such distribution, rights
or warrants are to be determined, or (y) the date on which any
reclassification, consolidation, merger, sale, conveyance, dissolution,
liquidation or winding up triggering an adjustment to the Conversion
Price pursuant to this Article Seventeen is expected to become
effective, and the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their Common Stock
for securities or other property deliverable upon such
reclassification, consolidation, merger sale, conveyance, dissolution,
liquidation or winding up.
Failure to give such notice or any defect therein shall not
affect the legality or validity of the proceedings described in clause
(1), (2) or (3) of this Section 1706.
SECTION 1707 Company To Reserve Stock: Registration; Listing.
(a) The Company shall, in accordance with the laws of
the State of Delaware, at all times reserve and keep
available, free from preemptive rights, out of its authorized
but unissued shares of Common Stock, for the purpose of
effecting the conversion of the Debentures, such number of its
duly authorized shares of Common Stock as shall from time to
time be sufficient to effect the conversion of all Debentures
then Outstanding into such Common Stock at any time (assuming
that, at the time of the computation of such number of shares
of Common Stock, all such Debentures would be held by a single
Holder); provided, however, that nothing contained herein
shall preclude the Company from satisfying its obligations in
respect of the conversion of the Debentures by delivery of
purchased shares of Common Stock which are then held in the
treasury of the Company. The Company covenants that all shares
of Common Stock which may be issued upon conversion of
Debentures will upon issue be fully paid and nonassessable and
free from all liens and charges and, except as provided in
Section 1708 hereof, taxes with respect to the issue thereof.
37
(b) If any shares of Common Stock which would be
issuable upon conversion of Debentures hereunder require
registration with or approval of any governmental authority
before such shares of Common Stock may be issued upon such
conversion, the Company will in good faith and as
expeditiously as possible endeavor to cause such shares or
securities to be duly registered or approved, as the case may
be. The Company further covenants that so long as the Common
Stock shall be listed on the NYSE, the Company will, if
permitted by the rules of such exchange, list and keep listed
all Common Stock issuable upon conversion of the Debentures,
and the Company will endeavor to list the shares of Common
Stock required to be delivered upon conversion of the
Debentures prior to such delivery upon any other national
securities exchange upon which the outstanding Common Stock is
listed at the time of such delivery.
SECTION 1708 Taxes on Conversion.
The issue of stock certificates on conversion of Debentures
shall be made without charge to the converting Holder for any
documentary, stamp or similar issue or transfer taxes in respect of the
issue thereof, and the Company shall pay any and all documentary, stamp
or similar issue or transfer taxes that may be payable in respect of
the issue or delivery of shares of Common Stock on conversion of
Debentures pursuant hereto. The Company shall not, however, be required
to pay any such tax which may be payable in respect of any transfer
involved in the issue or delivery of shares of Common Stock or the
portion, if any, of the Debentures which are not so converted in a name
other than that in which the Debentures so converted were registered,
and no such issue or delivery shall be made unless and until the Person
requesting such issue has paid to the Company the amount of such tax or
has established to the satisfaction of the Company that such tax has
been paid.
SECTION 1709 Conversion After Record Date.
Except as provided below, if any Debentures are surrendered
for conversion on any day other than an Interest Payment Date, the
Holder of such Debentures shall not be entitled to receive any
interest, including contingent interest, if any, that has accrued on
such Debentures since the prior Interest Payment Date. By delivery to
the Holder of the number of shares of Common Stock or other
consideration issuable upon conversion in accordance with this Article
Seventeen, any accrued and unpaid interest, including contingent
interest, if any, on such Debentures will be deemed to have been paid
in full.
If any Debentures are surrendered for conversion subsequent to
the Record Date preceding an Interest Payment Date but on or prior to
such Interest Payment Date, the Holder of such Debentures at the close
of business on such Record Date shall receive the interest, including
contingent interest, if any, payable on such Debentures on such
Interest Payment Date notwithstanding the conversion thereof.
Debentures surrendered for conversion during the period from the close
of business on any Record Date preceding any Interest Payment Date to
the opening of business on such Interest Payment Date shall (except in
the case of Debentures which have been called for redemption on a
Redemption Date within such period) be accompanied by payment by
Holders, for the account of the Company, in New York Clearing House
funds or other funds of an amount equal to the interest, including
contingent interest, if any, payable on such Interest Payment Date on
the Debentures being surrendered for conversion. Except as provided in
this Section 1709, no adjustments in respect of payments of interest,
including contingent interest, if any, on Debentures surrendered for
conversion or any dividends or distributions or interest on the Common
Stock issued upon conversion shall be made upon the conversion of any
Debentures.
38
SECTION 1710 Company Determination Final.
Any determination that the Company or the Board of Directors
must make pursuant to this Article Seventeen shall be conclusive if
made in good faith and in accordance with the provisions of this
Article, absent manifest error, and set forth in a Board Resolution.
SECTION 1711 Responsibility of Trustee for Conversion
Provisions.
The Trustee has no duty to determine when an adjustment under
this Article Seventeen should be made, how it should be made or what it
should be. The Trustee makes no representation as to the validity or
value of any securities or assets issued upon conversion of Debentures.
The Trustee shall not be responsible for any failure of the Company to
comply with this Article Seventeen. Each Conversion Agent other than
the Company shall have the same protection under this Section 1711 as
the Trustee.
The rights, privileges, protections, immunities and benefits
given to the Trustee under the Indenture, including, without
limitation, its rights to be indemnified, are extended to, and shall be
enforceable by, the Trustee in each of its capacities hereunder, and
each Paying Agent or Conversion Agent acting hereunder.
SECTION 1712 Unconditional Right of Holders to Convert.
Notwithstanding any other provision in this Indenture, the
Holder of any Debenture shall have the right, which is absolute and
unconditional, to convert its Debenture in accordance with this Article
Seventeen and to bring an action for the enforcement of any such right
to convert, and such rights shall not be impaired or affected without
the consent of such Holder.
Article III
MISCELLANEOUS
SECTION 3.1 Governing Law.
This Second Supplemental Indenture and the Debentures shall be
governed by and construed in accordance with the laws of the State of New York,
without regard to principles of conflicts of laws. This Second Supplemental
Indenture is subject to the provisions of the Trust Indenture Act that are
required to be part of this Indenture and shall, to the extent applicable, be
governed by such provisions.
SECTION 3.2 Separability.
In case any provision in this Second Supplemental Indenture or
in any Securities, including the Debentures, 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 3.3 Counterparts.
This Second Supplemental Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same Supplemental Indenture.
39
SECTION 3.4 Ratification.
The Base Indenture, as supplemented and amended by the First
Supplemental Indenture and this Second Supplemental Indenture, is in all
respects ratified and confirmed, and the Base Indenture, the First Supplemental
Indenture and this Second Supplemental Indenture shall be read, taken and
construed as one and the same instrument. All provisions included in this Second
Supplemental Indenture supersede any conflicting provisions included in the Base
Indenture or the First Supplemental Indenture unless not permitted by law. The
Trustee accepts the trusts created by the Indenture, as supplemented by the
First Supplemental Indenture and this Second Supplemental Indenture, and agrees
to perform the same upon the terms and conditions of the Indenture, as
supplemented by the First Supplemental Indenture and this Second Supplemental
Indenture.
SECTION 3.5 Effectiveness.
The provisions of this Second Supplemental Indenture shall
become effective as of the date hereof.
[Remainder of page intentionally left blank.]
40
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and attested, all as of the date first above written.
THE BANK OF NEW YORK,
as Trustee
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Assistant Vice President
41
QUEST DIAGNOSTICS INCORPORATED
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President and Treasurer
QUEST DIAGNOSTICS INCORPORATED (CA)
QUEST DIAGNOSTICS INCORPORATED (CT)
QUEST DIAGNOSTICS INCORPORATED (MA)
QUEST DIAGNOSTICS INCORPORATED (MD)
QUEST DIAGNOSTICS INCORPORATED (MI)
QUEST DIAGNOSTICS OF PENNSYLVANIA INC.
LABORATORY HOLDINGS INCORPORATED
DIAGNOSTIC REFERENCE SERVICES INC.
DPD HOLDINGS, INC.
METWEST INC.
XXXXXXX INSTITUTE DIAGNOSTICS
QUEST DIAGNOSTICS LLC
QUEST DIAGNOSTICS CLINICAL
LABORATORIES, INC.
QUEST DIAGNOSTICS HOLDINGS
INCORPORATED
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President and Treasurer
PATHOLOGY BUILDING PARTNERSHIP
By: Quest Diagnostics Incorporated (MD)
as General Partner
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President and Treasurer
42
QUEST DIAGNOSTICS INVESTMENTS
INCORPORATED
By: /s/ Xxxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President
QUEST DIAGNOSTICS FINANCE
INCORPORATED
By: /s/ Xxxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President
43
EXHIBIT A
Form of 1.75% Contingent Convertible Debenture due 2021
[The following legends apply only if the Debenture is a Global Debenture:
FOR PURPOSES OF SECTIONS 1273 AND 1275 OF THE INTERNAL REVENUE
CODE, THE ISSUE PRICE OF THIS SECURITY IS $990.00 PER DEBENTURE AND THIS
SECURITY IS ISSUED WITH AN INDETERMINATE AMOUNT OF ORIGINAL ISSUE DISCOUNT FOR
UNITED STATES FEDERAL INCOME TAX PURPOSES. THE ISSUE DATE IS NOVEMBER 26, 2001,
AND THE YIELD TO MATURITY FOR PURPOSES OF ACCRUING ORIGINAL ISSUE DISCOUNT FOR
UNITED STATES FEDERAL INCOME TAX PURPOSES IS 7.00% PER ANNUM, COMPOUNDED
SEMIANNUALLY.
THIS DEBENTURE IS A GLOBAL DEBENTURE WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY
OR A NOMINEE THEREOF. THIS DEBENTURE MAY NOT BE EXCHANGED IN WHOLE OR IN PART
FOR A DEBENTURE REGISTERED, AND NO TRANSFER OF THIS DEBENTURE IN WHOLE OR IN
PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITORY OR
ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND SUCH CERTIFICATE ISSUED IN
EXCHANGE FOR THIS CERTIFICATE IS REGISTERED IN THE NAME OF CEDE & CO., OR SUCH
OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY, 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.]
A-1
QUEST DIAGNOSTICS INCORPORATED
1.75% Contingent Convertible Debenture due 2021
Unconditionally guaranteed as to payment of
principal of and interest by
the Subsidiary Guarantors
No. 0 (Specimen) $250,000,000
CUSIP: 00000XXX0
Quest Diagnostics Incorporated, a Delaware corporation (herein
called the "Company," which term includes any successor Person under the
Indenture hereinafter referred to), for value received, hereby promises to pay
to Cede & Co., or registered assigns, the principal sum of $250,000,000 on
November 30, 2021 (the "Stated Maturity") (except to the extent redeemed or
repaid prior to the Stated Maturity) and to pay interest thereon from November
26, 2001 or from the most recent Interest Payment Date to which interest has
been paid or duly provided for semi-annually at the rate of 1.75% per annum, on
May 31 and November 30 of each year, commencing May 31, 2002, on the Stated
Maturity and on any Redemption Date (each such date, an "Interest Payment Date")
until the principal hereof is paid or made available for payment.
1. Payment of Interest. The interest so payable, and
punctually paid or made available for payment, on any Interest Payment Date,
will, as provided in the Indenture, be paid, in immediately available funds, to
the Person in whose name this Debenture (or one or more Predecessor Securities)
is registered at the close of business May 15 or November 15 (whether or not a
Business Day, as defined in the Indenture), as the case may be, next preceding
such Interest Payment Date (the "Regular Record Date"). Any such interest not
punctually paid or duly provided for ("Defaulted Interest") will forthwith cease
to be payable to the Holder on such Regular Record Date, and such Defaulted
Interest, may be paid to the Person in whose name this Debenture (or one or more
Predecessor Securities) is registered at the close of business on a special
record date (the "Special Record Date") for the payment of such Defaulted
Interest to be fixed by the Trustee, notice whereof shall be given to Holders of
Debentures not less than ten days prior to such Special Record Date, or may be
paid at any time in any other lawful manner not inconsistent with requirements
of any securities exchange on which the Debentures may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in said
Indenture.
If the principal amount hereof or any portion of such
principal amount is not paid when due (whether upon acceleration pursuant to
Section 502 of the Indenture, upon the date set for payment of the Redemption
Price as described under "Optional Redemption," upon the date set for payment of
the Change of Control Purchase Price pursuant to "Purchase of Debentures at
Option of Holder Upon a Change of Control," upon the date set for payment of the
Purchase Price under "Purchase by the Company at the Option of the Holder" or
upon the Stated Maturity of this Debenture or otherwise) or any interest,
including contingent interest, if any, on any Debenture is not paid when due,
then in each such case the overdue amount shall, to the extent permitted by law,
bear interest at the rate of 1.75% per annum, compounded semi-annually, which
interest shall accrue from the date of such overdue amount was originally due to
the date of payment of such amount, including interest thereon, has been made or
duly provided for. All such interest shall be payable on demand.
2. Place of Payment. The Place of Payment for the Debentures
and the place or places where the Debentures may be surrendered for registration
of transfer, exchange, repurchase, redemption or conversion and where notices
may be given to the Company in respect of the Debentures is at the
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Corporate Trust Office of the Trustee or such other office or agency of the
Company as may be designated for such purpose. Payment of principal and interest
and contingent interest, if any, on the Debentures will be in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
The Company will pay principal on (1) Global Debentures to DTC
in immediately available funds and (2) any definitive Debentures in immediately
available funds at the Company's office or agency in New York City, which
initially will be the Corporate Trust Office of the Trustee.
The Company will pay interest, including contingent interest,
if any, on (1) Global Debentures to DTC in immediately available funds, (2) any
definitive Debentures having an aggregate principal amount of $5,000,000 or less
by check mailed to the Holders of these Debentures, and (3) any definitive
Debentures having an aggregate principal amount of more than $5,000,000 by wire
transfer in immediately available funds if requested by the Holders of these
Debentures. At Stated Maturity the Company will pay interest on any definitive
Debentures at the Company's office or agency in New York City, which initially
will be the Corporate Trust Office of the Trustee.
3. Contingent Interest. Subject to the accrual and record date
provisions described below and in the Indenture, the Company shall pay
contingent interest to the Holders during any six-month period (a "Contingent
Interest Period") from June 1 to November 30 and from December 1 to May 31,
commencing December 1, 2004, if the average Debenture Market Price of a
Debenture for the Five Trading Day Period with respect to such Contingent
Interest Period equals $1,200 or more.
The amount of contingent interest payable per $1,000 principal
amount of Debentures in respect of any Contingent Interest Period shall equal
the greater of (1) 0.25% of the average Debenture Market Price of a Debenture
for the Five Trading Day Period and (2) the sum of all Regular Cash Dividends,
if any, paid by the Company per share of Common Stock during that Contingent
Interest Period multiplied by the Conversion Rate in effect on the date on each
such payment date.
Contingent interest, if any, will accrue and be payable to
Holders as of the 15th day preceding the last day of the relevant Contingent
Interest Period or, if the Company pays a Regular Cash Dividend during the
relevant Contingent Interest Period, to Holders as of the record date for the
related Regular Cash Dividend. Such payments will be paid on the last day of the
relevant Contingent Interest Period or, if the Company pays a Regular Cash
Dividend during the relevant Contingent Interest Period, on the payment date of
the related Regular Cash Dividend. Regular cash interest will continue to accrue
at the rate of 1.75% per year on the principal amount of the Debentures whether
or not contingent interest is paid.
"Five Trading Day Period" means, with respect to any
Contingent Interest Period, the five trading days ending on the second trading
day immediately preceding the first day of such Contingent Interest Period;
provided, however, if the Company shall have declared a Regular Cash Dividend on
its Common Stock that is payable during such Contingent Interest Period but for
which the record date for determining stockholders entitled thereto precedes the
first day of such Contingent Interest Period, then "Five Trading Day Period"
shall mean, with respect to such Contingent Interest Period, the five trading
days ending on the second trading day immediately preceding such record date.
"Regular Cash Dividends" means quarterly or other periodic
cash dividends on the Company's Common Stock as declared by the Company's Board
of Directors as part of its cash dividend payment practices and that are not
designated by such Board of Directors as extraordinary or special or other
nonrecurring dividends.
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"Debenture Market Price" means, as of any date of
determination, the average of the secondary market bid quotations per $1,000
principal amount of Debentures obtained by the Bid Solicitation Agent for $10
million principal amount of Debentures at approximately 4:00 p.m., New York City
time, on such determination date from three recognized securities dealers in The
City of New York (none of which shall be an Affiliate of the Company) selected
by the Company; provided, however, if (a) at least three such bids are not
obtained by the Bid Solicitation Agent or (b) in the Company's reasonable
judgment, the bid quotations are not indicative of the secondary market value of
the Debentures as of such determination date, then the Debenture Market Price
for such determination date shall equal (1) the Conversion Rate in effect as of
such determination date multiplied by (2) the average Sale Price for the five
Trading Days ending on such determination date, appropriately adjusted to take
into account the occurrence, during the period commencing on the first of such
Trading Days during such five trading day period and ending on such
determination date, of any event described in the Indenture.
Upon a determination by the Company that Holders will be
entitled to receive contingent interest which will become payable during a
Contingent Interest Period, on or prior to the first day of such Contingent
Interest Period, the Company shall issue a press release and publish such
information on its web site on the World Wide Web or through such other public
medium as the Company may use at that time.
4. Conversion. Subject to the provisions of this paragraph 4
and the Indenture and notwithstanding the fact that any other condition to
conversion has not been satisfied, Holders may convert the Debentures into
Common Stock at any time during any fiscal quarter if the Sale Price of the
Common Stock was more than 120% of the Conversion Price for at least 20 Trading
Days in the 30 consecutive Trading Days ending on the last Trading Day of the
immediately preceding fiscal quarter.
Subject to the provisions of this paragraph 4 and the
Indenture and notwithstanding the fact that any other condition to conversion
has not been satisfied, Holders may convert the Debentures into Common Stock on
any Business Day after July 1, 2021 if the Sale Price of the Common Stock was
more than 120% of the Conversion Price for at least one Trading Day after July
1, 2021.
Subject to the provisions of this paragraph 4 and the
Indenture and notwithstanding the fact that any other condition to conversion
has not been satisfied, Holders may convert the Debentures into Common Stock at
any time prior to the close of business on the second Business Day preceding the
Redemption Date, if such Debentures have been called for redemption pursuant to
the Indenture.
Subject to the provisions of this paragraph 4 and the
Indenture and notwithstanding the fact that any other condition to conversion
has not been satisfied, in the event that (A) the Company distributes to all
holders of its Common Stock rights or warrants entitling them (for a period
expiring within 60 days of the Record Date for such distribution) to subscribe
for or purchase Common Stock, at a price per share less than the Sale Price of
the Common Stock on the Business Day immediately preceding the announcement of
such distribution, or (B) the Company distributes to all holders of its Common
Stock, cash or other assets, debt securities or rights or warrants to purchase
its securities, where the Fair Market Value (as determined by the Board of
Directors) of such distribution per share of Common Stock exceeds 15% of the
Sale Price of the Common Stock on the Business Day immediately preceding the
date of declaration of such distribution, then, in either case, the Debentures
may be surrendered for conversion at any time on and after the date that the
Company gives notice to the Holders of such right, which shall be not less than
20 days prior to the Ex-Dividend Time for such distribution, until the earlier
of the close of business on the Business Day immediately preceding the
Ex-Dividend Time or the date the Company announces that such distribution will
not take place; provided that no adjustment to the Conversion Price or the
ability of a Holder of a Debenture to convert will be made if the Holder will
otherwise participate in such distribution without conversion.
A-4
Subject to the provisions of this paragraph 4 and the
Indenture and notwithstanding the fact that any other condition to conversion
has not been satisfied, in the event that the Company consolidates with or
merges into another corporation, or is a party to a binding share exchange
pursuant to which the shares of Common Stock would be converted into cash,
securities or other property as set forth in Section 1704 of the Indenture, then
the Debentures may be surrendered for conversion at any time from and after the
date which is 15 days prior to the date announced by the Company as the
anticipated effective date of such transaction until 15 days after the actual
effective date of such transaction.
"Ex-Dividend Time" means, with respect to any issuance or
distribution on shares of Common Stock, the first date on which the shares of
Common Stock trade regular way on the principal securities market on which the
shares of Common Stock are then traded without the right to receive such
issuance or distribution.
The "Conversion Rate," at any time, shall equal (A) $1,000
divided by (B) the Conversion Price at such time, rounded to four decimal places
(rounded up if the fifth decimal place thereof is 5 or more and otherwise
rounded down).
The initial Conversion Price is $87.50 and the initial
Conversion Rate is 11.4286 shares of Common Stock per $1,000 principal amount,
subject to adjustment in certain events described in the Indenture. The Company
will deliver cash or a check in lieu of any fractional share of Common Stock.
A Debenture in respect of which a Holder has delivered a
Purchase Notice or a Change of Control Purchase Notice exercising the option of
such Holder to require the Company to purchase such Debenture may be converted
only if such notice of exercise is withdrawn in accordance with the terms of the
Indenture.
To convert a Debenture, a Holder must (1) complete and
manually sign the conversion notice below (or complete and manually sign a
facsimile of such notice) and deliver such notice to the Conversion Agent, (2)
surrender the Debenture to the Conversion Agent, (3) furnish appropriate
endorsements and transfer documents if required by the Conversion Agent, the
Company or the Trustee and (4) pay any transfer or similar tax, if required.
The Conversion Rate will be adjusted as set forth in the
Indenture for dividends or distributions on Common Stock payable in Common Stock
or other Capital Stock; subdivisions, combinations or certain reclassifications
of Common Stock; distributions to all holders of Common Stock of certain rights
to purchase Common Stock for a period expiring within 60 days at less than the
Sale Price of the Common Stock at the Time of Determination; and distributions
to such holders of assets or debt securities of the Company or certain rights to
purchase securities of the Company (excluding certain cash dividends or
distributions). However, no adjustment need be made if Debenture holders may
participate in the transaction or in certain other cases. The Company from time
to time may voluntarily increase the Conversion Rate.
If the Company is a party to a consolidation, merger or
binding share exchange or a transfer of all or substantially all of its assets,
or upon certain distributions described in the Indenture, the right to convert a
Debenture into Common Stock may be changed into a right to convert it into
securities, cash or other assets of the Company or another person.
A Holder may convert a portion of a Debenture if the principal
amount of such portion is $1,000 or an integral multiple of $1,000. No payment
or adjustment will be made for dividends on the Common Stock except as provided
in the Indenture. Except as provided below in the next succeeding paragraph, if
any Debentures are surrendered for conversion on any day other than an Interest
Payment
A-5
Date, the Holder of such Debentures shall not be entitled to receive any
interest, including contingent interest, if any, that has accrued on such
Debentures since the prior Interest Payment Date. By delivery to the Holder of
the number of shares of Common Stock or other consideration issuable upon
conversion in accordance with the Indenture, any accrued and unpaid interest,
including contingent interest, if any, on such Debentures will be deemed to have
been paid in full.
If any Debentures are surrendered for conversion subsequent to
the Record Date preceding an Interest Payment Date but on or prior to such
Interest Payment Date, the Holder of such Debentures at the close of business on
such Record Date shall receive the interest, including contingent interest, if
any, payable on such Debentures on such Interest Payment Date notwithstanding
the conversion thereof. Debentures surrendered for conversion during the period
from the close of business on any Record Date preceding any Interest Payment
Date to the opening of business on such Interest Payment Date shall (except in
the case of Debentures which have been called for redemption on a Redemption
Date within such period) be accompanied by payment by Holders, for the account
of the Company, in New York Clearing House funds or other funds of an amount
equal to the interest, including contingent interest, if any, payable on such
Interest Payment Date on the Debentures being surrendered for conversion.
Each Debenture shall be convertible at the office of the
Conversion Agent into fully paid and nonassessable shares (calculated to the
nearest 1/100th of a share) of Common Stock. The Debenture will be converted
into shares of Common Stock at the Conversion Price therefor. No payment or
adjustment shall be made in respect of dividends on the Common Stock or accrued
interest on a converted Debenture, except as described in the Indenture. The
Company shall not issue any fraction of a share of Common Stock in connection
with any conversion of Debentures, but instead shall, subject to the Indenture,
make a cash payment (calculated to the nearest cent) equal to such fraction
multiplied by the Sale Price of the Common Stock on the last Trading Day prior
to the date of conversion.
5. Redemption at the Option of the Company. No sinking fund is
provided for the Debentures. At any time on or after November 30, 2004, the
Company, at its option, may redeem in principal amounts of $1,000 or integral
multiples of $1,000 the Debentures for cash as a whole, or from time to time in
part, accordance with the Indenture at a Redemption Price equal to 100% of the
principal amount of the Debentures to be redeemed, plus accrued and unpaid
interest, including contingent interest, if any, to, but not including, the
Redemption Date. The Debentures are redeemable upon not less than 30 nor more
than 60 days' notice by mail, e-mail or by publication.
If the Company redeems less than all of the outstanding
Debentures, the Trustee will select the Debentures to be redeemed (1) by lot;
(2) pro rata; or (3) by another method the Trustee considers fair and
appropriate. If the Trustee selects a portion of a Holder's Debentures for
partial redemption and the Holder converts a portion of the same Debentures, the
converted portion will be deemed to be from the portion selected for redemption.
6. Purchase By the Company at the Option of the Holder.
Subject to the terms and conditions of the Indenture, the Company shall become
obligated to purchase, at the option of the Holder, all or any portion of the
Debentures held by such Holder on November 30, 2004, 2005, 2008, 2012, and 2016
at a Purchase Price equal to 100% of the principal amount of the Debentures to
be repurchased, plus accrued and unpaid interest, including contingent interest,
if any, to, but not including, the Purchase Date.
To exercise such right, a Holder shall deliver to the Paying
Agent a Purchase Notice containing the information set forth in the Indenture,
at any time from the opening of business on the date that is 20 Business Days
prior to the relevant Purchase Date until the close of business on the third
A-6
Business Day prior to such Purchase Date, and shall deliver the Debentures to
the Paying Agent as set forth in the Indenture.
The Purchase Price may be paid, at the option of the Company,
in cash or Applicable Stock, or in any combination thereof, subject to the terms
and conditions of the Indenture.
Holders shall have the right to withdraw any Purchase Notice
at any time prior to the close of business on the Purchase Date by delivery of a
written notice of withdrawal to the Paying Agent in accordance with the
provisions of the Indenture.
If cash (and/or Applicable Stock if permitted under the
Indenture) sufficient to pay the Purchase Price of all Debentures, or portions
thereof for which a Purchase Notice has been given, is deposited with the Paying
Agent, on the Business Day following the Purchase Date interest, including
contingent interest, if any, will cease to accrue on such Debentures (or
portions thereof) immediately after such Purchase Date, and the Holder thereof
shall have no other rights as such other than the right to receive the Purchase
Price upon surrender of such Debenture.
7. Purchase By the Company at Option of Holders Upon a Change
of Control. Subject to the terms and conditions of the Indenture, the Company
shall become obligated to purchase, at the option of the Holder on the date that
is 30 days after the date of the Company Notice with respect to a Change of
Control given by the Company in accordance with Section 1303(d) of the Indenture
(the "Change of Control Purchase Date"), all or any portion of the Debentures
held by such Holder at a purchase price equal to 100% of the principal amount of
the Debentures to be repurchased, plus accrued and unpaid interest, including
contingent interest, if any, to, but not including, the Change of Control
Purchase Date.
To exercise such right, a Holder shall deliver to the Paying
Agent a Change of Control Purchase Notice containing the information set forth
in the Indenture, at any time on or prior to the close of business on the
Business Day immediately preceding the Change of Control Purchase Date, and
shall deliver the Debentures to the Paying Agent as set forth in the Indenture.
The Change of Control Purchase Price may be paid, at the
option of the Company, in cash or Applicable Stock, or in any combination
thereof, subject to the terms and conditions of the Indenture.
Holders shall have the right to withdraw any Change of Control
Purchase Notice at any time prior to the close of business on the Change of
Control Purchase Date by delivery of a written notice of withdrawal to the
Paying Agent in accordance with the provisions of the Indenture.
If cash (and/or Applicable Stock if permitted under the
Indenture) sufficient to pay the Change of Control Purchase Price of all
Debentures, or portions thereof for which a Change of Control Purchase Notice
has been given, is deposited with the Paying Agent, on the Business Day
following the Change of Control Purchase Date interest, including contingent
interest, if any, will cease to accrue on such Debentures (or portions thereof)
immediately after such Change of Control Purchase Date, and the Holder thereof
shall have no other rights as such other than the right to receive the Change of
Control Purchase Price upon surrender of such Debenture.
[The following paragraph applies only if the Debenture is a
Global Debenture:
8. Book-Entry. This Debenture is a Global Debenture
representing $250,000,000 of the Debentures. This Debenture is a "book entry"
Debenture and is being registered in the name of Cede &
A-7
Co. as nominee of The Depository Trust Company (the "Depository "), a clearing
agency. Subject to the terms of the Indenture, this Debenture will be held by a
clearing agency or its nominee, and beneficial interest will be held by
beneficial owners through the book-entry facilities of such clearing agency or
its nominee in minimum denominations of $1,000 and integral multiples thereof.
As long as this Debenture is registered in the name of the Depository or its
nominee, the Trustee will make payments of principal and interest on this
Debenture by wire transfer of immediately available funds to the Depository or
its nominee. Notwithstanding the above, the final payment on this Debenture will
be made after due notice by the Trustee of the pendency of such payment and only
upon presentation and surrender of this Debenture at its principal corporate
trust office or such other offices or agencies appointed by the Trustee for that
purpose and such other locations provided in the Indenture.]
9. Guarantees. This Debenture is entitled to the benefits of
the Subsidiary Guarantees by each of the Subsidiary Guarantors of the due and
punctual payment and performance of the Guarantor Obligations made in favor of
the Trustee for the benefit of the Holder of this Debenture. Reference is hereby
made to Article Sixteen of the Indenture for a statement of the respective
rights, limitations of rights, duties and obligations under the Guarantees of
each of the Subsidiary Guarantors. The Guarantees may be released in certain
circumstances as described in the Indenture.
10. Events of Default. If an Event of Default with respect to
the Debentures shall have occurred and be continuing, the principal of the
Debentures may be declared due and payable in the manner and with the effect
provided in the Indenture.
11. Modification and Waivers; Obligations of the Company
Absolute. The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Debentures. Such amendment may be
effected under the Indenture at any time by the Company, the Subsidiary
Guarantors and the Trustee with the consent of the Holders of not less than a
majority in aggregate principal amount of the Outstanding Debentures affected
thereby. The Indenture also contains provisions permitting the Holders of not
less than a majority in aggregate principal amount of the Debentures at the time
Outstanding, on behalf of the Holders of all Outstanding Debentures, to waive
compliance by the Company with certain provisions of the Indenture. Furthermore,
provisions in the Indenture permit the Holders of not less than a majority in
aggregate principal amount of the Outstanding Debentures to waive on behalf of
all of the Holders of Debentures certain past defaults under the Indenture and
their consequences. Any such consent or waiver shall be conclusive and binding
upon the Holders of the Debentures and upon all future Holders of the Debentures
and of any Debenture issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof, whether or not notation of such consent or
waiver is made upon this Debenture.
No reference herein to the Indenture and no provision of this
Debenture or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
interest, including contingent interest, if any, on this Debenture at the time,
place, and rate, and in the coin or currency, herein prescribed.
12. Limitation on Suits. As set forth in, and subject to, the
provisions of the Indenture, no Holder of this Debenture will have any right to
institute any proceeding with respect to the Indenture or for any remedy
thereunder, unless such Holder shall have previously given to the Trustee
written notice of a continuing Event of Default with respect to this Debenture,
the Holders of not less than 25% in aggregate principal amount of the
Outstanding Debentures shall have made written request, and offered reasonable
indemnity, to the Trustee to institute such proceedings as trustee, and the
Trustee shall not have received from the Holders of a majority in aggregate
principal amount of the Outstanding Debentures a direction inconsistent with
such request and shall have failed to institute such proceeding
A-8
within 60 days; provided, however, that such limitations do not apply to a suit
instituted by the Holder hereof for the enforcement of payment of the principal
of or interest, including contingent interest, if any, on this Debenture on or
after the respective due dates expressed herein.
13. Authorized Denominations. The Debentures are issuable only
in registered form without coupons in denominations of $1,000 or any integral
multiple thereof.
14. Registration of Transfer or Exchange. As provided in the
Indenture and subject to certain limitations herein and therein set forth, the
transfer of this Debenture is registrable in the Security Register upon
surrender of this Debenture for registration of transfer at the office or agency
of the Company in any place where the principal of and interest on this
Debenture are payable, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Debentures, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees.
As provided in the Indenture and subject to certain
limitations herein and therein set forth, the Debentures are exchangeable for a
like aggregate principal amount of Debentures of different authorized
denominations, as requested by the Holders surrendering the same.
[The following paragraph applies only if the Debenture is a Global
Debenture:
15. This Debenture is a Global Debenture. If the Depository is
at any time unwilling, unable or ineligible to continue as depository and a
successor depository is not appointed by the Company within 90 days or an Event
of Default under the Indenture has occurred and is continuing, the Company will
issue Debentures in certificated form in exchange for each Global Debenture. In
addition, the Company may at any time determine not to have Debentures
represented by a Global Debenture and, in such event, will issue Debentures in
certificated form in exchange in whole for the Global Debenture representing
such Debenture. In any such instance, an owner of a beneficial interest in a
Global Debenture will be entitled to physical delivery in certificated form of
Debentures equal in principal amount to such beneficial interest and to have
such Debentures registered in its name. Debentures so issued in certificated
form will be issued in denominations of $1,000 or any amount in excess thereof
which is an integral multiple of $1,000 and will be issued in registered form
only, without coupons.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Debenture for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Holder as the owner hereof for all purposes, whether or not this
Debenture be overdue, and neither the Company, the Trustee nor any such agent
shall be affected by notice to the contrary.]
16. Defined Terms. All terms used in this Debenture, which are
defined in the Indenture and are not otherwise defined herein, shall have the
meanings assigned to them in the Indenture.
17. Original Issue Discount Information Reporting
Requirements. In accordance with the United States Treasury Regulation Section
1.1275-3, a Holder may obtain the projected payment schedule and the comparable
yield by submitting a written request for such information to: Quest Diagnostics
Incorporated, Xxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxx 00000, Attention:
Investor Relations.
A-9
18. Governing Law. This Debenture shall be governed by and
construed in accordance with the law of the State of New York.
Unless the certificate of authentication hereon has been
executed by the Trustee by manual signature, this Debenture shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
A-10
QUEST DIAGNOSTICS INCORPORATED
By: _______________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Debentures of the series designated and
referred to in the within-mentioned Indenture, as such is supplemented by the
within-mentioned Second Supplemental Indenture.
THE BANK OF NEW YORK
as Trustee
By: _______________________________
Authorized Signatory
Dated: November , 2001
GUARANTEE OF THE SUBSIDIARY GUARANTORS
FOR VALUE RECEIVED, each of the Subsidiary Guarantors (as such
term is defined in the Indenture, as amended by the First Supplemental Indenture
and the Second Supplemental Indenture), hereby, jointly and severally,
unconditionally guarantees to the Holder of the Debenture upon which this
Subsidiary Guarantee is endorsed (the "Debenture") and to the Trustee on behalf
of the Holder, the prompt payment of the principal of (and premium, if any, on)
and interest (including, contingent interest, if any, and in case of default,
interest on principal and, to the extent permitted by applicable law, on overdue
interest required to be paid according to the terms of the Debentures) on the
Debenture, when due (whether upon acceleration pursuant to Section 502 of the
Indenture, upon the date set for payment of the Redemption Price as described
under "Optional Redemption," upon the date set for payment of the Change of
Control Purchase Price pursuant to "Purchase of Debentures at Option of Holder
Upon a Change of Control," upon the date set for payment of the Purchase Price
under "Purchase by the Company at the Option of the Holder" or upon the Stated
Maturity of this Debenture), according to the terms hereof and the terms of the
Indenture (the "Guarantor Obligations"). This Guarantee is a guarantee of
payment and not of collection and is a continuing guarantee and shall apply to
all Guarantor Obligations whenever arising.
Obligations Unconditional and Absolute. The obligations of the
Subsidiary Guarantors hereunder are absolute and unconditional irrespective of
the value, genuineness, validity, regularity or enforceability of the Indenture
or this Debenture, to the fullest extent permitted by applicable law,
irrespective of any circumstance whatsoever which might otherwise constitute a
legal or equitable discharge or defense of a surety or guarantor. Each of the
Subsidiary Guarantors agrees that this Guarantee may be enforced by the Holder
of this Debenture without the necessity at any time of proceeding against the
Company or any other Person (including a co-guarantor) or to pursue any other
remedy or enforce any other right. Each of the Subsidiary Guarantors further
agrees that nothing contained herein shall prevent the Holder of this Debenture
from suing on this Debenture or the Indenture or from exercising any other
rights available under this Debenture and the Indenture, and the exercise of any
of the aforesaid rights and shall not constitute a discharge of any Subsidiary
Guarantor's obligations hereunder and under the Indenture; it being the purpose
and the intent of each Subsidiary Guarantor that its obligations under this
Debenture and under the Indenture shall be absolute, independent and
unconditional under any and all circumstances. Neither any Subsidiary
Guarantor's obligations under this Guarantee nor any remedy for the enforcement
thereof shall be impaired, modified, changed or released in any manner
whatsoever by an impairment, modification, change, release or limitation of the
liability of the Company or by reason of the bankruptcy or insolvency of the
Company. Each Subsidiary Guarantor waives any and all notice of the creation,
renewal, extension or accrual of any of the Guarantor Obligations or acceptance
of this Guarantee. The Guarantor Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred, or renewed,
extended, amended or waived, in reliance upon this Guarantee.
Notwithstanding any of the foregoing, if any Subsidiary
Guarantor is unable to deliver shares of Common Stock of the Company in
connection with the Company's failure to convert Debentures into shares of
Common Stock of the Company upon exercise of a Holder's conversion right
pursuant to Article Seventeen of the Indenture, such Subsidiary Guarantor may
instead pay to such Holder the amount equal to the product of (i) the total
number of shares of Common Stock into which such Debentures are convertible on
the date of such exercise and (ii) the Current Market Price on the date of such
exercise.
Subrogation. Each of the Subsidiary Guarantors shall be
subrogated to all rights of the Holder of the Debenture against the Company in
respect of any amounts paid by such Subsidiary Guarantor on account of the
Debenture or the Indenture; provided, however, that such Subsidiary
Guarantor shall not be entitled to enforce or to receive any payments arising
out of, or based upon, such right of subrogation until the principal of (or
premium, if any, on) and interest including contingent interest, if any, on the
Debenture shall have been indefeasibly paid in full.
Modifications. Each Subsidiary Guarantor agrees that (a) the
time or place of payment of the Guarantor Obligations may be changed or
extended, in whole or in part, to a time certain or otherwise, and may be
renewed or accelerated, in whole or in part; (b) the Company and any other party
liable for payment under the Indenture or under the Debenture may be granted
indulgences generally; (c) any of the provisions of this Debenture or the
Indenture may be modified, amended or waived; and (d) any party (including any
Subsidiary Guarantor) liable for the payment under this Debenture or under the
Indenture may be granted indulgences or be released; all without notice to or
further assent by such Subsidiary Guarantor, which shall remain bound thereon,
notwithstanding any such exchange, compromise, surrender, extension, renewal,
acceleration, modification, indulgence or release.
Waiver of Rights. Each of the Subsidiary Guarantors hereby
waives to the fullest extent permitted by law: (a) notice of acceptance of this
Guarantee by the Holder of this Debenture; (b) presentment and demand for
payment or performance of any of the Guarantor Obligations; (c) protest and
notice of dishonor or default with respect to the Guarantor Obligations; and (d)
all other notices to which such Subsidiary Guarantor might otherwise be
entitled.
Reinstatement. The obligations of the Subsidiary Guarantors
under this Debenture and under Article Sixteen shall be automatically reinstated
if and to the extent that for any reason any payment by or on behalf of any
Person in respect of the Guarantor Obligations is rescinded or must otherwise be
restored by any Holder of the Debenture, whether as a result of any proceedings
in bankruptcy or reorganization or otherwise.
Remedies. Each of the Subsidiary Guarantors further agrees, to
the fullest extent that it may lawfully do so, that as between each such
Subsidiary Guarantor, on the one hand, and the Holder and the Trustee, on the
other hand, the maturity of the obligations guaranteed hereby may be accelerated
as provided in Article Five of the Indenture for the purposes of this Guarantee,
notwithstanding any stay, injunction or other prohibition extant under any
applicable bankruptcy law preventing such acceleration in respect of the
obligations guaranteed hereby.
Rights of Contribution. The Subsidiary Guarantors, in
connection with payments made hereunder, shall have contribution rights against
the other Subsidiary Guarantors as permitted under applicable law. Such
contribution rights shall be subordinate and subject in right of payment to the
obligations of the Subsidiary Guarantors under this Debenture and no Subsidiary
Guarantor shall exercise such rights of contribution until all Guarantor
Obligations have been paid in full.
Limitation of Guaranty. Notwithstanding any provision to the
contrary contained herein or in the Indenture, to the extent the obligations of
any Subsidiary Guarantor shall be adjudicated to be invalid or unenforceable for
any reason (including, without limitation, because of any applicable state or
federal law relating to fraudulent conveyances or transfers) then the
obligations of the Subsidiary Guarantors hereunder shall be limited to the
maximum amount that is permissible under applicable law (whether federal or
state or otherwise and including, without limitation, the Bankruptcy Code).
Release of Guarantors. Each of the Subsidiary Guarantors
hereby covenants that its Subsidiary Guarantee will not be discharged except by
complete performance of its obligations contained in the Debenture, this
Subsidiary Guarantee and pursuant to the Indenture; provided, however, that if
(a) a Subsidiary Guarantor does not guarantee any Indebtedness of the Company
the amount of which, excluding any Outstanding Debenture to which any Guarantee
of such Subsidiary Guarantor applies,
when added together with any other outstanding Indebtedness of the Company
guaranteed by its Subsidiaries that are not Subsidiary Guarantors, would exceed
$50 million in the aggregate, at the time of determination, and all outstanding
Indebtedness of such Subsidiary Guarantor would have been permitted to be
incurred pursuant to Section 1011 of the Indenture measured at the time of the
release and discharge as described in this paragraph, or (b) all or
substantially all of the assets of such Subsidiary Guarantor or all of the
capital stock of such Subsidiary Guarantor is sold (including by issuance,
merger, consolidation or otherwise) by the Company or any of its Subsidiaries,
then in each case of (a) or (b) above, such Subsidiary Guarantor or the
corporation acquiring such assets (in the event of a sale or other disposition
of all or substantially all of the assets or capital stock of such Subsidiary
Guarantor) shall be automatically and without any further action on the part of
any party to the Indenture, and upon notice to the Trustee, be fully released
and discharged from all its liabilities and obligations under or in respect of
the Indenture and this Subsidiary Guarantee of the Debenture, and promptly upon
the request of the Company and at the expense of the Company, the Trustee shall
execute such documents and take such other action as is reasonably requested by
the Company to evidence the release and discharge of such Subsidiary Guarantor
from all such liabilities and obligations and shall, if applicable, certify to
the Company that such Subsidiary Guarantor has no liabilities or obligations
resulting from a demand on such Subsidiary Guarantor's Guarantee.
Defined Terms. All terms used in this Debenture, which are
defined in the Indenture and are not otherwise defined herein, shall have the
meanings assigned to them in the Indenture.
Governing Law. This Subsidiary Guarantee shall be governed by
and construed in accordance with the law of the State of New York.
Subject to the next following paragraph, each Subsidiary
Guarantor hereby certifies and warrants that all acts, conditions and things
required to be done and performed and to have happened precedent to the creation
and issuance of this Subsidiary Guarantee and to constitute the same valid
obligation of each Subsidiary Guarantor have been done and performed and have
happened in due compliance with all applicable laws.
This Subsidiary Guarantee shall not be valid or become
obligatory for any purpose until the certificate of authentication on the
Debenture upon which this Subsidiary Guarantee is endorsed has been signed by
the Trustee under the Indenture referred to in this Debenture.
Dated: November 26, 2001
QUEST DIAGNOSTICS INCORPORATED (CA)
QUEST DIAGNOSTICS INCORPORATED (CT)
QUEST DIAGNOSTICS INCORPORATED (MA)
QUEST DIAGNOSTICS INCORPORATED (MD)
QUEST DIAGNOSTICS INCORPORATED (MI)
QUEST DIAGNOSTICS OF PENNSYLVANIA INC.
LABORATORY HOLDINGS INCORPORATED
DIAGNOSTIC REFERENCE SERVICES INC.
DPD HOLDINGS, INC.
METWEST INC.
XXXXXXX INSTITUTE DIAGNOSTICS
QUEST DIAGNOSTICS LLC
QUEST DIAGNOSTICS CLINICAL
LABORATORIES, INC.
QUEST DIAGNOSTICS HOLDINGS
INCORPORATED
By: ____________________________
Name:
Title:
PATHOLOGY BUILDING PARTNERSHIP
By: Quest Diagnostics Incorporated (MD)
as General Partner
By: ____________________________
Name:
Title:
QUEST DIAGNOSTICS INVESTMENTS
INCORPORATED
By: ______________________________
Name:
Title:
QUEST DIAGNOSTICS FINANCE
INCORPORATED
By: ______________________________
Name:
Title:
EXHIBIT B
FORM OF ADDITIONAL SUBSIDIARY GUARANTEE
FOR VALUE RECEIVED, each of the Subsidiary Guarantors
executing this additional Subsidiary Guarantee (the "Additional Subsidiary
Guarantors"), hereby fully and unconditionally guarantees, jointly and
severally, together with the existing Subsidiary Guarantors (as such term is
defined in the Indenture) of the Debenture, to the Holder of the Debenture upon
which this Subsidiary Guarantee is endorsed (the "Debenture") and to the Trustee
on behalf of the Holder, the prompt payment of the principal of (and premium, if
any, on) and interest (including contingent interest, if any, and in case of
default, interest on principal and, to the extent permitted by applicable law,
on overdue interest required to be paid according to the terms of the
Debentures) and contingent interest, if any, on the Debenture, when due (whether
at Stated Maturity, upon redemption or repurchase at the option of the Holders
of the Debentures, upon acceleration, upon tender for repayment at the option of
the Company), according to the terms hereof and the terms of the Indenture (the
"Guarantor Obligations"). This Guarantee is a guarantee of payment and not of
collection and is a continuing guarantee and shall apply to all Guarantor
Obligations whenever arising.
Obligations Unconditional and Absolute. The obligations of the
Additional Subsidiary Guarantors hereunder are absolute and unconditional
irrespective of the value, genuineness, validity, regularity or enforceability
of the Indenture or this Debenture, to the fullest extent permitted by
applicable law, irrespective of any circumstance whatsoever which might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor. Each of the Additional Subsidiary Guarantors agrees that this
Subsidiary Guarantee may be enforced by the Holder of this Debenture without the
necessity at any time of proceeding against the Company or any other Person
(including a co-guarantor) or to pursue any other remedy or enforce any other
right. Each of the Additional Subsidiary Guarantors further agrees that nothing
contained herein shall prevent the Holder of this Debenture from suing on this
Debenture or the Indenture or from exercising any other rights available under
this Debenture and the Indenture, and the exercise of any of the aforesaid
rights and shall not constitute a discharge of any Additional Subsidiary
Guarantor's obligations hereunder and under the Indenture; it being the purpose
and the intent of each Additional Subsidiary Guarantor that its obligations
under this Debenture and under the Indenture shall be absolute, independent and
unconditional under any and all circumstances. Neither any Additional Subsidiary
Guarantor's obligations under this Subsidiary Guarantee nor any remedy for the
enforcement thereof shall be impaired, modified, changed or released in any
manner whatsoever by an impairment, modification, change, release or limitation
of the liability of the Company or by reason of the bankruptcy or insolvency of
the Company. Each Additional Subsidiary Guarantor waives any and all notice of
the creation, renewal, extension or accrual of any of the Guarantor Obligations
or acceptance of this Subsidiary Guarantee. The Guarantor Obligations, and any
of them, shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon this
Subsidiary Guarantee.
Notwithstanding any of the foregoing, if any Additional
Subsidiary Guarantor is unable to deliver shares of Common Stock of the Company
in connection with the Company's failure to convert Debentures into shares of
Common Stock of the Company upon exercise of a Holder's conversion right
pursuant to Article Seventeen of the Indenture, such Additional Subsidiary
Guarantor may instead pay to such Holder the amount equal to the product of (i)
the total number of shares of Common Stock into which such Debentures are
convertible on the date of such exercise and (ii) the Current Market Price on
the date of such exercise.
B-1
Subrogation. Each of the Additional Subsidiary Guarantors
shall be subrogated to all rights of the Holder of the Debenture against the
Company in respect of any amounts paid by such Additional Subsidiary Guarantor
on account of the Debenture or the Indenture; provided, however, that such
Additional Subsidiary Guarantor shall not be entitled to enforce or to receive
any payments arising out of, or based upon, such right of subrogation until the
principal of (or premium, if any, on) and interest on all Debentures of this
series shall have been indefeasibly paid in full.
Modifications. Each Additional Subsidiary Guarantor agrees
that (a) the time or place of payment of the Guarantor Obligations may be
changed or extended, in whole or in part, to a time certain or otherwise, and
may be renewed or accelerated, in whole or in part; (b) the Company and any
other party liable for payment under the Indenture or under the Debenture may be
granted indulgences generally; (c) any of the provisions of this Debenture or
the Indenture may be modified, amended or waived; and (d) any party (including
any Subsidiary Guarantor) liable for the payment under this Debenture or under
the Indenture may be granted indulgences or be released; all without notice to
or further assent by such Additional Subsidiary Guarantor, which shall remain
bound thereon, notwithstanding any such exchange, compromise, surrender,
extension, renewal, acceleration, modification, indulgence or release.
Waiver of Rights. Each of the Additional Subsidiary Guarantors
hereby waives to the fullest extent permitted by law: (a) notice of acceptance
of this Subsidiary Guarantee by the Holder of this Debenture; (b) presentment
and demand for payment or performance of any of the Guarantor Obligations; (c)
protest and notice of dishonor or default with respect to the Guarantor
Obligations; and (d) all other notices to which such Additional Subsidiary
Guarantor might otherwise be entitled.
Reinstatement. The obligations of the Additional Subsidiary
Guarantors under this Debenture and under Article Sixteen shall be automatically
reinstated if and to the extent that for any reason any payment by or on behalf
of any Person in respect of the Guarantor Obligations is rescinded or must
otherwise be restored by any Holder of the Debentures, whether as a result of
any proceedings in bankruptcy or reorganization or otherwise.
Remedies. Each of the Additional Subsidiary Guarantors further
agrees, to the fullest extent that it may lawfully do so, that as between each
such Additional Subsidiary Guarantor, on the one hand, and the Holders and the
Trustee, on the other hand, the maturity of the obligations guaranteed hereby
may be accelerated as provided in Article Five of the Indenture for the purposes
of this Subsidiary Guarantee, notwithstanding any stay, injunction or other
prohibition extant under any applicable bankruptcy law preventing such
acceleration in respect of the obligations guaranteed hereby.
Rights of Contribution. The Additional Subsidiary Guarantors,
in connection with payments made hereunder, shall have contribution rights
against the other Subsidiary Guarantors as permitted under applicable law. Such
contribution rights shall be subordinate and subject in right of payment to the
obligations of the Subsidiary Guarantors under this Debenture and no Additional
Subsidiary Guarantor shall exercise such rights of contribution until all
Guarantor Obligations have been paid in full.
Limitation of Guaranty. Notwithstanding any provision to the
contrary contained herein or in the Indenture, to the extent the obligations of
any Additional Subsidiary Guarantor shall be adjudicated to be invalid or
unenforceable for any reason (including, without limitation, because of any
applicable state or federal law relating to fraudulent conveyances or transfers)
then the obligations of the Additional Subsidiary Guarantors hereunder shall be
limited to the maximum amount that is permissible under applicable law (whether
federal or state or otherwise and including, without limitation, the Bankruptcy
Code).
B-2
Release of Guarantors. Each of the Additional Subsidiary
Guarantors hereby covenants that its Subsidiary Guarantee will not be discharged
except by complete performance of its obligations contained in the Debenture,
this Subsidiary Guarantee and pursuant to the Indenture; provided, however, that
if (a) an Additional Subsidiary Guarantor does not guarantee any Indebtedness of
the Company the amount of which, when added together with any other outstanding
Indebtedness of the Company guaranteed by its Subsidiaries that are not
Subsidiary Guarantors, would exceed $50 million in the aggregate, excluding the
Debentures, and all outstanding Indebtedness of such Subsidiary Guarantor would
have been permitted to be incurred pursuant to Section 1011 of the Indenture
measured at the time of the release and discharge as described in this paragraph
or (b) all or substantially all of the assets of such Additional Subsidiary
Guarantor or all of the capital stock of such Additional Subsidiary Guarantor is
sold (including by issuance, merger, consolidation or otherwise) by the Company
or any of its Subsidiaries, then in each case of (a) or (b) above, such
Additional Subsidiary Guarantor or the corporation acquiring such assets (in the
event of a sale or other disposition of all or substantially all of the assets
or capital stock of such Subsidiary Guarantor) shall be automatically and
without any further action on the part of any party to the Indenture, and upon
notice to the Trustee, be fully released and discharged from all its liabilities
and obligations under or in respect of the Debenture, the Indenture and this
Subsidiary Guarantee, and promptly upon the request of the Company and at the
expense of the Company, the Trustee shall execute such documents and take such
other action as is reasonably requested by the Company to evidence the release
and discharge of such Additional Subsidiary Guarantor from all such liabilities
and obligations and shall, if applicable, certify to the Company that such
Additional Subsidiary Guarantor has no liabilities or obligations resulting from
a demand on its Subsidiary Guarantee.
Defined Terms. All terms used in this Debenture, which are
defined in the Indenture and are not otherwise defined herein, shall have the
meanings assigned to them in the Indenture.
Governing Law. This Subsidiary Guarantee shall be governed by
and construed in accordance with the law of the State of New York.
Subject to the next following paragraph, each Additional
Subsidiary Guarantor hereby certifies and warrants that all acts, conditions and
things required to be done and performed and to have happened precedent to the
creation and issuance of this Subsidiary Guarantee and to constitute the same
valid obligation of each Additional Subsidiary Guarantor have been done and
performed and have happened in due compliance with all applicable laws.
(Remainder of page intentionally left blank.)
B-3
This Subsidiary Guarantee shall not be valid or become
obligatory for any purpose until the certificate of authentication on the
Debenture upon which this Subsidiary Guarantee is endorsed has been signed by
the Trustee under the Indenture referred to in this Debenture.
[ADDITIONAL SUBSIDIARY GUARANTOR(S)]
By: ____________________________
Name:
Title:
