<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 13, 1995
REGISTRATION NO. 33-57057
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
----------------
NATIONAL MEDICAL ENTERPRISES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
NEVADA 95-2557091
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2700 Colorado Avenue
Santa Monica, California 90404
(310) 998-8000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
----------------
SCOTT M. BROWN, ESQ.
Senior Vice President, Secretary and General Counsel
National Medical Enterprises, Inc.
2700 Colorado Avenue
Santa Monica, California 90404
(310) 998-8000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------
Copies of all communications to:
THOMAS C. JANSON, JR. KIRK A. DAVENPORT, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LATHAM & WATKINS
300 SOUTH GRAND AVENUE, SUITE 3400 885 THIRD AVENUE, SUITE 1000
LOS ANGELES, CALIFORNIA 90071 NEW YORK, NEW YORK 10022
(213) 687-5000 (212) 906-1200
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. [_]
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered, other than
underwriting discounts and commissions. All of the amounts shown are estimated
except the SEC registration fee and the NASD filing fee. The Company will bear
all of such expenses.
<TABLE>
<S> <C>
SEC registration fee.......................................... $ 344,830
NASD filing fee............................................... 30,500
Rating Agency Fee............................................. 100,000
Blue sky fees and expenses.................................... 25,000
Printing and engraving expenses............................... 330,000
Legal fees and expenses....................................... 1,250,000
Accounting fees and expenses.................................. 150,000
Trustee fees.................................................. 10,000
Miscellaneous................................................. 50,000
----------
Total..................................................... $2,290,330
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 78.751 of the Nevada General Corporation Law ("Nevada Law") provides
generally and in pertinent part that a Nevada corporation may indemnify its
directors and officers against expenses, judgments, fines, and settlements
actually and reasonably incurred by them in connection with any civil suit or
action, except actions by or in the right of the corporation, or any
administrative or investigative proceeding if, in connection with the matters
in issue, they acted in good faith and in a manner they reasonably believed to
be in, or not opposed to, the best interests of the corporation, and in
connection with any criminal suit or proceeding, if in connection with the
matters in issue, they had no reasonable cause to believe their conduct was
unlawful. Section 78.751 further provides that, in connection with the defense
or settlement of any action by or in the right of the corporation, a Nevada
corporation may indemnify its directors and officers against expenses actually
and reasonably incurred by them if, in connection with the matters in issue,
they acted in good faith, in a manner they reasonably believed to be in, or not
opposed to, the best interest of the corporation. Section 78.751 further
permits a Nevada corporation to grant its directors and officers additional
rights of indemnification through by-law provisions and otherwise.
Article X of the Restated Articles of Incorporation, as amended, of the
Registrant and Article X of the Restated By-Laws, as amended, of the Registrant
provide that the Registrant shall indemnify its directors and officers to the
fullest extent permitted by Nevada Law. The Registrant has entered into
indemnification agreements with each of its directors and executive officers.
Such indemnification agreements are intended to provide a contractual right to
indemnification, to the maximum extent permitted by law, for expenses
(including attorneys' fees), judgments, penalties, fines, and amounts paid in
settlement actually and reasonably incurred by the person to be indemnified in
connection with any proceeding (including, to the extent permitted by
applicable law, any derivative action) to which they are, or are threatened to
be made, a party by reason of their status in such positions. Such
indemnification agreements do not change the basic legal standards for
indemnification set forth under Nevada Law or the Restated Articles of
Incorporation, as amended, of the Registrant. Such agreements are intended to
be in furtherance, and not in limitation of, the general right to
indemnification provided in the Registrant's Restated Articles of
Incorporation, as amended.
II-1
<PAGE>
Section 78.037 of the Nevada Law provides that the articles of incorporation
may contain a provision eliminating or limiting the personal liability of a
director or officer to the corporation or its shareholders for monetary damages
for breach of fiduciary duty as a director provided that such provision shall
not eliminate or limit the liability of a director or officer (i) for acts or
omissions which involve intentional misconduct or a knowing violation of law,
or (ii) under Section 78.300 of the Nevada Law (relating to liability for
unauthorized acquisitions or redemptions of, or dividends on, capital stock).
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Registrant
pursuant to the foregoing provisions, the Registrant has been informed that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
ITEM 16. EXHIBITS
(a) Exhibits
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement between NME and the Underwriters
2.1* Agreement and Plan of Merger, dated as of October 10, 1994, by and
among NME, AMH Acquisition Co. and American Medical Holdings,
Inc. (incorporated by reference to Exhibit 2(A) to NME's
Quarterly Report on Form 10-Q for the fiscal quarter ended August
31, 1994)
3.1* Restated By-Laws of NME, as amended September 28, 1994
4.1 Form of Indenture between NME and Bank of New York, as Trustee,
relating to the Senior Notes (including the form of certificate
representing the Senior Notes)
4.2 Form of Indenture between NME and Bank of New York, as Trustee,
relating to the Senior Subordinated Notes (including the form of
certificate representing the Senior Subordinated Notes)
5.1 Opinion of Scott M. Brown, Esq.
11.1* Statement of Computation of Per Share Earnings for the three
fiscal years ended May 31, 1994 (incorporated by reference to
Exhibit 11 to NME's Annual Report on Form 10-K for the fiscal
year ended May 31, 1994)
11.2* Statement of Computation of Per Share Earnings for the three
months ended November 30, 1993 and 1994 (incorporated by
reference to Exhibit 11 to NME's Quarterly Report on Form 10-Q
for the fiscal quarter ended November 30, 1994).
11.3* Statement of Computation of Pro Forma Per Share Earnings for the
fiscal year ended May 31, 1994 and the six months ended November
30, 1993 and 1994.
12.1* Statement of Computation of Ratios of Earnings to Fixed Charges
12.2* Statement of Computation of Pro Forma Ratios of Earnings to Fixed
Charges
23.1 Consent of Scott M. Brown, Esq. (to be included in the opinion
filed as Exhibit 5.1)
23.2* Consent of KPMG Peat Marwick LLP
23.3* Consent of Price Waterhouse LLP
23.4 Consent of Robert W. O'Leary
23.5* Consent of John T. Casey
23.6* Consent of Thomas J. Pritzker
24.1* Power of Attorney
25.1 Statement of Eligibility of Bank of New York, as Trustee with
respect to the Senior Notes
25.2 Statement of Eligibility of Bank of New York, as Trustee with
respect to the Senior Subordinated Notes
27.1* Financial Data Schedule (incorporated by reference to Exhibit 27.1
to NME's Quarterly Report on Form 10-Q for the fiscal quarter
ended November 30, 1994)
</TABLE>
- --------
* Previously filed.
II-2
<PAGE>
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(b) The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the Prospectus, to each person to whom the Prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the Prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the Prospectus, to deliver, or
cause to be delivered to each person to whom the Prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the Prospectus to provide such interim financial information.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, the Nevada Law, the
Restated Articles of Incorporation, and the Restated Bylaws, as amended, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
(d) The Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of Prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in the
form of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 2 to
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Santa Monica, State of California on
February 13, 1995.
NATIONAL MEDICAL ENTERPRISES, INC.
By: /s/ Scott M. Brown
-----------------------------------
Scott M. Brown
Senior Vice President, Secretary
and General Counsel
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to this Registration Statement has been signed by the following persons
in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Chairman of the Board of Directors
------------------------------------ and Chief Executive Officer
Jeffrey C. Barbakow (Principal Executive Officer)
* President, Chief Operating Officer
------------------------------------ and Director
Michael H. Focht, Sr.
* Senior Vice President and Chief
------------------------------------ Financial Officer
Raymond L. Mathiasen (Principal Financial and
Accounting Officer)
* Director
------------------------------------
Bernice B. Bratter
* Director
------------------------------------
Maurice J. DeWald
* Director
------------------------------------
Peter de Wetter
* Director
------------------------------------
Edward Egbert, M.D.
* Director
------------------------------------
Raymond A. Hay
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Director
------------------------------------
Lester B. Korn
* Director
------------------------------------
James P. Livingston
* Director
------------------------------------
Richard S. Schweiker
</TABLE>
*By: /s/ Scott M. Brown February 13, 1995
--------------------------
Scott M. Brown
Attorney-in-fact
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ----------- ------------
<C> <S> <C>
1.1 Form of Underwriting Agreement between NME and the
Underwriters
2.1* Agreement and Plan of Merger, dated as of October 10, 1994, by
and among NME, AMH Acquisition Co. and American Medical
Holdings, Inc. (incorporated by reference to Exhibit 2(A) to
NME's Quarterly Report on Form 10-Q for the fiscal quarter
ended August 31, 1994)
3.1* Restated By-Laws of NME, as amended September 28, 1994
4.1 Form of Indenture between NME and Bank of New York, as
Trustee, relating to the Senior Notes (including the form of
certificate representing the Senior Notes)
4.2 Form of Indenture between NME and Bank of New York, as
Trustee, relating to the Senior Subordinated Notes (including
the form of certificate representing the Senior Subordinated
Notes)
5.1 Opinion of Scott M. Brown, Esq.
11.1* Statement of Computation of Per Share Earnings for the three
fiscal years ended May 31, 1994 (incorporated by reference to
Exhibit 11 to NME's Annual Report on Form 10-K for the fiscal
year ended May 31, 1994)
11.2* Statement of Computation of Per Share Earnings for the three
months ended November 30, 1993 and 1994 (incorporated by
reference to Exhibit 11 to NME's Quarterly Report on Form 10-
Q for the fiscal quarter ended November 30, 1994).
11.3* Statement of Computation of Pro Forma Per Share Earnings for
the fiscal year ended May 31, 1994 and the six months ended
November 30, 1993 and 1994.
12.1* Statement of Computation of Ratios of Earnings to Fixed
Charges
12.2* Statement of Computation of Pro Forma Ratios of Earnings to
Fixed Charges
23.1 Consent of Scott M. Brown, Esq. (to be included in the opinion
filed as Exhibit 5.1)
23.2* Consent of KPMG Peat Marwick LLP
23.3* Consent of Price Waterhouse LLP
23.4 Consent of Robert W. O'Leary
23.5* Consent of John T. Casey
23.6* Consent of Thomas J. Pritzker
24.1* Power of Attorney
25.1 Statement of Eligibility of Bank of New York, as Trustee with
respect to the Senior Notes
25.2 Statement of Eligibility of Bank of New York, as Trustee with
respect to the Senior Subordinated Notes
27.1* Financial Data Schedule (incorporated by reference to Exhibit
27.1 to NME's Quarterly Report on Form 10-Q for the fiscal
quarter ended November 30, 1994)
</TABLE>
- --------
* Previously filed.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NATIONAL MEDICAL ENTERPRISES, INC.
AND
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
MORGAN STANLEY & CO. INCORPORATED
SALOMON BROTHERS INC
J.P. MORGAN SECURITIES INC.
BT SECURITIES CORPORATION
SMITH BARNEY INC.
BA SECURITIES, INC.
-------------------------------------
UNDERWRITING AGREEMENT
-------------------------------------
Dated as of February , 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
NATIONAL MEDICAL ENTERPRISES, INC.
% SENIOR NOTES DUE 2002
% SENIOR SUBORDINATED NOTES DUE 2005
UNDERWRITING AGREEMENT
February , 1995
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
MORGAN STANLEY & CO. INCORPORATED
SALOMON BROTHERS INC
J.P. MORGAN SECURITIES INC.
BT SECURITIES CORPORATION
SMITH BARNEY INC.
BA SECURITIES, INC.
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
140 Broadway
New York, New York 10005
Ladies and Gentlemen:
Subject to the terms and conditions herein contained, National Medical
Enterprises, Inc., a Nevada corporation (the "Company"), proposes to issue and
sell to Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated,
Salomon Brothers Inc, J.P.Morgan Securities Inc., BT Securities Corporation,
Smith Barney Inc. and BA Securities, Inc. (collectively with DLJ, the
"Underwriters") an aggregate of $300 million principal amount of its %
Senior Notes due 2002 (the "Senior Notes") and $700 million principal amount of
its % Senior Subordinated Notes due 2005 (the "Senior Subordinated Notes"
and, together with the Senior Notes, the "Securities"). The Senior Notes are to
be issued pursuant to the provisions of an Indenture (the "Senior Note
Indenture") to be dated as of , 1995, by and between the Company and The
Bank of New York, as Trustee (the "Senior Note Trustee"). The Senior
Subordinated Notes are to be issued pursuant to the provisions of an Indenture
(the "Senior Subordinated Note Indenture" and, together with the Senior Note
Indenture, the "Indentures") to be dated as of , 1995, by and between
the Company and The Bank of New York, as Trustee (the "Senior Subordinated Note
Trustee" and, together with the Senior Note Trustee, the "Trustees").
The Securities are being issued and sold in connection with the acquisition
(the "Acquisition") of American Medical Holdings, Inc., a Delaware corporation
("AMH"), by the Company. The Acquisition is being effected pursuant to an
Agreement and Plan of Merger, dated as of October 10, 1994 (the "Merger
Agreement"), by and among the Company, AMH Acquisition Co., a Delaware
corporation and a wholly owned subsidiary of the Company (the "Merger Sub"),
and AMH. Pursuant to the Merger Agreement, the Company will acquire all of the
issued and outstanding capital stock of AMH (the "Merger"). At the time the
Merger is consummated (the "Effective Time of the Merger") and pursuant to the
Merger Agreement, Merger Sub will be merged with and into AMH with AMH as the
surviving corporation. Prior to or concurrently with the issuance and sale of
the Securities, the Company will enter into a new bank credit facility
(together with the documents and agreements contemplated thereby, the "New
Credit Facility") with Morgan Guaranty Trust Company of New York, as
administrative agent, and certain lenders named therein. The Merger Agreement,
the New Credit Facility, this Agreement, the Securities and the Indentures are
collectively referred to herein as the "Transaction Documents."
<PAGE>
1. Registration Statement and Prospectus. The Company has prepared and filed
with the Securities and Exchange Commission (the "Commission") in accordance
with the provisions of the Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated pursuant thereto (collectively,
the "Act"), a registration statement on Form S-3 (No. 33-57057), with respect
to the Securities, including a preliminary prospectus, subject to completion,
relating to the Securities. The registration statement, as amended at the time
it becomes effective or, if a post-effective amendment is filed with respect
thereto, as amended by such post-effective amendment at the time of its
effectiveness (including in each case all documents incorporated or deemed to
be incorporated by reference therein, if any, all financial statements and
exhibits, and the information, if any, contained in a prospectus subsequently
filed with the Commission pursuant to Rule 424(b) under the Act and deemed to
be a part of the registration statement at the time of its effectiveness
pursuant to Rule 430A of the Act) is hereinafter referred to as the
"Registration Statement"; and the prospectus constituting a part of the
Registration Statement at the time it became effective, or such revised
prospectus as shall be provided to the Underwriters for use in connection with
the offering of the Securities that differs from the prospectus on file with
the Commission at the time the Registration Statement became effective
(including, in each case, all documents incorporated or deemed to be
incorporated by reference therein, if any), whether or not filed with the
Commission pursuant to Rule 424(b) under the Act, is hereinafter referred to as
the "Prospectus." Any reference herein to the Registration Statement, the
Prospectus, any amendment or supplement thereto or any preliminary prospectus
shall be deemed to refer to and include the documents incorporated by reference
therein, and any reference herein to the terms "amend," "amendment" or
"supplement" with respect to the Registration Statement or Prospectus shall be
deemed to refer to and include the filing after the execution hereof of any
document with the Commission deemed to be incorporated by reference therein.
2. Agreements to Sell and Purchase. On the basis of the representations and
warranties contained in this Agreement, and subject to its terms and
conditions, the Company agrees to issue and sell to the Underwriters, and the
Underwriters agree, severally and not jointly, to purchase from the Company,
(i) the Senior Notes in the respective principal amounts set forth opposite
their names on Schedule I hereto, plus such amount as they may individually
become obligated to purchase pursuant to Section 8 hereof, at a purchase price
equal to % of the principal amount of the Senior Notes (the "Senior Note
Purchase Price") and (ii) the Senior Subordinated Notes in the respective
principal amounts set forth opposite their names on Schedule II hereto, plus
such amount as they may individually become obligated to purchase pursuant to
Section 8 hereof, at a purchase price equal to % of the principal amount of
the Senior Subordinated Notes (the "Senior Subordinated Note Purchase Price"
and, together with the Senior Note Purchase Price, the "Purchase Price").
3. Delivery and Payment. Delivery to you of and payment for the Securities
shall be made at 10:00 A.M., New York City time, on , 1995
(such time and date being referred to as the "Closing Date"), at the offices of
DLJ at 140 Broadway, New York, New York 10005 (Cashier's Window, Main Level),
or such other place as you shall reasonably designate.
The Securities in definitive form shall be registered in such names and
issued in such denominations as you shall request in writing not later than two
full business days prior to the Closing Date, and shall be made available to
you at the offices of DLJ (or at such other place as shall be acceptable to
you) for inspection not later than 10:00 A.M., New York City time, on the
business day next preceding the Closing Date. The Securities shall be delivered
to you on the Closing Date with any transfer taxes payable upon initial
issuance thereof duly paid by the Company, for your respective accounts against
payment of the appropriate Purchase Price by certified or official bank check
or checks payable in New York Clearing House or similar next-day funds to the
order of the Company. The Closing Date and the location of delivery of, and the
form of payment for, the Securities may be varied by agreement between DLJ and
the Company.
4. Agreements of the Company. The Company agrees with each of you that:
(a) It will, if the Registration Statement has not heretofore become
effective under the Act, and if otherwise necessary or required by law,
file an amendment to the Registration Statement or, if necessary
2
<PAGE>
pursuant to Rule 430A of the Act, a post-effective amendment to the
Registration Statement, in each case as soon as practicable after the
execution and delivery of this Agreement, and it will use its best efforts
to cause the Registration Statement or such post-effective amendment to
become effective at the earliest possible time. If the Registration
Statement has become effective and the Company, omitting from the
Prospectus certain information in reliance upon Rule 430A of the Act,
elects not to file a post-effective amendment pursuant to Rule 430A of the
Act, it will file the form of Prospectus required by Rule 424(b) of the Act
within the time period specified by Rule 430A and Rule 424(b) of the Act.
The Company will otherwise comply in a timely manner with all applicable
provisions of Rule 424 and Rule 430A of the Act.
(b) It will advise DLJ promptly and, if requested by DLJ, confirm such
advice in writing, (i) when the Registration Statement has become
effective, if and when the Prospectus is sent for filing pursuant to Rule
424 of the Act and when any post-effective amendment to the Registration
Statement becomes effective, (ii) of the receipt of any comments from the
Commission or any state securities commission or any other regulatory
authority that relate to the Registration Statement or requests by the
Commission or any state securities commission or any other regulatory
authority for any amendment or supplement to the Registration Statement or
any amendment or supplements to the Prospectus or for additional
information, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement, or of the
suspension of qualification of the Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for such purpose by the
Commission or any state securities commission or any other regulatory
authority and (iv) of the happening of any event during the period referred
to in paragraph (d), below, which makes any statement of a material fact
made in the Registration Statement untrue or which requires the making of
any additions to or changes in the Registration Statement in order to make
the statements therein not misleading or that makes any statement of a
material fact made in the Prospectus untrue or which requires the making of
any addition to or change in the Prospectus in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Company shall use its best efforts to prevent the issuance
of any stop order or order suspending the qualification or exemption of the
Securities under any Federal or state securities or Blue Sky laws, and, if
at any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state securities
commission or any other regulatory authority shall issue an order
suspending the qualification or exemption of the Securities under any state
securities or Blue Sky laws, the Company shall use every reasonable effort
to obtain the withdrawal or lifting of such order at the earliest possible
time.
(c) Promptly after the Registration Statement becomes effective, and from
time to time thereafter for such period in your reasonable judgment as a
prospectus is required to be delivered in connection with sales of the
Securities by an Underwriter or a dealer, it will furnish to each
Underwriter and each dealer, without charge, as many copies of the
Prospectus, including all documents incorporated by reference therein, (and
of any amendment or supplement to the Prospectus) as you may reasonably
request.
(d) If during the period specified in paragraph (c) of this Section 4 any
event shall occur as a result of which it becomes necessary to amend or
supplement the Prospectus in order to make the statements therein, in the
light of the circumstances existing as of the date the Prospectus is
delivered to an offeree or a purchaser, not misleading, or if it is
necessary to amend or supplement the Prospectus to comply with any law, it
will promptly prepare and file with the Commission an appropriate amendment
or supplement to the Prospectus so that the statements in the Prospectus,
as so amended or supplemented, will not, in the light of the circumstances
existing as of the date the Prospectus is so delivered, be misleading, and
will comply with applicable law, and will promptly notify you of such event
and amendment or supplement and furnish to you without charge such number
of copies thereof as you may reasonably request.
(e) It will make generally available to its security holders, as soon as
practicable and for the time period specified by Rule 158 under the Act, a
consolidated earnings statement which shall satisfy the provisions of
Section 11(a) and Rule 158 of the Act.
3
<PAGE>
(f) Whether or not the transactions contemplated hereby are consummated
or this Agreement is terminated, it will pay and be responsible for all
costs, charges, expenses, fees and taxes incurred in connection with or
incident to (i) the preparation, printing, filing, distribution and
delivery under the Act of the Registration Statement (including financial
statements and exhibits), each preliminary prospectus, the Prospectus and
all amendments and supplements thereto, (ii) the registration with the
Commission and the issuance and delivery of the Securities, (iii) the
printing and delivery of this Agreement, the Indentures, any memoranda
describing state securities or Blue Sky Laws and all other agreements,
memoranda, reports, correspondence and other documents printed, distributed
and delivered in connection with the offering of the Securities, (iv) the
registration or qualification of the Securities for offer and sale under
the securities or Blue Sky laws of the jurisdictions referred to in
paragraph (i), below (including, in each case, the fees and disbursements
of counsel relating to such registration or qualification and memoranda
relating thereto and any filing fees in connection therewith), (v)
furnishing such copies of the Registration Statement (including exhibits),
Prospectus and preliminary prospectuses, and all amendments and supplements
to any of them, including any document incorporated by reference therein,
as may be reasonably requested by the Underwriters or by dealers to whom
Securities may be sold, (vi) the filing, registration and clearance with
the National Association of Securities Dealers, Inc. (the "NASD") of the
Underwriters' compensation in connection with the offering of the
Securities (including, without limitation, any filing fees in connection
therewith but excluding the fees of Latham & Watkins, legal counsel to the
Underwriters ("Underwriters' Counsel")), (vii) the listing of the
Securities on the New York Stock Exchange (the "NYSE"), (viii) the rating
of the Securities by investment rating agencies, (ix) any "qualified
independent underwriter" as required by Schedule E of the Bylaws of the
NASD (including fees and disbursements of counsel for such qualified
independent underwriter) and (x) the performance by the Company of its
other obligations under this Agreement, including (without limitation) the
fees of the Trustees, the cost of its personnel and other internal costs,
the cost of printing and engraving the certificates representing the
Securities, and all expenses and taxes incident to the sale and delivery of
the Securities to the Underwriters.
(g) It will furnish to DLJ, without charge, two (2) signed copies (plus
one additional signed copy to Underwriters' Counsel of the Registration
Statement as first filed with the Commission and of each amendment or
supplement to it, including each post-effective amendment, all exhibits
filed therewith and all documents incorporated by reference therein, and
such number of conformed copies of the Registration Statement as so filed
and of each amendment to it, including each post-effective amendment, but
without exhibits, as you may reasonably request.
(h) It will not file any amendment or supplement to the Registration
Statement, whether before or after the time when it becomes effective, or
make any amendment or supplement to the Prospectus (other than any document
required to be filed under the Securities Exchange Act of 1934, as amended,
including the rules and regulations thereunder (collectively, the "Exchange
Act") that upon filing is deemed to be incorporated by reference therein)
of which you shall not previously have been advised and provided a copy
prior to the filing thereof or to which you shall reasonably object; it
will furnish to you at or prior to the filing thereof a copy of any
document that upon filing is deemed to be incorporated by reference in the
Registration Statement or Prospectus; and it will prepare and file with the
Commission, promptly upon your reasonable request, any amendment or
supplement to the Registration Statement or amendment or supplement to the
Prospectus which may be necessary or advisable in connection with the
distribution of the Securities by you, and will use its best efforts to
cause the same to become effective as promptly as possible.
(i) Prior to any public offering of the Securities, it will cooperate
with you and Underwriters' Counsel in connection with the registration or
qualification of the Securities for offer and sale by the Underwriters
under the state securities or Blue Sky laws of such United States
jurisdictions as you may request [and the securities laws of the United
Kingdom, Switzerland and Japan]. The Company will continue such
qualification in effect so long as required by law for distribution of the
Securities and will file such consents to service of process or other
documents as may be necessary in order to effect such
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registration or qualification (provided, that the Company shall not be
obligated to qualify as a foreign corporation in any jurisdiction in which
it is not so qualified nor to take any action that would subject it to
general consent to service of process in any jurisdiction in which it is
not now so subject).
(j) It timely will complete all required filings and otherwise comply
fully in a timely manner with all provisions of the Exchange Act to effect
the registration of the Securities pursuant thereto, and will file timely
all reports and any definitive proxy or information statements required to
be filed by the Company with the Commission pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the
Prospectus and it will use its best efforts to cause the Securities to be
listed on the NYSE and to maintain such listing while any of the Securities
are outstanding.
(k) So long as any of the Securities are outstanding, it will mail to
each of the Underwriters, without charge, a copy of each report or other
publicly available information furnished to holders of the Securities, or
filed with the Commission, whether or not required by law or pursuant to
the applicable Indenture, and such other publicly available information
concerning the Company and its subsidiaries as you may reasonably request,
at the same time as such reports or other information are furnished to such
holders.
(l) It will not voluntarily claim, and will actively resist any attempts
to claim, the benefit of any usury laws against the holders of the
Securities.
(m) It will use the proceeds from the sale of the Securities in the
manner described in the Prospectus under the caption "Use of Proceeds."
(n) During the period beginning on the date of this Agreement and
continuing to and including the Closing Date, it will not offer, sell,
contract to sell or otherwise dispose of any debt securities of the Company
or warrants, rights, or options to purchase debt securities of the Company
(other than (i) the Securities and (ii) commercial paper issued in the
ordinary course of business), without your prior written consent.
(o) It will use its best efforts to do and perform all things required to
be done and performed under this Agreement by it prior to or after the
Closing Date and to satisfy all conditions precedent on its part to be
satisfied prior to the delivery of the Securities.
5. Representations and Warranties. The Company represents and warrants to
each Underwriter that:
(a) When the Registration Statement becomes effective, including on the
date of effectiveness of any post-effective amendment, at the date of the
Prospectus (if different) and at the Closing Date, the Registration
Statement will comply in all material respects with the provisions of the
Act, and will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading; the Prospectus and each
supplement or amendment thereto will not at the date of the Prospectus, at
the date of any such supplement or amendment and at the Closing Date,
contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
except that the representations and warranties contained in this paragraph
(a) shall not apply to statements in or omissions from the Registration
Statement or the Prospectus (or any supplement or amendment to them) made
in reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by or on behalf of any
Underwriter through DLJ expressly for use therein. The Company acknowledges
for all purposes under this Agreement (including this paragraph and Section
6 hereof) that the statements set forth in the last paragraph on the cover
page and the third paragraph under the caption "Underwriting" in the
Prospectus constitute the only written information furnished to the Company
by or on behalf of any Underwriter through DLJ expressly for use in the
Registration Statement, the preliminary prospectus, or the Prospectus (or
any amendment or supplement to any of them) and that the Underwriters shall
not be deemed to have provided any information (and therefore are not
responsible for any statements or omissions) pertaining to any arrangement
or agreement with respect to any party other than the Underwriters. When
the Registration Statement becomes effective, including at the date of any
post-
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effective amendment, at the date of the Prospectus and any amendment or
supplement thereto (if different) and at the Closing Date, the Indentures
will have been qualified under and will conform in all material respects to
the requirements of the Trust Indenture Act of 1939, as amended, and the
rules and regulations promulgated pursuant thereto (collectively, the
"TIA"). No contract or document of a character required to be described in
the Registration Statement, the Prospectus or any of the documents
incorporated by reference therein or to be filed as an exhibit to the
Registration Statement or to any of the documents incorporated by reference
therein has not been described and filed as required.
(b) Each preliminary prospectus and the Prospectus, filed as part of the
Registration Statement as originally filed or as part of any amendment or
supplement thereto, or filed pursuant to Rule 424 or 430A under the Act,
complied when so filed in all material respects with the Act.
(c) The documents incorporated by reference in the Registration
Statement, the Prospectus, any amendment or supplement thereto or any
preliminary prospectus, when they became or become effective under the Act
or were or are filed with the Commission under the Exchange Act, as the
case may be, conformed or will conform in all material respects with the
requirements of the Act or the Exchange Act, as applicable.
(d) No action has been taken and no statute, rule, regulation or order
has been enacted, adopted or issued by any United States Federal or state
[or United Kingdom, Swiss or Japanese] governmental body, agency or
official which prevents the issuance of the Securities, suspends the
effectiveness of the Registration Statement, prevents or suspends the use
of any preliminary prospectus or suspends the sale of the Securities in any
jurisdiction referred to in Section 4(i) hereof; no injunction, restraining
order, or order of any nature by any Federal or state court has been issued
with respect to the Company or any of its subsidiaries which would prevent
or suspend the issuance or sale of the Securities, the effectiveness of the
Registration Statement, or the use of any preliminary prospectus or
Prospectus in any jurisdiction referred to in Section 4(i) hereof; and the
Company has complied in all material respects with every request of the
Commission or any securities authority or agency of any jurisdiction for
additional information (to be included in the Registration Statement or the
Prospectus or otherwise).
(e) The capitalization table set forth in the Prospectus under the
caption "Historical and Pro Forma Capitalization" identifies in reasonable
detail all outstanding short-term and long-term indebtedness of the Company
and its subsidiaries, prior to and after giving effect to the Merger and
the related transactions on the terms described in the Prospectus.
(f) The Senior Notes rank and will rank on a parity with all unsecured
indebtedness (other than subordinated indebtedness) of the Company that is
outstanding on the date hereof or that may be incurred hereafter, and
senior to all subordinated indebtedness of the Company that is outstanding
on the date hereof or that may be incurred hereafter. All indebtedness
represented by the Senior Subordinated Notes shall be subordinated in right
of payment only to the Senior Indebtedness identified on Schedule
attached hereto, and only to the extent and in the manner set forth in the
Senior Subordinated Note Indenture and in the Senior Subordinated Notes.
(g) The Indentures have been duly authorized by the Company and, when
duly executed and delivered in accordance with their terms, will be valid
and legally binding agreements of the Company, enforceable against the
Company in accordance with their terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar
laws affecting creditors' rights and remedies generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity) and except to the extent that a waiver of
rights under any usury laws may be unenforceable.
(h) The Securities have been duly authorized by the Company and, when
executed and delivered by the Company and authenticated by the applicable
Trustee in accordance with the applicable Indenture and paid for in
accordance with the terms of this Agreement, will constitute legal, valid
and binding obligations of the Company, enforceable against the Company
according to their terms, subject to
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applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws affecting creditors' rights and remedies
generally and to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity) and except to
the extent that a waiver of rights under any usury laws may be
unenforceable, will be entitled to the benefits of the applicable Indenture
and will conform in all material respects to the description thereof in the
Prospectus.
(i) This Agreement has been duly authorized and validly executed and
delivered by the Company and constitutes a valid and legally binding
agreement of the Company, enforceable against the Company in accordance
with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws affecting
creditors' rights and remedies generally and to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law
or in equity) and except to the extent that rights to indemnification and
contribution with respect to liability in connection with Federal or state
securities laws may be unenforceable under such laws or the policies
underlying such laws.
(j) The execution and delivery of this Agreement by the Company, the
execution and delivery of the Indentures and the Securities by the Company,
the execution and delivery of each of the Transaction Documents by each of
the Company, Merger Sub and AMH (each a "Merger Party" and collectively,
the "Merger Parties"), to the extent each is a party thereto, the issuance
and sale of the Securities, the performance of this Agreement, the
Indentures and the Transaction Documents and the consummation of the
transactions contemplated by this Agreement and the other Transaction
Documents will not conflict with or result in a breach or violation of any
of the respective charters or bylaws of the Company, AMH or any of their
respective subsidiaries (each, a "Subsidiary" and collectively, the
"Subsidiaries") or any of the terms or provisions of, or constitute a
default or cause an acceleration of any obligation under or result in the
imposition or creation of (or the obligation to create or impose) any
security interest, mortgage, pledge, claim, lien, encumbrance or adverse
interest of any nature (each, a "Lien") with respect to, any of the
Transaction Documents or any other obligation, bond, agreement, note,
debenture, or other evidence of indebtedness, or any indenture, mortgage,
deed of trust or other agreement, lease or instrument to which the Company,
AMH or any of the Subsidiaries is a party or by which it or any of them is
bound, or to which any properties of the Company, AMH or any of the
Subsidiaries is or may be subject, or any order of any court or
governmental agency, body or official having jurisdiction over the Company,
AMH or any of the Subsidiaries or any of their properties, or violate or
conflict with any statute, rule or regulation or administrative regulation
or decree or court decree applicable to the Company, AMH or any of the
Subsidiaries, or any of their respective assets or properties where, in any
such instance, such conflict, breach, violation, default, acceleration of
indebtedness or Lien would have, singly or in the aggregate, a material
adverse effect or a prospective material adverse effect on the assets,
liabilities, results of operations or financial condition of the Company,
AMH and the Subsidiaries, taken as a whole ( a "Material Adverse Effect").
(k) No authorization, approval or consent or order of, or filing with,
any court or governmental body, agency or official is necessary in
connection with the transactions contemplated by this Agreement, except
such as may be required by the NASD or have been obtained and made under
the Act, the TIA or state securities or Blue Sky laws or regulations.
Neither the Company nor, to the best of the Company's knowledge, any of its
affiliates is presently doing business with the government of Cuba or with
any person or affiliate located in Cuba.
(l) The Securities have been approved for listing on the NYSE, subject to
official notice of issuance.
(m) The Company has been duly organized, is validly existing as a
corporation in good standing under the laws of the State of Nevada and has
the requisite power and authority to carry on its business as it is
currently being conducted, to own, lease and operate its properties and to
authorize the offering of the Securities, to execute, deliver and perform
this Agreement and to issue, sell and deliver the Securities, and is duly
qualified and is in good standing as a foreign corporation authorized to do
business in each jurisdiction where the operation, ownership or leasing of
property or the conduct of its business
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requires such qualification. AMH and each of the Subsidiaries of the
Company or of AMH that (i) directly or indirectly own or lease any interest
in any hospitals, healthcare facilities or medical office buildings, (ii)
directly or indirectly conduct any insurance activities or (iii) are
otherwise material to the Company or AMH, as the case may be (collectively,
the "Significant Subsidiaries") has been duly organized, is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and has the requisite power and authority to
carry on its business as it is currently being conducted and to own, lease
and operate its properties and each is duly qualified and is in good
standing as a foreign corporation authorized to do business in each
jurisdiction where the operation, ownership or leasing of property or the
conduct of its business requires such qualifications.
(n) All of the issued and outstanding shares of capital stock of, or
other ownership interests in, each of the Significant Subsidiaries have
been duly authorized and validly issued, and all of the shares of capital
stock of, or other ownership interests in, each of the Significant
Subsidiaries are owned, directly or through subsidiaries, by the Company or
AMH, as the case may be. All such shares of capital stock are fully paid
and nonassessable, and are owned free and clear of any Lien, except Liens
securing indebtedness under the New Credit Facility, and there are no
outstanding subscriptions, rights, warrants, options, calls, convertible or
exchangeable securities, commitments of sale, or Liens related to or
entitling any person to purchase or otherwise to acquire any shares of the
capital stock of, or other ownership interest in, any of the Subsidiaries,
except that shareholders of Australian Medical Enterprises, Ltd. ("AME")
have certain preemptive rights with respect to rights offerings by AME.
(o) None of the Company, AMH or the Subsidiaries is in violation of its
respective charter or bylaws or in default in the performance of any
obligation, bond, agreement, debenture, note or any other evidence of
indebtedness, or any indenture, mortgage, deed of trust or other contract,
lease or other instrument to which the Company, AMH or any of the
Subsidiaries is a party or by which any of them is bound, or to which any
of the property or assets of the Company, AMH or any of the Subsidiaries is
subject, except as would not have, singly or in the aggregate, a Material
Adverse Effect.
(p) There is no action, suit, proceeding or investigation before or by
any court, governmental agency or body, arbitration board or tribunal, or
governmental or private accrediting body, domestic or foreign, pending
against or affecting the Company, AMH, or any of the Subsidiaries, or any
of their respective assets or properties, which is required to be disclosed
in the Registration Statement or the Prospectus, or which could have,
singly or in the aggregate, a Material Adverse Effect, or which might
materially and adversely affect the Company's or any of its Subsidiaries'
performance of its obligations, as applicable, pursuant to this Agreement
(including, without limitation, the issuance of the Securities), the other
Transaction Documents or the transactions contemplated hereby and thereby,
and to the best of the Company's knowledge, after due inquiry, no such
action, suit, or proceeding is contemplated or threatened.
None of the Company, AMH or the Subsidiaries is subject to any judgment,
order, decree, rule or regulation of any court, governmental authority or
arbitration board or tribunal which has had or which can reasonably be
expected to have, a Material Adverse Effect.
(q) Except as could not reasonably be expected to have, singly or in the
aggregate, a Material Adverse Effect, none of the Company, AMH or the
Subsidiaries is in violation of any Federal, state or local laws or
regulations relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata), including, without
limitation, laws and regulations relating to emissions, discharges,
releases or threatened releases of toxic or hazardous substances, materials
or wastes, or petroleum and petroleum products ("Materials of Environmental
Concern"), or otherwise relating to the protection of human health and
safety, or the storage, disposal, transport or handling of Materials of
Environmental Concern (collectively, "Environmental Laws"), which violation
includes, but is not limited to, noncompliance with any permits or other
governmental authorizations; none of the Company, AMH or the Subsidiaries
has received any communication (written or oral), whether from a
governmental authority or otherwise,
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alleging any such violation or noncompliance, and there are no
circumstances, either past, present or that are reasonably foreseeable,
that may lead to such violation in the future; there is no pending or
threatened claim, action, investigation or notice (written or oral) by any
person or entity alleging potential liability for investigatory, cleanup,
or governmental responses costs, or natural resources or property damages,
or personal injuries, attorney's fees or penalties relating to (x) the
presence, or release into the environment, of any Material of Environmental
Concern at any location owned or operated by the Company, AMH or any of the
Subsidiaries, now or in the past, or (y) circumstances forming the basis of
any violation, or alleged violation, of any Environmental Law
(collectively, "Environmental Claims"); and there are no past or present
actions, activities, circumstances, conditions, events or incidents, that
could form the basis of any Environmental Claim against the Company, AMH or
any of the Subsidiaries or against any person or entity whose liability for
any Environmental Claim the Company, AMH or any of the Subsidiaries has
retained or assumed either contractually or by operation of law. In the
ordinary course of its business, the Company conducts a periodic review of
the effect of Environmental Laws on the business, operations and properties
of the Company and its Subsidiaries, in the course of which it identifies
and evaluates associated costs and liabilities (including, without
limitation, any capital or operating expenditures required for clean-up,
closure of properties or compliance with Environmental Laws or any permit,
license or approval, any related constraints on operating activities and
any potential liabilities to third parties); on the basis of such review,
the Company has reasonably concluded that such associated costs and
liabilities could not, singly or in the aggregate, have a Material Adverse
Effect.
(r) None of the Company, AMH or the Subsidiaries is in violation of any
Federal, state or local law relating to discrimination in the hiring,
promotion or pay of employees nor any applicable wage or hour laws that,
singly or in the aggregate, could have a Material Adverse Effect. There is
(A) no significant unfair labor practice complaint pending against the
Company, AMH or any of the Subsidiaries or, to the best knowledge of the
Company, threatened against any of them, before the National Labor
Relations Board or any state or local labor relations board, and no
significant grievance or significant arbitration proceeding arising out of
or under any collective bargaining agreement is so pending against the
Company, AMH or any of the Subsidiaries or, to the best knowledge of the
Company threatened against any of them, and (B) no labor dispute in which
the Company, AMH or any of the Subsidiaries is involved nor, to the best
knowledge of the Company, is any labor dispute imminent, other than routine
disciplinary and grievance matters. The Company, AMH and the Subsidiaries
are in compliance in all material respects with all presently applicable
provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the regulations and published interpretations
thereunder; no "reportable event" (as defined in ERISA and the regulations
and published interpretations thereunder) has occurred or is reasonably
expected to occur with respect to any "pension plan" (as defined in ERISA
and the regulations and published interpretations thereunder) established
or maintained by the Company, AMH or any of the Subsidiaries; the amount of
"unfunded benefit liabilities" (as defined in ERISA and the regulations and
published interpretations thereunder) under all "pension plans" does not
exceed $ ; none of the Company, AMH or the Subsidiaries
has incurred or expects to incur liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "pension plan" [in
excess of $ ] or (ii) Sections 4971, 4975, or 4980B of the
Internal Revenue Code of 1986, as amended (the "Code"); and each "pension
plan" established or maintained by the Company, AMH or any of the
Subsidiaries that is intended to be qualified under Section 401(a) of the
Code is so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which would cause the loss of such
qualification.
(s) Except as could not have, singly or in the aggregate, a Material
Adverse Effect, the Company, AMH and each of the Subsidiaries has good and
marketable title, free and clear of all Liens, to all property and assets
of the described in the Registration Statement as being owned by it and
such properties and assets are in good repair and suitable for use as so
described. All leases to which the Company, AMH or each of the Subsidiaries
is a party are valid and binding and no default has occurred or is
continuing thereunder which could result, singly or in the aggregate, in a
Material Adverse Effect,
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and the Company, AMH and each of the Subsidiaries enjoy peaceful and
undisturbed possession under all such leases to which any of them is a
party as lessee with such exceptions as do not interfere with the use made
by the Company, AMH or such Subsidiary.
(t) The Company, AMH, and each of the Subsidiaries maintain insurance at
least in such amounts and covering at least such risks as is adequate for
the conduct of their respective businesses and the value of their
respective properties and as is customary for companies engaged in similar
businesses in similar industries.
(u) The firms of accountants that have certified or shall certify the
applicable consolidated financial statements and supporting schedules and
the notes thereto of the Company and AMH filed or to be filed with the
Commission as part of the Registration Statement and the Prospectus are
independent public accountants with respect to the Company and its
Subsidiaries, and AMH and its Subsidiaries, respectively, as required by
the Act. The consolidated financial statements, together with related
schedules and notes, set forth or incorporated by reference in the
Prospectus and the Registration Statement, comply as to form in all
material respects with the requirements of the Act and fairly present the
consolidated financial position of the Company and its Subsidiaries and AMH
and its Subsidiaries, as the case may be, at the respective dates indicated
and the results of their operations and their cash flows for the respective
periods indicated, in accordance with generally accepted accounting
principles in the United States of America ("GAAP") consistently applied
throughout such periods and in accordance with Regulation S-X. The pro
forma financial statements contained in the Registration Statement have
been prepared in conformity with the standards set forth in Rule 11-02 of
Regulation S-X and on a basis consistent with such historical statements
and give effect to assumptions made on a reasonable basis and present
fairly the historical and proposed transactions contemplated by the
Prospectus and this Agreement. The Company's and AMH's ratios of earnings
to fixed charges (actual and pro forma) included in the Prospectus under
the captions "Prospectus Summary--Summary Unaudited Pro Forma Condensed
Combined Financial Data," "Pro Forma Financial Information," "Selected
Historical Financial Information of NME," "Selected Historical Financial
Information of AMH" and in Exhibit 12 to the Registration Statement have
been calculated in compliance with Item 503(d) of the Commission's
Regulation S-K. The other financial and statistical information and data
included or incorporated by reference in the Prospectus and in the
Registration Statement, historical and pro forma, are accurately presented
and prepared on a basis consistent with such financial statements and the
books and records of the Company.
(v) The projected amount of operating synergies and other cost reductions
resulting from the Merger included in the Registration Statement (i) is
within the coverage of Rule 175(b) under the Act, (ii) was determined by
the Company with a reasonable basis and in good faith and (iii) was
determined in accordance with Item 10 of the Commission's Regulation S-K.
The assumptions used in the determination of the amount of such projected
operating synergies and other cost reductions are all those the Company
believes are significant in projecting the amount of such synergies and
other cost reductions. The projected amount included in the Registration
Statement reflects a reasonable estimate of the amount of operating
synergies and other cost reductions resulting from the Merger.
Notwithstanding the foregoing, no assurance can be made as to the amount of
cost savings, if any, that actually will be realized.
(w) Except as contemplated by the Registration Statement and the
Prospectus, subsequent to the respective dates as of which information is
presented in the Registration Statement and the Prospectus and up to the
Closing Date (i) none of the Company, AMH or the Subsidiaries has incurred
any liabilities or obligations, direct or contingent, which are material to
the Company, AMH and the Subsidiaries, taken as a whole, or entered into
any transaction not in the ordinary course of business, (ii) there has been
no decision or judgment in the nature of litigation or arbitration that
could reasonably be expected to have a Material Adverse Effect, (iii) there
has been no dividend or distribution of any kind declared, paid or made by
the Company on any class of its capital stock and (iv) there has not been
any material adverse change, or any development which could involve a
material adverse change, in the results of
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operations, assets, liabilities or financial condition of the Company or
its Subsidiaries, taken as a whole, or AMH and its Subsidiaries, taken as a
whole (any of the items set forth in clauses (i), (ii), or (iii), above, a
"Material Adverse Change").
(x) All tax returns required to be filed by the Company, AMH or any of
the Subsidiaries in any jurisdiction have been filed and all taxes,
including withholding taxes, penalties and interest, assessments, fees and
other charges due or claimed to be due from such entities have been paid,
other than those being contested in good faith and for which adequate
reserves have been provided or those currently payable without penalty or
interest. All Tax Returns (as hereinafter defined) filed by the Company,
AMH and the Subsidiaries prior to the date hereof were complete and
accurate in all material respects. No material claim for assessment or
collection of Taxes is presently being asserted against the Company, AMH or
the Subsidiaries. Furthermore, none of the Company, AMH or the Subsidiaries
is a party to any pending action, proceeding or investigation by any
governmental authority for the assessment or collection of Taxes, nor does
the Company have knowledge of any such threatened action, proceeding or
investigation. No waivers of statutes of limitation in respect of any Tax
Returns have been given by or requested of the Company, AMH or any of the
Subsidiaries, nor has the Company, AMH or any of the Subsidiaries agreed to
any extension of time with respect to a Tax assessment or deficiency. No
material claim by any authority in a jurisdiction where the Company, AMH or
any of the Subsidiaries does not currently file a Tax Return is pending to
the effect that the Company, AMH or any of the Subsidiaries is or may be
subject to taxation by that jurisdiction. No Liens are presently imposed
upon or asserted against any of the Company's, AMH's or any of the
Subsidiaries' assets as a result of or in connection with any failure, or
alleged failure, to pay any Tax. As of the Closing Date, none of the
Company, AMH or the Subsidiaries will have any agreement, whether or not
written, providing for the payment of Tax liabilities or entitlement to
refunds with any other party. The Company, AMH and the Subsidiaries have
withheld and paid all Taxes required to be withheld in connection with any
amounts paid or owing to any employee, creditor, independent contractor or
other third party with respect to the business of the Company, AMH or the
Subsidiaries, as the case may be. The unpaid Taxes of the Company and its
Subsidiaries and AMH and its Subsidiaries do not exceed the reserve for Tax
liability (as opposed to any reserve for deferred Taxes established to
reflect timing differences between work and tax income) set forth on the
most recent balance sheet of the Company or AMH, respectively, as adjusted
for the passage of time through the date hereof in accordance with the past
custom and practice of the Company and AMH, respectively, in filing its Tax
Returns. For purposes of this Agreement, the terms "Tax" and "Taxes" shall
mean all federal, state, local or foreign income, payroll, employee
withholding, unemployment insurance, social security, sales, use, service
use, leasing use, excise, franchise, gross receipts, value added,
alternative or add-on minimum, estimated, occupation, real and personal
property, stamp, transfer, workers' compensation, severance, windfall
profits, environmental (including taxes under Section 59A of the Internal
Revenue Code of 1986, as amended), or other tax of the same or of a similar
nature, including any interest, penalty, or addition thereto, whether
disputed or not. The term "Tax Return" means any return, declaration,
report, form, claim for refund, or information return or statement relating
to Taxes or income subject to taxation, or any amendment thereto, and
including any schedule or attachment thereto.
(y) (i) Except as described in the Registration Statement or Prospectus
or as could not reasonably be expected to have a Material Adverse Effect,
each of the Company, AMH and the Subsidiaries has all certificates,
consents, exemptions, orders, permits, licenses, authorizations,
accreditations or other approvals or rights (each, an "Authorization") of
and from, and has made all declarations and filings with, all Federal,
state, local and other governmental authorities, all self-regulatory
organizations, all governmental and private accrediting bodies and all
courts and other tribunals, necessary or required to own, lease, license
and use its properties and assets and to conduct its business in the manner
described in the Prospectus, (ii) all such Authorizations are valid and in
full force and effect, except as could not have, singly or in the
aggregate, a Material Adverse Effect, (iii) the Company, AMH and the
Subsidiaries are in compliance in all material respects with the terms and
conditions of all such Authorizations and with the rules and regulations of
the regulatory authorities and governing bodies having jurisdiction with
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respect thereto and (iv) none of the Company, AMH or the Subsidiaries has
received any notice of proceedings relating to the revocation or
modification of any such Authorization.
(z) The Company, AMH and each of the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.
(aa) None of the Company, AMH, Merger Sub or any agent acting on their
respective behalf has taken or will take any action that is reasonably
likely to cause the issuance or sale of the Securities or the incurrence of
the indebtedness under the New Credit Facility to violate Regulation G, T,
U, or X of the Board of Governors of the Federal Reserve System, in each
case as in effect, on the date hereof.
(bb) None of the Company, AMH or the Significant Subsidiaries is (i) an
"investment company" or a company "controlled" by an investment company
within the meaning of the Investment Company Act of 1940, as amended, or
(ii) a "holding company" or a "subsidiary company" of a holding company, or
an "affiliate" thereof within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
(cc) Except as described in the Registration Statement or Prospectus,
none of the Company, AMH or the Subsidiaries, nor any director, officer,
agent, employee or other person associated with or acting on behalf of the
Company, AMH or any of the Subsidiaries, has used any corporate funds for
any unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity; made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
(dd) Each certificate signed by any officer of the Company and delivered
to the Underwriters or the Underwriters' Counsel shall be deemed to be a
representation and warranty by the Company to each Underwriter as to the
matters covered thereby.
(ee) The Company, Merger Sub and AMH (each, a "Merger Party" and,
collectively the "Merger Parties") have, to the extent each is or will be a
party thereto, all requisite corporate power and authority to execute,
deliver and perform their respective obligations under each of the
Transaction Documents; each of the Transaction Documents has been (or, with
respect to the New Credit Facility, at or prior to the Effective Time of
the Merger, will be) duly and validly authorized, executed and delivered by
the Merger Parties, to the extent each is a party thereto, and each
constitutes a valid and legally binding agreement of the Merger Party
enforceable against each Merger Party in accordance with its terms
(assuming due authorization, execution and delivery of each Transaction
Document by any other party thereto) except that enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity); except
as set forth in the Prospectus, no consent, approval, authorization or
order of any court or governmental agency or body is required for the
performance of any of the Transaction Documents by each of the Merger
Parties, to the extent each is a party thereto, or the consummation by each
of the Merger Parties of any of the transactions contemplated thereby,
except such as may be required and have been obtained, or upon
effectiveness of the Registration Statement, will have been obtained, under
the Act, the TIA or state securities or "Blue Sky" laws in connection with
the purchase and distribution of the Securities by the Underwriters; and
none of the Merger Parties is in default in the performance or observance
of any obligation, agreement, covenant or condition contained in any of the
Transaction Documents, which default would have a Material Adverse Effect.
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(ff) The Merger has been duly authorized by the Merger Parties and the
Merger has been approved by stockholders of AMH holding the requisite
number of shares required to approve the Merger; approval of the Merger by
the shareholders of the Company is not required; insofar as the Prospectus
contains summaries of the Merger Agreement and the Merger, such summaries
are in all material respects accurate.
(gg) Immediately after the consummation of the Merger and the
transactions contemplated by the Transaction Documents, the fair value and
present fair saleable value of the assets of the Company will exceed the
sum of its stated liabilities and identified contingent liabilities;
neither the Company nor AMH will be, after giving effect to the execution,
delivery and performance of the Transaction Documents, to the extent each
is a party thereto, and the consummation of the transactions contemplated
thereby, (i) left with unreasonably small capital with which to carry on
its business as it is proposed to be conducted, (ii) unable to pay its
debts (contingent or otherwise) as they mature or (iii) otherwise
insolvent.
(hh) The Company has delivered to the Underwriters a true and correct
copy of each of the Transaction Documents that have been executed and
delivered prior to the date of this Agreement and each other Transaction
Document in the form substantially as it will be executed and delivered on
or prior to the Closing Date, together with all related agreements and all
schedules and exhibits thereto, and there have been no amendments,
alterations, modifications or waivers of any of the provisions of any of
the Transaction Documents since their date of execution or from the form in
which it has been delivered to the Underwriters; there exists as of the
date hereof (after giving effect to the transactions contemplated by the
Transaction Documents) no event or condition which would constitute a
default or an event of default (in each case as defined in the New Credit
Facility) under the New Credit Facility and no event or condition which
would constitute a default or an event of default (in each case as defined
in each of the Transaction Documents) under any of the Transaction
Documents other than the New Credit Facility which would reasonably be
expected to result in a Material Adverse Effect or materially adversely
effect the ability of each of the Merger Parties to consummate the Merger
and the transactions contemplated by the Merger Agreement.
6. Indemnification.
(a) The Company agrees to indemnify and hold harmless (i) each of the
Underwriters and their respective affiliates, (ii) each person, if any, who
controls (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) any of the Underwriters or any of their respective affiliates
(any of the persons referred to in this clause (ii) being hereinafter
referred to as a "Controlling Person"), and (iii) each of the respective
officers, directors, partners, employees, representatives and agents of any
of the Underwriters or any Controlling Person, and each of their respective
officers, directors, partners, employees, representatives and agents (any
person referred to in clause (i), (ii) or (iii) of this Section 6(a) may
hereinafter be referred to as an "Indemnified Person") to the fullest
extent lawful, from and against any and all losses, claims, damages,
judgments, actions, costs, assessments, expenses and other liabilities
(collectively, "Liabilities"), including without limitation and as
incurred, reimbursement of all reasonable costs of investigating,
preparing, pursuing or defending any claim or action, or any investigation
or proceeding by any federal, state or local authority, regulatory body,
administrative agency, court or other governmental or quasi-governmental
body, commenced or threatened, including the reasonable fees and expenses
of counsel to any Indemnified Person, to the extent such Liabilities are
directly or indirectly caused by, related to, based upon or arising out of,
or in connection with, (A) any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement (or any
supplement or amendment thereto), or the Prospectus (including any
amendment or supplement thereto) or any preliminary prospectus, or any
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein (in the case
of the Prospectus, in light of the circumstances under which they were
made) not misleading, except insofar as such Liabilities are caused by an
untrue statement or omission or alleged untrue statement or omission that
is (x) made in reliance upon and in conformity with information relating to
any of the Underwriters furnished in writing to the Company by or on behalf
of the Underwriter through DLJ expressly for use
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in the Registration Statement (or any amendment or supplement thereto) or
the Prospectus (or any amendment or supplement thereto) or any preliminary
prospectus or (y) with respect to the Underwriter from whom the person
asserting the Liabilities purchased Securities, made in any preliminary
prospectus if a copy of the Prospectus (as amended or supplemented, if the
Company shall have furnished the Underwriters with such amendments or
supplements thereto on a timely basis) was not delivered by or on behalf of
such Underwriter to the person asserting the Liabilities, if required by
law to have been so delivered by the Underwriter seeking indemnification,
at or prior to the written confirmation of the sale of the Securities, and
it shall be finally determined by a court of competent jurisdiction, in a
judgment not subject to appeal or review, that the Prospectus (as so
amended or supplemented) would have completely corrected such untrue
statement or omission; or (B) any breach by the Company of any
representation or warranty or failure to comply with any of its agreements
contained herein. The foregoing indemnity shall be in addition to any
liability that the Company might otherwise have to any of the Underwriters
and such other Indemnified Persons. The Company shall notify you promptly
of the institution, threat or assertion of any claim, proceeding (including
any governmental investigation) or litigation in connection with the
matters addressed by this Agreement which involves the Company or an
Indemnified Person.
(b) In case any action or proceeding (for all purposes of this Section 6,
including any governmental or quasi-governmental investigation) shall be
brought or asserted against any of the Indemnified Persons with respect to
which indemnity under this Section 6 may be sought against the Company,
such Underwriter (or the Underwriter controlled by such Controlling Person)
promptly shall notify the Company in writing and the Company shall assume
the defense thereof, including the employment of counsel reasonably
satisfactory to such Underwriter and payment of all fees and expenses;
provided, that the delay or failure to give such notice shall not relieve
the Company from any liability that it may have on account of the indemnity
under this Section 6, unless and only to the extent that such delay or
omission materially adversely affects the ability of the Company to defend
or assume the defense of such action or proceeding. Upon receiving such
notice, the Company shall be entitled to participate in any such action or
proceeding and to assume, at its sole expense, the defense thereof, with
counsel reasonably satisfactory to such Indemnified Person (who shall not,
except with the consent of the Indemnified Person to be represented, be
counsel to the Company or any of the Subsidiaries) and, after written
notice from the Company to such Indemnified Person of its election so to
assume the defense thereof within five business days after receipt of the
notice from the Indemnified Person of such action or proceeding, the
Company shall not be liable to such Indemnified Person hereunder for legal
expenses of other counsel subsequently incurred by such Indemnified Person
in connection with the defense thereof, other than reasonable costs of
investigation, unless (i) the Company agrees in writing to pay such fees
and expenses, or (ii) the Company fails promptly to assume such defense or
fails to employ counsel reasonably satisfactory to such Indemnified Person,
or (iii) the named parties to any such action or proceeding (including any
impleaded parties) include both such Indemnified Person and the Company or
an affiliate of the Company, and that Indemnified Person shall have been
advised by counsel that either (x) there may be one or more legal defenses
available to such Indemnified Person that are different from or additional
to those available to the Company or such affiliate or (y) a conflict may
exist between such Indemnified Person and the Company or such affiliate. In
the event of any of clause (i), (ii) and (iii) of the immediately preceding
sentence, the Company shall not have the right to assume the defense
thereof on behalf of the Indemnified Person and such Indemnified Person
shall have the right to employ its own counsel in any such action and the
fees and expenses of such counsel shall be paid, as incurred, by the
Company, subject to repayment to the Company if it is ultimately determined
that an Indemnified Party is not entitled to indemnification hereunder, it
being understood, however, that the Company shall not, in connection with
any one such action or proceeding or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more
than one separate firm of attorneys (in addition to any local counsel) for
all of the Indemnified Persons which firm shall be designated in writing by
DLJ. The Company shall be not be liable for any settlement of any such
action or proceeding effected without the Company's written
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consent, which consent may not be unreasonably withheld, but if settled
with the written consent of the Company, the Company agrees to indemnify
and hold harmless any Indemnified Person from and against any loss or
liability by reason of such settlement. The Company shall not, without the
prior written consent of each Indemnified Person, settle or compromise or
consent to the entry of any judgment in or otherwise seek to terminate any
pending or threatened action, claim, suit, investigation or other
proceeding in respect of which any Indemnified Person is or could have been
a party and indemnification or contribution could have been sought
hereunder by such Indemnified Person, unless such settlement, compromise,
consent or termination includes an unconditional release of each
Indemnified Person from all liability on claims that are the subject matter
of such proceeding.
(c) Each of the Underwriters agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who
sign the Registration Statement, and any person controlling (within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act) the
Company, to the same extent as the foregoing indemnity from the Company to
each of the Indemnified Persons, but only with respect to claims and
actions based on information relating to such Underwriter furnished in
writing by or on behalf of such Underwriter through DLJ expressly for use
in the Registration Statement, Prospectus or preliminary prospectus, as
applicable. In case any action shall be brought against the Company, any of
its directors, any such officer, or any such controlling person based on
the Registration Statement, the Prospectus or any preliminary prospectus in
respect of which indemnity is sought against any Underwriter pursuant to
the foregoing sentence, the Underwriter shall have the rights and duties
given to the Company (except that if the Company shall have assumed the
defense thereof, such Underwriter shall not be required to do so, but may
employ separate counsel therein and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Underwriter), and the Company, its directors, any such officers, and each
such controlling person shall have the rights and duties given to the
Indemnified Person by Section 6(b) above.
(d) If the indemnification provided for in this Section 6 is finally
determined by a court of competent jurisdiction to be unavailable to an
Indemnified Person in respect of any Liabilities referred to herein, then
the Company, in lieu of indemnifying such Indemnified Person, shall
contribute to the amount paid or payable by such Indemnified Person as a
result of such Liabilities: (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and
the Indemnified Person on the other hand from the offering of the
Securities, or (ii) if the allocation provided by clause (i), above, is not
permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i), above,
but also the relative fault of the Company and the Indemnified Person in
connection with the actions, statements or omissions that resulted in such
Liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company, on the one hand, and any of the
Underwriters (and its related Indemnified Persons), on the other hand,
shall be deemed to be in the same proportion as the total proceeds from the
offering (net of underwriting discounts and commissions but before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by such Underwriter, in each case as set
forth in the Prospectus. The relative fault of the Company and the
Underwriter shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact related to
information supplied by the Company or the Underwriter and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The indemnity and
contribution obligations of the Company set forth herein shall be in
addition to any liability or obligation the Company may otherwise have to
any Indemnified Person.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 6(d) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, judgments, liabilities or expenses referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above,
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any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 6, none of the Underwriters (and
its related Indemnified Persons referred to in Section 6 above) shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the total underwriting discount applicable to the Securities purchased by
such Underwriter exceeds the amount of any damages or liabilities which such
Underwriter (and its related Indemnified Persons referred to in Section 6
above) has otherwise been required to pay or incur by reason of such untrue or
alleged untrue statement or omission or alleged omission or other indemnified
action or proceeding. Notwithstanding anything to the contrary contained
herein, no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute pursuant to this Section 6(d) are several in
proportion to the respective aggregate principal amount of Securities purchased
by each of the Underwriters hereunder and not joint.
7. Conditions of Underwriters' Obligations. The respective obligations of the
several Underwriters to purchase any Securities under this Agreement are
subject to the satisfaction or waiver by the several Underwriters of each of
the following conditions on the Closing Date:
(a) All the representations and warranties of the Company contained in
this Agreement shall be true and correct on the Closing Date and as of the
Effective Time of the Merger after giving effect to the transactions
contemplated by the Transaction Documents, with the same force and effect
as if made on and as of the Closing Date and as of the Effective Time of
the Merger, respectively. The Company and its Subsidiaries shall have
performed or complied with all of their obligations and agreements herein
contained and required to be performed or complied with by it at or prior
to the Closing Date.
(b) (i) The Registration Statement shall have become effective (or, if a
post-effective amendment is required to be filed pursuant to Rule 430A of
the Act, such post-effective amendment shall have become effective (or, if
any Securities are sold in reliance upon Rule 430A of the Act and no post-
effective amendment is so required to be filed, the Prospectus shall have
been timely filed with the Commission in accordance with Section 4(a)
hereof)) on the date of this Agreement or at such later date and time as
you may approve in writing, (ii) at the Closing Date, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been commenced or
shall be pending before or contemplated by the Commission and every request
for additional information on the part of the Commission shall have been
complied with in all respects, (iii) no stop order suspending the sale of
the Securities in any jurisdiction referred to in Section 4(i) shall have
been issued and no proceeding for that purpose shall have been commenced or
shall be pending or threatened, and (iv) since the effective date of the
Registration Statement, there shall not have occurred any event required to
be set forth in an amendment or supplement to the Registration Statement or
Prospectus that has not been set forth, and there shall not have been any
document required to be filed under the Exchange Act that upon such filing
would be deemed to be incorporated by reference in the Prospectus that has
not been so filed.
(c) No action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any governmental
agency, body or official which would, as of the Closing Date, prevent the
issuance of the Securities; and no injunction, restraining order or order
of any nature by any Federal or state court shall have been issued as of
the Closing Date which would prevent the issuance of the Securities.
Subsequent to the execution and delivery of this Agreement and prior to the
Closing Date, there shall not have been any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of any
review for a possible change that does not indicate the direction of the
possible change, in the rating accorded any of the Company's securities by
any "nationally recognized statistical rating organization," as such term
is defined for purposes of Rule 436(g)(2) of the Act.
(d) (i) Since the earlier of the date hereof or the dates as of which
information is given in the Registration Statement and the Prospectus,
there shall not have been any Material Adverse Change, (ii) since the date
of the latest balance sheet included in the Registration Statement and the
Prospectus,
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there shall not have been any material adverse change, or development
involving a prospective material adverse change, in the capital stock or
debt, of the Company, AMH and the Subsidiaries, taken as a whole, and (iii)
the Company, AMH and the Subsidiaries shall have no liability or
obligation, direct or contingent, that is material to the Company, AMH and
the Subsidiaries, taken as a whole, and which is not disclosed in the
Registration Statement and the Prospectus.
(e) You shall have received a certificate of the Company, dated the
Closing Date, executed on behalf of the Company, by an executive officer
and a financial officer of the Company satisfactory to you confirming, as
of the Closing Date, the matters set forth in paragraphs (a), (b), (c) and
(d) of this Section 7.
(f) On the Closing Date, you shall have received:
(1) an opinion (satisfactory to you and your counsel), dated the
Closing Date, of Skadden, Arps, Slate, Meagher & Flom, counsel for the
Company ("Skadden, Arps"), to the effect that:
(i) the Registration Statement was declared effective in
compliance with the Act; any required filing of the Prospectus, and
any amendments or supplements thereto, pursuant to Rule 424(b) has
been sent for filing in the manner and within the time period
required by Rule 424(b); and, to the best of such counsel's
knowledge, no stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued and no
proceedings therefor have been instituted or are pending or
contemplated under the Act; and the Indentures have been qualified
under the TIA;
(ii) at the time it became effective and on the Closing Date, the
Registration Statement, including all documents incorporated by
reference therein (except for financial statements, the notes
thereto and related schedules and other financial and statistical
data included therein and the Statements of Eligibility and
Qualification of the Trustees on Forms T-l (the "Forms T-1"), as to
which no opinion need be expressed), complied as to form in all
material respects with the Act, the Exchange Act and the TIA;
(iii) each document filed pursuant to the Exchange Act and
incorporated by reference in the Prospectus, at the time it was
filed or last amended (except for financial statements, the notes
thereto and related schedules and other financial, numerical,
statistical or accounting data included or incorporated by reference
therein or omitted therefrom, as to which such counsel need express
no opinion), complied as to form in all material respects to the
applicable requirements of the Exchange Act;
(iv) the Company has full power and authority to execute, deliver
and perform this Agreement and the Company has full power and
authority to authorize, issue and sell the Securities as
contemplated by this Agreement; this Agreement has been duly
authorized, executed and delivered by the Company, and the
Securities and the Indentures have been duly authorized, executed
and delivered by the Company;
(v) when authenticated in accordance with the terms of the
Indentures and delivered and paid for by the Underwriters in
accordance with the terms of this Agreement, the Securities will
constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their respective
terms and entitled to the benefits of their respective Indenture,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law
or in equity) and except to the extent that a waiver of rights under
any usury laws may be unenforceable;
(vi) the Indentures, assuming due authorization, execution and
delivery thereof by the applicable Trustee, each constitute a valid
and legally binding agreement of the Company, enforceable against
the Company in accordance with their terms, subject to applicable
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bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies
generally and to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity) and
except to the extent that a waiver of rights under any usury laws
may be unenforceable;
(vii) the Securities and the Indentures conform in all material
respects to the descriptions thereof contained in the Prospectus;
(viii) the Company and each of its Significant Subsidiaries (as
defined under the Commission's Regulation S-X) is a duly organized
and validly existing corporation in good standing under the laws of
its jurisdiction of organization, has the requisite corporate power
and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and
the Prospectus, and, to the extent each is a party thereto, to
execute, deliver and perform its obligations pursuant to the
Indentures and this Agreement, and is duly qualified as a foreign
corporation and in good standing in each jurisdiction where the
ownership, leasing or operation of property or the conduct of its
business requires such qualification, except where the failure so to
be qualified could not have, singly or in the aggregate, a Material
Adverse Effect;
(ix) neither the Company nor any of its Significant Subsidiaries
is (a) an "investment company" or a company "controlled" by an
investment company within the meaning of the Investment Company Act
of 1940, as amended, or (b) a "holding company" or a "subsidiary
company" of a holding company, or an "affiliate" thereof within the
meaning of the Public Utility Holding Company Act of 1935, as
amended;
(x) the descriptions in the Registration Statement and the
Prospectus of statutes, legal and governmental proceedings,
contracts and other documents, other than the descriptions of such
matters in the Registration Statement and the Prospectus under the
captions set forth in subsection (f)(3)(i) of this Section 7, are
accurate in all material respects as of the dates thereof and such
counsel does not know of any legal or governmental proceedings
required to be described in the Registration Statement or Prospectus
which are not described as required or of any contracts or documents
of a character required to be described in the Registration
Statement or Prospectus (or required to be filed under the Exchange
Act if upon such filing they would be incorporated by reference
therein) or to be filed as exhibits to the Registration Statement
which are not described and filed as required; it being understood
that such counsel need express no opinion as to the financial
statements, notes or schedules or other financial data included
therein or those parts of the Registration Statement that constitute
the Forms T-1);
(xi) no consent, approval, authorization or order of any United
States governmental agency or body is required for the consummation
by the Company of the transactions contemplated by this Agreement
and the Indentures in connection with the sale of the Securities,
except such as may be required under the Act, the TIA or state
securities or "blue sky" laws, provided, that the opinion set forth
in this paragraph may be limited to those statutes, laws and
regulations currently in effect which, in the experience of such
counsel, are ordinarily applicable to transactions of the type
contemplated by this Agreement and the Indentures;
(xii) the execution and delivery by the Company of this Agreement
and the Indentures and the issuance and sale of the Securities to
you as contemplated thereby and the performance of its obligations
pursuant to this Agreement and the Indentures will not conflict with
or result in a breach or violation of any of the terms or provisions
of, or constitute a default under, (a) any of the respective
charters or bylaws of the Company or any of its Significant
Subsidiaries, (b) assuming compliance with all applicable securities
laws and "blue sky" laws of those jurisdictions in which the
Securities may be offered or sold, any existing applicable statute,
rule
18
<PAGE>
or regulation or any order of any court or governmental agency or
body having jurisdiction over the Company or any of its Significant
Subsidiaries or any of their properties or (c) any agreement or
instrument to which the Company or any of its Subsidiaries is a
party and that has been specifically identified to us by the Company
as being material to the Company and its Subsidiaries taken as a
whole and set forth on Schedule hereto; provided that the
opinion expressed in clause (b) is limited to those statutes, rules
or regulations which, in the experience of such counsel, are
normally applicable to transactions of the type contemplated by this
Agreement in connection with the sale of the Securities;
(xiii) to the best of such counsel's knowledge, there is no
current, pending or threatened action, suit or proceeding before any
court or governmental agency, authority or body or any arbitrator
involving the Company or any of its Subsidiaries or to which any of
their respective property is subject of a character required to be
disclosed in the Registration Statement which is not adequately
disclosed in the Prospectus;
(xiv) all of the issued and outstanding shares of capital stock
of, or other ownership interests in, each Significant Subsidiary of
the Company have been duly and validly authorized and issued, and
the shares of capital stock of, or other ownership interests in,
each such subsidiary are owned of record, directly or through
subsidiaries, by the Company, are fully paid and nonassessable, and
to the best knowledge of such counsel are owned free and clear of
any Lien;
(xv) the Company and its Subsidiaries, to the extent each is a
party thereto, have full power and authority to execute, deliver and
perform the Merger Agreement;
(xvi) the Merger Agreement and the New Credit Facility conform in
all material respects to the descriptions thereof contained in the
Prospectus and are valid, duly authorized and enforceable agreements
against the Merger Parties, to the extent each is a party thereto;
and
(xvii) the approval of the Merger by the shareholders of the
Company is not required.
(2) In giving their opinion required by subsection (f)(l) of this
Section 7, such counsel (i) may state that such opinions are limited to
matters governed by the Federal laws of the United States of America,
the laws of the State of New York, the laws of the State of Delaware
and the laws of the State of Nevada, and (ii) shall state that (a) such
counsel has acted as counsel to the Company in connection with the
preparation of the Registration Statement and (b) such counsel has
participated in conferences with officers and other representatives of
the Company and AMH, representatives of the independent public
accountants for the Company and AMH, your representatives and your
counsel at which the contents of the Registration Statement and the
Prospectus and related matters were discussed and, although such
counsel is not passing upon and does not assume any responsibility for,
the accuracy, completeness or fairness of the statements contained in
the Registration Statement or the Prospectus on the basis of the
foregoing, no fact has come to the attention of such counsel that leads
it to believe that the Registration Statement, at the time it became
effective, contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus, as
of its date and as of the Closing Date, contained an untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, it being
understood that such counsel is not expressing any opinion or belief as
to the financial statements, schedules and other financial or
statistical data included in or excluded from the Registration
Statement or the Prospectus, or the Statements of Eligibility and
Qualifications of the Trustees on Form T-1.
19
<PAGE>
In rendering the foregoing opinions, Skadden, Arps may rely as to
matters of Nevada law on the opinion of Woodburn & Wedge, Nevada
counsel to the Company, or such other counsel as is reasonably
satisfactory to the Underwriters' Counsel.
(3) an opinion (satisfactory to you and Underwriters' Counsel), dated
the Closing Date, of , regulatory counsel for the Company,
to the effect that:
(i) the descriptions in the Registration Statement and the
Prospectus of statutes, legal and governmental proceedings,
contracts and other documents and regulatory matters described in
the Prospectus under the captions "Risk Factors--Limits on
Reimbursement," "-- Extensive Regulation," "--Healthcare Reform
Legislation," "Healthcare Industry Overview," "Business--Medicare,
Medicaid and other Revenues," and "--Healthcare Regulation and
Licensing," and in the Company's Annual Report on Form 10-K for the
fiscal year ended May 31, 1994 under the captions "Medicare,
Medicaid and Other Revenues" and "Health Care Reform, Regulation,
Licensing and Insurance" insofar as such statements constitute
summaries of legal matters, documents or proceedings referred to
therein are accurate in all material respects and fairly present the
information shown as of the dates thereof; and
(ii) each of the Company and its Subsidiaries has such
Authorizations from all regulatory or governmental officials, bodies
and tribunals as are necessary to own, lease and operate its
respective properties and to conduct its business in the manner
described in the Prospectus.
(4) In giving their opinion required by subsection f(3) of this
Section 7, such counsel shall state that no fact has come to the
attention of such counsel that leads it to believe that the
descriptions of statutes, legal and governmental proceedings, contracts
and other documents and regulatory matters described in the
Registration Statement and the Prospectus under the captions set forth
in subsection (f)(3)(i) of this Section 7 contained an untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(g) You shall have received an opinion, dated the Closing Date, of Latham
& Watkins, counsel for the Underwriters, in form and substance reasonably
satisfactory to you.
(h) You shall have received each of the opinions required to be delivered
under any of the other Transaction Documents, together with appropriate
reliance letters addressed to the Underwriters.
(i) You shall have received letters on and as of the date hereof as well
as on and as of the Closing Date, in the latter case constituting an
affirmation of the statements set forth in the earlier letters, in form and
substance satisfactory to you, from KPMG Peat Marwick LLP and Price
Waterhouse LLP, independent public accountants to the Company and AMH,
respectively, with respect to the financial statements and certain
financial information contained in the Registration Statement and the
Prospectus as you shall reasonably require.
(j) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Securities, the
Registration Statement and the Prospectus, and all other legal matters
relating to this Agreement and the transactions contemplated hereby shall
be reasonably satisfactory in all respects to Latham & Watkins, and such
counsel shall have been furnished with such documents and opinions, in
addition to those set forth above, as they may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in
this Section 7, in order to evidence the accuracy, completeness and
satisfaction in all material respects of any of the representations,
warranties or conditions herein contained and to render the opinion
referred to in Section 7(g).
(k) The Company shall not have failed at or prior to the Closing Date to
perform or comply with any of the agreements herein contained and required
to be performed or complied with by the Company at or prior to the Closing
Date.
20
<PAGE>
(l) There shall have been no amendments, alterations, modifications, or
waivers of any provisions of the Transaction Documents since the date of
the execution and delivery thereof by the parties thereto other than those
which are disclosed in the Registration Statement or the Prospectus or any
supplement thereto or which under the Act are not required to be disclosed
in the Prospectus or any supplement thereto and which have been disclosed
to the Underwriters prior to the date hereof.
(m) Each of the Merger Parties shall, to the extent each is a party
thereto, have complied in all respects with all agreements and covenants in
the Transaction Documents and performed all conditions specified therein
that the terms thereof require to be complied with or performed at or prior
to the Effective Time of the Merger, except to the extent that such
compliance or performance has been waived by the other parties to the
applicable Transaction Documents.
(n) The certificate of merger with respect to the Merger shall have been
filed with the Secretary of State of the State of Delaware and shall have
become effective, the Merger shall have occurred and all other transactions
contemplated by the Transaction Documents (other than the closing of the
offering and sale of the Securities under this Agreement) to be consummated
at or prior to the Effective Time of the Merger shall have been consummated
prior to or simultaneously with the consummation of the purchase and sale
of the Securities hereunder.
(o) Prior to or concurrently with the purchase and sale of the Securities
hereunder, the Company shall have entered into the New Credit Facility and
satisfied all conditions to borrowing thereunder and you shall have
received counterparts, conformed as executed, thereof. The Lenders under
the New Credit Facility shall have indicated to you that all such
conditions have been satisfied and that they are prepared to fund term
loans in the amount of $ and revolving loans in the amount of
$ .
(p) Except as is disclosed to the Underwriters in writing, the
representations and warranties of the Company set forth in the Transaction
Documents shall be true, accurate and complete in all respects.
(q) On or before the Closing Date, the Underwriters and Latham & Watkins,
counsel for the Underwriters, shall have received such further documents,
opinions, certificates and schedules or instruments relating to the
business, corporate, legal and financial affairs of each of the Merger
Parties as they shall have heretofore reasonably requested.
(r) Prior to the purchase and sale of the Securities hereunder, the
Company's tender offers to purchase for cash any and all of the Company's
outstanding Medium Term Notes, with maturities ranging through 1997 and 7 %
unsecured Notes due 1997 (the "NME Tender Offers") and the Company's tender
offers to purchase for cash any and all of the 11% Senior Notes due 2000,
9% Senior Subordinated Notes due 2006, 13% Senior Subordinated Notes due
2001 and 15% Junior Subordinated Debentures due 2005 of American Medical
International, Inc. ("AMI") (collectively, the "AMI Post 1991 Debt
Securities") and the related consent solicitations (collectively, the "AMI
Post 1991 Debt Securities Tender Offers") and the Company's tender offers
(the "AMI Swiss Bonds Tender Offers" and, together with the AMI Post 1991
Debt Securities Tender Offers, the "AMI Tender Offers") to purchase for
cash any and all of the 6% Dual Currency Bonds due 1997 and the 5% Swiss
Franc Bonds due 1996 of AMI (collectively, the "AMI Swiss Bonds") shall
have expired, the Company shall have accepted for payment all such
securities validly tendered pursuant to such tender offers and each of the
indentures governing the AMI Post 1991 Debt Securities shall have been
amended as contemplated by the applicable offer to purchase and consent
solicitation; immediately after the Effective Time of the Merger, the
Company shall have assigned its rights and obligations to purchase the AMI
Post 1991 Debt Securities and the AMI Swiss Bonds under the AMI Tender
Offers to AMI and transferred to AMI, from borrowings under the New Credit
Facility, the amount of funds necessary to consummate such AMI Tender
Offers and the Company and AMI shall have made provisions satisfactory to
the Underwriters so that the NME Tender Offers and the AMI Tender Offers,
respectively, are consummated as soon as practicable following the Closing
Date. You shall have received evidence satisfactory to you that the Company
has accepted for payment all securities validly tendered pursuant to the
NME Tender Offers and the AMI Tender Offers, the indentures governing the
AMI Post 1991
21
<PAGE>
Debt Securities have been amended pursuant to the applicable offer to
purchase and consent solicitation, the Company has assigned to AMI its
rights and obligations to purchase the AMI Post 1991 Debt Securities and
the AMI Swiss Bonds under the AMI Tender Offers, and the Company and AMI
will consummate the NME Tender Offers and the AMI Tender Offers,
respectively, as soon as practicable following the Closing Date.
(s) Prior to or concurrently with the purchase and sale of the Securities
hereunder, AMI shall have mailed redemption notices with respect to all of
its outstanding 11% Senior Notes due 2015 and 9% Convertible Debentures due
2001 and you shall have received evidence satisfactory to you that such
redemption notices have been so mailed by AMI.
8. Effective Date of Agreement, Default and Termination. This Agreement shall
become effective upon the later of (i) the execution and delivery of this
Agreement by the parties hereto, (ii) unless the Company intends to rely on
Rule 430A of the Act, the effectiveness of the Registration Statement, and
(iii) if the Company intends to rely on Rule 430A of the Act, the earlier of
the effectiveness of a post-effective amendment filed in compliance with Rule
430A of the Act or the filing of a final prospectus pursuant to Rule 424(b).
This Agreement may be terminated at any time on or prior to the Closing Date
by you by notice to the Company if any of the following has occurred: (i)
subsequent to the date the Registration Statement is declared effective or the
date of this Agreement, any Material Adverse Change which, in your judgment,
impairs the investment quality of the Securities, (ii) any outbreak or
escalation of hostilities or other national or international calamity or crisis
or material adverse change in the financial markets of the United States or
elsewhere, or any other substantial national or international calamity or
emergency if the effect of such outbreak, escalation, calamity, crisis or
emergency would, in your judgment make it impracticable or inadvisable to
market the Securities or to enforce contracts for the sale of the Securities,
(iii) any suspension or limitation of trading generally in securities on the
New York, American or Pacific Stock Exchanges, the National Association of
Securities Dealers Automated Quotation National Market, or the over-the-counter
markets or any setting of minimum prices for trading on such exchanges or
markets, (iv) any declaration of a general banking moratorium by either Federal
or New York authorities, (v) the taking of any action by any Federal, state or
local government or agency in respect of its monetary or fiscal affairs that in
your judgment has a material adverse effect on the financial markets in the
United States, and would, in your judgment, make it impracticable or
inadvisable to market the Securities or to enforce contracts for the sale of
the Securities, (vi) any securities of the Company or any of its Subsidiaries
shall have been downgraded or placed on any "watch list" for possible
downgrading or reviewed for a possible change that does not indicate the
direction of the possible change by any "nationally recognized statistical
rating organization," as such term is defined for purposes of Rule 436(g)(2) of
the Act, or (vii) the enactment, publication, decree or other promulgation of
any Federal or state statute, regulation, or rule or order of any court or
other governmental authority which in your judgment could have a Material
Adverse Effect.
If this Agreement shall be terminated by you pursuant to clause (i), (vi) or
(vii) of the second paragraph of this Section 8 or because of the failure or
refusal on the part of the Company to comply with the terms or to fulfill any
of the conditions of this Agreement, the Company agrees to reimburse you for
all reasonable out-of-pocket expenses (including the reasonable fees and
disbursements of counsel) incurred by you. Notwithstanding any termination of
this Agreement, the Company shall be liable for all expenses which it has
agreed to pay pursuant to Section 4(f) hereof. If this Agreement is terminated
pursuant to this Section 8, such termination shall be without liability of any
Underwriter to the Company or any of its Subsidiaries.
If on the Closing Date any of the Underwriters shall fail or refuse to
purchase the Securities which it has agreed to purchase hereunder on such date,
and the aggregate principal amount of such Securities that such defaulting
Underwriter or Underwriters, as the case may be, agreed but failed or refused
to purchase does not exceed 10% of the total principal amount of such
Securities to be purchased on such date by all Underwriters, each non-
defaulting Underwriter shall be obligated severally, in the proportion which
the
22
<PAGE>
amount of Securities set forth opposite its name in Schedule I and Schedule II,
respectively, hereto bears to the aggregate principal amount of Securities
which all the non-defaulting Underwriters, as the case may be, have agreed to
purchase, or in such other proportion as you (at your option) may specify, to
purchase the Securities that such defaulting Underwriter or Underwriters, as
the case may be, agreed but failed or refused to purchase on such date;
provided that in no event shall the aggregate principal amount of Securities
that any Underwriter has agreed to purchase pursuant to Section 2 hereof be
increased pursuant to this Section 8 by an amount in excess of one-ninth of
such principal amount of Securities without the written consent of such
Underwriter. If, on the Closing Date any of the Underwriters shall fail or
refuse to purchase the Securities, as the case may be, and the total principal
amount of Securities with respect to which such default occurs exceeds 10% of
the total amount of Securities to be purchased on such date by all Underwriters
and arrangements satisfactory to you and the Company for the purchase of such
Securities are not made within 48 hours after such default, this Agreement
shall terminate without liability on the part of the non-defaulting
Underwriters and the Company, except as otherwise provided in this Section 8.
In any such case that does not result in termination of this Agreement, either
you or the Company may postpone the Closing Date for not longer than seven (7)
days, in order that the required changes, if any, in the Registration Statement
and the Prospectus or any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve a defaulting Underwriter
from liability in respect of any default of any such Underwriter under this
Agreement.
9. Notices. Notices given pursuant to any provision of this Agreement shall
be addressed as follows: (a) if to the Company, to it at 2700 Colorado Avenue,
Santa Monica, California 90404, Attention: Treasurer, with copies to Attention:
General Counsel and to Skadden, Arps, Slate, Meagher & Flom, 300 South Grand
Avenue, Suite 3400, Los Angeles, California 90071, Attention: Thomas C. Janson,
Jr. and (b) if to any Underwriter, to Donaldson, Lufkin & Jenrette Securities
Corporation, 140 Broadway, New York, New York 10005, Attention: Syndicate
Department, and, in each case, with a copy to Latham & Watkins, 855 Third
Avenue, Suite 1000, New York, New York 10022, Attention: Kirk A. Davenport,
Esq., or in any case to such other address as the person to be notified may
have requested in writing.
10. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK AS APPLIED TO
CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY HEREBY IRREVOCABLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL AND NEW YORK STATE COURTS
LOCATED IN THE CITY OF NEW YORK IN CONNECTION WITH ANY SUIT, ACTION OR
PROCEEDING RELATED TO THIS AGREEMENT OR ANY OF THE MATTERS CONTEMPLATED HEREBY,
IRREVOCABLY WAIVES ANY DEFENSE OF LACK OF PERSONAL JURISDICTION AND IRREVOCABLY
AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING MAY BE
HEARD AND DETERMINED IN ANY SUCH COURT. THE COMPANY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
11. Severability. Any determination that any provision of this Agreement may
be, or is, unenforceable shall not affect the enforceability of the remainder
of this Agreement.
12. Successors. Except as otherwise provided, this Agreement has been and is
made solely for the benefit of and shall be binding upon the Company, the
Underwriters, any Indemnified Person referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement,
and no other person shall acquire or have any right under or by virtue of this
Agreement. The terms "successors and assigns" shall not include a purchaser of
any of the Securities from any of the Underwriters merely because of such
purchase.
23
<PAGE>
13. Certain Definitions. For purposes of this Agreement, (a) "business day"
means any day on which the NYSE, Inc. is open for trading and (b) "subsidiary"
has the meaning set forth in Rule 405 of the Act.
14. Counterparts. This Agreement may be executed in one or more counterparts
and, if executed in one or more counterparts, the executed counterparts shall
each be deemed to be an original, not all such counterparts shall together
constitute one and the same instrument.
15. Headings. The headings herein are inserted for convenience of reference
only and are not intended to be part of, or to effect the meaning or
interpretation of, this Agreement.
16. Survival. The indemnities and contribution provisions and the other
agreements, representations and warranties of the Company, its officers and
directors and of the Underwriters set forth in or made pursuant to this
Agreement shall remain operative and in full force and effect, and will survive
delivery of and payment for the Securities, regardless of (i) any
investigation, or statement as to the results thereof, made by or on behalf of
any of the Underwriters or by or on behalf of the Company, the officers or
directors of the Company or any controlling person of the Company, (ii)
acceptance of the Securities and payment for them hereunder and (iii)
termination of this Agreement.
This Agreement may be signed in various counterparts which together shall
constitute one and the same instrument. Please confirm that the foregoing
correctly sets forth the agreement among the Company and you.
Very truly yours,
NATIONAL MEDICAL ENTERPRISES, INC.
By:
-----------------------------------
Name:
Title:
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
MORGAN STANLEY & CO. INCORPORATED
SALOMON BROTHERS INC
J.P. MORGAN SECURITIES INC.
BT SECURITIES CORPORATION
SMITH BARNEY INC.
BA SECURITIES, INC.
Acting on behalf of themselves
By Donaldson, Lufkin & Jenrette
Securities Corporation
By:
----------------------------------------
Name:
Title:
24
<PAGE>
SCHEDULE I
SENIOR NOTES
<TABLE>
<CAPTION>
PRINCIPAL PERCENTAGE
UNDERWRITER AMOUNT OF TOTAL
- ----------- --------- ----------
<S> <C> <C>
Donaldson, Lufkin & Jenrette Securities Corporation........ $ $
Merrill Lynch, Pierce, Fenner & Smith
Incorporated......................................
Morgan Stanley & Co. Incorporated..........................
Salomon Brothers Inc.......................................
J.P. Morgan Securities Inc.................................
BT Securities Corporation..................................
Smith Barney Inc...........................................
BA Securities, Inc.........................................
-------- --------
Total.................................................... $ $
======== ========
</TABLE>
25
<PAGE>
SCHEDULE II
SENIOR SUBORDINATED NOTES
<TABLE>
<CAPTION>
PRINCIPAL PERCENTAGE
UNDERWRITER AMOUNT OF TOTAL
- ----------- --------- ----------
<S> <C> <C>
Donaldson, Lufkin & Jenrette Securities Corporation........ $ $
Merrill Lynch, Pierce, Fenner & Smith
Incorporated......................................
Morgan Stanley & Co. Incorporated..........................
Salomon Brothers Inc.......................................
J.P. Morgan Securities Inc.................................
BT Securities Corporation..................................
Smith Barney Inc...........................................
BA Securities, Inc.........................................
-------- --------
Total.................................................... $ $
======== ========
</TABLE>
26
<PAGE>
EXHIBIT 4.1
================================================================================
NATIONAL MEDICAL ENTERPRISES, INC.
----------------------------
$300,000,000
___ SENIOR NOTES due 2002
----------------------------
INDENTURE
Dated as of March ___, 1995
----------------------------
----------------------------
THE BANK OF NEW YORK
----------------------------
as Trustee
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1 - DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions............................................ 1
Section 1.02. Other Definitions...................................... 13
Section 1.03. Incorporation by Reference of TIA...................... 14
Section 1.04. Rules of Construction.................................. 14
ARTICLE 2 - THE SECURITIES
Section 2.01. Form and Dating........................................ 15
Section 2.02. Execution and Authentication........................... 15
Section 2.03. Registrar and Paying Agent............................. 16
Section 2.04. Paying Agent to Hold Money in Trust.................... 16
Section 2.05. Holder Lists........................................... 17
Section 2.06. Transfer and Exchange.................................. 17
Section 2.07. Replacement Securities................................. 17
Section 2.08. Outstanding Securities................................. 18
Section 2.09. Treasury Securities.................................... 18
Section 2.10. Temporary Securities................................... 18
Section 2.11. Cancellation........................................... 19
Section 2.12. Defaulted Interest..................................... 19
Section 2.13. Record Date............................................ 19
Section 2.14. CUSIP Number........................................... 19
Section 2.15. Offer to Purchase By Application of
Excess Proceeds........................................ 20
ARTICLE 3 - COVENANTS
Section 3.01. Payment of Securities.................................. 22
Section 3.02. Maintenance of Office or Agency........................ 22
Section 3.03. Commission Reports..................................... 23
Section 3.04. Compliance Certificate................................. 24
Section 3.05 Taxes.................................................. 25
Section 3.06. Stay, Extension and Usury Laws......................... 25
Section 3.07. Limitations on Restricted Payments..................... 25
Section 3.08. Limitations on Dividends and Other Payment
Restrictions Affecting Subsidiaries.................... 28
Section 3.09. Limitations on Incurrence of Indebtedness and
Issuance of Preferred Stock............................ 29
Section 3.10. Asset Sales............................................ 31
Section 3.11. Limitations on Transactions with Affiliates............ 32
</TABLE>
i
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<TABLE>
<CAPTION>
Page
<S> <C>
Section 3.12. Limitations on Liens................................... 33
Section 3.13. Change of Control...................................... 33
Section 3.14. Corporate Existence.................................... 35
Section 3.15. Line of Business....................................... 35
Section 3.16. Limitations on Issuances of Guarantees of
Indebtedness by Subsidiaries........................... 35
Section 3.17. No Amendment to Subordination Provisions of
Senior Subordinated Note Indenture..................... 36
ARTICLE 4 - SUCCESSORS
Section 4.01. Limitations On Mergers, Consolidations or
Sales of Assets........................................ 36
Section 4.02. Successor Corporation Substituted...................... 37
ARTICLE 5 - DEFAULTS AND REMEDIES
Section 5.01. Events of Default...................................... 37
Section 5.02. Acceleration........................................... 40
Section 5.03. Other Remedies......................................... 40
Section 5.04. Waiver of Past Defaults................................ 40
Section 5.05. Control by Majority.................................... 40
Section 5.06. Limitation on Suits.................................... 41
Section 5.07. Rights of Holders to Receive Payment................... 41
Section 5.08. Collection Suit by Trustee............................. 41
Section 5.09. Trustee May File Proofs of Claim....................... 42
Section 5.10. Priorities............................................. 42
Section 5.11. Undertaking for Costs.................................. 43
ARTICLE 6 - TRUSTEE
Section 6.01. Duties of Trustee...................................... 43
Section 6.02. Rights of Trustee...................................... 44
Section 6.03. Individual Rights of Trustee........................... 45
Section 6.04. Trustee's Disclaimer................................... 45
Section 6.05. Notice of Defaults..................................... 45
Section 6.06. Reports by Trustee to Holders.......................... 45
Section 6.07. Compensation and Indemnity............................. 46
Section 6.08. Replacement of Trustee................................. 46
Section 6.09. Successor Trustee or Agent by Merger, etc.............. 47
Section 6.10. Eligibility; Disqualification.......................... 48
Section 6.11. Preferential Collection of Claims Against
Company................................................ 48
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 7 - DISCHARGE OF INDENTURE
Section 7.01. Defeasance and Discharge of this
Indenture and the Securities........................... 48
Section 7.02. Legal Defeasance and Discharge......................... 48
Section 7.03. Covenant Defeasance.................................... 49
Section 7.04. Conditions to Legal or Covenant Defeasance............. 49
Section 7.05. Deposited Money and Government Securities to
be Held in Trust; Other Miscellaneous
Provisions............................................. 51
Section 7.06. Repayment to Company................................... 51
Section 7.07. Reinstatement.......................................... 52
ARTICLE 8 - AMENDMENT, SUPPLEMENT AND WAIVER
Section 8.01. Without Consent of Holders............................. 52
Section 8.02. With Consent of Holders................................ 53
Section 8.03. Compliance with TIA.................................... 54
Section 8.04. Revocation and Effect of Consents...................... 54
Section 8.05. Notation on or Exchange of Securities.................. 54
Section 8.06. Trustee to Sign Amendments, etc........................ 55
ARTICLE 9 - MISCELLANEOUS
Section 9.01. TIA Controls........................................... 55
Section 9.02. Notices................................................ 55
Section 9.03. Communication by Holders with Other Holders............ 56
Section 9.04. Certificate and Opinion as to
Conditions Precedent................................... 56
Section 9.05. Statements Required in Certificate or Opinion.......... 57
Section 9.06. Rules by Trustee and Agents............................ 57
Section 9.07. Legal Holidays......................................... 57
Section 9.08. No Personal Liability of Directors, Officers,
Employees and Stockholders............................. 58
Section 9.09. Duplicate Originals.................................... 58
Section 9.10. Governing Law.......................................... 58
Section 9.11. No Adverse Interpretation of Other Agreements.......... 58
Section 9.12. Successors............................................. 58
Section 9.13. Severability........................................... 58
Section 9.14. Counterpart Originals.................................. 58
Section 9.15. Table of Contents, Headings, etc....................... 59
EXHIBITS
Exhibit A FORM OF SECURITY....................................... A
Exhibit B FORM OF GUARANTEE...................................... B
</TABLE>
iii
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
- --------------- -----------------
<S> <C>
310(a)(1)................................................ 6.10
(a)(2)................................................ 6.10
(a)(3)................................................ N.A.
(a)(4)................................................ N.A.
(a)(5)................................................ 6.10
(b)................................................... 6.08; 6.10
(c)................................................... N.A.
311(a)................................................... 6.11
(b)................................................... 6.11
(c)................................................... N.A.
312(a)................................................... 2.05
(b)................................................... 9.03
(c)................................................... 9.03
313(a)................................................... 6.06
(b)(1)................................................ N.A.
(b)(2)................................................ 6.06
(c)................................................... 6.06; 9.02
(d)................................................... 6.06
314(a)................................................... 3.03; 9.02
(b)................................................... N.A.
(c)(1)................................................ 9.04
(c)(2)................................................ 9.04
(c)(3)................................................ N.A.
(d)................................................... N.A.
(e)................................................... 9.05
(f)................................................... N.A.
315(a)................................................... 6.01(iii)(b)
(b)................................................... 6.05; 9.02
(c)................................................... 6.01(i)
(d)................................................... 6.01(iii)
(e)................................................... 5.11
316(a)(last sentence).................................... 2.09
(a)(1)(A)............................................. 5.05
(a)(1)(B)............................................. 5.04
(a)(2)................................................ N.A.
(b)................................................... 5.07
(c)................................................... 2.13; 8.04
</TABLE>
<PAGE>
<TABLE>
<S> <C>
317(a)(1)................................................ 5.08
(a)(2)................................................ 5.09
(b)................................................... 2.04
318(a)................................................... 9.01
(b)................................................... N.A.
(c)................................................... 9.01
</TABLE>
N.A. means not applicable.
- ----------------------------
*THIS CROSS-REFERENCE TABLE IS NOT PART OF THE INDENTURE.
<PAGE>
INDENTURE dated as of March ___, 1995 between National Medical Enterprises,
Inc., a Nevada corporation (the "Company"), and The Bank of New York, as trustee
(the "Trustee").
The Company and the Trustee agree as follows for the benefit of each other
and for the equal and ratable benefit of the Holders of the ____% Senior Notes
due 2002 (the "Securities"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, however,
that beneficial ownership of 10% or more of the voting securities of a Person
shall be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets (including, without limitation, by way of a sale and leaseback
transaction) other than in the ordinary course of business consistent with past
practice (provided that the sale, lease, conveyance or other disposition of all
or substantially all of the assets of the Company and its Subsidiaries taken as
a whole shall be governed by Section 3.13 and/or Article 4 hereof and not by
Section 3.10 hereof) and (ii) the issuance or sale by the Company or any of its
Subsidiaries of Equity Interests of any of the Company's Subsidiaries, in the
case of either clause (i) or (ii), whether in a single transaction or a series
of related transactions (a) that have a fair market value in excess of $25.0
million or (b) for net proceeds in excess of $25.0 million. Notwithstanding the
foregoing: (a) a transfer of assets by the Company to a
<PAGE>
Subsidiary or by a Subsidiary to the Company or to another Subsidiary, (b) an
issuance of Equity Interests by a Subsidiary to the Company or to another
Subsidiary, (c) a Restricted Payment that is permitted by Section 3.07 hereof
and (d) a Hospital Swap will not be deemed to be an Asset Sale.
"Board of Directors" means the Board of Directors of the Company or any
authorized committee thereof.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease" means, at the time any determination thereof is to be made,
any lease of property, real or personal, in respect of which the present value
of the minimum rental commitment would be capitalized on a balance sheet of the
lessee in accordance with GAAP.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a Capital Lease that would
at such time be so required to be capitalized on a balance sheet in accordance
with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership, partnership interests
(whether general or limited) and (iv) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition, in one or a series of
related transactions, of all or substantially all of the assets of the Company
and its Subsidiaries taken as a whole to any Person or group (as such term is
used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act), other than to (a) a
Person or group who, prior to such transaction, held a majority of the voting
power of the voting stock of the Company, (ii) the acquisition by any Person or
group, as defined above, of a direct or indirect interest in more than 50% of
the voting power of the voting stock of the Company by way of merger,
consolidation or otherwise, or (iii) the first day on which a majority of the
members of the Board of Directors of the Company are not Continuing Directors.
"Change of Control Triggering Event" means the occurrence of both a Change
of Control and a Rating Decline.
"Commission" means the Securities and Exchange Commission.
"Company" means National Medical Enterprises, Inc., as obligor under the
Securities, unless and until a successor replaces National Medical Enterprises,
Inc., in accordance with Article 4 hereof and thereafter includes such
successor.
2
<PAGE>
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss of such Person plus any net loss realized in
connection with an Asset Sale (to the extent such losses were deducted in
computing such Consolidated Net Income), plus (ii) provision for taxes based on
income or profits of such Person and its Subsidiaries, for such period, to the
extent such provision for taxes was included in computing such Consolidated Net
Income, plus (iii) the Fixed Charges of such Person and its Subsidiaries for
such period, to the extent such Fixed Charges were deducted in computing such
Consolidated Net Income, plus (iv) depreciation and amortization (including
amortization of goodwill and other intangibles but excluding amortization of
prepaid cash expenses that were paid in a prior period) of such Person and its
Subsidiaries for such period to the extent such depreciation and amortization
were deducted in computing such Consolidated Net Income, in each case, on a
consolidated basis and determined in accordance with GAAP. Notwithstanding the
foregoing, the provision for taxes on the income or profits of, and the
depreciation and amortization of, a Subsidiary of the referent Person shall be
added to Consolidated Net Income to compute Consolidated Cash Flow only to the
extent (and in same proportion) that the Net Income of such Subsidiary was
included in calculating the Consolidated Net Income of such Person and only if a
corresponding amount would be permitted at the date of determination to be
dividended to the Company by such Subsidiary without prior approval (that has
not been obtained), pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Subsidiaries for such
period, on a consolidated basis, determined in accordance with GAAP but
excluding any one-time charge or expense incurred in order to consummate the
Refinancing; provided, that (i) the Net Income of any Person that is not a
Subsidiary or that is accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or distributions paid in
cash to the referent Person or a Wholly Owned Subsidiary thereof, (ii) the Net
Income of any Subsidiary shall be excluded to the extent that the declaration or
payment of dividends or similar distributions by that Subsidiary of that Net
Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Subsidiary or its stockholders, (iii) the Net Income of any Person acquired in a
pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded, and (iv) the cumulative effect of a change in
accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such Person
and its consolidated Subsidiaries as of such date plus (ii) the respective
amounts reported on such Person's balance sheet as of such date with respect to
any series of preferred stock (other than Disqualified Stock), less all write-
ups (other than write-ups resulting from foreign currency translations and
write-ups of tangible assets of a going concern business made in accordance with
GAAP as a result of the acquisition of such business) subsequent to the date
3
<PAGE>
hereof in the book value of any asset owned by such Person or a consolidated
Subsidiary of such Person, and excluding the cumulative effect of a change in
accounting principles, all as determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date hereof or (ii) was nominated for election or elected to
such Board of Directors with the affirmative vote of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 9.02 or such other address as to which the Trustee
may give notice to the Company.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the Holder thereof, in whole or in part, on or prior to
September __, 2002.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the New Credit Facility) in
existence on the date hereof, until such amounts are repaid, including all
reimbursement obligations with respect to letters of credit outstanding as of
the date hereof (other than letters of credit issued pursuant to the New Credit
Facility).
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period; provided, however, that in
the event that the Company or any of its Subsidiaries incurs, assumes,
Guarantees or redeems any Indebtedness (other than revolving credit borrowings)
or issues preferred stock subsequent to the commencement of the period for which
the Fixed Charge Coverage Ratio is being calculated but prior to the date on
which the event for which the calculation of the Fixed Charge Coverage Ratio is
made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, Guarantee or
redemption of Indebtedness, or such issuance or redemption of preferred stock,
as if the same had occurred at the beginning of the applicable four-quarter
reference period; and
4
<PAGE>
provided further that for purposes of making the computation referred to above,
(i) acquisitions that have been made by the Company or any of its Subsidiaries,
including through mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date shall be deemed to have
occurred on the first day of the four-quarter reference period, and (ii) the
Consolidated Cash Flow and Fixed Charges attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded.
"Fixed Charges" means, with respect to any Person for any period, the sum
of (i) the consolidated interest expense of such Person and its Subsidiaries for
such period, whether paid or accrued, (including, without limitation,
amortization of original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, commissions,
discounts and other fees and charges incurred in respect of letters of credit or
bankers' acceptance financings, and net payments (if any) pursuant to Hedging
Obligations) and (ii) the consolidated interest expense of such Person and its
Subsidiaries that was capitalized during such period, and (iii) any interest
expense on Indebtedness of another Person that is Guaranteed by such Person or
one of its Subsidiaries or secured by a Lien on assets of such Person or one of
its Subsidiaries (whether or not such Guarantee or Lien is called upon) and (iv)
the product of (a) all cash dividend payments (and non-cash dividend payments in
the case of a Person that is a Subsidiary) on any series of preferred stock of
such Person, times (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state and
local statutory tax rate of such Person, expressed as a decimal, in each case,
on a consolidated basis and in accordance with GAAP.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, as in effect from time to time.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements, (ii) foreign exchange contracts
or currency swap agreements and
5
<PAGE>
(iii) other agreements or arrangements designed to protect such Person against
fluctuations in interest rates or currency values.
"Holder" means a Person in whose name a Security is registered.
"Hospital" means a hospital, outpatient clinic, long-term care facility or
other facility that is used or useful in the provision of healthcare services.
"Hospital Swap" means an exchange of assets by the Company or a Subsidiary
of the Company for one or more Hospitals and/or one or more Related Businesses
or for the Capital Stock of any Person owning one or more Hospitals and/or one
or more Related Businesses.
"Indebtedness" means with respect to any Person any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property or representing any Hedging Obligations, except
any such balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing indebtedness (other than letter of credit and
Hedging Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, as well as all indebtedness of others
secured by a Lien on any asset of such Person (whether or not such indebtedness
is assumed by such Person) and, to the extent not otherwise included, the
Guarantee by such Person of any indebtedness of any other Person.
"Indenture" means this Indenture, as amended or supplemented from time to
time.
"International Subsidiaries" means International-NME, Inc., NME (Australia)
Pty. Limited, and National Medical Enterprises Corp., and each of such Person's
respective Subsidiaries.
"Investment Grade" means a rating of BBB- or higher by S&P or Baa3 or
higher by Moody's or the equivalent of such ratings by S&P or Moody's. In the
event that the Company shall select any other Rating Agency, the equivalent of
such ratings by such Rating Agency shall be used.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the form of direct or indirect
loans (including Guarantees of Indebtedness or other obligations), advances or
capital contributions, purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities and all other items that are
or would be classified as investments on a balance sheet prepared in accordance
with GAAP; provided that an acquisition of assets, Equity Interests or other
securities by the Company for consideration consisting of common equity
securities for the Company shall not be deemed to be an Investment.
6
<PAGE>
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset
given to secure Indebtedness, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement, any lease in the nature thereof, any option or other
agreement to sell or give a security interest in and any filing of or agreement
to give any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction with respect to any such lien, pledge, charge or
security interest).
"Moody's" means Moody's Investors Services, Inc. and its successors.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Subsidiaries,
and (ii) any extraordinary or nonrecurring gain (but not loss), together with
any related provision for taxes on such extraordinary or nonrecurring gain (but
not loss).
"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received upon the sale or other disposition of any
Permitted Non-Cash Consideration received in any Asset Sale), net of the direct
costs relating to such Asset Sale (including, without limitation, legal,
accounting and investment banking fees, and sales commissions) and any other
expenses incurred or to be incurred by the Company or a Subsidiary as a direct
result of the sale of such assets (including, without limitation, severance,
relocation, lease termination and other similar expenses), taxes actually paid
or payable as a result thereof, amounts required to be applied to the repayment
of Indebtedness (other than Senior Term Debt or Senior Revolving Debt) secured
by a Lien permitted hereunder on the asset or assets that were the subject of
such Asset Sale and any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with GAAP.
"New Credit Facility" means that certain Credit Agreement, dated as of
February __, 1995, by and among the Company and Morgan Guaranty Trust Company of
New York and the other banks that are party thereto, providing for $2.0 billion
in aggregate principal amount of Senior Term Debt and up to $500.0 million in
aggregate principal amount of Senior Revolving Debt, including any related
notes, collateral documents, instruments and agreements executed in connection
therewith, and in each case as amended, modified, extended, renewed, refunded,
replaced or refinanced, in whole or in part, from time to time.
"Non-Cash Consideration" means any non-cash consideration received by the
Company or a Subsidiary of the Company in connection with an Asset Sale and any
non-cash consideration received by the Company or any of its Subsidiaries upon
disposition thereof.
7
<PAGE>
"Non-Recourse Debt" means Indebtedness of an International Subsidiary (i)
as to which neither the Company nor any of its Subsidiaries (other than the
International Subsidiaries) (a) provides credit support of any kind (including
any undertaking, agreement or instrument that would constitute Indebtedness of
the Company or any of its Subsidiaries), or (b) is directly or indirectly liable
(as a guarantor or otherwise) and (ii) no default with respect to which
(including any rights that the holders thereof may have to take enforcement
action against an International Subsidiary) would permit (upon notice, lapse of
time or both) any holder of any other Indebtedness of the Company or any of its
Subsidiaries (other than the International Subsidiaries) to declare a default on
such other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its stated maturity (except any provisions set forth in
Existing Indebtedness until the same is repaid or refinanced).
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officers" means the Chairman of the Board, the Chief Executive Officer,
the President, the Chief Operating Officer, the Chief Financial Officer, the
Treasurer, any Assistant Treasurer, the Controller, the Secretary and any Vice
President of the Company or any Subsidiary, as the case may be.
"Officers' Certificate" means a certificate signed by two Officers, one of
whom must be the principal executive officer, principal financial officer or
principal accounting officer of the Company.
"Opinion of Counsel" means an opinion from legal counsel who is reasonably
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company, any Subsidiary or the Trustee.
"Payment Default" means any failure to pay any scheduled installment of
interest or principal on any Indebtedness within the grace period provided for
such payment in the documentation governing such Indebtedness.
"Performance Investment Plan" means the 1989 Performance Investment Plan
adopted by the Company's Board of Directors on March 10, 1989.
"Permitted Collateral" means, collectively, (i) all Capital Stock and other
Equity Interests of the Company's present and future direct Subsidiaries, (ii)
all intercompany Indebtedness owed to the Company and (iii) all Capital Stock
and other Equity Interests in Westminster Health Care Holdings PLC and The
Hillhaven Corporation owned by the Company.
"Permitted Liens" means (i) Liens on Permitted Collateral securing Senior
Term Debt of the Company under the New Credit Facility in an aggregate principal
amount at any time outstanding not to exceed an amount equal to $2.0 billion
less the aggregate amount of all repayments, optional or mandatory, of the
principal of any Senior Term Debt (other than repayments that are immediately
reborrowed) that have been made since the date
8
<PAGE>
hereof; (ii) Liens on Permitted Collateral securing Senior Revolving Debt and
letters of credit of the Company incurred pursuant to the New Credit Facility in
an aggregate principal amount at any time outstanding (with letters of credit
being deemed to have a principal amount equal to the maximum potential
reimbursement obligation of the Company with respect thereto) not to exceed an
amount equal to $500.0 million less the aggregate amount of all Net Proceeds of
Asset Sales applied to permanently reduce commitments with respect to such
Indebtedness pursuant to Section 3.10 hereof; (iii) Liens in favor of the
Company; (iv) Liens on property of a Person existing at the time such Person is
merged into or consolidated with the Company or any Subsidiary of the Company;
provided, that such Liens were in existence prior to the contemplation of such
merger or consolidation and do not extend to any assets other than those of the
Person merged into or consolidated with the Company; (v) Liens on property
existing at the time of acquisition thereof by the Company or any Subsidiary of
the Company; provided that such Liens were in existence prior to the
contemplation of such acquisition; (vi) Liens to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business; (vii)
Liens existing or created on the date hereof; (viii) Liens for taxes,
assessments or governmental charges or claims that are not yet delinquent or
that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded; provided that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor, (ix) other Liens on assets of the Company or any Subsidiary
of the Company securing Indebtedness that is permitted by the terms hereof to be
outstanding having an aggregate principal amount at any one time outstanding not
to exceed 10% of the Stockholders' Equity of the Company; and (x) Liens to
secure Permitted Refinancing Indebtedness incurred to refinance Indebtedness
that was secured by a Lien permitted hereunder and that was incurred in
accordance with the provisions hereof; provided, that such Liens do not extend
to or cover any property or assets of the Company or any Subsidiary other than
assets or property securing the Indebtedness so refinanced.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Subsidiaries issued in exchange for, or the net proceeds of which
are used solely to extend, refinance, renew, replace, defease or refund, other
Indebtedness of the Company or any of its Subsidiaries; provided that, except in
the case of Indebtedness of the Company issued in exchange for, or the net
proceeds of which are used solely to extend, refinance, renew, replace, defease
or refund Indebtedness of a Subsidiary of the Company: (i) the principal amount
of such Permitted Refinancing Indebtedness does not exceed the principal amount
of the Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded (plus the amount of any premiums paid and reasonable expenses incurred
in connection therewith); (ii) such Permitted Refinancing Indebtedness has a
final maturity date later than the final maturity date of, and has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; (iii) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of payment to
the Securities, such Permitted Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and is subordinated in right of
payment to, the Securities on terms at least as favorable to the Holders of
Securities as those contained in the documentation
9
<PAGE>
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness is incurred either by the
Company or by the Subsidiary who is the obligor on the Indebtedness being
extended, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization (including
any subdivision or ongoing business of any such entity or substantially all of
the assets of any such entity, subdivision or business).
"Physician Joint Venture Distributions" means distributions made by the
Company or any of its Subsidiaries to any physician, pharmacist or other allied
healthcare professional in connection with the unwinding, liquidation or other
termination of any joint venture or similar arrangement between any such Person
and the Company or any of its Subsidiaries.
"Physician Support Obligations" means any obligation or Guarantee incurred
in the ordinary course of business by the Company or a Subsidiary of the Company
in connection with any advance, loan or payment to, or on behalf of or for the
benefit of any physician, pharmacist or other allied healthcare professional for
the purpose of recruiting, redirecting or retaining the physician, pharmacist or
other allied healthcare professional to provide service to patients in the
service area of any Hospital or Related Business owned or operated by the
Company or any of its Subsidiaries; excluding, however, compensation for
services provided by physicians, pharmacists or other allied healthcare
professionals to any Hospital or Related Business owned or operated by the
Company or any of its Subsidiaries.
"Qualified Equity Interests" shall mean all Equity Interests of the Company
other than Disqualified Stock of the Company.
"Rating Agencies" means (i) S&P and (ii) Moody's or (iii) if S&P or Moody's
or both shall not make a rating of the Securities publicly available, a
nationally recognized securities rating agency or agencies, as the case may be,
selected by the Company, shall be substituted for S&P or Moody's or both, as the
case may be.
"Rating Category" means (i) with respect to S&P, any of the following
categories: BB, B, CCC, CC, C and D (or equivalent successor categories); (ii)
with respect to Moody's, any of the following categories: Ba, B, Caa, Ca, C and
D (or equivalent successor categories); and (iii) the equivalent of any such
category of S&P or Moody's used by another Rating Agency. In determining
whether the rating of the Securities has decreased by one or more gradations,
gradations within Rating Categories (+ and - for S&P, 1, 2 and 3 for Moody's; or
the equivalent gradations for another Rating Agency) shall be taken into account
(e.g., with respect to S&P, a decline in a rating from BB+ to BB, as well as
from BB- to B+, will constitute a decrease of one gradation).
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<PAGE>
"Rating Date" means the date which is 90 days prior to the earlier of (i) a
Change of Control and (ii) the first public notice of the occurrence of a Change
of Control or of the intention by the Company to effect a Change of Control.
"Rating Decline" means the occurrence on or within 90 days after the date
of the first public notice of the occurrence of a Change of Control or of the
intention by the Company to effect a Change of Control (which period shall be
extended so long as the rating of the Securities is under publicly announced
consideration for possible downgrade by any of the Rating Agencies) of: (a) in
the event the Securities are rated by either Moody's or S&P on the Rating Date
as Investment Grade, a decrease in the rating of the Securities by both Rating
Agencies to a rating that is below Investment Grade, or (b) in the event the
Securities are rated below Investment Grade by both Rating Agencies on the
Rating Date, a decrease in the rating of the Securities by either Rating Agency
by one or more gradations (including gradations within Rating Categories as well
as between Rating Categories).
"Refinancing" has the meaning ascribed to it in the prospectus dated
January 31, 1995 relating to the Securities.
"Related Business" means a healthcare business affiliated or associated
with a Hospital or any business related or ancillary to the provision of
healthcare services or the operation of a Hospital.
"Responsible Officer" when used with respect to the Trustee, means any
officer within the corporate trust department of the Trustee (or any successor
group of the Trustee) or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Restricted Investment" means an Investment in any of the International
Subsidiaries.
"Securities" means the securities described above, issued under this
Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Revolving Debt" means revolving credit loans outstanding from time
to time under the New Credit Facility.
"Senior Subordinated Asset Sale Offer" means the offer to purchase Senior
Subordinated Notes made by the Company to holders of Senior Subordinated Notes
under Section 4.10 of the Senior Subordinated Note Indenture.
"Senior Subordinated Notes" means the ____% Senior Subordinated Notes due
2005 of the Company limited in aggregate principal amount of $700.0 million,
issued pursuant to the Senior Subordinated Note Indenture.
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"Senior Subordinated Note Indenture" means the Indenture dated as of March
__, 1995 between the Company and The Bank of New York, as trustee, under which
the Senior Subordinated Notes were issued.
"Senior Term Debt" means term loans outstanding from time to time under the
New Credit Facility.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof.
"S&P" means Standard & Poor's Corporation and its successors.
"Specified Assets" means the Company's and its Subsidiaries' interest in
The Hillhaven Corporation and Westminster Healthcare Holdings PLC owned as of
the date hereof and the Capital Stock and assets of the International
Subsidiaries.
"Stockholders' Equity" means, with respect to any Person as of any date,
the stockholders' equity of such Person determined in accordance with GAAP as of
the date of the most recent available internal financial statements of such
Person, and calculated on a pro forma basis to give effect to any acquisition or
disposition by such Person consummated or to be consummated since the date of
such financial statements and on or prior to the date of such calculation.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof), provided that no
International Subsidiary shall be deemed to be a "Subsidiary" for any purpose
hereunder for so long as such International Subsidiary: (a) has no Indebtedness
other than Existing Indebtedness and Non-Recourse Debt; (b) is not a party to
any agreement, contract, arrangement or understanding with the Company or any of
its other Subsidiaries (other than International Subsidiaries) except any such
agreement, contract, arrangement or understanding that (i) was in effect on the
date hereof, or (ii) meets the requirements of Section 3.11 hereof; (c) is a
Person with respect to which neither the Company nor any of its Subsidiaries
(other than International Subsidiaries) has any direct or indirect obligation
(x) to subscribe for additional Equity Interests or (y) to maintain or preserve
such Person's financial condition or to cause such Person to achieve any
specified level of operating results except, in each case, any such obligation
in existence on the date hereof or created pursuant to the terms of any
Investment permitted by Section 3.07; and (d) has not Guaranteed or otherwise
directly or indirectly provided credit support for any Indebtedness of the
Company or any of its Subsidiaries (other than International
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Subsidiaries). If, at any time, any International Subsidiary would fail to meet
the foregoing requirements, it shall thereafter be deemed to be a Subsidiary for
all purposes of this Indenture and any Indebtedness of such International
Subsidiary shall be deemed to be incurred by a Subsidiary of the Company as of
such date (and, if such Indebtedness is not permitted to be incurred as of such
date under Section 3.09 hereof the Company shall be in default of such
covenant).
"TIA" means the Trust Indenture Act of 1939, as amended (15 U.S.C. (S)
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA, except as provided in Section 8.03 hereof.
"Transfer Restriction" means, with respect to the Company's Subsidiaries,
any encumbrance or restriction on the ability of any Subsidiary to (i) pay
dividends or make any other distributions to the Company or any of its
Subsidiaries (a) on its Capital Stock or (b) with respect to any other interest
or participation in, or measured by, its profits, (ii) pay any Indebtedness owed
to the Company or any of its Subsidiaries, (iii) make loans or advances to the
Company or any of its Subsidiaries, or (iv) transfer any of its properties or
assets to the Company or any of its Subsidiaries.
"Trustee" means the party named as such above until a successor replaces it
in accordance with the applicable provisions of this Indenture and thereafter
means the successor serving hereunder.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person means any Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person and one or
more Wholly Owned Subsidiaries of such Person.
<TABLE>
<CAPTION>
Section 1.02. Other Definitions.
Defined in
Term Section
---- ----------
<S> <C>
"Affiliate Transaction"............ 3.11
"Bankruptcy Law"................... 5.01
"Change of Control Offer".......... 3.13
"Change of Control Payment"........ 3.13
"Change of Control Payment Date"... 3.13
"Commencement Date"................ 2.15
</TABLE>
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<TABLE>
<S> <C>
"Covenant Defeasance".............. 7.03
"Custodian"........................ 5.01
"Event of Default"................. 5.01
"Excess Proceeds".................. 3.10
"incur"............................ 3.09
"Legal Defeasance"................. 7.02
"Legal Holiday".................... 9.07
"Notice of Default"................ 5.01
"Offer Amount"..................... 2.15
"Offer Period"..................... 2.15
"Paying Agent"..................... 2.03
"Purchase Date".................... 2.15
"Purchase Price"................... 3.10
"Registrar"........................ 2.03
"Restricted Payments".............. 3.07
"Senior Asset Sale Offer".......... 3.10
</TABLE>
Section 1.03. Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Securities;
"indenture security holder" means a Holder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Securities means the Company and any successor
obligor upon the Securities.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by the Commission rule
under the TIA have the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
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(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular; and
(5) provisions apply to successive events and transactions.
ARTICLE 2
THE SECURITIES
Section 2.01. Form and Dating.
The Securities and the Trustee's certificate of authentication shall
be substantially in the form of Exhibit A hereto, the terms of which are
incorporated in and made a part of this Indenture. The Securities may have
notations, legends or endorsements approved as to form by the Company and
required by law, stock exchange rule, agreements to which the Company is subject
or usage. Each Security shall be dated the date of its authentication. The
Securities shall be issuable only in registered form, without coupons, in
denominations of $1,000 and integral multiples thereof.
Section 2.02. Execution and Authentication.
An Officer of the Company shall sign the Securities for the Company by
manual or facsimile signature. The Company's seal shall be reproduced on the
Securities and may be in facsimile form.
If an Officer whose signature is on a Security no longer holds that
office at the time the Security is authenticated, the Security shall
nevertheless be valid.
A Security shall not be valid until authenticated by the manual
signature of the Trustee. The signature of the Trustee shall be conclusive
evidence that the Security has been authenticated under this Indenture. The form
of Trustee's certificate of authentication to be borne by the Securities shall
be substantially as set forth in Exhibit A hereto.
The Trustee shall, upon a written order of the Company signed by two
Officers of the Company, authenticate Securities for original issue up to an
aggregate principal amount stated in paragraph 4 of the Securities. The
aggregate principal amount of Securities outstanding at any time shall not
exceed the amount set forth herein except as provided in Section 2.07.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless limited by the terms of such
appointment, an authenticating
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<PAGE>
agent may authenticate Securities whenever the Trustee may do so. Each reference
in this Indenture to authentication by the Trustee includes authentication by
such agent. An authenticating agent has the same rights as an Agent to deal with
the Company or an Affiliate of the Company.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain (i) an office or agency where Securities
may be presented for registration of transfer or for exchange (including any co-
registrar, the "Registrar") and (ii) an office or agency where Securities may be
presented for payment (the "Paying Agent"). The Registrar shall keep a register
of the Securities and of their transfer and exchange. The Company may appoint
one or more co-registrars and one or more additional paying agents. The term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent, Registrar or co-registrar without prior notice to any Holder. The
Company shall notify the Trustee and the Trustee shall notify the Holders of the
name and address of any Agent not a party to this Indenture. If the Company
fails to appoint or maintain another entity as Registrar or Paying Agent, the
Trustee shall act as such. The Company or any of its Subsidiaries may act as
Paying Agent, Registrar or co-registrar. The Company shall enter into an
appropriate agency agreement with any Agent not a party to this Indenture, which
shall incorporate the provisions of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall notify
the Trustee of the name and address of any such Agent. If the Company fails to
maintain a Registrar or Paying Agent, or fails to give the foregoing notice, the
Trustee shall act as such, and shall be entitled to appropriate compensation in
accordance with Section 6.07 hereof.
The Company initially appoints the Trustee as Registrar, Paying Agent
and agent for service of notices and demands in connection with the Securities.
Section 2.04. Paying Agent to Hold Money in Trust.
On or prior to the due date of principal of, premium, if any, and
interest on any Securities, the Company shall deposit with the Trustee or the
Paying Agent money sufficient to pay such principal, premium, if any, and
interest becoming due. The Company shall require each Paying Agent other than
the Trustee to agree in writing that the Paying Agent shall hold in trust for
the benefit of the Holders or the Trustee all money held by the Paying Agent for
the payment of principal of, premium, if any, and interest on the Securities,
and shall notify the Trustee of any Default by the Company in making any such
payment. While any such Default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company) shall have no
further liability for the money delivered to the Trustee. If the Company acts as
Paying Agent, it shall segregate and hold in a separate trust fund for the
benefit of the Holders all money held by it as Paying Agent.
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<PAGE>
Section 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders and shall otherwise comply with TIA (S) 312(a). If the Trustee is not
the Registrar, the Company shall furnish to the Trustee at least seven Business
Days before each interest payment date and at such other times as the Trustee
may request in writing a list in such form and as of such date as the Trustee
may reasonably require of the names and addresses of Holders, including the
aggregate principal amount of the Securities held by each thereof, and the
Company shall otherwise comply with TIA (S) 312(a).
Section 2.06. Transfer and Exchange.
When Securities are presented to the Registrar with a request to
register the transfer or to exchange them for an equal principal amount of
Securities of other denominations, the Registrar shall register the transfer or
make the exchange if its requirements for such transactions are met; provided,
however, that any Security presented or surrendered for registration of transfer
or exchange shall be duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar and the Trustee duly executed by
the Holder thereof or by his attorney duly authorized in writing. To permit
registrations of transfer and exchanges, the Company shall issue and the Trustee
shall authenticate Securities at the Registrar's request, subject to such rules
as the Trustee may reasonably require.
Neither the Company nor the Registrar shall be required to register
the transfer or exchange of a Security between the record date and the next
succeeding interest payment date.
No service charge shall be made to any Holder for any registration of
transfer or exchange (except as otherwise expressly permitted herein), but the
Company may require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than such
transfer tax or similar governmental charge payable upon exchanges pursuant to
Sections 2.10 or 8.05 hereof, which shall be paid by the Company).
Prior to due presentment for registration of transfer of any Security,
the Trustee, any Agent and the Company may deem and treat the Person in whose
name any Security is registered as the absolute owner of such Security for the
purpose of receiving payment of principal of, premium, if any, and interest on
such Security and for all other purposes whatsoever, whether or not such
Security is overdue, and neither the Trustee, any Agent nor the Company shall be
affected by notice to the contrary.
Section 2.07. Replacement Securities.
If any mutilated Security is surrendered to the Trustee or the
Company, or the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Security,
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<PAGE>
the Company shall issue and the Trustee, upon written order of the Company
signed by two Officers of the Company, shall authenticate a replacement Security
if the Trustee's requirements for replacements of Securities are met. If
required by the Trustee or the Company, an indemnity bond must be supplied by
the Holder that is sufficient in the judgment of the Trustee and the Company to
protect the Company, the Trustee, any Agent and any authenticating agent from
any loss which any of them may suffer if a Security is replaced. Each of the
Company and the Trustee may charge for its expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Company.
Section 2.08. Outstanding Securities.
The Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those cancelled by it, those delivered
to it for cancellation and those described in this Section as not outstanding.
If a Security is replaced pursuant to Section 2.07 hereof, it ceases
to be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the principal amount of any Security is considered paid under
Section 3.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
Subject to Section 2.09 hereof, a Security does not cease to be
outstanding because the Company or an Affiliate of the Company holds the
Security.
Section 2.09. Treasury Securities.
In determining whether the Holders of the required principal amount of
Securities then outstanding, have concurred in any demand, direction, waiver or
consent, Securities owned by the Company or any Affiliate of the Company shall
be considered as though not outstanding, except that for purposes of determining
whether the Trustee shall be protected in relying on any such demand, direction,
waiver or consent, only Securities which a Responsible Officer actually knows to
be so owned shall be so considered. Notwithstanding the foregoing, Securities
that are to be acquired by the Company or an Affiliate of the Company pursuant
to an exchange offer, tender offer or other agreement shall not be deemed to be
owned by the Company or an Affiliate of the Company until legal title to such
Securities passes to the Company or Affiliate, as the case may be.
Section 2.10. Temporary Securities.
Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee, upon receipt of the written order of the Company signed
by two Officers of the Company, shall authenticate temporary Securities.
Temporary Securities shall be substantially in the form of definitive Securities
but may have variations that the Company and the Trustee consider appropriate
for temporary Securities. Without unreasonable delay,
18
<PAGE>
the Company shall prepare and the Trustee, upon receipt of the written order of
the Company signed by two Officers of the Company, shall authenticate definitive
Securities in exchange for temporary Securities. Until such exchange, temporary
Securities shall be entitled to the same rights, benefits and privileges as
definitive Securities.
Section 2.11. Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Securities surrendered to them for registration of transfer, exchange or
payment. The Trustee shall cancel all Securities surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall return such
cancelled Securities to the Company. The Company may not issue new Securities to
replace Securities that it has paid or that have been delivered to the Trustee
for cancellation.
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Securities, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, which date shall be at the earliest
practicable date but in all events at least five Business Days prior to the
payment date, in each case at the rate provided in the Securities and in Section
3.01 hereof. The Company shall, with the consent of the Trustee, fix or cause to
be fixed each such special record date and payment date. At least 15 days before
the special record date, the Company (or the Trustee, in the name of and at the
expense of the Company) shall mail to Holders a notice that states the special
record date, the related payment date and the amount of such interest to be
paid.
Section 2.13. Record Date.
The record date for purposes of determining the identity of Holders
entitled to vote or consent to any action by vote or consent authorized or
permitted under this Indenture shall be determined as provided for in TIA (S)
316(c).
Section 2.14. CUSIP Number.
The Company in issuing the Securities may use a "CUSIP" number, and if
it does so, the Trustee shall use the CUSIP number in notices to Holders;
provided that any such notice may state that no representation is made as to the
correctness or accuracy of the CUSIP number printed in the notice or on the
Securities, and that reliance may be placed only on the other identification
numbers printed on the Securities. The Company will promptly notify the Trustee
of any change in the CUSIP number.
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<PAGE>
Section 2.15. Offer to Purchase By Application of Excess Proceeds.
In the event that the Company shall commence a Senior Asset Sale Offer
pursuant to Section 3.10 hereof, it shall follow the procedures specified below:
No later than the date on which the aggregate amount of Excess
Proceeds exceeds $25.0 million, the Company shall notify the Trustee of such
Senior Asset Sale Offer and provide the Trustee with an Officers' Certificate
setting forth, in addition to the information to be included therein pursuant to
Section 3.10 the calculations used in determining the amount of Net Proceeds to
be applied to the purchase of Securities. The Company shall commence or cause to
be commenced the Senior Asset Sale Offer on a date no later than 10 Business
Days after such notice (the "Commencement Date").
The Senior Asset Sale Offer shall remain open for at least 20 Business
Days after the Commencement Date relating to such Senior Asset Sale Offer and
shall remain open for no more than such 20 Business Days, except to the extent
required by applicable law (as so extended, the "Offer Period"). No later than
one Business Day after the termination of the Offer Period (the "Purchase
Date"), the Company shall purchase the principal amount (the "Offer Amount") of
Securities required to be purchased in such Senior Asset Sale Offer pursuant to
Sections 2.15 and 3.10 hereof or, if less than the Offer Amount has been
tendered, all Securities tendered in response to the Senior Asset Sale Offer.
If the Purchase Date is on or after an interest payment record date
and on or before the related interest payment date, any accrued interest shall
be paid to the Person in whose name a Security is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Securities pursuant to the Senior Asset Sale Offer.
On the Commencement Date of any Senior Asset Sale Offer, the Company
shall send, by first class mail, a notice to each of the Holders at their last
registered address, with a copy to the Trustee. Such notice, which shall govern
the terms of the Senior Asset Sale Offer, shall contain all instructions and
materials necessary to enable the Holders to tender Securities pursuant to the
Senior Asset Sale Offer and shall state:
(1) that the Senior Asset Sale Offer is being made pursuant to
this Section 2.15 and Section 3.10 hereof and the length of
time the Senior Asset Sale Offer shall remain open;
(2) the Offer Amount, the Purchase Price and the Purchase Date;
(3) that any Security not tendered or accepted for payment shall
continue to accrue interest;
(4) that, unless the Company defaults in the payment of the
Purchase Price, any Security accepted for payment pursuant
to
20
<PAGE>
the Senior Asset Sale Offer shall cease to accrue interest
after the Purchase Date;
(5) that Holders electing to have a Security purchased pursuant
to any Senior Asset Sale Offer shall be required to
surrender the Security, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Security
completed, to the Company, a depositary, if appointed by the
Company, or a Paying Agent at the address specified in the
notice prior to the close of business on the Business Day
preceding the Purchase Date;
(6) that Holders shall be entitled to withdraw their election if
the Company, depositary or Paying Agent, as the case may be,
receives, not later than the close of business on the
Business Day preceding the termination of the Offer Period,
a facsimile transmission or letter setting forth the name of
the Holder, the principal amount of the Security the Holder
delivered for purchase and a statement that such Holder is
withdrawing his election to have the Security purchased;
(7) that, if the aggregate principal amount of Securities
surrendered by Holders exceeds the Offer Amount, the Trustee
shall select the Securities to be purchased on a pro rata
basis (with such adjustments as may be deemed appropriate by
the Trustee so that only Securities in denominations of
$1,000, or integral multiples thereof, shall be purchased);
and
(8) that Holders whose Securities were purchased only in part
shall be issued new Securities equal in principal amount to
the unpurchased portion of the Securities surrendered.
On or before the Purchase Date, the Company shall irrevocably deposit
with the Trustee or Paying Agent in immediately available funds the aggregate
Purchase Price with respect to a principal amount of Securities equal to the
Offer Amount, together with accrued interest thereon, to be held for payment in
accordance with the terms of this Section. On the Purchase Date, the Company
shall, to the extent lawful, (i) accept for payment, on a pro rata basis to the
extent necessary, an aggregate principal amount equal to the Offer Amount of
Securities tendered pursuant to the Senior Asset Sale Offer, or if less than the
Offer Amount has been tendered, all Securities or portion thereof tendered, (ii)
deliver or cause the Paying Agent or depositary, as the case may be, to deliver
to the Trustee Securities so accepted and (iii) deliver to the Trustee an
Officers' Certificate stating that such Securities or portions thereof were
accepted for payment by the Company in accordance with the terms of this Section
2.15. The Company, depositary or Paying Agent, as the case may be, shall
promptly (but in any case not later than two Business Days after the Purchase
Date) mail or deliver to each tendering Holder an amount equal to the Purchase
Price plus accrued and
21
<PAGE>
unpaid interest with respect to the Securities tendered by such Holder and
accepted by the Company for purchase, and the Company shall promptly issue a new
Security, and the Trustee shall authenticate and mail or deliver such new
Security, to such Holder, equal in principal amount to any unpurchased portion
of such Holder's Securities surrendered. Any Security not accepted in the
Senior Asset Sale Offer shall be promptly mailed or delivered by the Company to
the Holder thereof. The Company shall publicly announce in a newspaper of
general circulation the results of the Senior Asset Sale Offer on the Purchase
Date.
The Senior Asset Sale Offer shall be made by the Company in compliance
with all applicable laws, including, without limitation, Regulation 14E of the
Exchange Act and the rules thereunder and all other applicable federal and state
securities laws.
ARTICLE 3
COVENANTS
Section 3.01. Payment of Securities.
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest on the Securities on the dates and in the manner provided
in this Indenture and the Securities. Principal, premium, if any, and interest
shall be considered paid on the date due if the Paying Agent, if other than the
Company or a Subsidiary of the Company, holds as of 10:00 a.m. Eastern Time on
the due date money deposited by the Company in immediately available funds and
designated for and sufficient to pay all principal, premium, if any, and
interest then due. Such Paying Agent shall return to the Company, no later than
five days following the date of payment, any money (including accrued interest)
that exceeds such amount of principal, premium, if any, and interest to be paid
on the Securities.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the interest rate then applicable to the Securities
to the extent lawful. In addition, it shall pay interest (including post-
petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace period) at the
same rate to the extent lawful.
Section 3.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Securities may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Securities and this Indenture
may be served. The Company shall give prompt written notice to the Trustee of
the location, and any change in the location, of such office or agency. If at
any time the Company shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.
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The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York for such purposes. The Company shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
The Company hereby designates The Bank of New York, 101 Barclay
Street, 21 West, New York, New York 10286 as one such office or agency of the
Company in accordance with Section 2.03.
Section 3.03. Commission Reports.
(i) So long as any of the Securities remain outstanding, the Company
shall file with the Trustee within 15 days after the filing thereof with the
Commission copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as the
Commission may by rule and regulations prescribe) which the Company is required
to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act.
All obligors on the Securities shall comply with the provisions of TIA (S)
314(a). Notwithstanding that the Company may not be required to be subject to
the reporting requirements of Section 13 or 15(d) of the Exchange Act or
otherwise report on an annual and quarterly basis on forms provided for such
annual and quarterly reporting pursuant to rules and regulations promulgated by
the Commission, the Company will file with the Commission and provide the
Trustee (a) within 90 days after the end of each fiscal year, annual reports on
Form 10-K (or any successor or comparable form) containing the information
required to be contained therein (or required in such successor or comparable
form), including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and a report thereon by the Company's certified
public accountants; (b) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year, reports on Form 10-Q (or any successor or
comparable form) containing the information required to be contained therein (or
required in any successor or comparable form) including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations"; and
(c) promptly from time to time after the occurrence of an event required to be
therein reported, such other reports on Form 8-K (or any successor or comparable
form) containing the information required to be contained therein (or required
in any successor or comparable form); provided, however, that the Company shall
not be in default of the provisions of this Section 3.03(i) for any failure to
file reports with the Commission solely by the refusal by the Commission to
accept the same for filing. Each of such reports will be prepared in accordance
with generally accepted accounting principles. The Company will in all cases,
without cost to each recipient, provide copies of such information to the
Holders.
(ii) The Trustee, at the Company's expense, will promptly mail copies
of such annual reports, information, documents and other reports filed with the
Trustee pursuant
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to Section 3.03 to the Holders at their addresses appearing in the register of
Securities maintained by the Registrar.
(iii) If filing such annual reports, information, documents and other
reports with the Commission is not permitted under the Exchange Act or the rules
and regulations of the Commission, the Company shall, after the dates for filing
set forth above, promptly upon written request make copies of such annual
reports, information, documents and other reports available to prospective
purchasers of the Securities, and to securities analysts and broker-dealers upon
their request.
(iv) The Company shall provide the Trustee with a sufficient number of
copies of all reports and other documents and information that the Trustee may
be required to deliver to the Holders under this Section 3.03.
(v) Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
Section 3.04. Compliance Certificate.
(i) The Company shall deliver to the Trustee, within 120 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether each has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge each entity
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action each is taking or
proposes to take with respect thereto), all without regard to periods of grace
or notice requirements, and that to the best of his or her knowledge no event
has occurred and remains in existence by reason of which payments on account of
the principal of or interest, if any, on the Securities is prohibited or if such
event has occurred, a description of the event and what action each is taking or
proposes to take with respect thereto.
(ii) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 3.03 above shall be accompanied by a
written statement of the Company's certified independent public accountants (who
shall be a firm of established national reputation) that in making the
examination necessary for certification of such financial statements nothing has
come to their attention which would lead them to believe that the Company or any
Subsidiary of the Company has violated any provisions of Article 3 or
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of Article 4 of this Indenture or, if any such violation has occurred,
specifying the nature and period of existence thereof, it being understood that
such accountants shall not be liable directly or indirectly to any Person for
any failure to obtain knowledge of any such violation.
(iii) The Company shall, so long as any of the Securities are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of (a) any Default or Event of Default or (b) any event of default under any
other mortgage, indenture or instrument, an Officers' Certificate specifying
such Default, Event of Default or event of default and what action the Company
is taking or proposes to take with respect thereto.
Section 3.05. Taxes.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except (i) as contested in good faith by appropriate proceedings and with
respect to which appropriate reserves have been taken in accordance with GAAP or
(ii) where the failure to effect such payment is not adverse in any material
respect to the Holders.
Section 3.06. Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
Section 3.07. Limitations on Restricted Payments.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly: (i) declare or pay any dividend or make any
distribution on account of the Company's or any of its Subsidiaries' Equity
Interests (other than (w) Physician Joint Venture Distributions, (x) dividends
or distributions payable in Qualified Equity Interests of the Company, (y)
dividends or distributions payable to the Company or any Subsidiary of the
Company and (z) dividends or distributions by any Subsidiary of the Company
payable to all holders of a class of Equity Interests of such Subsidiary on a
pro rata basis); (ii) purchase, redeem or otherwise acquire or retire for value
any class of Equity Interests of the Company; (iii) make any principal payment
on, or purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness that is subordinated to the Securities issued hereunder, except at
the original final maturity date thereof or pursuant to the Refinancing; or (iv)
make any Restricted Investment (all such payments and other actions set forth in
clauses (i) through (iv) above being collectively referred to as "Restricted
Payments"), unless at the time of and after giving effect to such Restricted
Payment (the amount of any such Restricted Payment, if other than cash, shall be
the fair market value (as conclusively evidenced by a resolution of
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the Board of Directors set forth in an Officers' Certificate delivered to the
Trustee within 60 days prior to the date of such Restricted Payment) of the
asset(s) proposed to be transferred by the Company or such Subsidiary, as the
case may be, pursuant to such Restricted Payment):
(a) no Default or Event of Default shall have occurred and be
continuing at the time of such Restricted Payment or would occur
as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted
Payment had been made at the beginning of the most recently ended
four full fiscal quarter period for which internal financial
statements are available immediately preceding the date of such
Restricted Payment, have been permitted to incur at least $1.00
of additional Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in the first paragraph of Section 3.09; and
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments (other than Restricted Payments made pursuant
to clauses (ii), (iii), (iv) and (v) of the following paragraph)
made by the Company and its Subsidiaries after the date hereof,
is less than the sum of (1) 50% of the Consolidated Net Income of
the Company for the period (taken as one accounting period) from
the first day of the first full fiscal quarter commencing after
the date hereof to the end of the Company's most recently ended
full fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less 100%
of such deficit), plus (2) 100% of the aggregate net cash
proceeds received by the Company from the issue or sale (other
than to a Subsidiary of the Company) since the date hereof of (A)
Qualified Equity Interests of the Company or (B) debt securities
of the Company or any of its Subsidiaries that have been
converted into or exchanged for such Qualified Equity Interests
of the Company, plus (3) $20.0 million.
If no Default or Event of Default has occurred and is continuing, the
foregoing provisions will not prohibit:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment
would have complied with the provisions hereof;
(ii) the payment of cash dividends on any series of Disqualified Stock
issued after the date hereof in an aggregate amount not to exceed
the
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cash received by the Company since the date hereof upon issuance
of such Disqualified Stock;
(iii) the repurchase of the Performance Investment Plan investment
options from the holders thereof;
(iv) the redemption, repurchase, retirement or other acquisition of
any Equity Interests of the Company or any Subsidiary in exchange
for, or out of the net cash proceeds of, the substantially
concurrent sale (other than to a Subsidiary of the Company) of
Qualified Equity Interests of the Company); provided that the
amount of any such net cash proceeds that are utilized for any
such redemption, repurchase, retirement or other acquisition
shall be excluded from clause (c)(2) of the preceding paragraph;
(v) the defeasance, redemption or repurchase of subordinated
Indebtedness with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness or in exchange for or out of
the net cash proceeds from the substantially concurrent sale
(other than to a Subsidiary of the Company) of Qualified Equity
Interests of the Company; provided, that the amount of any such
net cash proceeds that are utilized for any such redemption,
repurchase, retirement or other acquisition shall be excluded
from clause (c)(2) of the preceding paragraph;
(vi) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of the Company or any Subsidiary of
the Company held by any member of the Company's (or any of its
Subsidiaries') management pursuant to any management equity
subscription agreement or stock option agreement in effect as of
the date hereof or entered into thereafter; provided, however,
that the aggregate price paid for all such repurchased, redeemed,
acquired or retired Equity Interests in any twelve-month period
shall not exceed $5.0 million and no Default or Event of Default
shall have occurred and be continuing immediately after such
transaction; and
(vii) the making and consummation of (A) a Senior Subordinated Asset
Sale Offer in accordance with the provisions of the Senior
Subordinated Note Indenture with any Excess Proceeds that remain
after consummation of a Senior Asset Sale Offer, within 120 days
of the consummation of such Senior Asset Sale Offer, or (B) a
Change of Control Offer with respect to the Senior Subordinated
Notes in accordance with the provisions of the Senior
Subordinated Note Indenture.
Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is
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permitted and setting forth the basis upon which the calculations required by
this covenant were computed, which calculations may be based upon the Company's
latest available financial statements.
Section 3.08. Limitations on Dividends and Other Payment Restrictions Affecting
Subsidiaries.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any consensual Transfer Restriction, except for such Transfer
Restrictions existing under or by reason of:
(a) Existing Indebtedness as in effect on the date hereof,
(b) the Indenture and the Securities,
(c) applicable law,
(d) any instrument governing Indebtedness or Capital Stock of a
Person acquired by the Company or any of its Subsidiaries as in
effect at the time of such acquisition (except to the extent such
Indebtedness was incurred in connection with or in contemplation
of such acquisition or in violation of Section 3.09 hereof),
which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person,
or the property or assets of the Person, so acquired, provided
that the Consolidated Cash Flow of such Person shall not be taken
into account in determining whether such acquisition was
permitted by the terms hereof except to the extent that such
Consolidated Cash Flow would be permitted to be dividends to the
Company without the prior consent or approval of any third party,
(e) customary non-assignment provisions in leases entered into in the
ordinary course of business and consistent with past practice,
(f) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions on the ability of any
of the Company's Subsidiaries to transfer the property so
acquired to the Company or any of its Subsidiaries,
(g) Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more restrictive than those
contained in the agreements governing the Indebtedness being
refinanced, or
(h) the New Credit Facility and related documentation as the same is
in effect on the date hereof and as amended or replaced from time
to time, provided that no such amendment or replacement is more
restrictive as
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to the matters enumerated above than the New Credit Facility and
related documentation as in effect on the date hereof.
Section 3.09. Limitations on Incurrence of Indebtedness and Issuance of
Preferred Stock
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, issue, assume, Guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") after the date hereof any Indebtedness (including
Acquired Debt) and the Company shall not issue any Disqualified Stock, and shall
not permit any of its Subsidiaries to issue any shares of preferred stock;
provided, however, that the Company may incur Indebtedness (including Acquired
Debt) and the Company may issue shares of Disqualified Stock, if the Fixed
Charge Coverage Ratio for the Company's most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is incurred or such
Disqualified Stock is issued would have been at least (x) 2.25 to 1 if such
incurrence or issuance occurs on or before March 31, 1996, or (y) 2.5 to 1 if
such incurrence or issuance occurs at any time thereafter, in each case
determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred or the
Disqualified Stock had been issued, as the case may be, at the beginning of such
four-quarter period. Indebtedness consisting of reimbursement obligations in
respect of a letter of credit will be deemed to be incurred when the letter of
credit is first issued. The Company will not permit any of the International
Subsidiaries to incur any Indebtedness other than Non-Recourse Debt.
The foregoing provisions will not apply to:
(a) the incurrence by the Company of Senior Term Debt pursuant to the
New Credit Facility in an aggregate principal amount at any time
outstanding not to exceed an amount equal to $2.0 billion less
the aggregate amount of all repayments, optional or mandatory, of
the principal of any Senior Term Debt (other than repayments that
are immediately reborrowed) that have been made since the date
hereof;
(b) the incurrence by the Company of Senior Revolving Debt and
letters of credit pursuant to the New Credit Facility in an
aggregate principal amount at any time outstanding (with letters
of credit being deemed to have a principal amount equal to the
maximum potential reimbursement obligation of the Company with
respect thereto) not to exceed an amount equal to $500.0 million
less the aggregate amount of all Net Proceeds of Asset Sales
applied to permanently reduce the commitments with respect to
such Indebtedness pursuant to Section 3.10 hereof;
(c) the incurrence by the Company of Indebtedness represented by the
Securities;
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(d) the incurrence by the Company and its Subsidiaries of the
Existing Indebtedness;
(e) the incurrence by the Company or any of its Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the
proceeds of which are used to extend, refinance, renew, replace,
defease, or refund, Indebtedness that was permitted by this
Indenture to be incurred (including, without limitation, Existing
Indebtedness);
(f) the incurrence by the Company of Hedging Obligations that are
incurred for the purpose of fixing or hedging interest rate or
currency risk with respect to any fixed or floating rate
Indebtedness that is permitted by the terms hereof to be
outstanding or any receivable or liability the payments of which
is determined by reference to a foreign currency; provided, that
the notional principal amount of any such Hedging Obligation does
not exceed the principal amount of the Indebtedness to which such
Hedging Obligation relates;
(g) the incurrence by the Company or any of its Subsidiaries of
Physician Support Obligations;
(h) the incurrence by the Company or any of its Subsidiaries of
intercompany Indebtedness between or among the Company and any of
its Subsidiaries;
(i) the incurrence by the Company or any of its Subsidiaries of
Indebtedness represented by performance bonds, standby letters of
credit or appeal bonds, in each case to the extent incurred in
the ordinary course of business of the Company or such
Subsidiary;
(j) the incurrence by any Subsidiary of the Company of Indebtedness,
the aggregate principal amount of which, together with all other
Indebtedness of the Company's Subsidiaries at the time
outstanding (excluding the Existing Indebtedness until repaid or
refinanced and excluding Physician Support Obligations), does not
exceed the greater of (1) 10% of the Company's Stockholders'
Equity or (2) $10.0 million; provided that, in case of clause (1)
only, the Fixed Charge Coverage Ratio for the Company's most
recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date
on which such Indebtedness is incurred would have been at least
(x) 2.25 to 1 if such incurrence occurs on or before March 31,
1996, or (y) 2.5 to 1 if such incurrence occurs at any time
thereafter, in each case determined on a pro forma basis
(including a pro forma application of the net proceeds
therefrom), as if such Indebtedness has been incurred at the
beginning of such four-quarter period; and
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(k) the incurrence by the Company of Indebtedness (in addition to
Indebtedness permitted by any other clause of this paragraph) in an aggregate
principal amount not exceeding $250.0 million at any one time outstanding.
Section 3.10. Asset Sales.
The Company shall not, and shall not permit any of its Subsidiaries to
consummate an Asset Sale, unless (i) the Company (or the Subsidiary as the case
may be) receives consideration at the time of such Asset Sale at least equal to
the fair market value (as conclusively determined by a resolution of the Board
of Directors set forth in an Officers' Certificate delivered to the Trustee) of
the assets or Equity Interests issued or sold or otherwise disposed of and (ii)
except in the case of a sale of Specified Assets, at least 80% of the
consideration therefor received by the Company or such Subsidiary is in the form
of cash; provided, however, that for purposes of this provision, (x) the amount
of (A) any liabilities (as shown on the Company's or such Subsidiary's most
recent balance sheet or in the notes thereto), of the Company or any Subsidiary
(other than, in the case of an Asset Sale by the Company, liabilities that are
by their terms subordinated to the Securities that are assumed by the transferee
of any such assets and (B) any securities or other obligations received by the
Company or any such Subsidiary from such transferee that are immediately
converted by the Company or such Subsidiary into cash (or as to which the
Company or such Subsidiary has received at or prior to the consummation of the
Asset Sale a commitment (which may be subject to customary conditions) from a
nationally recognized investment, merchant or commercial bank to convert into
cash within 90 days of the consummation of such Asset Sale and which are
thereafter actually converted into cash within such 90-day period) will be
deemed to be cash (but shall not be deemed to be Net Proceeds for purposes of
the following provisions until reduced to cash); and (y) the fair market value
of any Non-Cash Consideration received by the Company or a Subsidiary in any
Asset Sale shall be deemed to be cash (but shall not be deemed to be Net
Proceeds for purposes of the following provisions until reduced to cash) to the
extent that the aggregate fair market value (as conclusively determined by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of all Non-Cash Consideration (measured at the time
received and without giving effect to any subsequent changes in value) held by
the Company immediately after consummation of such Asset Sale does not exceed
10% of the Company's Stockholders' Equity.
Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, the Company may apply the Net Proceeds from such Asset Sale (i) to
purchase one or more Hospitals or Related Businesses and/or a controlling
interest in the Capital Stock of a Person owning one or more Hospitals and/or
one or more Related Businesses, (ii) to make a capital expenditure or to acquire
other tangible assets, in each case, that are used or useful in any business in
which the Company is permitted to be engaged pursuant to Section 3.15 hereof,
(iii) to permanently reduce Senior Term Debt or Existing Indebtedness of a
Subsidiary or (iv) to permanently reduce Senior Revolving Debt (and to
correspondingly reduce commitments with respect thereto), except that up to an
aggregate of $200.0 million of Net Proceeds from Asset Sales may be applied
after the date hereof to reduce Senior Revolving
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Debt without a corresponding reduction in commitments with respect thereto.
Pending the final application of any such Net Proceeds, the Company may
temporarily reduce Senior Revolving Debt or otherwise invest such Net Proceeds
in any manner that is not prohibited by the terms hereof. Any Net Proceeds from
Asset Sales that are not so invested or applied will be deemed to constitute
"Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $25.0
million, the Company shall make an offer to all holders of Securities and any
other Indebtedness of the Company ranking on a parity with the Securities from
time to time outstanding with similar provisions requiring the Company to make
an offer to purchase or to redeem such Indebtedness with the proceeds from any
assets, pro rata in proportion to the respective principal amounts of the
Securities and such other Indebtedness then outstanding (a "Senior Asset Sale
Offer") to purchase the maximum principal amount of Securities and such other
Indebtedness that may be purchased out of the Excess Proceeds, at an offer price
in cash equal to 100% of the principal amount thereof (the "Purchase Price")
plus accrued and unpaid interest thereon, if any, to the date of purchase, in
accordance with the procedures set forth in Section 2.15 hereof. To the extent
that aggregate amount of Securities and such other Indebtedness tendered
pursuant to a Senior Asset Sale Offer is less than the Excess Proceeds, the
Company may use any remaining Excess Proceeds for general corporate purposes
including an offer to purchase Senior Subordinated Notes pursuant to Section
4.10 of the Senior Subordinated Note Indenture. If the aggregate principal
amount of Securities and such other Indebtedness surrendered by holders pursuant
to a Senior Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee
shall select the Securities and such other Indebtedness to be purchased on a pro
rata basis. Upon completion of a Senior Asset Sale Offer, the amount of Excess
Proceeds shall be reset at zero.
Section 3.11. Limitations on Transactions with Affiliates.
The Company shall not, and shall not permit any of its Subsidiaries
to, sell, lease, transfer or otherwise dispose of any of its properties or
assets to, or purchase any property or assets from, or enter into or make any
contract, agreement, understanding, loan, advance or Guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction")
unless (i) such Affiliate Transaction is on terms that are no less favorable to
the Company or the relevant Subsidiary than those that could have been obtained
in a comparable transaction by the Company or such Subsidiary with an unrelated
Person and (ii) the Company delivers to the Trustee (a) with respect to any
Affiliate Transaction involving aggregate consideration in excess of $5.0
million, a resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with clause (i)
above and that such Affiliate Transaction was approved by a majority of the
disinterested members of the Board of Directors and (b) with respect to any
Affiliate Transaction involving aggregate consideration in excess of $15.0
million, an opinion as to the fairness of such Affiliate Transaction to the
Company or such Subsidiary from a financial point of view issued by an
unaffiliated investment banking firm of national standing; provided, however,
that (x) transactions or payments pursuant to any employment arrangements or
employee or director benefit plans entered into by the Company or any of its
Subsidiaries in the ordinary course of business and consistent with the past
practice of the Company or such Subsidiary, (y) transactions between or among
the Company and/or its
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Subsidiaries and (z) Restricted Payments permitted under Section 3.07, in each
case, shall not be deemed Affiliate Transactions.
Section 3.12. Limitations on Liens.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly create, incur, assume or suffer to exist any Lien
(except Permitted Liens) on any asset now owned or hereafter acquired, or on any
income or profits therefrom, or assign or convey any right to receive income
therefrom, unless all payments due hereunder and under the Securities are
secured on an equal and ratable basis with the Obligations so secured until such
time as such Obligations are no longer secured by a Lien.
Section 3.13. Change of Control.
Upon the occurrence of a Change of Control Triggering Event, each
Holder of Securities shall have the right to require the Company to repurchase
all or any part (equal to $1,000 or an integral multiple thereof) of such
Holder's Securities pursuant to an offer described below (the "Change of Control
Offer") at an offer price in cash equal to 101% of the aggregate principal
amount thereof, plus accrued and unpaid interest, if any, thereon to the date of
repurchase (the "Change of Control Payment") on a date that is not more than 90
days after the occurrence of such Change of Control Triggering Event (the
"Change of Control Payment Date"). The Company shall comply with the
requirements of Regulation 14e-1 under the Exchange Act and any other securities
laws and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Securities as a result of a
Change of Control.
Within 30 days following any Change of Control Triggering Event, the
Company shall mail, or at the Company's request the Trustee shall mail, a notice
of a Change of Control to each Holder (at its last registered address with a
copy to the Trustee and the Paying Agent) offering to repurchase the Securities
held by such Holder pursuant to the procedure specified in such notice. The
Change of Control Offer shall remain open from the time of mailing until the
close of business on the Business Day preceding the Change of Control Payment
Date. The notice, which shall govern the terms of the Change of Control Offer,
shall state:
(1) that the Change of Control Offer is being made pursuant to this
Section 3.13 and that all Securities tendered will be accepted
for payment;
(2) the Change of Control Payment and the Change of Control Payment
Date, which date shall be no earlier than 30 days nor later than
60 days from the date such notice is mailed;
(3) that any Securities not tendered will continue to accrue interest
in accordance with the terms of the Indenture;
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(4) that, unless the Company defaults in the payment of the Change of
Control Payment, all Securities accepted for payment pursuant to
the Change of Control Offer shall cease to accrue interest after
the Change of Control Payment Date;
(5) that Holders electing to have Securities purchased pursuant to
the Change of Control Offer will be required to surrender their
Securities, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Security completed, to the Paying
Agent at the address specified in the notice prior to the close
of business on the Business Day preceding the Change of Control
Payment Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on
the Business Day preceding the Change of Control Payment Date, a
facsimile transmission or letter setting forth the name of the
Holder, the principal amount of Securities the Holder delivered
for purchase, and a statement that such Holder is withdrawing his
election to have such Securities purchased;
(7) that Holders whose Securities are being purchased only in part
will be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered, which
unpurchased portion must be equal to $1,000 in principal amount
or an integral multiple thereof; and
(8) the circumstances and relevant facts regarding such Change of
Control (including, but not limited to, information with respect
to pro forma historical and, if available, projected financial
information after giving effect to such Change of Control,
information regarding the Person or Persons acquiring control and
such Person's or Persons' business plans going forward).
On the Change of Control Payment Date, the Company shall, to the
extent lawful, (i) accept for payment Securities or portions thereof properly
tendered and not withdrawn pursuant to the Change of Control Offer, (ii) deposit
with the Paying Agent an amount equal to the Change of Control Payment in
respect of all Securities or portions thereof so tendered and (iii) deliver or
cause to be delivered to the Trustee the Securities so accepted together with an
Officers' Certificate stating the aggregate principal amount of Securities or
portions thereof being purchased by the Company. The Paying Agent shall
promptly mail to each Holder of Securities so tendered payment in an amount
equal to the Change of Control Payment for such Securities, and the Trustee
shall promptly authenticate and mail or deliver (or cause to be transferred by
book entry) a new Security to such Holder equal in principal amount to any
unpurchased portion of the Securities surrendered, if any; provided, that each
such new Security shall be in a principal amount of $1,000 or an integral
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multiple thereof. The Company shall publicly announce the results of the Change
of Control Offer on or as soon as practicable after the Change of Control
Payment Date.
Section 3.14. Corporate Existence.
Subject to Section 3.13 and Article 4 hereof, the Company shall do or
cause to be done all things necessary to preserve and keep in full force and
effect (i) its corporate existence, and the corporate, partnership or other
existence of each of its Subsidiaries, in accordance with the respective
organizational documents (as the same may be amended from time to time) of each
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its Subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders.
Section 3.15. Line of Business
The Company shall not, and shall not permit any of its Subsidiaries
to, engage to any material extent in any business other than the ownership,
operation and management of Hospitals and Related Businesses.
Section 3.16. Limitations on Issuances of Guarantees of Indebtedness by
Subsidiaries
The Company shall not permit any Subsidiary, directly or indirectly,
to Guarantee or secure the payment of any other Indebtedness of the Company or
any of its Subsidiaries (except Indebtedness of a Subsidiary of such Subsidiary
or Physician Support Obligations) unless such Subsidiary simultaneously executes
and delivers a supplemental indenture to this Indenture providing for the
Guarantee of the payment of the Securities by such Subsidiary, which Guarantee
shall be senior to or pari passu with such Subsidiary's Guarantee of or pledge
to secure such other Indebtedness. Notwithstanding the foregoing, any such
Guarantee by a Subsidiary of the Securities shall be substantially in the form
of Exhibit B hereto and shall provide by its terms that it shall be
automatically and unconditionally released and discharged upon the sale or other
disposition, by way of merger or otherwise, to any Person not an Affiliate of
the Company, of all of the Company's stock in, or all or substantially all the
assets of, such Subsidiary, which sale or other disposition is made in
compliance with, and the Net Proceeds therefrom are applied in accordance with,
the applicable provisions hereof. The foregoing provisions will not be
applicable to any one or more Guarantees of up to $10.0 million in aggregate
principal amount of Indebtedness of the Company at any time outstanding.
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Section 3.17. No Amendment to Subordination Provisions of Senior Subordinated
Note Indenture
The Company shall not amend, modify or alter the Senior Subordinated
Note Indenture in any way that would (i) increase the principal of, advance the
final maturity date of or shorten the Weighted Average Life to Maturity of any
Senior Subordinated Notes such that the final maturity date of the Senior
Subordinated Notes is earlier than the 91st day following the final maturity
date of the Securities or (ii) amend the provisions of Article 10 of the Senior
Subordinated Indenture (which relates to subordination) in a manner that would
be adverse to the Holders of the Securities.
ARTICLE 4
SUCCESSORS
Section 4.01. Limitations On Mergers, Consolidations or Sales of Assets
The Company may not consolidate or merge with or into (whether or not
the Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions to another corporation, Person or
entity unless:
(i) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger
(if other than the Company) or to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the
United States, any state thereof or the District of Columbia;
(ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity
or Person to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made assumes all
the Obligations of the Company pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee, under
the Securities and the Indenture;
(iii) immediately after such transaction no Default or Event of
Default exists; and
(iv) the Company or any entity or Person formed by or surviving any
such consolidation or merger (if other than the Company), or to
which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made (a) will have Consolidated Net
Worth (immediately after giving effect to the transaction) equal
to or greater than the Consolidated Net Worth of the Company
immediately preceding the transaction and (b) will, at the time
of such transaction and after giving pro forma effect thereto as
if such transaction had occurred at the
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beginning of the applicable four-quarter period, be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph
of Section 3.09.
The Company shall deliver to the Trustee prior to the consummation of
the proposed transaction an Officers' Certificate to the foregoing effect and an
Opinion of Counsel, covering clauses (i) through (iv) above, stating that the
proposed transaction and such supplemental indenture comply with this Indenture.
The Trustee shall be entitled to conclusively rely upon such Officers'
Certificate and Opinion of Counsel.
Section 4.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 4.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, assignment, transfer, lease, conveyance or
other disposition, the provisions of this Indenture referring to the "Company"
shall refer instead to the successor corporation), and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person has been named as the Company, herein.
ARTICLE 5
DEFAULTS AND REMEDIES
Section 5.01. Events of Default.
Each of the following constitutes an "Event of Default":
(i) a default for 30 days in the payment when due of interest on
the Securities;
(ii) a default in payment when due of principal of or premium, if
any, on the Securities at maturity or otherwise;
(iii) a default in the performance or breach of Sections 3.07,
3.09, 3.10, or 3.13;
(iv) a failure by the Company to comply with any other covenant
or agreement in the Indenture or the Securities for the
period and after the notice specified below;
(v) any default that occurs under any mortgage, indenture or
instrument under which there may be issued or by which there
may be secured or evidenced any Indebtedness for money
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borrowed by the Company or any of its Significant
Subsidiaries (or the payment of which is Guaranteed by the
Company or any of its Significant Subsidiaries), whether
such Indebtedness or Guarantee exists on the date hereof or
is created after the date hereof, which default (i)
constitutes a Payment Default or (ii) results in the
acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any
other such Indebtedness under which there has been a Payment
Default or that has been so accelerated, aggregates $25.0
million or more;
(vi) a failure by the Company or any of its Significant
Subsidiaries to pay a final judgment or final judgments
aggregating in excess of $25.0 million entered by a court or
courts of competent jurisdiction against the Company or any
of its Significant Subsidiaries if such final judgment or
judgments remain unpaid or undischarged for a period (during
which execution shall not be effectively stayed) of 60 days
after their entry;
(vii) the Company or any Significant Subsidiary thereof
pursuant to or within the meaning of any Bankruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief against it
in an involuntary case in which it is the debtor,
(c) consents to the appointment of a Custodian of it or for
all or substantially all of its property,
(d) makes a general assignment for the benefit of its
creditors, or
(e) admits in writing its inability generally to pay its
debts as the same become due; and
(viii) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(a) is for relief against the Company or any Significant
Subsidiary thereof in an involuntary case in which it
is the debtor,
(b) appoints a Custodian of the Company or any Significant
Subsidiary thereof or for all or substantially all of
the
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property of the Company or any Significant Subsidiary
thereof, or
(c) orders the liquidation of the Company or any
Significant Subsidiary thereof,
and the order or decree remains unstayed and in effect for 60
days.
The term "Bankruptcy Law" means title 11, U.S. Code or any similar
federal or state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
A Default under clause (iv) is not an Event of Default until the
Trustee notifies the Company in writing, or the Holders of at least 25% in
principal amount of the then outstanding Securities notify the Company and the
Trustee in writing, of the Default and the Company does not cure the Default
within 60 days after receipt of such notice. The written notice must specify
the Default, demand that it be remedied and state that the notice is a "Notice
of Default."
If an Event of Default occurs prior to the maturity of the Securities
by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of the Company the primary purpose of which was to allow the Company to
avoid the prohibition on redemption of the Securities prior to the date of
maturity, then, in addition to all amounts otherwise payable with respect to
such Securities, a premium with respect thereto (expressed as a percentage of
the amount that would otherwise be due but for the provisions of this sentence),
shall also become and be immediately due and payable if such Securities are
repaid during the 12-month period beginning on March __ of the years set forth
below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
1994........................ %
1995........................ %
1996........................ %
1997........................ %
1998........................ %
1999........................ %
2000........................ %
2001........................ %
</TABLE>
Any determination regarding the primary purpose of any such action or
inaction, as the case may be, shall be made by and set forth in a resolution of
the Board of Directors (including the concurrence of a majority of the
independent directors of the Company then serving) delivered to the Trustee
after consideration of the business reasons for such action or inaction, other
than the avoidance of payment of such premium or prohibition on redemption. In
the absence of fraud, each such determination shall be final and binding upon
the Holders of Securities. Subject to Section 6.01 hereof, the Trustee shall
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<PAGE>
be entitled to rely on the determination set forth in any such resolutions
delivered to the Trustee.
Section 5.02. Acceleration.
If an Event of Default (other than an Event of Default specified in
clauses (vii) and (viii) of Section 5.01) occurs and is continuing, the Trustee
by notice to the Company, or the Holders of not less than 25% in aggregate
principal amount of the then outstanding Securities by written notice to the
Company and the Trustee, may declare the unpaid principal of, premium, if any,
and any accrued and unpaid interest on all the Securities to be due and payable.
Upon such declaration the principal, premium, if any, and interest shall be due
and payable immediately. If an Event of Default specified in clause (vii) or
(viii) of Section 5.01 occurs with respect to the Company or any Significant
Subsidiary thereof such an amount shall ipso facto become and be immediately due
and payable without any declaration or other act on the part of the Trustee or
any Holder.
Section 5.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal or interest on
the Securities or to enforce the performance of any provision of the Securities
or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. All remedies are cumulative
to the extent permitted by law.
Section 5.04. Waiver of Past Defaults.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Securities by written notice to the Trustee may waive an
existing Default or Event of Default and its consequences under this Indenture,
except a continuing Default or Event of Default in the payment of the principal
of, premium, if any, or interest on any Security. Upon any such waiver, such
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.
Section 5.05. Control by Majority.
Holders of a majority in principal amount of the then outstanding
Securities may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders or that may involve the
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Trustee in personal liability. The Trustee may take any other action which it
deems proper which is not inconsistent with any such direction.
Section 5.06. Limitation on Suits.
A Holder may pursue a remedy with respect to this Indenture or the
Securities only if:
(i) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(ii) the Holders of at least 25% in principal amount of the then
outstanding Securities make a written request to the Trustee to
pursue the remedy;
(iii)such Holder or Holders offer and, if requested, provide to the
Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(iv) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the
provision of indemnity; and
(v) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Securities do not give the Trustee
a direction inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another Holder or
to obtain a preference or priority over another Holder.
Section 5.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal, premium, if any, and interest on the
Security, on or after the respective due dates expressed in the Security, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of the Holder.
Section 5.08. Collection Suit by Trustee.
If an Event of Default specified in Section 5.01(i) or (ii) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company or any other obligor for the
whole amount of principal, premium, if any, and interest remaining unpaid on the
Securities and interest on overdue principal and, to the extent lawful, interest
and such further amount as shall be sufficient to cover amounts due the Trustee
under Section 6.07, including the costs and expenses of collection, including
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
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Section 5.09. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relative to the Company (or any
other obligor upon the Securities), its creditors or its property and shall be
entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 6.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 6.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties which the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall
be deemed to authorize the Trustee to authorize or consent to or accept or adopt
on behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
Section 5.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 6.07, including payment of all compensation, expense and liabilities
incurred, and all advances made, by the Trustee and the costs and expenses of
collection;
Second: to Holders for amounts due and unpaid on the Securities for
principal, premium, if any, and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Securities
for principal, premium, if any and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 5.10 upon five Business Days prior notice to
the Company.
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Section 5.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder pursuant to Section 5.07, or a suit by Holders of more than 10% in
principal amount of the then outstanding Securities.
ARTICLE 6
TRUSTEE
Section 6.01. Duties of Trustee.
(i) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(ii) Except during the continuance of an Event of Default known to the
Trustee:
(a) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture or the TIA and the Trustee
need perform only those duties that are specifically set forth in
this Indenture or the TIA and no others, and no implied covenants
or obligations shall be read into this Indenture against the
Trustee, and
(b) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Indenture. However, the Trustee shall
examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
(iii) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(a) this paragraph does not limit the effect of paragraph (ii)
of this Section;
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(b) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the
pertinent facts; and
(c) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.05 hereof.
(iv) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(i), (ii), and (iii) of this Section.
(v) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee may refuse to perform
any duty or exercise any right or power unless it receives security and
indemnity satisfactory to it against any loss, liability or expense.
(vi) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Absent written instruction from the Company, the Trustee shall not be required
to invest any such money. Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by law.
(vii) The Trustee shall not be deemed to have knowledge of any matter
unless such matter is actually known to a Responsible Officer.
Section 6.02. Rights of Trustee.
(i) The Trustee may conclusively rely upon any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(ii) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall
not be liable for any action it takes or omits to take in good faith in reliance
on such Officers' Certificate or Opinion of Counsel. The Trustee may consult
with counsel and the written advice of such counsel or any Opinion of Counsel
shall be full and complete authorization and protection from liability in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon.
(iii) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
(iv) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers conferred upon
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<PAGE>
it by this Indenture. A permissive right granted to the Trustee hereunder shall
not be deemed an obligation to act.
(v) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
Section 6.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee is
subject to Sections 6.10 and 6.11 hereof.
Section 6.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Securities, nor shall it
be accountable for the Company's use of the proceeds from the Securities or any
money paid to the Company or upon the Company's direction under any provision of
this Indenture, nor shall it be responsible for the use or application of any
money received by any Paying Agent other than the Trustee, nor shall it be
responsible for any statement or recital herein or any statement in the
Securities or any other document in connection with the sale of the Securities
or pursuant to this Indenture other than its certificate of authentication.
Section 6.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders a notice of the Default
or Event of Default within 90 days after it occurs. Except in the case of a
Default or Event of Default in payment on any Security, the Trustee may withhold
the notice if and so long as a committee of its Responsible Officers in good
faith determines that withholding the notice is in the interests of the Holders.
Section 6.06. Reports by Trustee to Holders.
Within 60 days after each December 31 beginning with the December 31
following the date hereof, the Trustee shall mail to the Holders a brief report
dated as of such reporting date that complies with TIA (S) 313(a) (but if no
event described in TIA (S) 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA (S) 313(b). The Trustee shall also transmit by mail all
reports as required by TIA (S) 313(c).
A copy of each report at the time of its mailing to the Holders shall
be mailed to the Company and filed with the Commission and each stock exchange
on which the
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Securities are listed. The Company shall promptly notify the Trustee when the
Securities are listed on any stock exchange.
Section 6.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time such
compensation for its acceptance of this Indenture and services hereunder as the
Company and Trustee shall agree in writing. The Trustee's compensation shall
not be limited by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities, damages, claims or expenses incurred by it arising out of or in
connection with the acceptance of its duties and the administration of the
trusts under this Indenture, except as set forth below. The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify the Company shall not relieve the Company of
its obligations hereunder. The Company shall defend the claim and the Trustee
shall cooperate in the defense. The Trustee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel. The Company
need not pay for any settlement made without its consent, which consent shall
not be unreasonably withheld.
The obligations of the Company under this Section 6.07 shall survive
the satisfaction and discharge of this Indenture.
The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through its own negligence or bad
faith.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Securities on all money or property held
or collected by the Trustee, except that held in trust to pay principal and
interest on particular Securities. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 5.01(vii) or (viii) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its agents
and counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
Section 6.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
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The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of a majority
in principal amount of the then outstanding Securities may remove the Trustee by
so notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:
(1) the Trustee fails to comply with Section 6.10 hereof;
(2) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(3) a Custodian or public officer takes charge of the Trustee or its
property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Securities may appoint
a successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of at least 10% in principal amount of the then outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee after written request by any Holder who has been a
Holder for at least six months fails to comply with Section 6.10, such Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, provided all sums owing
to the Trustee hereunder have been paid and subject to the Lien provided for in
Section 6.07 hereof. Notwithstanding replacement of the Trustee pursuant to
this Section 6.08, the Company's obligations under Section 6.07 hereof shall
continue for the benefit of the retiring Trustee.
Section 6.09. Successor Trustee or Agent by Merger, etc.
If the Trustee or any Agent consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee or Agent.
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Section 6.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America or of any state thereof authorized under such laws to exercise corporate
trustee power, shall be subject to supervision or examination by federal or
state authority and shall have a combined capital and surplus of at least $100.0
million as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA (S) 310(a)(1), (2) and (5). The Trustee is subject to TIA
(S) 310(b).
Section 6.11. Preferential Collection of Claims Against Company.
The Trustee is subject to TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
ARTICLE 7
DISCHARGE OF INDENTURE
Section 7.01. Defeasance and Discharge of this Indenture and the Securities.
The Company may, at the option of its Board of Directors evidenced by
a resolution set forth in an Officers' Certificate, at any time, with respect to
the Securities, elect to have either Section 7.02 or 7.03 be applied to all
outstanding Securities upon compliance with the conditions set forth below in
this Article 7.
Section 7.02. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 7.01 of the option
applicable to this Section 7.02, the Company shall be deemed to have been
discharged from its obligations with respect to all outstanding Securities on
the date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, such Legal Defeasance means that the Company
shall be deemed to have paid and discharged the entire Indebtedness represented
by the outstanding Securities, which shall thereafter be deemed to be
"outstanding" only for the purposes of Section 7.05 and the other Sections of
this Indenture referred to in clauses (i) and (ii) of this Section 7.02, and to
have satisfied all its other obligations under such Securities and this
Indenture (and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging the same), except for the
following which shall survive until otherwise terminated or discharged
hereunder: (i) the rights of Holders of outstanding Securities to receive
solely from the trust fund described in Section 7.04, and as more fully set
forth in such Section, payments in respect of the principal of, premium, if any,
and interest on such Securities when such payments are due, (ii) the Company's
obligations with respect to such Securities under
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Sections 2.04, 2.06, 2.07, 2.10 and 3.02, (iii) the rights, powers, trusts,
duties and immunities of the Trustee hereunder, including, without limitation,
the Trustee's rights under Section 6.07, and the Company's obligations in
connection therewith and (iv) this Article 7. Subject to compliance with this
Article 7, the Company may exercise its option under this Section 7.02
notwithstanding the prior exercise of its option under Section 7.03 with respect
to the Securities.
Section 7.03. Covenant Defeasance.
Upon the Company's exercise under Section 7.01 of the option
applicable to this Section 7.03, the Company shall be released from its
obligations under the covenants contained in Sections 2.15, 3.07, 3.08, 3.09,
3.10, 3.11, 3.12, 3.13, 3.15, 3.16 and 3.17 and Article 4 with respect to the
outstanding Securities on and after the date the conditions set forth below are
satisfied (hereinafter, "Covenant Defeasance"), and the Securities shall
thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Securities shall not be deemed outstanding for accounting purposes). For this
purpose, such Covenant Defeasance means that, with respect to the outstanding
Securities, the Company may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 5.01(iii),
but, except as specified above, the remainder of this Indenture and such
Securities shall be unaffected thereby. In addition, upon the Company's
exercise under Section 7.01 of the option applicable to this Section 7.03,
Sections 5.01(iv) through 5.01(viii) shall not constitute Events of Default.
Section 7.04. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to application of either Section
7.02 or Section 7.03 to the outstanding Securities:
(i) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 6.10 who shall agree to comply with the provisions of this
Article 7 applicable to it) as trust funds in trust for the purpose of
making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such Securities, (a)
cash in U.S. Dollars in an amount, or (b) non-callable Government
Securities which through the scheduled payment of principal and interest in
respect thereof in accordance with their terms will provide, not later than
one day before the due date of any payment, cash in U.S. Dollars in an
amount, or (c) a combination thereof, in such amounts, as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered
to the Trustee, to pay and discharge and which shall be
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applied by the Trustee (or other qualifying trustee) to pay and discharge
the principal of, premium, if any, and interest on the outstanding
Securities on the stated maturity date of such principal or installment of
principal, premium, if any, or interest.
(ii) In the case of an election under Section 7.02, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States
confirming that (a) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (b) since the date
hereof, there has been a change in the applicable federal income tax law,
in either case to the effect that, and based thereon such opinion shall
confirm that, the Holders of the outstanding Securities will not recognize
income, gain or loss for federal income tax purposes as a result of such
Legal Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such Legal Defeasance had not occurred.
(iii) In the case of an election under Section 7.03, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States
confirming that the Holders of the outstanding Securities will not
recognize income, gain or loss for federal income tax purposes as a result
of such Covenant Defeasance and will be subject to federal income tax in
the same amount, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred.
(iv) No Default or Event of Default with respect to the Securities
shall have occurred and be continuing on the date of such deposit (other
than a Default or Event of Default resulting from the borrowing of funds to
be applied to such deposit) or, insofar as Subsection 5.01(vii) or
5.01(viii) is concerned, at any time in the period ending on the 91st day
after the date of such deposit (it being understood that this condition
shall not be deemed satisfied until the expiration of such period).
(v) Such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under any other material
agreement or instrument (other than this Indenture) to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound.
(vi) In the case of an election under either Section 7.02 or 7.03, the
Company shall have delivered to the Trustee an Opinion of Counsel to the
effect that after the 91st day following the deposit, the trust funds will
not be subject to the effect of any applicable Bankruptcy Law.
(vii) In the case of an election under either Section 7.02 or 7.03,
the Company shall have delivered to the Trustee an Officers' Certificate
stating that the deposit made by the Company pursuant to its election under
Section 7.02 or 7.03 was not made by the Company with the intent of
preferring the Holders of the Securities over other creditors of the
Company with the intent of defeating, hindering, delaying or defrauding
creditors of the Company or others.
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(viii) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel in the United States, each stating
that all conditions precedent provided for relating to either the Legal
Defeasance under Section 7.02 or the Covenant Defeasance under Section 7.03
(as the case may be) have been complied with as contemplated by this
Section 7.04.
Section 7.05. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.
Subject to Section 7.06, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 7.05, the
"Trustee") pursuant to Section 7.04 in respect of the outstanding Securities
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Securities and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as Paying
Agent) as the Trustee may determine, to the Holders of such Securities of all
sums due and to become due thereon in respect of principal, premium, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 7.04 or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding
Securities.
Anything in this Article 7 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the Company's
request any money or non-callable Government Securities held by it as provided
in Section 7.04 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
7.04(i)), are in excess of the amount thereof which would then be required to be
deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
Section 7.06. Repayment to Company.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on any Security and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its written request or (if then held by the Company)
shall be discharged from such trust; and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in the New York Times and The
Wall Street Journal (national edition), notice that such money
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remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
Section 7.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any U.S. Dollars or
non-callable Government Securities in accordance with Section 7.02 or 7.03, as
the case may be, by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, then
the Company's obligations under this Indenture and the Securities shall be
revived and reinstated as though no deposit had occurred pursuant to Section
7.02 or 7.03 until such time as the Trustee or Paying Agent is permitted to
apply all such money in accordance with Section 7.02 or 7.03, as the case may
be; provided, however, that, if the Company makes any payment of principal of,
premium, if any, or interest on any Security following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Security to receive such payment from the money held by the Trustee or
Paying Agent.
ARTICLE 8
AMENDMENT, SUPPLEMENT AND WAIVER
Section 8.01. Without Consent of Holders.
The Company and the Trustee may amend or supplement this Indenture or
the Securities without the consent of any Holder:
(i) to cure any ambiguity, defect or inconsistency;
(ii) to provide for uncertificated Securities in addition to or
in place of certificated Securities;
(iii) to provide for any supplemental indenture required pursuant
to Section 3.16 hereof;
(iv) to provide for the assumption of the Company's obligations
to the Holders of the Securities in the case of a merger,
consolidation or sale of assets pursuant to Article 4
hereof;
(v) to make any change that would provide any additional rights
or benefits to the Holders of the Securities or that does
not adversely affect the legal rights hereunder of any
Holder; or
(vi) to comply with requirements of the Commission in order to
effect or maintain the qualification of this Indenture under
the TIA.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such supplemental indenture,
and upon receipt by the Trustee of the documents described in Section 8.06
hereof, the Trustee shall join with the
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Company in the execution of any supplemental indenture authorized or permitted
by the terms of this Indenture and to make any further appropriate agreements
and stipulations which may be therein contained, but the Trustee shall not be
obligated to enter into such supplemental indenture which affects its own
rights, duties or immunities under this Indenture or otherwise.
Section 8.02. With Consent of Holders.
Except as provided in the next succeeding paragraphs, the Indenture or
the Securities may be amended or supplemented with the consent of the Holders of
at least a majority in principal amount of the Securities then outstanding
(including consents obtained in connection with a tender offer or exchange offer
for such Securities), and any existing default or compliance with any provision
of the Indenture or the Securities may be waived with the consent of the Holders
of a majority in principal amount of the then outstanding Securities (including
consents obtained in connection with a tender offer or exchange offer for such
Securities).
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such supplemental indenture,
and upon the filing with the Trustee of evidence satisfactory to the Trustee of
the consent of the Holders as aforesaid, and upon receipt by the Trustee of the
documents described in Section 8.06 hereof, the Trustee shall join with the
Company in the execution of such supplemental indenture unless such supplemental
indenture affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Holders under this
Section 8.02 to approve the particular form of any proposed amendment or waiver,
but it shall be sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture or waiver.
Subject to Sections 5.04 and 5.07 hereof, the Holders of a majority in aggregate
principal amount of the Securities then outstanding may waive compliance in a
particular instance by the Company with any provision of this Indenture or the
Securities. Without the consent of each Holder affected, however, an amendment
or waiver may not (with respect to any Security held by a non-consenting
Holder):
(i) reduce the principal amount of Securities whose Holders must
consent to an amendment, supplement or waiver;
(ii) reduce the principal of or change the fixed maturity of any
Security;
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(iii) reduce the rate of or change the time for payment of interest
on any Security;
(iv) waive a Default or Event of Default in the payment of principal
of or premium, if any, or interest on the Securities (except a
rescission of acceleration of the Securities by the Holders of at
least a majority in aggregate principal amount of the Securities
and a waiver of the payment default that resulted from such
acceleration);
(v) make any Security payable in money other than that stated in the
Securities;
(vi) make any change in Section 5.04 or 5.07 hereof, or
(vii) make any change in this sentence of this Section 8.02.
Section 8.03. Compliance with TIA.
Every amendment to this Indenture or the Securities shall be set
forth in a supplemental indenture that complies with the TIA as then in effect.
Section 8.04. Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to it
by a Holder is a continuing consent by the Holder and every subsequent Holder of
a Security or portion of a Security that evidences the same debt as the
consenting Holder's Security, even if notation of the consent is not made on any
Security. However, any such Holder or subsequent Holder may revoke the consent
as to its Security if the Trustee receives written notice of revocation before
the date the waiver or amendment becomes effective. An amendment or waiver
becomes effective in accordance with its terms and thereafter binds every
Holder.
The Company may, but shall not be obligated to, fix a record date
for determining which Holders must consent to such amendment or waiver. If the
Company fixes a record date, the record date shall be fixed at (i) the later of
30 days prior to the first solicitation of such consent or the date of the most
recent list of Holders furnished to the Trustee prior to such solicitation
pursuant to Section 2.05 or (ii) such other date as the Company shall designate.
Section 8.05. Notation on or Exchange of Securities.
The Trustee may place an appropriate notation about an amendment
or waiver on any Security thereafter authenticated. The Company in exchange for
all Securities may issue and the Trustee shall authenticate new Securities that
reflect the amendment or waiver.
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Failure to make the appropriate notation or issue a new Security
shall not affect the validity and effect of such amendment or waiver.
Section 8.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment or supplemental indenture
authorized pursuant to this Article 8 if the amendment does not adversely affect
the rights, duties, liabilities or immunities of the Trustee. If it does, the
Trustee may, but need not, sign it. In signing or refusing to sign such
amendment or supplemental indenture, the Trustee shall be entitled to receive
and, subject to Section 6.01, shall be fully protected in relying upon, an
Officers' Certificate and an Opinion of Counsel as conclusive evidence that such
amendment or Supplemental Indenture is authorized or permitted by this
Indenture, that it is not inconsistent herewith, and that it will be valid and
binding upon the Company in accordance with its terms. The Company may not sign
an amendment or supplemental indenture until the Board of Directors approves it.
ARTICLE 9
MISCELLANEOUS
Section 9.01. TIA Controls.
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by TIA (S)318(c), the imposed duties shall control.
Section 9.02. Notices.
Any notice or communication by the Company or the Trustee to the
other is duly given if in writing and delivered in person or mailed by first
class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
other's address:
If to the Company:
National Medical Enterprises, Inc.
2700 Colorado Avenue
Santa Monica, California 90404
Telecopier No.: (310) 998-______
Attention: Treasurer
With a copy to:
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Telecopier No.: (213) 687-5600
55
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Attention: Thomas C. Janson, Jr.
If to the Trustee:
The Bank of New York
101 Barclay Street, 21 West
New York, New York 10286
Telecopier No.: (212) 815-5915
Attention: Corporate Trust Trustee Administration
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first
class mail, certified or registered, return receipt requested, or by overnight
air courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar. Any notice or communication shall also be so mailed to
any Person described in TIA (S) 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it
shall mail a copy to the Trustee and each Agent at the same time.
Section 9.03. Communication by Holders with Other Holders.
Holders may communicate pursuant to TIA (S) 312(b) with other
Holders with respect to their rights under this Indenture or the Securities. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA (S) 312(c).
Section 9.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to
take any action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate (which shall include the statements
set forth in Section 9.05 hereof)
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stating that, in the opinion of the signers, all conditions precedent and
covenants, if any, provided for in this Indenture relating to the proposed
action have been satisfied; and
(2) an Opinion of Counsel (which shall include the statements set
forth in Section 9.05 hereof) stating that, in the opinion of such counsel,
all such conditions precedent and covenants have been satisfied.
Section 9.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA (S) 314(a)(4)) shall include:
(1) a statement that the person making such certificate or opinion has
read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and
(4) a statement as to whether or not, in the opinion of such person,
such condition or covenant has been satisfied; provided, however, that with
respect to matters of fact, an Opinion of Counsel may rely on an Officers'
Certificate or certificates of public officials.
Section 9.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules and
set reasonable requirements for its functions.
Section 9.07. Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which
banking institutions in The City of New York or at a place of payment are
authorized or obligated by law, regulation or executive order to remain closed.
If a payment date is a Legal Holiday at a place of payment, payment may be made
at that place on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period.
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Section 9.08. No Personal Liability of Directors, Officers, Employees and
Stockholders
No director, officer, employee, incorporator or stockholder of the Company,
as such, shall have any liability for any obligations of the Company under the
Securities, the Indenture or for any claim based on, in respect of, or by reason
of, such obligations or their creation. Each Holder of the Securities by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Securities. Such
waiver may not be effective to waive liabilities under the federal securities
laws and it is the view of the Commission that such a waiver is against public
policy.
Section 9.09. Duplicate Originals.
The parties may sign any number of copies of this Indenture. One signed
copy is enough to prove this Indenture.
Section 9.10. Governing Law.
The internal law of the State of New York, shall govern and be used to
construe this Indenture and the Securities, without regard to the conflict of
laws provisions thereof.
Section 9.11. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or its Subsidiaries. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
Section 9.12. Successors.
All agreements of the Company in this Indenture and the Securities shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successor.
Section 9.13. Severability.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby,
it being intended that all of the provisions hereof shall be enforceable to the
full extent permitted by law.
Section 9.14. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
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Section 9.15. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
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SIGNATURES
Dated as of _______________ NATIONAL MEDICAL ENTERPRISES, INC.
By:_______________________________
Name:
Title:
Attest:
_____________________ (SEAL)
Dated as of _______________ THE BANK OF NEW YORK, as Trustee
By:______________________________
Name:
Title:
Attest:
_____________________ (SEAL)
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EXHIBIT A
(Face of Security)
___% Senior Note
due September ___, 2002
CUSIP: _________
No. $____________
NATIONAL MEDICAL ENTERPRISES, INC.
promises to pay to
_________________________________________________________________________
or its registered assigns, the principal sum of _________________________
Dollars on September __, 2002.
Interest Payment Dates: March ___ and September ___, commencing
September ___,1995.
Record Dates: ___________ and _________ (whether or not a Business Day).
NATIONAL MEDICAL ENTERPRISES, INC.
By: _________________________
A-1
<PAGE>
Dated: ___________, 1995
(SEAL)
Trustee's Certificate of Authentication:
This is one of the Securities referred
to in the within-mentioned Indenture:
The Bank of New York, as Trustee
By: ___________________________
Authorized Signatory
A-2
<PAGE>
(Back of Security)
___% SENIOR NOTE
Due September ___, 2002
Capitalized terms used herein have the meanings assigned to them in the
Indenture (as defined below) unless otherwise indicated.
1. Interest. National Medical Enterprises, Inc., a Nevada corporation
(the "Company"), promises to pay interest on the principal amount of this
Security at the rate and in the manner specified below.
The Company shall pay interest in cash on the principal amount of this
Security at the rate per annum of _____%. The Company will pay interest
semiannually in arrears on March __ and September __ of each year, commencing
September __, 1995, or if any such day is not a Business Day on the next
succeeding Business Day (each an "Interest Payment Date").
Interest will be computed on the basis of a 360-day year consisting of
twelve 30-day months. Interest shall accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of the
original issuance of the Securities. To the extent lawful, the Company shall
pay interest on overdue principal at the rate of 1% per annum in excess of the
interest rate then applicable to the Securities; it shall pay interest on
overdue installments of interest (without regard to any applicable grace
periods) at the same rate to the extent lawful.
2. Method of Payment. The Company will pay interest on the Securities
(except defaulted interest) to the Persons who are registered Holders of
Securities at the close of business on the record date next preceding the
Interest Payment Date, even if such Securities are cancelled after such record
date and on or before such Interest Payment Date. The Holder hereof must
surrender this Security to a Paying Agent to collect principal payments. The
Company will pay principal and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts.
The Company, however, may pay principal, premium, if any, and interest by check
payable in such money. It may mail an interest check to a Holder's registered
address. Notwithstanding the foregoing, all payments with respect to Securities
having a principal amount of $10.0 million or more the Holders of which have
given wire transfer instructions, on or before the relevant record date, to the
Paying Agent shall be made by wire transfer of immediately available funds to
the accounts specified by such Holders.
3. Paying Agent and Registrar. Initially, the Trustee will act as Paying
Agent and Registrar. The Company may change any Paying Agent or Registrar or
co-registrar without prior notice to any Holder. The Company and any of its
Subsidiaries may act in any such capacity.
A-3
<PAGE>
4. Indenture. The Company issued the Securities under an Indenture, dated
as of March ___, 1995 (the "Indenture"), between the Company and the Trustee.
The terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code (S)(S) 77aaa-77bbbb) (the "TIA") as in effect on the date
of the Indenture. The Securities are subject to all such terms, and Holders are
referred to the Indenture and such act for a statement of such terms. The terms
of the Indenture shall govern any inconsistencies between the Indenture and the
Securities. The Securities are unsecured general obligations of the Company.
The Securities are limited to $300,000,000 in aggregate principal amount.
5. Mandatory Redemption. Subject to the Company's obligation to make an
offer to repurchase Securities under certain circumstances pursuant to Sections
3.10 and 3.13 of the Indenture (as described in paragraph 6 below), the Company
shall have no mandatory redemption or sinking fund obligations with respect to
the Securities.
6. Repurchase at Option of Holder. (i) If there is a Change of Control
Triggering Event, the Company shall be required to offer to repurchase on the
Change of Control Payment Date all outstanding Securities at 101% of the
aggregate principal amount thereof, plus accrued and unpaid interest to the
Change of Control Payment Date. Holders that are subject to an offer to
purchase will receive a Change of Control Offer from the Company prior to any
related Change of Control Payment Date and may elect to have such Securities
purchased by completing the form entitled "Option of Holder to Elect Purchase"
appearing below.
(ii) If the Company or a Subsidiary consummates an Asset Sale, within 365
days after the receipt of any Net Proceeds from such Asset Sale, the Company may
elect to apply the Net Proceeds therefrom (a) to purchase one or more Hospitals
or Related Businesses and/or a controlling interest in the Capital Stock of a
Person owning one or more Hospitals and/or one or more Related Businesses, (b)
to make a capital expenditure or to acquire other tangible assets, in each case,
that are used or useful in any business in which the Company is permitted to be
engaged pursuant to Section 3.15 of the Indenture, (c) to permanently reduce
Senior Term Debt or Existing Indebtedness of a Subsidiary or (d) to permanently
reduce Senior Revolving Debt (and to correspondingly reduce commitments with
respect thereto), except that up to an aggregate of $200.0 million of Net
Proceeds from Asset Sales may be applied after the date of the Senior Note
Indenture to reduce Senior Revolving Debt without a corresponding reduction in
commitments with respect thereto. Pending the final application of any such Net
Proceeds, the Company may temporarily reduce Senior Revolving Debt or otherwise
invest such Net Proceeds in any manner that is not prohibited by the Indenture.
Any Net Proceeds from any Asset Sale that are not so invested or applied shall
be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds that have not been so invested or applied in accordance with (a), (b),
(c) or (d) above exceeds $25.0 million, the Company shall be required to make an
offer to all Holders of Securities and any other Indebtedness of the Company
ranking on a parity with the Securities from time to time outstanding with
similar provisions requiring the Company to make an offer to purchase or to
redeem such Indebtedness with the proceeds from any asset sales, pro rata in
proportion to the respective principal amounts of the Securities and such
A-4
<PAGE>
other Indebtedness then outstanding (a "Senior Asset Sale Offer") to purchase
the maximum principal amount of Securities and such other Indebtedness that may
be purchased out of the Excess Proceeds, at an offer price in cash in an amount
equal to 100% of the principal amount thereof, plus accrued and unpaid interest
thereon, if any, to the date of purchase in accordance with the terms of the
Indenture. If the aggregate principal amount of Securities and such other
Indebtedness surrendered by Holders thereof exceeds the amount of Excess
Proceeds, the Securities and such other Indebtedness to be redeemed shall be
selected on a pro rata basis. Holders that are the subject of an offer to
purchase will receive a Senior Asset Sale Offer from the Company prior to any
related purchase date and may elect to have such Securities purchased by
completing the form entitled "Option of Holder to Elect Purchase" appearing
below.
7. Denominations, Transfer, Exchange. The Securities are in registered
form without coupons, and in denominations of $1,000 and integral multiples of
$1,000. The transfer of Securities may be registered and Securities may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not exchange or register the transfer of any
Securities between a record date and the corresponding Interest Payment Date.
8. Persons Deemed Owners. Prior to due presentment to the Trustee for
registration of the transfer of this Security, the Trustee, any Agent and the
Company may deem and treat the Person in whose name this Security is registered
as its absolute owner for the purpose of receiving payment of principal of,
premium, if any, and interest on this Security and for all other purposes
whatsoever, whether or not this Security is overdue, and neither the Trustee,
any Agent nor the Company shall be affected by notice to the contrary. The
registered Holder of a Security shall be treated as its owner for all purposes.
9. Amendment, Supplement and Waivers. Except as provided in the next
succeeding paragraphs, the Indenture or the Securities may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the Securities then outstanding (including consents obtained in
connection with a tender offer or exchange offer for Securities) and any
existing default or compliance with any provision of the Indenture or the
Securities may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Securities (including consents obtained
in connection with a tender offer or exchange offer for Securities).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Securities held by a non-consenting Holder of Securities):
(i) reduce the principal amount of Securities whose Holders must consent to an
amendment, supplement or waiver, (ii) reduce the principal of or change the
fixed maturity of any Security, (iii) reduce the rate of or change the time for
payment of interest on any Security, (iv) waive a Default or Event of Default in
the payment of principal of or premium, if any, or interest on the Securities,
(except a rescission of acceleration of the Securities by the Holders of at
least a majority aggregate principal amount of the Securities and a waiver of
the payment default
A-5
<PAGE>
that resulted from such acceleration), (v) make any Security payable in money
other than that stated in the Securities, (vi) make any change in the provisions
of the Indenture relating to waivers of past Defaults or the rights of Holders
of Securities to receive payments of principal of or premium, if any, or
interest on the Securities or (vii) make any change in the foregoing amendment
and waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder of
Securities, the Company and the Trustee may amend or supplement the Indenture or
the Securities to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Securities in addition to or in place of certificated Securities,
to provide for any supplemental indenture required pursuant to Section 3.16 of
the Indenture to provide for the assumption of the Company's obligations to
Holders of the Securities in the case of a merger, consolidation or sale of
assets, to make any change that would provide any additional rights or benefits
to the Holders of the Securities or that does not adversely affect the legal
rights under the Indenture of any such Holder, or to comply with requirements of
the Securities and Exchange Commission (the "Commission") in order to effect or
maintain the qualification of the Indenture under the TIA.
10. Defaults and Remedies. Events of Default under the Indenture include:
(i) a default for 30 days in the payment when due of interest on the Securities;
(ii) a default in payment when due of principal of or premium, if any, on the
Securities, at maturity or otherwise; (iii) a failure by the Company to comply
with the provisions described under the covenants "Limitations on Restricted
Payments," "Limitations on Incurrence of Indebtedness and Issuance of Preferred
Stock," "Asset Sales," and "Change of Control;" (iv) a failure by the Company
for 60 days after notice to comply with any of its other agreements in the
Indenture or the Securities; (v) any default that occurs under any mortgage,
indenture or instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the Company or any
of its Significant Subsidiaries (or the payment of which is Guaranteed by the
Company or any of its Significant Subsidiaries) whether such Indebtedness or
Guarantee exists on the date hereof, or is created after the date hereof, which
default (a) constitutes a Payment Default or (b) results in the acceleration of
such Indebtedness prior to its express maturity and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default or that has been
so accelerated, aggregates $25.0 million or more; (vi) failure by the Company or
any of its Significant Subsidiaries to pay a final judgment or final judgments
aggregating in excess of $25.0 million entered by a court or courts or competent
jurisdiction against the Company or any of its Significant Subsidiaries if such
final judgments remain undischarged for a period (during which execution shall
not be effectively stayed) of 60 days after their entry; and (vii) certain
events of bankruptcy or insolvency with respect to the Company or any of its
Significant Subsidiaries. If any Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in aggregate principal amount of the then
outstanding Securities by written notice to the Company and the Trustee, may
declare all the Securities to be due and payable immediately (plus, in the case
of an Event of Default that is the result of willful actions (or inactions) by
the Company intended to avoid prohibitions on, or premiums related to,
redemptions of the Securities contained in the Indenture or the Securities, an
amount of premium that would have been applicable pursuant to the Securities).
Notwithstanding the
A-6
<PAGE>
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency with respect to the Company, all outstanding Securities
will become due and payable without further action or notice. Holders of the
Securities may not enforce the Indenture or the Securities except as provided in
the Indenture. Subject to certain limitation, Holders of a majority in
principal amount of the then outstanding Securities may direct the Trustee in
its exercise of any trust or power. The Trustee may withhold from Holders of
the Securities notice of any continuing Default or Event of Default (except a
Default or Event of Default relating to the payment of principal or interest) if
it determines that withholding notice is in such Holders' interest.
The Holders of a majority in aggregate principal amount of the Securities
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Securities waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of Default
in the payment of interest or premium on, or the principal of, the Securities.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
The above description of Events of Default and remedies is qualified by
reference, and subject in its entirety, to the more complete description thereof
contained in the Indenture.
11. Restrictive Covenants. The Indenture imposes certain limitations on
the ability of the Company and its Subsidiaries to incur additional indebtedness
and issue preferred stock, pay dividends or make other distributions, repurchase
Equity Interests or subordinated indebtedness, create certain liens, enter into
certain transactions with affiliates, sell assets of the Company or its
Subsidiaries, issue or sell Equity Interests of the Company's Subsidiaries,
issue Guarantees of Indebtedness by the Company's Subsidiaries and enter into
certain mergers and consolidations.
12. Trustee Dealings with Company. The Trustee under the Indenture, in
its individual or any other capacity, may make loans to, accept deposits from,
and perform services for the Company or its Affiliates, and may otherwise deal
with the Company or its Affiliates, as if it were not Trustee.
13. No Personal Liability of Directors, Officers, Employees and
Stockholders. No director, officer, employee, incorporator or stockholder of
the Company, as such, shall have any liability for any obligations of the
Company under the Securities, the Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities. Such
waiver may not be effective to waive liabilities under the federal securities
laws and it is the view of the Commission that such a waiver is against public
policy.
A-7
<PAGE>
14. Authentication. This Security shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
15. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
16. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Securities and has directed the Trustee to
use CUSIP numbers as a convenience to Holders. No representation is made as to
the accuracy of such numbers either as printed on the Securities and reliance
may be placed only on the other identification numbers placed thereon.
A-8
<PAGE>
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Request may be made to:
National Medical Enterprises, Inc.
2700 Colorado Avenue
Santa Monica, California 90404
Attention: Treasurer
A-9
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign and
transfer this Security to
______________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint _____________________________________________________
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
______________________________________________________________________________
Date: ______________
Your Signature:________________________________
(Sign exactly as your name appears on the face of this Security)
Signature Guarantee.*
__________
*Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A-10
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Security purchased by
the Company pursuant to Section 3.10 or Section 3.13 of the Indenture, check the
appropriate box:
[_] Section 3.10 [_] Section 3.13
(Asset Sale) (Change of Control)
If you want to have only part of the Security purchased by the Company
pursuant to Section 3.10 or Section 3.13 of the Indenture, state the amount you
elect to have purchased:
$ _______________
Date:____________
Your Signature:________________________________
(Sign exactly as your name appears on the face of this Security)
Signature Guarantee.*
__________
*Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A-11
<PAGE>
EXHIBIT 4.2
================================================================================
NATIONAL MEDICAL ENTERPRISES, INC.
----------------------------------
$700,000,000
___ SENIOR SUBORDINATED NOTES due 2005
----------------------------------
------------------------
INDENTURE
Dated as of March ___, 1995
------------------------
----------------------------------
THE BANK OF NEW YORK
----------------------------------
as Trustee
===============================================================================
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
--------------- -----------------
<S> <C>
310 (a)(1)............................................... 7.10
(a)(2)............................................... 7.10
(a)(3)............................................... N.A.
(a)(4)............................................... N.A.
(a)(5)............................................... 7.10
(b).................................................. 7.08; 7.10
(c).................................................. N.A.
311 (a).................................................. 7.11
(b).................................................. 7.11
(c).................................................. N.A.
312 (a).................................................. 2.05
(b).................................................. 11.03
(c).................................................. 11.03
313 (a).................................................. 7.06
(b)(1)............................................... N.A.
(b)(2)............................................... 8.06
(c).................................................. 7.06; 11.02
(d).................................................. 7.06
314 (a).................................................. 4.03; 11.02
(b).................................................. N.A.
(c)(1)............................................... 11.04
(c)(2)............................................... 11.04
(c)(3)............................................... N.A.
(d).................................................. N.A.
(e).................................................. 11.05
(f).................................................. N.A.
315 (a).................................................. 7.01(ii)(b)
(b).................................................. 7.05; 11.02
(c).................................................. 7.01(i)
(d).................................................. 7.01(iii)
(e).................................................. 6.11
316 (a)(last sentence)................................... 2.09
(a)(1)(A)............................................ 6.05
(a)(1)(B)............................................ 6.04
(a)(2)............................................... N.A.
(b).................................................. 6.07
(c).................................................. 2.13; 8.04
</TABLE>
<PAGE>
<TABLE>
<S> <C>
317 (a)(1)................................................. 6.08
(a)(2)................................................. 6.09
(b).................................................... 2.04
318 (a).................................................... 11.01
(b).................................................... N.A.
(c).................................................... 11.01
</TABLE>
N.A. means not applicable.
- ----------------------------
*THIS CROSS-REFERENCE TABLE IS NOT PART OF THE INDENTURE.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
ARTICLE 1 - DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C> <C>
Section 1.01. Definitions.......................................... 1
Section 1.02. Other Definitions.................................... 13
Section 1.03. Incorporation by Reference of TIA.................... 14
Section 1.04. Rules of Construction................................ 14
ARTICLE 2 - THE SECURITIES
Section 2.01. Form and Dating...................................... 15
Section 2.02. Execution and Authentication........................ 15
Section 2.03. Registrar and Paying Agent........................... 16
Section 2.04. Paying Agent to Hold Money in Trust.................. 16
Section 2.05. Holder Lists......................................... 17
Section 2.06. Transfer and Exchange................................ 17
Section 2.07. Replacement Securities............................... 18
Section 2.08. Outstanding Securities............................... 18
Section 2.09. Treasury Securities.................................. 18
Section 2.10. Temporary Securities................................. 19
Section 2.11. Cancellation......................................... 19
Section 2.12. Defaulted Interest................................... 19
Section 2.13. Record Date.......................................... 19
Section 2.14. CUSIP Number......................................... 19
ARTICLE 3 - REDEMPTION
Section 3.01. Notice to Trustee.................................... 20
Section 3.02. Selection of Securities to Be Redeemed............... 20
Section 3.03. Notice of Redemption................................. 21
Section 3.04. Effect of Notice of Redemption....................... 22
Section 3.05. Deposit of Redemption Price.......................... 22
Section 3.06. Securities Redeemed in Part.......................... 22
Section 3.07. Optional Redemption.................................. 22
Section 3.08. Mandatory Redemption................................. 23
Section 3.09. Offer to Purchase By Application of Net Proceeds..... 23
ARTICLE 4 - COVENANTS
Section 4.01. Payment of Securities................................ 25
Section 4.02. Maintenance of Office or Agency...................... 26
Section 4.03. Commission Reports................................... 26
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
Section 4.04. Compliance Certificate............................... 28
Section 4.05. Taxes................................................ 28
Section 4.06. Stay, Extension and Usury Laws....................... 29
Section 4.07. Limitations on Restricted Payments................... 29
Section 4.08. Limitations on Dividends and Other Payment
Restrictions Affecting Subsidiaries.................. 31
Section 4.09. Limitations on Incurrence of Indebtedness
and Issuance of Preferred Stock...................... 32
Section 4.10. Asset Sales.......................................... 34
Section 4.11. Limitations on Transactions with Affiliates.......... 36
Section 4.12. Limitations on Liens................................. 36
Section 4.13. Change of Control.................................... 36
Section 4.14. Corporate Existence.................................. 38
Section 4.15. Line of Business..................................... 39
Section 4.16. Limitations on Issuances of Guarantees of
Indebtedness by Subsidiaries......................... 39
Section 4.17. No Senior Subordinated Debt.......................... 39
ARTICLE 5 - SUCCESSORS
Section 5.01. Limitations On Mergers, Consolidations or
Sales of Assets...................................... 39
Section 5.02. Successor Corporation Substituted.................... 40
ARTICLE 6 - DEFAULTS AND REMEDIES
Section 6.01. Events of Default.................................... 41
Section 6.02. Acceleration......................................... 43
Section 6.03. Other Remedies....................................... 43
Section 6.04. Waiver of Past Defaults.............................. 43
Section 6.05. Control by Majority.................................. 44
Section 6.06. Limitation on Suits.................................. 44
Section 6.07. Rights of Holders to Receive Payment................. 44
Section 6.08. Collection Suit by Trustee........................... 45
Section 6.09. Trustee May File Proofs of Claim..................... 45
Section 6.10. Priorities........................................... 45
Section 6.11. Undertaking for Costs................................ 46
ARTICLE 7 - TRUSTEE
Section 7.01. Duties of Trustee.................................... 46
Section 7.02. Rights of Trustee.................................... 47
Section 7.03. Individual Rights of Trustee......................... 48
Section 7.04. Trustee's Disclaimer................................. 48
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
Section 7.05. Notice of Defaults................................... 48
Section 7.06. Reports by Trustee to Holders........................ 49
Section 7.07. Compensation and Indemnity........................... 49
Section 7.08. Replacement of Trustee............................... 50
Section 7.09. Successor Trustee or Agent by Merger, etc............ 51
Section 7.10. Eligibility; Disqualification........................ 51
Section 7.11. Preferential Collection of Claims Against
Company.............................................. 51
ARTICLE 8 - DISCHARGE OF INDENTURE
Section 8.01. Defeasance and Discharge of this Indenture
and the Securities................................... 51
Section 8.02. Legal Defeasance and Discharge....................... 51
Section 8.03. Covenant Defeasance.................................. 52
Section 8.04. Conditions to Legal or Covenant Defeasance........... 52
Section 8.05. Deposited Money and Government Securities
to be Held in Trust; Other Miscellaneous
Provisions........................................... 54
Section 8.06. Repayment to Company................................. 55
Section 8.07. Reinstatement........................................ 55
ARTICLE 9 - AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders........................... 55
Section 9.02. With Consent of Holders.............................. 56
Section 9.03. Compliance with TIA.................................. 58
Section 9.04. Revocation and Effect of Consents.................... 58
Section 9.05. Notation on or Exchange of Securities................ 58
Section 9.06. Trustee to Sign Amendments, etc...................... 58
ARTICLE 10 - SUBORDINATION
Section 10.01. Agreement to Subordinate............................. 59
Section 10.02. Certain Definitions.................................. 59
Section 10.03. Liquidation; Dissolution; Bankruptcy................. 59
Section 10.04. Default on Designated Senior Debt.................... 60
Section 10.05. Acceleration of Securities........................... 61
Section 10.06. When Distribution Must Be Paid Over.................. 61
Section 10.07. Notice by Company.................................... 61
Section 10.08. Subrogation.......................................... 61
Section 10.09. Relative Rights...................................... 62
Section 10.10. Subordination May Not Be Impaired by Company......... 62
</TABLE>
iii
<PAGE>
INDENTURE dated as of March ___, 1995 between National Medical Enterprises,
Inc., a Nevada corporation (the "Company"), and The Bank of New York, as trustee
(the "Trustee").
The Company and the Trustee agree as follows for the benefit of each other
and for the equal and ratable benefit of the Holders of the ____% Senior
Subordinated Notes due 2005 (the "Securities"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, however,
that beneficial ownership of 10% or more of the voting securities of a Person
shall be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets (including, without limitation, by way of a sale and leaseback
transaction) other than in the ordinary course of business consistent with past
practice (provided that the sale, lease, conveyance or other disposition of all
or substantially all of the assets of the Company and its Subsidiaries taken as
a whole shall be governed by Section 4.13 and/or Article 5 hereof and not by
Section 4.10 hereof) and (ii) the issuance or sale by the Company or any of its
Subsidiaries of Equity Interests of any of the Company's Subsidiaries, in the
case of either clause (i) or (ii), whether in a single transaction or a series
of related transactions (a) that have a fair market value in excess of $25.0
million or (b) for net proceeds in excess of $25.0 million. Notwithstanding the
foregoing: (a) a transfer of assets by the Company to a
<PAGE>
Subsidiary or by a Subsidiary to the Company or to another Subsidiary, (b) an
issuance of Equity Interests by a Subsidiary to the Company or to another
Subsidiary, (c) a Restricted Payment that is permitted by Section 4.07 hereof
and (d) a Hospital Swap will not be deemed to be an Asset Sale.
"Board of Directors" means the Board of Directors of the Company or any
authorized committee thereof.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease" means, at the time any determination thereof is to be made,
any lease of property, real or personal, in respect of which the present value
of the minimum rental commitment would be capitalized on a balance sheet of the
lessee in accordance with GAAP.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a Capital Lease that would
at such time be so required to be capitalized on a balance sheet in accordance
with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership, partnership interests
(whether general or limited) and (iv) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition, in one or a series of
related transactions, of all or substantially all of the assets of the Company
and its Subsidiaries taken as a whole to any Person or group (as such term is
used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act), other than to (a) a
Person or group who, prior to such transaction, held a majority of the voting
power of the voting stock of the Company, (ii) the acquisition by any Person or
group, as defined above, of a direct or indirect interest in more than 50% of
the voting power of the voting stock of the Company by way of merger,
consolidation or otherwise, or (iii) the first day on which a majority of the
members of the Board of Directors of the Company are not Continuing Directors.
"Change of Control Triggering Event" means the occurrence of both a Change
of Control and a Rating Decline.
"Commission" means the Securities and Exchange Commission.
"Company" means National Medical Enterprises, Inc., as obligor under the
Securities, unless and until a successor replaces National Medical Enterprises,
Inc., in accordance with Article 5 hereof and thereafter includes such
successor.
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"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss of such Person plus any net loss realized in
connection with an Asset Sale (to the extent such losses were deducted in
computing such Consolidated Net Income), plus (ii) provision for taxes based on
income or profits of such Person and its Subsidiaries, for such period, to the
extent such provision for taxes was included in computing such Consolidated Net
Income, plus (iii) the Fixed Charges of such Person and its Subsidiaries for
such period, to the extent such Fixed Charges were deducted in computing such
Consolidated Net Income, plus (iv) depreciation and amortization (including
amortization of goodwill and other intangibles but excluding amortization of
prepaid cash expenses that were paid in a prior period) of such Person and its
Subsidiaries for such period to the extent such depreciation and amortization
were deducted in computing such Consolidated Net Income, in each case, on a
consolidated basis and determined in accordance with GAAP. Notwithstanding the
foregoing, the provision for taxes on the income or profits of, and the
depreciation and amortization of, a Subsidiary of the referent Person shall be
added to Consolidated Net Income to compute Consolidated Cash Flow only to the
extent (and in same proportion) that the Net Income of such Subsidiary was
included in calculating the Consolidated Net Income of such Person and only if a
corresponding amount would be permitted at the date of determination to be
dividended to the Company by such Subsidiary without prior approval (that has
not been obtained), pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Subsidiaries for such
period, on a consolidated basis, determined in accordance with GAAP but
excluding any one-time charge or expense incurred in order to consummate the
Refinancing; provided, that (i) the Net Income of any Person that is not a
Subsidiary or that is accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or distributions paid in
cash to the referent Person or a Wholly Owned Subsidiary thereof, (ii) the Net
Income of any Subsidiary shall be excluded to the extent that the declaration or
payment of dividends or similar distributions by that Subsidiary of that Net
Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Subsidiary or its stockholders, (iii) the Net Income of any Person acquired in a
pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded, and (iv) the cumulative effect of a change in
accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such Person
and its consolidated Subsidiaries as of such date plus (ii) the respective
amounts reported on such Person's balance sheet as of such date with respect to
any series of preferred stock (other than Disqualified Stock), less all write-
ups (other than write-ups resulting from foreign currency translations and
write-ups of tangible assets of a going concern business made in accordance with
GAAP as a result of the acquisition of such business) subsequent to the date
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hereof in the book value of any asset owned by such Person or a consolidated
Subsidiary of such Person, and excluding the cumulative effect of a change in
accounting principles, all as determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date hereof or (ii) was nominated for election or elected to
such Board of Directors with the affirmative vote of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 11.02 or such other address as to which the Trustee
may give notice to the Company.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the Holder thereof, in whole or in part, on or prior to March
__, 2005.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the New Credit Facility) in
existence on the date hereof, until such amounts are repaid, including all
reimbursement obligations with respect to letters of credit outstanding as of
the date hereof (other than letters of credit issued pursuant to the New Credit
Facility).
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period; provided, however, that in
the event that the Company or any of its Subsidiaries incurs, assumes,
Guarantees or redeems any Indebtedness (other than revolving credit borrowings)
or issues preferred stock subsequent to the commencement of the period for which
the Fixed Charge Coverage Ratio is being calculated but prior to the date on
which the event for which the calculation of the Fixed Charge Coverage Ratio is
made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, Guarantee or
redemption of Indebtedness, or such issuance or redemption of preferred stock,
as if the same had occurred at the beginning of the applicable four-quarter
reference period; and
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provided further that for purposes of making the computation referred to above,
(i) acquisitions that have been made by the Company or any of its Subsidiaries,
including through mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date shall be deemed to have
occurred on the first day of the four-quarter reference period, and (ii) the
Consolidated Cash Flow and Fixed Charges attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded.
"Fixed Charges" means, with respect to any Person for any period, the sum
of (i) the consolidated interest expense of such Person and its Subsidiaries for
such period, whether paid or accrued, (including, without limitation,
amortization of original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, commissions,
discounts and other fees and charges incurred in respect of letters of credit or
bankers' acceptance financings, and net payments (if any) pursuant to Hedging
Obligations) and (ii) the consolidated interest expense of such Person and its
Subsidiaries that was capitalized during such period, and (iii) any interest
expense on Indebtedness of another Person that is Guaranteed by such Person or
one of its Subsidiaries or secured by a Lien on assets of such Person or one of
its Subsidiaries (whether or not such Guarantee or Lien is called upon) and (iv)
the product of (a) all cash dividend payments (and non-cash dividend payments in
the case of a Person that is a Subsidiary) on any series of preferred stock of
such Person, times (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state and
local statutory tax rate of such Person, expressed as a decimal, in each case,
on a consolidated basis and in accordance with GAAP.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, as in effect from time to time.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements, (ii) foreign exchange contracts
or currency swap agreements and
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(iii) other agreements or arrangements designed to protect such Person against
fluctuations in interest rates or currency values.
"Holder" means a Person in whose name a Security is registered.
"Hospital" means a hospital, outpatient clinic, long-term care facility or
other facility that is used or useful in the provision of healthcare services.
"Hospital Swap" means an exchange of assets by the Company or a Subsidiary
of the Company for one or more Hospitals and/or one or more Related Businesses
or for the Capital Stock of any Person owning one or more Hospitals and/or one
or more Related Businesses.
"Indebtedness" means with respect to any Person any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property or representing any Hedging Obligations, except
any such balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing indebtedness (other than letter of credit and
Hedging Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, as well as all indebtedness of others
secured by a Lien on any asset of such Person (whether or not such indebtedness
is assumed by such Person) and, to the extent not otherwise included, the
Guarantee by such Person of any indebtedness of any other Person.
"Indenture" means this Indenture, as amended or supplemented from time to
time.
"International Subsidiaries" means International-NME, Inc., NME (Australia)
Pty. Limited, and National Medical Enterprises Corp., and each of such Person's
respective Subsidiaries.
"Investment Grade" means a rating of BBB- or higher by S&P or Baa3 or
higher by Moody's or the equivalent of such ratings by S&P or Moody's. In the
event that the Company shall select any other Rating Agency, the equivalent of
such ratings by such Rating Agency shall be used.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the form of direct or indirect
loans (including Guarantees of Indebtedness or other obligations), advances or
capital contributions, purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities and all other items that are
or would be classified as investments on a balance sheet prepared in accordance
with GAAP; provided that an acquisition of assets, Equity Interests or other
securities by the Company for consideration consisting of common equity
securities for the Company shall not be deemed to be an Investment.
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<PAGE>
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset
given to secure Indebtedness, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement, any lease in the nature thereof, any option or other
agreement to sell or give a security interest in and any filing of or agreement
to give any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction with respect to any such lien, pledge, charge or
security interest).
"Moody's" means Moody's Investors Services, Inc. and its successors.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Subsidiaries,
and (ii) any extraordinary or nonrecurring gain (but not loss), together with
any related provision for taxes on such extraordinary or nonrecurring gain (but
not loss).
"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received upon the sale or other disposition of any
Permitted Non-Cash Consideration received in any Asset Sale), net of the direct
costs relating to such Asset Sale (including, without limitation, legal,
accounting and investment banking fees, and sales commissions) and any other
expenses incurred or to be incurred by the Company or a Subsidiary as a direct
result of the sale of such assets (including, without limitation, severance,
relocation, lease termination and other similar expenses), taxes actually paid
or payable as a result thereof, amounts required to be applied to the repayment
of Indebtedness (other than Senior Term Debt or Senior Revolving Debt) secured
by a Lien permitted hereunder on the asset or assets that were the subject of
such Asset Sale and any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with GAAP.
"New Credit Facility" means that certain Credit Agreement, dated as of
February __, 1995, by and among the Company and Morgan Guaranty Trust Company of
New York and the other banks that are party thereto, providing for $2.0 billion
in aggregate principal amount of Senior Term Debt and up to $500.0 million in
aggregate principal amount of Senior Revolving Debt, including any related
notes, collateral documents, instruments and agreements executed in connection
therewith, and in each case as amended, modified, extended, renewed, refunded,
replaced or refinanced, in whole or in part, from time to time.
"Non-Cash Consideration" means any non-cash consideration received by the
Company or a Subsidiary of the Company in connection with an Asset Sale and any
non-cash consideration received by the Company or any of its Subsidiaries upon
disposition thereof.
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"Non-Recourse Debt" means Indebtedness of an International Subsidiary (i)
as to which neither the Company nor any of its Subsidiaries (other than the
International Subsidiaries) (a) provides credit support of any kind (including
any undertaking, agreement or instrument that would constitute Indebtedness of
the Company or any of its Subsidiaries), or (b) is directly or indirectly liable
(as a guarantor or otherwise) and (ii) no default with respect to which
(including any rights that the holders thereof may have to take enforcement
action against an International Subsidiary) would permit (upon notice, lapse of
time or both) any holder of any other Indebtedness of the Company or any of its
Subsidiaries (other than the International Subsidiaries) to declare a default on
such other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its stated maturity (except any provisions set forth in
Existing Indebtedness until the same is repaid or refinanced).
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officers" means the Chairman of the Board, the Chief Executive Officer,
the President, the Chief Operating Officer, the Chief Financial Officer, the
Treasurer, any Assistant Treasurer, the Controller, the Secretary and any Vice
President of the Company or any Subsidiary, as the case may be.
"Officers' Certificate" means a certificate signed by two Officers, one of
whom must be the principal executive officer, principal financial officer or
principal accounting officer of the Company.
"Opinion of Counsel" means an opinion from legal counsel who is reasonably
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company, any Subsidiary or the Trustee.
"Performance Investment Plan" means the 1989 Performance Investment Plan
adopted by the Company's Board of Directors on March 10, 1989.
"Permitted Collateral" means, collectively, (i) all Capital Stock and other
Equity Interests of the Company's present and future direct Subsidiaries, (ii)
all intercompany Indebtedness owed to the Company and (iii) all Capital Stock
and other Equity Interests in Westminster Health Care Holdings PLC and The
Hillhaven Corporation owned by the Company.
"Permitted Liens" means (i) Liens on Permitted Collateral securing Senior
Term Debt of the Company under the New Credit Facility in an aggregate principal
amount at any time outstanding not to exceed an amount equal to $2.0 billion
less the aggregate amount of all repayments, optional or mandatory, of the
principal of any Senior Term Debt (other than repayments that are immediately
reborrowed) that have been made since the date
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hereof; (ii) Liens on Permitted Collateral securing Senior Revolving Debt and
letters of credit of the Company incurred pursuant to the New Credit Facility in
an aggregate principal amount at any time outstanding (with letters of credit
being deemed to have a principal amount equal to the maximum potential
reimbursement obligation of the Company with respect thereto) not to exceed an
amount equal to $500.0 million less the aggregate amount of all Net Proceeds of
Asset Sales applied to permanently reduce commitments with respect to such
Indebtedness pursuant to Section 4.10 hereof; (iii) Liens in favor of the
Company; (iv) Liens on property of a Person existing at the time such Person is
merged into or consolidated with the Company or any Subsidiary of the Company;
provided, that such Liens were in existence prior to the contemplation of such
merger or consolidation and do not extend to any assets other than those of the
Person merged into or consolidated with the Company; (v) Liens on property
existing at the time of acquisition thereof by the Company or any Subsidiary of
the Company; provided that such Liens were in existence prior to the
contemplation of such acquisition; (vi) Liens to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business; (vii)
Liens existing or created on the date hereof; (viii) Liens for taxes,
assessments or governmental charges or claims that are not yet delinquent or
that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded; provided that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor, (ix) other Liens on assets of the Company or any Subsidiary
of the Company securing Indebtedness that is permitted by the terms hereof to be
outstanding having an aggregate principal amount at any one time outstanding not
to exceed 10% of the Stockholders' Equity of the Company; and (x) Liens to
secure Permitted Refinancing Indebtedness incurred to refinance Indebtedness
that was secured by a Lien permitted hereunder and that was incurred in
accordance with the provisions hereof; provided, that such Liens do not extend
to or cover any property or assets of the Company or any Subsidiary other than
assets or property securing the Indebtedness so refinanced.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Subsidiaries issued in exchange for, or the net proceeds of which
are used solely to extend, refinance, renew, replace, defease or refund, other
Indebtedness of the Company or any of its Subsidiaries; provided that, except in
the case of Indebtedness of the Company issued in exchange for, or the net
proceeds of which are used solely to extend, refinance, renew, replace, defease
or refund Indebtedness of a Subsidiary of the Company: (i) the principal amount
of such Permitted Refinancing Indebtedness does not exceed the principal amount
of the Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded (plus the amount of any premiums paid and reasonable expenses incurred
in connection therewith); (ii) such Permitted Refinancing Indebtedness has a
final maturity date later than the final maturity date of, and has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; (iii) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of payment to
the Securities, such Permitted Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and is subordinated in right of
payment to, the Securities on terms at least as favorable to the Holders of
Securities as those contained in the documentation
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governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness is incurred either by the
Company or by the Subsidiary who is the obligor on the Indebtedness being
extended, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization (including
any subdivision or ongoing business of any such entity or substantially all of
the assets of any such entity, subdivision or business).
"Physician Joint Venture Distributions" means distributions made by the
Company or any of its Subsidiaries to any physician, pharmacist or other allied
healthcare professional in connection with the unwinding, liquidation or other
termination of any joint venture or similar arrangement between any such Person
and the Company or any of its Subsidiaries.
"Physician Support Obligations" means any obligation or Guarantee incurred
in the ordinary course of business by the Company or a Subsidiary of the Company
in connection with any advance, loan or payment to, or on behalf of or for the
benefit of any physician, pharmacist or other allied healthcare professional for
the purpose of recruiting, redirecting or retaining the physician, pharmacist or
other allied healthcare professional to provide service to patients in the
service area of any Hospital or Related Business owned or operated by the
Company or any of its Subsidiaries; excluding, however, compensation for
services provided by physicians, pharmacists or other allied healthcare
professionals to any Hospital or Related Business owned or operated by the
Company or any of its Subsidiaries.
"Qualified Equity Interests" shall mean all Equity Interests of the Company
other than Disqualified Stock of the Company.
"Rating Agencies" means (i) S&P and (ii) Moody's or (iii) if S&P or Moody's
or both shall not make a rating of the Securities publicly available, a
nationally recognized securities rating agency or agencies, as the case may be,
selected by the Company, shall be substituted for S&P or Moody's or both, as the
case may be.
"Rating Category" means (i) with respect to S&P, any of the following
categories: BB, B, CCC, CC, C and D (or equivalent successor categories); (ii)
with respect to Moody's, any of the following categories: Ba, B, Caa, Ca, C and
D (or equivalent successor categories); and (iii) the equivalent of any such
category of S&P or Moody's used by another Rating Agency. In determining
whether the rating of the Securities has decreased by one or more gradations,
gradations within Rating Categories (+ and - for S&P, 1, 2 and 3 for Moody's; or
the equivalent gradations for another Rating Agency) shall be taken into account
(e.g., with respect to S&P, a decline in a rating from BB+ to BB, as well as
from BB- to B+, will constitute a decrease of one gradation).
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"Rating Date" means the date which is 90 days prior to the earlier of (i) a
Change of Control and (ii) the first public notice of the occurrence of a Change
of Control or of the intention by the Company to effect a Change of Control.
"Rating Decline" means the occurrence on or within 90 days after the date
of the first public notice of the occurrence of a Change of Control or of the
intention by the Company to effect a Change of Control (which period shall be
extended so long as the rating of the Securities is under publicly announced
consideration for possible downgrade by any of the Rating Agencies) of: (a) in
the event the Securities are rated by either Moody's or S&P on the Rating Date
as Investment Grade, a decrease in the rating of the Securities by both Rating
Agencies to a rating that is below Investment Grade, or (b) in the event the
Securities are rated below Investment Grade by both Rating Agencies on the
Rating Date, a decrease in the rating of the Securities by either Rating Agency
by one or more gradations (including gradations within Rating Categories as well
as between Rating Categories).
"Refinancing" has the meaning ascribed to it in the prospectus dated
January 31, 1995 relating to the Securities.
"Related Business" means a healthcare business affiliated or associated
with a Hospital or any business related or ancillary to the provision of
healthcare services or the operation of a Hospital.
"Responsible Officer" when used with respect to the Trustee, means any
officer within the corporate trust department of the Trustee (or any successor
group of the Trustee) or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Restricted Investment" means an Investment in any of the International
Subsidiaries.
"Securities" means the securities described above, issued under this
Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Asset Sale Offer" means the offer to purchase Senior Notes made by
the Company to holders of Senior Notes under Section 3.10 of the Senior Note
Indenture.
"Senior Notes" means the ____% Senior Notes due 2002 of the Company limited
in aggregate principal amount of $300.0 million, issued pursuant to the Senior
Note Indenture.
"Senior Note Indenture" means the Indenture dated as of March __, 1995
between the Company and The Bank of New York, as trustee, under which the Senior
Notes were issued.
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"Senior Revolving Debt" means revolving credit loans outstanding from time
to time under the New Credit Facility.
"Senior Term Debt" means term loans outstanding from time to time under the
New Credit Facility.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof.
"S&P" means Standard & Poor's Corporation and its successors.
"Specified Assets" means the Company's and its Subsidiaries' interest in
The Hillhaven Corporation and Westminster Healthcare Holdings PLC owned as of
the date hereof and the Capital Stock and assets of the International
Subsidiaries.
"Stockholders' Equity" means, with respect to any Person as of any date,
the stockholders' equity of such Person determined in accordance with GAAP as of
the date of the most recent available internal financial statements of such
Person, and calculated on a pro forma basis to give effect to any acquisition or
disposition by such Person consummated or to be consummated since the date of
such financial statements and on or prior to the date of such calculation.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof), provided that no
International Subsidiary shall be deemed to be a "Subsidiary" for any purpose
hereunder for so long as such International Subsidiary: (a) has no Indebtedness
other than Existing Indebtedness and Non-Recourse Debt; (b) is not a party to
any agreement, contract, arrangement or understanding with the Company or any of
its other Subsidiaries (other than International Subsidiaries) except any such
agreement, contract, arrangement or understanding that (i) was in effect on the
date hereof, or (ii) meets the requirements of Section 4.11 hereof; (c) is a
Person with respect to which neither the Company nor any of its Subsidiaries
(other than International Subsidiaries) has any direct or indirect obligation
(x) to subscribe for additional Equity Interests or (y) to maintain or preserve
such Person's financial condition or to cause such Person to achieve any
specified level of operating results except, in each case, any such obligation
in existence on the date hereof or created pursuant to the terms of any
Investment permitted by Section 4.07; and (d) has not Guaranteed or otherwise
directly or indirectly provided credit support for any Indebtedness of the
Company or any of its Subsidiaries (other than International Subsidiaries). If,
at any time, any International Subsidiary would fail to meet the foregoing
12
<PAGE>
requirements, it shall thereafter be deemed to be a Subsidiary for all purposes
of this Indenture and any Indebtedness of such International Subsidiary shall be
deemed to be incurred by a Subsidiary of the Company as of such date (and, if
such Indebtedness is not permitted to be incurred as of such date under Section
4.09 hereof the Company shall be in default of such covenant).
"TIA" means the Trust Indenture Act of 1939, as amended (15 U.S.C. (S)
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA, except as provided in Section 9.03 hereof.
"Transfer Restriction" means, with respect to the Company's Subsidiaries,
any encumbrance or restriction on the ability of any Subsidiary to (i) pay
dividends or make any other distributions to the Company or any of its
Subsidiaries (a) on its Capital Stock or (b) with respect to any other interest
or participation in, or measured by, its profits, (ii) pay any Indebtedness owed
to the Company or any of its Subsidiaries, (iii) make loans or advances to the
Company or any of its Subsidiaries, or (iv) transfer any of its properties or
assets to the Company or any of its Subsidiaries.
"Trustee" means the party named as such above until a successor replaces it
in accordance with the applicable provisions of this Indenture and thereafter
means the successor serving hereunder.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person means any Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person and one or
more Wholly Owned Subsidiaries of such Person.
Section 1.02. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
---------- ----------
<S> <C>
"Affiliate Transaction".................. 4.11
"Bankruptcy Law"......................... 6.01
"Change of Control Offer"................ 4.13
"Change of Control Payment".............. 4.13
"Change of Control Payment Date"......... 4.13
"Commencement Date"...................... 3.09
"Covenant Defeasance".................... 8.03
</TABLE>
13
<PAGE>
<TABLE>
<S> <C>
"Custodian".............................. 6.01
"Designated Senior Debt"................. 10.02
"Event of Default"....................... 6.01
"Excess Proceeds"........................ 4.10
"incur".................................. 4.09
"Legal Defeasance"....................... 8.02
"Legal Holiday".......................... 11.07
"Notice of Default"...................... 6.01
"Offer Amount"........................... 3.09
"Offer Period"........................... 3.09
"Paying Agent"........................... 2.03
"Payment Blockage Notice"................ 10.04
"Purchase Date".......................... 3.09
"Purchase Price"......................... 4.10
"Registrar".............................. 2.03
"Representative"......................... 10.02
"Restricted Payments".................... 4.07
"Senior Subordinated Asset Sale Offer"... 4.10
"Senior Debt"............................ 10.02
</TABLE>
Section 1.03. Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Securities;
"indenture security holder" means a Holder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Securities means the Company and any successor
obligor upon the Securities.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by the Commission rule
under the TIA have the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
14
<PAGE>
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular; and
(5) provisions apply to successive events and transactions.
ARTICLE 2
THE SECURITIES
Section 2.01. Form and Dating.
The Securities and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto, the terms of which
are incorporated in and made a part of this Indenture. The Securities may
have notations, legends or endorsements approved as to form by the Company
and required by law, stock exchange rule, agreements to which the Company
is subject or usage. Each Security shall be dated the date of its
authentication. The Securities shall be issuable only in registered form,
without coupons, in denominations of $1,000 and integral multiples thereof.
Section 2.02. Execution and Authentication.
An Officer of the Company shall sign the Securities for the
Company by manual or facsimile signature. The Company's seal shall be
reproduced on the Securities and may be in facsimile form.
If an Officer whose signature is on a Security no longer holds
that office at the time the Security is authenticated, the Security shall
nevertheless be valid.
A Security shall not be valid until authenticated by the manual
signature of the Trustee. The signature of the Trustee shall be conclusive
evidence that the Security has been authenticated under this Indenture.
The form of Trustee's certificate of authentication to be borne by the
Securities shall be substantially as set forth in Exhibit A hereto.
The Trustee shall, upon a written order of the Company signed by
two Officers of the Company, authenticate Securities for original issue up
to an aggregate principal amount stated in paragraph 4 of the Securities.
The aggregate principal amount of Securities outstanding at any time shall
not exceed the amount set forth herein except as provided in Section 2.07.
15
<PAGE>
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities whenever
the Trustee may do so. Each reference in this Indenture to authentication
by the Trustee includes authentication by such agent. An authenticating
agent has the same rights as an Agent to deal with the Company or an
Affiliate of the Company.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain (i) an office or agency where
Securities may be presented for registration of transfer or for exchange
(including any co-registrar, the "Registrar") and (ii) an office or agency
where Securities may be presented for payment (the "Paying Agent"). The
Registrar shall keep a register of the Securities and of their transfer and
exchange. The Company may appoint one or more co-registrars and one or
more additional paying agents. The term "Paying Agent" includes any
additional paying agent. The Company may change any Paying Agent,
Registrar or co-registrar without prior notice to any Holder. The Company
shall notify the Trustee and the Trustee shall notify the Holders of the
name and address of any Agent not a party to this Indenture. If the Company
fails to appoint or maintain another entity as Registrar or Paying Agent,
the Trustee shall act as such. The Company or any of its Subsidiaries may
act as Paying Agent, Registrar or co-registrar. The Company shall enter
into an appropriate agency agreement with any Agent not a party to this
Indenture, which shall incorporate the provisions of the TIA. The
agreement shall implement the provisions of this Indenture that relate to
such Agent. The Company shall notify the Trustee of the name and address
of any such Agent. If the Company fails to maintain a Registrar or Paying
Agent, or fails to give the foregoing notice, the Trustee shall act as
such, and shall be entitled to appropriate compensation in accordance with
Section 7.07 hereof.
The Company initially appoints the Trustee as Registrar, Paying
Agent and agent for service of notices and demands in connection with the
Securities.
Section 2.04. Paying Agent to Hold Money in Trust.
On or prior to the due date of principal of, premium, if any, and
interest on any Securities, the Company shall deposit with the Trustee or
the Paying Agent money sufficient to pay such principal, premium, if any,
and interest becoming due. The Company shall require each Paying Agent
other than the Trustee to agree in writing that the Paying Agent shall hold
in trust for the benefit of the Holders or the Trustee all money held by
the Paying Agent for the payment of principal of, premium, if any, and
interest on the Securities, and shall notify the Trustee of any Default by
the Company in making any such payment. While any such Default continues,
the Trustee may require a Paying Agent to pay all money held by it to the
Trustee. The Company at any time may require a Paying Agent to pay all
money held by it to the Trustee. Upon payment over to the Trustee, the
Paying Agent (if other than the Company) shall have no further liability
for the money delivered to the Trustee. If the Company acts as Paying
Agent, it shall segregate and hold in a separate trust fund for the benefit
of the Holders all money held by it as Paying Agent.
16
<PAGE>
Section 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses
of Holders and shall otherwise comply with TIA (S) 312(a). If the Trustee
is not the Registrar, the Company shall furnish to the Trustee at least
seven Business Days before each interest payment date and at such other
times as the Trustee may request in writing a list in such form and as of
such date as the Trustee may reasonably require of the names and addresses
of Holders, including the aggregate principal amount of the Securities held
by each thereof, and the Company shall otherwise comply with TIA (S)
312(a).
Section 2.06. Transfer and Exchange.
When Securities are presented to the Registrar with a request to
register the transfer or to exchange them for an equal principal amount of
Securities of other denominations, the Registrar shall register the
transfer or make the exchange if its requirements for such transactions are
met; provided, however, that any Security presented or surrendered for
registration of transfer or exchange shall be duly endorsed or accompanied
by a written instruction of transfer in form satisfactory to the Registrar
and the Trustee duly executed by the Holder thereof or by his attorney duly
authorized in writing. To permit registrations of transfer and exchanges,
the Company shall issue and the Trustee shall authenticate Securities at
the Registrar's request, subject to such rules as the Trustee may
reasonably require.
Neither the Company nor the Registrar shall be required to (i)
issue, register the transfer of or exchange Securities during a period
beginning at the opening of business on a Business Day 15 days before the
day of any selection of Securities for redemption under Section 3.02 and
ending at the close of business on the day of selection, (ii) register the
transfer of or exchange any Security so selected for redemption in whole or
in part, except the unredeemed portion of any Security being redeemed in
part or (iii) register the transfer or exchange of a Security between the
record date and the next succeeding interest payment date.
No service charge shall be made to any Holder for any
registration of transfer or exchange (except as otherwise expressly
permitted herein), but the Company may require payment of a sum sufficient
to cover any transfer tax or similar governmental charge payable in
connection therewith (other than such transfer tax or similar governmental
charge payable upon exchanges pursuant to Sections 2.10 or 9.05 hereof,
which shall be paid by the Company).
Prior to due presentment for registration of transfer of any
Security, the Trustee, any Agent and the Company may deem and treat the
Person in whose name any Security is registered as the absolute owner of
such Security for the purpose of receiving payment of principal of,
premium, if any, and interest on such Security and for all other purposes
whatsoever, whether or not such Security is overdue, and neither the
Trustee, any Agent nor the Company shall be affected by notice to the
contrary.
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<PAGE>
Section 2.07. Replacement Securities.
If any mutilated Security is surrendered to the Trustee or the
Company, or the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Security, the Company shall issue and the
Trustee, upon the written order of the Company signed by two Officers of
the Company, shall authenticate a replacement Security if the Trustee's
requirements for replacements of Securities are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by the Holder
that is sufficient in the judgment of the Trustee and the Company to
protect the Company, the Trustee, any Agent and any authenticating agent
from any loss which any of them may suffer if a Security is replaced. Each
of the Company and the Trustee may charge for its expenses in replacing a
Security.
Every replacement Security is an additional obligation of the
Company.
Section 2.08. Outstanding Securities.
The Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those cancelled by it, those
delivered to it for cancellation and those described in this Section as not
outstanding.
If a Security is replaced pursuant to Section 2.07 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to
it that the replaced Security is held by a bona fide purchaser.
If the principal amount of any Security is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest on it ceases
to accrue.
Subject to Section 2.09 hereof, a Security does not cease to be
outstanding because the Company or an Affiliate of the Company holds the
Security.
Section 2.09. Treasury Securities.
In determining whether the Holders of the required principal
amount of Securities then outstanding, have concurred in any demand,
direction, waiver or consent, Securities owned by the Company or any
Affiliate of the Company shall be considered as though not outstanding,
except that for purposes of determining whether the Trustee shall be
protected in relying on any such demand, direction, waiver or consent, only
Securities which a Responsible Officer actually knows to be so owned shall
be so considered. Notwithstanding the foregoing, Securities that are to be
acquired by the Company or an Affiliate of the Company pursuant to an
exchange offer, tender offer or other agreement shall not be deemed to be
owned by the Company or an Affiliate of the Company until legal title to
such Securities passes to the Company or Affiliate, as the case may be.
18
<PAGE>
Section 2.10. Temporary Securities.
Until definitive Securities are ready for delivery, the Company
may prepare and the Trustee, upon receipt of the written order of the
Company signed by two Officers of the Company, shall authenticate temporary
Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company and the
Trustee consider appropriate for temporary Securities. Without
unreasonable delay, the Company shall prepare and the Trustee, upon receipt
of the written order of the Company signed by two Officers of the Company,
shall authenticate definitive Securities in exchange for temporary
Securities. Until such exchange, temporary Securities shall be entitled to
the same rights, benefits and privileges as definitive Securities.
Section 2.11. Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee
any Securities surrendered to them for registration of transfer, exchange
or payment. The Trustee shall cancel all Securities surrendered for
registration of transfer, exchange, payment, replacement or cancellation
and shall return such cancelled Securities to the Company. The Company may
not issue new Securities to replace Securities that it has paid or that
have been delivered to the Trustee for cancellation.
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the
Securities, it shall pay the defaulted interest in any lawful manner plus,
to the extent lawful, interest payable on the defaulted interest, to the
Persons who are Holders on a subsequent special record date, which date
shall be at the earliest practicable date but in all events at least five
Business Days prior to the payment date, in each case at the rate provided
in the Securities and in Section 4.01 hereof. The Company shall, with the
consent of the Trustee, fix or cause to be fixed each such special record
date and payment date. At least 15 days before the special record date,
the Company (or the Trustee, in the name of and at the expense of the
Company) shall mail to Holders a notice that states the special record
date, the related payment date and the amount of such interest to be paid.
Section 2.13. Record Date.
The record date for purposes of determining the identity of
Holders entitled to vote or consent to any action by vote or consent
authorized or permitted under this Indenture shall be determined as
provided for in TIA (S) 316(c).
Section 2.14. CUSIP Number.
The Company in issuing the Securities may use a "CUSIP" number,
and if it does so, the Trustee shall use the CUSIP number in notices to
Holders; provided that any such notice may state that no representation is
made as to the
19
<PAGE>
correctness or accuracy of the CUSIP number printed in the notice or on the
Securities, and that reliance may be placed only on the other
identification numbers printed on the Securities. The Company will
promptly notify the Trustee of any change in the CUSIP number.
ARTICLE 3
REDEMPTION
Section 3.01. Notices to Trustee.
If the Company elects to redeem Securities pursuant to the
optional redemption provisions of Section 3.07 hereof, it shall furnish to
the Trustee, at least 45 days but not more than 60 days before a redemption
date, an Officers' Certificate setting forth (i) the Section of this
Indenture pursuant to which the redemption shall occur, (ii) the redemption
date, (iii) the principal amount of Securities to be redeemed and (iv) the
redemption price.
If the Company is required to make an offer to purchase
Securities pursuant to the provisions of Section 4.10 or 4.13 hereof, it
shall furnish to the Trustee an Officers' Certificate setting forth (i) the
Section of this Indenture pursuant to which the redemption shall occur,
(ii) the redemption date, (iii) the principal amount of Securities to be
redeemed, (iv) the redemption price and (v) a statement to the effect that
(a) the Company or one of its Subsidiaries has effected an Asset Sale and
the conditions set forth in Section 4.10 have been satisfied or (b) a
Change of Control has occurred and the conditions set forth in Section 4.13
have been satisfied, as applicable.
Section 3.02. Selection of Securities to Be Redeemed.
If less than all of the Securities are to be redeemed at any
time, the Trustee shall select the Securities to be redeemed among the
Holders in compliance with the requirements of the principal national
securities exchange, if any, on which the Securities are then listed, or,
if the Securities are not so listed, on a pro rata basis, by lot or by such
method the Trustee shall deem fair and appropriate; provided, that
Securities with a principal amount of $1,000 shall not be redeemed in part.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Security
selected for partial redemption, the principal amount thereof to be
redeemed. Securities and portions of them selected shall be in amounts of
$1,000 or whole multiples of $1,000; except that if all of the Securities
of a Holder are to be redeemed, the entire outstanding amount of Securities
held by such Holder, even if not a multiple of $1,000, shall be redeemed.
Except as provided in the preceding sentence, provisions of this Indenture
that apply to Securities called for redemption also apply to portions of
Securities called subject to an offer to purchase.
In the event the Company is required to make an offer to purchase
Securities pursuant to Sections 3.09 and 4.10 hereof and the amount of the
Excess Proceeds from the
20
<PAGE>
Asset Sale are not evenly divisible by $1,000, the Trustee shall promptly
refund to the Company any remaining Excess Proceeds.
Section 3.03. Notice of Redemption.
Subject to the provisions of Section 3.09 hereof, at least 30
days but not more than 60 days before a redemption date, the Company shall
mail or cause to be mailed by first class mail a notice of redemption to
each Holder of Securities to be redeemed at its registered address.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
(3) if any Security is being redeemed in part, the portion of
the principal amount of such Security to be redeemed and
that, after the redemption date upon surrender of such
Security, a new Security or Securities in principal amount
equal to the unredeemed portion shall be issued;
(4) the name and address of the Paying Agent;
(5) that Securities called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(6) that, unless the Company defaults in making such redemption
payment, interest on Securities called for redemption ceases
to accrue on and after the redemption date;
(7) the paragraph of the Securities and/or Section of this
Indenture pursuant to which the Securities called for
redemption are being redeemed; and
(8) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice
or printed on the Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph. The notice mailed in the manner herein provided
shall be conclusively presumed to have been duly given whether or not the Holder
receives such notice. In any case, failure to give such notice by mail or any
defect in the notice to the Holder of any Security shall not affect the validity
of the proceeding for the redemption of any other Security.
21
<PAGE>
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Securities called for redemption become due and payable on the
redemption date at the redemption price plus accrued and unpaid interest, if
any, to such date.
Section 3.05. Deposit of Redemption Price.
One Business Day prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of, and accrued interest on, all Securities to be redeemed on
that date. The Trustee or the Paying Agent shall promptly return to the Company
any money deposited with the Trustee or the Paying Agent by the Company in
excess of the amounts necessary to pay the redemption price of (including any
applicable premium), and accrued interest on, all Securities to be redeemed.
On and after the redemption date, interest ceases to accrue on the
Securities or the portions of Securities called for redemption. If a Security
is redeemed on or after an interest record date but on or prior to the related
interest payment date, then any accrued and unpaid interest shall be paid to the
Person in whose name such Security was registered at the close of business on
such record date. If any Security called for redemption shall not be so paid
upon surrender for redemption because of the failure of the Company to comply
with the preceding paragraph, interest shall be paid on the unpaid principal,
from the redemption date until such principal is paid, and to the extent lawful
on any interest not paid on such unpaid principal, in each case at the rate
provided in the Securities and in Section 4.01 hereof.
Section 3.06. Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the Company
shall issue and the Trustee shall authenticate for the Holder at the expense of
the Company a new Security equal in principal amount to the unredeemed portion
of the Security surrendered.
Section 3.07. Optional Redemption.
On or after March __, 2000, the Company may redeem all or any portion
of the Securities at a redemption price (expressed as a percentage of the
principal amount thereof), as set forth in the immediately succeeding paragraph,
plus accrued and unpaid interest, if any, to the redemption date.
22
<PAGE>
The redemption price as a percentage of the principal amount shall be
as follows, if the Securities are redeemed during the 12-month period beginning
March __ of the following years:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2000...................................... %
2001...................................... %
2002...................................... %
2003 and thereafter....................... 100.000%
</TABLE>
Section 3.08. Mandatory Redemption.
Subject to the Company's obligation to make an offer to repurchase
Securities under certain circumstances pursuant to Sections 4.10 and 4.13
hereof, the Company shall have no mandatory redemption or sinking fund
obligations with respect to the Securities.
Section 3.09. Offer to Purchase By Application of Net Proceeds.
In the event that the Company shall commence a Senior Subordinated
Asset Sale Offer pursuant to Section 4.10 hereof, it shall follow the procedures
specified below:
No later than the date on which the aggregate amount of Excess
Proceeds exceeds $25.0 million, the Company shall notify the Trustee of such
Senior Subordinated Asset Sale Offer and provide the Trustee with an Officers'
Certificate setting forth, in addition to the information to be included therein
pursuant to Section 4.10 the calculations used in determining the amount of Net
Proceeds to be applied to the purchase of Securities. The Company shall
commence or cause to be commenced the Senior Subordinated Asset Sale Offer on a
date no later than 10 Business Days after such notice (the "Commencement Date").
The Senior Subordinated Asset Sale Offer shall remain open for at
least 20 Business Days after the Commencement Date relating to such Senior
Subordinated Asset Sale Offer and shall remain open for no more than such 20
Business Days, except to the extent required by applicable law (as so extended,
the "Offer Period"). No later than one Business Day after the termination of
the Offer Period (the "Purchase Date"), the Company shall purchase the principal
amount (the "Offer Amount") of Securities required to be purchased in such
Senior Subordinated Asset Sale Offer pursuant to Sections 3.09 and 4.10 hereof
or, if less than the Offer Amount has been tendered, all Securities tendered in
response to the Senior Subordinated Asset Sale Offer.
If the Purchase Date is on or after an interest payment record date
and on or before the related interest payment date, any accrued interest shall
be paid to the Person in whose name a Security is registered at the close of
business on such record date, and no
23
<PAGE>
additional interest shall be payable to Holders who tender Securities pursuant
to the Senior Subordinated Asset Sale Offer.
On the Commencement Date of any Senior Subordinated Asset Sale Offer,
the Company shall send, by first class mail, a notice to each of the Holders at
their last registered address, with a copy to the Trustee. Such notice, which
shall govern the terms of the Senior Subordinated Asset Sale Offer, shall
contain all instructions and materials necessary to enable the Holders to tender
Securities pursuant to the Senior Subordinated Asset Sale Offer and shall state:
(1) that the Senior Subordinated Asset Sale Offer is being made
pursuant to this Section 3.09 and Section 4.10 hereof and
the length of time the Senior Subordinated Asset Sale Offer
shall remain open;
(2) the Offer Amount, the Purchase Price and the Purchase Date;
(3) that any Security not tendered or accepted for payment shall
continue to accrue interest;
(4) that, unless the Company defaults in the payment of the
Purchase Price, any Security accepted for payment pursuant
to the Senior Subordinated Asset Sale Offer shall cease to
accrue interest after the Purchase Date;
(5) that Holders electing to have a Security purchased pursuant
to any Senior Subordinated Asset Sale Offer shall be
required to surrender the Security, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the
Security completed, to the Company, a depositary, if
appointed by the Company, or a Paying Agent at the address
specified in the notice prior to the close of business on
the Business Day preceding the Purchase Date;
(6) that Holders shall be entitled to withdraw their election if
the Company, depositary or Paying Agent, as the case may be,
receives, not later than the close of business on the
Business Day preceding the termination of the Offer Period,
a facsimile transmission or letter setting forth the name of
the Holder, the principal amount of the Security the Holder
delivered for purchase and a statement that such Holder is
withdrawing his election to have the Security purchased;
(7) that, if the aggregate principal amount of Securities
surrendered by Holders exceeds the Offer Amount, the Trustee
shall select the Securities to be purchased on a pro rata
basis (with such
24
<PAGE>
adjustments as may be deemed appropriate by the Trustee so
that only Securities in denominations of $1,000, or integral
multiples thereof, shall be purchased); and
(8) that Holders whose Securities were purchased only in part
shall be issued new Securities equal in principal amount to
the unpurchased portion of the Securities surrendered.
On or before the Purchase Date, the Company shall irrevocably deposit
with the Trustee or Paying Agent in immediately available funds the aggregate
Purchase Price with respect to a principal amount of Securities equal to the
Offer Amount, together with accrued interest thereon, to be held for payment in
accordance with the terms of this Section. On the Purchase Date, the Company
shall, to the extent lawful, (i) accept for payment, on a pro rata basis to the
extent necessary, an aggregate principal amount equal to the Offer Amount of
Securities tendered pursuant to the Senior Subordinated Asset Sale Offer, or if
less than the Offer Amount has been tendered, all Securities or portion thereof
tendered, (ii) deliver or cause the Paying Agent or depositary, as the case may
be, to deliver to the Trustee Securities so accepted and (iii) deliver to the
Trustee an Officers' Certificate stating that such Securities or portions
thereof were accepted for payment by the Company in accordance with the terms of
this Section 3.09. The Company, depositary or Paying Agent, as the case may be,
shall promptly (but in any case not later than two Business Days after the
Purchase Date) mail or deliver to each tendering Holder an amount equal to the
Purchase Price plus accrued and unpaid interest with respect to the Securities
tendered by such Holder and accepted by the Company for purchase, and the
Company shall promptly issue a new Security, and the Trustee shall authenticate
and mail or deliver such new Security, to such Holder, equal in principal amount
to any unpurchased portion of such Holder's Securities surrendered. Any
Security not accepted in the Senior Subordinated Asset Sale Offer shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
shall publicly announce in a newspaper of general circulation the results of the
Senior Subordinated Asset Sale Offer on the Purchase Date.
The Senior Subordinated Asset Sale Offer shall be made by the Company
in compliance with all applicable laws, including, without limitation,
Regulation 14E of the Exchange Act and the rules thereunder and all other
applicable federal and state securities laws.
ARTICLE 4
COVENANTS
Section 4.01. Payment of Securities.
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest on the Securities on the dates and in the manner provided
in this Indenture and the Securities. Principal, premium, if any, and interest
shall be considered paid on the date due if the Paying Agent, if other than the
Company or a Subsidiary of the Company, holds
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as of 10:00 a.m. Eastern Time on the due date money deposited by the Company in
immediately available funds and designated for and sufficient to pay all
principal, premium, if any, and interest then due. Such Paying Agent shall
return to the Company, no later than five days following the date of payment,
any money (including accrued interest) that exceeds such amount of principal,
premium, if any, and interest to be paid on the Securities.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the interest rate then applicable to the Securities
to the extent lawful. In addition, it shall pay interest (including post-
petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace period) at the
same rate to the extent lawful.
Section 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Securities may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Securities and this Indenture
may be served. The Company shall give prompt written notice to the Trustee of
the location, and any change in the location, of such office or agency. If at
any time the Company shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York for such purposes. The Company shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
The Company hereby designates The Bank of New York, 101 Barclay
Street, 21 West, New York, New York 10286 as one such office or agency of the
Company in accordance with Section 2.03.
Section 4.03. Commission Reports.
(i) So long as any of the Securities remain outstanding, the Company
shall file with the Trustee within 15 days after the filing thereof with the
Commission copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as the
Commission may by rule and regulations prescribe) which the Company is required
to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act.
All obligors on the Securities shall comply with the provisions of TIA
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(S) 314(a). Notwithstanding that the Company may not be required to be subject
to the reporting requirements of Section 13 or 15(d) of the Exchange Act or
otherwise report on an annual and quarterly basis on forms provided for such
annual and quarterly reporting pursuant to rules and regulations promulgated by
the Commission, the Company will file with the Commission and provide the
Trustee (a) within 90 days after the end of each fiscal year, annual reports on
Form 10-K (or any successor or comparable form) containing the information
required to be contained therein (or required in such successor or comparable
form), including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and a report thereon by the Company's certified
public accountants; (b) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year, reports on Form 10-Q (or any successor or
comparable form) containing the information required to be contained therein (or
required in any successor or comparable form) including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations"; and
(c) promptly from time to time after the occurrence of an event required to be
therein reported, such other reports on Form 8-K (or any successor or comparable
form) containing the information required to be contained therein (or required
in any successor or comparable form); provided, however, that the Company shall
not be in default of the provisions of this Section 4.03(i) for any failure to
file reports with the Commission solely by the refusal of the Commission to
accept the same for filing. Each of such reports will be prepared in accordance
with generally accepted accounting principles. The Company will in all cases,
without cost to each recipient, provide copies of such information to the
Holders.
(ii) The Trustee, at the Company's expense, will promptly mail copies
of such annual reports, information, documents and other reports filed with the
Trustee pursuant to Section 4.03 to the Holders at their addresses appearing in
the register of Securities maintained by the Registrar.
(iii) If filing such annual reports, information, documents and other
reports with the Commission is not permitted under the Exchange Act or the rules
and regulations of the Commission, the Company shall, after the dates for filing
set forth above, promptly upon written request make copies of such annual
reports, information, documents and other reports available to prospective
purchasers of the Securities, and to securities analysts and broker-dealers upon
their request.
(iv) The Company shall provide the Trustee with a sufficient number of
copies of all reports and other documents and information that the Trustee may
be required to deliver to the Holders under this Section 4.03.
(v) Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
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Section 4.04. Compliance Certificate.
(i) The Company shall deliver to the Trustee, within 120 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether each has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge each entity
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action each is taking or
proposes to take with respect thereto), all without regard to periods of grace
or notice requirements, and that to the best of his or her knowledge no event
has occurred and remains in existence by reason of which payments on account of
the principal of or interest, if any, on the Securities is prohibited or if such
event has occurred, a description of the event and what action each is taking or
proposes to take with respect thereto.
(ii) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03 above shall be accompanied by a
written statement of the Company's certified independent public accountants (who
shall be a firm of established national reputation) that in making the
examination necessary for certification of such financial statements nothing has
come to their attention which would lead them to believe that the Company or any
Subsidiary of the Company has violated any provisions of Article 4 or of Article
5 of this Indenture or, if any such violation has occurred, specifying the
nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.
(iii) The Company shall, so long as any of the Securities are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of (a) any Default or Event of Default or (b) any event of default under any
other mortgage, indenture or instrument, an Officers' Certificate specifying
such Default, Event of Default or event of default and what action the Company
is taking or proposes to take with respect thereto.
Section 4.05. Taxes.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except (i) as contested in good faith by appropriate proceedings and with
respect to which appropriate reserves have been taken in accordance with GAAP or
(ii) where the failure to effect such payment is not adverse in any material
respect to the Holders.
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Section 4.06. Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
Section 4.07. Limitations on Restricted Payments.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly: (i) declare or pay any dividend or make any
distribution on account of the Company's or any of its Subsidiaries' Equity
Interests (other than (w) Physician Joint Venture Distributions, (x) dividends
or distributions payable in Qualified Equity Interests of the Company, (y)
dividends or distributions payable to the Company or any Subsidiary of the
Company and (z) dividends or distributions by any Subsidiary of the Company
payable to all holders of a class of Equity Interests of such Subsidiary on a
pro rata basis); (ii) purchase, redeem or otherwise acquire or retire for value
any class of Equity Interests of the Company; (iii) make any principal payment
on, or purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness that is subordinated to the Securities issued hereunder, except at
the original final maturity date thereof or pursuant to the Refinancing; or (iv)
make any Restricted Investment (all such payments and other actions set forth in
clauses (i) through (iv) above being collectively referred to as "Restricted
Payments"), unless at the time of and after giving effect to such Restricted
Payment (the amount of any such Restricted Payment, if other than cash, shall be
the fair market value (as conclusively evidenced by a resolution of the Board of
Directors set forth in an Officers' Certificate delivered to the Trustee within
60 days prior to the date of such Restricted Payment) of the asset(s) proposed
to be transferred by the Company or such Subsidiary, as the case may be,
pursuant to such Restricted Payment):
(a) no Default or Event of Default shall have occurred and be
continuing at the time of such Restricted Payment or would occur
as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted
Payment had been made at the beginning of the most recently ended
four full fiscal quarter period for which internal financial
statements are available immediately preceding the date of such
Restricted Payment, have been permitted to incur at least $1.00
of additional Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in the first paragraph of Section 4.09; and
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(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments (other than Restricted Payments made pursuant
to clauses (ii), (iii), (iv) and (v) of the following paragraph)
made by the Company and its Subsidiaries after the date hereof,
is less than the sum of (1) 50% of the Consolidated Net Income of
the Company for the period (taken as one accounting period) from
the first day of the first full fiscal quarter commencing after
the date hereof to the end of the Company's most recently ended
full fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less 100%
of such deficit), plus (2) 100% of the aggregate net cash
proceeds received by the Company from the issue or sale (other
than to a Subsidiary of the Company) since the date hereof of (A)
Qualified Equity Interests of the Company or (B) debt securities
of the Company or any of its Subsidiaries that have been
converted into or exchanged for such Qualified Equity Interests
of the Company, plus (3) $20.0 million.
If no Default or Event of Default has occurred and is continuing, the
foregoing provisions will not prohibit:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such
payment would have complied with the provisions hereof;
(ii) the payment of cash dividends on any series of Disqualified
Stock issued after the date hereof in an aggregate amount not
to exceed the cash received by the Company since the date
hereof upon issuance of such Disqualified Stock;
(iii) the repurchase of the Performance Investment Plan investment
options from the holders thereof;
(iv) the redemption, repurchase, retirement or other acquisition of
any Equity Interests of the Company or any Subsidiary in
exchange for, or out of the net cash proceeds of, the
substantially concurrent sale (other than to a Subsidiary of
the Company) of Qualified Equity Interests of the Company);
provided that the amount of any such net cash proceeds that are
utilized for any such redemption, repurchase, retirement or
other acquisition shall be excluded from clause (c)(2) of the
preceding paragraph;
(v) the defeasance, redemption or repurchase of subordinated
Indebtedness with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness or in exchange for or out of
the net cash proceeds from the substantially concurrent sale
(other than to a Subsidiary of the
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Company) of Qualified Equity Interests of the Company; provided,
that the amount of any such net cash proceeds that are utilized
for any such redemption, repurchase, retirement or other
acquisition shall be excluded from clause (c)(2) of the preceding
paragraph;
(vi) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of the Company or any Subsidiary of
the Company held by any member of the Company's (or any of its
Subsidiaries') management pursuant to any management equity
subscription agreement or stock option agreement in effect as of
the date hereof or entered into thereafter; provided, however,
that the aggregate price paid for all such repurchased, redeemed,
acquired or retired Equity Interests in any twelve-month period
shall not exceed $5.0 million and no Default or Event of Default
shall have occurred and be continuing immediately after such
transaction; and
(vii)the making and consummation of (A) a Senior Subordinated Asset
Sale Offer in accordance with the provisions of this Indenture
with any Excess Proceeds that remain after consummation of a
Senior Asset Sale Offer, within 120 days of the consummation of
such Senior Asset Sale Offer, or (B) a Change of Control Offer
with respect to the Securities in accordance with the provisions
of this Indenture.
Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this covenant were computed, which calculations may be
based upon the Company's latest available financial statements.
Section 4.08. Limitations on Dividends and Other Payment Restrictions Affecting
Subsidiaries.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any consensual Transfer Restriction, except for such Transfer
Restrictions existing under or by reason of:
(a) Existing Indebtedness as in effect on the date hereof,
(b) the Indenture and the Securities,
(c) applicable law,
(d) any instrument governing Indebtedness or Capital Stock of a
Person acquired by the Company or any of its Subsidiaries as in
effect at the time of such acquisition (except to the extent such
Indebtedness was incurred in connection with or in contemplation
of such acquisition or
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in violation of Section 4.09 hereof), which encumbrance or
restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or
assets of the Person, so acquired, provided that the Consolidated
Cash Flow of such Person shall not be taken into account in
determining whether such acquisition was permitted by the terms
hereof except to the extent that such Consolidated Cash Flow
would be permitted to be dividends to the Company without the
prior consent or approval of any third party,
(e) customary non-assignment provisions in leases entered into in the
ordinary course of business and consistent with past practice,
(f) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions on the ability of any
of the Company's Subsidiaries to transfer the property so
acquired to the Company or any of its Subsidiaries,
(g) Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more restrictive than those
contained in the agreements governing the Indebtedness being
refinanced, or
(h) the New Credit Facility and related documentation as the same is
in effect on the date hereof and as amended or replaced from time
to time, provided that no such amendment or replacement is more
restrictive as to the matters enumerated above than the New
Credit Facility and related documentation as in effect on the
date hereof.
Section 4.09. Limitations on Incurrence of Indebtedness and Issuance of
Preferred Stock
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, issue, assume, Guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") after the date hereof any Indebtedness (including
Acquired Debt) and the Company shall not issue any Disqualified Stock, and shall
not permit any of its Subsidiaries to issue any shares of preferred stock;
provided, however, that the Company may incur Indebtedness (including Acquired
Debt) and the Company may issue shares of Disqualified Stock, if the Fixed
Charge Coverage Ratio for the Company's most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is incurred or such
Disqualified Stock is issued would have been at least (x) 2.25 to 1 if such
incurrence or issuance occurs on or before March 31, 1996, or (y) 2.5 to 1 if
such incurrence or issuance occurs at any time thereafter, in each case
determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred or the
Disqualified Stock had been issued, as the case may be, at the beginning of such
four-quarter period. Indebtedness
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consisting of reimbursement obligations in respect of a letter of credit will be
deemed to be incurred when the letter of credit is first issued. The Company
will not permit any of the International Subsidiaries to incur any Indebtedness
other than Non-Recourse Debt.
The foregoing provisions will not apply to:
(a) the incurrence by the Company of Senior Term Debt pursuant to the
New Credit Facility in an aggregate principal amount at any time
outstanding not to exceed an amount equal to $2.0 billion less
the aggregate amount of all repayments, optional or mandatory, of
the principal of any Senior Term Debt (other than repayments that
are immediately reborrowed) that have been made since the date
hereof;
(b) the incurrence by the Company of Senior Revolving Debt and
letters of credit pursuant to the New Credit Facility in an
aggregate principal amount at any time outstanding (with letters
of credit being deemed to have a principal amount equal to the
maximum potential reimbursement obligation of the Company with
respect thereto) not to exceed an amount equal to $500.0 million
less the aggregate amount of all Net Proceeds of Asset Sales
applied to permanently reduce the commitments with respect to
such Indebtedness pursuant to Section 4.10 hereof;
(c) the incurrence by the Company of Indebtedness represented by the
Securities;
(d) the incurrence by the Company and its Subsidiaries of the
Existing Indebtedness;
(e) the incurrence by the Company or any of its Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the
proceeds of which are used to extend, refinance, renew, replace,
defease, or refund, Indebtedness that was permitted by this
Indenture to be incurred (including, without limitation, Existing
Indebtedness);
(f) the incurrence by the Company of Hedging Obligations that are
incurred for the purpose of fixing or hedging interest rate or
currency risk with respect to any fixed or floating rate
Indebtedness that is permitted by the terms hereof to be
outstanding or any receivable or liability the payments of which
is determined by reference to a foreign currency; provided, that
the notional principal amount of any such Hedging Obligation does
not exceed the principal amount of the Indebtedness to which such
Hedging Obligation relates;
(g) the incurrence by the Company or any of its Subsidiaries of
Physician Support Obligations;
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(h) the incurrence by the Company or any of its Subsidiaries of
intercompany Indebtedness between or among the Company and any of
its Subsidiaries;
(i) the incurrence by the Company or any of its Subsidiaries of
Indebtedness represented by performance bonds, standby letters of
credit or appeal bonds, in each case to the extent incurred in
the ordinary course of business of the Company or such
Subsidiary;
(j) the incurrence by any Subsidiary of the Company of Indebtedness,
the aggregate principal amount of which, together with all other
Indebtedness of the Company's Subsidiaries at the time
outstanding (excluding the Existing Indebtedness until repaid or
refinanced and excluding Physician Support Obligations), does not
exceed the greater of (1) 10% of the Company's Stockholders'
Equity or (2) $10.0 million; provided that, in case of clause (1)
only, the Fixed Charge Coverage Ratio for the Company's most
recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date
on which such Indebtedness is incurred would have been at least
(x) 2.25 to 1 if such incurrence occurs on or before March 31,
1996, or (y) 2.5 to 1 if such incurrence occurs at any time
thereafter, in each case determined on a pro forma basis
(including a pro forma application of the net proceeds
therefrom), as if such Indebtedness has been incurred at the
beginning of such four-quarter period; and
(k) the incurrence by the Company of Indebtedness (in addition to
Indebtedness permitted by any other clause of this paragraph) in
an aggregate principal amount not exceeding $250.0 million at any
one time outstanding.
Section 4.10. Asset Sales.
The Company shall not, and shall not permit any of its Subsidiaries to
consummate an Asset Sale, unless (i) the Company (or the Subsidiary as the case
may be) receives consideration at the time of such Asset Sale at least equal to
the fair market value (as conclusively determined by a resolution of the Board
of Directors set forth in an Officers' Certificate delivered to the Trustee) of
the assets or Equity Interests issued or sold or otherwise disposed of and (ii)
except in the case of a sale of Specified Assets, at least 80% of the
consideration therefor received by the Company or such Subsidiary is in the form
of cash; provided, however, that for purposes of this provision, (x) the amount
of (A) any liabilities (as shown on the Company's or such Subsidiary's most
recent balance sheet or in the notes thereto), of the Company or any Subsidiary
(other than, in the case of an Asset Sale by the Company, liabilities that are
by their terms subordinated to the Securities that are assumed by the transferee
of any such assets and (B) any securities or other obligations received by the
Company or any such Subsidiary from such transferee that are immediately
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converted by the Company or such Subsidiary into cash (or as to which the
Company or such Subsidiary has received at or prior to the consummation of the
Asset Sale a commitment (which may be subject to customary conditions) from a
nationally recognized investment, merchant or commercial bank to convert into
cash within 90 days of the consummation of such Asset Sale and which are
thereafter actually converted into cash within such 90-day period) will be
deemed to be cash (but shall not be deemed to be Net Proceeds for purposes of
the following provisions until reduced to cash); and (y) the fair market value
of any Non-Cash Consideration received by the Company or a Subsidiary in any
Asset Sale shall be deemed to be cash (but shall not be deemed to be Net
Proceeds for purposes of the following provisions until reduced to cash) to the
extent that the aggregate fair market value (as conclusively determined by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of all Non-Cash Consideration (measured at the time
received and without giving effect to any subsequent changes in value) held by
the Company immediately after consummation of such Asset Sale does not exceed
10% of the Company's Stockholders' Equity.
Within 465 days after the receipt of any Net Proceeds from an Asset
Sale, the Company may apply the Net Proceeds from such Asset Sale (i) to
purchase one or more Hospitals or Related Businesses and/or a controlling
interest in the Capital Stock of a Person owning one or more Hospitals and/or
one or more Related Businesses, (ii) to make a capital expenditure or to acquire
other tangible assets, in each case, that are used or useful in any business in
which the Company is permitted to be engaged pursuant to Section 4.15 hereof,
(iii) to permanently reduce Senior Term Debt or Existing Indebtedness of a
Subsidiary, (iv) to permanently reduce Senior Revolving Debt (and to
correspondingly reduce commitments with respect thereto), except that up to an
aggregate of $200.0 million of Net Proceeds from Asset Sales may be applied
after the date hereof to reduce Senior Revolving Debt without a corresponding
reduction in commitments with respect thereto, or (v) to repurchase Senior Notes
or redeem or repurchase other Senior Debt. Pending the final application of any
such Net Proceeds, the Company may temporarily reduce Senior Revolving Debt or
otherwise invest such Net Proceeds in any manner that is not prohibited by the
terms hereof. Any Net Proceeds from Asset Sales that are not so invested or
applied will be deemed to constitute "Excess Proceeds." When the aggregate
amount of Excess Proceeds exceeds $25.0 million, the Company shall make an offer
to all Holders of Securities (a "Senior Subordinated Asset Sale Offer") to
purchase the maximum principal amount of Securities that may be purchased out of
the Excess Proceeds, at an offer price in cash equal to 100% of the principal
amount thereof (the "Purchase Price") plus accrued and unpaid interest thereon,
if any, to the date of purchase, in accordance with the procedures set forth in
Section 3.09 hereof. To the extent that aggregate amount of Securities tendered
pursuant to a Senior Subordinated Asset Sale Offer is less than the Excess
Proceeds, the Company may use any remaining Excess Proceeds for general
corporate purposes. If the aggregate principal amount of Securities surrendered
by holders pursuant to a Senior Subordinated Asset Sale Offer exceeds the amount
of Excess Proceeds, the Trustee shall select the Securities to be purchased on a
pro rata basis. Upon completion of a Senior Subordinated Asset Sale Offer, the
amount of Excess Proceeds shall be reset at zero.
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Section 4.11. Limitations on Transactions with Affiliates.
The Company shall not, and shall not permit any of its Subsidiaries
to, sell, lease, transfer or otherwise dispose of any of its properties or
assets to, or purchase any property or assets from, or enter into or make any
contract, agreement, understanding, loan, advance or Guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction")
unless (i) such Affiliate Transaction is on terms that are no less favorable to
the Company or the relevant Subsidiary than those that could have been obtained
in a comparable transaction by the Company or such Subsidiary with an unrelated
Person and (ii) the Company delivers to the Trustee (a) with respect to any
Affiliate Transaction involving aggregate consideration in excess of $5.0
million, a resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with clause (i)
above and that such Affiliate Transaction was approved by a majority of the
disinterested members of the Board of Directors and (b) with respect to any
Affiliate Transaction involving aggregate consideration in excess of $15.0
million, an opinion as to the fairness of such Affiliate Transaction to the
Company or such Subsidiary from a financial point of view issued by an
unaffiliated investment banking firm of national standing; provided, however,
that (x) transactions or payments pursuant to any employment arrangements or
employee or director benefit plans entered into by the Company or any of its
Subsidiaries in the ordinary course of business and consistent with the past
practice of the Company or such Subsidiary, (y) transactions between or among
the Company and/or its Subsidiaries and (z) Restricted Payments permitted under
Section 4.07, in each case, shall not be deemed Affiliate Transactions.
Section 4.12. Limitations on Liens.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly create, incur, assume or suffer to exist any Lien to
secure Indebtedness that is pari passu with or subordinated in right of payment
to the Securities (except Permitted Liens) on any asset now owned or hereafter
acquired, or on any income or profits therefrom, or assign or convey any right
to receive income therefrom, unless all payments due hereunder and under the
Securities are secured on an equal and ratable basis with the Obligations so
secured until such time as such Obligations are no longer secured by a Lien.
Section 4.13. Change of Control.
Upon the occurrence of a Change of Control Triggering Event, each
Holder of Securities shall have the right to require the Company to repurchase
all or any part (equal to $1,000 or an integral multiple thereof) of such
Holder's Securities pursuant to an offer described below (the "Change of Control
Offer") at an offer price in cash equal to 101% of the aggregate principal
amount thereof, plus accrued and unpaid interest, if any, thereon to the date of
repurchase (the "Change of Control Payment") on a date that is not more than 90
days after the occurrence of such Change of Control Triggering Event (the
"Change of Control Payment Date"). The Company shall comply with the
requirements of Regulation 14e-1 under the Exchange Act and any other securities
laws and regulations thereunder to the
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extent such laws and regulations are applicable in connection with the
repurchase of the Securities as a result of a Change of Control.
Within 30 days following any Change of Control Triggering Event, the
Company shall mail, or at the Company's request the Trustee shall mail, a notice
of a Change of Control to each Holder (at its last registered address with a
copy to the Trustee and the Paying Agent) offering to repurchase the Securities
held by such Holder pursuant to the procedure specified in such notice. The
Change of Control Offer shall remain open from the time of mailing until the
close of business on the Business Day preceding the Change of Control Payment
Date. The notice, which shall govern the terms of the Change of Control Offer,
shall state:
(1) that the Change of Control Offer is being made pursuant to this
Section 4.13 and that all Securities tendered will be accepted
for payment;
(2) the Change of Control Payment and the Change of Control Payment
Date, which date shall be no earlier than 30 days nor later than
60 days from the date such notice is mailed;
(3) that any Securities not tendered will continue to accrue interest
in accordance with the terms of the Indenture;
(4) that, unless the Company defaults in the payment of the Change of
Control Payment, all Securities accepted for payment pursuant to
the Change of Control Offer shall cease to accrue interest after
the Change of Control Payment Date;
(5) that Holders electing to have Securities purchased pursuant to
the Change of Control Offer will be required to surrender their
Securities, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Security completed, to the Paying
Agent at the address specified in the notice prior to the close
of business on the Business Day preceding the Change of Control
Payment Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on
the Business Day preceding the Change of Control Payment Date, a
facsimile transmission or letter setting forth the name of the
Holder, the principal amount of Securities the Holder delivered
for purchase, and a statement that such Holder is withdrawing his
election to have such Securities purchased;
(7) that Holders whose Securities are being purchased only in part
will be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered, which
unpurchased portion must
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be equal to $1,000 in principal amount or an integral multiple
thereof; and
(8) the circumstances and relevant facts regarding such Change of
Control (including, but not limited to, information with respect
to pro forma historical and, if available, projected financial
information after giving effect to such Change of Control,
information regarding the Person or Persons acquiring control and
such Person's or Persons' business plans going forward).
On the Change of Control Payment Date, the Company shall, to the
extent lawful, (i) accept for payment Securities or portions thereof properly
tendered and not withdrawn pursuant to the Change of Control Offer, (ii) deposit
with the Paying Agent an amount equal to the Change of Control Payment in
respect of all Securities or portions thereof so tendered and (iii) deliver or
cause to be delivered to the Trustee the Securities so accepted together with an
Officers' Certificate stating the aggregate principal amount of Securities or
portions thereof being purchased by the Company. The Paying Agent shall
promptly mail to each Holder of Securities so tendered payment in an amount
equal to the Change of Control Payment for such Securities, and the Trustee
shall promptly authenticate and mail or deliver (or cause to be transferred by
book entry) a new Security to such Holder equal in principal amount to any
unpurchased portion of the Securities surrendered, if any; provided, that each
such new Security shall be in a principal amount of $1,000 or an integral
multiple thereof.
Prior to complying with the provisions of this Section 4.13, but in
any event within 90 days following a Change of Control Triggering Event, the
Company shall either repay all outstanding Senior Debt or obtain the requisite
consents, if any, under all agreements governing outstanding Senior Debt to
permit the repurchase of Securities required by this Section 4.13.
The Company shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date.
Section 4.14. Corporate Existence.
Subject to Section 4.13 and Article 5 hereof, the Company shall do or
cause to be done all things necessary to preserve and keep in full force and
effect (i) its corporate existence, and the corporate, partnership or other
existence of each of its Subsidiaries, in accordance with the respective
organizational documents (as the same may be amended from time to time) of each
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its Subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders.
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Section 4.15. Line of Business
The Company shall not, and shall not permit any of its Subsidiaries
to, engage to any material extent in any business other than the ownership,
operation and management of Hospitals and Related Businesses.
Section 4.16. Limitations on Issuances of Guarantees of Indebtedness by
Subsidiaries
The Company shall not permit any Subsidiary, directly or indirectly,
to Guarantee or secure the payment of any other Indebtedness of the Company or
any of its Subsidiaries (except Indebtedness of a Subsidiary of such Subsidiary
or Physician Support Obligations) unless such Subsidiary simultaneously executes
and delivers a supplemental indenture to this Indenture providing for the
Guarantee of the payment of the Securities by such Subsidiary, which Guarantee
shall be subordinate to such Subsidiary's Guarantee of or pledge to secure such
other Indebtedness to the same extent as the Securities are subordinated to such
other Indebtedness under this Indenture. Notwithstanding the foregoing, any
such Guarantee by a Subsidiary of the Securities shall be substantially in the
form of Exhibit B hereto and shall provide by its terms that it shall be
automatically and unconditionally released and discharged upon the sale or other
disposition, by way of merger or otherwise, to any Person not an Affiliate of
the Company, of all of the Company's stock in, or all or substantially all the
assets of, such Subsidiary, which sale or other disposition is made in
compliance with, and the Net Proceeds therefrom are applied in accordance with,
the applicable provisions hereof. The foregoing provisions will not be
applicable to any one or more Guarantees of up to $10.0 million in aggregate
principal amount of Indebtedness of the Company at any time outstanding.
Section 4.17. No Senior Subordinated Debt
The Company shall not incur any Indebtedness that is subordinate or
junior in right of payment to any Senior Debt and senior in any respect in right
of payment to the Securities.
ARTICLE 5
SUCCESSORS
Section 5.01. Limitations On Mergers, Consolidations or Sales of Assets
The Company may not consolidate or merge with or into (whether or not
the Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions to another corporation, Person or
entity unless:
(i) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger
(if other than
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the Company) or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made is a
corporation organized or existing under the laws of the United
States, any state thereof or the District of Columbia;
(ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the
entity or Person to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made
assumes all the Obligations of the Company pursuant to a
supplemental indenture in a form reasonably satisfactory to the
Trustee, under the Securities and the Indenture;
(iii) immediately after such transaction no Default or Event of
Default exists; and
(iv) the Company or any entity or Person formed by or surviving any
such consolidation or merger (if other than the Company), or to
which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made (a) will have
Consolidated Net Worth (immediately after giving effect to the
transaction) equal to or greater than the Consolidated Net Worth
of the Company immediately preceding the transaction and (b)
will, at the time of such transaction and after giving pro forma
effect thereto as if such transaction had occurred at the
beginning of the applicable four-quarter period, be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first
paragraph of Section 4.09.
The Company shall deliver to the Trustee prior to the consummation of
the proposed transaction an Officers' Certificate to the foregoing effect and an
Opinion of Counsel, covering clauses (i) through (iv) above, stating that the
proposed transaction and such supplemental indenture comply with this Indenture.
The Trustee shall be entitled to conclusively rely upon such Officers'
Certificate and Opinion of Counsel.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, assignment, transfer, lease, conveyance or
other disposition, the provisions of this Indenture referring to the "Company"
shall refer instead to the successor corporation), and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person has been named as the Company, herein.
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ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
Each of the following constitutes an "Event of Default":
(i) a default for 30 days in the payment when due of interest on the
Securities whether or not such payment is prohibited by the provisions of
Article 10 hereof;
(ii) a default in payment when due of principal of or premium, if any,
on the Securities at maturity, upon redemption or otherwise, whether or not
such payment is prohibited by the provisions of Article 10 hereof;
(iii) a default in the performance or breach of Sections 4.07, 4.09,
4.10 or 4.13 hereof;
(iv) a failure by the Company to comply with any other covenant or
agreement in the Indenture or the Securities for the period and after the
notice specified below;
(v) any default occurs under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Significant Subsidiaries (or the payment of which is Guaranteed by the
Company or any of its Significant Subsidiaries), whether such Indebtedness
or Guarantee exists on the date of this Indenture or is created hereafter,
which default (a) constitutes a failure to pay principal at final maturity
or (b) results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of such
Indebtedness, together with the principal amount of any other Indebtedness
that has not been paid at final maturity or that has been so accelerated,
aggregates $25.0 million or more;
(vi) a failure by the Company or any of its Significant Subsidiaries
to pay a final judgment or final judgments aggregating in excess of $25.0
million entered by a court or courts of competent jurisdiction against the
Company or any of its Significant Subsidiaries if such final judgment or
judgments remain unpaid or undischarged for a period (during which
execution shall not be effectively stayed) of 60 days after their entry;
(vii) the Company or any Significant Subsidiary thereof pursuant to or
within the meaning of any Bankruptcy Law:
(a) commences a voluntary case,
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(b) consents to the entry of an order for relief against it in an
involuntary case in which it is the debtor,
(c) consents to the appointment of a Custodian of it or for all
or substantially all of its property,
(d) makes a general assignment for the benefit of its creditors,
or
(e) admits in writing its inability generally to pay its debts as
the same become due; and
(viii) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(a) is for relief against the Company or any Significant
Subsidiary in an involuntary case in which it is the debtor,
(b) appoints a Custodian of the Company or any Significant
Subsidiary thereof or for all or substantially all of the property of
the Company or any Significant Subsidiary thereof, or
(c) orders the liquidation of the Company or any Significant
Subsidiary thereof,
and the order or decree remains unstayed and in effect for 60 days.
The term "Bankruptcy Law" means title 11, U.S. Code or any similar
--------------
federal or state law for the relief of debtors. The term "Custodian" means any
---------
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
A Default under clause (iv) is not an Event of Default until the
Trustee notifies the Company, or the Holders of at least 25% in principal amount
of the then outstanding Securities notify the Company and the Trustee, of the
Default and the Company does not cure the Default within 60 days after receipt
of the notice. The notice must specify the Default, demand that it be remedied
and state that the notice is a "Notice of Default."
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Securities pursuant to
Section 3.07 hereof, an equivalent premium shall also become and be immediately
due and payable to the extent permitted by law upon the acceleration of the
Securities, anything in this Indenture or in the Securities to the contrary
notwithstanding. If an Event of Default occurs prior to March ___, 2000 by
reason of any willful action (or inaction) taken (or not taken) by or on behalf
of the Company with the intention of avoiding the prohibition on redemption of
the Securities prior to March ___, 2000 pursuant to Section 3.07 hereof, then
the premium payable for purposes
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of this paragraph for each of the years beginning on March __ of the years set
forth below shall be as set forth in the following table expressed as a
percentage of the amount that would otherwise be due but for the provisions of
this sentence, plus accrued interest, if any, to the date of payment:
Year Percentage
---- ----------
1995 [implied call price during non-call period]
1996 [implied call price during non-call period]
1997 [implied call price during non-call period]
1998 [implied call price during non-call period]
1999 [implied call price during non-call period]
Section 6.02. Acceleration.
If an Event of Default (other than an Event of Default specified in
clauses (vii) and (viii) of Section 6.01) occurs and is continuing, the Trustee
by notice to the Company, or the Holders of at least 25% in principal amount of
the then outstanding Securities by written notice to the Company and the Trustee
may declare the unpaid principal of and any accrued interest on all the
Securities to be due and payable. Upon such declaration the principal and
interest shall be due and payable immediately (together with the premium
referred to in Section 6.01, if applicable). If an Event of Default specified in
clause (vii) or (viii) of Section 6.01 relating to the Company or any
Significant Subsidiary thereof occurs, such an amount shall ipso facto become
---- -----
and be immediately due and payable without any declaration or other act on the
part of the Trustee or any Holder.
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal or interest on
the Securities or to enforce the performance of any provision of the Securities
or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. All remedies are cumulative
to the extent permitted by law.
Section 6.04. Waiver of Past Defaults.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Securities by written notice to the Trustee may waive an
existing Default or Event of Default and its consequences under this Indenture,
except a continuing Default or Event of Default in the payment of the principal
of, premium, if any, or interest on any Security. Upon any such waiver, such
Default shall cease to exist, and any Event of Default
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arising therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.
Section 6.05. Control by Majority.
Holders of a majority in principal amount of the then outstanding
Securities may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders or that may involve the Trustee in
personal liability. The Trustee may take any other action which it deems proper
which is not inconsistent with any such direction.
Section 6.06. Limitation on Suits.
A Holder may pursue a remedy with respect to this Indenture or the
Securities only if:
(i) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(ii) the Holders of at least 25% in principal amount of the then
outstanding Securities make a written request to the Trustee to
pursue the remedy;
(iii) such Holder or Holders offer and, if requested, provide to the
Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(iv) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the
provision of indemnity; and
(v) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Securities do not give the Trustee
a direction inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another Holder or
to obtain a preference or priority over another Holder.
Section 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal, premium, if any, and interest on the
Security, on or after the respective due dates expressed in the Security, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of the Holder.
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Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 5.01(i) or (ii) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company or any other obligor for the
whole amount of principal, premium, if any, and interest remaining unpaid on the
Securities and interest on overdue principal and, to the extent lawful, interest
and such further amount as shall be sufficient to cover amounts due the Trustee
under Section 7.07, including the costs and expenses of collection, including
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relative to the Company (or any
other obligor upon the Securities), its creditors or its property and shall be
entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties which the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall
be deemed to authorize the Trustee to authorize or consent to or accept or adopt
on behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07, including payment of all compensation, expense and liabilities
incurred, and all advances made, by the Trustee and the costs and expenses of
collection;
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Second: to Holders for amounts due and unpaid on the Securities for
principal, premium, if any, and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Securities
for principal, premium, if any and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 6.10 upon five Business Days prior notice to
the Company.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder pursuant to Section 6.07, or a suit by Holders of more than 10% in
principal amount of the then outstanding Securities.
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.
(i) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(ii) Except during the continuance of an Event of Default known to the
Trustee:
(a) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture or the TIA and the
Trustee need perform only those duties that are specifically
set forth in this Indenture or the TIA and no others, and no
implied covenants or obligations shall be read into this
Indenture against the Trustee, and
(b) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon
certificates
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or opinions furnished to the Trustee and conforming to the
requirements of this Indenture. However, the Trustee shall
examine the certificates and opinions to determine whether
or not they conform to the requirements of this Indenture.
(iii) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(a) this paragraph does not limit the effect of paragraph (ii)
of this Section;
(b) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the
pertinent facts; and
(c) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05 hereof.
(iv) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(i), (ii), and (iii) of this Section.
(v) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee may refuse to perform
any duty or exercise any right or power unless it receives security and
indemnity satisfactory to it against any loss, liability or expense.
(vi) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Absent written instruction from the Company, the Trustee shall not be required
to invest any such money. Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by law.
(vii) The Trustee shall not be deemed to have knowledge of any matter
unless such matter is actually known to a Responsible Officer.
Section 7.02. Rights of Trustee.
(i) The Trustee may conclusively rely upon any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(ii) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall
not be liable for
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any action it takes or omits to take in good faith in reliance on such Officers'
Certificate or Opinion of Counsel. The Trustee may consult with counsel and the
written advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection from liability in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.
(iii) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
(iv) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers conferred upon it by this Indenture. A permissive right granted to the
Trustee hereunder shall not be deemed an obligation to act.
(v) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee is
subject to Sections 7.10 and 7.11 hereof.
Section 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Securities, nor shall it
be accountable for the Company's use of the proceeds from the Securities or any
money paid to the Company or upon the Company's direction under any provision of
this Indenture, nor shall it be responsible for the use or application of any
money received by any Paying Agent other than the Trustee, nor shall it be
responsible for any statement or recital herein or any statement in the
Securities or any other document in connection with the sale of the Securities
or pursuant to this Indenture other than its certificate of authentication.
Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders a notice of the Default
or Event of Default within 90 days after it occurs. Except in the case of a
Default or Event of Default in payment on any Security, the Trustee may withhold
the notice if and so long as a committee of its Responsible Officers in good
faith determines that withholding the notice is in the interests of the Holders.
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Section 7.06. Reports by Trustee to Holders.
Within 60 days after each December 31 beginning with the December 31
following the date hereof, the Trustee shall mail to the Holders a brief report
dated as of such reporting date that complies with TIA (S) 313(a) (but if no
event described in TIA (S) 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA (S) 313(b). The Trustee shall also transmit by mail all
reports as required by TIA (S) 313(c).
A copy of each report at the time of its mailing to the Holders shall
be mailed to the Company and filed with the Commission and each stock exchange
on which the Securities are listed. The Company shall promptly notify the
Trustee when the Securities are listed on any stock exchange.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time such
compensation for its acceptance of this Indenture and services hereunder as the
Company and Trustee shall agree in writing. The Trustee's compensation shall
not be limited by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities, damages, claims or expenses incurred by it arising out of or in
connection with the acceptance of its duties and the administration of the
trusts under this Indenture, except as set forth below. The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify the Company shall not relieve the Company of
its obligations hereunder. The Company shall defend the claim and the Trustee
shall cooperate in the defense. The Trustee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel. The Company
need not pay for any settlement made without its consent, which consent shall
not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through its own negligence or bad
faith.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Securities on all money or property held
or collected by the Trustee, except that held in trust to pay principal and
interest on particular Securities. Such Lien shall survive the satisfaction and
discharge of this Indenture.
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When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(vii) or (viii) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its agents
and counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of a majority
in principal amount of the then outstanding Securities may remove the Trustee by
so notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:
(1) the Trustee fails to comply with Section 7.10 hereof;
(2) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(3) a Custodian or public officer takes charge of the Trustee or its
property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Securities may appoint
a successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of at least 10% in principal amount of the then outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee after written request by any Holder who has been a
Holder for at least six months fails to comply with Section 7.10, such Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of
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its succession to Holders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, provided all sums owing
to the Trustee hereunder have been paid and subject to the Lien provided for in
Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant to
this Section 7.08, the Company's obligations under Section 7.07 hereof shall
continue for the benefit of the retiring Trustee.
Section 7.09. Successor Trustee or Agent by Merger, etc.
If the Trustee or any Agent consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee or Agent.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America or of any state thereof authorized under such laws to exercise corporate
trustee power, shall be subject to supervision or examination by federal or
state authority and shall have a combined capital and surplus of at least $100.0
million as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA (S) 310(a)(1), (2) and (5). The Trustee is subject to TIA
(S) 310(b).
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee is subject to TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
ARTICLE 8
DISCHARGE OF INDENTURE
Section 8.01. Defeasance and Discharge of this Indenture and the Securities.
The Company may, at the option of its Board of Directors evidenced by
a resolution set forth in an Officers' Certificate, at any time, with respect to
the Securities, elect to have either Section 8.02 or 8.03 be applied to all
outstanding Securities upon compliance with the conditions set forth below in
this Article 8.
Section 8.02. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.01 of the option
applicable to this Section 8.02, the Company shall be deemed to have been
discharged from its obligations with respect to all outstanding Securities on
the date the conditions set forth below are
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satisfied (hereinafter, "Legal Defeasance"). For this purpose, such Legal
Defeasance means that the Company shall be deemed to have paid and discharged
the entire Indebtedness represented by the outstanding Securities, which shall
thereafter be deemed to be "outstanding" only for the purposes of Section 8.05
and the other Sections of this Indenture referred to in clauses (i) and (ii) of
this Section 8.02, and to have satisfied all its other obligations under such
Securities and this Indenture (and the Trustee, on demand of and at the expense
of the Company, shall execute proper instruments acknowledging the same), except
for the following which shall survive until otherwise terminated or discharged
hereunder: (i) the rights of Holders of outstanding Securities to receive
solely from the trust fund described in Section 8.04, and as more fully set
forth in such Section, payments in respect of the principal of, premium, if any,
and interest on such Securities when such payments are due, (ii) the Company's
obligations with respect to such Securities under Sections 2.04, 2.06, 2.07,
2.10 and 4.02, (iii) the rights, powers, trusts, duties and immunities of the
Trustee hereunder, including, without limitation, the Trustee's rights under
Section 7.07, and the Company's obligations in connection therewith and (iv)
this Article 8. Subject to compliance with this Article 8, the Company may
exercise its option under this Section 8.02 notwithstanding the prior exercise
of its option under Section 8.03 with respect to the Securities.
Section 8.03. Covenant Defeasance.
Upon the Company's exercise under Section 8.01 of the option
applicable to this Section 8.03, the Company shall be released from its
obligations under the covenants contained in Sections 3.09, 4.07, 4.08, 4.09,
4.10, 4.11, 4.12, 4.13, 4.15, 4.16 and 4.17 and Article 5 with respect to the
outstanding Securities on and after the date the conditions set forth below are
satisfied (hereinafter, "Covenant Defeasance"), and the Securities shall
thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Securities shall not be deemed outstanding for accounting purposes). For this
purpose, such Covenant Defeasance means that, with respect to the outstanding
Securities, the Company may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 6.01(iii),
but, except as specified above, the remainder of this Indenture and such
Securities shall be unaffected thereby. In addition, upon the Company's
exercise under Section 8.01 of the option applicable to this Section 8.03,
Sections 6.01(iv) through 6.01(viii) shall not constitute Events of Default.
Section 8.04. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to application of either Section
8.02 or Section 8.03 to the outstanding Securities:
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(i) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 7.10 who shall agree to comply with the provisions of this
Article 8 applicable to it) as trust funds in trust for the purpose of
making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such Securities, (a)
cash in U.S. Dollars in an amount, or (b) non-callable Government
Securities which through the scheduled payment of principal and interest in
respect thereof in accordance with their terms will provide, not later than
one day before the due date of any payment, cash in U.S. Dollars in an
amount, or (c) a combination thereof, in such amounts, as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered
to the Trustee, to pay and discharge and which shall be applied by the
Trustee (or other qualifying trustee) to pay and discharge the principal
of, premium, if any, and interest on the outstanding Securities on the
stated maturity date or on the applicable redemption date, as the case may
be, of such principal or installment of principal, premium, if any, or
interest and the Company must specify whether the Securities are being
defeased to maturity or to a particular redemption date (in which case the
Company shall issue an irrevocable notice of redemption as of a specified
date that will be delivered by the Trustee in accordance with the
redemption provisions of this Indenture).
(ii) In the case of an election under Section 8.02, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States
confirming that (a) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (b) since the date
hereof, there has been a change in the applicable federal income tax law,
in either case to the effect that, and based thereon such opinion shall
confirm that, the Holders of the outstanding Securities will not recognize
income, gain or loss for federal income tax purposes as a result of such
Legal Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such Legal Defeasance had not occurred.
(iii) In the case of an election under Section 8.03, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States
confirming that the Holders of the outstanding Securities will not
recognize income, gain or loss for federal income tax purposes as a result
of such Covenant Defeasance and will be subject to federal income tax in
the same amount, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred.
(iv) No Default or Event of Default with respect to the Securities
shall have occurred and be continuing on the date of such deposit (other
than a Default or Event of Default resulting from the borrowing of funds to
be applied to such deposit) or, insofar as Subsection 6.01(vii) or
6.01(viii) is concerned, at any time in the period ending on the 91st day
after the date of such deposit (it being understood that this condition
shall not be deemed satisfied until the expiration of such period).
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(v) Such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under any other material
agreement or instrument (other than this Indenture) to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound.
(vi) In the case of an election under either Section 8.02 or 8.03, the
Company shall have delivered to the Trustee an Opinion of Counsel to the
effect that after the 91st day following the deposit, the trust funds will
not be subject to the effect of any applicable Bankruptcy Law.
(vii) In the case of an election under either Section 8.02 or 8.03,
the Company shall have delivered to the Trustee an Officers' Certificate
stating that the deposit made by the Company pursuant to its election under
Section 8.02 or 8.03 was not made by the Company with the intent of
preferring the Holders of the Securities over other creditors of the
Company with the intent of defeating, hindering, delaying or defrauding
creditors of the Company or others.
(viii) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel in the United States, each stating
that all conditions precedent provided for relating to either the Legal
Defeasance under Section 8.02 or the Covenant Defeasance under Section 8.03
(as the case may be) have been complied with as contemplated by this
Section 8.04.
Section 8.05. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.
Subject to Section 8.06, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 in respect of the outstanding Securities
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Securities and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as Paying
Agent) as the Trustee may determine, to the Holders of such Securities of all
sums due and to become due thereon in respect of principal, premium, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding
Securities.
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the Company's
request any money or non-callable Government Securities held by it as provided
in Section 8.04 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a
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written certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(i)), are in excess of the amount thereof which
would then be required to be deposited to effect an equivalent Legal Defeasance
or Covenant Defeasance.
Section 8.06. Repayment to Company.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on any Security and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its written request or (if then held by the Company)
shall be discharged from such trust; and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in the New York Times and The
Wall Street Journal (national edition), notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such notification or publication, any unclaimed balance of such
money then remaining will be repaid to the Company.
Section 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any U.S. Dollars or
non-callable Government Securities in accordance with Section 8.02 or 8.03, as
the case may be, by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, then
the Company's obligations under this Indenture and the Securities shall be
revived and reinstated as though no deposit had occurred pursuant to Section
8.02 or 8.03 until such time as the Trustee or Paying Agent is permitted to
apply all such money in accordance with Section 8.02 or 8.03, as the case may
be; provided, however, that, if the Company makes any payment of principal of,
premium, if any, or interest on any Security following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Security to receive such payment from the money held by the Trustee or
Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders.
The Company and the Trustee may amend or supplement this Indenture or
the Securities without the consent of any Holder:
(i) to cure any ambiguity, defect or inconsistency;
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(ii) to provide for uncertificated Securities in addition to or
in place of certificated Securities;
(iii) to provide for any supplemental indenture required pursuant
to Section 4.16 hereof;
(iv) to provide for the assumption of the Company's obligations
to the Holders of the Securities in the case of a merger,
consolidation or sale of assets pursuant to Article 5
hereof;
(v) to make any change that would provide any additional rights
or benefits to the Holders of the Securities or that does
not adversely affect the legal rights hereunder of any
Holder; or
(vi) to comply with requirements of the Commission in order to
effect or maintain the qualification of this Indenture under
the TIA.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such supplemental indenture,
and upon receipt by the Trustee of the documents described in Section 9.06
hereof, the Trustee shall join with the Company in the execution of any
supplemental indenture authorized or permitted by the terms of this Indenture
and to make any further appropriate agreements and stipulations which may be
therein contained, but the Trustee shall not be obligated to enter into such
supplemental indenture which affects its own rights, duties or immunities under
this Indenture or otherwise.
Section 9.02. With Consent of Holders.
Except as provided in the next succeeding paragraphs, the Indenture or
the Securities may be amended or supplemented with the consent of the Holders of
at least a majority in principal amount of the Securities then outstanding
(including consents obtained in connection with a tender offer or exchange offer
for such Securities), and any existing default or compliance with any provision
of the Indenture or the Securities may be waived with the consent of the Holders
of a majority in principal amount of the then outstanding Securities (including
consents obtained in connection with a tender offer or exchange offer for such
Securities).
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such supplemental indenture,
and upon the filing with the Trustee of evidence satisfactory to the Trustee of
the consent of the Holders as aforesaid, and upon receipt by the Trustee of the
documents described in Section 9.06 hereof, the Trustee shall join with the
Company in the execution of such supplemental indenture unless such supplemental
indenture affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such supplemental indenture.
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It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment or waiver,
but it shall be sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture or waiver.
Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate
principal amount of the Securities then outstanding may waive compliance in a
particular instance by the Company with any provision of this Indenture or the
Securities. Without the consent of each Holder affected, however, an amendment
or waiver may not (with respect to any Security held by a non-consenting
Holder):
(i) reduce the principal amount of Securities whose Holders must
consent to an amendment, supplement or waiver;
(ii) reduce the principal of or change the fixed maturity of any
Security or alter the provisions with respect to the redemption
of the Securities (other than provisions relating to covenants
in Sections 4.10 and 4.13 hereof);
(iii) reduce the rate of or change the time for payment of interest
on any Security;
(iv) waive a Default or Event of Default in the payment of principal
of or premium, if any, or interest on the Securities (except a
rescission of acceleration of the Securities by the Holders of
at least a majority in aggregate principal amount of the
Securities and a waiver of the payment default that resulted
from such acceleration);
(v) make any Security payable in money other than that stated in the
Securities;
(vi) make any change in Section 6.04 or 6.07 hereof;
(vii) waive a redemption payment with respect to any Security (other
than a payment required under Section 4.10 or 4.13 hereof); or
(viii)make any change in this sentence of this Section 9.02.
Notwithstanding the foregoing, any amendment to the provisions of Article
10 hereof shall require the consent of the Holders of at least 75% in aggregate
principal amount of the Securities then outstanding if such amendment would
adversely affect the rights of the Holders of the Securities.
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Section 9.03. Compliance with TIA.
Every amendment to this Indenture or the Securities shall be set forth in a
supplemental indenture that complies with the TIA as then in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to it by a Holder
is a continuing consent by the Holder and every subsequent Holder of a Security
or portion of a Security that evidences the same debt as the consenting Holder's
Security, even if notation of the consent is not made on any Security. However,
any such Holder or subsequent Holder may revoke the consent as to its Security
if the Trustee receives written notice of revocation before the date the waiver
or amendment becomes effective. An amendment or waiver becomes effective in
accordance with its terms and thereafter binds every Holder.
The Company may, but shall not be obligated to, fix a record date for
determining which Holders must consent to such amendment or waiver. If the
Company fixes a record date, the record date shall be fixed at (i) the later of
30 days prior to the first solicitation of such consent or the date of the most
recent list of Holders furnished to the Trustee prior to such solicitation
pursuant to Section 2.05 or (ii) such other date as the Company shall designate.
Section 9.05. Notation on or Exchange of Securities.
The Trustee may place an appropriate notation about an amendment or waiver
on any Security thereafter authenticated. The Company in exchange for all
Securities may issue and the Trustee shall authenticate new Securities that
reflect the amendment or waiver.
Failure to make the appropriate notation or issue a new Security shall not
affect the validity and effect of such amendment or waiver.
Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment or supplemental indenture authorized
pursuant to this Article 9 if the amendment does not adversely affect the
rights, duties, liabilities or immunities of the Trustee. If it does, the
Trustee may, but need not, sign it. In signing or refusing to sign such
amendment or supplemental indenture, the Trustee shall be entitled to receive
and, subject to Section 7.01, shall be fully protected in relying upon, an
Officers' Certificate and an Opinion of Counsel as conclusive evidence that such
amendment or Supplemental Indenture is authorized or permitted by this
Indenture, that it is not inconsistent herewith, and that it will be valid and
binding upon the Company in accordance with its terms. The Company may not sign
an amendment or supplemental indenture until the Board of Directors approves it.
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ARTICLE 10
SUBORDINATION
Section 10.01. Agreement to Subordinate.
The Company agrees, and each Holder by accepting a Security agrees,
that the Indebtedness evidenced by the Security is subordinated in right of
payment, to the extent and in the manner provided in this Article, to the prior
payment in full of all Senior Debt (whether outstanding on the date hereof or
hereafter created, incurred, assumed or Guaranteed), and that the subordination
is for the benefit of the holders of Senior Debt.
Section 10.02. Certain Definitions.
"Designated Senior Debt" means (i) so long as any Obligations are
outstanding under the New Credit Facility, such Obligations and (ii) thereafter,
any other Senior Debt permitted hereunder the principal amount of which is
$100.0 million or more and that has been designated by the Company as
"Designated Senior Debt".
"Representative" means the indenture trustee or other trustee, agent
or representative for any Senior Debt.
"Senior Debt" means (i) the Senior Term Debt and the Senior Revolving
Debt, (ii) the Senior Notes, (iii) any other Indebtedness that is permitted to
be incurred by the Company under the terms of this Indenture, unless the
instrument under which such Indebtedness is incurred expressly provides that it
is on a parity with or subordinated in right of payment to the Securities and
(iv) all Obligations with respect to any of the foregoing. Notwithstanding
anything to the contrary in the foregoing, Senior Debt will not include (w) any
liability for federal, state, local or other taxes owed or owing by the Company,
(x) any Indebtedness of the Company to any of its Subsidiaries or other
Affiliates, (y) any trade payables or (z) any Indebtedness that is incurred in
violation of this Indenture.
A distribution may consist of cash, securities or other property, by
set-off or otherwise.
Section 10.03. Liquidation; Dissolution; Bankruptcy.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, an
assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities, holders of Senior Debt will be entitled to receive
payment in full of all Obligations due in respect of such Senior Debt (including
interest accruing after the commencement of any such proceeding at the rate
specified in the applicable Senior Debt, whether or not allowed or allowable as
a claim in such proceeding) before the Holders will be entitled to receive any
payment with respect to the Securities and until all Obligations with respect to
Senior Debt are paid in full, any distribution to which the Holders would be
entitled shall be made to the holders of Senior
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Debt (except (a) that Holders may receive securities that (i) are subordinated
to at least the same extent as the Securities to Senior Debt and any securities
issued in exchange for Senior Debt, (ii) are unsecured (except to the extent the
Securities are secured), (iii) are not Guaranteed by any Subsidiary of the
Company (except to the extent the Securities are so Guaranteed), and (iv) have a
Weighted Average Life to Maturity and final maturity that are not shorter than
the Weighted Average Life to Maturity of the Securities or any securities issued
to Holders of Senior Debt under the New Credit Facility pursuant to a plan of
reorganization or readjustment and (b) payments made from the trust described in
Section 8.04).
Section 10.04. Default on Designated Senior Debt.
The Company may not make any payment upon or in respect of the
Securities (except in securities that (i) are subordinated to at least the same
extent as the Securities to Senior Debt and any securities issued in exchange
for Senior Debt, (ii) are unsecured (except to the extent the Securities are
secured), (iii) are not Guaranteed by any Subsidiary of the Company (except to
the extent the Securities are so Guaranteed), and (iv) have a Weighted Average
Life to Maturity and final maturity that are not shorter than the Weighted
Average Life to Maturity of the Securities or any securities issued to Holders
of Senior Debt under the New Credit Facility pursuant to a plan of
reorganization or readjustment or from the trust described in Section 8.04) if;
(i) a default in the payment of the principal of, premium, if any or
interest on Designated Senior Debt occurs and is continuing beyond any
applicable period of grace in the agreement, indenture or other document
governing such Designated Senior Debt; or
(ii) any other default occurs and is continuing with respect to
Designated Senior Debt that permits holders of the Designated Senior Debt
as to which such default relates to accelerate its maturity and the Trustee
receives a notice of such default (a "Payment Blockage Notice"), for so
long as any Obligations are outstanding under the New Credit Facility, from
the Representative thereunder and, thereafter, from the holders or
Representative of any Designated Senior Debt. If the Trustee receives any
such notice, a subsequent notice received within 360 days thereafter shall
not be effective for purposes of this Section 10.04. No nonpayment default
that existed or was continuing on the date of delivery of any such notice
to the Trustee shall be, or be made, the basis for a subsequent notice.
The Company may and shall resume payments on the Securities:
(1) in the case of a payment default, upon the date which the default
is cured or waived, and
(2) in the case of a nonpayment default referred to in Section
10.04(ii) hereof, the earlier of the date on which such nonpayment default
is cured or waived
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or 179 days after the date on which the applicable Payment Blockage
Notice is received, unless the maturity of any Designated Senior Debt
has been accelerated.
Section 10.05. Acceleration of Securities.
If payment of the Securities is accelerated because of an Event
of Default, the Company shall promptly notify holders of Senior Debt of the
acceleration.
Section 10.06. When Distribution Must Be Paid Over.
In the event that the Trustee or any Holder receives any payment
of any Obligations with respect to the Securities at a time when the
Trustee or such Holder, as applicable, has actual knowledge that such
payment is prohibited by Section 10.04 hereof, such payment shall be held
by the Trustee or such Securityholder, in trust for the benefit of, and
shall be paid forthwith over and delivered, upon written request, to, the
holders of Senior Debt as their interests may appear or their
Representative under the indenture or other agreement (if any) pursuant to
which such Senior Debt may have been issued, as their respective interests
may appear, for application to the payment of all Obligations with respect
to Senior Debt remaining unpaid to the extent necessary to pay such
Obligations in full in accordance with their terms, after giving effect to
any concurrent payment or distribution to or for the holders of Senior
Debt.
With respect to the holders of Senior Debt, the Trustee
undertakes to perform only such obligations on the part of the Trustee as
are specifically set forth in this Article 10, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into
this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Debt, and shall not be liable
to any such holders if the Trustee shall pay over or distribute to or on
behalf of Holders or the Company or any other Person money or assets to
which any holders of Senior Debt shall be entitled by virtue of this
Article 10, except if such payment is made as a result of the willful
misconduct or gross negligence of the Trustee.
Section 10.07. Notice by Company.
The Company shall promptly notify the Trustee and the Paying
Agent of any facts known to the Company that would cause a payment of any
Obligations with respect to the Securities to violate this Article, but
failure to give such notice shall not affect the subordination of the
Securities to the Senior Debt as provided in this Article.
Section 10.08. Subrogation.
After all Senior Debt is paid in full and until the Securities
are paid in full, Holders shall be subrogated (equally and ratably with all
other Indebtedness pari passu with the Securities) to the rights of holders
of Senior Debt to receive distributions applicable to Senior Debt to the
extent that distributions otherwise payable to the Holders have been
applied to the payment of Senior Debt. A distribution made under this
Article to holders of
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<PAGE>
Senior Debt that otherwise would have been made to Holders is not, as
between the Company and Holders, a payment by the Company on the Securities.
Section 10.09. Relative Rights.
This Article defines the relative rights of Holders and holders of
Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Company and Holders, the obligation of the
Company, which is absolute and unconditional, to pay principal of and
interest on the Securities in accordance with their terms;
(2) affect the relative rights of Holders and creditors of the Company
other than their rights in relation to holders of Senior Debt; or
(3) prevent the Trustee or any Holder from exercising its available
remedies upon a Default or Event of Default, subject to the rights of
holders and owners of Senior Debt to receive distributions and payments
otherwise payable to Holders.
If the Company fails because of this Article to pay principal of or
interest on a Security on the due date, the failure is still a Default or Event
of Default.
Section 10.10. Subordination May Not Be Impaired by Company.
No right of any holder of Senior Debt to enforce the subordination of the
Indebtedness evidenced by the Securities shall be impaired by any act or failure
to act by the Company or any Holder or by the failure of the Company or any
Holder to comply with this Indenture.
Section 10.11. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Trustee and the Holders shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction or upon any
certificate of such Representative or of the liquidating trustee or agent or
other Person making any distribution to the Trustee or to the Holders for the
purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.
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<PAGE>
Section 10.12. Rights of Trustee and Paying Agent.
Notwithstanding the provisions of this Article 10 or any other provision of
this Indenture, the Trustee shall not be charged with knowledge of the existence
of any facts that would prohibit the making of any payment or distribution by
the Trustee, and the Trustee and the Paying Agent may continue to make payments
on the Securities, unless the Trustee shall have received at its Corporate Trust
Office at least five Business Days prior to the date of such payment written
notice of facts that would cause the payment of any Obligations with respect to
the Securities to violate this Article 10. Only the Company or a Representative
may give the notice. Nothing in this Article 10 shall impair the claims of, or
payments to, the Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior Debt
with the same rights it would have if it were not Trustee. Any Agent may do the
same with like rights.
Section 10.13. Authorization to Effect Subordination.
Each Holder of a Security by the Holder's acceptance thereof authorizes and
directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as the Holder's attorney-in-fact for
any and all such purposes.
Section 10.14. Amendments.
The provisions of this Article 10 shall not be amended or modified without
the written consent of the holders of all Senior Debt.
ARTICLE 11
MISCELLANEOUS
Section 11.01. TIA Controls.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA (S)318(c), the imposed duties shall control.
Section 11.02. Notices.
Any notice or communication by the Company or the Trustee to the other is
duly given if in writing and delivered in person or mailed by first class mail
(registered or certified, return receipt requested), telex, telecopier or
overnight air courier guaranteeing next day delivery, to the other's address:
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<PAGE>
If to the Company:
National Medical Enterprises, Inc.
2700 Colorado Avenue
Santa Monica, California 90404
Telecopier No.: (310) 998-______
Attention: Treasurer
With a copy to:
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Telecopier No.: (213) 687-5600
Attention: Thomas C. Janson, Jr.
If to the Trustee:
The Bank of New York
101 Barclay Street, 21 West
New York, New York 10286
Telecopier No.: (212) 815-5915
Attention: Corporate Trust Trustee Administration
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.
Unless otherwise set forth above, any notice or communication to a Holder
shall be mailed by first class mail, certified or registered, return receipt
requested, or by overnight air courier guaranteeing next day delivery to its
address shown on the register kept by the Registrar. Any notice or communication
shall also be so mailed to any Person described in TIA (S) 313(c), to the extent
required by the TIA. Failure to mail a notice or communication to a Holder or
any defect in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to Holders, it shall mail a
copy to the Trustee and each Agent at the same time.
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<PAGE>
Section 11.03. Communication by Holders with Other Holders.
Holders may communicate pursuant to TIA (S) 312(b) with other Holders with
respect to their rights under this Indenture or the Securities. The Company,
the Trustee, the Registrar and anyone else shall have the protection of TIA (S)
312(c).
Section 11.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate (which shall include the statements set
forth in Section 11.05 hereof) stating that, in the opinion of the signers,
all conditions precedent and covenants, if any, provided for in this
Indenture relating to the proposed action have been satisfied; and
(2) an Opinion of Counsel (which shall include the statements set
forth in Section 11.05 hereof) stating that, in the opinion of such
counsel, all such conditions precedent and covenants have been satisfied.
Section 11.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA (S) 314(a)(4)) shall include:
(1) a statement that the person making such certificate or opinion has
read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and
(4) a statement as to whether or not, in the opinion of such person,
such condition or covenant has been satisfied; provided, however, that with
respect to matters of fact, an Opinion of Counsel may rely on an Officers'
Certificate or certificates of public officials.
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<PAGE>
Section 11.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 11.07. Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in The City of New York or at a place of payment are authorized or
obligated by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period.
Section 11.08. No Personal Liability of Directors, Officers, Employees and
Stockholders
No director, officer, employee, incorporator or stockholder of the Company,
as such, shall have any liability for any obligations of the Company under the
Securities, the Indenture or for any claim based on, in respect of, or by reason
of, such obligations or their creation. Each Holder of the Securities by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Securities. Such
waiver may not be effective to waive liabilities under the federal securities
laws and it is the view of the Commission that such a waiver is against public
policy.
Section 11.09. Duplicate Originals.
The parties may sign any number of copies of this Indenture. One signed
copy is enough to prove this Indenture.
Section 11.10. Governing Law.
The internal law of the State of New York shall govern and be used to
construe this Indenture and the Securities, without regard to the conflict of
laws provisions thereof.
Section 11.11. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or its Subsidiaries. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
Section 11.12. Successors.
All agreements of the Company in this Indenture and the Securities shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successor.
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<PAGE>
Section 11.13. Severability.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby,
it being intended that all of the provisions hereof shall be enforceable to the
full extent permitted by law.
Section 11.14. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
Section 11.15. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
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<PAGE>
SIGNATURES
Dated as of NATIONAL MEDICAL ENTERPRISES, INC.
---------------------
By:
---------------------------------------
Name:
Title:
Attest:
- --------------------------------- (SEAL)
Dated as of THE BANK OF NEW YORK, as Trustee
---------------------
By:
--------------------------------------
Name:
Title:
Attest:
- --------------------------------- (SEAL)
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<PAGE>
EXHIBIT A
(Face of Security)
___% Senior Subordinated Note
due March ___, 2005
CUSIP: _______
No. $____________
NATIONAL MEDICAL ENTERPRISES, INC.
promises to pay to
_________________________________________________________________________
or its registered assigns, the principal sum of
___________________________________
Dollars on September __, 2002.
Interest Payment Dates: March ___ and September ___, commencing September ___,
1995.
Record Dates: ___________ and _________ (whether or not a Business Day).
NATIONAL MEDICAL ENTERPRISES, INC.
By: _________________________
<PAGE>
Dated: __________, 1995
(SEAL)
Trustee's Certificate of Authentication:
This is one of the Securities referred
to in the within-mentioned Indenture:
The Bank of New York, as Trustee
By: ___________________________
Authorized Signatory
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<PAGE>
(Back of Security)
___% SENIOR SUBORDINATED NOTE
due March ___, 2002
Capitalized terms used herein have the meanings assigned to them in the
Indenture (as defined below) unless otherwise indicated.
1. Interest. National Medical Enterprises, Inc., a Nevada corporation
(the "Company"), promises to pay interest on the principal amount of this
Security at the rate and in the manner specified below.
The Company shall pay interest in cash on the principal amount of this
Security at the rate per annum of _____%. The Company will pay interest
semiannually in arrears on March __ and September __ of each year, commencing
September __, 1995, or if any such day is not a Business Day on the next
succeeding Business Day (each an "Interest Payment Date").
Interest will be computed on the basis of a 360-day year consisting of
twelve 30-day months. Interest shall accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of the
original issuance of the Securities. To the extent lawful, the Company shall
pay interest on overdue principal at the rate of 1% per annum in excess of the
interest rate then applicable to the Securities; it shall pay interest on
overdue installments of interest (without regard to any applicable grace
periods) at the same rate to the extent lawful.
2. Method of Payment. The Company will pay interest on the Securities
(except defaulted interest) to the Persons who are registered Holders of
Securities at the close of business on the record date next preceding the
Interest Payment Date, even if such Securities are cancelled after such record
date and on or before such Interest Payment Date. The Holder hereof must
surrender this Security to a Paying Agent to collect principal payments. The
Company will pay principal and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts.
The Company, however, may pay principal, premium, if any, and interest by check
payable in such money. It may mail an interest check to a Holder's registered
address. Notwithstanding the foregoing, all payments with respect to Securities
having a principal amount of $10.0 million or more the Holders of which have
given wire transfer instructions, on or before the relevant record date, to the
Paying Agent shall be made by wire transfer of immediately available funds to
the accounts specified by such Holders.
3. Paying Agent and Registrar. Initially, the Trustee will act as Paying
Agent and Registrar. The Company may change any Paying Agent or Registrar or
co-registrar without prior notice to any Holder. The Company and any of its
Subsidiaries may act in any such capacity.
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<PAGE>
4. Indenture. The Company issued the Securities under an Indenture, dated
as of March ___, 1995 (the "Indenture"), between the Company and the Trustee.
The terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code (S)(S) 77aaa-77bbbb) (the "TIA") as in effect on the date
of the Indenture. The Securities are subject to all such terms, and Holders are
referred to the Indenture and such act for a statement of such terms. The terms
of the Indenture shall govern any inconsistencies between the Indenture and the
Securities. The Securities are unsecured general obligations of the Company.
The Securities are limited to $700,000,000 in aggregate principal amount.
5. Optional Redemption. On or after March , 2000, the Company may redeem
--
all or any portion of the Securities at a redemption price (expressed as a
percentage of the principal amount thereof), as set forth in the immediately
succeeding paragraph, plus accrued and unpaid interest, if any, to the
redemption date.
The redemption price as a percentage of the principal amount shall be
as follows, if the Securities are redeemed during the 12-month period beginning
March of the following years:
--
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2000 ......................... %
2001 ......................... %
2002 ......................... %
2003 and thereafter .......... 100.000%
</TABLE>
6. Mandatory Redemption. Subject to the Company's obligation to make an
offer to repurchase Securities under certain circumstances pursuant to Sections
4.10 and 4.13 of the Indenture (as described in paragraph 7 below), the Company
shall have no mandatory redemption or sinking fund obligations with respect to
the Securities.
7. Repurchase at Option of Holder. (i) If there is a Change of Control
Triggering Event, the Company shall be required to offer to repurchase on the
Change of Control Payment Date all outstanding Securities at 101% of the
aggregate principal amount thereof, plus accrued and unpaid interest to the
Change of Control Payment Date. Holders that are subject to an offer to
purchase will receive a Change of Control Offer from the Company prior to any
related Change of Control Payment Date and may elect to have such Securities
purchased by completing the form entitled "Option of Holder to Elect Purchase"
appearing below.
(ii) If the Company or a Subsidiary consummates an Asset Sale, within 465
days after the receipt of any Net Proceeds from such Asset Sale, the Company may
elect to apply the Net Proceeds therefrom (a) to purchase one or more Hospitals
or Related Businesses and/or a controlling interest in the Capital Stock of a
Person owning one or more Hospitals and/or one or more Related Businesses, (b)
to make a capital expenditure or to acquire other tangible assets, in each case,
that are used or useful in any business in which the Company is permitted to be
engaged pursuant to Section 4.15 of the Indenture, (c) to permanently reduce
Senior Term Debt or Existing Indebtedness of a Subsidiary, (d) to permanently
reduce Senior Revolving Debt (and to correspondingly reduce commitments with
respect thereto), except that up to an aggregate of $200.0 million of Net
Proceeds from Asset Sales may be applied after the date of the Senior Note
Indenture to reduce Senior Revolving Debt without a corresponding reduction in
commitments with respect thereto or (e) to repurchase Senior Notes or redeem or
repurchase other Senior Debt. Pending the final application of any such Net
Proceeds, the Company may temporarily reduce Senior Revolving Debt or otherwise
invest such Net Proceeds in any manner that is not prohibited by the Indenture.
Any Net Proceeds from any Asset Sale that are not so invested or applied shall
be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds that have not been so invested or applied in accordance with (a), (b),
(c) or (d) above exceeds $25.0 million, the Company shall be required to make an
offer to all Holders of Securities to purchase the maximum principal amount of
Securities that may be purchased out of the Excess Proceeds, at an offer price
in cash in an amount equal to 100% of the principal amount thereof, plus accrued
and unpaid interest thereon, if any, to the date of
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<PAGE>
purchase in accordance with the terms of the Indenture. If the aggregate
principal amount of Securities surrendered by Holders thereof exceeds the amount
of Excess Proceeds, the Securities shall be selected on a pro rata basis.
Holders that are the subject of an offer to purchase will receive a Senior
Subordinated Asset Sale Offer from the Company prior to any related purchase
date and may elect to have such Securities purchased by completing the form
entitled "Option of Holder to Elect Purchase" appearing below.
8. Subordination. The Securities are subordinated to Senior Debt (as
defined in the Indenture), which includes any Indebtedness arising under or in
connection with (a) Existing Indebtedness, (b) the New Credit Facility (but only
to the extent permitted under Section 4.09 of the Indenture), and (c) all other
Indebtedness permitted by the Indenture that is not expressly pari passu with or
---- -----
subordinated to the Securities, all Obligations (as defined in the Indenture) of
the Company with respect thereto and all permissible renewals, extensions,
refundings and refinancings thereof, in each case whether outstanding on the
date of the Indenture or thereafter created, incurred or assumed. To the extent
provided in the Indenture, Senior Debt must be paid, in cash, cash equivalents
or otherwise in a manner satisfactory to the holders of Senior Debt, before the
Securities may be paid. The Company agrees, and each Holder by accepting a
Security consents and agrees, to the subordination provided in the Indenture and
authorizes the Trustee to give it effect.
9. Notice of Redemption. Notice of redemption shall be mailed at least 30
days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at its registered address. Securities may be redeemed
in part but only in whole multiples of $1,000, unless all of the Securities held
by a Holder are to be redeemed. On and after the redemption date, interest
ceases to accrue on Securities or portions of them called for redemption.
10. Denominations, Transfer, Exchange. The Securities are in registered
form without coupons, and in denominations of $1,000 and integral multiples of
$1,000. The transfer of Securities may be registered and Securities may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not exchange or register the transfer of any
Securities between a record date and the corresponding Interest Payment Date.
11. Persons Deemed Owners. Prior to due presentment to the Trustee for
registration of the transfer of this Security, the Trustee, any Agent and the
Company may deem and treat the Person in whose name this Security is registered
as its absolute owner for the purpose of receiving payment of principal of,
premium, if any, and interest on this Security and for all other purposes
whatsoever, whether or not this Security is overdue, and neither the Trustee,
any Agent nor the Company shall be affected by notice to the contrary. The
registered Holder of a Security shall be treated as its owner for all purposes.
12. Amendment, Supplement and Waivers. Except as provided in the next
succeeding paragraphs, the Indenture or the Securities may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the Securities then outstanding (including consents obtained in
connection with a tender offer or exchange offer for Securities) and any
existing default or compliance with any provision of the Indenture or the
Securities may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Securities (including consents obtained
in connection with a tender offer or exchange offer for Securities).
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<PAGE>
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Securities held by a non-consenting Holder of Securities):
(i) reduce the principal amount of Securities whose Holders must consent to an
amendment, supplement or waiver, (ii) reduce the principal of or change the
fixed maturity of any Security or alter the provisions with respect to the
redemption of the Securities (other than provisions relating to covenants in
Sections 4.10 and 4.13 hereof), (iii) reduce the rate of or change the time for
payment of interest on any Security, (iv) waive a Default or Event of Default in
the payment of principal of or premium, if any, or interest on the Securities,
(except a rescission of acceleration of the Securities by the Holders of at
least a majority aggregate principal amount of the Securities and a waiver of
the payment default that resulted from such acceleration), (v) make any Security
payable in money other than that stated in the Securities, (vi) make any change
in the provisions of the Indenture relating to waivers of past Defaults or the
rights of Holders of Securities to receive payments of principal of or premium,
if any, or interest on the Securities, (vii) waive a redemption payment with
respect to any Security (other than a payment required under Section 4.10 or
4.13 of the Indenture or (viii) make any change in the foregoing amendment and
waiver provisions.
Any amendment to the provisions of Article 10 hereof shall require the
consent of the Holders of at least 75% in aggregate principal amount of the
Securities then outstanding if such amendment would adversely affect the rights
of the Holders of the Securities.
Notwithstanding the foregoing, without the consent of any Holder of
Securities, the Company and the Trustee may amend or supplement the Indenture or
the Securities to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Securities in addition to or in place of certificated Securities,
to provide for any supplemental indenture required pursuant to Section 4.16 of
the Indenture, to provide for the assumption of the Company's obligations to
Holders of the Securities in the case of a merger, consolidation or sale of
assets, to make any change that would provide any additional rights or benefits
to the Holders of the Securities or that does not adversely affect the legal
rights under the Indenture of any such Holder, or to comply with requirements of
the Securities and Exchange Commission (the "Commission") in order to effect or
maintain the qualification of the Indenture under the TIA.
13. Defaults and Remedies. Events of Default under the Indenture include:
(i) a default for 30 days in the payment when due of interest on the Securities;
(ii) a default in payment when due of principal of or premium, if any, on the
Securities, at maturity, upon redemption or otherwise; (iii) a failure by the
Company to comply with the provisions described under the covenants "Limitations
on Restricted Payments," "Limitations on Incurrence of Indebtedness and Issuance
of Preferred Stock," "Asset Sales," and "Change of Control;" (iv) a failure by
the Company for 60 days after notice to comply with any of its other agreements
in the Indenture or the Securities; (v) any default that occurs under any
mortgage, indenture or instrument under which there may be issued or by which
there may be secured or evidenced any Indebtedness for money borrowed by the
Company or any of its Significant Subsidiaries (or the payment of which is
Guaranteed by the Company or any of its Significant Subsidiaries) whether such
Indebtedness or Guarantee exists on the date hereof, or is created after the
date hereof, which default (a) constitutes a failure to pay principal at final
maturity or (b) results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
that has not been paid at final maturity or that has been so accelerated,
aggregates $25.0 million or more; (vi) failure by the Company or any of its
Significant Subsidiaries to pay a final judgment or final judgments aggregating
in excess of $25.0 million entered by a court or courts or competent
jurisdiction against the Company or any of
A-6
<PAGE>
its Significant Subsidiaries if such final judgments remain undischarged for a
period (during which execution shall not be effectively stayed) of 60 days after
their entry; and (vii) certain events of bankruptcy or insolvency with respect
to the Company or any of its Significant Subsidiaries. If any Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
aggregate principal amount of the then outstanding Securities by written notice
to the Company and the Trustee, may declare all the Securities to be due and
payable immediately (plus, in the case of an Event of Default that is the result
of willful actions (or inactions) by the Company intended to avoid prohibitions
on, or premiums related to, redemptions of the Securities contained in the
Indenture or the Securities, an amount of premium that would have been
applicable pursuant to the Securities). Notwithstanding the foregoing, in the
case of an Event of Default arising from certain events of bankruptcy or
insolvency with respect to the Company, all outstanding Securities will become
due and payable without further action or notice. Holders of the Securities may
not enforce the Indenture or the Securities except as provided in the Indenture.
Subject to certain limitation, Holders of a majority in principal amount of the
then outstanding Securities may direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders of the Securities notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in such Holders' interest.
The Holders of a majority in aggregate principal amount of the Securities
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Securities waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of Default
in the payment of interest or premium on, or the principal of, the Securities.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
The above description of Events of Default and remedies is qualified by
reference, and subject in its entirety, to the more complete description thereof
contained in the Indenture.
14. Restrictive Covenants. The Indenture imposes certain limitations on
the ability of the Company and its Subsidiaries to incur additional indebtedness
and issue preferred stock, pay dividends or make other distributions, repurchase
Equity Interests or subordinated indebtedness, create certain liens, enter into
certain transactions with affiliates, sell assets of the Company or its
Subsidiaries, issue or sell Equity Interests of the Company's Subsidiaries,
issue Guarantees of Indebtedness by the Company's Subsidiaries and enter into
certain mergers and consolidations.
15. Trustee Dealings with Company. The Trustee under the Indenture, in
its individual or any other capacity, may make loans to, accept deposits from,
and perform
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<PAGE>
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not Trustee.
16. No Personal Liability of Directors, Officers, Employees and
Stockholders. No director, officer, employee, incorporator or stockholder of
the Company, as such, shall have any liability for any obligations of the
Company under the Securities, the Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities. Such
waiver may not be effective to waive liabilities under the federal securities
laws and it is the view of the Commission that such a waiver is against public
policy.
17. Authentication. This Security shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
18. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
19. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Securities and has directed the Trustee to
use CUSIP numbers as a convenience to Holders. No representation is made as to
the accuracy of such numbers either as printed on the Securities and reliance
may be placed only on the other identification numbers placed thereon.
A-8
<PAGE>
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Request may be made to:
National Medical Enterprises, Inc.
2700 Colorado Avenue
Santa Monica, California 90404
Attention: Treasurer
A-9
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign and
transfer this Security to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
________________________________________________________________________________
Date: ______________
Your Signature: __________________________________
(Sign exactly as your name appears on the face of this Security)
Signature Guarantee.*
__________
*Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A-10
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Security purchased by
the Company pursuant to Section 4.10 or Section 4.13 of the Indenture, check the
appropriate box:
[_] Section 4.10 [_] Section 4.13
(Asset Sale) (Change of Control)
If you want to have only part of the Security purchased by the Company
pursuant to Section 4.10 or Section 4.13 of the Indenture, state the amount you
elect to have purchased:
$ _______________
Date:____________
Your Signature:________________________________
(Sign exactly as your name appears on the face of this Security)
Signature Guarantee.*
__________
*Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A-11
<PAGE>
February 13, 1995
National Medical Enterprises, Inc.
2700 Colorado Avenue
Santa Monica, California 90404
Re: National Medical Enterprises, Inc.
Registration Statement No. 33-57057
-----------------------------------
Ladies and Gentlemen:
I am the General Counsel of National Medical Enterprises, Inc. (the
"Company"), and have acted as counsel to the Company in connection with the
preparation of the above-referenced Registration Statement on Form S-3, filed by
the Company with the Securities and Exchange Commission (the "Commission") on
December 23, 1994 under the Securities Act of 1933, as amended (the "Act"),
Amendment No. 1 thereto, filed with the Commission on January 31, 1995 and
Amendment No. 2 thereto, filed with the Commission on February 13, 1995,
including information deemed to be a part of the Registration Statement at the
time of effectiveness pursuant to Rule 430A of the General Rules and Regulations
under the Act (such Registration Statement, as so amended, being hereinafter
referred to the "Registration Statement"). The Registration Statement relates
to the registration under the Act of $300,000,000 principal amount of Senior
Notes due 2002 (the "Senior Notes") and $700,000,000 principal amount of Senior
Subordinated Notes due 2005 (the "Senior Subordinated Notes") (collectively, the
"Debt Securities") to be issued by the Company.
The Debt Securities are to be sold pursuant to an underwriting
agreement to be entered into among the Company and the underwriters named
therein (the "Underwriting Agreement"). The Senior Notes will be issued
pursuant to an Indenture (the "Senior Note Indenture") between the Company and
The Bank of New York, as Trustee. The Senior Subordinated Notes will be issued
pursuant to an Indenture (the "Senior Subordinated Note Indenture"
<PAGE>
and, together with the Senior Note Indenture, the "Indentures") between the
Company and The Bank of New York, as Trustee. The terms of the Debt Securities
include those stated in the Indentures and those made part of the Indentures by
reference to the Trust Indenture Act of 1939, as amended.
This opinion is delivered in accordance with the requirements of Item
601(b)(5) of Regulation S-K under the 1933 Act.
In connection with this opinion, I have examined and am familiar with
originals or copies, certified or otherwise identified to my satisfaction, of
such records of the Company and all such agreements, certificates of public
officials, certificates of officers or other representatives of the Company and
others and such other documents, certificates and records as I have deemed
necessary or appropriate as a basis for the opinions set forth herein,
including, without limitation, (i) the Registration Statement (together with the
form of preliminary prospectus forming a part thereof), (ii) the Restated
Articles of Incorporation and Restated By-laws of the Company, as amended to
date, (iii) copies of certain resolutions adopted by the Board of Directors of
the Company relating to the filing of the Registration Statement and any
amendments or supplements thereto, the proposed issuance of the Debt Securities
and related matters, (iv) the form of Underwriting Agreement and (v) forms of
the Indentures. In my examination, I have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to me as originals, the conformity to original documents of
all documents submitted to me as certified, conformed or photostatic copies and
the authenticity of the originals of such copies. As to any facts material to
the opinions expressed herein which I have not independently established or
verified, I have relied upon statements and representations of officers and
other representatives of the Company and others.
I am a member of the California Bar and for purposes of this opinion
do not express any opinion as to the laws of any jurisdiction other than
California and the General Corporation Law of the State of Nevada.
2
<PAGE>
National Medical Enterprises, Inc.
Page 3
Based on and subject to the foregoing, I am of the opinion that the
Debt Securities will be, when issued and sold in accordance with the
Registration Statement and the respective Indenture, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except that the enforcement of such obligations may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or similar laws affecting the enforcement of creditors' rights
generally, and (ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
This opinion is furnished to you solely for your benefit in connection
with the filing of the Registration Statement and is not to be used, circulated,
quoted or otherwise referred to for any other purpose without my prior written
consent. I hereby consent to the filing of this opinion with the Commission as
Exhibit 5 to the Registration Statement. I also consent to the reference to me
under the heading "Legal Matters" in the Registration Statement. In giving this
consent, I do not thereby admit that I am included in the category of persons
whose consent is required under Section 7 of the 1933 Act or the rules and
regulations of the Commission promulgated thereunder. This opinion is expressed
as of the date hereof unless otherwise expressly stated and I disclaim any
undertaking to advise you of any subsequent changes of the facts stated or
assumed herein or any subsequent changes in applicable law.
Very truly yours,
Scott M. Brown
3
<PAGE>
EXHIBIT 23.4
CONSENT
I hereby consent to the reference to me under the caption "Management--
Executive Officers and Directors" in the Registration Statement on Form S-3
(File No. 33-57057) of National Medical Enterprises, Inc. and in the Prospectus
forming a part of the Registration Statement relating to the public offering of
debt securities by NME.
Date: January 30, 1995 /s/ Robert O' Leary
_____________________________________
Robert O' Leary
<PAGE>
CONFORMED COPY
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
NATIONAL MEDICAL ENTERPRISES, INC.
(Exact name of obligor as specified in its charter)
Nevada 95-2557091
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
2700 Colorado Avenue
Santa Monica, California 90404
(Address of principal executive offices) (Zip code)
______________________
% Senior Notes due 2002
(Title of the indenture securities)
================================================================================
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT
IS SUBJECT.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None. (See Note on page 3.)
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION,
ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO
RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE 24 OF
THE COMMISSION'S RULES OF PRACTICE.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 8th day of February, 1995.
THE BANK OF NEW YORK
By: /s/ WALTER N. GITLIN
___________________________
Name: WALTER N. GITLIN
Title: VICE PRESIDENT
-4-
<PAGE>
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business September 30,
1994, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin...................... $ 2,833,550
Interest-bearing balances.............. 701,828
Securities:
Held-to-maturity securities............ 1,359,569
Available-for-sale securities.......... 1,725,600
Federal funds sold in domestic
offices of the bank.................... 5,350,368
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................24,252,467
LESS: Allowance for loan and
lease losses ..............629,631
LESS: Allocated transfer risk
reserve .....................30,661
Loans and leases, net of unearned
income, allowance, and reserve 23,592,175
Assets held in trading accounts.......... 1,354,396
Premises and fixed assets (including
capitalized leases).................... 629,219
Other real estate owned.................. 51,372
Investments in unconsolidated
subsidiaries and associated
companies.............................. 178,742
Customers' liability to this bank on
acceptances outstanding................ 996,184
Intangible assets........................ 76,599
Other assets............................. 1,498,770
-----------
Total assets............................. $40,348,372
===========
LIABILITIES
Deposits:
In domestic offices.................... $19,692,982
Noninterest-bearing .......8,179,472
Interest-bearing .........11,513,510
In foreign offices, Edge and
Agreement subsidiaries, and IBFs....... 10,034,789
Noninterest-bearing ..........57,902
Interest-bearing ..........9,976,887
Federal funds purchased and secu-
rities sold under agreements to re-
purchase in domestic offices of
the bank and of its Edge and
Agreement subsidiaries, and in
IBFs:
Federal funds purchased............... 1,240,870
Securities sold under agreements
to repurchase....................... 37,612
Demand notes issued to the U.S.
Treasury.............................. 197,519
Trading liabilities..................... 975,739
Other borrowed money:
With original maturity of one year
or less............................. 1,621,466
With original maturity of more than
one year............................ 33,955
Bank's liability on acceptances exe-
cuted and outstanding................. 997,024
Subordinated notes and debentures....... 1,062,320
Other liabilities....................... 1,450,981
----------
Total liabilities....................... 37,345,257
==========
EQUITY CAPITAL
Common stock............................ 942,284
Surplus................................. 525,666
Undivided profits and capital
reserves.............................. 1,577,819
Net unrealized holding gains
(losses) on available-for-sale
securities............................ (36,779)
Cumulative foreign currency transla-
tion adjustments...................... (5,875)
----------
Total equity capital.................... 3,003,115
----------
Total liabilities and equity
</TABLE>
capital ........................... $40,348,372
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Renyi ]
J. Carter Bacot ] Directors
Alan R. Griffith ]
- --------------------------------------------------------------------------------
<PAGE>
CONFORMED COPY
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
NATIONAL MEDICAL ENTERPRISES, INC.
(Exact name of obligor as specified in its charter)
Nevada 95-2557091
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
2700 Colorado Avenue
Santa Monica, California 90404
(Address of principal executive offices) (Zip code)
______________________
% Senior Subordinated Notes due 2005
(Title of the indenture securities)
================================================================================
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT
IS SUBJECT.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None. (See Note on page 3.)
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE 24 OF THE
COMMISSION'S RULES OF PRACTICE.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
2
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 8th day of February, 1995.
THE BANK OF NEW YORK
By: /s/ LLOYD A. MCKENZIE
-----------------------------------
Name: LLOYD A. MCKENZIE
Title: ASSISTANT VICE PRESIDENT
4
<PAGE>
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business September 30,
1994, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin...................... $ 2,833,550
Interest-bearing balances.............. 701,828
Securities:
Held-to-maturity securities............ 1,359,569
Available-for-sale securities.......... 1,725,600
Federal funds sold in domestic
offices of the bank.................... 5,350,368
Loans and lease financing
receivables:
Loans and leases, net of
unearned income.......... 24,252,467
LESS: Allowance for loan
and lease losses......... 629,631
LESS: Allocated transfer
risk reserve............. 30,661
Loans and leases, net of unearned
income, allowance, and reserve 23,592,175
Assets held in trading accounts.......... 1,354,396
Premises and fixed assets (including
capitalized leases).................... 629,219
Other real estate owned.................. 51,372
Investments in unconsolidated
subsidiaries and associated
companies.............................. 178,742
Customers' liability to this bank on
acceptances outstanding................ 996,184
Intangible assets........................ 76,599
Other assets............................. 1,498,770
-----------
Total assets............................. $40,348,372
===========
LIABILITIES
Deposits:
In domestic offices.................... $19,692,982
Noninterest-bearing ....... 8,179,472
Interest-bearing .......... 11,513,510
In foreign offices, Edge and
Agreement subsidiaries, and IBFs....... 10,034,789
Noninterest-bearing ....... 57,902
Interest-bearing .......... 9,976,887
Federal funds purchased and securities
sold under agreements to repurchase in
domestic offices of the bank and of its
Edge and Agreement subsidiaries, and in
IBFs:
Federal funds purchased............... 1,240,870
Securities sold under agreements
to repurchase....................... 37,612
Demand notes issued to the U.S.
Treasury.............................. 197,519
Trading liabilities..................... 975,739
Other borrowed money:
With original maturity of one year
or less............................. 1,621,466
With original maturity of more than
one year............................ 33,955
Bank's liability on acceptances exe-
cuted and outstanding................. 997,024
Subordinated notes and debentures....... 1,062,320
Other liabilities....................... 1,450,981
----------
Total liabilities....................... 37,345,257
==========
EQUITY CAPITAL
Common stock............................ 942,284
Surplus................................. 525,666
Undivided profits and capital
reserves.............................. 1,577,819
Net unrealized holding gains
(losses) on available-for-sale
securities............................ (36,779)
Cumulative foreign currency transla-
tion adjustments...................... (5,875)
----------
Total equity capital.................... 3,003,115
----------
Total liabilities and equity
capital............................... $40,348,372
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Renyi ]
J. Carter Bacot ] Directors
Alan R. Griffith ]
- --------------------------------------------------------------------------------
