UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended June 30, 1997
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission File Number: 1-12306
Integrated Health Services, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE 23-2428312
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10065 Red Run Boulevard, Owings Mills, MD 21117
(Address of principal executive offices) (Zip Code)
(410) 998-8400
(Registrant's telephone, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[ X ] Yes [ ] No
Number of shares of common stock of the registrant outstanding as of
August 6, 1997: 25,513,551 shares.
Page 1 of 27
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INTEGRATED HEALTH SERVICES, INC.
INDEX
PART I. FINANCIAL INFORMATION
Page
Item 1. - Condensed Financial Statements -
Consolidated Balance Sheets
June 30, 1997 and December 31, 1996 3
Consolidated Statements of Earnings
for the three and six months ended
June 30, 1997 and 1996 4
Consolidated Statement of Changes in
Stockholders' Equity for the six
months ended June 30, 1997 5
Consolidated Statements of Cash Flows
for the six months ended June 30, 1997
and 1996 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 14
PART II: OTHER INFORMATION
Item 2. Changes in Securities 24
Item 4. Submission of Matters to a Vote of
Security Holders 25
Item 6. Exhibits and Reports on Form 8-K 25
Page 2 of 27
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<TABLE>
<CAPTION>
INTEGRATED HEALTH SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
June 30, December 31,
1997 1996
----------------- --------------------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 43,105 39,028
Temporary investments 2,367 2,044
Patient accounts and third-party payor settlements
receivable, less allowance for doubtful receivables 344,144 326,883
of $38,881 at June 30, 1997 and $41,527 at December 31, 1996
Supplies inventories, prepaid expenses
and other current assets 28,931 26,243
Income tax receivable 30,617 20,992
----------------- --------------------
Total current assets 449,164 415,190
----------------- --------------------
Property, plant and equipment, net 910,772 864,335
Intangible assets 633,206 572,159
Investments in and advances to affiliates 74,001 76,047
Other assets 75,504 65,376
----------------- --------------------
Total assets $ 2,142,647 1,993,107
================= ====================
Liabilities and Stockholders' Equity
Current Liabilities:
Current maturities of long-term debt $ 13,161 16,547
Accounts payable and accrued expenses 276,961 341,094
----------------- --------------------
Total current liabilities 290,122 357,641
----------------- --------------------
Long-term Debt:
Convertible subordinated debentures 258,750 258,750
Other long-term debt, less current maturities 946,337 779,450
----------------- --------------------
Total long-term debt 1,205,087 1,038,200
----------------- --------------------
Other long-term liabilities 35,315 33,851
Deferred income taxes 25,073 22,283
Deferred gain on sale-leaseback transactions 5,731 6,267
Stockholders' equity:
Preferred stock, authorized 15,000,000 shares; no shares
issued and outstanding -- --
Common stock, $0.001 par value. Authorized 150,000,000
shares; outstanding 25,387,377 at June 30, 1997 and 23,628,250
at December 31, 1996 (including 41,900 treasury shares at
June 30, 1997) 25 24
Additional paid-in capital 492,892 445,667
Retained earnings 89,940 79,814
Unrealized gain on available for sale securities 0 9,360
Treasury stock at cost (41,900 shares at June 30, 1997) (1,538) 0
----------------- --------------------
Net stockholders' equity 581,319 534,865
----------------- --------------------
Total liabilities and stockholders' equity $ 2,142,647 1,993,107
================= ====================
See accompanying Notes to Consolidated Financial Statements
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<CAPTION>
INTEGRATED HEALTH SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(Dollars in Thousands)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------------- --------------------------------------
1997 1996 1997 1996
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Net revenues:
Basic medical services $ 88,055 98,063 176,810 195,279
Specialty medical services 360,113 226,868 722,802 446,393
Management services and other 9,805 10,849 19,304 21,381
---------------- ---------------- ---------------- ----------------
Total revenues 457,973 335,780 918,916 663,053
---------------- ---------------- ---------------- ----------------
Costs and expenses:
Operating expenses 338,736 254,274 691,148 504,169
Corporate administrative and general 18,135 14,854 36,151 29,947
Depreciation and amortization 15,814 8,505 30,844 16,779
Rent 25,786 17,879 49,795 35,535
Interest, net 23,224 15,888 44,645 30,102
Non-recurring charges, net 21,072 0 20,047 0
---------------- ---------------- ---------------- ----------------
Total costs and expenses 442,767 311,400 872,630 616,532
---------------- ---------------- ---------------- ----------------
Earnings before equity in earnings
(loss) of affiliates, income taxes
and extraordinary items 15,206 24,380 46,286 46,521
Equity in earnings (loss) of affiliates (83) 460 98 760
---------------- ---------------- ---------------- ----------------
Earnings before income taxes
and extraordinary items 15,123 24,840 46,384 47,281
Federal and state income taxes 5,898 9,563 18,090 18,203
---------------- ---------------- ---------------- ----------------
Earnings before extraordinary items 9,225 15,277 28,294 29,078
Extraordinary items (Note 6) 18,168 1,431 18,168 1,431
---------------- ---------------- ---------------- ----------------
Net earnings (loss) $ (8,943) 13,846 10,126 27,647
================ ================ ================ ================
Per Common Share - primary
Earnings before extraordinary
item $ 0.31 0.64 1.05 1.26
Net earnings (loss) (0.36) 0.58 0.38 1.20
================ ================ ================ ================
Per Common Share - fully diluted
Earnings before extraordinary
item 0.29 0.56 0.92 1.10
Net earnings (loss) (0.22) 0.51 0.41 1.05
================ ================ ================ ================
See accompanying Notes to Consolidated Financial Statements
Page 4 of 27
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<CAPTION>
INTEGRATED HEALTH SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(dollars in thousands)
Unrealized
Gain On
Additional Available
Common Paid-In Retained For Sale Treasury
Stock Capital Earnings Securities Stock Total
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 $ 24 445,667 79,814 9,360 - 534,865
Issuance of 976,504 shares of common
stock in payment of earn-out in
connection with prior acquisition (Note 3) 1 26,438 - - - 26,439
Issuance of 322,472 shares of
common stock in connection with 1997
acquisitions (Note 3) - 11,460 - - - 11,460
Issuance of 30,248 shares of common
stock in connection with employee
stock purchase plan - 647 - - - 647
Exercise of employee stock options
for 471,803 shares of common stock - 8,680 - - - 8,680
Repurchase of 41,900 shares of treasury
stock (Note 7) - - - - (1,538) (1,538)
Realized gain on available for sale
securities - - - (9,360) - (9,360)
Net earnings - - 10,126 - - 10,126
--------------------------------------------------------------------------------------
Balance at June 30, 1997 $ 25 492,892 89,940 0 (1,538) 581,319
======================================================================================
See accompanying Notes to Consolidated Financial Statements
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<TABLE>
<CAPTION>
INTEGRATED HEALTH SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
Six Months Ended
June 30,
-------------------------------------
1997 1996
---------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 10,126 27,647
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Extraordinary item (Note 6) 29,784 2,327
Non-recurring charges, net 20,047 0
Undistributed results of joint ventures 328 (390)
Depreciation and amortization 30,844 16,779
Deferred income taxes and other non-cash items 2,090 2,095
Amortization of gain on sale-leaseback transactions (536) (516)
Increase in patient accounts and third-party
payor settlements receivable, net (10,109) (31,399)
Increase in supplies inventory, prepaid
expenses and other current assets (2,483) (986)
Decrease in accounts payable and accrued expenses (59,439) (16,716)
(Increase) decrease in income taxes receivable (9,644) 1,800
---------------- ----------------
Net cash provided by operating activities 11,008 641
---------------- ----------------
Cash flows from financing activities:
Proceeds from issuance of capital stock, net 9,327 1,799
Proceeds from long-term borrowings 1,083,219 627,675
Repayment of long-term debt (919,514) (490,761)
Payment of pre-payment premiums and fees of debt
extinguishment (Note 6) (23,598) 0
Deferred financing costs (13,840) (8,090)
Dividends paid (471) (435)
Purchase of treasury stock (1,538) 0
---------------- ----------------
Net cash provided by financing activities 133,585 130,188
---------------- ----------------
Cash flows from investing activities:
Sale of temporary investments 119 97
Purchase of temporary investments (442) 0
Business acquisitions (34,543) (18,159)
Payment of termination fees and other costs of terminated merger (27,555) 0
Purchase of property, plant and equipment (67,588) (67,355)
Other assets (10,507) (39,930)
---------------- ----------------
Net cash used by investing activities (140,516) (125,347)
---------------- ----------------
Increase in cash and cash equivalents 4,077 5,482
Cash and cash equivalents, beginning of period 39,028 38,917
---------------- ----------------
Cash and cash equivalents, end of period $ 43,105 44,399
================ ================
See accompanying Notes to Consolidated Financial Statements
Page 6 of 27
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NOTES
TO
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements included herein do not
contain all information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles. For further
information, such as the significant accounting policies
followed by Integrated Health Services, Inc. ("IHS" or
"Company"), refer to the consolidated financial statements and
notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1996. In the opinion of
management, the consolidated financial statements include all
necessary adjustments (consisting of only normal recurring
accruals) for a fair presentation of the financial position and
results of operations for the interim periods presented. The
results of operations for the interim periods presented are not
necessarily indicative of the results that may be expected for
the full year.
NOTE 2: EARNINGS PER SHARE
Primary earnings per share is computed based on the weighted
average number of common and common equivalent shares
outstanding during the periods. Common stock equivalents
include options and warrants to purchase common stock, assumed
to be exercised using the treasury stock method. Fully diluted
earnings per share is computed as described above, except that
the weighted average number of common equivalent shares is
determined assuming the dilution resulting from the issuance of
the aforementioned options and warrants at the higher of the
end-of-period price per share or the weighted average price for
the period, and the issuance of common shares upon the assumed
conversion of the convertible subordinated debentures.
Additionally, interest expense and amortization of underwriting
costs related to such debentures are added, net of tax, to
income for the purpose of calculating fully diluted earnings
per share. Such amounts and the resulting net earnings for
fully diluted earnings per share purposes are summarized as
follows for the six months ended June 30, 1997 and 1996,
respectively:
1997 1996
-----------------
Net earnings $10,126 27,647
Adjustment for interest and underwriting
costs on convertible debentures 4,904 4,944
--------- -------
Net earnings for fully diluted EPS $15,030 32,591
========= =======
Weighted average shares-Primary 26,963 23,039
Weighted average shares-Fully Diluted 36,233 31,028
========= =======
Page 7 of 27
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NOTE 3: NEW ACQUISITIONS
ACQUISITIONS DURING THE SIX MONTHS ENDED JUNE 30, 1997
Acquisitions for the six months ended June 30, 1997 and
the manner of payment are summarized as follows:
COMMON
TOTAL STOCK ACCRUED CASH
MONTH TRANSACTION DESCRIPTION COST ISSUED LIABILITIES PAID
- ----- ----------------------- ----- ------ ----------- ----
<S> <C> <C> <C> <C> <C>
January Stock of In-Home Health
Care, Inc. $3,450 $---- $250 $3,200
February Assets of Professional
Health Services, Inc. 350 ---- 100 250
February Assets of Portable X-Ray
Labs, Inc. 6,200 ---- 1,300 4,900
March Assets of Laboratory
Corporation of America 35 ---- ---- 35
March Assets of Doctor's Home
Health Agency, Inc. 445 ---- 95 350
March Payment of earnout in
connection with Achieve-
ment Rehab acquisition
in December 1993 26,439 26,439 ---- ----
April Assets of Coastal
Rehabilitation, Inc. 1,450 ---- 200 1,250
April Assets of Mobile
Diagnostics, Inc. 225 ---- 75 150
June Stock of Health Care
Industries, Inc. 2,325 ---- 500 1,825
June Assets of The Nursing
Connection 330 ---- ---- 330
June Assets of Rehab Dynamics,
Inc. and Restorative
Therapy, Ltd. 22,163 11,460 2,500 8,203
Various Cash payments of
acquisition costs
accrued in 1996 ---- ---- (14,050) 14,050
------ --------- -------- ------
$63,412 $37,899 $(9,030) $34,543
======= ========= ======== =======
Page 8 of 27
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<CAPTION>
The allocation of the total cost of the 1997 acquisitions to the assets acquired
and liabilities assumed is summarized as follows:
PROPERTY,
CURRENT PLANT & OTHER INTANGIBLE CURRENT LONG-TERM TOTAL
TRANSACTION ASSETS EQUIPMENT ASSETS ASSETS LIABILITIES LIABILITIES COSTS
- ----------- ------- --------- ------ ---------- ----------- ----------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
In-Home Health
Care, Inc. $ 989 $ 229 $ 7 $ 3,856 ($ 797) ($ 834) $ 3,450
Professional
Health Services,
Inc. -- 20 9 321 -- -- 350
Portable X-Ray
Labs, Inc. 1,309 -- 11 5,653 (297) (476) 6,200
Laboratory Corp.
of America
-- 10 -- 25 -- -- 35
Doctor's Home
Health Agency,
Inc. -- 6 -- 439 -- -- 445
Achievement
Rehab (earnout) -- -- -- 26,439 -- -- 26,439
Coastal
Rehabilitation,
Inc. 257 85 -- 1,764 (576) (80) 1,450
Mobile
Diagnostics,
Inc. -- 38 -- 187 -- -- 225
Health Care
Industries,
Inc. 805 204 41 2,505 (1,080) (150) 2,325
The Nursing
Connection,
Inc. 14 62 -- 254 -- -- 330
Rehab Dynamics,
Inc. & Restorative
Therapy, Ltd. 4,140 954 107 21,478 (3,204) (1,312) 22,163
----- ----- ----- ------- ------- ------- ------
$7,514 $1,608 $175 $62,921 ($5,954) ($2,852) $63,412
====== ====== ===== ======= ======== ======== =======
Page 9 of 27
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<PAGE>
NOTE 4: 9-1/2% SENIOR SUBORDINATED NOTES DUE 2007
In May 1997, the Company issued $450 million aggregate
principal amount of its 9-1/2% Senior Subordinated
Notes due 2007 (the "Senior Notes"). Interest on the
Senior Notes is payable semiannually on March 15 and
September 15, commencing September 15, 1997. The Senior
Notes are redeemable for cash at any time on or after
September 15, 2002, at the option of the Company, in
whole or in part, initially at the redemption price
equal to 104.75% of principal amount, declining to 100%
of principal amount on September 15, 2005, plus accrued
interest thereon to the date fixed for redemption. In
addition, IHS may redeem up to $150,000,000 aggregate
principal amount of Senior Notes at any time and from
time to time prior to September 15, 2000 at a
redemption price equal to 108.50% of the aggregate
principal amount thereof, plus accrued interest
thereon, out of the net cash proceeds of one or more
Public Equity Offerings (as defined in the indenture
under which the Senior Notes were issued (the "Senior
Notes Indenture")). In the event of a change in control
of IHS (as defined in the Senior Notes Indenture), each
holder of Senior Notes may require IHS to repurchase
such holder's Senior Notes, in whole or in part, at
101% of the principal amount thereof, plus accrued
interest to the repurchase date. The Senior Notes
Indenture contains covenants, including, but not
limited to, covenants with respect to the following
matters: (1) limitations on additional indebtedness
unless certain coverage ratios are met; (2) limitations
on other subordinated debt; (3) limitations on liens;
(4) limitations on the issuance of preferred stock by
the Company's subsidiaries; (5) limitations on
transactions with affiliates; (6) limitations on
restricted payments and investments; (7) application of
the proceeds of certain asset sales; (8) limitations on
restrictions on subsidiary dividends; and (9)
restrictions on mergers, consolidations and the
transfer of all or substantially all of the assets of
the Company to another person. The Company used
approximately $247.2 million of the net proceeds from
the sale of the Senior Notes to repurchase
substantially all of its 9-5/8% Senior Subordinated
Notes due 2002 and its 10-3/4% Senior Subordinated
Notes due 2004, to pay pre-payment premiums, consent
fees and accrued interest related to the repurchase,
and used the remaining approximately $191.0 million to
repay a portion of the $436.0 million then outstanding
under its revolving credit facility. In connection with
the repurchase, the Company recorded an extraordinary
loss of $18.2 million (net of tax). (See Note 6:
Extraordinary Item)
NOTE 5: NON-RECURRING CHARGES
PHARMACY GAIN:
In July 1996, the Company sold its pharmacy division to
Capstone Pharmacy, Inc. ("Capstone") for a purchase
price of $150 million, consisting of cash of $125
million, and shares of Capstone stock having a value of
$25 million. At the date of the sale the Company's
investment in the shares of Capstone's common stock was
recorded at its carryover cost of $14.7 million, which
represented less than 20% of the total Capstone shares.
During the first quarter of 1997, the Company recorded
the remaining gain of $7.6 million on its investment in
the Capstone shares. Previously, such gain was
accounted for as an unrealized gain on available for
sale securities.
Page 10 of 27
<PAGE>
SETTLEMENT WITH CORAM:
On October 19, 1996, the Company and Coram Healthcare
Corporation ("Coram") entered into a definitive
agreement and plan of merger (the "Merger Agreement")
providing for the merger of a wholly-owned subsidiary
of IHS into Coram, with Coram becoming a wholly-owned
subsidiary of IHS. Under the terms of the Merger
Agreement, holders of Coram common stock were to
receive for each share of Coram common stock 0.2111 of
a share of the Company's common stock, and IHS would
have assumed approximately $375 million of
indebtedness. On April 4, 1997, IHS notified Coram that
it had exercised its rights to terminate the Merger
Agreement. IHS also terminated the March 30, 1997
letter amendment, setting forth proposed revisions to
the terms of the merger (which included a reduction in
the exchange ratio to 0.15 of a share of IHS common
stock for each share of Coram common stock), prior to
the revisions becoming effective at the close of
business on April 4, 1997. On May 5, 1997, IHS and
Coram entered into a settlement agreement pursuant to
which the Company paid Coram $21 million in full
settlement of all claims Coram might have against IHS
pursuant to the Merger Agreement, which the Company
recognized as a non-recurring charge in the second
quarter. In addition, during the first quarter the
Company incurred a non-recurring charge of $6.6 million
relating to accounting, legal and other costs related
to the merger.
NOTE 6: EXTRAORDINARY ITEM
In the second quarter of 1997, the Company recorded a
pre-tax loss of $29.8 million representing (1)
approximately $23.6 million of cash payments for
pre-payment premium and tender and consent fees
relating to the early extinguishment of debt resulting
from the Company's repurchase pursuant to cash tender
offers of $99,873,000 principal amount of the Company's
$100 million of outstanding 10-3/4% Senior Subordinated
Notes due 2004 and $114,975,000 of the Company's $115
million of outstanding 9-5/8% Senior Subordinated Notes
due 2002 and (2) approximately $6.2 million relating to
the write-off of deferred financing costs. Such loss,
reduced by the related income tax effect of $11.6
million, is presented in the statement of earnings as
an extraordinary loss of $18.2 million.
In the second quarter of 1996, the Company replaced its
$500 million revolving credit facility and term loan
with the $700 million revolving credit facility. This
event has been accounted for as an extinguishment of
debt and the Company has recorded a loss on
extinguishment of debt of $2.3 million, relating
primarily to the write-off of deferred costs. Such
loss, reduced by the related income tax effect of
$896,000, is presented in the statement of earnings as
an extraordinary item of $1.4 million.
NOTE 7: STOCK REPURCHASE
The Company's Board of Directors has authorized the
repurchase in the open market of up to $20 million of
the Company's Common Stock. The purpose of the
repurchase program is to have available treasury shares
of Common Stock to (i) satisfy contingent earn-out
payments under prior business combinations accounted
for by the purchase method, (ii) issue in connection
with acquisition and (iii) issue upon exercise of
outstanding options. The repurchases will be funded
from the cash from operations and drawings under the
Company's revolving credit
Page 11 of 27
<PAGE>
facility. During the six months ended June 30, 1997,
the Company repurchased 41,900 shares of Common Stock
for an aggregate purchase price of approximately $1.5
million.
NOTE 8: RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards
Board issued Statement No. 128, "Earnings Per Share,"
("SFAS 128"), which simplifies the standards for
computing earnings per share ("EPS"). SFAS 128 is
effective for the Company's fourth quarter and year
ending December 31, 1997. Early application is not
permitted and prior period EPS data will be restated.
Under SFAS 128, primary EPS will be replaced with basic
EPS. Basic EPS excludes the dilutive effect of common
stock equivalents. Also, under SFAS 128, fully-diluted
EPS will be replaced by diluted EPS. Diluted EPS is
calculated similarly to fully-diluted EPS pursuant to
Accounting Principles Board Opinion 15.
The change in calculation method is not expected to
have a material impact on previously reported earnings
per common share data.
NOTE 9: SUBSEQUENT EVENTS
PROPOSED MERGER WITH ROTECH MEDICAL CORPORATION:
On July 6, 1997, the Company and RoTech Medical
Corporation ("RoTech") entered into a definitive merger
agreement pursuant to which RoTech will merge with the
Company. RoTech provides comprehensive home healthcare
and primary care physician services, principally to
patients in non-urban areas.
Under the terms of the agreement, the Company will
issue 0.5806 shares of IHS common stock for each share
of RoTech common stock currently outstanding. When the
acquisition is consummated, IHS will issue
approximately 15.3 million shares of common stock. The
equity value of the acquisition is approximately $615
million, based on the exchange terms, and the Company
will reserve for issuance approximately 20 million
shares upon exercise of RoTech options and
approximately 2.4 million shares for issuance upon
conversion of $110 million of RoTech's convertible
Debentures. Following the merger, IHS may be obligated
to repurchase such debentures at face value. The total
value of the transaction including the assumption of
RoTech's debt by IHS and other financial obligations,
will be approximately $915 million.
The transaction, which will be accounted for under the
purchase method, has been unanimously approved by the
Board of Directors of each company. Completion of the
transaction is subject to various conditions including
approval by IHS and RoTech stockholders, approval by
IHS' senior lenders, and certain regulatory approvals.
Each party may terminate the agreement if the average
trading price of IHS Common Stock over the ten trading
days ending on the fifth trading day prior to the
RoTech stockholders' meeting to approve the merger is
equal to or less than $33.00. The merger agreement also
provides for payment of breakup fees under certain
circumstances.
PROPOSED MERGER WITH COMMUNITY CARE OF AMERICA, INC.:
On August 1, 1997 the Company and Community Care of
America, Inc. ("CCA") entered into a definitive merger
agreement for IHS to acquire all of the outstanding
shares of CCA for $4.00 per share in cash. Community
Care of America, Inc., based in Naples, Florida,
develops and operates skilled nursing facilities in
medically underserved rural communities. CCA's
Page 12 of 27
<PAGE>
operations include 54 long-term care facilities, one
physician practice, and one outpatient rehabilitation
center. Pursuant to the agreement, IHS on August 7,
1997 commenced a tender offer of $4.00 per share in
cash for all outstanding shares of CCA's common stock.
IHS' obligation to purchase the tendered shares is
subject to a number of conditions, including there
being tendered at least 5,329,119 shares of CCA
(representing a majority of the outstanding CCA shares
on a fully-diluted basis). IHS estimates the total cost
for the transaction, including the assumption of
approximately $62 million of debt, will be
approximately $98.2 million.
Dr. Robert N. Elkins, Chairman and Chief Executive
Officer of the Company, is a director of CCA, and
beneficially owns approximately 21% of CCA's shares;
and John Silverman, a director and employee of the
Company, is Chairman of CCA.
OTHER ACQUISITIONS:
On August 8, 1997, the Company purchased Healthcare
Personell, Inc., a home health services company, for
approximately $675,000.
The Company has reached agreements in principle to
purchase a mobile x-ray company for approximately
$300,000, a mobile x-ray company for approximately $1.2
million, a home health company for approximately $5.1
million, and a home health company for approximately
$60.0 million. The Company has also reached definitive
agreements to purchase a home health company for
approximately $24.5 million, and a home health company
for approximately $27.9 million.
There can be no assurance that any of these pending
acquisitions will be consummated on the proposed terms,
on different terms, or at all.
Page 13 of 27
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION
AND
RESULTS OF OPERATIONS
Statements in this Quarterly Report on Form 10-Q concerning the
Company's business outlook or future economic performance; anticipated
profitability, revenues, expenses or other financial items; and product line
growth, together with other statements that are not historical facts, are
"forward-looking statements" as that term is defined under Federal Securities
Laws. Forward-looking statements are subject to risks, uncertainties and other
factors which could cause actual results to differ materially from those stated
in such statements. Such risks, uncertainties and factors include, but are not
limited to, the Company's substantial indebtedness, growth strategy, managed
care strategy, capital requirements and recent acquisitions as well as
competition, government regulation, general economic conditions and the other
risks detailed in the Company's filings with the Securities and Exchange
Commission, including the Company's Annual Report on Form 10-K for the year
ended December 31, 1996.
THREE MONTHS ENDED JUNE 30, 1997
COMPARED TO THREE MONTHS ENDED JUNE 30, 1996
Net revenues for the three months ended June 30, 1997 increased
$122.2 million, or 36%, to $458.0 million from the comparable period in 1996.
Approximately 83% of the increase is attributable to the acquisition of
companies providing rehabilitation, home health, mobile x-ray and
electrocardiogram services subsequent to June 30, 1996, partially offset by a
reduction in revenue resulting from the sale of the Company's pharmacy division
in July 1996, the sale of a majority interest in its assisted living services
division in October 1996, and the sale of two facilities in the second quarter
of 1997. Revenues in the three months ended June 30, 1996 include revenues of
$25.0 million for the pharmacy division and revenues of $5.7 million from its
assisted living services division. The remaining increase was due primarily to
facilities and ancillary companies acquired during the second quarter of 1996
and increased revenues from facilities and ancillary companies in operation
during both periods. The Company derived approximately 49% and 17% of its
patient revenues from Medicare and Medicaid, respectively, in the three months
ended June 30, 1997, compared to 33% and 24%, respectively, in the comparable
period in 1996.
Basic medical services revenue decreased 10% from $98.1 million
to $88.1 million. This decrease primarily resulted from the conversion by the
Company of certain skilled nursing beds to Medical Specialty Unit (MSU) beds
after June 30, 1996, the sale of a majority interest in its assisted living
services division in October 1996, and the sale of two facilities in the second
quarter of 1997.
Specialty medical services revenue increased 59% from $226.9
million to $360.1 million. Of the $133.2 million increase, $101.1 million, or
76%, was attributable to revenue from acquisitions subsequent to June 30, 1996,
partially offset by a reduction in specialty medical services revenue as a
result of the sale of the Company's pharmacy division in July 1996. The
remaining increase was due to increased revenue from facilities and ancillary
companies in operation in both
Page 14 of 27
<PAGE>
periods, ancillary companies acquired during the second quarter of 1996, as well
as skilled nursing beds being converted to MSU beds after June 30, 1996.
Management services and other revenues decreased 10% from $10.8
million to $9.8 million.
Total expenses for the period increased 42% to $442.8 million
from $311.4 million in the comparable period of 1996. Of the $131.4 million
increase, $84.5 million, or 64%, resulted from an increase in operating
expenses. A substantial portion of the increase in operating expenses was due to
acquisitions consummated subsequent to June 30, 1996, partially offset by the
sale of the Company's pharmacy division in July 1996, the sale of a majority
interest in its assisted living services division in October 1996, and the sale
of two facilities in the second quarter of 1997.
Corporate administrative and general expenses for the three
months ended June 30, 1997 increased by $3.3 million, or 22%, over the
comparable period in 1996. This increase primarily represents additional
operations, information systems, accounting, finance and other personnel to
support the growth resulting from the acquisition of ancillary businesses.
Depreciation and amortization increased to $15.8 million during the three months
ended June 30, 1997, an 86% increase as compared to $8.5 million in the same
period in 1996, primarily as a result of increases in goodwill amortization, as
well as depreciation related to ancillary company acquisitions consummated
during 1996 and 1997. Rent expense increased by $7.9 million, or 44%, over the
comparable period in 1996, primarily as a result of increases in contingent
rentals, which are based on gross revenues of certain leased facilities and rent
at ancillary companies acquired subsequent to June 30, 1996, partially offset by
a reduction resulting from the sale of the pharmacy division and the sale of a
majority interest in its assisted living services division. Interest expense,
net, increased $7.3 million, or 46%, during the three months ended June 30, 1997
to $23.2 million. The increase in interest expense was primarily a result of the
Company's $450 million principal amount of 9-1/2% Senior
Page 15 of 27
<PAGE>
Subordinated Notes issued in May 1997, the Company's $150 million principal
amount of 10-1/4% Senior Subordinated Notes issued in May 1996, and increased
borrowings under its current $700 million credit facility, partially offset by a
reduction in interest resulting from the repurchase of substantially all of the
Company's 9-5/8% and 10-3/4% Senior Subordinated Notes.
Earnings before equity in earnings (loss) of affiliates, income
taxes and extraordinary items decreased by 38% to $15.2 million for the three
months ended June 30, 1997, as compared to $24.4 million for the comparable
period in the prior year. This decrease resulted primarily from non-recurring
charges incurred during the three months ended June 30, 1997. The non-recurring
charge in the three months ended June 30, 1997 represents the settlement and
other costs of the terminated merger with Coram Health Care Corporation
("Coram") of $27.6 million, less the gain on the sale of the pharmacy division
of $7.6 million. Such gain had previously been deferred and reported as an
unrealized gain on available for sale securities, as discussed more fully in
Note 5. Excluding the non-recurring charges, net, earnings before equity in
earnings (loss) of affiliates, income taxes and extraordinary items would have
increased $11.9 million, or 49% over the comparable prior period.
Earnings before income taxes and extraordinary items decreased
by 39% to $15.1 million for the three months ended June 30, 1997, as compared to
$24.8 million for the comparable period in the prior year. This decrease
resulted primarily from the non-recurring charges incurred during the three
months ended June 30, 1997. (See Note 5: Non-Recurring Charges) Excluding the
non-recurring charges, net, earnings before income taxes and extraordinary
items, would have increased $11.4 million or 46% over the comparable prior
period. The provision for federal and state income taxes was $5.9 million for
the three months ended June 30, 1997, and $9.6 million for the same period in
the prior year. Net loss and fully-diluted loss per share for the quarter were
$8.9 million in 1997, or 22 cents per share, as compared to net earnings and
fully diluted earnings per share of $13.8 million or 51 cents per share for the
same period in 1996. During the three months ended June 30, 1997 and 1996, the
Company incurred extraordinary losses on the extinguishments of debt of $18.2
million (net of tax), or 51 cents per share (fully-diluted) representing the
payment of premium and consent fees and the write-off of deferred financing
costs in connection with the repurchase of substantially all of the Company's 9
5/8% and 10 3/4% Senior Subordinated Notes (see Note 6: Extraordinary Item.),
and $1.4 million (net of tax), or 5 cents per share (fully-diluted) representing
the write-off of deferred fees related to replacement of the Company's $500
million revolving credit and term loan facility with the $700 million revolving
credit facility. (See Note 6: Extraordinary Item.), respectively.
Page 16 of 27
<PAGE>
SIX MONTHS ENDED JUNE 30, 1997
COMPARED TO SIX MONTHS ENDED JUNE 30, 1996
Net revenues for the six months ended June 30, 1997 increased
$255.9 million, or 39%, to $918.9 million from the comparable period in 1996.
Approximately 84% of the increase is attributable to the acquisition of
companies providing rehabilitation, home health, mobile x-ray and
electrocardiogram services subsequent to June 30, 1996, partially offset by a
reduction in revenue resulting from the sale of the Company's pharmacy division
in July 1996, the sale of a majority interest in its assisted living services
division in October 1996, and the sale of two facilities in the second quarter
of 1997. Revenues in the six months ended June 30, 1996 include revenues of
$47.4 million for the pharmacy division and revenues of $11.3 million from its
assisted living services division. The remaining increase was due primarily to
facilities and ancillary companies acquired during the first half of 1996 and
increased revenues from facilities and ancillary companies in operation during
both periods. The Company derived approximately 49% and 17% of its patient
revenues from Medicare and Medicaid, respectively, in the six months ended June
30, 1997, compared to 33% and 24%, respectively, in the comparable prior period.
Basic medical services revenue decreased 9% from $195.3 million
to $176.8 million. This decrease primarily resulted from the conversion by the
Company of certain skilled nursing beds to Medical Specialty Unit (MSU) beds
after June 30, 1996, the sale of a majority interest in its assisted living
services division in October 1996, and the sale of two facilities in the second
quarter of 1997.
Specialty medical services revenue increased 62% from $446.4
million to $722.8 million. Of the $276.4 million increase, $214.0 million, or
77%, was attributable to revenue from acquisitions subsequent to June 30, 1996
partially offset by a reduction in specialty medical services revenue as a
result of the sale of the Company's pharmacy division in July 1996. The
remaining increase was due to increased revenue from facilities in operation in
both periods, ancillary companies acquired during the first half of 1996, as
well as skilled nursing beds being converted to MSU beds after June 30, 1996.
Page 17 of 27
<PAGE>
Management services and other revenues decreased 10% from $21.4
million to $19.3 million.
Total expenses for the period increased 42% to $872.6 million
from $616.5 million, an increase of 42%. Of the $256.1 million increase, $187.0
million, or 73%, was due to an increase in operating expenses. A substantial
portion of the increase in operating expenses was due to acquisitions
consummated subsequent to June 30, 1996, partially offset by the sale of the
Company's pharmacy division in July 1996, the sale of a majority interest in its
assisted living services division in October 1996, and the sale of two
facilities in the second quarter of 1997.
Corporate administrative and general expenses for the six
months ended June 30, 1997 increased by $6.2 million, or 21%, over the
comparable period in 1996. This increase primarily represents additional
operations, information systems, accounting, finance and other personnel to
support the growth resulting from the acquisition of ancillary businesses.
Depreciation and amortization increased 84% to $30.8 million during the six
months ended June 30, 1997 as compared to $16.8 million for the six months ended
June 30, 1996. This increase is primarily the result of increased goodwill
amortization, as well as depreciation related to ancillary company acquisitions
consummated subsequent to the second quarter of 1996. Rent expense increased by
$14.3 million, or 40%, over the comparable period in 1996, as a result of
increases in contingent rentals, which are based on gross revenues of certain
leased facilities and rent at ancillary companies acquired subsequent to June
30, 1996, partially offset by a reduction in rent resulting from the sale of the
pharmacy division and the sale of a majority interest in the Company's assisted
living services division. Interest expense, net increased $14.5 million, or 48%,
during the six months ended June 30, 1997 to $44.6 million. This increase in
interest expense was primarily
Page 18 of 27
<PAGE>
a result of the Company's 9-1/2% Senior Subordinated Notes issued in May 1997,
10-1/4% Senior Subordinated Notes issued in May 1996, and increased borrowings
under its $700 million credit facility, partially offset by a reduction in
interest resulting from the repurchase of substantially all of the Company's
9-5/8% and 10-3/4% Senior Subordinated Notes.
Earnings before equity in earnings of affiliates, income taxes
and extraordinary items decreased by 1% to $46.3 million for the six months
ended June 30, 1997, as compared to $46.5 million for the comparable period in
the prior year. This decrease is primarily the result of the non-recurring
charges which were incurred during the three months ended June 30, 1997. (See
Note 5: Non-Recurring Charges) Excluding the non-recurring charges, net,
earnings before equity in earnings of affiliates, income taxes and extraordinary
items would have increased $19.8 million or 43% over the comparable prior
period.
Earnings before income taxes and extraordinary items decreased
by 2% to $46.4 million for the six months ended June 30, 1997, as compared to
$47.3 million for the comparable period in the prior year. This decrease is
primarily the result of the non-recurring charge, net, discussed above.
Excluding the non-recurring charges, net, earnings before income taxes and
extraordinary items would have increased $19.2 million or 41% over the
comparable prior period. The provision for federal and state income taxes was
$18.1 million for the six months ended June 30, 1997, and $18.2 million for the
same period in the prior year. Net earnings and fully diluted earnings per share
for the six months were $10.1 million in 1997, or 41 cents per share, as
compared to $27.6 million or $1.05 per share for the same period in 1996. During
the six months ended June 30, 1997 and 1996, the Company incurred extraordinary
losses on the extinguishments of debt of $18.2 million (net of tax), or 51 cents
per share (fully-diluted) and $1.4 million (net of tax), or 5 cents per share
(fully-diluted), respectively. Weighted average shares (fully-diluted) increased
by 17%, from 31,028,000 at June 30, 1996 to 36,233,000 at June 30, 1997.
Page 19 of 27
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1997, the Company had working capital of $159.0
million, as compared with $57.5 million at December 31, 1996. The increase in
working capital was primarily due to an increase in patient accounts and third
party payor settlements receivable and other current assets and a decrease in
accounts payable and accrued expenses. There were no material commitments for
capital expenditures as of June 30, 1997. Net patient accounts and third-party
payor settlements receivable increased $17.3 million to $344.1 million at June
30, 1997, as compared to $326.9 million at December 31, 1996. Of the $17.3
million increase in accounts receivable, $7.1 million was attributable to
related service businesses acquired subsequent to December 31, 1996 and $10.2
million was due to increased accounts receivable at facilities in operation and
related service businesses owned at both December 31, 1996 and June 30, 1997.
Gross patient accounts receivable were $364.1 million at June 30, 1997, as
compared to $340.8 million at December 31, 1996. Net third-party payor
settlements receivable from federal and state governments (i.e., Medicare and
Medicaid cost reports) was $18.9 million at June 30, 1997, as compared to $27.6
million at December 31, 1996. Approximately $10.8 million, or 57%, of the
third-party payor settlements receivable from federal and state governments at
June 30, 1997 represent the costs for its MSU patients which exceed regional
reimbursement limits established under Medicare.
The Company's cost of care for its MSU patients generally
exceeds regional reimbursement limits established under Medicare. The success of
the Company's MSU strategy will depend in part on its ability to obtain
reimbursement for those costs which exceed the Medicare established
reimbursement limits by obtaining waivers of these cost limitations. The Company
has submitted waiver requests for 225 cost reports, covering all cost report
periods through December 31, 1996. To date, final action has been taken by the
Health Care Financing Administration ("HCFA") on 221 waiver requests covering
cost report periods through December 31, 1996. The Company's final rates as
approved by HCFA represent approximately 95% of the requested rates as submitted
in the waiver requests. There can be no assurance, however, that the
Page 20 of 27
<PAGE>
Company will be able to recover its excess costs under any waiver requests which
may be submitted in the future. The Company's failure to recover substantially
all these excess costs would adversely affect its results of operations and
could adversely affect its MSU strategy.
As discussed in Note 4, in May 1997, the Company issued $450
million principal amount Senior Subordinated Notes. The Company used the net
proceeds to repurchase substantially all of its 9-5/8% Senior Subordinated Notes
due 2002 and its 10-3/4% Senior Subordinated Notes due 2004, to pay pre-payment
premiums, consent fees and accrued interest related to the repurchase, as well
as to repay a portion of the $436.0 million then outstanding under its revolving
credit facility. In connection with the repurchase, the Company recorded an
extraordinary loss of $18.2 million (net of tax).
The other asset and liability increases were due to
acquisitions and normal growth in operations which was consistent with the
growth in revenues of such operations in 1997.
Net cash provided by operating activities for the six months
ended June 30, 1997, was $11.0 million as compared to $600,000 for the
comparable period in 1996.
Net cash provided by financing activities was $133.6 million
for the six month period in 1997 as compared to $130.2 million for the
comparable period in 1996. In both periods, the Company received net proceeds
from long-term borrowings and made repayments on certain debt.
Net cash used by investing activities was $140.5 million for
the six month period ended June 30, 1997 as compared to $125.3 million for the
six month period ended June 30, 1996. Cash used for the acquisition of
facilities and ancillary company acquisitions was $34.5 million in 1997 as
compared to $18.2 million for 1996. Cash used for the purchase of property,
plant and equipment was $67.6 million in 1997 and $67.4 million in 1996.
Page 21 of 27
<PAGE>
The Company's contingent liabilities (other than liabilities in
respect of litigation and the contingent payments in respect of the First
American acquisition) aggregated approximately $77.3 million as of June 30,
1997. The Company is obligated to purchase its Greenbriar facility upon a change
in control of the Company. The net purchase price of the facility is
approximately $4.0 million. The Company has guaranteed approximately $6.6
million of the lessor's indebtedness. The Company is required, upon certain
defaults under the lease, to purchase its Orange Hills facility at a purchase
price equal to the greater of $7.1 million or the facility's fair market value.
The Company entered into a guaranty agreement whereby the Company guaranteed
approximately $4.0 million owed by the Tutera Group, Inc. and Sunset Plaza
Limited Partnership, a partnership affiliated with a partnership in which the
Company has a 49% interest, to Finova Capital Corporation. The Company has
guaranteed approximately $8.9 million owed by Litchfield Asset Management
Corporation to National Health Investors, Inc. The Company has established
several irrevocable letters of credit with the Bank of Nova Scotia totaling
$15.7 million at June 30, 1997 to secure certain of the Company's workers'
compensation, health benefits and other obligations. The Company has guaranteed
a maximum of $539,062 owed by Dunns Creek to National Health Investors. The
Company has guaranteed approximately $4.8 million owed by Community Care of
America, Inc. ("CCA"), a related party company to which IHS provides certain
management services, to Daiwa Healthco-II, LLC. The Company has also guaranteed
approximately $10.0 million owed by CCA to Health and Retirement Properties
Trust under a loan and lease financing agreement. The Company has also
established three Irrevocable Standby Letters of Credit in the total amount of
$10.7 million. In addition, the Company has obligations under operating leases
aggregating approximately $212.1 million at June 30, 1997. The Company owns
warrants to purchase approximately 14.9% of CCA, and the Company's Chairman and
Chief Executive Officer beneficially owns approximately 21.0% of CCA's
outstanding common stock. The Company has made available to CCA a $10.0 million
revolving credit facility. At June 30, 1997 $5.0 million was outstanding. The
Company currently has outstanding a cash tender offer for all outstanding shares
of CCA. In addition, with respect to certain acquired businesses, the Company is
obligated to make certain contingent payments.
Page 22 of 27
<PAGE>
if earnings of the acquired business increase or earnings targets are met. The
Company is also obligated under certain circumstances to make contingent
payments of up to $155 million in respect of its acquisition of First American.
The liquidity of the Company will depend in large part on the
timing of payments by private, third-party and governmental payors, including
payments in excess of regional cost reimbursement limitations established under
Medicare. Costs in excess of the regional reimbursement limits relate primarily
to the delivery of services and patient care to the Company's MSU patients.
The healthcare industry is experiencing a trend toward cost
containment, as government and other third party payors seek to impose lower
reimbursement and utilization rates and negotiate reduced payment schedules with
service providers. These cost containment measures, combined with the increasing
influence of managed care payors and competition for patients, has resulted in
reduced rates of reimbursement for services provided by IHS, which has adversely
affected, and may continue to adversely affect, margins, particularly in its
skilled nursing and subacute facilities. Aspects of certain healthcare reform
proposals, such as cutbacks in the Medicare and Medicaid programs, containment
of healthcare costs on an interim basis by means that could include a short-term
freeze on prices charged by healthcare providers, and permitting greater state
flexibility in the administration of Medicaid, could adversely affect IHS. The
Balanced Budget Act of 1997, enacted in August 1997, provides, among other
things, for a prospective payment system for home nursing to be implemented for
cost reporting periods beginning on or after October 1, 1999, a reduction in
current cost reimbursement for home health care pending implementation of a
prospective payment system and a shift of the bulk of home health coverage from
Part A to Part B of Medicare. The failure to implement a prospective payment
system for home nursing services in the next several years could adversely
affect IHS' post-acute care network strategy. The Company expects that there
will continue to be numerous initiatives on the federal and state levels for
comprehensive reforms affecting the payment for and availability of healthcare
services, including proposals that will further limit reimbursement under
Medicare and Medicaid. It is not clear at this time what proposals, if any, will
be adopted or, if adopted, what effect such proposals will have on the Company's
business.
The Company anticipates that cashflow from operations and
borrowings under revolving credit facilities will be adequate to cover its
scheduled debt payments and future anticipated capital expenditure requirements
throughout 1997. The Company expects to continue to be growth oriented in 1997
through the expansion of its existing operations, by the acquisition of
additional facilities and ancillary companies and the entry into agreements to
manage additional facilities.
Page 23 of 27
<PAGE>
Part II: Other Information
Item 2 Changes in Securities
(c) On March 27, 1997, the Company issued 976,504 shares of
Common Stock, having a value of $26.4 million (based on
the average closing price of IHS Common Stock for the
sixty day trading period ending March 19, 1997), in
payment of an earnout related to the December 1993
acquisition of Associated Therapists Corporation,
d/b/a/ Achievement Rehab, a provider of rehabilitation
therapy services. The earnout was paid based on the
increase in Achievement Rehab's earnings over a base
amount in 1996. The issuance of stock was exempt from
registration pursuant to Section 4(2) of the Securities
Act of 1933, as amended (the "Securities Act"). Each of
the investors made representations (the "Investment
Representations") to the effect that: (i) that the
shares were being acquired for its own account and not
with a view to, or for sale in connection with, any
distribution; (ii) acknowledging that the shares were
restricted securities under Rule 144; (iii) that it had
knowledge and experience in business matters, was
capable of evaluating the merits and risks of the
investment, and was able to bear the risk of loss; and
(iv) had the opportunity to make inquiries of and
obtain information from IHS.
On May 30, 1997, the Company sold $450 million
aggregate principal amount of its 9 1/2% Senior
Subordinated Notes due 2007 to Smith Barney Inc.,
Donaldson, Lufkin & Jenrette Securities Corporation,
Morgan Stanley & Co. Incorporated and Salomon Brothers
Inc as Initial Purchasers pursuant to Section 4(2) of
the Securities Act. The Initial Purchasers resold the
notes to qualified institutional buyers pursuant to
Rule 144A under the Securities Act. The Company
received net proceeds (after underwriting discounts and
commissions) of $438,187,500.
On June 20, 1997, the Company acquired substantially
all the assets, and assumed certain liabilities, of
Rehab Dynamics, Inc. and Restorative Therapy Limited
(which has since changed its name to Synergy Two,
Inc.), which provide contract rehabilitation services,
including speech and language pathology, occupational
therapy and physical therapy services, to patients in a
variety of settings. The purchase price was $31.4
million, of which $8.2 million was paid in cash at the
closing, $11.5 million was paid through the issuance of
322,472 shares of the Company's Common Stock (based on
the average closing price of IHS' common stock for the
thirty day trading period ending two days prior to
closing date) and the remainder is to be paid after
determination of any purchase price adjustment due to
earnings relating to the purchased assets in the year
following the closing. The issuance of stock was exempt
from registration pursuant to Section 4(2) of the
Securities Act. The sellers made the Investment
Representations. These shares were subsequently
registered for resale pursuant to a Registration
Statement on Form S-3 (No. 333-31121).
Page 24 of 27
<PAGE>
Item 4: Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Stockholders of Integrated
Health Services, Inc. was held on June 20, 1997.
(c)(i) The following persons, comprising the entire
Board of Directors, were elected at the Annual Meeting
pursuant to the following vote tabulations:
Votes
Votes For Withheld
--------- --------
Robert N. Elkins 19,839,582 693,460
Lawrence P. Cirka 19,737,006 796,036
Edwin M. Crawford 19,825,899 707,143
Kenneth M. Mazik 19,889,406 643,636
Robert A. Mitchell 19,889,357 643,685
Charles W. Newhall 19,826,006 707,036
Timothy F. Nicholson 19,889,372 643,670
John L. Silverman 19,825,972 707,070
George H. Strong 19,889,396 643,646
Item 6: EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS
4.1 Second Amended and Restated Supplemental
Indenture, dated as of May 15, 1997, between
Integrated Health Services Inc. and Signet Trust
Company, as Trustee, relating to the Company's 9
5/8% Senior Subordinated Notes due 2002.
4.2 Amended and Restated Supplemental Indenture, dated
as of May 15, 1997, between Integrated Health
Services, Inc. and Signet Trust Company, as
Trustee, relating to the Company's 10 3/4% Senior
Subordinated Notes due 2004.
4.3 Indenture, dated as of May 30, 1997, between
Integrated Health Services, Inc., and First Union
National Bank of Virginia, as Trustee, relating to
the Company's 9 1/2% Senior Subordinated Notes due
2007.
10.1 Credit Agreement, dated as of May 15, 1996, as
amended, by and among Integrated Health Services,
the lenders named therein, and Citibank, N.A., as
administrative agent.
10.2 Purchase Agreement, dated May 22, 1997, between
Integrated Health Services, Inc. and Smith Barney
Inc., Donaldson, Lufkin & Jenrette Securities
Corporation, Morgan Stanley & Co. Incorporated and
Salomon Brothers Inc, relating to the Company's
9 1/2% Senior Subordinated Notes due 2007.
10.3 Registration Rights Agreement, dated May 22, 1997,
between Integrated Health Services, Inc., and
Smith Barney Inc., Donaldson, Lufkin & Jenrette
Securities Corporation, Morgan Stanley & Co.
Incorporated and Salomon Brothers Inc, relating
to the Company's 9 1/2% Senior Subordinated Notes
due 2007.
10.4 Agreement and Plan of Merger, dated as of July 6,
1997, by and among Integrated Health Services,
Inc., IHS Acquisition XXIV, Inc. and RoTech
Medical Corporation (incorporated by reference
from the Company's Current Report on Form 8-K
dated July 6, 1997).
10.5 Agreement and Plan of Merger, dated as of August
1, 1997, by and among Integrated Health Services,
Inc., IHS Acquisition XXVI, Inc. and Community
Care of America, Inc. (incorporated by reference
from the Company's Schedule 14D-1 filed August 7,
1997).
Page 25 of 27
<PAGE>
B. REPORTS ON FORM 8-K
The Company filed a Current Report on Form 8-K dated as
of May 23, 1997 relating to the private issuance of
$450,000,000 aggregate principal amount 9-1/2% Senior
Subordinated Notes due 2007.
The Company filed a Current Report on Form 8-K dated as
of May 30, 1997, relating to the completion of tender
offer for its 9-5/8% and 10-3/4% Senior Subordinated
Notes and completion of financing.
The Company filed a Current Report on Form 8-K dated as
of October 19, 1996 as amended by Form 8/KA filed April
11, 1997 relating to the Company's termination of its
agreement to acquire Coram Healthcare Corporation.
The Company filed a Current Report on Form 8-K dated
October 17, 1996 reporting the acquisition of First
American Healthcare of Georgia, Inc., as amended by
Form 8-K/A filed November 26, 1996 and Amendment No. 1
to form 8-K/A filed July 11, 1997.
The Company filed a Current Report on Form 8-K dated
July 6, 1997 reporting the execution of the Agreement
and Plan of Merger among the Company, IHS Acquisition
XXIV, Inc., and RoTech Medical Corporation ("RoTech")
relating to the Company's proposed acquisition of
RoTech.
Page 26 of 27
<PAGE>
- SIGNATURES -
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTEGRATED HEALTH SERVICES, INC.
By: /s/ Robert N. Elkins
--------------------
Robert N. Elkins
Chief Executive Officer
By: /s/ W. Bradley Bennett
----------------------
W. Bradley Bennett
Senior Vice President and
Chief Accounting Officer
By: /s/ Eleanor C. Harding
----------------------
Eleanor C. Harding
Senior Vice President Finance
Dated: August 13, 1997
-------------------------
Page 27 of 27
================================================================================
INTEGRATED HEALTH SERVICES, INC.,
A DELAWARE CORPORATION,
AS ISSUER
TO
SIGNET TRUST COMPANY,
AS TRUSTEE
--------------------
SECOND AMENDED AND RESTATED SUPPLEMENTAL INDENTURE
Dated as of May 15, 1997
------------------
$115,000,000
9 5/8% Senior Subordinated Notes due 2002
9 5/8% Senior Subordinated Notes due 2002, Series A
================================================================================
<PAGE>
CROSS REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
- --------------- -----------------
310(a)(1) ..................................... 7.9
(a)(2) ..................................... 7.9
(a)(3) ..................................... Not Applicable
(a)(4) ..................................... Not Applicable
(a)(5) ..................................... 7.9
(b) ..................................... 7.9
(c) ..................................... Not Applicable
311(a) ..................................... **
(b) ..................................... **
(c) ..................................... Not Applicable
312 ..................................... **
313(a) ..................................... **
(b)(1) ..................................... Not Applicable
(b)(2) ..................................... **
(c) ..................................... **
(d) ..................................... **
314(a) ..................................... 4.3,4.4
(b) ..................................... Not Applicable
(c)(1) ..................................... 11.3
(c)(3) ..................................... Not Applicable
(d) ..................................... Not Applicable
(e) ..................................... 11.4
(f) ..................................... Not Applicable
315(a) ..................................... 7.1(2)
(b) ..................................... 7.5,11.2
(c) ..................................... 7.1(1)
(d) ..................................... 7.1(3)
(e) ..................................... 6.11
316(a)(last sentence) ..................................... 2.8
(a)(1)(A) ..................................... .6.5
(a)(1)(B) ..................................... .6.4
(a)(2) ..................................... Not Applicable
(b) ..................................... 6.7
(c) ..................................... 9.4
317(a)(1) ..................................... 6.8
(a)(2) ..................................... 6.9
(b) ..................................... 2.4
318(a) ..................................... 11.1
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* This Cross-Reference Table is not part of the Indenture.
** Included pursuant to Section 318(c) of the Trust Indenture Act of 1939.
<PAGE>
TABLE OF CONTENTS
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ARTICLE 1.
DEFINITIONS AND INCORPORATION
BY REFERENCE
<S> <C> <C>
Section 1.1 Definitions................................................................. 1
Section 1.2 Other Definition............................................................ 9
Section 1.3 Incorporation by Reference of Trust Indenture Act........................... 9
Section 1.4 Rules of Construction....................................................... 9
ARTICLE 2.
THE SECURITIES
Section 2.1 Form and Dating............................................................. 10
Section 2.2 Execution and Authentication................................................ 10
Section 2.3 Registrar and Paying Agent.................................................. 11
Section 2.4 Paying Agent to Hold Money in Trust......................................... 11
Section 2.5 Registration of Transfer and Exchange....................................... 11
Section 2.6 Replacement Securities...................................................... 15
Section 2.7 Outstanding Securities...................................................... 15
Section 2.8 Treasury Securities......................................................... 15
Section 2.9 Temporary Securities........................................................ 16
Section 2.10 Cancellation................................................................ 16
Section 2.11 Defaulted Interest.......................................................... 16
Section 2.12 Securities Issuable in the Form of a Global Security........................ 16
ARTICLE 3.
COVENANTS
Section 3.1 Payment of Securities....................................................... 17
Section 3.2 Maintenance of Office or Agency............................................. 18
Section 3.3 SEC Reports................................................................. 18
Section 3.4 Compliance Certificate...................................................... 18
Section 3.5 Corporate Existence, Taxes, etc............................................. 19
Section 3.6 Stay, Extension and Usury Laws.............................................. 19
Section 3.7 Change in Control........................................................... 19
Section 3.8 Limitations on Asset Sales.................................................. 20
ARTICLE 4.
SUCCESSORS
Section 4.1 Limitations on Mergers and Consolidations................................... 21
Section 4.2 Successor Corporation Substituted........................................... 21
ARTICLE 5.
DEFAULTS AND REMEDIES
Section 5.1 Events of Default........................................................... 21
Section 5.2 Acceleration................................................................ 23
Section 5.3 Other Remedies.............................................................. 23
Section 5.4 Waiver of Past Defaults..................................................... 23
Section 5.5 Control by Majority......................................................... 23
Section 5.6 Limitations on Suits........................................................ 24
Section 5.7 Rights of Holders to Receive Payment........................................ 24
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Section 5.8 Collection Suit by Trustee................................................. 24
Section 5.9 Trustee May File Proofs of Claim........................................... 24
Section 5.10 Priorities................................................................. 25
Section 5.11 Undertaking for Costs...................................................... 25
ARTICLE 6.
TRUSTEE
Section 6.1 Duties of Trustee.......................................................... 25
Section 6.2 Rights of Trustee.......................................................... 26
Section 6.3 Individual Rights of Trustee............................................... 27
Section 6.4 Trustee's Disclaimer....................................................... 27
Section 6.5 Notice of Defaults......................................................... 27
Section 6.6 Compensation and Indemnity................................................. 27
Section 6.7 Replacement of Trustee..................................................... 28
Section 6.8 Successor Trustee by Merger, etc........................................... 28
Section 6.9 Eligibility; Disqualification.............................................. 28
ARTICLE 7.
DISCHARGE OF INDENTURE
Section 7.1 Termination of Company's Obligations....................................... 29
Section 7.2 Application of Trust Money................................................. 31
Section 7.3 Repayment to the Company................................................... 31
Section 7.4 Reinstatement.............................................................. 31
ARTICLE 8.
AMENDMENTS
Section 8.1 Without Consent of Holders................................................. 32
Section 8.2 With Consent of Holders.................................................... 32
Section 8.3 Compliance with Trust Indenture Act........................................ 33
Section 8.4 Revocation and Effect of Consents.......................................... 33
Section 8.5 Notation on or Exchange of Securities...................................... 34
Section 8.6 Trustee to Sign Amendments, etc............................................ 34
ARTICLE 9.
SUBORDINATION
Section 9.1 Securities Subordinated to Senior Indebtedness............................. 34
Section 9.2 Payment Over of Proceeds Upon Dissolution, Etc............................. 34
Section 9.3 Prior Payment to Senior Indebtedness Upon Acceleration of Securities
.......................................................................... 35
Section 9.4 No Payment Upon Certain Defaults with Respect to Senior Indebtedness
.......................................................................... 36
Section 9.5 Payment Permitted If No Default............................................ 37
Section 9.6 Subrogation to Rights of Holders of Senior Indebtedness.................... 37
Section 9.7 Provisions Solely to Define Relative Rights................................ 37
Section 9.8 Application by Trustee of Monies Deposited With It......................... 38
Section 9.9 Trustee to Effectuate Subordination........................................ 38
Section 9.10 No Waiver of Subordination Provisions...................................... 38
Section 9.11 Notice to Trustee.......................................................... 39
Section 9.12 Reliance on Judicial Order or Certificate of Liquidating Agent............. 40
Section 9.13 Trustee Not Fiduciary for Holders of Senior Indebtedness................... 40
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Section 9.14 Rights of Trustee as Holder of Senior Indebtedness; Preservation of
Trustee's Rights........................................................... 40
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ARTICLE 10.
MISCELLANEOUS
Section 10.1 Trust Indenture Act Controls............................................... 41
Section 10.2 Notices.................................................................... 41
Section 10.3 Certificate and Opinion as to Conditions Precedent......................... 42
Section 10.4 Statements Required in Certificate or Opinion.............................. 42
Section 10.5 Rules by Trustee and Agents................................................ 42
Section 10.6 Legal Holidays............................................................. 42
Section 10.7 No Recourse Against Others................................................. 42
Section 10.8 Governing Law.............................................................. 43
Section 10.9 No Adverse Interpretation of Other Agreements.............................. 43
Section 10.10 Successors................................................................. 43
Section 10.11 Severability............................................................... 43
Section 10.12 Counterpart Originals...................................................... 43
Section 10.13 Trustee as Paying Agent and Registrar...................................... 43
Section 10.14 Table of Contents, Headings, etc........................................... 43
Section 10.15 Effective Date............................................................. 43
SIGNATURES................................................................................. 44
</TABLE>
EXHIBIT A FORM OF RULE 144A NOTE
EXHIBIT B FORM OF SERIES A NOTE
EXHIBIT C TRANSFER CERTIFICATION
iv
<PAGE>
SECOND AMENDED AND RESTATED SUPPLEMENTAL INDENTURE dated as of May 15,
1997, between INTEGRATED HEALTH SERVICES, INC., a Delaware corporation (the
"Company"), and SIGNET TRUST COMPANY, a Virginia corporation, as Trustee (the
"Trustee").
RECITALS OF THE COMPANY
The Company duly authorized the issue of its 9 5/8% Senior Subordinated
Notes due 2002 (the "Rule 144A Notes") in the aggregate principal amount of
$115,000,000, and to provide the terms and conditions upon which the Rule 144A
Notes were authenticated, issued and delivered the Company and the Trustee
entered into an Indenture dated as of May 15, 1995 with regard to the Rule 144A
Notes.
The Company and the Trustee subsequently amended, restated and supplemented
said Indenture (the "Amended and Restated Supplemental Indenture") to permit the
issuance of the Company's 9 5/8% Senior Subordinated Notes due 2002, Series A
(the "Series A Notes" and collectively with the Rule 144A Notes, the
"Securities"), having the same terms as the Rule 144A Notes except that the
Series A Notes are registered under the Securities Act (as hereinafter defined),
in exchange for the Rule 144A Notes pursuant to the Exchange Offer (as
hereinafter defined).
On June 13, 1996, the Company, with the consent of Holders of not less than
a majority in principal amount of the Outstanding Securities executed a
Supplemental Indenture amending the Amended and Restated Supplemental Indenture
(such Indenture, as amended, restated and supplemented through the date hereof,
the "Original Indenture").
The Company by Board Resolution has authorized, and the Holders of not less
than a majority in principal amount of the Company's Outstanding Securities have
by consents delivered to the Trustee consented to, the execution and delivery of
this Second Amended and Restated Supplemental Indenture amending and restating
the Original Indenture.
Each party agrees as follows for the benefit of the other parties and for
the equal and ratable benefit of the Holders of the Securities:
ARTICLE 1.
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.1 DEFINITIONS
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling, controlled by or under direct or indirect common control
with such specified Person. For purposes of this definition, "control" when used
with respect to any specified Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agent" means any Registrar or Paying Agent.
"Allowed and Disallowed Post-Commencement Interest and Expenses" means all
interest, at the rate provided in the applicable document or documents
(including any rate applicable upon any default or event of default, to the
extent lawful), and all reimbursements, costs, expenses and indemnities, to the
extent provided in the applicable document or documents, accruing or claimed at
any time after commencement of any insolvency or bankruptcy case or
<PAGE>
proceeding, or any receivership, liquidation, reorganization, dissolution,
winding up, assignment for the benefit of creditors, marshalling of assets and
liabilities or other similar case or proceeding, whether or not such interest,
reimbursement, cost or expense is an allowed claim enforceable against the
Company in a case or proceeding under Bankruptcy Law or in any other such case
or proceeding.
"Asset Sale" for any Person means the sale, lease, conveyance or other
disposition (including, without limitation, by merger or consolidation, and
whether by operation of law or otherwise) of any of that Person's assets
(including, without limitation, the sale or other disposition of Capital Stock
of any Subsidiary of such Person, whether by such Person or by such Subsidiary),
whether owned on the date hereof or hereafter acquired, in one transaction or a
series of related transactions, in which such Person and/or its Subsidiaries
sell, lease, convey or otherwise dispose of (i) all or substantially all of the
Capital Stock of any of such Person's Subsidiaries, (ii) assets which constitute
substantially all of an operating unit or business of such Person or any of its
Subsidiaries, or (iii) any health care facility; provided, however, that the
following shall not constitute Asset Sales: (a) a transaction or series of
related transactions that results in a Change in Control, or (b) transactions
between the Company and any of its Wholly Owned Subsidiaries or among such
Wholly Owned Subsidiaries or (c) transactions in which either (x) the fair
market value of the asset disposed of does not exceed 2.5% of the Consolidated
Tangible Assets of the Company or (y) the Consolidated EBITDA of the company
associated with the asset disposed of does not exceed 2.5% of the Consolidated
EBITDA of the Company.
"Attributable Indebtedness," when used with respect to any Sale and
Leaseback Transaction or an operating lease with respect to a health care
facility means, as at the time of determination, the present value (discounted
at a rate equivalent to the interest rate implicit in the lease, compounded on a
semi-annual basis) of the total obligations of the lessee for rental payments,
after excluding all amounts required to be paid on account of maintenance and
repairs, insurance, taxes, utilities and other similar expenses payable by the
lessee pursuant to the terms of the lease, during the remaining term of the
lease included in any such Sale and Leaseback Transaction or such operating
lease or until the earliest date on which the lessee may terminate such lease
without penalty or upon payment of a penalty (in which case the rental payments
shall include such penalty); provided, that the Attributable Indebtedness with
respect to a Sale and Leaseback Transaction shall be no less than the fair
market value of the property subject to such Sale and Leaseback Transaction.
"Bank Agent" means Citicorp USA, Inc., as Administrative Agent for the
Lenders, or any successor under the Credit Agreement.
"Bank Debt" means all obligations of the Company and its Subsidiaries, now
or hereafter existing under the Credit Agreement, whether for principal,
interest, reimbursement of amounts drawn under letters of credit issued pursuant
thereto, guarantees in respect thereof, fees, expenses, premiums, indemnities or
otherwise, including such obligations incurred by the Company or its
Subsidiaries in connection with any extension, refunding, refinancing or
replacement of, or successor to, the Credit Agreement.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state
law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company or any
authorized committee of the Board of Directors of the Company.
"Business Day" means any day other than a Legal Holiday.
"Capital Stock" of any Person means any and all shares, rights to purchase,
warrants or options (whether or not currently exercisable), participation or
other equivalents of or interests in (however designated) the equity (including,
without limitation, common stock, preferred stock and partnership and joint
venture interests) of such Person (excluding any debt securities that are
convertible into, or exchangeable for, such equity).
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"Capitalized Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP, and the
amount of such obligation shall be the capitalized amount thereof determined in
accordance with GAAP.
"Change in Control" means any of the following: (i) the sale, lease,
conveyance or other disposition of all or substantially all of the Company's
assets as an entirety or substantially as an entirety to any Person or "group"
(within the meaning of Section 13(d)(3) of the Exchange Act) (other than to a
Permitted Holder) in one or a series of transactions; (ii) stockholders of the
Company shall approve any plan or proposal for the liquidation or dissolution of
the Company; (iii) consummation of any consolidation or merger of the Company
(a) in which the Company is not the continuing or surviving corporation (other
than a consolidation or merger with a Wholly Owned Subsidiary of the Company in
which all shares of Common Stock outstanding immediately prior to the
effectiveness thereof are changed into or exchanged for the same consideration)
or (b) pursuant to which the Common Stock would be converted into cash,
securities or other property, in each case other than a consolidation or merger
of the Company in which the holders of the Common Stock immediately prior to the
consolidation or merger have, directly or indirectly, at least a majority of the
common stock of the continuing or surviving corporation immediately after such
consolidation or merger; or (iv) any transaction or series of transactions (as a
result of a tender offer, merger, consolidation or otherwise) that results in
any Person (other than a Permitted Holder), including a "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) that includes such Person,
acquiring "beneficial ownership" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of 50% or more of the aggregate voting power of
all classes of capital stock of the Company entitled to vote generally in the
election of directors of the Company.
"Common Equity" of any Person means all Capital Stock of such Person that
is generally entitled to (i) vote in the election of directors of such Person or
(ii) if such Person is not a corporation, vote or otherwise participate in the
selection of the governing body, partners, managers or others that will control
the management and policies of such Person.
"Company" means (i) Integrated Health Services, Inc., a Delaware
corporation, and (ii) any successor of Integrated Health Services, Inc.
"Consolidated Amortization Expense" of any Person for any period means the
amortization expense of such Person and its Subsidiaries for such period (to the
extent included in the computation of Consolidated Net Income of such Person),
determined on a consolidated basis in accordance with GAAP.
"Consolidated Depreciation Expense" of any Person for any period means the
depreciation expense of such Person and its Subsidiaries for such period (to the
extent included in the computation of Consolidated Net Income of such Person),
determined on a consolidated basis in accordance with GAAP.
"Consolidated EBITDA" of any Person means, with respect to any
determination date, Consolidated Net Income before extraordinary losses and
losses realized in connection with Asset Sales, plus (i) Consolidated Income Tax
Expense, plus (ii) Consolidated Depreciation Expense, plus (iii) Consolidated
Amortization Expense, plus (iv) Consolidated Interest Expense, plus (v) all
other non-cash items reducing Consolidated Net Income of such Person and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP, and
less all non-cash items increasing Consolidated Net Income of such Person and
its Subsidiaries, determined on a consolidated basis in accordance with GAAP, in
each case, for such Person's prior four full fiscal quarters for which financial
results have been reported immediately preceding the determination date.
"Consolidated Income Tax Expense" of any Person for any period means the
provision for taxes based on income and profits of such Person and its
Subsidiaries to the extent such income or profits were included in computing
Consolidated Net Income of such Person for such period.
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<PAGE>
"Consolidated Interest Expense" of any Person for any period means the
Interest Expense of such Person and its Subsidiaries for such period, determined
on a consolidated basis in accordance with GAAP, plus any dividends accrued for
such period on any Preferred Stock of any Subsidiary not held by the Company or
any Wholly Owned Subsidiary.
"Consolidated Net Income" of any Person for any period means the net income
(or loss) of such Person and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, without giving effect to dividends
on any series of preferred stock of any Subsidiary of such Person, whether or
not in cash, to the extent such consolidated net income was reduced thereby;
provided that there shall be excluded from such net income (to the extent
otherwise included therein), without duplication: (i) the net income (or loss)
of any Person (other than a Subsidiary of the referent Person) in which any
Person other than the referent Person has an ownership interest, except to the
extent that any such income has actually been received by the referent Person or
any of its Wholly Owned Subsidiaries in the form of dividends or similar
distributions during such period; (ii) except to the extent includible in the
consolidated net income of the referent Person pursuant to the foregoing clause
(i), the net income (or loss) of any Person that accrued prior to the date that
(a) such Person becomes a Subsidiary of the referent Person or is merged into or
consolidated with the referent Person or any of its Subsidiaries or (b) the
assets of such Person are acquired by the referent Person or any of its
Subsidiaries; (iii) the net income of any Subsidiary of the referent Person
(other than a Wholly Owned Subsidiary) to the extent that the declaration or
payment of dividends or similar distributions by such Subsidiary of that income
is not permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary during such period; (iv) any gain (but not loss),
together with any related provisions for taxes on any such gain, realized during
such period by the referent Person or any of its Subsidiaries upon (a) the
acquisition of any securities, or the extinguishment of any Indebtedness, of the
referent Person or any of its Subsidiaries or (b) any Asset Sale by the referent
Person or any of its Subsidiaries; (v) any extraordinary gain (but not
extraordinary loss), together with any related provision for taxes on any such
extraordinary gain, realized by the referent Person or any of its Subsidiaries
during such period; and (vi) in the case of a successor to such Person by
consolidation, merger or transfer of its assets, any earnings of the successor
prior to such merger, consolidation or transfer of assets.
"Consolidated Tangible Assets" of any Person as of any date means the total
assets of such Person and its Subsidiaries (excluding any assets that would be
classified as "intangible assets" under GAAP) on a consolidated basis at such
date, as determined in accordance with GAAP, less all write-ups (other than
write-ups in connection with acquisitions) subsequent to the date of this
Indenture in the book value of any asset (except any such intangible assets)
owned by such Person or any of its Subsidiaries.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 10.2 or such other address as the Trustee may give
notice to the Company.
"Credit Agreement" means the Revolving Credit and Term Loan Agreement,
dated as of April 20, 1995, among the Company, the Bank Agent, and the other
financial institutions signatory thereto, together with the related documents
thereto, including, without limitation, any security documents and all exhibits
and schedules thereto, and any agreement or agreements relating to any
extension, refunding, refinancing, successor or replacement facility, whether or
not with the same lenders, and whether or not the principal amount or amount of
letters of credit outstanding thereunder or the interest rate payable in respect
thereof shall be thereby increased, in each case as amended and in effect from
time to time.
"Default" means any event, act or condition that is, or after notice or the
passage of time or both would be, an Event of Default.
"Definitive Securities" means any Securities other than a Global Security.
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<PAGE>
"Depositary" means, with respect to Securities issuable or issued in whole
or in part in global form hereunder, unless otherwise specified by the Company
pursuant to Section 2.12, The Depository Trust Company, New York, New York, or
any successor thereto registered as a clearing agency under the Exchange Act or
other applicable statute or regulation.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the offer the Company is to make pursuant to the
Registration Rights Agreement to exchange Rule 144A Notes for Series A Notes.
"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 may be approved by a significant segment of the accounting
profession of the United States, as in effect from time to time.
"Global Security" means a Security which is executed by the Company and
authenticated and delivered by the Trustee to the Depositary or pursuant to the
Depositary's instruction, all in accordance with this Indenture and pursuant to
a written order of the Company, which shall be registered in the name of the
Depositary or its nominee and which shall represent, and shall be denominated in
an amount equal to the aggregate principal amount of, all of the Securities or
any portion thereof, but not including any Securities that are no longer
outstanding, and having the same terms, including, without limitation, the same
original issue date, date or dates on which principal is due, and rate of
interest.
"Guarantee" by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Indebtedness or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation of such other Person (whether
arising by virtue of partnership arrangements, by agreement to keepwell, to
purchase assets, goods, securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for the
purpose of assuring in any other manner the obligee of such Indebtedness or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part); provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any interest rate swap agreement, foreign currency exchange
agreement, interest rate collar agreement, option or futures contract or other
similar agreement or arrangement relating to interest rates or foreign exchange
rates.
"Holder" means a Person in whose name a Security is registered.
"Indebtedness" of any Person at any date means, without duplication: (i)
all Bank Debt; (ii) all other Indebtedness of such Person for borrowed money
(whether or not the recourse of the lender is to the whole of the assets of such
Person or only to a portion thereof); (iii) all obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments; (iv) all
obligations of such Person in respect of letters of credit or other similar
instruments (or reimbursement obligations with respect thereto); (v) all
obligations of such Person with respect to Hedging Obligations (other than those
that fix the interest rate on variable rate indebtedness otherwise permitted by
this Indenture or that protect the Company and/or its Subsidiaries against
changes in foreign exchange rates); (vi) all obligations of such Person to pay
the deferred and unpaid purchase price of property or services, except trade
payables and accrued expenses incurred in the ordinary course of business; (vii)
all Capitalized Lease Obligations of such Person; (viii) all Indebtedness of
others secured by a Lien on any asset of such Person, whether or not such
Indebtedness is assumed by such Person; (ix) all Indebtedness of others
guaranteed by such Person to the extent of such guarantee; and (x) all
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Attributable Indebtedness. The amount of Indebtedness of any Person at any date
shall be the outstanding balance at such date of all unconditional obligations
as described above; and in the case of clauses (iv) and (ix), the maximum
liability of such Person for any such contingent obligations at such date and,
in the case of clause (viii), the amount of the Indebtedness secured.
"Indenture" means this Second Amended and Restated Supplemental Indenture,
as amended from time to time.
"Interest Expense" of any Person for any period means the
aggregate amount of interest which, in accordance with GAAP, would be set
opposite the caption "interest expense" or any like caption on an income
statement for such Person (including, without limitation or duplication, imputed
interest included in Capitalized Lease Obligations, all commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers'
acceptance financing, the net costs associated with Hedging Obligations,
amortization of financing fees and expenses, the interest portion of any
deferred payment obligation, amortization of discount and all other non-cash
interest expense).
"Interest Payment Date" shall have the meaning assigned to such term in the
Securities.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or other similar encumbrance of any kind in respect of
such asset, whether or not filed, recorded or otherwise perfected under
applicable law (including, without limitation, any conditional sale or other
title retention agreement, and any financing lease in the nature thereof, any
agreement to sell, and any filing of, or agreement to give, any financing
statement (other than notice filings not perfecting a security interest) under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Net Proceeds" with respect to any Asset Sale means (i) cash (in U.S.
dollars or freely convertible into U.S. dollars) received by the Company or any
of its Subsidiaries from such Asset Sale (including, without limitation, cash
received as consideration for the assumption or incurrence of liabilities
incurred in connection with or in anticipation of such Asset Sale), after (a)
provision for all income or other taxes measured by or resulting from such Asset
Sale or the transfer of the proceeds of such Asset Sale to the Company or any of
its Subsidiaries, (b) payment of all brokerage commissions and the underwriting
and other fees and expenses related to such Asset Sale and (c) deduction of
appropriate amounts to be provided by the Company or any of its Subsidiaries as
a reserve, in accordance with GAAP, against any liabilities associated with the
assets sold or otherwise disposed of in such Asset Sale and retained by the
Company or any of its Subsidiaries after such Asset Sale (including, without
limitation, pension and other post-employment benefit liabilities and
liabilities related to environmental matters) or against any indemnification
obligations associated with the sale or other disposition of the assets sold or
otherwise disposed of in such Asset Sale and (ii) all non-cash consideration
received by the Company or any of its Subsidiaries from such Asset Sale upon the
liquidation or conversion of such consideration into cash.
"Officer" means the Chief Executive Officer, the Chief Financial Officer,
the Treasurer, any Assistant Treasurer, Controller, Secretary or any Vice
President of the Company.
"Officers' Certificate" means a certificate signed by two Officers, one of
whom must be the Company's Chief Executive Officer or Chief Financial Officer.
"Opinion of Counsel" means an opinion from legal counsel who is acceptable
to the Trustee in its sole discretion. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Payment or Distribution in Respect of the Securities" means, for purposes
of Article 9 hereof, any payment or distribution of any kind or character,
whether in cash, property or securities, on account of the payment of the
principal of and premium, if any, and interest on any of the Securities,
including, without limitation, any redemption or repurchase price paid for any
optional or mandatory redemption, Asset Sale Offer, Change in Control Repurchase
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or other repurchase or retirement of the Securities or any other payment on
account of the Securities (including payments with respect to claims related to
the issuance of the Securities); provided, however, that the exchange of Rule
144A Notes for a like amount of Series A Notes shall not constitute a Payment or
Distribution in Respect of the Securities. For purposes of this definition, the
words "cash, property or securities" shall not be deemed to include securities
of the Company as reorganized or readjusted, or securities of the Company or any
other corporation provided for by a plan of reorganization or readjustment which
are subordinated in right of payment to all Senior Indebtedness which may be
outstanding to substantially the same extent as, or to a greater extent than,
the Securities are so subordinated as provided in Article 9 and which securities
are not subject to maturity or mandatory prepayment prior to the maturity of any
Senior Indebtedness then outstanding.
"Permitted Holder" means Robert N. Elkins and any group (within the meaning
of Section 13(d)(3) of the Exchange Act) of which Mr. Elkins is a member; so
long as, with respect to any group, Mr. Elkins owns more than 20% of the total
voting power of all classes of Capital Stock of the acquiring entity entitled to
vote generally in the election of directors of the acquiring entity.
"Person" means any individual, corporation, partnership, joint venture,
incorporated or unincorporated association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof or other entity of any kind.
"Preferred Stock" means with respect to any Person all Capital Stock of
such Person which has a preference in liquidation or a preference with respect
to the payment of dividends.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of May 11, 1995 by and between Smith Barney Inc. and the Company as
such agreement may be amended, modified or supplemented from time to time.
"Rule 144A Notes" means the Company's 9 5/8% Senior Subordinated Notes due
2002, issued under this Indenture.
"Sale and Leaseback Transaction" means with respect to any Person, an
arrangement with any bank, insurance company or other lender or investor or to
which such lender or investor is a party, providing for the leasing by such
Person or any of its Subsidiaries of any property or asset of such Person or any
of its Subsidiaries which has been or is being sold or transferred by such
Person or such Subsidiary to such lender or investor or to any Person to whom
funds have been or are to be advanced by such lender or investor on the security
of such property or asset.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Rule 144A Notes and Series A Notes issued under this
Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" means the principal of and premium, if any, and
interest on and other amounts due on or in connection with any Indebtedness of
the Company (including, without limitation, all Allowed and Disallowed
Post-Commencement Interest and Expenses in respect of such Indebtedness) and any
amounts with respect to Hedging Obligations that fix the interest rate on
variable rate indebtedness otherwise permitted by this Indenture, other than the
Securities, the Company's 10 3/4% Senior Subordinated Notes due 2004, the
Company's 5 3/4% Convertible Senior Subordinated Debentures due 2001 and the
Company's 6% Convertible Subordinated Debentures due 2003, whether outstanding
on the date of the Original Indenture or thereafter created, incurred or
assumed, unless, in the case of any particular Indebtedness, the instrument
creating or evidencing the same or pursuant to which the same is outstanding
expressly provides that such Indebtedness shall not be senior in right of
payment to the Securities; provided that Senior Indebtedness will not include
(i) any Indebtedness, liability or obligation of the Company to (a) any of its
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Subsidiaries, (b) trade creditors or (c) any person arising out of any lawsuit
against the Company or any of its Subsidiaries or any settlement thereof (other
than any lawsuit or settlement thereof respecting amounts payable with regard to
Senior Indebtedness), (ii) any redemption or other payments on Preferred Stock,
(iii) any Indebtedness incurred in violation of the provisions of the Indenture
or (iv) amounts owing under leases (other than Capitalized Lease Obligations).
"Series A Notes" means the Company's 9 5/8% Senior Subordinated Notes due
2002, Series A, issued under this Indenture.
"Shelf Registration Statement" means the Registration Statement with
respect to the Securities which the Company is required to file pursuant to the
Registration Rights Agreement.
"Significant Subsidiary" has the meaning ascribed to it under Regulation C
promulgated under the Securities Act of 1933, as amended.
"Stated Maturity" means, when used with respect to any security or any
installment of interest thereon, that date specified in such security as the
fixed date on which the principal of such security or such installment of
interest is due and payable.
"Subsidiary" of any Person means (i) any corporation of which Common Equity
having ordinary voting power to elect a majority of the directors of such
corporation is owned by such Person directly or through one or more other
Subsidiaries of such Person, and (ii) any entity other than a corporation in
which such Person, directly or indirectly, owns at least a majority of the
Common Equity of such entity.
"TIA" means the Trust Indenture Act of 1939, as amended (15 U.S.C. ss.ss.
77aaa-77bbbb), as in effect on the date hereof (unless otherwise specifically
provided herein).
"Transfer Restricted Securities" means Securities that bear or are required
to bear the legend set forth in Section 2.5 hereof.
"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.
"Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer its corporate trust matters.
"U.S. Government Obligations" means direct obligations of the United States
of America for the payment of which the full faith and credit of the United
States of America is pledged.
"Wholly Owned Subsidiary" of any Person means (i) a Subsidiary of which
100% of the Common Equity (except for directors' qualifying shares or certain
minority interests owned by other Persons solely due to local law requirements
that there be more than one stockholder, but which interest is not in excess of
what is required for such purpose) is owned directly by such Person or through
one or more other Wholly Owned Subsidiaries of such Person and (ii) any entity
other than a corporation in which such Person, directly or indirectly, owns all
of the Common Equity of such entity.
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SECTION 1.2 OTHER DEFINITIONS
Defined
Term in Section
"Asset Sale Offer"......................................... 3.8
"Custodian"................................................ 5.1
"Change in Control Repurchase"............................. 3.7
"Event of Default"......................................... 5.1
"Legal Holiday"............................................ 10.6
"Payment Blockage Period".................................. 9.4
"Paying Agent"............................................. 2.3
"Registrar"................................................ 2.3
"Repurchase Date".......................................... 3.7
"Successor"................................................ 4.1
SECTION 1.3 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
All terms used in this Indenture that are defined by the TIA, defined by
TIA reference to another statute or defined by SEC rule under the TIA have the
meanings so assigned to them.
SECTION 1.4 RULES OF CONSTRUCTION
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural include
the singular;
(5) provisions apply to successive events and transactions;
(6) any amount may be negative; and
(7) "herein", "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or
Subdivision.
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ARTICLE 2.
THE SECURITIES
SECTION 2.1 FORM AND DATING
The Rule 144A Notes and the Trustee's certificate of authentication shall
be substantially in the form of Exhibit A. Subject to Section 2.6, the Rule 144A
Notes shall be in an aggregate principal amount no greater than $115,000,000;
provided, that if Series A Notes are issued hereunder pursuant to the Exchange
Offer, the aggregate maximum principal amount of Rule 144A Notes shall be
reduced by the principal amount of Series A Notes so issued. The Series A Notes,
when and if issued, and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit B. Subject to Section 2.6, the Series A
Notes shall be in an aggregate principal amount no greater than $115,000,000
less the principal amount of Rule 144A Notes not exchanged for the Series A
Notes in the Exchange Offer. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage. Each Security shall
be dated the date of its authentication. The Securities shall be in
denominations of $1,000 and integral multiples thereof.
The Securities may be initially issued either in the form of a Global
Security or Securities or in the form of Definitive Securities or both. A Global
Security shall represent such of the outstanding Securities as shall be
specified therein and shall provide that it shall represent the aggregate amount
of outstanding Securities from time to time endorsed thereon and that the
aggregate amount of outstanding Securities represented thereby may from time to
time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Security to reflect the amount of any
increase or decrease in the amount of outstanding Securities represented thereby
shall be made by the Trustee or an agent thereof, at the direction of the
Trustee, in accordance with instructions given by the Holder thereof. Definitive
Securities shall be printed, lithographed or engraved or produced by any
combination of these methods on steel engraved borders or may be produced in any
other manner permitted by the rules of any securities exchange on which the
Securities may be listed, all as determined by the officers executing such
Securities, as evidenced by their execution of such Securities.
The terms and provisions contained in the Securities shall constitute, and
are hereby expressly made, a part of this Indenture and to the extent
applicable, the Company and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
SECTION 2.2 EXECUTION AND AUTHENTICATION
Two Officers 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 nevertheless shall be
valid.
A Security shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Security has
been authenticated under this Indenture.
The Trustee shall authenticate Securities for original issue up to the
aggregate principal amount stated in paragraph 4 of the Securities, upon a
written order of the Company signed by two Officers. The aggregate principal
amount of Securities outstanding at any time may not exceed such amount except
as provided in Section 2.6.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Securities. An authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture
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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.
SECTION 2.3 REGISTRAR AND PAYING AGENT
The Company shall maintain or cause to be maintained through the Trustee or
such other Person as may be appointed hereunder an office or agency where
Securities may be presented for registration of transfer or for exchange
("Registrar") and an office or agency where Securities may be presented for
payment ("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 "Registrar"
includes any co-registrar and the term "Paying Agent" includes any additional
paying agent. The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company shall notify the Trustee of the name and
address of any Agent not a party to this Indenture. If the Company fails to
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 or Registrar.
SECTION 2.4 PAYING AGENT TO HOLD MONEY IN TRUST
The Company shall require each Paying Agent other than the Trustee to agree
in writing that the Paying Agent will 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 or premium, if any, or interest on the Securities, and will 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 or a Subsidiary) shall have no further
liability for the money. If the Company or a Subsidiary 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.
SECTION 2.5 REGISTRATION OF TRANSFER AND EXCHANGE
(a) With respect to the transfer and exchange of Definitive Securities:
when Definitive Securities are presented to the Trustee with the request (x) to
register the transfer of the Definitive Securities or (y) to exchange such
Definitive Securities for an equal principal amount of Definitive Securities of
other authorized denominations, the Trustee shall register the transfer or make
the exchange as requested if its requirements for such transactions are met;
provided, however, that the Definitive Securities presented or surrendered for
register of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Trustee duly executed by the Holder
thereof or by its attorney, duly authorized in writing; and
(ii) shall, in the case of Transfer Restricted Securities that are
Definitive Securities, except if exchanged for a Series A Note in the
Exchange Offer, be accompanied by the following additional information and
documents, as applicable
(A) if such Transfer Restricted Security is being delivered to
the Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that effect (in
substantially the form of Exhibit C hereto); or
(B) if such Transfer Restricted Security is being transferred to
a "qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in reliance on Rule 144A under the Securities Act or
pursuant to an exemption from registration in accordance with Rule 144
or Regulation S under the Securities Act or pursuant to an effective
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registration statement under the Securities Act, a certification to
that effect (in substantially the form of Exhibit C hereto); or
(C) if such Transfer Restricted Security is being transferred in
reliance on another exemption from the registration requirements of
the Securities Act, a certification to that effect (in substantially
the form of Exhibit C hereto) and an Opinion of counsel reasonably
acceptable to the Company and to the Registrar to the effect that such
transfer is in compliance with the Securities Act.
(b) The following restrictions apply to any transfer of a Definitive
Security for a beneficial interest in a Global Security. A Definitive Security
may not be exchanged for a beneficial interest in a Global Security except until
and upon satisfaction of the requirements set forth below. Upon receipt by the
Trustee of a Definitive Security, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Trustee, together with:
(i) if such Definitive Security is a Transfer Restricted Security and
such transfer is not being made in connection with the Exchange Offer,
certification, substantially in the form of Exhibit C hereto, that such
Definitive Security is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act) in accordance
with Rule 144A under the Securities Act; and
(ii) whether or not such Definitive Security is a Transfer Restricted
Security, written instructions directing the Trustee to make an endorsement
on the Global Security to reflect an increase in the aggregate principal
amount of the Securities represented by the Global Security,
then the Trustee shall cancel such Definitive Security and cause, in accordance
with the standing instructions and procedures existing between it and the
Depositary, the aggregate principal amount of Securities represented by the
Global Security to be increased accordingly. If no Global Securities are then
outstanding, the Company shall issue and, upon receipt of a written
authentication order in the form of an Officers' Certificate, the Trustee shall
authenticate a new Global Security in the appropriate principal amount.
(c) The transfer and exchange of Global Securities or beneficial interests
therein shall be effected through the Depositary, in accordance with this
Indenture (including the restrictions on transfer set forth herein) and the
procedures of the Depositary therefor.
(d) With respect to the transfer of a beneficial interest in a Global
Security for a Definitive Security:
(i) Any person having a beneficial interest in a Global Security may
upon request exchange such beneficial interest for a Definitive Security.
Upon receipt by the Trustee of written instructions or such other form of
instructions as is customary for the Depositary or its nominee on behalf of
any person having a beneficial interest in a Global Security constituting a
Transfer Restricted Security only, except if exchanged for a Series A Note
in the Exchange Offer, the following additional information and documents
(all of which may be submitted by facsimile):
(A) if such beneficial interest is being transferred to the
person designated by the Depositary as being the beneficial owner, a
certification from such person to that effect (in substantially the
form of Exhibit C hereto); or
(B) if such beneficial interest is being transferred to a
"qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A
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under the Securities Act or pursuant to an exemption from registration
in accordance with Rule 144 or Regulation S under the Securities Act
or pursuant to an effective registration statement under the
Securities Act, a certification to that effect from the transferor (in
substantially the form of Exhibit C hereto); or
(C) if such beneficial interest is being transferred in reliance
on another exemption from the registration requirements of the
Securities Act, a certification to that effect from the transferee or
transferor (in substantially the form of Exhibit C hereto) and an
Opinion of counsel from the transferee or transferor reasonably
acceptable to the Company and to the Security Registrar to the effect
that such transfer is in compliance with the Securities Act,
then the Trustee will cause, in accordance with the standing instructions and
procedures existing between it and the Depositary, the aggregate principal
amount of the Global Security to be reduced and, following such reduction, the
Company will execute and, upon receipt of a written authentication order in the
form of an Officers' Certificate the Trustee will authenticate and deliver to
the transferee a Definitive Security.
(ii) Definitive Securities issued in exchange for a beneficial
interest in a Global Security pursuant to this Section 2.5 shall be
registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall
deliver such Definitive Securities to the persons in whose name such
Securities are so registered.
(e) Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.5), a Global Security
may not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) The following relates to the authentication of Definitive Securities in
absence of the Depositary. If at any time: (i) the Depositary for the Securities
notifies the Company that the Depositary is unwilling or unable to continue as
Depositary for the Global Securities and a successor Depositary for the Global
Securities is not appointed by the Company within 90 days after delivery of such
notice; or (ii) the Company, at its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of Definitive Securities under this
Indenture, then the Company will execute, and the Trustee, upon receipt of a
written order in the form of an Officers' Certificate requesting the
authentication and delivery of Definitive Securities, will authenticate and
deliver Definitive Securities, in an aggregate a principal amount equal to the
principal amount of the Global Securities, in exchange for such Global
Securities.
(g) (i) Except as permitted by the following paragraph (ii), each Rule 144A
Note certificate evidencing the Global Securities and the Definitive Securities
(and all Securities other than Series A Notes issued in exchange therefor or
substitution thereof) shall bear a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR
NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HERETO AGREES NOT TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER OF THE
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ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATED PERSON OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY) UNLESS SUCH OFFER, SALE OR OTHER TRANSFER IS
(A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON THE
HOLDER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT
THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS
AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (A)(2), (A)(3) OR (A)(7)
OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS
OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED
INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR
SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT,
OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE
TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES
(D), (E) or (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN
EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING
ON THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE.
THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE THEN HOLDER OF THIS
SECURITY AFTER THE RESALE RESTRICTION TERMINATION DATE.
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a Global
Security) pursuant to Rule 144 under the Securities Act or an effective
registration statement under the Securities Act (including the Shelf
Registration Statement):
(A) in the case of any Transfer Restricted Security that is a
Definitive Security, the Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Security for a Definitive Security
that does not bear the legend set forth above and rescind any
restriction on the transfer of such Transfer Restricted Security; and
(B) any such Transfer Restricted Security represented by a Global
Security shall not be subject to the provisions set forth in (i) above
(such sales or transfers being subject only to the provisions of
Section 305(c) hereof); provided, however, that with respect to any
request for an exchange of a Transfer Restricted Security that is
represented by a Global Security for a Definitive Security that does
not bear a legend, which request is made in reliance upon Rule 144 or
an effective registration statement, the Holder thereof shall certify
in writing to the Registrar that such request is being made pursuant
to Rule 144 or an effective registration statement (such certification
to be substantially in the form of Exhibit C hereto.)
(h) At such time as all beneficial interests in a Global Security have
either been exchanged for Definitive Securities, redeemed, repurchased or
cancelled, such Global Security shall be returned to or retained and cancelled
by the Trustee. At any time prior to such cancellation, if any beneficial
interest in a Global Security is exchanged for Definitive Securities, redeemed,
repurchased or cancelled, the principal amount of Securities represented
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by such Global Security shall be reduced and an endorsement shall be made on
such Global Security, by the Trustee or the Securities Custodian, at the
direction of the Trustee, to reflect such reduction.
(i) All Definitive Securities and Global Securities issued upon any
registration of transfer or exchange of Definitive Securities or Global
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Definitive
Securities or Global Securities surrendered upon such registration of transfer
or exchange.
No service charge shall be made to a 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 and any other expenses (including the fees
and expenses of the Trustee) in connection therewith (other than such transfer
tax or similar governmental charge payable upon exchanges pursuant to Section
2.6 or 8.5).
SECTION 2.6 REPLACEMENT SECURITIES
If any mutilated Security is surrendered to the Trustee, or the Company and
the Trustee receive evidence to their 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, shall authenticate a replacement
Security if the Trustee's requirements 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, the Agent or any authenticating agent from any loss which any of them
may suffer if a Security is replaced. The Company may charge for its expenses in
replacing a Security.
Every replacement Security is an additional obligation of the Company.
SECTION 2.7 OUTSTANDING SECURITIES
The Securities outstanding at any time are all the Securities authenticated
by the Trustee except for those canceled by it, those delivered to it for
cancellation and those described in this Section 2.7 as not outstanding.
If a Security is replaced pursuant to Section 2.6, 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
3.1, it ceases to be outstanding and interest on it ceases to accrue as of the
date it is deemed paid. Upon a "legal defeasance" pursuant to Section 7.1(b) or
a "covenant defeasance" pursuant to Section 7.1(c), the Securities shall be
deemed to be outstanding or not outstanding as provided in the applicable
Section 7.1(b) or 7.1(c).
Except as set forth in Section 2.8, a Security does not cease to be
outstanding because the Company or an Affiliate holds the Security.
SECTION 2.8 TREASURY SECURITIES
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company or by any Person directly or indirectly controlling or controlled
by or under direct or indirect common control with the Company shall be
considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Securities which the Trustee knows are so
owned shall be so disregarded.
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SECTION 2.9 TEMPORARY SECURITIES
Until definitive Securities are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Securities. Temporary Securities
shall be substantially in the form of definitive Securities but may have
variations that the Company considers appropriate for temporary Securities.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Securities in exchange for temporary Securities.
SECTION 2.10 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, upon request of
the Company, certification of their destruction shall be delivered to the
Company unless, by a written order signed by two Officers, the Company shall
direct that canceled Securities be returned to it. 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 2.11 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, in each case at the rate provided
in the Securities. The Company, with the consent of the Trustee, shall fix each
such special record date and payment date. At least 15 days before the special
record date, the Company (or, upon request of the Company, 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 2.12 SECURITIES ISSUABLE IN THE FORM OF A GLOBAL SECURITY
(a) If the Company shall establish that the Securities are to be issued in
whole or in part in the form of one or more Global Securities, then the Company
shall execute and the Trustee or an agent thereof shall, in accordance with
Section 2.2 and the written order of the Company delivered to the Trustee or its
agent thereunder, authenticate and deliver such Global Security or Securities,
which (i) shall represent, and shall be denominated in an amount equal to the
aggregate principal amount of, the outstanding Securities to be represented by
such Global Security or Securities, or such portion thereof as the Company shall
specify in a written order of the Company signed by two Officers, (ii) shall be
registered in the name of the Depositary for such Global Security or Securities
or its nominee, (iii) shall be delivered by the Trustee or its agent to the
Depositary or pursuant to the Depositary's instruction and (iv) shall bear a
legend substantially to the following effect: "Unless and until it is exchanged
in whole or in part for securities in definitive form, this security may not be
transferred except as a whole by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary. Unless this certificate is presented by
an authorized representative of the Depositary to the Company or its agent for
registration of transfer, exchange, or payment, and any certificate issued is
registered in the name of the nominee of the Depositary or in such other name as
is requested by an authorized representative of the Depositary (and any payment
is made to the nominee of the Depositary or to such other entity as is requested
by an authorized representative of the Depositary), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, the nominee of the Depositary, has an interest
herein."
(b) Notwithstanding any other provision of this Section 2.12 or of Section
2.5, and subject to the provisions of paragraph (c) below, a Global Security may
be transferred, in whole but not in part and in the manner
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provided in Section 2.5, only to a nominee of the Depositary for such Global
Security, or to the Depositary, or a successor Depositary for such Global
Security selected or approved by the Company, or to a nominee of such successor
Depositary.
(c) (i) If at any time the Depositary for a Global Security notifies the
Company that it is unwilling or unable to continue as Depositary for such Global
Security or if at any time the Depositary for the Securities shall no longer be
eligible or in good standing under the Exchange Act or any other applicable
statute or regulation, the Company shall appoint a successor Depositary with
respect to such Global Security. If a successor Depositary for such Global
Security is not appointed by the Company within 90 days after the Company
receives such notice or becomes aware of such ineligibility, the Company will
execute, and the Trustee or an agent thereof, upon receipt of a written order of
the Company signed by two Officers for the authentication and delivery of
individual Definitive Securities in exchange for such Global Security, will
authenticate and deliver, individual Definitive Securities of like tenor and
terms in an aggregate principal amount equal to the principal amount of the
Global Security in exchange for such Global Security.
(ii) The Company may at any time and in its sole discretion determine that
the Securities issued in the form of one or more Global Securities shall no
longer be represented by such Global Security or Securities. In such event the
Company will execute, and the Trustee, upon receipt of a written order of the
Company signed by two Officers for the authentication and delivery of individual
Definitive Securities in exchange in whole or in part for such Global Security,
will authenticate and deliver individual Definitive Securities of like tenor and
terms in an aggregate principal amount equal to the principal amount of such
Global Security or Securities in exchange for such Global Security or
Securities.
(iii) If specified by the Company pursuant to a written order of the
Company signed by two Officers, the Depositary for a Global Security may
surrender such Global Security in exchange in whole or in part for individual
Definitive Securities of like tenor and terms on such terms as are acceptable to
the Company and such Depositary. Thereupon the Company shall execute, and the
Trustee or an agent thereof, upon a written order of the Company signed by two
Officers, shall authenticate and deliver, without service charge, (1) to each
Person specified by such Depositary a new Definitive Security or Securities of
like tenor and terms and of any authorized denomination as requested by such
Person in an aggregate principal amount equal to and in exchange for such
Person's beneficial interest as specified by such Depositary in the Global
Security; and (2) to such Depositary a new Global Security of like tenor and
terms and in an authorized denomination equal to the difference, if any, between
the principal amount of the surrendered Global Security and the aggregate
principal amount of Definitive Securities delivered to Holders thereof.
(iv) In any exchange provided for in (i), (ii) or (iii) of this paragraph
(c), the Company will execute and the Trustee or an agent thereof will
authenticate and deliver individual Definitive Securities in registered form in
authorized denominations. Upon the exchange of the entire principal amount of a
Global Security for individual Definitive Securities, such Global Securities
shall be cancelled by the Trustee or an agent thereof. Except as provided in
(iii) above, Definitive Securities issued in exchange for a Global Security
pursuant to this Section shall be registered in such names and in such
authorized denominations as the Depositary for such Global Security, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct either the Trustee or the Registrar. Such Trustee or the Registrar
shall deliver such Definitive Securities to the Persons in whose names such
Securities are so registered.
ARTICLE 3
COVENANTS
SECTION 3.1 PAYMENT OF SECURITIES
The Company shall pay the principal of and premium, if any, and interest on
the Securities on the dates and in the manner provided in the Securities.
Principal, premium, if any, and interest shall be considered paid on the
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date due if the Paying Agent, other than the Company or a Subsidiary of the
Company, holds on that date money deposited by the Company designated for and
sufficient to pay all principal, premium, if any, and interest then due.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
the interest rate on the Securities to the extent lawful; it shall pay interest
on overdue payments of premium, if any, or installments of interest (without
regard to any applicable grace period) at the same rate to the extent lawful.
SECTION 3.2 MAINTENANCE OF OFFICE OR AGENCY
The Company will maintain an office or agency where Securities may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company with respect of the Securities and this Indenture
may be served pursuant to Section 2.3. The Company hereby designates the
Corporate Trust Office of the Trustee as such office or agency of the Company.
The Company also from time to time may designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
such purposes and from time to time may rescind such designations. The Company
will 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.
SECTION 3.3 SEC REPORTS
(a) The Company shall remain subject to the reporting requirements of
Section 13 or Section 15(d) of the Exchange Act and shall continue to file with
the SEC such annual reports and such information, documents and other reports
which are specified in Sections 13 and 15(d) of the Exchange Act.
(b) The Company shall file with the Trustee and cause to be provided to the
Holders, within 15 days after it files the same with the SEC, copies of its
annual reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the SEC may by rules and regulations
prescribe) which the Company or any subsidiary of the Company is required to
file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. The
Company shall cause any annual report furnished to its stockholders generally
and any quarterly or other financial reports furnished by it to its stockholders
generally to be filed with the Trustee and mailed to the Holders at their
addresses appearing in the register of Securities maintained by the Registrar.
SECTION 3.4 COMPLIANCE CERTIFICATE
(a) The Company shall deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company, 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 the Company 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 knowledge the Company has kept, observed, performed and fulfilled each
covenant contained in this Indenture and is not in default in the performance or
observance of any of the terms, provisions and conditions hereof (or, if a
Default or Event of Default shall have occurred, describing all such Defaults or
Events of Default of which he may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or premium, if any, or interest, if any,
on the Securities are prohibited or, if such event has occurred, a description
of the event and what action the Company is taking or proposes to take with
respect thereto.
(b) So long as (i) not contrary to the then current recommendations of the
American Institute of Certified Public Accountants or (ii) the Company's
independent public accountants do not have in effect a policy, of
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general applicability with respect to their clients, that such accountants will
not prepare statements on the subjects specified below, the year-end financial
statements delivered pursuant to Section 4.3 shall be accompanied by a written
statement of the Company's 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
that would lead them to believe that the Company has violated any provisions of
Article 3 or 4 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.
(c) The Company, so long as any of the Securities are outstanding, will
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default under this Indenture, an Officers' Certificate specifying
such Default or Event of Default and what action the Company is taking or
proposes to take with respect thereto.
SECTION 3.5 CORPORATE EXISTENCE, TAXES, ETC.
Subject to the provisions of Section 4.1, the Company shall do or cause to
be done all things necessary to preserve and keep in full force and effect its
rights (charter and statutory), licenses and franchises; provided, however, that
the Company shall not be required to preserve any such right or franchise 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 the loss thereof is
not disadvantageous in any material respect to the Holders.
SECTION 3.6 STAY, EXTENSION AND USURY LAWS
The Company covenants (to the extent that it may lawfully do so) that it
will 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 Company's
obligation to pay the Securities; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
insofar as such law applies to the Securities, and covenants that it will not,
by resort to any such law, hinder, delay or impede the execution of any power,
right or remedy herein granted to the Trustee, but will suffer and permit the
execution of every such power, right or remedy as though no such law has been
enacted.
SECTION 3.7 CHANGE IN CONTROL
(a) Following the occurrence of any Change in Control, each Holder will
have the right, at such Holder's option, to require that the Company purchase (a
"Change in Control Repurchase"), and upon the exercise of such right, the
Company shall, subject to the provisions of Section 9.3 hereof, purchase, all or
any part of such Holder's Securities on a date (the "Repurchase Date") that is
no earlier than 30 days nor later than 60 days after the date on which the
Company gives notice of a Change in Control as provided in (b) below at a
purchase price equal to 101% of the aggregate principal amount of the
Securities, plus accrued and unpaid interest thereon, if any, to the Repurchase
Date.
(b) Within 30 days after any Change in Control, the Company (with notice to
the Trustee), or the Trustee at the Company's request, will mail or cause to be
mailed to all Holders on the date of the Change in Control a notice of the
occurrence of such Change in Control and of the Holders' rights arising as a
result thereof. Such notice, which shall govern the terms of the Change in
Control Repurchase, shall state:
(1) that a Change in Control has occurred and that such Holder has the
right to require the Company to repurchase such Holder's Notes in cash;
(2) the Repurchase Date (which will be no earlier than 30 days nor
later than 60 days from the date such notice is mailed);
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(3) the purchase price for the repurchase;
(4) the date by which the repurchase right must be exercised; and
(5) the instructions determined by the Company, consistent with this
Section 3.7, that a Holder must follow in order to have its Securities
repurchased.
(c) To exercise a repurchase right, a Holder shall deliver to the Company
(or a depositary or Paying Agent designated by the Company for such purpose in
the notice referred to in (b) above), on or before the close of business on the
Repurchase Date, the Security or Securities with respect to which the repurchase
right is being exercised, duly endorsed for transfer to the Company, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of each
Security so delivered completed. Holders shall be entitled to withdraw their
election if the Company (or the depositary or Paying Agent designated by the
Company for the purpose of receiving such election) receives, not later than
five Business Days prior to the Repurchase Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Security or Securities the Holder delivered for purchase and a
statement that such Holder is withdrawing its election to the have the Security
or Securities purchased.
(d) In the event a repurchase right shall be exercised in accordance with
the terms hereof, subject to Article 9, the Company shall on or promptly
following the Repurchase Date pay or cause to be paid in cash to the Holder
thereof the repurchase price of the Security or Securities as to which the
repurchase right has been exercised. In the event that the repurchase right is
exercised with respect to less than the entire principal amount of a surrendered
Security, the Company shall execute and deliver to the Trustee and the Trustee
shall authenticate for issuance in the name of the Holder a new Security or
Securities in the aggregate principal amount of the unrepurchased portion of
such surrendered security.
(e) If the Repurchase Date is on or before an Interest Payment Date and on
or after the related record date, any interest accrued and unpaid to the
Repurchase Date will be paid to the Person in whose name the Security is
registered at the close of business on such record date, and no additional
interest will be payable to Holders who exercise their repurchase right pursuant
to this Section 3.7.
(f) Any Change in Control Repurchase shall be conducted in compliance with
applicable tender offer rules, including Section 14(e) of the Exchange Act and
Rule 14(e)(1) thereunder. The Change in Control Repurchase may not be modified
or conditioned by the Company in any manner.
SECTION 3.8 LIMITATIONS ON ASSET SALES
The Company shall not, and shall not permit any of its Subsidiaries to,
consummate any Asset Sale unless (i) the Company or its Subsidiaries receive
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets or Capital Stock included in such Asset Sale (as determined
in good faith by the Board of Directors, whose determination shall be conclusive
and evidenced by a board resolution) and (ii) not less than 50% of such
consideration is in the form of cash. The Net Proceeds of Asset Sales shall,
within 360 days, (a) be reinvested in the lines of business of the Company or
any of its Subsidiaries immediately prior to such investment; (b) be applied to
the payment of the principal of, and interest on, Senior Indebtedness; (c) be
utilized to make any Investment in any other Person permitted under this
Indenture; or (d) be applied to an offer (an "Asset Sale Offer") to purchase
outstanding Securities. In any such Asset Sale Offer, the Company shall offer to
purchase Securities, as selected by lot (with such adjustments as may be deemed
appropriate by the Company so that only Securities in denominations of $1,000 or
integral multiples thereof shall be purchased), at a purchase price equal to
100% of the aggregate principal amount of the Securities, plus accrued and
unpaid interest to the date of purchase, in the manner set forth in this
Indenture. Any Asset Sale Offer will be conducted in compliance with applicable
tender offer rules, including Section 14(e) of the Exchange Act and Rule 14e-1
thereunder. Any Net Proceeds remaining immediately after the completion of any
Asset
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Sale Offer may be used by the Company or its Subsidiaries for any purpose not
inconsistent with the other provisions of this Indenture.
ARTICLE 4
SUCCESSORS
SECTION 4.1 LIMITATIONS ON MERGERS AND CONSOLIDATIONS
The Company shall not consolidate or merge with or into, or sell, lease,
convey or otherwise dispose of all or substantially all of its assets, or assign
any of its obligations hereunder or under the Securities, to any Person unless:
(i) the Person formed by or surviving such consolidation or merger (if
other than the Company), or to which sale, lease, conveyance or other
disposition or assignment shall be made (collectively, the "Successor"), is
a corporation organized and existing under the laws of the United States or
any State thereof or the District of Columbia, and the Successor assumes by
supplemental indenture in a form satisfactory to the Trustee all of the
obligations of the Company hereunder and under the Securities; and
(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing.
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 stating that the proposed transaction and such supplemental
indenture comply with this Indenture.
SECTION 4.2 SUCCESSOR CORPORATION SUBSTITUTED
Upon any consolidation or merger, or any sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company or any
assignment of its obligations under this Indenture or the Securities in
accordance with Section 4.1, the Successor formed by such consolidation or into
or with which the Company is merged or to which such sale, lease, conveyance or
other disposition or assignment is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this Indenture
with the same effect as if such Successor has been named as the Company herein
and the predecessor Company, in the case of a sale, lease, conveyance or other
disposition or assignment, shall be released from all obligations under this
Indenture and the Securities.
ARTICLE 5
DEFAULTS AND REMEDIES
SECTION 5.1 EVENTS OF DEFAULT
An "Event of Default" occurs if:
(1) the Company defaults in the payment of the principal of, or any
premium on, any Security when the same becomes due and payable, whether at
Stated Maturity, upon redemption, upon acceleration or otherwise;
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(2) the Company defaults in the payment of interest on any Security
when the same becomes due and payable and the Default continues for a
period of 30 days (even if such payment is prohibited by Article 9 hereof);
(3) the Company fails to comply with any of its agreements or
covenants in, or provisions of, the Securities or this Indenture and such
failure continues for the period and after the notice specified below;
(4) any acceleration of the maturity of Indebtedness of the Company or
its Subsidiaries having an outstanding principal amount of at least $50.0
million or a failure to pay such Indebtedness at its Stated Maturity;
provided that such acceleration or failure to pay is not cured within 10
days after such acceleration or failure to pay;
(5) the Company or any of its Significant Subsidiaries 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,
(c) consents to the appointment of a Custodian of it or for all
or substantially all of its property, or
(d) makes a general assignment for the benefit of its creditors;
or
(6) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(a) is for relief against the Company or any of its Significant
Subsidiaries as debtor in an involuntary case,
(b) appoints a Custodian of the Company or any of its Significant
Subsidiaries or a Custodian for all or substantially all of the
property of the Company or any of its Significant Subsidiaries, or
(c) orders the liquidation of the Company or any of its
Significant Subsidiaries,
and the order or decree remains unstayed and in effect for 60 days.
The term "Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
The Trustee shall not be deemed to know of a Default unless it has actual
knowledge of such Default or receives written notice of such Default with
specific reference to such Default.
A Default under clause (3) is not an Event of Default until the Trustee
notifies the Company, or the Holders of at least 25% in aggregate 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 45 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."
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SECTION 5.2 ACCELERATION
If an Event of Default (other than an Event of Default with respect to the
Company specified in clause (6) or (7) of Section 5.1) occurs and is continuing,
the Trustee by written notice to the Company, 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 Securities to be due and payable
immediately. Upon such declaration the amounts due and payable on the
Securities, as determined in the next succeeding paragraph, shall be due and
payable immediately. If an Event of Default with respect to the Company
specified in clause (6) or (7) of Section 5.1 occurs, such an amount shall ipso
facto become and be immediately due and payable without any declaration, notice
or other act on the part of the Trustee or any Holder. The Holders of a majority
in aggregate principal amount of the then outstanding Securities by written
notice to the Trustee may rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default (except nonpayment of principal of, or premium, if any, or
interest on the Securities or that resulted from a failure to comply with
Section 3.7) have been cured or waived.
In the event that the maturity of the Securities is accelerated pursuant to
this Section 5.2, 100% of the principal amount thereof and premium, if any,
shall become due and payable plus accrued interest to the date of payment plus
interest on defaulted interest to the extent provided herein.
SECTION 5.3 OTHER REMEDIES
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal of, or premium, if any, 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 5.4 WAIVER OF PAST DEFAULTS
The Holders of a majority in aggregate principal amount of the then
outstanding Securities by notice to the Trustee may waive an existing Default or
Event of Default and its consequences, except a continuing Default or Event of
Default in the payment of the principal of, or premium, if any, or interest on
any Security or in respect of a provision under this Indenture which cannot be
modified or amended without the consent of the Holder of each Security then
outstanding. Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right or remedy consequent
thereon.
SECTION 5.5 CONTROL BY MAJORITY
The Holders of a majority in aggregate 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, in each case as determined by the Trustee.
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SECTION 5.6 LIMITATIONS ON SUITS
A Holder may pursue a remedy with respect to this Indenture or the
Securities only if:
(1) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(2) the Holders of at least 25% in aggregate principal amount of the
then outstanding Securities make a written request to the Trustee to pursue
the remedy;
(3) such Holder or Holders offer to the Trustee indemnity satisfactory
to the Trustee in its sole discretion against any loss, liability or
expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and
(5) during such 60-day period the Holders of a majority in aggregate
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 5.7 RIGHTS OF HOLDERS TO RECEIVE PAYMENT
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security to receive payment 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 5.8 COLLECTION SUIT BY TRUSTEE
If an Event of Default specified in Section 5.1(1) or (2) 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 for the amount of principal,
premium, if any, and interest remaining unpaid on the Securities, determined in
accordance with Section 5.2, and interest on overdue principal and premium, if
any, and, to the extent lawful, interest on overdue installments of interest,
and such further amount as shall be sufficient to cover the costs and expenses
of collection, including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.
SECTION 5.9 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, 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 6.6. 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 6.6 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
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properties which the Holders of the Securities 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; provided, however, that the Trustee may, on behalf of the Holders,
vote for the election of a trustee (or similar official) in bankruptcy and may
be a member of the creditors' committee.
SECTION 5.10 PRIORITIES
If the Trustee collects any money pursuant to this Article 5, it shall pay
out the money in the following order:
First: to the Trustee for amounts due under Section 6.6;
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.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Article.
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,
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 5.11
does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
5.7 or a suit by Holders of more than 10% in principal amount of the then
outstanding Securities.
ARTICLE 6
TRUSTEE
SECTION 6.1 DUTIES OF TRUSTEE
(1) 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 such exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(2) Except during the continuance of an Event of Default:
(a) the Trustee need perform only those duties that are specifically
set forth in this Indenture and no others, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
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(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, on their face, they appear to conform to the requirements
of this Indenture.
(3) 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 (2) of this
Section;
(b) the Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(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 6.5.
(4) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (1),
(2), (3) and (5) of this Section 6.1.
(5) 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 indemnity satisfactory to
it against any loss, liability or expense.
(6) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 6.2 RIGHTS OF TRUSTEE
(1) Subject to Section 6.1, the Trustee may rely on any document believed
by it to be genuine and to have been signed or presented by the proper Person,
and the Trustee need not investigate any fact or matter stated in the document.
(2) 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 in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.
(3) The Trustee may act through agents and shall not be responsible for the
misconduct or negligence of any agent appointed with due care.
(4) 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.
(5) 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.
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SECTION 6.3 INDIVIDUAL RIGHTS OF TRUSTEE
The Trustee in its individual or any other capacity may become the owner or
pledgee of Securities and may otherwise deal with the Company or any of its
Affiliates with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights.
SECTION 6.4 TRUSTEE'S DISCLAIMER
The Trustee makes no representation as to the validity or adequacy of this
Indenture or the Securities or as to the Company's ability to pay the Securities
when and as due or perform its other obligations hereunder. It shall not 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
hereof. It shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee. It shall not be responsible
for any statement or recital herein or any statement in the Securities other
than its certificate of authentication.
SECTION 6.5 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 of principal of, or premium, if any, or
interest on any Security or that resulted from a failure by the Company to
comply with Section 3.7, the Trustee may withhold the notice if it in good faith
determines that withholding the notice is in the interests of Holders.
SECTION 6.6 COMPENSATION AND INDEMNITY
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. 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 upon
request for all reasonable disbursements, advances and expenses incurred by it.
Such expenses shall include the reasonable compensation, disbursements and
expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee, its employees, officers, directors
and agents and any predecessor Trustee hereunder against any loss, liability or
expense incurred by it arising out of or in connection with the acceptance or
administration of its duties under this Indenture or in connection with
enforcing this indemnification provision, except as set forth in the next
paragraph. The Trustee promptly shall notify the Company of any claim for which
it may seek indemnity. 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 Company need not reimburse any expense or indemnify against any loss or
liability incurred by the Trustee through negligence or bad faith.
To secure the Company's payment obligations in this Section 6.6, 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 of,
premium, if any, 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 5.1(6) or (7) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
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SECTION 6.7 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 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. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 310(b) of the TIA;
(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.
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 fails to comply with Section 310 of the TIA, any 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, subject to the Lien provided for in Section 6.6.
Notwithstanding replacement of the Trustee pursuant to this Section 6.7, the
Company's obligations under Section 6.6 shall continue for the benefit of the
retiring Trustee.
SECTION 6.8 SUCCESSOR TRUSTEE BY MERGER, ETC.
Subject to Section 6.9, if the Trustee 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.
SECTION 6.9 ELIGIBILITY; DISQUALIFICATION
There shall at all times be a Trustee hereunder which shall be a bank or
corporation organized and doing business under the laws of the United States of
America, any state thereof or the District of Columbia authorized under such
laws to exercise corporate trustee power, shall be subject to supervision or
examination by Federal or state (or the District of Columbia) authority and
shall have a combined capital and surplus of at least $50 million as set forth
in its most recent published annual report of condition.
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This Indenture shall always have a Trustee who satisfies the requirements
of TIA ss. 310(a)(1) and 310(a)(2). The Trustee is subject to TIA ss. 310(b). If
at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect specified in Section 6.7.
ARTICLE 7
DISCHARGE OF INDENTURE
SECTION 7.1 TERMINATION OF COMPANY'S OBLIGATIONS
(a) This Indenture shall cease to be of further effect (except that the
Company's obligations under Section 6.6 and the Trustee's and Paying Agent's
obligations under Section 7.3 shall survive) when all outstanding Securities
theretofore authenticated and issued have been delivered (other than destroyed,
lost or stolen Securities that have been replaced or paid) to the Trustee for
cancellation and the Company has paid all sums payable hereunder. In addition,
the Company may elect to have either paragraph (b) or paragraph (c) below be
applied to the outstanding Securities upon compliance with the conditions set
forth in paragraph (d).
(b) Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (b), the Company shall be deemed to have been
released and discharged from its obligations with respect to the 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 the Sections of and
matters under this Indenture referred to in (i) and (ii) below, and to have
satisfied all its other obligations under such Securities and this Indenture
insofar as such Securities are concerned (and the Trustee, 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 paragraph (d) below and as more fully set forth
in such paragraph, 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 2.5, 2.6 and 3.2,
and, with respect to the Trustee, under Section 6.6, (iii) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and (iv) this Section
7.1. Subject to compliance with this Section 7.1, the Company may exercise its
option under this paragraph (b) notwithstanding the prior exercise of its option
under paragraph (c) below with respect to the Securities.
(c) Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (c), the Company shall be released and discharged
from its obligations under any covenant contained in Article 4 and in Section
3.3, 3.4 and 3.6 through 3.8 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 to be not
"outstanding" for the purpose 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. 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 5.1, but, except as specified above, the remainder of this Indenture and
such Securities shall be unaffected thereby.
(d) The following shall be the conditions to the application of either
paragraph (b) or (c) above to the outstanding Securities:
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(1) the Company has irrevocably deposited in trust with the Trustee
or, at the option of the Trustee, with a trustee satisfactory to the
Trustee and the Company under the terms of an irrevocable trust agreement
in form and substance satisfactory to the Trustee in its sole discretion,
money or U.S. Government Obligations sufficient to pay principal of,
premium, if any, and interest on the Securities to maturity or redemption
(in the opinion of a nationally recognized accounting firm of independent
certified public accountants expressed in a written certificate delivered
to the Trustee) and to pay all other sums payable by it hereunder; provided
that (i) the trustee of the irrevocable trust shall have been irrevocably
instructed to pay such money or the proceeds of such U.S. Government
Obligations to the Trustee and (ii) the Trustee shall have been irrevocably
instructed to apply such money or the proceeds of such U.S. Government
Obligations to the payment of said principal, premium, if any, and interest
with respect to the Securities;
(2) the Company has delivered to the Trustee an Officer's Certificate
stating that (a) all conditions precedent provided for relating to either
the legal defeasance under paragraph (b) above or the covenant defeasance
under paragraph (c) above, as the case may be, have been complied with and
(b) if any other Indebtedness of the Company shall then be outstanding or
committed, such legal defeasance or covenant defeasance will not violate
the provisions of the agreements or instruments evidencing such
Indebtedness;
(3) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit;
(4) the Trustee shall not have received notice from any holder of Bank
Debt or any holder of Senior Indebtedness in an aggregate principal amount
in excess of $20 million that such legal defeasance or covenant defeasance
would violate the provisions of the agreements or instruments evidencing
such Senior Indebtedness;
(5) such legal defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default or event of default under,
this Indenture or any other material agreement or instrument to which the
Company is a party or by which it is bound;
(6) in the case of an election under paragraph (b) above, the Company
shall have delivered to the Trustee an Opinion of Counsel from nationally
recognized counsel acceptable to the Trustee stating that (x) the Company
has received from, or there has been published by, the Internal Revenue
Service a ruling, (y) there exists controlling precedent, or (z) since the
date of this Indenture, there has been a change in the applicable Federal
income tax law, in any case to the effect 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 amount and in the same manner and
at the same time as would have been the case if such legal defeasance had
not occurred; and
(7) in the case of an election under paragraph (c) above, the Company
shall have delivered to the Trustee an Opinion of Counsel from nationally
recognized counsel acceptable to the Trustee (i) to the effect 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 on the same amount and
in the same manner and at the same time as would have been the case if such
covenant defeasance had not occurred or (ii) that the Company has received
from, or there has been published by, the Internal Revenue Service a ruling
to the foregoing effect.
After such irrevocable deposit made pursuant to this Section 7.1 and
satisfaction of the other conditions set forth herein, the Trustee upon request
shall acknowledge in writing the discharge of the Company's obligations under
this Indenture except for those surviving obligations specified above.
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The Company may make an irrevocable deposit pursuant to this Section 7.1
only if at such time it is not prohibited from doing so under the provisions of
Article 9 and the Company shall have delivered to the Trustee and any Paying
Agent an Officers' Certificate to that effect.
In order to have money available on a payment date to pay principal,
premium, if any, or interest on the Securities, the U.S. Government Obligations
shall be payable as to principal, premium, if any, or interest on or before such
payment date in such amounts as will provide the necessary money to effect the
applicable defeasance. U.S. Government Obligations shall not be callable at the
issuer's option.
SECTION 7.2 APPLICATION OF TRUST MONEY
The Trustee or a trustee satisfactory to the Trustee and the Company shall
hold in trust money or U.S. Government Obligations deposited with it pursuant to
Section 7.1. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of, premium, if any, and interest on the
Securities.
SECTION 7.3 REPAYMENT TO THE COMPANY
The Trustee and the Paying Agent shall promptly pay to the Company upon
written request any excess money or securities held by them at any time.
The Trustee and the Paying Agent shall pay to the Company at their option
or upon written request any money held by them for the payment of principal,
premium, if any, or interest that remains unclaimed for two years after the date
upon which such payment shall have become due; provided, however, that the
Company shall have either caused notice of such payment to be mailed to each
Holder entitled thereto no less than 30 days prior to such repayment or within
such period shall have published such notice in a financial newspaper of
widespread circulation published in The City of New York. After payment to the
Company, Holders entitled to the money must look to the Company for payment as
general creditors unless an applicable abandoned property law designates another
Person, and all liability of the Trustee and such Paying Agent with respect to
such money shall cease.
SECTION 7.4 REINSTATEMENT
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 7.1 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 7.1 until
such time as the Trustee or Paying Agent is permitted to apply all such money or
U.S. Government Obligations in accordance with Section 7.1; provided, however,
that if the Company has made any payment of premium, if any, or interest on or
principal of any Securities because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Securities to
receive such payment from the money or U.S. Government Obligations held by the
Trustee or Paying Agent.
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ARTICLE 8
AMENDMENTS
SECTION 8.1 WITHOUT CONSENT OF HOLDERS
The Company and the Trustee may amend this Indenture or the Securities or
waive any provision hereof without the consent of any Holder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Section 4.1;
(3) to evidence and provide for the acceptance of appointment hereunder by
a successor Trustee with respect to the Securities;
(4) to make any change that does not adversely affect the legal rights
hereunder of any Holder; or
(5) to comply with a provision or provisions of the TIA applicable to this
Indenture.
Upon the request of the Company, accompanied by a resolution of the Board
of Directors authorizing the execution of any such supplemental indenture, and
upon receipt by the Trustee of the documents described in Section 8.6, the
Trustee shall join with the Company in the execution of any supplemental
indenture authorized or permitted by the terms of this Indenture and make any
further appropriate agreements and stipulations that may be therein contained,
but the Trustee shall not be obligated to enter into any supplemental indenture
that affects its own rights, duties or immunities under this Indenture or
otherwise. After an amendment or waiver under this Section becomes effective,
the Company shall mail to the Holders of each Security affected thereby a notice
briefly describing the amendment 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.
SECTION 8.2 WITH CONSENT OF HOLDERS
Except as provided in this Section 8.2, the Company and the Trustee may
amend this Indenture or the Securities with the written consent of the Holders
of at least a majority in principal amount of the then outstanding Securities.
Upon the request of the Company, accompanied by a resolution of the Board
of Directors authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence of the consent of the Holders as
aforesaid, and upon receipt by the Trustee of the documents described in Section
8.6, 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
to approve the particular form of any proposed amendment or waiver, but it shall
be sufficient if such consent approves the substance thereof.
The Holders of a majority in 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. However, without the consent
of each Holder affected, an amendment or waiver under this Section may not:
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(1) change the Stated Maturity of the principal of, or any installment of
interest on, any Security;
(2) reduce the principal amount of, or premium, if any, or interest on,
any Security;
(3) modify the provisions of Article 9 hereof in a manner adverse to the
Holders;
(4) change the place of payment where, or the coin or currency in which,
any Security or any premium or interest thereon is payable;
(5) adversely affect the right of Holders to require the Company to
repurchase Securities pursuant to Section 3.7 hereof or modify the
obligations of the Company to make an Asset Sale Offer in accordance
with Sections 3.8;
(6) impair the right of Holders to institute suit for the enforcement of
payment of the principal of and premium, if any, and interest on
Securities on or after the Stated Maturity thereof (or in the case of
redemption, on or after the redemption date);
(7) reduce the percentage in principal amount of Securities, the consent
of whose Holders is required for any modification or amendment of the
Indenture, or the consent of whose Holders is required for any waiver
of compliance with certain provisions of this Indenture or certain
Defaults or Events of Default hereunder and their consequences
provided for in this Indenture; or
(8) modify any of the provisions of Section 5.4 or this sentence of this
Section 8.2.
The right of any Holder to participate in any consent required or sought
pursuant to any provision of this Indenture (and the obligation of the Company
to obtain any such consent otherwise required from such Holder) may be subject
to the requirement that such Holder shall have been the Holder of record of any
Securities with respect to which such consent is required or sought as of a date
identified by the Trustee in a notice furnished to Holders in accordance with
the terms of this Indenture.
SECTION 8.3 COMPLIANCE WITH TRUST INDENTURE ACT
Every amendment to this Indenture or the Securities shall comply in form
and substance with the TIA as then in effect.
SECTION 8.4 REVOCATION AND EFFECT OF CONSENTS
Until an amendment (which includes any supplement) or waiver becomes
effective, a consent to it by a Holder of a Security 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
may revoke the consent as to his or her Security or portion of a Security if the
Trustee receives written notice of revocation before the date the amendment or
waiver becomes effective. An amendment or waiver becomes effective in accordance
with its terms and thereafter binds every Holder of a Security whether
theretofore or thereafter authenticated and delivered.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment or
waiver. If the Company elects to fix a record date for such purpose, 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, or (ii) such other date as the Company shall
designate. If a record date is fixed, then notwithstanding the provisions of the
immediately preceding paragraph, those
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Persons who were Holders at such record date (or their duly designated proxies),
and only those Persons, shall be entitled to consent to such amendment or waiver
or to revoke any consent previously given, whether or not such Persons continue
to be Holders after such record date. No consent shall be valid or effective for
more than 90 days after such record date unless consents from Holders of the
principal amount of Securities required hereunder for such amendment or waiver
to be effective shall have also been given and not revoked within such 90-day
period.
SECTION 8.5 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 the
Securities may issue and the Trustee shall authenticate new Securities that
reflect the amendment or waiver.
SECTION 8.6 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 6.1 and 6.2 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.
ARTICLE 9
SUBORDINATION
SECTION 9.1 SECURITIES SUBORDINATED TO SENIOR INDEBTEDNESS
The Company covenants and agrees, and each Holder of a Security, by his
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article 9, the indebtedness represented
by the Securities and all Payments or Distributions in Respect of the Securities
are hereby expressly made subordinate and subject in right of payment to the
prior payment in full of all Senior Indebtedness.
If at any time following the payment of any amount to a holder of Senior
Indebtedness with respect to such Senior Indebtedness, such payment is rescinded
or must otherwise be returned by such holder upon the insolvency, bankruptcy,
reorganization, dissolution or liquidation of the Company or any other Person or
otherwise, and is so rescinded or returned to the party or parties making such
payment, such Senior Indebtedness shall be reinstated to the extent of such
payment and the provisions of this Article 9 shall be applicable as if such
payment were never made.
The provisions of this Article 9 are for the benefit of the holders of
Senior Indebtedness, and each Holder of the Securities, by his purchase or other
acquisition of the Securities, hereby agrees for the benefit of each holder of
Senior Indebtedness that his Securities are subject to the provisions of this
Article 9.
SECTION 9.2 PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.
In the event of (a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding,
relative to the Company or to its creditors, as such, or to a substantial part
of its assets, or (b) any proceeding for the liquidation, dissolution or other
winding up of the Company, whether voluntary or involuntary and whether or not
involving insolvency or bankruptcy, or (c) any assignment for the benefit
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of creditors or any other marshalling of assets and liabilities of the Company,
then and in any such event the holders of Senior Indebtedness shall be entitled
to receive payment in full of all amounts due or to become due on or in respect
of all Senior Indebtedness (including, without limitation, all Allowed and
Disallowed Post-Commencement Interest and Expenses), or provision shall be made
for such payment in cash or in a manner otherwise satisfactory to the holders of
Senior Indebtedness, before the Holders of the Securities are entitled to
receive any Payment or Distribution in Respect of the Securities (other than
payments of amounts deposited prior to any such case, proceeding, dissolution or
other winding up or event in accordance with the defeasance provisions of
Article 7 hereof), and to that end the holders of Senior Indebtedness shall be
entitled to receive, for application to the payment thereof, any payment or
distribution of any kind or character, whether in cash, property or securities,
including any such payment or distribution which may be payable or deliverable
by reason of the payment of any other indebtedness of the Company being
subordinated to the payment of the Securities, which may be payable or
deliverable in respect of the Securities in any such case, proceeding,
dissolution, liquidation or other winding up or event.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received any
Payment or Distribution in Respect of the Securities in any such case,
proceeding, dissolution, liquidation or other winding up or event (other than
payments of amounts deposited prior to any such case, proceeding, dissolution or
other winding up or event in accordance with the defeasance provisions of
Article 7 hereof), including any such payment or distribution which may be
payable or deliverable by reason of the payment of any other indebtedness of the
Company being subordinated to the payment of the Securities, before all Senior
Indebtedness (including, without limitation, all Allowed and Disallowed
Post-Commencement Interest and Expenses) is paid in full or payment thereof
provided for, and, if (i) subject to Section 9.8, such fact shall, at or prior
to the time of such payment or distribution, have been made known to the
Trustee, then and in such event such payment or distribution shall be paid over
or delivered forthwith to the holders of Senior Indebtedness or to a
representative duly appointed by any such holder or holders of Senior
Indebtedness unless otherwise required by law or court order or (ii) such fact
shall have been made known to such Holder at any time before or after such
payment, then and in such event such Holder shall forthwith pay over and deliver
such payment to the holders of Senior Indebtedness or to a representative duly
appointed by any such holder or holders of such Senior Indebtedness unless
otherwise required by law or court order, in either such case for application to
the payment of all Senior Indebtedness remaining unpaid, to the extent necessary
to pay all Senior Indebtedness (including, without limitation, all Allowed and
Disallowed Post- Commencement Interest and Expenses) in full, after giving
effect to any concurrent payment or distribution to or for the holders of Senior
Indebtedness.
The consolidation of the Company with, or the merger of the Company into,
another Person or the liquidation or dissolution of the Company following the
conveyance or transfer of its properties and assets substantially as an entirety
to another Person upon the terms and conditions set forth in Article 4 shall not
be deemed a dissolution, winding up, liquidation, reorganization, assignment for
the benefit of creditors or marshalling of assets and liabilities of the Company
for the purposes of this Section if the Person formed by such consolidation or
into which the Company is merged or which acquires by conveyance or transfer
such properties and assets substantially as an entirety, as the case may be,
shall, as a part of such consolidation, merger, conveyance or transfer, comply
with the conditions set forth in Article 4.
SECTION 9.3 PRIOR PAYMENT TO SENIOR INDEBTEDNESS UPON ACCELERATION OF
SECURITIES
In the event that any Securities are declared due and payable before their
Stated Maturity, then and in such event the holders of Senior Indebtedness
outstanding at the time such Securities so become due and payable shall be
entitled to receive payment in full in cash, or in a manner otherwise
satisfactory to the holders of Senior Indebtedness, of all amounts due on or in
respect of such Senior Indebtedness (including, without limitation, all Allowed
and Disallowed Post-Commencement Interest and Expenses) before the Holders of
the Securities are entitled to receive any Payment or Distribution in Respect of
the Securities (including any payment which may be payable by reason of the
payment of any other indebtedness of the Company being subordinated to the
payment of the Securities), other than
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payment of amounts previously deposited in accordance with the defeasance
provisions of Article 7 hereof, by or for the account of the Company.
In the event that, notwithstanding the foregoing, the Company shall make
any Payment or Distribution in Respect of the Securities to the Trustee or the
Holder of any Security prohibited by the foregoing provisions of this Section,
then if (i) subject to Section 9.8, such fact shall, prior to the time of such
payment, have been made known to the Trustee, then and in such event the Trustee
shall forthwith pay over and deliver such payment to the holders of such Senior
Indebtedness or to a representative duly appointed by any such holder or holders
of such Senior Indebtedness or (ii) such fact shall have been made known to such
Holder at any time before or after such payment, then and in such event such
Holder shall forthwith pay over and deliver such payment to the holders of
Senior Indebtedness or to a representative duly appointed by any such holder or
holders of such Senior Indebtedness, in either such case for application to the
payment of all Senior Indebtedness then remaining unpaid (including, without
limitation, all Allowed and Disallowed Post-Commencement Interest and Expenses),
after giving effect to any concurrent payment or distribution to or for the
benefit of holders of Senior Indebtedness.
The provisions of this Section shall not apply to any payment with respect
to which Section 9.2 is applicable.
SECTION 9.4 NO PAYMENT UPON CERTAIN DEFAULTS WITH RESPECT TO SENIOR
INDEBTEDNESS
(a) No Payment or Distribution in Respect of the Securities (other than
payments of amounts previously deposited in accordance with the defeasance
provisions of Article 7 hereof) shall be made by or for the account of the
Company upon the occurrence of any default in the payment of any Bank Debt or
any Senior Indebtedness (other than Bank Debt) in excess of $20 million beyond
any applicable grace period, unless and until such default is cured or waived or
ceases to exist or such Senior Indebtedness has been paid in full or provision
for such payment in cash or in a manner otherwise satisfactory to holders of
Senior Indebtedness has been made.
(b) Upon any default with respect to the financial covenants under the
Credit Agreement as specified therein, or if any payment or distribution by the
Company with respect to any Security would, immediately after giving effect
thereto, result in such default, no Payment or Distribution in Respect of the
Securities (other than payments of amounts previously deposited in accordance
with the defeasance provisions of Article 7 hereof), including any payment which
may be payable by reason of the payment of any other indebtedness being
subordinated to the payment of the Securities, shall be made by or for the
account of the Company on account of principal of or premium, if any, or
interest on the Securities or on account of the purchase, redemption or other
acquisition of the Securities for the period specified below (the "Payment
Blockage Period"). The Payment Blockage Period shall commence upon the receipt
of notice by the Company or the Trustee from the Bank Agent and shall end on the
earlier of (i) 179 days thereafter, (ii) the date on which such default with
respect to the financial covenants under the Credit Agreement is cured or waived
or ceases to exist or on which such Bank Debt is paid in full or provision for
such payment in money or money's worth has been made, (iii) the date on which
the maturity of any Indebtedness (other than Senior Indebtedness) shall have
been accelerated by virtue of such event, or (iv) the date on which such Payment
Blockage Period shall have been terminated by notice to the Company or the
Trustee from the Bank Agent, after which any and all required payments in
respect of the Securities, including any missed payments, may resume. Only one
Payment Blockage Period may be commenced during any period of 365 consecutive
days. No default with respect to the financial covenants under the Credit
Agreement that existed or was continuing on the date of the commencement of any
Payment Blockage Period will be, or can be, made the basis for the commencement
of a second Payment Blockage Period whether or not within a period of 365
consecutive days, unless such default has been cured or waived for a period of
not less than 90 consecutive days. In no event will a Payment Blockage Period
extend beyond 179 days.
(c) In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, then (i) subject to Section 9.8, if such
fact shall, at or prior to the time of such payment, have been made known to the
Trustee, then and
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in such event the Trustee shall forthwith pay over and deliver such payment to
the holders of Senior Indebtedness or to a representative duly appointed by any
such holder or holders of such Senior Indebtedness or (ii) such fact shall have
been made known to such Holder at any time before or after such payment, then
and in such event such Holder shall forthwith pay over and deliver such payment
to the holders of Senior Indebtedness or to a representative duly appointed by
any such holder or holders of such Senior Indebtedness.
The provisions of this Section shall not apply to any payment with respect
to which Section 9.2 is applicable.
SECTION 9.5 PAYMENT PERMITTED IF NO DEFAULT
Nothing contained in this Article or elsewhere in this Indenture or in any
of the Securities shall prevent (a) the Company, at any time except during the
pendency of any case, proceeding, dissolution, liquidation or other winding up,
assignment for the benefit of creditors or other marshalling of assets and
liabilities of the Company referred to in Section 9.2 or under the conditions
described in Section 9.3 or Section 9.4, from making any Payment or Distribution
in Respect of the Securities, or (b) the application by the Trustee of any money
deposited with it hereunder with respect to any Payment or Distribution in
Respect of the Securities or the retention of such Payment or Distribution in
Respect of the Securities by the Holders, if, at the time of such application by
the Trustee, it had not been notified in accordance with Section 9.8 that such
payment was prohibited by the provisions of this Article 9.
SECTION 9.6 SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS
Subject to the payment in full in cash of all amounts due on or in respect
of Senior Indebtedness (including, without limitation, all Allowed and
Disallowed Post-Commencement Interest and Expenses, except to the extent
provided below), the Holders of the Securities shall be subrogated to the extent
of the payments or distributions made to the holders of such Senior Indebtedness
pursuant to the provisions of this Article 9 (equally and ratably with the
holders of all indebtedness of the Company which by its express terms is
subordinated to other indebtedness of the Company to substantially the same
extent as the Securities are subordinated and are entitled to like rights of
subrogation) to the rights of the holders of such Senior Indebtedness to receive
payments and distributions of cash, property and securities applicable to the
Senior Indebtedness until the principal of and premium, if any, and interest on
the Securities shall be paid in full. For purposes of such subrogation, no
payments or distributions to the holders of the Senior Indebtedness of any cash,
property or securities to which the Holders of the Securities or the Trustee
would be entitled except for the provisions of this Article 9, and no payments
over pursuant to the provisions of this Article to the holders of Senior
Indebtedness by Holders of the Securities or the Trustee, shall, as among the
Company, its creditors other than holders of Senior Indebtedness and the Holders
of the Securities, be deemed to be a payment or distribution by the Company to
or on account of the Senior Indebtedness.
Notwithstanding anything to the contrary in this Section 9.6, the Holders
of the Securities hereby agree that they shall have no rights of subrogation
with respect to amounts paid to the holders of Senior Indebtedness in payment of
any interest, reimbursements, costs, expenses or indemnities that are not
allowed claims enforceable against the Company in a case or proceeding under
Bankruptcy Law.
SECTION 9.7 PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS
The provisions of this Article 9 are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities on the
one hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Article or elsewhere in this Indenture or in the Securities is
intended to or shall (a) impair, as among the Company, its creditors other than
holders of Senior Indebtedness and the Holders of the Securities, the obligation
of the Company, which is absolute and unconditional, to pay to the Holders of
the Securities the principal of and premium, if any, and interest on the
Securities as and when the same shall become due and payable in accordance with
their terms; or (b) affect the relative rights against the Company of the
Holders of the Securities and creditors of
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the Company other than the holders of Senior Indebtedness; or (c) prevent the
Trustee or the Holder of any Security from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article 9 of the holders of Senior Indebtedness to
receive cash, property and securities otherwise payable or deliverable to the
Trustee or such Holder. The failure to make a payment on account of principal
of, premium, if any, or interest on, or any other amounts then payable with
respect to, the Securities by any reason of this Article 9 shall not be
construed as preventing the occurrence of an Event of Default under Section 5.1.
SECTION 9.8 APPLICATION BY TRUSTEE OF MONIES DEPOSITED WITH IT
Money and U.S. Government Obligations deposited in trust with the Trustee
pursuant to Section 7.2 and in compliance with Section 7.1 shall be for the sole
benefit of the Holders and, to the extent allocated for the payment of
Securities, shall not be subject to the subordination provisions of this Article
9. Otherwise, any deposit of monies by the Company with the Trustee or any
Paying Agent (whether or not in trust) for payment on account of principal of,
premium, if any, and interest on the Securities or that otherwise constitutes a
Payment or Distribution in Respect of the Securities shall be subject to the
provisions of Sections 9.1, 9.2, 9.3 and 9.4 except that, if at least three
Business Days prior to the date on which by the terms of this Indenture any such
monies may become payable for any purpose (including, without limitation, the
payment of the principal of, premium, if any, or the interest on any Security)
the Trustee shall not have received with respect to such monies the notice
provided for in Section 9.4(b) or 9.11, then the Trustee shall have full power
and authority to receive such monies and to apply the same to the purpose for
which they were received, and shall not be affected by any notice to the
contrary which may be received by it within three Business Days of such date.
This Section shall be construed solely for the benefit of the Trustee and Paying
Agent and shall not otherwise affect the rights of holders of Senior
Indebtedness.
SECTION 9.9 TRUSTEE TO EFFECTUATE SUBORDINATION
Each holder of a Security by his acceptance thereof authorizes and directs
the Trustee on his behalf to take such action as may be necessary or appropriate
to effectuate the subordination provided in this Article and appoints the
Trustee his attorney-in-fact for any and all such purposes.
SECTION 9.10 NO WAIVER OF SUBORDINATION PROVISIONS
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness may, at any time and from time to time, without
the consent of or notice to the Trustee or the Holders of the Securities,
without incurring responsibility to the Holders of the Securities and without
impairing or releasing the subordination provided in this Article or the
obligations hereunder of the Holders of the Securities to the holders of Senior
Indebtedness, do any one or more of the following: (i) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter,
compromise, accelerate, extend or refinance Senior Indebtedness, or otherwise
amend or supplement in any manner Senior Indebtedness or any instrument
evidencing the same or any agreement under which Senior Indebtedness is
outstanding; (ii) sell, exchange, release, foreclose upon or otherwise deal with
any property pledged, mortgaged or otherwise securing Senior Indebtedness; (iii)
release any Person liable in any manner for the payment or collection of Senior
Indebtedness; (iv) exercise or refrain from exercising any rights against the
Company and any other Person; (v) increase or reduce the rate of interest or
amount of principal payable on any Senior Indebtedness; (vi) release or
discharge the Company, by acceptance of a deed or assignment in lieu of
foreclosure or otherwise, as to all or any portion of the Senior Indebtedness;
or (vii) release, substitute or add any one or more guarantors or endorsers,
accept additional or substituted security for payment or performance of the
Senior Indebtedness,
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or release or subordinate any security therefor. No exercise, delay in exercise
or failure to exercise by any holder of any Senior Indebtedness of any right
hereby given it, no dealing by any holder of any Senior Indebtedness with the
Company or any other guarantor, endorser or other person, no change, impairment
or suspension of any right or remedy of any holder of any Senior Indebtedness,
and no act or thing which but for this provision could act as a release or
exoneration of the Holders of the Securities hereunder, shall in any way affect,
decrease, diminish or impair any of the obligations of the Holders of the
Securities and the Trustee or give to the Holders of the Securities, the Trustee
or any other person or entity any recourse or defense against any holder of any
Senior Indebtedness.
SECTION 9.11 NOTICE TO TRUSTEE
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Securities. Notwithstanding the provisions of this
Article or any other provision of this Indenture, the
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Trustee shall not be charged with knowledge of the existence of any facts which
would prohibit the making of any payment to or by the Trustee in respect of the
Securities, unless and until the Trustee shall have received written notice
thereof from the Company or a holder of Senior Indebtedness or from any trustee
or other representative therefor; and, prior to the receipt of any such written
notice, the Trustee, subject to the provisions of Sections 6.1 and 6.2, shall be
entitled in all respects to assume that no such facts exist.
Subject to the provisions of Sections 6.1 and 6.2, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a trustee
therefor) to establish that such notice has been given by a holder of Senior
Indebtedness (or a trustee therefor). In the event that the Trustee determines
in good faith that further evidence is required with respect to the right of any
Person as a holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article 9, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article 9, and if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
SECTION 9.12 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT
Upon any payment or distribution of assets of the Company referred to in
this Article 9, the Trustee, subject to the provisions of Sections 6.1 and 6.2,
and the Holders of the Securities shall be entitled to rely upon any order or
decree entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
9.
SECTION 9.13 TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Indebtedness and shall not be liable to any such holders if it shall in
good faith mistakenly pay over or distribute to Holders of Securities or to the
Company or to any other Person cash, property or securities to which holders of
Senior Indebtedness shall be entitled by virtue of this Article 9 or otherwise.
SECTION 9.14 RIGHTS OF TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS; PRESERVATION
OF TRUSTEE'S RIGHTS
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article with respect to any Senior Indebtedness which may at
any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 6.6.
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ARTICLE 10
MISCELLANEOUS
SECTION 10.1 TRUST INDENTURE ACT CONTROLS
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA ss. 318(c), the imposed duties shall control.
SECTION 10.2 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:
Integrated Health Services, Inc.
10065 Red Run Boulevard
Owings Mills, Maryland 21117
Attention: General Counsel
If to the Trustee:
Signet Trust Company
7 St. Paul Street
Baltimore, MD 21202
Attn: Corporate Trust Department
The Company or the Trustee by notice to the other may designate additional
or different addresses for subsequent notices or communications.
All notices and communications 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
to the Holder's address shown on the register kept by the Registrar. 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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SECTION 10.3 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 10.4) 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 complied with; and
(2) an Opinion of Counsel (which shall include the statements set
forth in Section 10.4) stating that, in the opinion of such counsel, all
such conditions precedent and covenants have been complied with.
SECTION 10.4 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 ss. 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
complied with; and
(4) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been complied with.
SECTION 10.5 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 10.6 LEGAL HOLIDAYS
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in The City of New York 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 10.7 NO RECOURSE AGAINST OTHERS
A director, officer, employee or stockholder of the Company or the Trustee,
as such, shall not have any liability for any obligations of the Company under
the Securities or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability.
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SECTION 10.8 GOVERNING LAW
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW.
SECTION 10.9 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or a Subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
SECTION 10.10 SUCCESSORS
All agreements of the Company in this Indenture and the Securities shall
bind its successor. All agreements of the Trustee in this Indenture shall bind
its successor.
SECTION 10.11 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.
SECTION 10.12 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 10.13 TRUSTEE AS PAYING AGENT AND REGISTRAR
The Company initially appoints the Trustee as Paying Agent and Registrar.
SECTION 10.14 TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof and shall in no way modify or
restrict any of the terms or provisions hereof.
SECTION 10.15 EFFECTIVE DATE
This Second Amended and Restated Supplemental Indenture shall be effective,
and the effective date shall be deemed to have occurred, upon the receipt by the
Trustee of a written notice from the Company that the conditions to the Offer to
Purchase the Company's 9 5/8% Senior Subordinated Notes due 2002, Series A and
Consent Solicitation dated May 1, 1997, have been satisfied or waived by the
Company and that the Acceptance Date (as defined therein) has occurred.
[Signatures on Next Page]
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SIGNATURES
Dated as of May 15, 1997
(SEAL)
INTEGRATED HEALTH SERVICES, INC.
By:/s/
------------------------------
Name:
Title:
Attest:
/s/
- -------------------------------
Dated as of May 15, 1997
(SEAL)
SIGNET TRUST COMPANY,
as Trustee
By:/s/
------------------------------
Name:
Title:
Attest:
/s/
- -------------------------------
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EXHIBIT A
LEGENDS FOR GLOBAL SECURITY:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO
THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HERETO AGREES NOT TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATED PERSON OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY) UNLESS SUCH OFFER, SALE OR OTHER TRANSFER IS (A)
TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON THE HOLDER REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING
OF SUBPARAGRAPH (A)(1), (A)(2), (A)(3) OR (A)(7) OF RULE 501 UNDER THE
SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM, AND IN EACH OF THE FOREGOING CASES,
A-1
<PAGE>
A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS COMPLETED
AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON
THE REQUEST OF THE THEN HOLDER OF THIS SECURITY AFTER THE RESALE RESTRICTION
TERMINATION DATE.
LEGENDS FOR DEFINITIVE SECURITY
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATED PERSON OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY) UNLESS SUCH OFFER, SALE OR OTHER TRANSFER IS (A)
TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON THE HOLDER REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING
OF SUBPARAGRAPH (A)(1), (A)(2), (A)(3) OR (A)(7) OF RULE 501 UNDER THE
SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE
FORM APPEARING ON THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO
THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE THEN HOLDER OF
THIS SECURITY AFTER THE RESALE RESTRICTION TERMINATION DATE.
A-2
<PAGE>
9 5/8% SENIOR SUBORDINATED NOTES DUE 2002
Cusip No. $
INTEGRATED HEALTH SERVICES, INC.
promises to pay to
or registered assigns,
the principal sum of
Dollars [or such greater or lesser amount as indicated on the Schedule of
Exchanges of Definitive Securities on the reverse hereof]1 on May 31, 2002
Interest Payment Dates: May 31 and November 30
Record Dates: May 15 and November 15
Authentication: Dated: , 1995
This is one of the Securities referred to in the within-mentioned Indenture.
SIGNET TRUST COMPANY,
as Trustee INTEGRATED HEALTH SERVICES, INC.
By: By:
-------------------------- -----------------------------
Authorized Officer
By:
-----------------------------
(SEAL)
- --------
1 This phrase should be included only if the Security is issued in global
form.
A-3
<PAGE>
9 5/8% SENIOR SUBORDINATED NOTES DUE 2002
1. INTEREST. INTEGRATED HEALTH SERVICES, INC., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Security at
9 5/8% per annum from the date this Security is issued until maturity. The
Company will pay interest semiannually on May 31 and November 30 of each year,
or if any such day is not a Business Day, on the next succeeding Business Day
(each an "Interest Payment Date") and any Penalty Interest payable pursuant to
Section 6 of the Registration Rights Agreement on such Interest Payment Date.
Interest on the Securities will accrue from the most recent date on which
interest has been paid or, if no interest has been paid, from the date of
issuance; provided, that if there is no existing Default in the payment of
interest, and if this Security is authenticated between a record date referred
to on the face hereof and the next succeeding Interest Payment Date, interest
shall accrue from such next succeeding Interest Payment Date; provided, further,
that the first Interest Payment Date shall be November 30, 1995. Interest will
be computed on the basis of a 360-day year of twelve 30-day months.
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 canceled after such record
date and on or before such Interest Payment Date. In the case of a Security to
be repurchased by the Company in connection with a Change in Control Repurchase
pursuant to paragraph 6, on or after an interest payment record date and prior
to the next Interest Payment Date, the registered holder of such Security as of
such record date shall be entitled to accrued and unpaid interest to the
repurchase date, as provided in paragraph 6 below. The Holder must surrender
this Security to a Paying Agent to collect principal payments. The Company will
pay the principal of, premium, if any, and interest on the Securities in money
of the United States of America that at the time of payment is legal tender for
payment of public and private debts. The Company, however, may pay such amounts
by check payable in such money mailed to a Holder's registered address.
3. PAYING AGENT AND REGISTRAR. Initially, SIGNET TRUST COMPANY, the Trustee
under the Indenture, will act as Paying Agent and Registrar. The Company may
change any Paying Agent, Registrar or co-registrar without notice to any Holder.
The Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Securities under an Indenture dated as
of May 15, 1995, as subsquently amended and restated by an Amended and Restated
Supplemental Indenture dated as of May 15, 1995, supplemented by a Supplemental
Indenture dated as of June 13, 1996 and amended and restated by a Second Amended
and Restated Supplemental Indenture dated as of May 15, 1997 ("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 ss.ss. 77aaa-77bbbb), as
in effect on the date of execution 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 Securities are unsecured general obligations of the
Company limited to $115,000,000 in aggregate principal amount, plus amounts, if
any, sufficient to pay interest on outstanding Securities as set forth in
Paragraph 2 hereof. The Securities will rank pari passu with the Company's 10
3/4% Senior Subordinated Notes due 2004.
5. OPTIONAL REDEMPTION. The Securities are not redeemable prior to their
Stated Maturity.
6. RIGHT TO REQUIRE REPURCHASE. Following the occurrence of any Change in
Control, each Holder will have the right to require that the Company repurchase
(a "Change in Control Repurchase") such Holder's Securities at a purchase price
equal to 101% of the aggregate principal amount of the Securities, plus accrued
and unpaid interest thereon, if any, to the date of repurchase. Within 30 days
after any Change in Control, the Company or, at the Company's request, the
Trustee, shall cause to be mailed a notice to all Holders notifying such Holders
of the occurrence
A-4
<PAGE>
of such Change in Control, the Holder's rights arising as a result thereof and
the procedures to be followed by Holders wishing to exercise such rights.
A Holder of Securities may exercise the right to require a Change in
Control Repurchase after receipt of notice of the existence of such right by
completing the form entitled "OPTION OF HOLDER TO ELECT PURCHASE" appearing on
this Security and by complying with the other procedures set forth in such
notice. Any portion of Securities with respect to which the Holder wishes to
exercise such right must be in integral multiples of $1,000.
7. DENOMINATIONS, TRANSFER, EXCHANGE. The Securities are in registered form
without coupons 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.
8. PERSONS DEEMED OWNERS. The registered Holder of a Security may be
treated as its owner for all purposes.
9. AMENDMENTS AND WAIVERS. Subject to certain exceptions, 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, and
any existing default under, or compliance with any provision of, the Indenture
may be waived (other than any continuing Default or Event of Default in the
payment of interest or premium, if any, on or the principal of the Securities or
in respect of a provision under the Indenture which cannot be modified or
amended without the consent of the Holder of each Security then outstanding)
with the consent of the Holders of a majority in principal amount of the
Securities then outstanding. Without the consent of any Holder, the Company and
the Trustee may amend or supplement the Indenture or the Securities to cure any
ambiguity, defect or inconsistency; to provide for the assumption of the
Company's obligations to Holders in the case of a merger or acquisition; to
evidence and provide for the acceptance of appointment of any successor Trustee
under the Indenture; to make any change that does not adversely affect the legal
rights of any Holder; or to comply with the requirements of the Trust Indenture
Act of 1939, as amended.
The right of any Holder to participate in any consent required or sought
pursuant to any provision of the Indenture (and the obligation of the Company to
obtain any such consent otherwise required from such Holder) may be subject to
the requirement that such Holder shall have been the Holder of record of any
Securities with respect to which such consent is required or sought as of a date
identified by the Trustee in a notice furnished to Holders in accordance with
the terms of the Indenture.
Without the consent of each Holder affected, the Company may not, among
other things, (i) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, (ii) reduce the principal amount of,
or premium, if any, or interest on, any Security, (iii) modify the subordination
provisions of the Indenture in a manner adverse to the Holders, (iv) change the
place of payment where, or the coin or currency in which, any Security or any
premium or interest thereon is payable, (v) adversely affect the right of
Holders to require the Company to make a Change in Control Repurchase or modify
the obligations of the Company to make an Asset Sale Offer or modify the
redemption provisions of the Indenture, (vi) impair the right of a Holder to
institute suit for the enforcement of payment of the principal of and premium,
if any, and interest on any Security on or after the Stated Maturity thereof (or
in the case of a redemption, on or after the redemption date) or (vii) reduce
the percentage in principal amount of Securities the consent of whose Holders is
required for any modification or amendment of the Indenture, or the consent of
whose Holders is required for any waiver of compliance with certain provisions
of the Indenture or certain Defaults or Events of Default thereunder.
10. DEFAULTS AND REMEDIES. Events of Default include: (i) default in
payment of principal or premium on the Securities; (ii) default in payment of
interest on the Securities for 30 days; (iii) failure by the Company for 45 days
after notice to it to comply with any of its other agreements in the Indenture
or the Securities; (iv) any
A-5
<PAGE>
acceleration of Indebtedness of the Company or its Subsidiaries having an
outstanding principal amount of $50 million or a failure to pay such
Indebtedness at its stated maturity; and (v) certain events of bankruptcy or
insolvency. If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Securities
may declare all the Securities to be immediately due and payable for an amount
equal to 100% of the principal amount of the Securities, and premium, if any,
plus accrued interest to the date of payment, except that in the case of an
Event of Default arising from certain events of bankruptcy or insolvency, all
outstanding Securities become due and payable immediately without further action
or notice. Holders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may require indemnity satisfactory to it
before it enforces the Indenture or the Securities. Subject to certain
limitations, 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 notice of any continuing default (except a
default in payment of principal or interest or that resulted from the failure of
the Company to comply with its obligations with respect to Holders' rights to
require repurchase of Securities upon a Change in Control) if it determines that
withholding notice is in their interests. The Company must furnish an annual
compliance certificate to the Trustee.
11. TRUSTEE DEALINGS WITH COMPANY. The Trustee, 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.
12. NO RECOURSE AGAINST OTHERS. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. Each Holder by accepting a Security waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Securities.
13. AUTHENTICATION. This Security shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
14. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (--tenants in common), TEN ENT
(--tenants by the entireties), JT TEN (--joint tenants with right of
survivorship and not as tenants in common), CUST (--Custodian), and U/G/M/A
(--Uniform Gifts to Minors Act).
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Request may be made to:
Integrated Health Services, Inc.
10065 Red Run Boulevard
Owings Mills, Maryland 21117
Attention: Secretary
A-6
<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 ________________________________________ 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:____________________________
A-7
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 3.7 of the Indenture, check the box:
YES [ ]
If you want to elect to have only part of the Security purchased by the
Company pursuant to Section 3.7 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:_______________________________
A-8
<PAGE>
[FORM OF SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES2]
The following exchanges of a part of this Global Security for Definitive
Securities have been made.
<TABLE>
<CAPTION>
Amount of Amount of Principal Amount of
decrease in increase in this Global Security
Principal Amount Principal Amount following such Signature of autho
Date of of this Global of this Global decrease (or rized officer of
Exchange Security Security increase) Trustee
-------- ---------------- ---------------- -------------------- ------------------
<S> <C> <C> <C> <C>
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
</TABLE>
- --------
2 This schedule should be included only if the Security is issued in global
form.
A-9
<PAGE>
EXHIBIT B
LEGEND FOR GLOBAL SECURITY:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO
THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
B-1
<PAGE>
9 5/8% SENIOR SUBORDINATED NOTES DUE 2002, SERIES A
Cusip No. $
INTEGRATED HEALTH SERVICES, INC.
promises to pay to
or registered assigns,
the principal sum of
Dollars [or such greater or lesser amount as indicated on the Schedule of
Exchanges of Definitive Securities on the reverse hereof]* on May 31, 2002
Interest Payment Dates: May 31 and November 30
Record Dates: May 15 and November 15
Authentication: Dated: , 1995
This is one of the Securities referred to in the within-mentioned Indenture.
SIGNET TRUST COMPANY,
as Trustee INTEGRATED HEALTH SERVICES, INC.
By: By:
-------------------------- -----------------------------
Authorized Officer
By:
-----------------------------
(SEAL)
- --------
* This phrase should be included only if the Security is issued in global
form.
B-2
<PAGE>
9 5/8% SENIOR SUBORDINATED NOTES DUE 2002, SERIES A
1. INTEREST. INTEGRATED HEALTH SERVICES, INC., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Security
(which has been exchanged for one of the Company's 9 5/8% Senior Subordinated
Notes due 2002 (the "Rule 144A Notes)) at 9 5/8% per annum from the date this
Security is issued until maturity. The Company will pay interest semiannually on
May 31 and November 30 of each year, or if any such day is not a Business Day,
on the next succeeding Business Day (each an "Interest Payment Date"). Interest
on the Securities will accrue from the most recent date on which interest has
been paid or, if no interest has been paid, from the most recent date on which
interest was paid on the Rule 144A Notes or, if no interest was paid on the Rule
144A Notes, from the date of original issuance of the Rule 144A Notes; provided,
that if there is no existing Default in the payment of interest, and if this
Security is authenticated between a record date referred to on the face hereof
and the next succeeding Interest Payment Date, interest shall accrue from such
next succeeding Interest Payment Date; provided, further, that the first
Interest Payment Date shall be November 30, 1995. Interest will be computed on
the basis of a 360-day year of twelve 30-day months.
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 canceled after such record
date and on or before such Interest Payment Date. In the case of a Security to
be repurchased by the Company in connection with a Change in Control Repurchase
pursuant to paragraph 6, on or after an interest payment record date and prior
to the next Interest Payment Date, the registered holder of such Security as of
such record date shall be entitled to accrued and unpaid interest to the
repurchase date, as provided in paragraph 6 below. The Holder must surrender
this Security to a Paying Agent to collect principal payments. The Company will
pay the principal of, premium, if any, and interest on the Securities in money
of the United States of America that at the time of payment is legal tender for
payment of public and private debts. The Company, however, may pay such amounts
by check payable in such money mailed to a Holder's registered address.
3. PAYING AGENT AND REGISTRAR. Initially, SIGNET TRUST COMPANY, the Trustee
under the Indenture, will act as Paying Agent and Registrar. The Company may
change any Paying Agent, Registrar or co-registrar without notice to any Holder.
The Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Securities under an Amended and
Restated Supplemental Indenture dated as of May 15, 1995, as subsquently
supplemented by a Supplemental Indenture dated as of June 13, 1996 and amended
and restated by a Second Amended and Restated Supplemental Indenture dated as of
May 15, 1997 ("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 ss.ss. 77aaa- 77bbbb), as in effect on the date of execution 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
Securities are unsecured general obligations of the Company limited to
$115,000,000 in aggregate principal amount, plus amounts, if any, sufficient to
pay interest on outstanding Securities as set forth in Paragraph 2 hereof. The
Securities will rank pari passu with the Company's 10 3/4% Senior Subordinated
Notes due 2004 and the Company's 9 5/8% Senior Subordinated Notes due 2002.
5. OPTIONAL REDEMPTION. The Securities are not redeemable prior to their
Stated Maturity.
6. RIGHT TO REQUIRE REPURCHASE. Following the occurrence of any Change in
Control, each Holder will have the right to require that the Company repurchase
(a "Change in Control Repurchase") such Holder's Securities at a purchase price
equal to 101% of the aggregate principal amount of the Securities, plus accrued
and unpaid interest thereon, if any, to the date of repurchase. Within 30 days
after any Change in Control, the Company or, at the Company's request, the
Trustee, shall cause to be mailed a notice to all Holders notifying such Holders
of the occurrence of such Change in Control, the Holder's rights arising as a
result thereof and the procedures to be followed by Holders wishing to exercise
such rights.
A Holder of Securities may exercise the right to require a Change in
Control Repurchase after receipt of notice of the existence of such right by
completing the form entitled "OPTION OF HOLDER TO ELECT PURCHASE" appearing on
this Security and by complying with the other procedures set forth in such
notice. Any portion of Securities with respect to which the Holder wishes to
exercise such right must be in integral multiples of $1,000.
7. DENOMINATIONS, TRANSFER, EXCHANGE. The Securities are in registered form
without coupons 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
B-3
<PAGE>
furnish appropriate endorsements and transfer documents and to pay any taxes and
fees required by law or permitted by the Indenture.
8. PERSONS DEEMED OWNERS. The registered Holder of a Security may be
treated as its owner for all purposes.
9. AMENDMENTS AND WAIVERS. Subject to certain exceptions, 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, and
any existing default under, or compliance with any provision of, the Indenture
may be waived (other than any continuing Default or Event of Default in the
payment of interest or premium, if any, on or the principal of the Securities or
in respect of a provision under the Indenture which cannot be modified or
amended without the consent of the Holder of each Security then outstanding)
with the consent of the Holders of a majority in principal amount of the
Securities then outstanding. Without the consent of any Holder, the Company and
the Trustee may amend or supplement the Indenture or the Securities to cure any
ambiguity, defect or inconsistency; to provide for the assumption of the
Company's obligations to Holders in the case of a merger or acquisition; to
evidence and provide for the acceptance of appointment of any successor Trustee
under the Indenture; to make any change that does not adversely affect the legal
rights of any Holder; or to comply with the requirements of the Trust Indenture
Act of 1939, as amended.
The right of any Holder to participate in any consent required or sought
pursuant to any provision of the Indenture (and the obligation of the Company to
obtain any such consent otherwise required from such Holder) may be subject to
the requirement that such Holder shall have been the Holder of record of any
Securities with respect to which such consent is required or sought as of a date
identified by the Trustee in a notice furnished to Holders in accordance with
the terms of the Indenture.
Without the consent of each Holder affected, the Company may not, among
other things, (i) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, (ii) reduce the principal amount of,
or premium, if any, or interest on, any Security, (iii) modify the subordination
provisions of the Indenture in a manner adverse to the Holders, (iv) change the
place of payment where, or the coin or currency in which, any Security or any
premium or interest thereon is payable, (v) adversely affect the right of
Holders to require the Company to make a Change in Control Repurchase or modify
the obligations of the Company to make an Asset Sale Offer or modify the
redemption provisions of the Indenture, (vi) impair the right of a Holder to
institute suit for the enforcement of payment of the principal of and premium,
if any, and interest on any Security on or after the Stated Maturity thereof (or
in the case of a redemption, on or after the redemption date) or (vii) reduce
the percentage in principal amount of Securities the consent of whose Holders is
required for any modification or amendment of the Indenture, or the consent of
whose Holders is required for any waiver of compliance with certain provisions
of the Indenture or certain Defaults or Events of Default thereunder.
10. DEFAULTS AND REMEDIES. Events of Default include: (i) default in
payment of principal or premium on the Securities; (ii) default in payment of
interest on the Securities for 30 days; (iii) failure by the Company for 45 days
after notice to it to comply with any of its other agreements in the Indenture
or the Securities; (iv) any acceleration of Indebtedness of the Company or its
Subsidiaries having an outstanding principal amount of $50 million or a failure
to pay such Indebtedness at its stated maturity; and (v) certain events of
bankruptcy or insolvency. If an Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Securities may declare all the Securities to be immediately due and
payable for an amount equal to 100% of the principal amount of the Securities,
and premium, if any, plus accrued interest to the date of payment, except that
in the case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Securities become due and payable immediately
without further action or notice. Holders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or the Securities.
Subject to certain limitations, 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 notice of any continuing default
(except a default in payment of principal or interest or that resulted from the
failure of the Company to comply with its obligations with respect to Holders'
rights to require repurchase of Securities upon a Change in Control) if it
determines that withholding notice is in their interests. The Company must
furnish an annual compliance certificate to the Trustee.
11. TRUSTEE DEALINGS WITH COMPANY. The Trustee, 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.
12. NO RECOURSE AGAINST OTHERS. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities or the Indenture or for any
claim based
B-4
<PAGE>
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.
13. AUTHENTICATION. This Security shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
14. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (--tenants in common), TEN ENT
(--tenants by the entireties), JT TEN (--joint tenants with right of
survivorship and not as tenants in common), CUST (--Custodian), and U/G/M/A
(--Uniform Gifts to Minors Act).
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Request may be made to:
Integrated Health Services, Inc.
10065 Red Run Boulevard
Owings Mills, Maryland 21117
Attention: Secretary
B-5
<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 ________________________________________ 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:____________________________
B-6
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 3.7 of the Indenture, check the box:
YES [ ]
If you want to elect to have only part of the Security purchased by the
Company pursuant to Section 3.7 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:_______________________________
B-7
<PAGE>
[FORM OF SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES*]
The following exchanges of a part of this Global Security for Definitive
Securities have been made.
<TABLE>
<CAPTION>
Amount of Amount of Principal Amount of
decrease in increase in this Global Security
Principal Amount Principal Amount following such Signature of autho
Date of of this Global of this Global decrease (or rized officer of
Exchange Security Security increase) Trustee
-------- ---------------- ---------------- -------------------- ------------------
<S> <C> <C> <C> <C>
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
</TABLE>
- --------
* This schedule should be included only if the Security is issued in global
form.
B-8
<PAGE>
EXHIBIT C
[FORM OF CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER
OF RULE 144A NOTES]
CERTIFICATE FOR EXCHANGE OR TRANSFER
Re: 9 5/8% Senior Subordinated Notes due 2002 ("Rule 144A Notes")
This Certificate relates to $_________ Principal amount of Securities held
in *__________ book-entry or *__________ definitive form by _________________
(the "Transferor").
The Transferor*:
[ ] has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Security held by the Depositary a Security
or Securities in definitive, registered form of authorized denominations and an
aggregate principal amount equal to its beneficial interest in such Global
Security (or the portion thereof indicated above); or
[ ] has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
In connection with such request and in respect of each such security, the
Transferor does hereby certify that Transferor is familiar with the Indenture
relating to the above-captioned Notes and as provided in Section 2.5 of such
Indenture, the transfer of this Security does not require registration under the
Securities Act (as defined below) because*:
[ ] Such Security is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.5(a)(ii)(A) or Section
2.5(d)(i)(A) of the Indenture).
[ ] Such Security is being transferred to a "qualified institutional buyer"
(as defined in rule 144A under the Securities Act of 1933, as amended (the
"Securities Act") in reliance on Rule 144A (in satisfaction of Section
2.5(a)(ii)(B), section 2.5(b)(i) or Section 2.5(d)(i)(B) of the Indenture) or
pursuant to an exemption from registration in accordance with Regulation S under
the Securities Act (in satisfaction of Section 2.5(a)(ii)(B) or Section
2.5(d)(i)(B) of the Indenture.)
[ ] Such Security is being transferred in accordance with Rule 144 under
the Securities Act, or pursuant to an effective registration statement under the
Securities Act.
[ ] Such Security is being transferred in reliance and in compliance with
an exemption from the registration requirements of the Securities Act, other
than Rule 144A, 144 or 145 or Regulation S under the Securities Act. An opinion
of counsel to the effect that such transfer does not require registration under
the Securities Act accompanies this Certificate.
-----------------------------------------------------
[INSERT NAME OF TRANSFEROR]
By:__________________________________________________
Date:________________________
- -----------------------------
- --------
* Check applicable box.
C-1
================================================================================
INTEGRATED HEALTH SERVICES, INC.,
A DELAWARE CORPORATION,
AS ISSUER
TO
SIGNET TRUST COMPANY,
AS TRUSTEE
--------------------
AMENDED AND RESTATED SUPPLEMENTAL INDENTURE
Dated as of May 15, 1997
------------------
$100,000,000
10 3/4% Senior Subordinated Notes due 2004
================================================================================
<PAGE>
CROSS REFERENCE TABLE***
Trust Indenture
Act Section Indenture Section
- --------------- -----------------
310(a)(1) ..................................... 7.9
(a)(2) ..................................... 7.9
(a)(3) ..................................... Not Applicable
(a)(4) ..................................... Not Applicable
(a)(5) ..................................... 7.9
(b) ..................................... 7.9
(c) ..................................... Not Applicable
311(a) ..................................... ****
(b) ..................................... **
(c) ..................................... Not Applicable
312 ..................................... **
313(a) ..................................... **
(b)(1) ..................................... Not Applicable
(b)(2) ..................................... **
(c) ..................................... **
(d) ..................................... **
314(a) ..................................... 4.3,4.4
(b) ..................................... Not Applicable
(c)(1) ..................................... 11.3
(c)(3) ..................................... Not Applicable
(d) ..................................... Not Applicable
(e) ..................................... 11.4
(f) ..................................... Not Applicable
315(a) ..................................... 7.1(2)
(b) ..................................... 7.5,11.2
(c) ..................................... 7.1(1)
(d) ..................................... 7.1(3)
(e) ..................................... 6.11
316(a)(last sentence) ..................................... 2.8
(a)(1)(A) ..................................... 6.5
(a)(1)(B) ..................................... 6.4
(a)(2) ..................................... Not Applicable
(b) .....................................
.........................................................................6.7
(c) ..................................... 9.4
317(a)(1) ..................................... 6.8
(a)(2) ..................................... 6.9
(b) ..................................... 2.4
318(a) ..................................... 11.1
- --------
*** This Cross-Reference Table is not part of the Indenture.
**** Included pursuant to Section 318(c) of the Trust Indenture Act of 1939.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
ARTICLE 1.
DEFINITIONS AND INCORPORATION
BY REFERENCE
<S> <C> <C>
Section 1.1 Definitions................................................................ 1
Section 1.2 Other Definitions.......................................................... 8
Section 1.3 Incorporation by Reference of Trust Indenture Act.......................... 8
Section 1.4 Rules of Construction...................................................... 8
ARTICLE 2.
THE SECURITIES
Section 2.1 Form and Dating............................................................ 9
Section 2.2 Execution and Authentication............................................... 9
Section 2.3 Registrar and Paying Agent................................................. 10
Section 2.4 Paying Agent to Hold Money in Trust........................................ 10
Section 2.5 Registration of Transfer and Exchange...................................... 10
Section 2.6 Replacement Securities..................................................... 11
Section 2.7 Outstanding Securities..................................................... 11
Section 2.8 Treasury Securities........................................................ 11
Section 2.9 Temporary Securities....................................................... 11
Section 2.10 Cancellation............................................................... 12
Section 2.11 Defaulted Interest......................................................... 12
Section 2.12 Securities Issuable in the Form of a Global Security....................... 12
ARTICLE 3.
OPTIONAL REDEMPTION AND ASSET SALE OFFER
Section 3.1 Notices to Trustee......................................................... 13
Section 3.2 Selection of Securities to Be Redeemed or Purchased........................ 14
Section 3.3 Notices to Holders......................................................... 14
Section 3.4 Effect of Notice of Redemption............................................. 16
Section 3.5 Deposit of Redemption Price or Purchase Price.............................. 16
Section 3.6 Securities Redeemed or Purchased in Part................................... 16
Section 3.7 Optional Redemption........................................................ 16
Section 3.8 Asset Sale Offer........................................................... 17
ARTICLE 4.
COVENANTS
Section 4.1 Payment of Securities...................................................... 17
Section 4.2 Maintenance of Office or Agency............................................ 18
Section 4.3 SEC Reports................................................................ 18
Section 4.4 Compliance Certificate..................................................... 18
i
<PAGE>
<CAPTION>
Page
Section 4.5 Corporate Existence, Taxes, etc............................................ 19
Section 4.6 Stay, Extension and Usury Laws............................................. 19
Section 4.7 Change in Control.......................................................... 19
Section 4.8 Limitations on Asset Sales................................................. 20
ii
<PAGE>
<CAPTION>
Page
ARTICLE 5.
SUCCESSORS
Section 5.1 Limitations on Mergers and Consolidations.................................. 21
Section 5.2 Successor Corporation Substituted.......................................... 21
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.1 Events of Default.......................................................... 21
Section 6.2 Acceleration............................................................... 22
Section 6.3 Other Remedies............................................................. 23
Section 6.4 Waiver of Past Defaults.................................................... 23
Section 6.5 Control by Majority........................................................ 23
Section 6.6 Limitations on Suits....................................................... 23
Section 6.7 Rights of Holders to Receive Payment....................................... 24
Section 6.8 Collection Suit by Trustee................................................. 24
Section 6.9 Trustee May File Proofs of Claim........................................... 24
Section 6.10 Priorities................................................................. 24
Section 6.11 Undertaking for Costs...................................................... 25
ARTICLE 7.
TRUSTEE
Section 7.1 Duties of Trustee.......................................................... 25
Section 7.2 Rights of Trustee.......................................................... 26
Section 7.3 Individual Rights of Trustee............................................... 26
Section 7.4 Trustee's Disclaimer....................................................... 26
Section 7.5 Notice of Defaults......................................................... 27
Section 7.6 Compensation and Indemnity................................................. 27
Section 7.7 Replacement of Trustee..................................................... 27
Section 7.8 Successor Trustee by Merger, etc........................................... 28
Section 7.9 Eligibility; Disqualification.............................................. 28
ARTICLE 8.
DISCHARGE OF INDENTURE
Section 8.1 Termination of Company's Obligations....................................... 28
Section 8.2 Application of Trust Money................................................. 31
Section 8.3 Repayment to the Company................................................... 31
Section 8.4 Reinstatement.............................................................. 31
ARTICLE 9.
AMENDMENTS
Section 9.1 Without Consent of Holders................................................. 31
Section 9.2 With Consent of Holders.................................................... 32
Section 9.3 Compliance with Trust Indenture Act........................................ 33
iii
<PAGE>
<CAPTION>
Page
Section 9.4 Revocation and Effect of Consents.......................................... 33
Section 9.5 Notation on or Exchange of Securities...................................... 33
Section 9.6 Trustee to Sign Amendments, etc............................................ 33
ARTICLE 10.
SUBORDINATION
Section 10.1 Securities Subordinated to Senior Indebtedness............................. 34
Section 10.2 Payment Over of Proceeds Upon Dissolution, Etc............................. 34
Section 10.3 Prior Payment to Senior Indebtedness Upon Acceleration of Securities....... 35
Section 10.4 No Payment Upon Certain Defaults with Respect to Senior Indebtedness....... 36
Section 10.5 Payment Permitted If No Default............................................ 36
Section 10.6 Subrogation to Rights of Holders of Senior Indebtedness.................... 37
Section 10.7 Provisions Solely to Define Relative Rights................................ 37
Section 10.8 Application by Trustee of Monies Deposited With It......................... 37
Section 10.9 Trustee to Effectuate Subordination........................................ 38
Section 10.10 No Waiver of Subordination Provisions...................................... 38
Section 10.11 Notice to Trustee.......................................................... 38
Section 10.12 Reliance on Judicial Order or Certificate of Liquidating Agent............. 39
Section 10.13 Trustee Not Fiduciary for Holders of Senior Indebtedness................... 39
Section 10.14 Rights of Trustee as Holder of Senior Indebtedness; Preservation of
Trustee's Rights........................................................... 39
ARTICLE 11.
MISCELLANEOUS
Section 11.1 Trust Indenture Act Controls............................................... 39
Section 11.2 Notices.................................................................... 40
Section 11.3 Certificate and Opinion as to Conditions Precedent......................... 40
Section 11.4 Statements Required in Certificate or Opinion.............................. 41
Section 11.5 Rules by Trustee and Agents................................................ 41
Section 11.6 Legal Holidays............................................................. 41
Section 11.7 No Recourse Against Others................................................. 41
Section 11.8 Governing Law.............................................................. 41
Section 11.9 No Adverse Interpretation of Other Agreements.............................. 41
Section 11.10 Successors................................................................. 42
Section 11.11 Severability............................................................... 42
Section 11.12 Counterpart Originals...................................................... 42
Section 11.13 Trustee as Paying Agent and Registrar...................................... 42
Section 11.14 Table of Contents, Headings, etc........................................... 42
Section 11.15 Effective Date............................................................. 42
SIGNATURES.................................................................................... 43
EXHIBIT A FORM OF SECURITY
</TABLE>
iv
<PAGE>
AMENDED AND RESTATED SUPPLEMENTAL INDENTURE dated as of May 15, 1997,
between INTEGRATED HEALTH SERVICES, INC., a Delaware corporation (the
"Company"), and SIGNET TRUST COMPANY, a Virginia corporation, as Trustee (the
"Trustee").
RECITALS OF THE COMPANY
The Company duly authorized the issue of its 10 3/4% Senior Subordinated
Notes due 2004 (the "Securities") in the aggregate principal amount of
$100,000,000, and to provide the terms and conditions upon which the Securities
were authenticated, issued and delivered the Company and the Trustee entered
into an Indenture dated as of July 1, 1994 with regard to the Securities.
On June 13, 1996, the Company, with the consent of Holders of not less than
a majority in principal amount of the Outstanding Securities executed a
Supplemental Indenture amending the Indenture (such Indenture, as amended,
restated and supplemented through the date hereof, the "Original Indenture").
The Company by Board Resolution has authorized, and the Holders of not less
than a majority in principal amount of the Company's Outstanding Securities have
by consents delivered to the Trustee consented to, the execution and delivery of
this Amended and Restated Supplemental Indenture amending and restating the
Original Indenture.
Each party agrees as follows for the benefit of the other parties and for
the equal and ratable benefit of the Holders of the Securities:
ARTICLE 1.
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.1 DEFINITIONS
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling, controlled by or under direct or indirect common control
with such specified Person. For purposes of this definition, "control" when used
with respect to any specified Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agent" means any Registrar or Paying Agent.
"Allowed and Disallowed Post-Commencement Interest and Expenses" means all
interest, at the rate provided in the applicable document or documents
(including any rate applicable upon any default or event of default, to the
extent lawful), and all reimbursements, costs, expenses and indemnities, to the
extent provided in the applicable document or documents, accruing or claimed at
any time after commencement of any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization, dissolution, winding up,
assignment for the benefit of creditors, marshalling of assets and liabilities
or other similar case or proceeding, whether or not such interest,
reimbursement, cost or expense is an allowed claim enforceable against the
Company in a case or proceeding under Bankruptcy Law or in any other such case
or proceeding.
"Asset Sale" for any Person means the sale, lease, conveyance or other
disposition (including, without limitation, by merger or consolidation, and
whether by operation of law or otherwise) of any of that Person's assets
-1-
<PAGE>
(including, without limitation, the sale or other disposition of Capital Stock
of any Subsidiary of such Person, whether by such Person or by such Subsidiary),
whether owned on the date hereof or hereafter acquired, in one transaction or a
series of related transactions, in which such Person and/or its Subsidiaries
sell, lease, convey or otherwise dispose of (i) all or substantially all of the
Capital Stock of any of such Person's Subsidiaries, (ii) assets which constitute
substantially all of an operating unit or business of such Person or any of its
Subsidiaries, or (iii) any health care facility; provided, however, that the
following shall not constitute Asset Sales: (a) a transaction or series of
related transactions that results in a Change in Control, or (b) transactions
between the Company and any of its Wholly Owned Subsidiaries or among such
Wholly Owned Subsidiaries or (c) transactions in which either (x) the fair
market value of the asset disposed of does not exceed 2.5% of the Consolidated
Tangible Assets of the Company or (y) the Consolidated EBITDA of the company
associated with the asset disposed of does not exceed 2.5% of the Consolidated
EBITDA of the Company.
"Attributable Indebtedness," when used with respect to any Sale and
Leaseback Transaction or an operating lease with respect to a health care
facility means, as at the time of determination, the present value (discounted
at a rate equivalent to the interest rate implicit in the lease, compounded on a
semi-annual basis) of the total obligations of the lessee for rental payments,
after excluding all amounts required to be paid on account of maintenance and
repairs, insurance, taxes, utilities and other similar expenses payable by the
lessee pursuant to the terms of the lease, during the remaining term of the
lease included in any such Sale and Leaseback Transaction or such operating
lease or until the earliest date on which the lessee may terminate such lease
without penalty or upon payment of a penalty (in which case the rental payments
shall include such penalty); provided, that the Attributable Indebtedness with
respect to a Sale and Leaseback Transaction shall be no less than the fair
market value of the property subject to such Sale and Leaseback Transaction.
"Bank Agent" means Citicorp USA, Inc., as Agent for the Lenders, or any
successor under the Credit Agreement.
"Bank Debt" means all obligations of the Company and its Subsidiaries, now
or hereafter existing under the Credit Agreement, whether for principal,
interest, reimbursement of amounts drawn under letters of credit issued pursuant
thereto, guarantees in respect thereof, fees, expenses, premiums, indemnities or
otherwise, including such obligations incurred by the Company or its
Subsidiaries in connection with any extension, refunding, refinancing or
replacement of, or successor to, the Credit Agreement.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state
law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company or any
authorized committee of the Board of Directors of the Company.
"Business Day" means any day other than a Legal Holiday.
"Capital Stock" of any Person means any and all shares, rights to purchase,
warrants or options (whether or not currently exercisable), participation or
other equivalents of or interests in (however designated) the equity (including,
without limitation, common stock, preferred stock and partnership and joint
venture interests) of such Person (excluding any debt securities that are
convertible into, or exchangeable for, such equity).
"Capitalized Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP, and the
amount of such obligation shall be the capitalized amount thereof determined in
accordance with GAAP.
"Change in Control" means any of the following: (i) the sale, lease,
conveyance or other disposition of all or substantially all of the Company's
assets as an entirety or substantially as an entirety to any Person or "group"
-2-
<PAGE>
(within the meaning of Section 13(d)(3) of the Exchange Act) (other than to a
Permitted Holder) in one or a series of transactions; (ii) stockholders of the
Company shall approve any plan or proposal for the liquidation or dissolution of
the Company; (iii) consummation of any consolidation or merger of the Company
(A) in which the Company is not the continuing or surviving corporation (other
than a consolidation or merger with a Wholly Owned Subsidiary of the Company in
which all shares of Common Stock outstanding immediately prior to the
effectiveness thereof are changed into or exchanged for the same consideration)
or (B) pursuant to which the Common Stock would be converted into cash,
securities or other property, in each case other than a consolidation or merger
of the Company in which the holders of the Common Stock immediately prior to the
consolidation or merger have, directly or indirectly, at least a majority of the
common stock of the continuing or surviving corporation immediately after such
consolidation or merger; or (iv) any transaction or series of transactions (as a
result of a tender offer, merger, consolidation or otherwise) that results in
any Person (other than a Permitted Holder), including a "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) that includes such Person,
acquiring "beneficial ownership" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of 50% or more of the aggregate voting power of
all classes of capital stock of the Company entitled to vote generally in the
election of directors of the Company.
"Common Equity" of any Person means all Capital Stock of such Person that
is generally entitled to (i) vote in the election of directors of such Person or
(ii) if such Person is not a corporation, vote or otherwise participate in the
selection of the governing body, partners, managers or others that will control
the management and policies of such Person.
"Company" means (i) Integrated Health Services, Inc., a Delaware
corporation, and (ii) any successor of Integrated Health Services, Inc.
"Consolidated Amortization Expense" of any Person for any period means the
amortization expense of such Person and its Subsidiaries for such period (to the
extent included in the computation of Consolidated Net Income of such Person),
determined on a consolidated basis in accordance with GAAP.
"Consolidated Depreciation Expense" of any Person for any period means the
depreciation expense of such Person and its Subsidiaries for such period (to the
extent included in the computation of Consolidated Net Income of such Person),
determined on a consolidated basis in accordance with GAAP.
"Consolidated EBITDA" of any Person means, with respect to any
determination date, Consolidated Net Income before extraordinary losses and
losses realized in connection with Asset Sales, plus (i) Consolidated Income Tax
Expense, plus (ii) Consolidated Depreciation Expense, plus (iii) Consolidated
Amortization Expense, plus (iv) Consolidated Interest Expense, plus (v) all
other non-cash items reducing Consolidated Net Income of such Person and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP, and
less all non-cash items increasing Consolidated Net Income of such Person and
its Subsidiaries, determined on a consolidated basis in accordance with GAAP, in
each case, for such Person's prior four full fiscal quarters for which financial
results have been reported immediately preceding the determination date.
"Consolidated Income Tax Expense" of any Person for any period means the
provision for taxes based on income and profits of such Person and its
Subsidiaries to the extent such income or profits were included in computing
Consolidated Net Income of such Person for such period.
"Consolidated Interest Expense" of any Person for any period means the
Interest Expense of such Person and its Subsidiaries for such period, determined
on a consolidated basis in accordance with GAAP, plus any dividends accrued for
such period on any Preferred Stock of any Subsidiary not held by the Company or
any Wholly Owned Subsidiary.
"Consolidated Net Income" of any Person for any period means
the net income (or loss) of such Person and its Subsidiaries for such period
Idetermined on a consolidated basis in accordance with GAAP, without
-3-
<PAGE>
giving effect to dividends on any series of preferred stock of any Subsidiary of
such Person, whether or not in cash, to the extent such consolidated net income
was reduced thereby; provided that there shall be excluded from such net income
(to the extent otherwise included therein), without duplication: (i) the net
income (or loss) of any Person (other than a Subsidiary of the referent Person)
in which any Person other than the referent Person has an ownership interest,
except to the extent that any such income has actually been received by the
referent Person or any of its Wholly Owned Subsidiaries in the form of dividends
or similar distributions during such period; (ii) except to the extent
includible in the consolidated net income of the referent Person pursuant to the
foregoing clause (i), the net income (or loss) of any Person that accrued prior
to the date that (a) such Person becomes a Subsidiary of the referent Person or
is merged into or consolidated with the referent Person or any of its
Subsidiaries or (b) the assets of such Person are acquired by the referent
Person or any of its Subsidiaries; (iii) the net income of any Subsidiary of the
referent Person (other than a Wholly Owned Subsidiary) to the extent that the
declaration or payment of dividends or similar distributions by such Subsidiary
of that income is not permitted by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary during such period; (iv) any gain (but
not loss), together with any related provisions for taxes on any such gain,
realized during such period by the referent Person or any of its Subsidiaries
upon (a) the acquisition of any securities, or the extinguishment of any
Indebtedness, of the referent Person or any of its Subsidiaries or (b) any Asset
Sale by the referent Person or any of its Subsidiaries; (v) any extraordinary
gain (but not extraordinary loss), together with any related provision for taxes
on any such extraordinary gain, realized by the referent Person or any of its
Subsidiaries during such period; and (vi) in the case of a successor to such
Person by consolidation, merger or transfer of its assets, any earnings of the
successor prior to such merger, consolidation or transfer of assets.
"Consolidated Tangible Assets" of any Person as of any date means the total
assets of such Person and its Subsidiaries (excluding any assets that would be
classified as "intangible assets" under GAAP) on a consolidated basis at such
date, as determined in accordance with GAAP, less all write-ups (other than
write-ups in connection with acquisitions) subsequent to the date of this
Indenture in the book value of any asset (except any such intangible assets)
owned by such Person or any of its Subsidiaries.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 11.2 or such other address as the Trustee may give
notice to the Company.
"Credit Agreement" means the Revolving Credit and Term Loan Agreement,
dated December 1, 1993, as amended as of December 21, 1993, March 25, 1994 and
May 9, 1994, among the Company and the Bank Agent, Citibank, N.A., as LC Bank
and the other financial institutions signatory thereto, together with the
related documents thereto, including, without limitation, any security documents
and all exhibits and schedules thereto, and any agreement or agreements relating
to any extension, refunding, refinancing, successor or replacement facility,
whether or not with the same lenders, and whether or not the principal amount or
amount of letters of credit outstanding thereunder or the interest rate payable
in respect thereof shall be thereby increased, in each case as amended and in
effect from time to time.
"Default" means any event, act or condition that is, or after notice or the
passage of time or both would be, an Event of Default.
"Definitive Securities" means any Securities other than a Global Security.
"Depositary" means, with respect to Securities issuable or issued in whole
or in part in global form hereunder, unless otherwise specified by the Company
pursuant to Section 2.12, The Depository Trust Company, New York, New York, or
any successor thereto registered as a clearing agency under the Exchange Act or
other applicable statute or regulation.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
-4-
<PAGE>
"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 may be approved by a significant segment of the accounting
profession of the United States, as in effect from time to time.
"Global Security" means a Security which is executed by the Company and
authenticated and delivered by the Trustee to the Depositary or pursuant to the
Depositary's instruction, all in accordance with this Indenture and pursuant to
a written order of the Company, which shall be registered in the name of the
Depositary or its nominee and which shall represent, and shall be denominated in
an amount equal to the aggregate principal amount of, all of the Securities or
any portion thereof, but not including any Securities that are no longer
outstanding, and having the same terms, including, without limitation, the same
original issue date, date or dates on which principal is due, and rate of
interest.
"Guarantee" by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Indebtedness or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation of such other Person (whether
arising by virtue of partnership arrangements, by agreement to keepwell, to
purchase assets, goods, securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for the
purpose of assuring in any other manner the obligee of such Indebtedness or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part); provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any interest rate swap agreement, foreign currency exchange
agreement, interest rate collar agreement, option or futures contract or other
similar agreement or arrangement relating to interest rates or foreign exchange
rates.
"Holder" means a Person in whose name a Security is registered.
"Indebtedness" of any Person at any date means, without duplication: (i)
all Bank Debt; (ii) all other Indebtedness of such Person for borrowed money
(whether or not the recourse of the lender is to the whole of the assets of such
Person or only to a portion thereof); (iii) all obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments; (iv) all
obligations of such Person in respect of letters of credit or other similar
instruments (or reimbursement obligations with respect thereto); (v) all
obligations of such Person with respect to Hedging Obligations (other than those
that fix the interest rate on variable rate indebtedness otherwise permitted by
this Indenture or that protect the Company and/or its Subsidiaries against
changes in foreign exchange rates); (vi) all obligations of such Person to pay
the deferred and unpaid purchase price of property or services, except trade
payables and accrued expenses incurred in the ordinary course of business; (vii)
all Capitalized Lease Obligations of such Person; (viii) all Indebtedness of
others secured by a Lien on any asset of such Person, whether or not such
Indebtedness is assumed by such Person; (ix) all Indebtedness of others
guaranteed by such Person to the extent of such guarantee; and (x) all
Attributable Indebtedness. The amount of Indebtedness of any Person at any date
shall be the outstanding balance at such date of all unconditional obligations
as described above; and in the case of clauses (iv) and (ix), the maximum
liability of such Person for any such contingent obligations at such date and,
in the case of clause (viii), the amount of the Indebtedness secured.
"Indenture" means this Amended and Restated Indenture, as amended from time
to time.
"Interest Expense" of any Person for any period means the aggregate amount
of interest which, in accordance with GAAP, would be set opposite the caption
"interest expense" or any like caption on an income statement for such Person
(including, without limitation or duplication, imputed interest included in
Capitalized Lease Obligations,
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all commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing, the net costs associated
with Hedging Obligations, amortization of financing fees and expenses, the
interest portion of any deferred payment obligation, amortization of discount
and all other non-cash interest expense).
"Interest Payment Date" shall have the meaning assigned to such term in the
Securities.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or other similar encumbrance of any kind in respect of
such asset, whether or not filed, recorded or otherwise perfected under
applicable law (including, without limitation, any conditional sale or other
title retention agreement, and any financing lease in the nature thereof, any
agreement to sell, and any filing of, or agreement to give, any financing
statement (other than notice filings not perfecting a security interest) under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Net Proceeds" with respect to any Asset Sale means (i) cash (in U.S.
dollars or freely convertible into U.S. dollars) received by the Company or any
of its Subsidiaries from such Asset Sale (including, without limitation, cash
received as consideration for the assumption or incurrence of liabilities
incurred in connection with or in anticipation of such Asset Sale), after (a)
provision for all income or other taxes measured by or resulting from such Asset
Sale or the transfer of the proceeds of such Asset Sale to the Company or any of
its Subsidiaries, (b) payment of all brokerage commissions and the underwriting
and other fees and expenses related to such Asset Sale and (c) deduction of
appropriate amounts to be provided by the Company or any of its Subsidiaries as
a reserve, in accordance with GAAP, against any liabilities associated with the
assets sold or otherwise disposed of in such Asset Sale and retained by the
Company or any of its Subsidiaries after such Asset Sale (including, without
limitation, pension and other post-employment benefit liabilities and
liabilities related to environmental matters) or against any indemnification
obligations associated with the sale or other disposition of the assets sold or
otherwise disposed of in such Asset Sale and (ii) all non-cash consideration
received by the Company or any of its Subsidiaries from such Asset Sale upon the
liquidation or conversion of such consideration into cash.
"Officer" means the Chief Executive Officer, the Chief Financial Officer,
the Treasurer, any Assistant Treasurer, Controller, Secretary or any Vice
President of the Company.
"Officers' Certificate" means a certificate signed by two Officers, one of
whom must be the Company's Chief Executive Officer or Chief Financial Officer.
"Opinion of Counsel" means an opinion from legal counsel who is acceptable
to the Trustee in its sole discretion. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Payment or Distribution in Respect of the Securities" means, for purposes
of Article 10 hereof, any payment or distribution of any kind or character,
whether in cash, property or securities, on account of the payment of the
principal of and premium, if any, and interest on any of the Securities,
including, without limitation, any redemption or repurchase price paid for any
optional or mandatory redemption, Asset Sale Offer, Change in Control Repurchase
or other repurchase or retirement of the Securities or any other payment on
account of the Securities (including payments with respect to claims related to
the issuance of the Securities). For purposes of this definition, the words
"cash, property or securities" shall not be deemed to include securities of the
Company as reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment which are
subordinated in right of payment to all Senior Indebtedness which may be
outstanding to substantially the same extent as, or to a greater extent than,
the Securities are so subordinated as provided in Article 10 and which
securities are not subject to maturity or mandatory prepayment prior to the
maturity of any Senior Indebtedness then outstanding.
"Permitted Holder" means Robert N. Elkins and any group (within the meaning
of Section 13(d)(3) of the Exchange Act) of which Mr. Elkins is a member; so
long as, with respect to any group, Mr. Elkins owns more
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than 20% of the total voting power of all classes of Capital Stock of the
acquiring entity entitled to vote generally in the election of directors of the
acquiring entity.
"Person" means any individual, corporation, partnership, joint venture,
incorporated or unincorporated association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof or other entity of any kind.
"Preferred Stock" means with respect to any Person all Capital Stock of
such Person which has a preference in liquidation or a preference with respect
to the payment of dividends.
"Sale and Leaseback Transaction" means with respect to any Person, an
arrangement with any bank, insurance company or other lender or investor or to
which such lender or investor is a party, providing for the leasing by such
Person or any of its Subsidiaries of any property or asset of such Person or any
of its Subsidiaries which has been or is being sold or transferred by such
Person or such Subsidiary to such lender or investor or to any Person to whom
funds have been or are to be advanced by such lender or investor on the security
of such property or asset.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Securities described above issued under this
Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" means the principal of and premium, if any, and
interest on and other amounts due on or in connection with any Indebtedness of
the Company (including, without limitation, all Allowed and Disallowed
Post-Commencement Interest and Expenses in respect of such Indebtedness) and any
amounts with respect to Hedging Obligations that fix the interest rate on
variable rate indebtedness otherwise permitted by this Indenture, other than the
Securities, the Company's 5 3/4% Convertible Senior Subordinated Debentures due
2001 and the Company's 6% Convertible Subordinated Debentures due 2003, whether
outstanding on the date of the Original Indenture or thereafter created,
incurred or assumed, unless, in the case of any particular Indebtedness, the
instrument creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such Indebtedness shall not be senior in
right of payment to the Securities; provided that Senior Indebtedness will not
include (i) any Indebtedness, liability or obligation of the Company to (A) any
of its Subsidiaries, (B) trade creditors or (C) any person arising out of any
lawsuit against the Company or any of its Subsidiaries or any settlement thereof
(other than any lawsuit or settlement thereof respecting amounts payable with
regard to Senior Indebtedness), (ii) any redemption or other payments on
Preferred Stock, (iii) any Indebtedness incurred in violation of the provisions
of the Indenture or (iv) amounts owing under leases (other than Capitalized
Lease Obligations).
"Significant Subsidiary" has the meaning ascribed to it under Regulation C
promulgated under the Securities Act of 1933, as amended.
"Stated Maturity" means, when used with respect to any security or any
installment of interest thereon, that date specified in such security as the
fixed date on which the principal of such security or such installment of
interest is due and payable.
"Subsidiary" of any Person means (i) any corporation of which Common Equity
having ordinary voting power to elect a majority of the directors of such
corporation is owned by such Person directly or through one or more other
Subsidiaries of such Person, and (ii) any entity other than a corporation in
which such Person, directly or indirectly, owns at least a majority of the
Common Equity of such entity.
"TIA" means the Trust Indenture Act of 1939, as amended (15 U.S.C. ss.ss.
77aaa-77bbbb), as in effect on the date hereof (unless otherwise specifically
provided herein).
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"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.
"Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer its corporate trust matters.
"U.S. Government Obligations" means direct obligations of the United States
of America for the payment of which the full faith and credit of the United
States of America is pledged.
"Wholly Owned Subsidiary" of any Person means (i) a Subsidiary of which
100% of the Common Equity (except for directors' qualifying shares or certain
minority interests owned by other Persons solely due to local law requirements
that there be more than one stockholder, but which interest is not in excess of
what is required for such purpose) is owned directly by such Person or through
one or more other Wholly Owned Subsidiaries of such Person and (ii) any entity
other than a corporation in which such Person, directly or indirectly, owns all
of the Common Equity of such entity.
SECTION 1.2 OTHER DEFINITIONS
Defined
Term in Section
"Asset Sale Offer"............................................ 4.8
"Asset Sale Offer Period"..................................... 3.8
"Asset Sale Payment Date"..................................... 3.8
"Custodian"................................................... 6.1
"Change in Control Repurchase"................................ 4.7
"Event of Default"............................................ 6.1
"Legal Holiday"............................................... 11.6
"Payment Blockage Period"..................................... 10.4
"Paying Agent"................................................ 2.3
"Registrar"................................................... 2.3
"Repurchase Date"............................................. 4.7
"Successor"................................................... 5.1
SECTION 1.3 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
All terms used in this Indenture that are defined by the TIA, defined by
TIA reference to another statute or defined by SEC rule under the TIA have the
meanings so assigned to them.
SECTION 1.4 RULES OF CONSTRUCTION
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP;
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(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural include
the singular;
(5) provisions apply to successive events and transactions;
(6) any amount may be negative; and
(7) "herein", "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or
Subdivision.
ARTICLE 2.
THE SECURITIES
SECTION 2.1 FORM AND DATING
The Securities and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A. The Securities may have notations,
legends or endorsements required by law, stock exchange rule or usage. Each
Security shall be dated the date of its authentication. The Securities shall be
in denominations of $1,000 and integral multiples thereof.
The Securities may be initially issued either in the form of a
Global Security or Securities or in the form of Definitive Securities or both. A
Global Security shall represent such of the outstanding Securities as shall be
specified therein and shall provide that it shall represent the aggregate amount
of outstanding Securities from time to time endorsed thereon and that the
aggregate amount of outstanding Securities represented thereby may from time to
time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Security to reflect the amount of any
increase or decrease in the amount of outstanding Securities represented thereby
shall be made by the Trustee or an agent thereof, at the direction of the
Trustee, in accordance with instructions given by the Holder thereof. Definitive
Securities shall be printed, lithographed or engraved or produced by any
combination of these methods on steel engraved borders or may be produced in any
other manner permitted by the rules of any securities exchange on which the
Securities may be listed, all as determined by the officers executing such
Securities, as evidenced by their execution of such Securities.
The terms and provisions contained in the Securities shall constitute, and
are hereby expressly made, a part of this Indenture and to the extent
applicable, the Company and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
SECTION 2.2 EXECUTION AND AUTHENTICATION
Two Officers 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 nevertheless shall be
valid.
A Security shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Security has
been authenticated under this Indenture.
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The Trustee shall authenticate Securities for original issue up to the
aggregate principal amount stated in paragraph 4 of the Securities, upon a
written order of the Company signed by two Officers. The aggregate principal
amount of Securities outstanding at any time may not exceed such amount except
as provided in Section 2.6.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Securities. An authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by 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.
SECTION 2.3 REGISTRAR AND PAYING AGENT
The Company shall maintain or cause to be maintained through the Trustee or
such other Person as may be appointed hereunder an office or agency where
Securities may be presented for registration of transfer or for exchange
("Registrar") and an office or agency where Securities may be presented for
payment ("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 "Registrar"
includes any co-registrar and the term "Paying Agent" includes any additional
paying agent. The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company shall notify the Trustee of the name and
address of any Agent not a party to this Indenture. If the Company fails to
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 or Registrar.
SECTION 2.4 PAYING AGENT TO HOLD MONEY IN TRUST
The Company shall require each Paying Agent other than the Trustee to agree
in writing that the Paying Agent will 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 or premium, if any, or interest on the Securities, and will 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 or a Subsidiary) shall have no further
liability for the money. If the Company or a Subsidiary 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.
SECTION 2.5 REGISTRATION OF TRANSFER AND EXCHANGE
Where Securities are presented to the Registrar with a request to register
a transfer of or to exchange the Securities 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 a form satisfactory to the Company, the Registrar and the Trustee
duly executed by the Holder thereof or the Holder's attorney duly authorized in
writing. To permit registrations of transfers and exchanges, the Company shall
issue and the Trustee shall authenticate Securities at the Registrar's request.
Without the prior written consent of the Company the Registrar shall not be
required (i) to register the transfer of or to exchange Securities during a
period beginning at the opening of business on a Business Day 15 days before the
day of the mailing of a notice of redemption under Section 3.1 and ending at the
close of business on the day of such mailing or (ii) to register the transfer of
or to exchange any Security so selected for redemption in whole or in part,
except the unredeemed portion of any Security being redeemed in part.
No service charge shall be made to a 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 and any other expenses (including the fees
and expenses of the Trustee) in
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connection therewith (other than such transfer tax or similar governmental
charge payable upon exchanges pursuant to Section 3.6 or 9.5).
The transfer and exchange of Global Securities or beneficial interests
therein shall be effected through the Depositary in accordance with the terms of
this Indenture and the procedures of the Depositary therefor.
SECTION 2.6 REPLACEMENT SECURITIES
If any mutilated Security is surrendered to the Trustee, or the Company and
the Trustee receive evidence to their 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, shall authenticate a replacement
Security if the Trustee's requirements 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, the Agent or any authenticating agent from any loss which any of them
may suffer if a Security is replaced. The Company may charge for its expenses in
replacing a Security.
Every replacement Security is an additional obligation of the Company.
SECTION 2.7 OUTSTANDING SECURITIES
The Securities outstanding at any time are all the Securities authenticated
by the Trustee except for those canceled by it, those delivered to it for
cancellation and those described in this Section 2.7 as not outstanding.
If a Security is replaced pursuant to Section 2.6, 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
4.1, it ceases to be outstanding and interest on it ceases to accrue as of the
date it is deemed paid. Upon a "legal defeasance" pursuant to Section 8.1(b) or
a "covenant defeasance" pursuant to Section 8.1(c), the Securities shall be
deemed to be outstanding or not outstanding as provided in the applicable
Section 8.1(b) or 8.1(c).
Except as set forth in Section 2.8, a Security does not cease
to be outstanding because the Company or an Affiliate holds the Security.
SECTION 2.8 TREASURY SECURITIES
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company or by any Person directly or indirectly controlling or controlled
by or under direct or indirect common control with the Company shall be
considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Securities which the Trustee knows are so
owned shall be so disregarded.
SECTION 2.9 TEMPORARY SECURITIES
Until definitive Securities are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Securities. Temporary Securities
shall be substantially in the form of definitive Securities but may have
variations that the Company considers appropriate for temporary Securities.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Securities in exchange for temporary Securities.
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SECTION 2.10 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, upon request of
the Company, certification of their destruction shall be delivered to the
Company unless, by a written order signed by two Officers, the Company shall
direct that canceled Securities be returned to it. 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 2.11 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, in each case at the rate provided
in the Securities. The Company, with the consent of the Trustee, shall fix each
such special record date and payment date. At least 15 days before the special
record date, the Company (or, upon request of the Company, 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 2.12 SECURITIES ISSUABLE IN THE FORM OF A GLOBAL SECURITY
(a) If the Company shall establish that the Securities are to be issued in
whole or in part in the form of one or more Global Securities, then the Company
shall execute and the Trustee or an agent thereof shall, in accordance with
Section 2.2 and the written order of the Company delivered to the Trustee or its
agent thereunder, authenticate and deliver such Global Security or Securities,
which (i) shall represent, and shall be denominated in an amount equal to the
aggregate principal amount of, the outstanding Securities to be represented by
such Global Security or Securities, or such portion thereof as the Company shall
specify in a written order of the Company signed by two Officers, (ii) shall be
registered in the name of the Depositary for such Global Security or Securities
or its nominee, (iii) shall be delivered by the Trustee or its agent to the
Depositary or pursuant to the Depositary's instruction and (iv) shall bear a
legend substantially to the following effect: "Unless and until it is exchanged
in whole or in part for securities in definitive form, this security may not be
transferred except as a whole by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary. Unless this certificate is presented by
an authorized representative of the Depositary to the Company or its agent for
registration of transfer, exchange, or payment, and any certificate issued is
registered in the name of the nominee of the Depositary or in such other name as
is requested by an authorized representative of the Depositary (and any payment
is made to the nominee of the Depositary or to such other entity as is requested
by an authorized representative of the Depositary), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, the nominee of the Depositary, has an interest
herein."
(b) Notwithstanding any other provision of this Section 2.12 or of Section
2.5, and subject to the provisions of paragraph (c) below, a Global Security may
be transferred, in whole but not in part and in the manner provided in Section
2.5, only to a nominee of the Depositary for such Global Security, or to the
Depositary, or a successor Depositary for such Global Security selected or
approved by the Company, or to a nominee of such successor Depositary.
(c) (i) If at any time the Depositary for a Global Security notifies the
Company that it is unwilling or unable to continue as Depositary for such Global
Security or if at any time the Depositary for the Securities shall no longer be
eligible or in good standing under the Exchange Act or any other applicable
statute or regulation, the Company
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shall appoint a successor Depositary with respect to such Global Security. If a
successor Depositary for such Global Security is not appointed by the Company
within 90 days after the Company receives such notice or becomes aware of such
ineligibility, the Company will execute, and the Trustee or an agent thereof,
upon receipt of a written order of the Company signed by two Officers for the
authentication and delivery of individual Definitive Securities in exchange for
such Global Security, will authenticate and deliver, individual Definitive
Securities of like tenor and terms in an aggregate principal amount equal to the
principal amount of the Global Security in exchange for such Global Security.
(ii) The Company may at any time and in its sole discretion determine that
the Securities issued in the form of one or more Global Securities shall no
longer be represented by such Global Security or Securities. In such event the
Company will execute, and the Trustee, upon receipt of a written order of the
Company signed by two Officers for the authentication and delivery of individual
Definitive Securities in exchange in whole or in part for such Global Security,
will authenticate and deliver individual Definitive Securities of like tenor and
terms in an aggregate principal amount equal to the principal amount of such
Global Security or Securities in exchange for such Global Security or
Securities.
(iii) If specified by the Company pursuant to a written order of the
Company signed by two Officers, the Depositary for a Global Security may
surrender such Global Security in exchange in whole or in part for individual
Definitive Securities of like tenor and terms on such terms as are acceptable to
the Company and such Depositary. Thereupon the Company shall execute, and the
Trustee or an agent thereof, upon a written order of the Company signed by two
Officers, shall authenticate and deliver, without service charge, (1) to each
Person specified by such Depositary a new Definitive Security or Securities of
like tenor and terms and of any authorized denomination as requested by such
Person in an aggregate principal amount equal to and in exchange for such
Person's beneficial interest as specified by such Depositary in the Global
Security; and (2) to such Depositary a new Global Security of like tenor and
terms and in an authorized denomination equal to the difference, if any, between
the principal amount of the surrendered Global Security and the aggregate
principal amount of Definitive Securities delivered to Holders thereof.
(iv) In any exchange provided for in (i), (ii) or (iii) of this paragraph
(c), the Company will execute and the Trustee or an agent thereof will
authenticate and deliver individual Definitive Securities in registered form in
authorized denominations. Upon the exchange of the entire principal amount of a
Global Security for individual Definitive Securities, such Global Securities
shall be cancelled by the Trustee or an agent thereof. Except as provided in
(iii) above, Definitive Securities issued in exchange for a Global Security
pursuant to this Section shall be registered in such names and in such
authorized denominations as the Depositary for such Global Security, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct either the Trustee or the Registrar. Such Trustee or the Registrar
shall deliver such Definitive Securities to the Persons in whose names such
Securities are so registered.
ARTICLE 3.
OPTIONAL REDEMPTION AND ASSET SALE OFFER
SECTION 3.1 NOTICES TO TRUSTEE
(a) If the Company elects to redeem Securities pursuant to the optional
redemption provisions of Section 3.7, it shall furnish to the Trustee, at least
45 days but not more than 60 days before a redemption date, an Officers'
Certificate stating that the Company has exercised its option to redeem
Securities pursuant to Section 3.7 and setting forth the redemption date, the
principal amount of Securities to be redeemed and the redemption price.
(b) If the Company offers to purchase Securities pursuant to the provisions
of Section 3.8, it shall furnish to the Trustee, on or before the fifth day
preceding the commencement of an Asset Sale Offer Period, an Officers'
Certificate stating that the Company is making an Asset Sale Offer pursuant to
Section 3.8 and setting forth
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the Asset Sale Payment Date, the principal amount of Securities the Company is
offering to purchase and the purchase price of such Securities, and further
setting forth a statement to the effect that (a) the Company has consummated an
Asset Sale and (b) the conditions set forth in the first sentence of Section 4.8
have been satisfied.
SECTION 3.2 SELECTION OF SECURITIES TO BE REDEEMED OR PURCHASED
(a) If less than all of the Securities are to be redeemed pursuant to
Section 3.7, the Trustee shall select the Securities to be redeemed by lot. The
particular Securities to be redeemed shall be selected, unless otherwise
provided herein, prior to the date notice of redemption is required to be sent
by the Trustee from the outstanding Securities not previously called for
redemption.
The Trustee promptly shall 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 integral multiples of $1,000.
Provisions of this Indenture that apply to Securities called for redemption also
apply to portions of Securities called for redemption.
(b) If less than all of the Securities are to be purchased pursuant to
Section 3.8, the Trustee shall select the Securities to be purchased by lot. The
particular Securities to be purchased shall be selected, unless otherwise
provided herein, prior to the date notice of purchase is required to be sent by
the Trustee from the outstanding Securities tendered pursuant to the Asset Sale
Offer.
The Trustee promptly shall notify the Company in writing of the Securities
selected for purchase and, in the case of any Security selected for partial
purchase, the principal amount thereof to be purchased. Securities and portions
of them selected shall be in amounts of $1,000 or integral multiples of $1,000.
Provisions of this Indenture that apply to Securities called for purchase also
apply to portions of Securities called for purchase.
SECTION 3.3 NOTICES TO HOLDERS
(a) At least 30 days but not more than 60 days before a redemption date,
the Company shall mail a notice to each Holder whose Securities are to be
redeemed.
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 will be issued;
(4) the name and address of the Paying Agent;
(5) that Securities called for redemption must be surrendered to the
Paying Agent at the address specified in such notice to collect
the redemption price;
(6) that interest on Securities called for redemption ceases to
accrue on and after the redemption date;
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(7) the paragraph of the Securities pursuant to which the Securities
are being redeemed; and
(8) the aggregate principal amount of Securities that are being
redeemed.
(b) If the Company determines to make an Asset Sale Offer as provided in Section
3.8, the Company shall promptly mail a notice to each Holder.
The Notice shall state:
(1) that an Asset Sale Offer is being made pursuant to Section 3.8
and the length of time the Asset Sale Offer will remain open;
(2) the purchase price and the Asset Sale Payment Date;
(3) the aggregate principal amount of Securities the Company is
offering to purchase;
(4) that any Security not tendered or accepted for payment will
continue to accrue interest;
(5) that any Security accepted for payment pursuant to the Asset Sale
Offer shall cease to accrue interest on the Asset Sale Payment
Date;
(6) that Holders electing to have a Security purchased pursuant to
any Asset Sale Offer will be required to surrender the Security,
with the form entitled "Option of Holder to Elect Purchase" on
the reverse side 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 expiration of the Asset
Sale Offer Period;
(7) that Holders will be entitled to withdraw their election if the
Company, depositary or Paying Agent, as the case may be,
receives, not later than the expiration of the Asset Sale Offer
Period, or such longer period as may be required by law, a
telegram, telex, 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;
(8) that, if the aggregate principal amount of Securities surrendered
by Holders exceeds the aggregate principal amount of Securities
offered to be purchased, the Trustee shall select the Securities
to be purchased by lot (with such adjustments as may be deemed
appropriate by the Company so that only Securities in
denominations of $1,000 or integral multiples thereof shall be
purchased); and
(9) that Holders whose Securities are purchased only in part will be
issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered.
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(c) At the Company's request, the Trustee shall give the notice required in
Section 3.3(a) or 3.3(b) in the Company's name and at its expense; provided,
however, that the Company shall deliver to the Trustee, at least 45 days prior
to the redemption date or not later than the fifth day preceding the
commencement of an Asset Sale Offer Period, as the case may be, an Officers'
Certificate requesting that the Trustee give such notice and setting forth the
information to be stated in such notice as provided in Section 3.3(a) or 3.3(b).
SECTION 3.4 EFFECT OF NOTICE OF REDEMPTION
Once notice of redemption under Section 3.7 is mailed, Securities called
for redemption become due and payable on the redemption date at the redemption
price. However, if a redemption date is on or before an Interest Payment Date
and on or after the related record date, any interest accrued and unpaid to the
redemption date shall be paid on such Interest Payment Date to the person in
whose name the Security is registered at the close of business on such record
date and the only remaining right of the Holders of Securities called for
redemption shall be to receive the redemption price (excluding such interest)
upon surrender of such Securities to the Paying Agent.
SECTION 3.5 DEPOSIT OF REDEMPTION PRICE OR PURCHASE PRICE
One Business Day prior to the redemption date or the Asset Sale Payment
Date, as the case may be, the Company shall deposit with the Trustee or with the
Paying Agent money sufficient to pay the redemption price or the purchase price
of, and accrued interest on, all Securities to be redeemed or purchased on that
date. The Trustee or the Paying Agent shall return to the Company any money not
required for that purpose.
If the Company complies with the preceding paragraph, interest on the
Securities or portions thereof to be redeemed or purchased (in the case of a
redemption, whether or not such Securities are presented for payment) will cease
to accrue on the applicable redemption date or Asset Sale Payment Date, as the
case may be. If any Security called for redemption shall not be so paid upon
surrender, or if any Security to be purchased shall not be so paid on the Asset
Sale Payment Date, because of the failure of the Company to comply with the
preceding paragraph, then interest will be paid on the unpaid principal from the
redemption date or the Asset Sale Payment Date, as the case may be, until such
principal is paid and on any interest not paid on such unpaid principal, in each
case, at the rate provided in the Securities and in Section 4.1.
SECTION 3.6 SECURITIES REDEEMED OR PURCHASED IN PART
Upon surrender of a Security that is redeemed or purchased 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 or the portion not purchased of the Security surrendered.
SECTION 3.7 OPTIONAL REDEMPTION
The Company may redeem all or any of the Securities at any time on or after
July 15, 1999, at the following redemption prices (expressed as percentages of
principal amount) plus accrued and unpaid interest to the redemption date, if
redeemed during the 12-month period beginning:
Optional
Year Redemption Price
---- ----------------
July 15, 1999 105.375%
July 15, 2000 103.583%
July 15, 2001 101.792%
July 15, 2002 and thereafter 100%
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Any redemption pursuant to this Section 3.7 shall be made, to the extent
applicable, in accordance with the provisions of Sections 3.1 through 3.6.
SECTION 3.8 ASSET SALE OFFER
If the Company determines to make an Asset Sale Offer, the Company shall
promptly mail (with notice to the Trustee) or shall cause the Trustee to
promptly mail (in the Company's name and at its expense) notice of an Asset Sale
Offer to each Holder of Securities as set forth in Section 3.3(b). The Asset
Sale Offer shall be deemed to have commenced on the date of such mailing and
shall terminate 30 days after its commencement unless a longer offering period
is required by law (the "Asset Sale Offer Period"). On or prior to the fifth
Business Day following the termination of the Asset Sale Offer Period (the
"Asset Sale Payment Date"), the Company shall purchase, or cause the Trustee to
purchase, and mail or deliver payment for, as selected by lot (with such
adjustments as may be deemed appropriate by the Company so that only Securities
in denominations of $1,000 or integral multiples thereof shall be purchased),
from Holders tendering their Securities pursuant to the Asset Sale Offer, the
amount of Securities required to be purchased pursuant to Section 4.8. If the
Asset Sale Payment Date is on or after an interest payment record date and on or
before the related interest payment date, any accrued interest will 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 will be payable to Holders who
tender Securities pursuant to the Asset Sale Offer. Any Asset Sale Offer shall
be conducted in compliance with applicable tender offer rules, including Section
14(e) of the Exchange Act and Rule 14e-1 thereunder.
On or before any Asset Sale Payment Date, the Company, to the extent
lawful, shall (i) accept for payment, as selected by lot (with such adjustments
as may be deemed appropriate by the Company so that only Securities in
denominations of $1,000 or integral multiples thereof shall be purchased),
Securities or portions thereof tendered pursuant to the Asset Sale Offer, (ii)
if the Company appoints a depositary or Paying Agent, deposit with such
depositary or Paying Agent money sufficient to pay the purchase price (including
all accrued interest on the purchased Securities) of all Securities or portions
thereof so accepted, (iii) deliver or cause the depositary or Paying Agent to
deliver to the Trustee Securities so accepted and (iv) deliver an Officers'
Certificate identifying the Securities or portions thereof accepted for payment
by the Company in accordance with the terms of this Section 3.8. The depositary,
the Paying Agent or the Company, as the case may be, promptly shall mail or
deliver to each tendering Holder an amount equal to the purchase price
(including all accrued interest on the purchased Securities) of the Securities
tendered by such Holder and accepted by the Company for purchase, and the
Trustee promptly shall authenticate and mail or deliver to such Holders a new
Security equal in principal amount to any unpurchased portion of the Security
surrendered. Any Securities not so accepted promptly shall be mailed or
delivered by the Company to the Holder thereof. The Company will publicly
announce the results of the Asset Sale Offer on the Asset Sale Payment Date.
Other than as specifically provided in this Section 3.8, any offer to
purchase Securities pursuant to this Section 3.8 shall be made in accordance
with the other provisions of this Indenture.
ARTICLE 4
COVENANTS
SECTION 4.1 PAYMENT OF SECURITIES
The Company shall pay the principal of and premium, if any, and interest on
the Securities on the dates and in the manner provided in the Securities.
Principal, premium, if any, and interest shall be considered paid on the date
due if the Paying Agent, other than the Company or a Subsidiary of the Company,
holds on that date money deposited by the Company designated for and sufficient
to pay all principal, premium, if any, and interest then due.
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The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
the interest rate on the Securities to the extent lawful; it shall pay interest
on overdue payments of premium, if any, or installments of interest (without
regard to any applicable grace period) at the same rate to the extent lawful.
SECTION 4.2 MAINTENANCE OF OFFICE OR AGENCY
The Company will maintain an office or agency where Securities may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company with respect of the Securities and this Indenture
may be served pursuant to Section 2.3. The Company hereby designates the
Corporate Trust Office of the Trustee as such office or agency of the Company.
The Company also from time to time may designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
such purposes and from time to time may rescind such designations. The Company
will 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.
SECTION 4.3 SEC REPORTS
(a) The Company shall remain subject to the reporting requirements of
Section 13 or Section 15(d) of the Exchange Act and shall continue to file with
the SEC such annual reports and such information, documents and other reports
which are specified in Sections 13 and 15(d) of the Exchange Act.
(b) The Company shall file with the Trustee and cause to be provided to the
Holders, within 15 days after it files the same with the SEC, copies of its
annual reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the SEC may by rules and regulations
prescribe) which the Company or any subsidiary of the Company is required to
file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. The
Company shall cause any annual report furnished to its stockholders generally
and any quarterly or other financial reports furnished by it to its stockholders
generally to be filed with the Trustee and mailed to the Holders at their
addresses appearing in the register of Securities maintained by the Registrar.
SECTION 4.4 COMPLIANCE CERTIFICATE
(a) The Company shall deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company, 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 the Company 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 knowledge the Company has kept, observed, performed and fulfilled each
covenant contained in this Indenture and is not in default in the performance or
observance of any of the terms, provisions and conditions hereof (or, if a
Default or Event of Default shall have occurred, describing all such Defaults or
Events of Default of which he may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or premium, if any, or interest, if any,
on the Securities are prohibited or, if such event has occurred, a description
of the event and what action the Company is taking or proposes to take with
respect thereto.
(b) So long as (i) not contrary to the then current recommendations of the
American Institute of Certified Public Accountants or (ii) the Company's
independent public accountants do not have in effect a policy, of general
applicability with respect to their clients, that such accountants will not
prepare statements on the subjects specified below, the year-end financial
statements delivered pursuant to Section 4.3 shall be accompanied by a written
statement of the Company's independent public accountants (who shall be a firm
of established national reputation) that
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in making the examination necessary for certification of such financial
statements nothing has come to their attention that would lead them to believe
that the Company has violated any provisions of Article 4 or 5 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.
(c) The Company, so long as any of the Securities are outstanding, will
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default under this Indenture, an Officers' Certificate specifying
such Default or Event of Default and what action the Company is taking or
proposes to take with respect thereto.
SECTION 4.5 CORPORATE EXISTENCE, TAXES, ETC.
Subject to the provisions of Section 5.1, the Company shall do or cause to
be done all things necessary to preserve and keep in full force and effect its
rights (charter and statutory), licenses and franchises; provided, however, that
the Company shall not be required to preserve any such right or franchise 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 the loss thereof is
not disadvantageous in any material respect to the Holders.
SECTION 4.6 STAY, EXTENSION AND USURY LAWS
The Company covenants (to the extent that it may lawfully do so) that it
will 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 Company's
obligation to pay the Securities; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
insofar as such law applies to the Securities, and covenants that it will not,
by resort to any such law, hinder, delay or impede the execution of any power,
right or remedy herein granted to the Trustee, but will suffer and permit the
execution of every such power, right or remedy as though no such law has been
enacted.
SECTION 4.7 CHANGE IN CONTROL
(a) Following the occurrence of any Change in Control, each Holder will
have the right, at such Holder's option, to require that the Company purchase (a
"Change in Control Repurchase"), and upon the exercise of such right, the
Company shall, subject to the provisions of Section 10.3 hereof, purchase, all
or any part of such Holder's Securities on a date (the "Repurchase Date") that
is no earlier than 30 days nor later than 60 days after the date on which the
Company gives notice of a Change in Control as provided in (b) below at a
purchase price equal to 101% of the aggregate principal amount of the
Securities, plus accrued and unpaid interest thereon, if any, to the Repurchase
Date.
(b) Within 30 days after any Change in Control, the Company (with notice to
the Trustee), or the Trustee at the Company's request, will mail or cause to be
mailed to all Holders on the date of the Change in Control a notice of the
occurrence of such Change in Control and of the Holders' rights arising as a
result thereof. Such notice, which shall govern the terms of the Change in
Control Repurchase, shall state:
(1) that a Change in Control has occurred and that such Holder has the
right to require the Company to repurchase such Holder's Notes in cash;
(2) the Repurchase Date (which will be no earlier than 30 days nor
later than 60 days from the date such notice is mailed);
(3) the purchase price for the repurchase;
(4) the date by which the repurchase right must be exercised; and
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(5) the instructions determined by the Company, consistent with this
Section 4.7, that a Holder must follow in order to have its Securities
repurchased.
(c) To exercise a repurchase right, a Holder shall deliver to the Company
(or a depositary or Paying Agent designated by the Company for such purpose in
the notice referred to in (b) above), on or before the close of business on the
Repurchase Date, the Security or Securities with respect to which the repurchase
right is being exercised, duly endorsed for transfer to the Company, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of each
Security so delivered completed. Holders shall be entitled to withdraw their
election if the Company (or the depositary or Paying Agent designated by the
Company for the purpose of receiving such election) receives, not later than
five Business Days prior to the Repurchase Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Security or Securities the Holder delivered for purchase and a
statement that such Holder is withdrawing its election to the have the Security
or Securities purchased.
(d) In the event a repurchase right shall be exercised in accordance with
the terms hereof, then subject to Article 10, the Company shall on or promptly
following the Repurchase Date pay or cause to be paid in cash to the Holder
thereof the repurchase price of the Security or Securities as to which the
repurchase right has been exercised. In the event that the repurchase right is
exercised with respect to less than the entire principal amount of a surrendered
Security, the Company shall execute and deliver to the Trustee and the Trustee
shall authenticate for issuance in the name of the Holder a new Security or
Securities in the aggregate principal amount of the unrepurchased portion of
such surrendered security.
(e) If the Repurchase Date is on or before an Interest Payment Date and on
or after the related record date, any interest accrued and unpaid to the
Repurchase Date will be paid to the Person in whose name the Security is
registered at the close of business on such record date, and no additional
interest will be payable to Holders who exercise their repurchase right pursuant
to this Section 4.7.
(f) Any Change in Control Repurchase shall be conducted in compliance with
applicable tender offer rules, including Section 14(e) of the Exchange Act and
Rule 14(e)(1) thereunder. The Change in Control Repurchase may not be modified
or conditioned by the Company in any manner.
SECTION 4.8 LIMITATIONS ON ASSET SALES
The Company shall not, and shall not permit any of its Subsidiaries to,
consummate any Asset Sale unless (i) the Company or its Subsidiaries receive
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets or Capital Stock included in such Asset Sale (as determined
in good faith by the Board of Directors, whose determination shall be conclusive
and evidenced by a board resolution) and (ii) not less than 50% of such
consideration is in the form of cash. The Net Proceeds of Asset Sales shall,
within 360 days, (A) be reinvested in the lines of business of the Company or
any of its Subsidiaries immediately prior to such investment; (B) be applied to
the payment of the principal of, and interest on, Senior Indebtedness; (C) be
utilized to make any Investment in any other Person permitted under this
Indenture; or (D) be applied to an offer (an "Asset Sale Offer") to purchase
outstanding Securities. In any such Asset Sale Offer, the Company shall offer to
purchase Securities, as selected by lot (with such adjustments as may be deemed
appropriate by the Company so that only Securities in denominations of $1,000 or
integral multiples thereof shall be purchased), at a purchase price equal to
100% of the aggregate principal amount of the Securities, plus accrued and
unpaid interest to the date of purchase, in the manner set forth in this
Indenture. Any Asset Sale Offer will be conducted in compliance with applicable
tender offer rules, including Section 14(e) of the Exchange Act and Rule 14e-1
thereunder. Any Net Proceeds remaining immediately after the completion of any
Asset Sale Offer may be used by the Company or its Subsidiaries for any purpose
not inconsistent with the other provisions of this Indenture.
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ARTICLE 5
SUCCESSORS
SECTION 5.1 LIMITATIONS ON MERGERS AND CONSOLIDATIONS
The Company shall not consolidate or merge with or into, or sell, lease,
convey or otherwise dispose of all or substantially all of its assets, or assign
any of its obligations hereunder or under the Securities, to any Person unless:
(i) the Person formed by or surviving such consolidation or merger (if
other than the Company), or to which sale, lease, conveyance or other
disposition or assignment shall be made (collectively, the "Successor"), is
a corporation organized and existing under the laws of the United States or
any State thereof or the District of Columbia, and the Successor assumes by
supplemental indenture in a form satisfactory to the Trustee all of the
obligations of the Company hereunder and under the Securities; and
(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing.
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 stating that the proposed transaction and such supplemental
indenture comply with this Indenture.
SECTION 5.2 SUCCESSOR CORPORATION SUBSTITUTED
Upon any consolidation or merger, or any sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company or any
assignment of its obligations under this Indenture or the Securities in
accordance with Section 5.1, the Successor formed by such consolidation or into
or with which the Company is merged or to which such sale, lease, conveyance or
other disposition or assignment is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this Indenture
with the same effect as if such Successor has been named as the Company herein
and the predecessor Company, in the case of a sale, lease, conveyance or other
disposition or assignment, shall be released from all obligations under this
Indenture and the Securities.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.1 EVENTS OF DEFAULT
An "Event of Default" occurs if:
(1) the Company defaults in the payment of the principal of, or any
premium on, any Security when the same becomes due and payable, whether at
Stated Maturity, upon redemption, upon acceleration or otherwise;
(2) the Company defaults in the payment of interest on any Security
when the same becomes due and payable and the Default continues for a
period of 30 days (even if such payment is prohibited by Article 10
hereof);
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(3) the Company fails to comply with any of its agreements or
covenants in, or provisions of, the Securities or this Indenture and such
failure continues for the period and after the notice specified below;
(4) any acceleration of the maturity of Indebtedness of the Company or
its Subsidiaries having an outstanding principal amount of at least $50.0
million or a failure to pay such Indebtedness at its Stated Maturity;
provided that such acceleration or failure to pay is not cured within 10
days after such acceleration or failure to pay;
(5) the Company or any of its Significant Subsidiaries 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,
(c) consents to the appointment of a Custodian of it or for all
or substantially all of its property, or
(d) makes a general assignment for the benefit of its creditors;
or
(6) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(a) is for relief against the Company or any of its Significant
Subsidiaries as debtor in an involuntary case,
(b) appoints a Custodian of the Company or any of its
Significant Subsidiaries or a Custodian for all or
substantially all of the property of the Company or any of
its Significant Subsidiaries, or
(c) orders the liquidation of the Company or any of its
Significant Subsidiaries,
and the order or decree remains unstayed and in effect for 60 days.
The term "Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
The Trustee shall not be deemed to know of a Default unless it has actual
knowledge of such Default or receives written notice of such Default with
specific reference to such Default.
A Default under clause (3) is not an Event of Default until the Trustee
notifies the Company, or the Holders of at least 25% in aggregate 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 45 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."
SECTION 6.2 ACCELERATION
If an Event of Default (other than an Event of Default with respect to the
Company specified in clause (5) or (6) of Section 6.1) occurs and is continuing,
the Trustee by written notice to the Company, 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 Securities to be due and payable
immediately. Upon such declaration the amounts due and payable on the
Securities, as determined in the next succeeding paragraph, shall be due and
payable immediately. If
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an Event of Default with respect to the Company specified in clause (5) or (6)
of Section 6.1 occurs, such an amount shall ipso facto become and be immediately
due and payable without any declaration, notice or other act on the part of the
Trustee or any Holder. The Holders of a majority in aggregate principal amount
of the then outstanding Securities by written notice to the Trustee may rescind
an acceleration and its consequences if the rescission would not conflict with
any judgment or decree and if all existing Events of Default (except nonpayment
of principal of, or premium, if any, or interest on the Securities or that
resulted from a failure to comply with Section 4.7) have been cured or waived.
In the event that the maturity of the Securities is accelerated pursuant to
this Section 6.2, 100% of the principal amount thereof and premium, if any,
shall become due and payable plus accrued interest to the date of payment plus
interest on defaulted interest to the extent provided herein.
SECTION 6.3 OTHER REMEDIES
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal of, or premium, if any, 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 6.4 WAIVER OF PAST DEFAULTS
The Holders of a majority in aggregate principal amount of the then
outstanding Securities by notice to the Trustee may waive an existing Default or
Event of Default and its consequences, except a continuing Default or Event of
Default in the payment of the principal of, or premium, if any, or interest on
any Security or in respect of a provision under this Indenture which cannot be
modified or amended without the consent of the Holder of each Security then
outstanding. Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right or remedy consequent
thereon.
SECTION 6.5 CONTROL BY MAJORITY
The Holders of a majority in aggregate 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, in each case as determined by the Trustee.
SECTION 6.6 LIMITATIONS ON SUITS
A Holder may pursue a remedy with respect to this Indenture or the
Securities only if:
(1) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(2) the Holders of at least 25% in aggregate principal amount of the
then outstanding Securities make a written request to the Trustee to pursue
the remedy;
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(3) such Holder or Holders offer to the Trustee indemnity satisfactory
to the Trustee in its sole discretion against any loss, liability or
expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and
(5) during such 60-day period the Holders of a majority in aggregate
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 6.7 RIGHTS OF HOLDERS TO RECEIVE PAYMENT
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security to receive payment 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 6.8 COLLECTION SUIT BY TRUSTEE
If an Event of Default specified in Section 6.1(1) or (2) 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 for the amount of principal,
premium, if any, and interest remaining unpaid on the Securities, determined in
accordance with Section 6.2, and interest on overdue principal and premium, if
any, and, to the extent lawful, interest on overdue installments of interest,
and such further amount as shall be sufficient to cover the costs and expenses
of collection, including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.
SECTION 6.9 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, 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 7.6. 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 7.6 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 of the Securities 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; provided, however, that the Trustee may, on behalf of the Holders,
vote for the election of a trustee (or similar official) in bankruptcy and may
be a member of the creditors' committee.
SECTION 6.10 PRIORITIES
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If the Trustee collects any money pursuant to this Article 6, it shall pay
out the money in the following order:
First: to the Trustee for amounts due under Section 7.6;
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.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Article.
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,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section 6.11
does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
6.7 or a suit by Holders of more than 10% in principal amount of the then
outstanding Securities.
ARTICLE 7
TRUSTEE
SECTION 7.1 DUTIES OF TRUSTEE
(1) 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 such exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(2) Except during the continuance of an Event of Default:
(a) the Trustee need perform only those duties that are specifically
set forth in this Indenture 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, on their face, they appear to conform to the requirements
of this Indenture.
(3) 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 (2) 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 Trust 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 6.5.
(4) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (1),
(2), (3) and (5) of this Section 7.1.
(5) 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 indemnity satisfactory to
it against any loss, liability or expense.
(6) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.2 RIGHTS OF TRUSTEE
(1) Subject to Section 7.1, the Trustee may rely on any document believed
by it to be genuine and to have been signed or presented by the proper Person,
and the Trustee need not investigate any fact or matter stated in the document.
(2) 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 in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.
(3) The Trustee may act through agents and shall not be responsible for the
misconduct or negligence of any agent appointed with due care.
(4) 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.
(5) 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 7.3 INDIVIDUAL RIGHTS OF TRUSTEE
The Trustee in its individual or any other capacity may become the owner or
pledgee of Securities and may otherwise deal with the Company or any of its
Affiliates with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights.
SECTION 7.4 TRUSTEE'S DISCLAIMER
The Trustee makes no representation as to the validity or adequacy of this
Indenture or the Securities or as to the Company's ability to pay the Securities
when and as due or perform its other obligations hereunder. It shall not 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
hereof. It shall not be responsible for the use or application of any
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money received by any Paying Agent other than the Trustee. It shall not be
responsible for any statement or recital herein or any statement in the
Securities other than its certificate of authentication.
SECTION 7.5 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 of principal of, or premium, if any, or
interest on any Security or that resulted from a failure by the Company to
comply with Section 4.7, the Trustee may withhold the notice if it in good faith
determines that withholding the notice is in the interests of Holders.
SECTION 7.6 COMPENSATION AND INDEMNITY
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. 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 upon
request for all reasonable disbursements, advances and expenses incurred by it.
Such expenses shall include the reasonable compensation, disbursements and
expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee, its employees, officers, directors
and agents and any predecessor Trustee hereunder against any loss, liability or
expense incurred by it arising out of or in connection with the acceptance or
administration of its duties under this Indenture or in connection with
enforcing this indemnification provision, except as set forth in the next
paragraph. The Trustee promptly shall notify the Company of any claim for which
it may seek indemnity. 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 Company need not reimburse any expense or indemnify against any loss or
liability incurred by the Trustee through negligence or bad faith.
To secure the Company's payment obligations in this Section 7.6, 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 of,
premium, if any, 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 6.1(5) or (6) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
SECTION 7.7 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 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. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 310(b) of the TIA;
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(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.
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 fails to comply with Section 310 of the TIA, any 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, subject to the Lien provided for in Section 7.6.
Notwithstanding replacement of the Trustee pursuant to this Section 7.7, the
Company's obligations under Section 7.6 shall continue for the benefit of the
retiring Trustee.
SECTION 7.8 SUCCESSOR TRUSTEE BY MERGER, ETC.
Subject to Section 7.9, if the Trustee 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.
SECTION 7.9 ELIGIBILITY; DISQUALIFICATION
There shall at all times be a Trustee hereunder which shall be a bank or
corporation organized and doing business under the laws of the United States of
America, any state thereof or the District of Columbia authorized under such
laws to exercise corporate trustee power, shall be subject to supervision or
examination by Federal or state (or the District of Columbia) authority and
shall have a combined capital and surplus of at least $50 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 ss. 310(a)(1) and 310(a)(2). The Trustee is subject to TIA ss. 310(b). If
at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect specified in Section 7.7.
ARTICLE 8
DISCHARGE OF INDENTURE
SECTION 8.1 TERMINATION OF COMPANY'S OBLIGATIONS
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(a) This Indenture shall cease to be of further effect (except that the
Company's obligations under Section 7.6 and the Trustee's and Paying Agent's
obligations under Section 8.3 shall survive) when all outstanding Securities
theretofore authenticated and issued have been delivered (other than destroyed,
lost or stolen Securities that have been replaced or paid) to the Trustee for
cancellation and the Company has paid all sums payable hereunder. In addition,
the Company may elect to have either paragraph (b) or paragraph (c) below be
applied to the outstanding Securities upon compliance with the conditions set
forth in paragraph (d).
(b) Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (b), the Company shall be deemed to have been
released and discharged from its obligations with respect to the 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 the Sections of and
matters under this Indenture referred to in (i) and (ii) below, and to have
satisfied all its other obligations under such Securities and this Indenture
insofar as such Securities are concerned (and the Trustee, 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 paragraph (d) below and as more fully set forth
in such paragraph, 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 2.5, 2.6 and 4.2,
and, with respect to the Trustee, under Section 7.6, (iii) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and (iv) this Section
8.1. Subject to compliance with this Section 8.1, the Company may exercise its
option under this paragraph (b) notwithstanding the prior exercise of its option
under paragraph (c) below with respect to the Securities.
(c) Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (c), the Company shall be released and discharged
from its obligations under any covenant contained in Article 5 and in Section
4.3, 4.4 and 4.6 through 4.8 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 to be not
"outstanding" for the purpose 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. 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 6.1, but, except as specified above, the remainder of this Indenture and
such Securities shall be unaffected thereby.
(d) The following shall be the conditions to the application of either
paragraph (b) or (c) above to the outstanding Securities:
(1) the Company has irrevocably deposited in trust with the Trustee
or, at the option of the Trustee, with a trustee satisfactory to the
Trustee and the Company under the terms of an irrevocable trust agreement
in form and substance satisfactory to the Trustee in its sole discretion,
money or U.S. Government Obligations sufficient to pay principal of,
premium, if any, and interest on the Securities to maturity or redemption
(in the opinion of a nationally recognized accounting firm of independent
certified public accountants expressed in a written certificate delivered
to the Trustee) and to pay all other sums payable by it hereunder; provided
that (i) the trustee of the irrevocable trust shall have been irrevocably
instructed to pay such money or the proceeds of such U.S. Government
Obligations to the Trustee and (ii) the Trustee shall have been irrevocably
instructed to apply such money or the proceeds of such U.S. Government
Obligations to the payment of said principal, premium, if any, and interest
with respect to the Securities;
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(2) the Company has delivered to the Trustee an Officer's Certificate
stating that (A) all conditions precedent provided for relating to either
the legal defeasance under paragraph (b) above or the covenant defeasance
under paragraph (c) above, as the case may be, have been complied with and
(B) if any other Indebtedness of the Company shall then be outstanding or
committed, such legal defeasance or covenant defeasance will not violate
the provisions of the agreements or instruments evidencing such
Indebtedness; and
(3) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit;
(4) the Trustee shall not have received notice from any holder of Bank
Debt or any holder of Senior Indebtedness in an aggregate principal amount
in excess of $20 million that such legal defeasance or covenant defeasance
would violate the provisions of the agreements or instruments evidencing
such Senior Indebtedness;
(5) such legal defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default or event of default under,
this Indenture or any other material agreement or instrument to which the
Company is a party or by which it is bound;
(6) in the case of an election under paragraph (b) above, the Company
shall have delivered to the Trustee an Opinion of Counsel from nationally
recognized counsel acceptable to the Trustee stating that (x) the Company
has received from, or there has been published by, the Internal Revenue
Service a ruling, (y) there exists controlling precedent, or (z) since the
date of this Indenture, there has been a change in the applicable Federal
income tax law, in any case to the effect 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 amount and in the same manner and
at the same time as would have been the case if such legal defeasance had
not occurred; and
(7) in the case of an election under paragraph (c) above, the Company
shall have delivered to the Trustee an Opinion of Counsel from nationally
recognized counsel acceptable to the Trustee (i) to the effect 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 on the same amount and
in the same manner and at the same time as would have been the case if such
covenant defeasance had not occurred or (ii) that the Company has received
from, or there has been published by, the Internal Revenue Service a ruling
to the foregoing effect.
After such irrevocable deposit made pursuant to this Section 8.1 and
satisfaction of the other conditions set forth herein, the Trustee upon request
shall acknowledge in writing the discharge of the Company's obligations under
this Indenture except for those surviving obligations specified above.
The Company may make an irrevocable deposit pursuant to this Section 8.1
only if at such time it is not prohibited from doing so under the provisions of
Article 10 and the Company shall have delivered to the Trustee and any Paying
Agent an Officers' Certificate to that effect.
In order to have money available on a payment date to pay principal,
premium, if any, or interest on the Securities, the U.S. Government Obligations
shall be payable as to principal, premium, if any, or interest on or before such
payment date in such amounts as will provide the necessary money to effect the
applicable defeasance. U.S. Government Obligations shall not be callable at the
issuer's option.
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SECTION 8.2 APPLICATION OF TRUST MONEY
The Trustee or a trustee satisfactory to the Trustee and the Company shall
hold in trust money or U.S. Government Obligations deposited with it pursuant to
Section 8.1. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of, premium, if any, and interest on the
Securities.
SECTION 8.3 REPAYMENT TO THE COMPANY
The Trustee and the Paying Agent shall promptly pay to the Company upon
written request any excess money or securities held by them at any time.
The Trustee and the Paying Agent shall pay to the Company at their option
or upon written request any money held by them for the payment of principal,
premium, if any, or interest that remains unclaimed for two years after the date
upon which such payment shall have become due; provided, however, that the
Company shall have either caused notice of such payment to be mailed to each
Holder entitled thereto no less than 30 days prior to such repayment or within
such period shall have published such notice in a financial newspaper of
widespread circulation published in The City of New York. After payment to the
Company, Holders entitled to the money must look to the Company for payment as
general creditors unless an applicable abandoned property law designates another
Person, and all liability of the Trustee and such Paying Agent with respect to
such money shall cease.
SECTION 8.4 REINSTATEMENT
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 8.1 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.1 until
such time as the Trustee or Paying Agent is permitted to apply all such money or
U.S. Government Obligations in accordance with Section 8.1; provided, however,
that if the Company has made any payment of premium, if any, or interest on or
principal of any Securities because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Securities to
receive such payment from the money or U.S. Government Obligations held by the
Trustee or Paying Agent.
ARTICLE 9
AMENDMENTS
SECTION 9.1 WITHOUT CONSENT OF HOLDERS
The Company and the Trustee may amend this Indenture or the Securities or
waive any provision hereof without the consent of any Holder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Section 5.1;
(3) to evidence and provide for the acceptance of appointment hereunder by
a successor Trustee with respect to the Securities;
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sss
(4) to make any change that does not adversely affect the legal rights
hereunder of any Holder; or
(5) to comply with a provision or provisions of the TIA applicable to this
Indenture.
Upon the request of the Company, accompanied by a resolution of the Board
of Directors authorizing the execution of any such supplemental indenture, and
upon receipt by the Trustee of the documents described in Section 9.6, the
Trustee shall join with the Company in the execution of any supplemental
indenture authorized or permitted by the terms of this Indenture and make any
further appropriate agreements and stipulations that may be therein contained,
but the Trustee shall not be obligated to enter into any supplemental indenture
that affects its own rights, duties or immunities under this Indenture or
otherwise. After an amendment or waiver under this Section becomes effective,
the Company shall mail to the Holders of each Security affected thereby a notice
briefly describing the amendment 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.
SECTION 9.2 WITH CONSENT OF HOLDERS
Except as provided in this Section 9.2, the Company and the Trustee may
amend this Indenture or the Securities with the written consent of the Holders
of at least a majority in principal amount of the then outstanding Securities.
Upon the request of the Company, accompanied by a resolution of the Board
of Directors authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence of the consent of the Holders as
aforesaid, and upon receipt by the Trustee of the documents described in Section
9.6, 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
to approve the particular form of any proposed amendment or waiver, but it shall
be sufficient if such consent approves the substance thereof.
The Holders of a majority in 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. However, without the consent
of each Holder affected, an amendment or waiver under this Section may not:
(1) change the Stated Maturity of the principal of, or any installment of
interest on, any Security;
(2) reduce the principal amount of, or premium, if any, or interest on,
any Security;
(3) modify the provisions of Article 10 hereof in a manner adverse to the
Holders;
(4) change the place of payment where, or the coin or currency in which,
any Security or any premium or interest thereon is payable;
(5) adversely affect the right of Holders to require the Company to
repurchase Securities pursuant to Section 4.7 hereof or modify the
obligations of the Company to make an Asset Sale Offer in accordance
with Sections 4.8 and 3.8 or modify the redemption provisions of
Section 3.7;
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(6) impair the right of Holders to institute suit for the enforcement of
payment of the principal of and premium, if any, and interest on
Securities on or after the Stated Maturity thereof (or in the case of
redemption, on or after the redemption date);
(7) reduce the percentage in principal amount of Securities, the consent
of whose Holders is required for any modification or amendment of the
Indenture, or the consent of whose Holders is required for any waiver
of compliance with certain provisions of this Indenture or certain
Defaults or Events of Default hereunder and their consequences
provided for in this Indenture; or
(8) modify any of the provisions of Section 6.4 or this sentence of this
Section 9.2.
The right of any Holder to participate in any consent required or sought
pursuant to any provision of this Indenture (and the obligation of the Company
to obtain any such consent otherwise required from such Holder) may be subject
to the requirement that such Holder shall have been the Holder of record of any
Securities with respect to which such consent is required or sought as of a date
identified by the Trustee in a notice furnished to Holders in accordance with
the terms of this Indenture.
SECTION 9.3 COMPLIANCE WITH TRUST INDENTURE ACT
Every amendment to this Indenture or the Securities shall comply in form
and substance with the TIA as then in effect.
SECTION 9.4 REVOCATION AND EFFECT OF CONSENTS
Until an amendment (which includes any supplement) or waiver becomes
effective, a consent to it by a Holder of a Security 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
may revoke the consent as to his or her Security or portion of a Security if the
Trustee receives written notice of revocation before the date the amendment or
waiver becomes effective. An amendment or waiver becomes effective in accordance
with its terms and thereafter binds every Holder of a Security whether
theretofore or thereafter authenticated and delivered.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment or
waiver. If the Company elects to fix a record date for such purpose, 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, or (ii) such other date as the Company shall
designate. If a record date is fixed, then notwithstanding the provisions of the
immediately preceding paragraph, those Persons who were Holders at such record
date (or their duly designated proxies), and only those Persons, shall be
entitled to consent to such amendment or waiver or to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No consent shall be valid or effective for more than 90 days after
such record date unless consents from Holders of the principal amount of
Securities required hereunder for such amendment or waiver to be effective shall
have also been given and not revoked within such 90-day period.
SECTION 9.5 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 the
Securities may issue and the Trustee shall authenticate new Securities that
reflect the amendment or waiver.
SECTION 9.6 TRUSTEE TO SIGN AMENDMENTS, ETC.
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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 7.1 and 7.2 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.
ARTICLE 10
SUBORDINATION
SECTION 10.1 SECURITIES SUBORDINATED TO SENIOR INDEBTEDNESS
The Company covenants and agrees, and each Holder of a Security, by his
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article 10, the indebtedness
represented by the Securities and all Payments or Distributions in Respect of
the Securities are hereby expressly made subordinate and subject in right of
payment to the prior payment in full of all Senior Indebtedness.
If at any time following the payment of any amount to a holder of Senior
Indebtedness with respect to such Senior Indebtedness, such payment is rescinded
or must otherwise be returned by such holder upon the insolvency, bankruptcy,
reorganization, dissolution or liquidation of the Company or any other Person or
otherwise, and is so rescinded or returned to the party or parties making such
payment, such Senior Indebtedness shall be reinstated to the extent of such
payment and the provisions of this Article 10 shall be applicable as if such
payment were never made.
The provisions of this Article 10 are for the benefit of the holders of
Senior Indebtedness, and each Holder of the Securities, by his purchase or other
acquisition of the Securities, hereby agrees for the benefit of each holder of
Senior Indebtedness that his Securities are subject to the provisions of this
Article 10.
SECTION 10.2 PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.
In the event of (a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding,
relative to the Company or to its creditors, as such, or to a substantial part
of its assets, or (b) any proceeding for the liquidation, dissolution or other
winding up of the Company, whether voluntary or involuntary and whether or not
involving insolvency or bankruptcy, or (c) any assignment for the benefit of
creditors or any other marshalling of assets and liabilities of the Company,
then and in any such event the holders of Senior Indebtedness shall be entitled
to receive payment in full of all amounts due or to become due on or in respect
of all Senior Indebtedness (including, without limitation, all Allowed and
Disallowed Post-Commencement Interest and Expenses), or provision shall be made
for such payment in cash or in a manner otherwise satisfactory to the holders of
Senior Indebtedness, before the Holders of the Securities are entitled to
receive any Payment or Distribution in Respect of the Securities (other than
payments of amounts deposited prior to any such case, proceeding, dissolution or
other winding up or event in accordance with the defeasance provisions of
Article 8 hereof), and to that end the holders of Senior Indebtedness shall be
entitled to receive, for application to the payment thereof, any payment or
distribution of any kind or character, whether in cash, property or securities,
including any such payment or distribution which may be payable or deliverable
by reason of the payment of any other indebtedness of the Company being
subordinated to the payment of the Securities, which may be payable or
deliverable in respect of the Securities in any such case, proceeding,
dissolution, liquidation or other winding up or event.
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In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received any
Payment or Distribution in Respect of the Securities in any such case,
proceeding, dissolution, liquidation or other winding up or event (other than
payments of amounts deposited prior to any such case, proceeding, dissolution or
other winding up or event in accordance with the defeasance provisions of
Article 8 hereof), including any such payment or distribution which may be
payable or deliverable by reason of the payment of any other indebtedness of the
Company being subordinated to the payment of the Securities, before all Senior
Indebtedness (including, without limitation, all Allowed and Disallowed
Post-Commencement Interest and Expenses) is paid in full or payment thereof
provided for, and, if (i) subject to Section 10.8, such fact shall, at or prior
to the time of such payment or distribution, have been made known to the
Trustee, then and in such event such payment or distribution shall be paid over
or delivered forthwith to the holders of Senior Indebtedness or to a
representative duly appointed by any such holder or holders of Senior
Indebtedness unless otherwise required by law or court order or (ii) such fact
shall have been made known to such Holder at any time before or after such
payment, then and in such event such Holder shall forthwith pay over and deliver
such payment to the holders of Senior Indebtedness or to a representative duly
appointed by any such holder or holders of such Senior Indebtedness unless
otherwise required by law or court order, in either such case for application to
the payment of all Senior Indebtedness remaining unpaid, to the extent necessary
to pay all Senior Indebtedness (including, without limitation, all Allowed and
Disallowed Post- Commencement Interest and Expenses) in full, after giving
effect to any concurrent payment or distribution to or for the holders of Senior
Indebtedness.
The consolidation of the Company with, or the merger of the Company into,
another Person or the liquidation or dissolution of the Company following the
conveyance or transfer of its properties and assets substantially as an entirety
to another Person upon the terms and conditions set forth in Article 5 shall not
be deemed a dissolution, winding up, liquidation, reorganization, assignment for
the benefit of creditors or marshalling of assets and liabilities of the Company
for the purposes of this Section if the Person formed by such consolidation or
into which the Company is merged or which acquires by conveyance or transfer
such properties and assets substantially as an entirety, as the case may be,
shall, as a part of such consolidation, merger, conveyance or transfer, comply
with the conditions set forth in Article 5.
SECTION 10.3 PRIOR PAYMENT TO SENIOR INDEBTEDNESS UPON ACCELERATION OF
SECURITIES
In the event that any Securities are declared due and payable before their
Stated Maturity, then and in such event the holders of Senior Indebtedness
outstanding at the time such Securities so become due and payable shall be
entitled to receive payment in full in cash, or in a manner otherwise
satisfactory to the holders of Senior Indebtedness, of all amounts due on or in
respect of such Senior Indebtedness (including, without limitation, all Allowed
and Disallowed Post-Commencement Interest and Expenses) before the Holders of
the Securities are entitled to receive any Payment or Distribution in Respect of
the Securities (including any payment which may be payable by reason of the
payment of any other indebtedness of the Company being subordinated to the
payment of the Securities), other than payment of amounts previously deposited
in accordance with the defeasance provisions of Article 8 hereof, by or for the
account of the Company.
In the event that, notwithstanding the foregoing, the Company shall make
any Payment or Distribution in Respect of the Securities to the Trustee or the
Holder of any Security prohibited by the foregoing provisions of this Section,
then if (i) subject to Section 10.8, such fact shall, prior to the time of such
payment, have been made known to the Trustee, then and in such event the Trustee
shall forthwith pay over and deliver such payment to the holders of such Senior
Indebtedness or to a representative duly appointed by any such holder or holders
of such Senior Indebtedness or (ii) such fact shall have been made known to such
Holder at any time before or after such payment, then and in such event such
Holder shall forthwith pay over and deliver such payment to the holders of
Senior Indebtedness or to a representative duly appointed by any such holder or
holders of such Senior Indebtedness, in either such case for application to the
payment of all Senior Indebtedness then remaining unpaid (including, without
limitation, all Allowed and Disallowed Post-Commencement Interest and Expenses),
after giving effect to any concurrent payment or distribution to or for the
benefit of holders of Senior Indebtedness.
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The provisions of this Section shall not apply to any payment with respect
to which Section 10.2 is applicable.
SECTION 10.4 NO PAYMENT UPON CERTAIN DEFAULTS WITH RESPECT TO SENIOR
INDEBTEDNESS
(a) No Payment or Distribution in Respect of the Securities (other than
payments of amounts previously deposited in accordance with the defeasance
provisions of Article 8 hereof) shall be made by or for the account of the
Company upon the occurrence of any default in the payment of any Bank Debt or
any Senior Indebtedness (other than Bank Debt) in excess of $20 million beyond
any applicable grace period, unless and until such default is cured or waived or
ceases to exist or such Senior Indebtedness has been paid in full or provision
for such payment in cash or in a manner otherwise satisfactory to holders of
Senior Indebtedness has been made.
(b) Upon any default with respect to the financial covenants under the
Credit Agreement as specified therein, or if any payment or distribution by the
Company with respect to any Security would, immediately after giving effect
thereto, result in such default, no Payment or Distribution in Respect of the
Securities (other than payments of amounts previously deposited in accordance
with the defeasance provisions of Article 8 hereof), including any payment which
may be payable by reason of the payment of any other indebtedness being
subordinated to the payment of the Securities, shall be made by or for the
account of the Company on account of principal of or premium, if any, or
interest on the Securities or on account of the purchase, redemption or other
acquisition of the Securities for the period specified below (the "Payment
Blockage Period"). The Payment Blockage Period shall commence upon the receipt
of notice by the Company or the Trustee from the Bank Agent and shall end on the
earlier of (i) 179 days thereafter, (ii) the date on which such default with
respect to the financial covenants under the Credit Agreement is cured or waived
or ceases to exist or on which such Bank Debt is paid in full or provision for
such payment in money or money's worth has been made, (iii) the date on which
the maturity of any Indebtedness (other than Senior Indebtedness) shall have
been accelerated by virtue of such event, or (iv) the date on which such Payment
Blockage Period shall have been terminated by notice to the Company or the
Trustee from the Bank Agent, after which any and all required payments in
respect of the Securities, including any missed payments, may resume. Only one
Payment Blockage Period may be commenced during any period of 365 consecutive
days. No default with respect to the financial covenants under the Credit
Agreement that existed or was continuing on the date of the commencement of any
Payment Blockage Period will be, or can be, made the basis for the commencement
of a second Payment Blockage Period whether or not within a period of 365
consecutive days, unless such default has been cured or waived for a period of
not less than 90 consecutive days. In no event will a Payment Blockage Period
extend beyond 179 days.
(c) In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, then (i) subject to Section 10.8, if such
fact shall, at or prior to the time of such payment, have been made known to the
Trustee, then and in such event the Trustee shall forthwith pay over and deliver
such payment to the holders of Senior Indebtedness or to a representative duly
appointed by any such holder or holders of such Senior Indebtedness or (ii) such
fact shall have been made known to such Holder at any time before or after such
payment, then and in such event such Holder shall forthwith pay over and deliver
such payment to the holders of Senior Indebtedness or to a representative duly
appointed by any such holder or holders of such Senior Indebtedness.
The provisions of this Section shall not apply to any payment with respect
to which Section 10.2 is applicable.
SECTION 10.5 PAYMENT PERMITTED IF NO DEFAULT
Nothing contained in this Article or elsewhere in this Indenture or in any
of the Securities shall prevent (a) the Company, at any time except during the
pendency of any case, proceeding, dissolution, liquidation or other winding up,
assignment for the benefit of creditors or other marshalling of assets and
liabilities of the Company referred to in Section 10.2 or under the conditions
described in Section 10.3 or Section 10.4, from making any Payment or
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Distribution in Respect of the Securities, or (b) the application by the Trustee
of any money deposited with it hereunder with respect to any Payment or
Distribution in Respect of the Securities or the retention of such Payment or
Distribution in Respect of the Securities by the Holders, if, at the time of
such application by the Trustee, it had not been notified in accordance with
Section 10.8 that such payment was prohibited by the provisions of this Article
10.
SECTION 10.6 SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS
Subject to the payment in full in cash of all amounts due on or in respect
of Senior Indebtedness (including, without limitation, all Allowed and
Disallowed Post-Commencement Interest and Expenses, except to the extent
provided below), the Holders of the Securities shall be subrogated to the extent
of the payments or distributions made to the holders of such Senior Indebtedness
pursuant to the provisions of this Article 10 (equally and ratably with the
holders of all indebtedness of the Company which by its express terms is
subordinated to other indebtedness of the Company to substantially the same
extent as the Securities are subordinated and are entitled to like rights of
subrogation) to the rights of the holders of such Senior Indebtedness to receive
payments and distributions of cash, property and securities applicable to the
Senior Indebtedness until the principal of and premium, if any, and interest on
the Securities shall be paid in full. For purposes of such subrogation, no
payments or distributions to the holders of the Senior Indebtedness of any cash,
property or securities to which the Holders of the Securities or the Trustee
would be entitled except for the provisions of this Article 10, and no payments
over pursuant to the provisions of this Article to the holders of Senior
Indebtedness by Holders of the Securities or the Trustee, shall, as among the
Company, its creditors other than holders of Senior Indebtedness and the Holders
of the Securities, be deemed to be a payment or distribution by the Company to
or on account of the Senior Indebtedness.
Notwithstanding anything to the contrary in this Section 10.6, the Holders
of the Securities hereby agree that they shall have no rights of subrogation
with respect to amounts paid to the holders of Senior Indebtedness in payment of
any interest, reimbursements, costs, expenses or indemnities that are not
allowed claims enforceable against the Company in a case or proceeding under
Bankruptcy Law.
SECTION 10.7 PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS
The provisions of this Article 10 are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities on the
one hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Article or elsewhere in this Indenture or in the Securities is
intended to or shall (a) impair, as among the Company, its creditors other than
holders of Senior Indebtedness and the Holders of the Securities, the obligation
of the Company, which is absolute and unconditional, to pay to the Holders of
the Securities the principal of and premium, if any, and interest on the
Securities as and when the same shall become due and payable in accordance with
their terms; or (b) affect the relative rights against the Company of the
Holders of the Securities and creditors of the Company other than the holders of
Senior Indebtedness; or (c) prevent the Trustee or the Holder of any Security
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article 10 of
the holders of Senior Indebtedness to receive cash, property and securities
otherwise payable or deliverable to the Trustee or such Holder. The failure to
make a payment on account of principal of, premium, if any, or interest on, or
any other amounts then payable with respect to, the Securities by any reason of
this Article 10 shall not be construed as preventing the occurrence of an Event
of Default under Section 6.1.
SECTION 10.8 APPLICATION BY TRUSTEE OF MONIES DEPOSITED WITH IT
Money and U.S. Government Obligations deposited in trust with the Trustee
pursuant to Section 8.2 and in compliance with Section 8.1 shall be for the sole
benefit of the Holders and, to the extent allocated for the payment of
Securities, shall not be subject to the subordination provisions of this Article
10. Otherwise, any deposit of monies by the Company with the Trustee or any
Paying Agent (whether or not in trust) for payment on account of principal of,
premium, if any, and interest on the Securities or that otherwise constitutes a
Payment or Distribution in Respect of the Securities shall be subject to the
provisions of Sections 10.1, 10.2, 10.3 and 10.4 except that, if at least
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three Business Days prior to the date on which by the terms of this Indenture
any such monies may become payable for any purpose (including, without
limitation, the payment of the principal of, premium, if any, or the interest on
any Security) the Trustee shall not have received with respect to such monies
the notice provided for in Section 10.4(b) or 10.11, then the Trustee shall have
full power and authority to receive such monies and to apply the same to the
purpose for which they were received, and shall not be affected by any notice to
the contrary which may be received by it within three Business Days of such
date. This Section shall be construed solely for the benefit of the Trustee and
Paying Agent and shall not otherwise affect the rights of holders of Senior
Indebtedness.
SECTION 10.9 TRUSTEE TO EFFECTUATE SUBORDINATION
Each holder of a Security by his acceptance thereof authorizes and directs
the Trustee on his behalf to take such action as may be necessary or appropriate
to effectuate the subordination provided in this Article and appoints the
Trustee his attorney-in-fact for any and all such purposes.
SECTION 10.10 NO WAIVER OF SUBORDINATION PROVISIONS
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness may, at any time and from time to time, without
the consent of or notice to the Trustee or the Holders of the Securities,
without incurring responsibility to the Holders of the Securities and without
impairing or releasing the subordination provided in this Article or the
obligations hereunder of the Holders of the Securities to the holders of Senior
Indebtedness, do any one or more of the following: (i) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter,
compromise, accelerate, extend or refinance Senior Indebtedness, or otherwise
amend or supplement in any manner Senior Indebtedness or any instrument
evidencing the same or any agreement under which Senior Indebtedness is
outstanding; (ii) sell, exchange, release, foreclose upon or otherwise deal with
any property pledged, mortgaged or otherwise securing Senior Indebtedness; (iii)
release any Person liable in any manner for the payment or collection of Senior
Indebtedness; (iv) exercise or refrain from exercising any rights against the
Company and any other Person; (v) increase or reduce the rate of interest or
amount of principal payable on any Senior Indebtedness; (vi) release or
discharge the Company, by acceptance of a deed or assignment in lieu of
foreclosure or otherwise, as to all or any portion of the Senior Indebtedness;
or (vii) release, substitute or add any one or more guarantors or endorsers,
accept additional or substituted security for payment or performance of the
Senior Indebtedness, or release or subordinate any security therefor. No
exercise, delay in exercise or failure to exercise by any holder of any Senior
Indebtedness of any right hereby given it, no dealing by any holder of any
Senior Indebtedness with the Company or any other guarantor, endorser or other
person, no change, impairment or suspension of any right or remedy of any holder
of any Senior Indebtedness, and no act or thing which but for this provision
could act as a release or exoneration of the Holders of the Securities
hereunder, shall in any way affect, decrease, diminish or impair any of the
obligations of the Holders of the Securities and the Trustee or give to the
Holders of the Securities, the Trustee or any other person or entity any
recourse or defense against any holder of any Senior Indebtedness.
SECTION 10.11 NOTICE TO TRUSTEE
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Securities. Notwithstanding the provisions of this
Article or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof from the
Company or a holder of
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Senior Indebtedness or from any trustee or other representative therefor; and,
prior to the receipt of any such written notice, the Trustee, subject to the
provisions of Sections 7.1 and 7.2, shall be entitled in all respects to assume
that no such facts exist.
Subject to the provisions of Sections 7.1 and 7.2, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a trustee
therefor) to establish that such notice has been given by a holder of Senior
Indebtedness (or a trustee therefor). In the event that the Trustee determines
in good faith that further evidence is required with respect to the right of any
Person as a holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article 10, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article 10, and if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
SECTION 10.12 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT
Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Trustee, subject to the provisions of Sections 7.1 and 7.2,
and the Holders of the Securities shall be entitled to rely upon any order or
decree entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
10.
SECTION 10.13 TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Indebtedness and shall not be liable to any such holders if it shall in
good faith mistakenly pay over or distribute to Holders of Securities or to the
Company or to any other Person cash, property or securities to which holders of
Senior Indebtedness shall be entitled by virtue of this Article 10 or otherwise.
SECTION 10.14 RIGHTS OF TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS; PRESERVATION
OF TRUSTEE'S RIGHTS
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article with respect to any Senior Indebtedness which may at
any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 7.6.
ARTICLE 11.
MISCELLANEOUS
SECTION 11.1 TRUST INDENTURE ACT CONTROLS
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If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA ss. 318(c), the imposed duties shall control.
SECTION 11.2 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:
Integrated Health Services, Inc.
10065 Red Run Boulevard
Owings Mills, Maryland 21117
Attention: President
If to the Trustee:
Signet Trust Company
7 St. Paul Street
Baltimore, Maryland 21202
Attention: Corporate Trust Department
The Company or the Trustee by notice to the other may designate additional
or different addresses for subsequent notices or communications.
All notices and communications 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
to the Holder's address shown on the register kept by the Registrar. 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 11.3 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 11.4) 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 complied with; and
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(2) an Opinion of Counsel (which shall include the statements set
forth in Section 11.4) stating that, in the opinion of such counsel, all
such conditions precedent and covenants have been complied with.
SECTION 11.4 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 ss. 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
complied with; and
(4) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been complied with.
SECTION 11.5 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 11.6 LEGAL HOLIDAYS
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in The City of New York 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 11.7 NO RECOURSE AGAINST OTHERS
A director, officer, employee or stockholder of the Company or the Trustee,
as such, shall not have any liability for any obligations of the Company under
the Securities or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability.
SECTION 11.8 GOVERNING LAW
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW.
SECTION 11.9 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company or a Subsidiary. Any such indenture, loan
or debt agreement may not be used to interpret this Indenture.
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SECTION 11.10 SUCCESSORS
All agreements of the Company in this Indenture and the Securities shall
bind its successor. All agreements of the Trustee in this Indenture shall bind
its successor.
SECTION 11.11 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.
SECTION 11.12 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 11.13 TRUSTEE AS PAYING AGENT AND REGISTRAR
The Company initially appoints the Trustee as Paying Agent and Registrar.
SECTION 11.14 TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof and shall in no way modify or
restrict any of the terms or provisions hereof.
SECTION 11.15 EFFECTIVE DATE
This Amended and Restated Supplemental Indenture shall be effective, and
the effective date shall be deemed to have occurred, upon the receipt by the
Trustee of a written notice from the Company that the conditions to the Offer to
Purchase the Company's 10 3/4% Senior Subordinated Notes due 2004 and Consent
Solicitation dated May 1, 1997, have been satisfied or waived by the Company and
that the Acceptance Date (as defined therein) has occurred.
[Signatures on Next Page]
-42-
<PAGE>
SIGNATURES
Dated as of May 15, 1997
(SEAL)
INTEGRATED HEALTH SERVICES, INC.
By: /s/
--------------------------------
Name:
Title:
Attest:
/s/
- ---------------------------------
Dated as of May 15, 1997
(SEAL)
SIGNET TRUST COMPANY,
as Trustee
By /s/
--------------------------------
Name:
Title:
Attest:
/s/
- ---------------------------------
-43-
<PAGE>
EXHIBIT A
10 3/4% SENIOR SUBORDINATED NOTES DUE 2004
No. $
INTEGRATED HEALTH SERVICES, INC.
promises to pay to
or registered assigns,
the principal sum of
Dollars [or such greater or lesser amount as indicated on the Schedule of
Exchanges of Definitive Securities on the reverse hereof]1 on July 15, 2004
Interest Payment Dates: January 15 and July 15
Record Dates: December 31 and June 30
Authentication: Dated: , 1994
This is one of the Securities referred to in the within-mentioned Indenture.
SIGNET TRUST COMPANY,
as Trustee INTEGRATED HEALTH SERVICES, INC.
By:_____________________________ By:_____________________________
Authorized Officer
By:_____________________________
(SEAL)
- ----------
1 This phrase should be included only if the Security is issued in global
form.
A-1
<PAGE>
10 3/4% SENIOR SUBORDINATED NOTES DUE 2004
1. INTEREST. INTERGRATED HEALTH SERVICES, INC., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Security at
10 3/4% per annum from the date this Security is issued until maturity. The
Company will pay interest semiannually on January 15 and July 15 of each year,
or if any such day is not a Business Day, on the next succeeding Business Day
(each an "Interest Payment Date"). Interest on the Securities will accrue from
the most recent date on which interest has been paid or, if no interest has been
paid, from the date of issuance; provided, that if there is no existing Default
in the payment of interest, and if this Security is authenticated between a
record date referred to on the face hereof and the next succeeding Interest
Payment Date, interest shall accrue from such next succeeding Interest Payment
Date; provided, further, that the first Interest Payment Date shall be January
15, 1995. Interest will be computed on the basis of a 360-day year of twelve
30-day months.
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 canceled after such record
date and on or before such Interest Payment Date. In the case of a Security
which is called for redemption on a redemption date, or to be repurchased by the
Company in connection with a Change in Control Repurchase pursuant to paragraph
6 or an Asset Sale Offer pursuant to Paragraph 7, on or after an interest
payment record date and prior to the next Interest Payment Date, the registered
holder of such Security as of such record date shall be entitled to accrued and
unpaid interest to the redemption date or repurchase date, as the case may be,
as provided in paragraphs 5, 6 and 7 below. The Holder must surrender this
Security to a Paying Agent to collect principal payments. The Company will pay
the principal of, premium, if any, and interest on the Securities in money of
the United States of America that at the time of payment is legal tender for
payment of public and private debts. The Company, however, may pay such amounts
by check payable in such money mailed to a Holder's registered address.
3. PAYING AGENT AND REGISTRAR. Initially, Signet Trust Company, the Trustee
under the Indenture, will act as Paying Agent and Registrar. The Company may
change any Paying Agent, Registrar or co-registrar without notice to any Holder.
The Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Securities under an Indenture dated as
of July 1, 1994, as subsquently supplemented by a Supplemental Indenture dated
as of June 13, 1996 and amended and restated by an Amended and Restated
Supplemental Indenture dated as of May 15, 1997 ("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 ss.ss. 77aaa-77bbbb), as in
effect on the date of execution 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 Securities are unsecured general obligations of the
Company limited to $100,000,000 in aggregate principal amount, plus amounts, if
any, sufficient to pay interest on outstanding Securities as set forth in
Paragraph 2 hereof.
5. OPTIONAL REDEMPTION. The Company may redeem all or any of the Securities
at any time on or after July 15, 1999 at the following redemption prices
(expressed as percentages of principal amount) plus accrued and unpaid interest
to the redemption date, if redeemed during the 12-month period beginning:
A-2
<PAGE>
Optional
Year Redemption Price
---- ----------------
July 15, 1999 105.375%
July 15, 2000 103.583%
July 15, 2001 101.792%
July 15, 2002 and thereafter 100%
6. RIGHT TO REQUIRE REPURCHASE. Following the occurrence of any Change in
Control, each Holder will have the right to require that the Company repurchase
(a "Change in Control Repurchase") such Holder's Securities at a purchase price
equal to 101% of the aggregate principal amount of the Securities, plus accrued
and unpaid interest thereon, if any, to the date of repurchase. Within 30 days
after any Change in Control, the Company or, at the Company's request, the
Trustee, shall cause to be mailed a notice to all Holders notifying such Holders
of the occurrence of such Change in Control, the Holder's rights arising as a
result thereof and the procedures to be followed by Holders wishing to exercise
such rights.
A Holder of Securities may exercise the right to require a Change in
Control Repurchase after receipt of notice of the existence of such right by
completing the form entitled "OPTION OF HOLDER TO ELECT PURCHASE" appearing on
this Security and by complying with the other procedures set forth in such
notice. Any portion of Securities with respect to which the Holder wishes to
exercise such right must be in integral multiples of $1,000.
7. MANDATORY OFFER TO REPURCHASE. If the Company consummates any Asset Sale
(as such term is defined in the Indenture), the Company will, under certain
circumstances, be required to utilize a portion of the net proceeds received
from such Asset Sale to offer to purchase Securities at a purchase price equal
to 100% of the aggregate principal amount of the Securities plus accrued
interest to the date fixed for redemption (the "Asset Sale Offer"). Holders of
Securities that are the subject of an offer to purchase will receive an Asset
Sale Offer from the Company or the Trustee. The Asset Sale Offer shall remain
open for a period of 30 days after its commencement unless a longer offering
period is required by law (the "Asset Sale Offer Period"). On or prior to the
fifth Business Day following the termination of the Asset Sale Offer Period (the
"Asset Sale Payment Date"), the Company shall purchase, or cause the Trustee to
purchase, and mail or deliver payment for the amount of Securities required to
be purchased pursuant to the Asset Sale Offer or, if less than the amount of
Securities required to be purchased pursuant to the Asset Sale Offer has been
tendered, all Securities tendered in response to the Asset Sale Offer.
A Holder of Securities may tender or refrain from tendering all or any
portion of his Securities at his discretion by completing the form entitled
"OPTION OF HOLDER TO ELECT PURCHASE" appearing on this Security. Any portion of
Securities tendered must be in integral multiples of $1,000.
8. NOTICE OF REDEMPTION. Notice of Redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at his registered address. Securities in denominations
larger than $1,000 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
thereof called for redemption.
9. SUBORDINATION. The indebtedness evidenced by this Security is, to the
extent provided in the Indenture, subordinate and subject in right of payment to
the prior payment in full of all Senior Indebtedness (as defined in the
Indenture), and this Security is issued subject to the provisions of the
Indenture with respect thereto. Each Holder of this Security, by accepting the
same, (a) agrees to and shall be bound by such provisions, (b) authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination so provided, and (c) appoints the
Trustee his attorney-in-fact for any and all such purposes.
A-3
<PAGE>
10. DENOMINATIONS, TRANSFER, EXCHANGE. The Securities are in registered
form without coupons 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
Security or portion of a Security selected for redemption. Also, it need not
exchange or register the transfer of any Securities for a period of 15 days
before a selection of Securities to be redeemed.
11. PERSONS DEEMED OWNERS. The registered Holder of a Security may be
treated as its owner for all purposes.
12. AMENDMENTS AND WAIVERS. Subject to certain exceptions, 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, and
any existing default under, or compliance with any provision of, the Indenture
may be waived (other than any continuing Default or Event of Default in the
payment of interest or premium, if any, on or the principal of the Securities or
in respect of a provision under the Indenture which cannot be modified or
amended without the consent of the Holder of each Security then outstanding)
with the consent of the Holders of a majority in principal amount of the
Securities then outstanding. Without the consent of any Holder, the Company and
the Trustee may amend or supplement the Indenture or the Securities to cure any
ambiguity, defect or inconsistency; to provide for the assumption of the
Company's obligations to Holders in the case of a merger or acquisition; to
evidence and provide for the acceptance of appointment of any successor Trustee
under the Indenture; to make any change that does not adversely affect the legal
rights of any Holder; or to comply with the requirements of the Trust Indenture
Act of 1939, as amended.
The right of any Holder to participate in any consent required or sought
pursuant to any provision of the Indenture (and the obligation of the Company to
obtain any such consent otherwise required from such Holder) may be subject to
the requirement that such Holder shall have been the Holder of record of any
Securities with respect to which such consent is required or sought as of a date
identified by the Trustee in a notice furnished to Holders in accordance with
the terms of the Indenture.
Without the consent of each Holder affected, the Company may not, among
other things, (i) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, (ii) reduce the principal amount of,
or premium, if any, or interest on, any Security, (iii) modify the subordination
provisions of the Indenture in a manner adverse to the Holders, (iv) change the
place of payment where, or the coin or currency in which, any Security or any
premium or interest thereon is payable, (v) adversely affect the right of
Holders to require the Company to make a Change in Control Repurchase or modify
the obligations of the Company to make an Asset Sale Offer or modify the
redemption provisions of the Indenture, (vi) impair the right of a Holder to
institute suit for the enforcement of payment of the principal of and premium,
if any, and interest on any Security on or after the Stated Maturity thereof (or
in the case of a redemption, on or after the redemption date) or (vii) reduce
the percentage in principal amount of Securities the consent of whose Holders is
required for any modification or amendment of the Indenture, or the consent of
whose Holders is required for any waiver of compliance with certain provisions
of the Indenture or certain Defaults or Events of Default thereunder.
13. DEFAULTS AND REMEDIES. Events of Default include: (i) default in
payment of principal or premium on the Securities; (ii) default in payment of
interest on the Securities for 30 days; (iii) failure by the Company for 45 days
after notice to it to comply with any of its other agreements in the Indenture
or the Securities; (iv) any acceleration of Indebtedness of the Company or its
Subsidiaries having an outstanding principal amount of $50 million or a failure
to pay such Indebtedness at its stated maturity; and (v) certain events of
bankruptcy or insolvency. If an Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Securities may declare all the Securities to be immediately due and
payable for an amount equal to 100% of the principal amount of the Securities,
and premium, if any, plus accrued interest to the date of payment, except that
in the case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Securities
A-4
<PAGE>
become due and payable immediately without further action or notice. Holders may
not enforce the Indenture or the Securities except as provided in the Indenture.
The Trustee may require indemnity satisfactory to it before it enforces the
Indenture or the Securities. Subject to certain limitations, 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 notice of any continuing default (except a default in payment of
principal or interest or that resulted from the failure of the Company to comply
with its obligations with respect to Holders' rights to require repurchase of
Securities upon a Change in Control) if it determines that withholding notice is
in their interests. The Company must furnish an annual compliance certificate to
the Trustee.
14. TRUSTEE DEALINGS WITH COMPANY. The Trustee, 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.
15. NO RECOURSE AGAINST OTHERS. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. Each Holder by accepting a Security waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Securities.
16. AUTHENTICATION. This Security shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
17. 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).
A-5
<PAGE>
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Request may be made to:
Integrated Health Services, Inc.
10065 Red Run Boulevard
Owings Mills, Maryland 21117
Attention: Secretary
A-6
<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 ________________________________________ 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:____________________________
A-7
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 3.8 or 4.7 of the Indenture, check the appropriate box:
[ ] Section 3.8 [ ] Section 4.7
If you want to elect to have only part of the Security purchased by the
Company pursuant to Section 3.8 or 4.7 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:_______________________________
A-8
<PAGE>
[FORM OF SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES2]
The following exchanges of a part of this Global Security for Definitive
Securities have been made.
<TABLE>
<CAPTION>
Amount of Amount of Principal Amount of
decrease in increase in this Global Security
Principal Amount Principal Amount following such Signature of autho-
Date of of this Global of this Global decrease (or rized officer of
Exchange Security Security increase) Trustee
-------- ---------------- ---------------- -------------------- ------------------
<S> <C> <C> <C> <C>
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
</TABLE>
- --------
2 This schedule should be included only if the Security is issued in global
form.
A-9
INTEGRATED HEALTH SERVICES, INC.,
A DELAWARE CORPORATION,
AS ISSUER
TO
FIRST UNION NATIONAL BANK OF VIRGINIA
AS TRUSTEE
--------------------
INDENTURE
Dated as of May 30, 1997
------------------
$450,000,000
9 1/2% Senior Subordinated Notes due 2007
<PAGE>
CROSS REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
31 (a)(1) ............................. 7.9
(a)(2) ............................. 7.9
(a)(3) ............................. Not Applicable
(a)(4) ............................. Not Applicable
(a)(5) ............................. 7.9
(b) ............................. 7.9
(c) ............................. Not Applicable
311(a) ............................. **
(b) ............................. **
(c) ............................. Not Applicable
312 ............................. **
313(a) ............................. **
(b)(1) ............................. Not Applicable
(b)(2) ............................. **
(c) ............................. **
(d) ............................. **
314(a) ............................. 4.3,4.4
(b) ............................. Not Applicable
(c)(1) ............................. 11.3
(c)(2) ............................. 11.3
(c)(3) ............................. Not Applicable
(d) ............................. Not Applicable
(e) ............................. 11.4
(f) ............................. Not Applicable
315(a) ............................. 7.1(2)
(b) ............................. 7.5,11.2
(c) ............................. 7.1(1)
(d) ............................. 7.1(3)
(e) ............................. 6.11
316(a)(last sentence) ............................. 2.8
(a)(1)(A) ............................. 6.5
(a)(1)(B) ............................. 6.4
(a)(2) ............................. Not Applicable
(b) ............................. 6.7
(c) ............................. 9.4
317(a)(1) ............................. 6.8
(a)(2) ............................. 6.9
(b) ............................. 2.4
318(a) ............................. 11.1
- ----------
* This Cross-Reference Table is not part of the Indenture.
** Included pursuant to Section 318(c) of the Trust Indenture Act of 1939.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1.
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1 Definitions.................................................... 1
Section 1.2 Other Definitions.............................................. 11
Section 1.3 Incorporation by Reference of Trust Indenture Act.............. 11
Section 1.4 Rules of Construction.......................................... 12
ARTICLE 2.
THE SECURITIES
Section 2.1 Form and Dating................................................ 12
Section 2.2 Execution and Authentication................................... 13
Section 2.3 Registrar and Paying Agent..................................... 13
Section 2.4 Paying Agent to Hold Money in Trust............................ 13
Section 2.5 Registration of Transfer and Exchange.......................... 13
Section 2.6 Replacement Securities......................................... 17
Section 2.7 Outstanding Securities......................................... 17
Section 2.8 Treasury Securities............................................ 17
Section 2.9 Temporary Securities........................................... 18
Section 2.10 Cancellation................................................... 18
Section 2.11 Defaulted Interest............................................. 18
Section 2.12 Securities Issuable in the Form of a Global Security........... 20
ARTICLE 3.
OPTIONAL REDEMPTION AND ASSET SALE OFFER
Section 3.1 Notices to Trustee............................................. 19
Section 3.2 Selection of Securities to Be Redeemed or Purchased............ 20
Section 3.3 Notices to Holders............................................. 20
Section 3.4 Effect of Notice of Redemption................................. 21
Section 3.5 Deposit of Redemption Price or Purchase Price.................. 22
Section 3.6 Securities Redeemed or Purchased in Part....................... 22
Section 3.7 Optional Redemption............................................ 22
Section 3.8 Asset Sale Offer............................................... 23
ARTICLE 4.
COVENANTS
Section 4.1 Payment of Securities.......................................... 24
Section 4.2 Maintenance of Office or Agency................................ 24
Section 4.3 SEC Reports.................................................... 24
Section 4.4 Compliance Certificate......................................... 25
Section 4.5 Corporate Existence, Taxes, etc................................ 25
Section 4.6 Stay, Extension and Usury Laws................................. 25
Section 4.7 Limitations on Restricted Payments............................. 25
Section 4.8 Limitations on Restrictions on Distributions from Subsidiaries. 26
Section 4.9 Limitations on Additional Indebtedness......................... 26
i
<PAGE>
Section 4.10 Change in Control.............................................. 27
Section 4.11 Limitations on Asset Sales..................................... 28
Section 4.12 Limitations on Transactions with Affiliates.................... 29
Section 4.13 Limitations on Liens........................................... 29
Section 4.14 Limitations on Subsidiary Preferred Stock...................... 30
Section 4.15 Limitations on Certain Other Subordinated Indebtedness......... 30
Section 4.16 Limitations on Subsidiaries and Unrestricted Subsidiaries...... 30
ARTICLE 5.
SUCCESSORS
Section 5.1 Limitations on Mergers and Consolidations...................... 31
Section 5.2 Successor Corporation Substituted.............................. 31
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.1 Events of Default.............................................. 31
Section 6.2 Acceleration................................................... 33
Section 6.3 Other Remedies................................................. 33
Section 6.4 Waiver of Past Defaults........................................ 33
Section 6.5 Control by Majority............................................ 33
Section 6.6 Limitations on Suits........................................... 33
Section 6.7 Rights of Holders to Receive Payment........................... 34
Section 6.8 Collection Suit by Trustee..................................... 34
Section 6.9 Trustee May File Proofs of Claim............................... 34
Section 6.10 Priorities..................................................... 34
Section 6.11 Undertaking for Costs.......................................... 35
ARTICLE 7.
TRUSTEE
Section 7.1 Duties of Trustee.............................................. 35
Section 7.2 Rights of Trustee.............................................. 36
Section 7.3 Individual Rights of Trustee................................... 36
Section 7.4 Trustee's Disclaimer........................................... 36
Section 7.5 Notice of Defaults............................................. 36
Section 7.6 Compensation and Indemnity..................................... 36
Section 7.7 Replacement of Trustee......................................... 37
Section 7.8 Successor Trustee by Merger, etc............................... 38
Section 7.9 Eligibility; Disqualification.................................. 38
ARTICLE 8.
DISCHARGE OF INDENTURE
Section 8.1 Termination of Company's Obligations........................... 38
Section 8.2 Application of Trust Money..................................... 40
Section 8.3 Repayment to the Company....................................... 40
Section 8.4 Reinstatement.................................................. 40
ii
<PAGE>
ARTICLE 9.
AMENDMENTS
Section 9.1 Without Consent of Holders..................................... 40
Section 9.2 With Consent of Holders........................................ 41
Section 9.3 Compliance with Trust Indenture Act............................ 42
Section 9.4 Revocation and Effect of Consents.............................. 42
Section 9.5 Notation on or Exchange of Securities.......................... 43
Section 9.6 Trustee to Sign Amendments, etc................................ 43
ARTICLE 10.
SUBORDINATION
Section 10.1 Securities Subordinated to Senior Indebtedness................. 43
Section 10.2 Payment Over of Proceeds Upon Dissolution, Etc................. 43
Section 10.3 Prior Payment to Senior Indebtedness Upon Acceleration
of Securities................................................................ 44
Section 10.4 No Payment Upon Certain Defaults with Respect to Senior
Indebtedness................................................................. 44
Section 10.5 Payment Permitted If No Default................................ 46
Section 10.6 Subrogation to Rights of Holders of Senior Indebtedness........ 46
Section 10.7 Provisions Solely to Define Relative Rights.................... 46
Section 10.8 Application by Trustee of Monies Deposited With It............. 47
Section 10.9 Trustee to Effectuate Subordination............................ 47
Section 10.10 No Waiver of Subordination Provisions.......................... 47
Section 10.11 Notice to Trustee.............................................. 48
Section 10.12 Reliance on Judicial Order or Certificate of Liquidating Agent. 48
Section 10.13 Trustee Not Fiduciary for Holders of Senior Indebtedness....... 48
Section 10.14 Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights............................................. 48
ARTICLE 11.
MISCELLANEOUS
Section 11.1 Trust Indenture Act Controls................................... 49
Section 11.2 Notices........................................................ 49
Section 11.3 Certificate and Opinion as to Conditions Precedent............. 49
Section 11.4 Statements Required in Certificate or Opinion.................. 50
Section 11.5 Rules by Trustee and Agents.................................... 50
Section 11.6 Legal Holidays................................................. 50
Section 11.7 No Recourse Against Others..................................... 50
Section 11.8 Governing Law.................................................. 50
Section 11.9 No Adverse Interpretation of Other Agreements.................. 50
Section 11.10 Successors..................................................... 51
Section 11.11 Severability................................................... 51
Section 11.12 Counterpart Originals.......................................... 51
Section 11.13 Trustee as Paying Agent and Registrar.......................... 51
Section 11.14 Table of Contents, Headings, etc............................... 51
SIGNATURES................................................................... 52
EXHIBIT A FORM OF RULE 144A NOTE
EXHIBIT B FORM OF EXCHANGE NOTE
EXHIBIT C TRANSFER CERTIFICATION
iii
<PAGE>
INDENTURE dated as of May 30, 1997, between INTEGRATED HEALTH SERVICES,
INC., a Delaware corporation (the "Company"), and FIRST UNION NATIONAL BANK OF
VIRGINIA, a national banking association organized under the laws of the United
States, as Trustee (the "Trustee").
Each party agrees as follows for the benefit of the other parties and for
the equal and ratable benefit of the Holders of the Rule 144A Notes and the
Exchange Notes (each as defined below):
ARTICLE 1.
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1 Definitions
"Acquired Indebtedness" means (a) with respect to any Person (including an
Unrestricted Subsidiary) that becomes a Subsidiary of the Company after the date
hereof, Indebtedness of such Person and its Subsidiaries existing at the time
such Person becomes a Subsidiary of the Company that was not incurred in
connection with, or in contemplation of, such Person becoming a Subsidiary of
the Company and (b) with respect to the Company or any of its Subsidiaries, any
Indebtedness assumed by the Company or any of its Subsidiaries in connection
with the acquisition of an asset from another Person that was not incurred by
such other Person in connection with, or in contemplation of, such acquisition.
Acquired Indebtedness shall be deemed to be incurred on the date such person
becomes a Subsidiary or the date of the related asset acquisition.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling, controlled by or under direct or indirect common control
with such specified Person. For purposes of this definition, "control" when used
with respect to any specified Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agent" means any Registrar or Paying Agent.
"Allowed and Disallowed Post-Commencement Interest and Expenses" means all
interest, at the rate provided in the applicable document or documents
(including any rate applicable upon any default or event of default, to the
extent lawful), and all reimbursements, costs, expenses and indemnities, to the
extent provided in the applicable document or documents, accruing or claimed at
any time after commencement of any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization, dissolution, winding up,
assignment for the benefit of creditors, marshalling of assets and liabilities
or other similar case or proceeding, whether or not such interest,
reimbursement, cost or expense is an allowed claim enforceable against the
Company in a case or proceeding under Bankruptcy Law or in any other such case
or proceeding.
"Asset Sale" for any Person means the sale, lease, conveyance or other
disposition (including, without limitation, by merger or consolidation, and
whether by operation of law or otherwise) of any of that Person's assets
(including, without limitation, the sale or other disposition of Capital Stock
of any Subsidiary of such Person, whether by such Person or by such Subsidiary),
whether owned on the date hereof or subsequently acquired, in one transaction or
a series of related transactions, in which such Person and/or its Subsidiaries
sell, lease, convey or otherwise dispose of (i) all or substantially all of the
Capital Stock of any of such Person's Subsidiaries, (ii) assets which constitute
substantially all of an operating unit or business of such Person or any of its
Subsidiaries, or (iii) any health care facility; provided, however, that the
following shall not constitute Asset Sales: (i) a transaction or series of
related transactions that results in a Change in Control, (ii) transactions
between the Company and any of its Wholly Owned Subsidiaries or among such
Wholly Owned Subsidiaries or (iii) a transaction or a series of related
transactions in which either (x) the fair market value of the asset(s) disposed
of does not exceed 2.5% of the Consolidated Tangible Assets of the Company or
(y) the Consolidated EBITDA of the company associated with the asset disposed of
does not exceed 2.5% of the Consolidated EBITDA of the Company.
"Attributable Indebtedness," when used with respect to any Sale and
Leaseback Transaction or an
<PAGE>
operating lease with respect to a health care facility means, as at the time of
determination, the present value (discounted at a rate equivalent to the
interest rate implicit in the lease, compounded on a semi-annual basis) of the
total obligations of the lessee for rental payments, after excluding all amounts
required to be paid on account of maintenance and repairs, insurance, taxes,
utilities and other similar expenses payable by the lessee pursuant to the terms
of the lease, during the remaining term of the lease included in any such Sale
and Leaseback Transaction or such operating lease or until the earliest date on
which the lessee may terminate such lease without penalty or upon payment of a
penalty (in which case the rental payments shall include such penalty);
provided, that the Attributable Indebtedness with respect to a Sale and
Leaseback Transaction shall be no less than the fair market value of the
property subject to such Sale and Leaseback Transaction.
"Bank Agent" means Citibank, N.A., as Administrative Agent under the Credit
Agreement or any successor Administrative Agent thereunder.
"Bank Debt" means all obligations of the Company and its Subsidiaries, now
or hereafter existing under the Credit Agreement, whether for principal,
interest, reimbursement of amounts drawn under letters of credit issued pursuant
thereto, guarantees in respect thereof, fees, expenses, premiums, indemnities or
otherwise, including such obligations incurred by the Company or its
Subsidiaries in connection with any extension, refunding or refinancing of the
Credit Agreement.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state
law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company or any
authorized committee of the Board of Directors of the Company.
"Business Day" means any day other than a Legal Holiday.
"Capital Stock" of any Person means any and all shares, rights to purchase,
warrants or options (whether or not currently exercisable), participation or
other equivalents of or interests in (however designated) the equity (including,
without limitation, common stock, preferred stock and partnership and joint
venture interests) of such Person. Solely for purposes of clause (ii)(2) of
Section 4.7 hereof, "the Company's Capital Stock" shall include Capital Stock
(other than Disqualified Stock) issued by a subsidiary trust of the Company
which is not conducting business operations, provided, that the calculation
pursuant to clause (ii)(2) of Section 4.7 hereof shall not include (i) the
subsequent issuance of Capital Stock of the Company in exchange for or upon
conversion of such subsidiary trust's Capital Stock or (ii) any proceeds
received by the subsidiary trust from the sale of Capital Stock by such trust to
the Company or any Subsidiary or Affiliate of the Company, and provided further
that to the extent the subsidiary trust uses the proceeds of its sale of Capital
Stock to purchase debt securities of the Company, (i) such debt securities are
subordinated in right of payment to the Securities and (ii) distributions on the
Capital Stock of the subsidiary trust may be suspended at the option of the
Company or the subsidiary trust for a period extending up to the lesser of five
years or the maturity of the underlying debt security of the Company issued to
the subsidiary trust.
"Capitalized Lease Obligation" of any Person means the obligation of such
Person to pay rent or other amounts under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP, and the
amount of such obligation shall be the capitalized amount thereof determined in
accordance with GAAP.
"Cash Equivalents" means, at any time, (i) any evidence of Indebtedness
with a maturity of 180 days or less issued or directly and fully guaranteed or
insured by the United States of America or any agency or instrumentality thereof
(provided that the full faith and credit of the United States of America is
pledged in support thereof); (ii) certificates of deposit or acceptance with a
maturity of 180 days or less of any financial institution that is a member of
the Federal Reserve System having combined capital and surplus and undivided
profits of not less than $500.0 million or (iii) commercial paper, maturing not
more than 180 days after the date of acquisition, issued by any corporation
(other than an Affiliate or Subsidiary of the Company) organized and existing
under the laws of the United States of America with a rating, at the time as of
which any investment therein is made, of "P-1" (or higher) according to Moody's
Investor Service, Inc. or any successor rating agency, or "A-1" (or higher)
according to Standard and Poor's Corporation or any successor rating agency.
"Change in Control" means any of the following: (i) all or substantially
all of the Company's assets
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are sold, leased, conveyed or disposed of as an entirety or substantially as an
entirety, to any Person or related "group" of Persons (other than a Permitted
Holder); (ii) stockholders of the Company shall approve any plan or proposal for
the liquidation or dissolution of the Company; (iii) there shall be consummated
any consolidation or merger of the Company (A) in which the Company is not the
continuing or surviving corporation (other than a consolidation or merger with a
Wholly Owned Subsidiary of the Company in which all shares of Common Stock
outstanding immediately prior to the effectiveness thereof are changed into or
exchanged for the same consideration) or (B) pursuant to which the Common Stock
would be converted into cash, securities or other property, in each case other
than a consolidation or merger of the Company in which the holders of the Common
Stock immediately prior to the consolidation or merger have, directly or
indirectly, at least a majority of the common stock of the continuing or
surviving corporation immediately after such consolidation or merger; or (iv)
any Person, or any Persons acting together which would constitute a "group" for
purposes of Section 13(d) of the Exchange Act (other than a Permitted Holder),
together with any affiliates thereof shall beneficially own (as defined in Rule
13d-3 under the Exchange Act) at least 50% of the total voting power of all
classes of capital stock of the Company entitled to vote generally in the
election of directors of the Company.
"Common Equity" of any Person means all Capital Stock of such Person that
is generally entitled to (i) vote in the election of directors of such Person or
(ii) if such Person is not a corporation, vote or otherwise participate in the
selection of the governing body, partners, managers or others that will control
the management and policies of such Person.
"Company" means (i) Integrated Health Services, Inc., a Delaware
corporation, and (ii) any successor of Integrated Health Services, Inc.
"Consolidated Amortization Expense" of any Person for any period means the
amortization expense of such Person and its Subsidiaries for such period (to the
extent included in the computation of Consolidated Net Income of such Person),
determined on a consolidated basis in accordance with GAAP.
"Consolidated Coverage Ratio" with respect to the Company means the ratio
of (i) Consolidated EBITDA of the Company to (ii) the aggregate amount of
Consolidated Interest Expense of the Company for the four full fiscal quarters
immediately preceding the date of the transaction giving rise to the need to
calculate the Consolidated Coverage Ratio and for which such quarters financial
results have been reported; provided, however, that if any calculation of the
Company's Consolidated Coverage Ratio requires the use of any quarter prior to
the date of the Indenture, such calculation shall be made on a pro forma basis,
giving effect to the issuance of the Securities and the use of the net proceeds
therefrom as if the same had occurred at the beginning of the four-quarter
period used to make such calculation; and provided further that if any Asset
Sale was consummated or any acquisition of a hospital or other healthcare
facility or any assets purchased outside the ordinary course of business was
effected by the Company or any of its Subsidiaries during such four quarter
period or on any later date on or prior to the date of the transaction giving
rise to the need to calculate the Consolidated Coverage Ratio, such calculation
shall be made on a pro forma basis, giving effect to each such Asset Sale or
acquisition (including the Consolidated EBITDA relating to the hospital,
healthcare facility or other assets acquired), as the case may be, and the use
of any proceeds therefrom, as if the same had occurred at the beginning of the
four-quarter period used to make such calculation (except that if any
calculation of the Consolidated Coverage Ratio requires the use of any quarter
prior to the acquisition of First American Health Care of Georgia, Inc. ("First
American"), then the results of operations for First American shall be reflected
in such calculation from the date of the acquisition of First American (on an
annualized basis for the four quarter period following the acquisition) and pro
forma effect shall not be given to such results of operations (but shall be
given effect to any financing, including the incurrence of Indebtedness, in
connection with such acquisition) as if it had occurred at the beginning of the
four-quarter period used to make such calculation). The calculation of the
Consolidated Coverage Ratio shall also give pro forma effect to (i) the
incurrence, repayment or retirement of any other Indebtedness, and the issuance
or redemption of any Preferred Stock, by the Company and its Subsidiaries and
(ii) the discontinuance of any operations by the Company and its Subsidiaries,
in any case occurring during such four quarter period or on any later date on or
prior to the date of the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio as if such Indebtedness was incurred, repaid or
retired or such Preferred Stock was issued or redeemed at the beginning of such
four-quarter period. For purposes of calculating the Consolidated Coverage
Ratio, (i) the Consolidated Interest Expense attributable to interest on any
Indebtedness computed on a pro forma basis and (A) bearing a floating interest
rate shall be computed as if the average rate over the applicable period had
been the applicable rate for the entire period and (B) which was not outstanding
during the period for which the computation is being made but which bears, at
the option of the Company, a fixed or floating rate of interest, shall be
computed by applying at the option of the Company either the fixed or floating
rate and (ii) in making such calculation, the Consolidated Interest Expense of
the Company
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<PAGE>
attributable to interest on any Indebtedness under a revolving credit facility
computed on a pro forma basis shall be computed based upon the average daily
balance of such Indebtedness during the applicable period.
"Consolidated Depreciation Expense" of any Person for any period means the
depreciation expense of such Person and its Subsidiaries for such period (to the
extent included in the computation of Consolidated Net Income of such Person),
determined on a consolidated basis in accordance with GAAP.
"Consolidated EBITDA" of any Person means, with respect to any
determination date, Consolidated Net Income, plus (i) Consolidated Income Tax
Expense, plus (ii) Consolidated Depreciation Expense, plus (iii) Consolidated
Amortization Expense, plus (iv) Consolidated Interest Expense (to the extent
reducing Consolidated Net Income), plus (v) all other non-cash items reducing
Consolidated Net Income of such Person and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP, and less all non-cash items
increasing Consolidated Net Income of such Person and its Subsidiaries,
determined on a consolidated basis in accordance with GAAP, in each case, for
such Person's prior four full fiscal quarters for which financial results have
been reported immediately preceding the determination date.
"Consolidated Income Tax Expense" means, for any Person for any period, the
provision for taxes based on income and profits of such Person and its
Subsidiaries to the extent such income or profits were included in computing
Consolidated Net Income of such Person for such period.
"Consolidated Interest Expense" of any Person for any period means the
Interest Expense of such Person and its Subsidiaries for such period, determined
on a consolidated basis in accordance with GAAP, plus any dividends accrued for
such period on any Preferred Stock of any Subsidiary not held by the Company or
any Wholly Owned Subsidiary of the Company.
"Consolidated Net Income" of any Person for any period means the net income
(or loss) of such Person and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, without giving effect to dividends
on any series of preferred stock of any Subsidiary of such Person, whether or
not in cash, to the extent such consolidated net income was reduced thereby;
provided that there shall be excluded from such net income (to the extent
otherwise included therein), without duplication: (i) the net income (or loss)
of any Person (other than a Subsidiary of the referent Person) in which any
Person other than the referent Person has an ownership interest, except to the
extent that any such income has actually been received by the referent Person or
any of its Subsidiaries in the form of dividends or similar distributions during
such period; (ii) except to the extent includible in the consolidated net income
of the referent Person pursuant to the foregoing clause (i), the net income (or
loss) of any Person that accrued prior to the date that (a) such Person becomes
a Subsidiary of the referent Person or is merged into or consolidated with the
referent Person or any of its Subsidiaries or (b) the assets of such Person are
acquired by the referent Person or any of its Subsidiaries; (iii) the net income
of any Subsidiary of the referent Person (other than a Wholly Owned Subsidiary)
to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary of that income is not permitted by operation of
the terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Subsidiary during
such period; (iv) any gain or loss, together with any related provisions for
taxes on any such gain or loss, realized during such period by the referent
Person or any of its Subsidiaries upon (a) the acquisition of any securities, or
the extinguishment of any Indebtedness, of the referent Person or any of its
Subsidiaries or (b) any Asset Sale by the referent Person or any of its
Subsidiaries; (v) any extraordinary gain or loss, together with any related
provision for taxes on any such extraordinary gain or loss, realized by the
referent Person or any of its Subsidiaries during such period; (vi) any unusual
or nonrecurring non-cash charge which is not, under generally accepted
accounting principles, an extraordinary item; and (vii) in the case of a
successor to such Person by consolidation, merger or transfer of its assets, any
earnings of the successor prior to such merger, consolidation or transfer of
assets.
"Consolidated Net Worth" of any Person as of any date means the
stockholders' equity (including any preferred stock that is classified as equity
under GAAP, other than Disqualified Stock) of such Person and its Subsidiaries
(excluding any equity adjustment for foreign currency translation for any period
subsequent to the date of this Indenture) on a consolidated basis at such date,
as determined in accordance with GAAP, less all write-ups (other than write-ups
in connection with acquisitions) subsequent to the date of this Indenture in the
book value of any asset owned by such Person or any of its Subsidiaries.
"Consolidated Tangible Assets" of any Person as of any date means the total
assets of such Person
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<PAGE>
and its Subsidiaries (excluding any assets that would be classified as
"intangible assets" under GAAP) on a consolidated basis at such date, as
determined in accordance with GAAP, less all write-ups (other than write-ups in
connection with acquisitions) subsequent to the date of this Indenture in the
book value of any asset (except any such intangible assets) owned by such Person
or any of its Subsidiaries.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 11.2 or such other address as the Trustee may give
notice to the Company.
"Credit Agreement" means the Revolving Credit Agreement, dated May 15,
1996, among the Company, the Bank Agent, and the other financial institutions
signatory thereto, together with the related documents thereto, including,
without limitation, any security documents and all exhibits and schedules
thereto, and any agreement or agreements relating to any extension, refunding,
refinancing, successor or replacement facility, whether or not with the same
lenders, and whether or not the principal amount or amount of letters of credit
outstanding thereunder or the interest rate payable in respect thereof shall be
thereby increased, in each case as amended and in effect from time to time.
"Credit Facility" means the Credit Agreement and one or more borrowing
arrangements to be entered into by and between the Company and/or one or more of
its Subsidiaries and a commercial bank or other institutional lender, including
any related notes, security documentation, guarantees, collateral documents,
instruments and agreements executed in connection therewith, in each case as
amended, modified, supplemented, restructured, renewed, restated, refunded,
replaced or refinanced or extended from time to time on one or more occasions.
"Default" means any event, act or condition that is, or after notice or the
passage of time or both would be, an Event of Default.
"Definitive Securities" means any Securities other than a Global Security.
"Depositary" means, with respect to Securities issuable or issued in whole
or in part in global form hereunder, unless otherwise specified by the Company
pursuant to Section 2.12, The Depository Trust Company, New York, New York, or
any successor thereto registered as a clearing agency under the Exchange Act or
other applicable statute or regulation.
"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 the
final maturity date of the Securities for cash or debt securities at any time
prior to any such final maturity, or is convertible into or exchangeable for
debt securities at any time prior to any such final maturity.
"Eligible Investments" of any Person means Investments of such Person in
(i) securities issued or fully guaranteed or insured by the United States
Government or any agency thereof and backed by the full faith and credit of the
United States maturing not more than one year from the date of acquisition; (ii)
certificates of deposit, time deposits, Eurodollar time deposits, bankers'
acceptances or deposit accounts having in each case a remaining term to maturity
of not more than one year, which are either (a) fully insured by the Federal
Deposit Insurance Corporation or (b) issued by any lender or by any commercial
bank under the laws of any State or any national banking association that has
combined capital and surplus of not less than $500,000,000 and whose short-term
securities are rated at least A-1 by S&P or P-1 by Moody's; (iii) commercial
paper that is rated at least A-1 by S&P or P-1 by Moody's, issued by a company
that is incorporated under the laws of the United States or of any State and
directly issues its own commercial paper, and has a remaining term to maturity
of not more than one year; (iv) a repurchase agreement with (A) any commercial
bank that is organized under the laws of any State or any national banking
association and that has total assets of at least $500,000,000, or (B) any
investment bank that is organized under the laws of any state and that has total
assets of at least $500,000,000, which agreement is secured by any one or more
of the securities and obligations described in clauses (i), (ii) or (iii) of
this definition of Eligible Investments, which shall have a market value
(exclusive of accrued interest and valued at least monthly) at least equal to
the principal amount of such investment; (v) any money market or other
investment fund the investments of which are limited to investments described in
clauses (i), (ii), (iii) and (iv) of this definition of Eligible Investments and
which is managed by (A) a commercial bank that is organized under the laws of
any State or any national banking association and that has total assets of at
least $500,000,000, or (B) any investment bank that is organized under the laws
of any State and that has total assets of at least $500,000,000; (vi)
obligations,
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debentures, notes, bonds or other evidences of indebtedness rated at least A- by
Moody's or A3 by S&P; provided that the aggregate amount of investments by any
Person permitted under this clause (vi) shall not exceed 25% of the total amount
invested by such Person in eligible investments; (vii) investments in investment
grade auction rate and adjustable rate preferred equities for issuers whose
actual or implied senior long-term debt is rated at least A- by Moody's or A3 by
S&P; (viii) investments in investment grade fixed rate preferred equities for
issuers whose actual or implied senior long-term debt is rated at least A- by
Moody's or A3 by S&P; provided that the aggregate amount of investments by any
Person permitted under this clause (viii) shall not exceed 10% of the total
amount invested by such Person in Eligible Investments; (ix) adjustable rate
mortgage-backed securities rated at least AA by S&P or Aa by Moody's; and (x)
fixed rate mortgage-backed securities rated at least AA by S&P or Aa by Moody's,
provided that the aggregate amount of investments by any Person permitted under
this clause (x) shall not exceed 25% of the total amount invested by such Person
in Eligible Investments.
"Equity Interest" means, with respect to any Person, any and all shares or
other equivalents (however designated) of capital stock, partnership interests
or any other participation, right or other interests in the nature of an equity
interest in such Person or any option, warrant or other security convertible
into or exchangeable for the foregoing.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means Notes having terms substantially identical in all
respects to the Rule 144A Notes for which they are to be exchanged in the
Exchange Offer, except that (i) the Exchange Notes will have been registered
under the Securities Act and, therefore, will not bear legends restricting the
transfer thereof, and (ii) Holders of Exchange Notes will not be entitled to
certain rights of holders of Rule 144A Notes under the Registration Rights
Agreement.
"Exchange Offer" means the offer the Company is to make pursuant to the
Registration Rights Agreement to exchange Rule 144A Notes for Exchange Notes.
"Existing Indebtedness" means all of the Indebtedness of the Company and
its Subsidiaries that is outstanding on the date hereof.
"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 may be approved by a significant segment of the accounting
profession of the United States, as in effect from time to time.
"Global Security" means a Security which is executed by the Company and
authenticated and delivered by the Trustee to the Depositary or pursuant to the
Depositary's instruction, all in accordance with this Indenture and pursuant to
a written order of the Company, which shall be registered in the name of the
Depositary or its nominee and which shall represent, and shall be denominated in
an amount equal to the aggregate principal amount of, all of the Securities or
any portion thereof, but not including any Securities that are no longer
outstanding, and having the same terms, including, without limitation, the same
original issue date, date or dates on which principal is due, and rate of
interest.
"Guarantee" by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Indebtedness or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation of such other Person (whether
arising by virtue of partnership arrangements, by agreement to keepwell, to
purchase assets, goods, securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for the
purpose of assuring in any other manner the obligee of such Indebtedness or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part); provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any interest rate swap agreement, foreign currency exchange
agreement, interest rate collar agreement, option or futures contract or
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other similar agreement or arrangement relating to interest rates or foreign
exchange rates.
"Holder" means a Person in whose name a Security is registered.
"Indebtedness" of any Person at any date means, without duplication: (i)
all Bank Debt; (ii) all other indebtedness of such Person for borrowed money
(whether or not recourse of the lender is to the whole of the assets of such
Person or only to a portion thereof); (iii) all obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments; (iv) all
obligations of such Person in respect of letters of credit or other similar
instruments (or reimbursement obligations with respect thereto); (v) all
obligations of such Person with respect to Hedging Obligations (other than those
that fix the interest rate on variable rate indebtedness otherwise permitted by
this Indenture or that protect the Company and/or its Subsidiaries against
changes in foreign exchange rates); (vi) all obligations of such Person to pay
the deferred and unpaid purchase price of property or services, except trade
payables and accrued expenses incurred in the ordinary course of business; (vii)
all Capitalized Lease Obligations of such Person; (viii) all Indebtedness of
others secured by a Lien on any asset of such Person, whether or not such
Indebtedness is assumed by such Person; (ix) all Indebtedness of others
guaranteed by such Person to the extent of such guarantee; and (x) all
Attributable Indebtedness. The amount of Indebtedness of any Person at any date
shall be the outstanding balance at such date of all unconditional obligations
as described above; and in the case of clauses (iv) and (ix), the maximum
liability of such Person for any such contingent obligations at such date, and
in the case of clause (viii), the amount of the Indebtedness secured.
"Indenture" means this Indenture, as amended from time to time.
"Interest Expense" of any Person for any period means the aggregate amount
of interest which, in accordance with GAAP, would be set opposite the caption
"interest expense" or any like caption on an income statement for such Person
(including, without limitation or duplication, imputed interest included in
Capitalized Lease Obligations, all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing, the net costs associated with Hedging Obligations, amortization of
financing fees and expenses, the interest portion of any deferred payment
obligation, amortization of discount and all other non-cash interest expense).
"Interest Payment Date" shall have the meaning assigned to such term in the
Securities.
"Investments" of any Person means (i) all investments by such Person in any
other Person in the form of loans, advances or capital contributions (excluding
commission, travel and similar advances to officers and employees made in the
ordinary course of business), (ii) all guarantees of Indebtedness or other
obligations of any other Person by such Person, (iii) all purchases (or other
acquisitions for consideration) by such Person of Indebtedness, Capital Stock or
other securities of any other Person and (iv) all other items that would be
classified as investments (including, without limitation, purchases of assets
outside the ordinary course of business) on a balance sheet of such Person
prepared in accordance with GAAP.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or other similar encumbrance of any kind in respect of
such asset, whether or not filed, recorded or otherwise perfected under
applicable law (including, without limitation, any conditional sale or other
title retention agreement, any financing lease in the nature thereof, any
agreement to sell, and any filing of, or agreement to give, any financing
statement (other than notice filings not perfecting a security interest) under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Net Proceeds" with respect to any Asset Sale means (i) cash (in U.S.
dollars or freely convertible into U.S. dollars) received by the Company or any
of its Subsidiaries from such Asset Sale (including, without limitation, cash
received as consideration for the assumption or incurrence of liabilities
incurred in connection with or in anticipation of such Asset Sale), after (a)
provision for all income or other taxes measured by or resulting from such Asset
Sale or the transfer of the proceeds of such Asset Sale to the Company or any of
its Subsidiaries, (b) payment of all brokerage commissions and the underwriting
and other fees and expenses related to such Asset Sale and (c) deduction of an
appropriate amount to be provided by the Company or any of its Subsidiaries as a
reserve, in accordance with GAAP, against any liabilities associated with the
assets sold or otherwise disposed of in such Asset Sale and retained by the
Company or any of its Subsidiaries after such Asset Sale (including, without
limitation, pension and other post-employment benefit liabilities and
liabilities related to environmental matters) or against any indemnification
obligations associated with the sale or other disposition of the assets sold or
otherwise disposed of in such Asset Sale
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and (ii) all non-cash consideration received by the Company or any of its
Subsidiaries from such Asset Sale upon the liquidation or conversion of such
consideration into cash.
"Officer" means the Chief Executive Officer, the Chief Financial Officer,
the Treasurer, any Assistant Treasurer, Controller, Secretary or any Vice
President of the Company.
"Officers' Certificate" means a certificate signed by two Officers, one of
whom must be the Company's Chief Executive Officer or Chief Financial Officer.
"Opinion of Counsel" means an opinion from legal counsel who is acceptable
to the Trustee in its sole discretion. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Payment or Distribution in Respect of the Securities" means, for purposes
of Article 10 hereof, any payment or distribution of any kind or character,
whether in cash, property or securities, on account of the payment of the
principal of and premium, if any, and interest on any of the Securities,
including, without limitation, any redemption or repurchase price paid for any
optional or mandatory redemption, Asset Sale Offer, Change in Control Repurchase
or other repurchase or retirement of the Securities or any other payment on
account of the Securities (including payments with respect to claims related to
the issuance of the Securities); provided, however, that the exchange of Rule
144A Notes for a like amount of Exchange Notes shall not constitute a Payment or
Distribution in Respect of the Securities. For purposes of this definition, the
words "cash, property or securities" shall not be deemed to include securities
of the Company as reorganized or readjusted, or securities of the Company or any
other corporation provided for by a plan of reorganization or readjustment which
are subordinated in right of payment to all Senior Indebtedness which may be
outstanding to substantially the same extent as, or to a greater extent than,
the Securities are so subordinated as provided in Article 10 and which
securities are not subject to maturity or mandatory prepayment prior to the
maturity of any Senior Indebtedness then outstanding.
"Permitted Holder" means Robert N. Elkins and any group (within the meaning
of Section 13(d)(3) of the Exchange Act) of which Mr. Elkins is a member; so
long as, with respect to any group, Mr. Elkins owns more than 20% of the total
voting power of all classes of Capital Stock of the acquiring entity entitled to
vote generally in the election of directors of the acquiring entity.
"Permitted Investment" means (i) capital contributions, advances or loans
to the Company by any Subsidiary, by the Company to a Wholly Owned Subsidiary or
by a Subsidiary to a Wholly Owned Subsidiary; (ii) the acquisition or holding by
the Company or any Subsidiary of receivables owing to the Company or such
Subsidiary, if created or acquired in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms; (iii) the
acquisition or holding by the Company or any Subsidiary of cash and Eligible
Investments; (iv) the Company and its Subsidiaries may make Investments in
Persons at least a majority of whose revenues result from healthcare related
businesses or facilities; (v) Investments acquired or retained from another
Person in connection with any sale, conveyance, transfer, lease or other
disposition of any properties or assets to such Person in accordance with the
covenant described in Section 4.11 hereof; and (vi) Investments not otherwise
permitted by clauses (i) through (v) above in an aggregate amount not exceeding
$10 million.
"Person" means any individual, corporation, partnership, joint venture,
incorporated or unincorporated association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof or other entity of any kind.
"Preferred Stock" means with respect to any Person all Capital Stock of
such Person which has a preference in liquidation or a preference with respect
to the payment of dividends.
"Public Equity Offering" means a public offering by the Company of shares
of its common stock (however designated and whether voting or non-voting but
excluding Disqualified Stock) and any and all rights, warrants or options to
acquire such common stock pursuant to a registration statement registered under
the Securities Act.
"Refinancing Indebtedness" means Indebtedness that refunds, refinances or
extends any Existing Indebtedness or other Indebtedness permitted to be incurred
under the Indenture (other than Existing Indebtedness under the Credit
Agreement); provided that: (i) the Refinancing Indebtedness is the obligation of
the same Person as was
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obligated on the Indebtedness being refinanced and has a ranking in priority
relative to the Securities equal to or junior to that of the Indebtedness being
refunded, refinanced or extended; (ii) the Refinancing Indebtedness is scheduled
to mature no earlier than the Indebtedness being refunded, refinanced or
extended; (iii) the Refinancing Indebtedness has a Weighted Average Life to
Maturity at the time such Refinancing Indebtedness is incurred that is equal to
or greater than the Weighted Average Life to Maturity of the portion of the
Indebtedness being refunded, refinanced or extended; (iv) the Refinancing
Indebtedness is secured only to the extent, if at all, and by the assets that
the Indebtedness being refunded, refinanced or extended is secured; and (v) such
Refinancing Indebtedness is in an aggregate principal amount that is equal to or
less than the aggregate principal amount then outstanding under the Indebtedness
being refunded, refinanced or extended (except for issuance costs and increases
in Attributable Indebtedness due solely to increases in the present value
calculations resulting from renewals or extensions of the terms of the
underlying leases in effect on the date of this Indenture).
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of May 22, 1997 by and between the Company and Smith Barney Inc.,
Donaldson, Lufkin & Jenrette Securities Corporation, Morgan Stanley & Co.
Incorporated and Salomon Brothers Inc, as Initial Purchasers, as such agreement
may be amended, modified or supplemented from time to time.
"Restricted Payment" means, with respect to any Person: (i) the declaration
of any dividend or the making of any other payment or distribution of cash,
securities or other property or assets in respect of such Person's Capital Stock
(except that a dividend payable solely in Capital Stock (other than Disqualified
Stock) of such Person shall not constitute a Restricted Payment); (ii) any
payment on account of the purchase, redemption, retirement or other acquisition
for value of such Person's Capital Stock or options, warrants or other rights to
acquire such Capital Stock, or any other payment or distribution made in respect
thereof, either directly or indirectly; (iii) the making of any payment of
principal, premium or interest on, or any payment on account of the purchase,
redemption, retirement, defeasance or other acquisition for value (prior to any
scheduled maturity, scheduled repayment, scheduled sinking fund payment or
scheduled interest payment date) of, Indebtedness of the Company or its
Subsidiaries which is pari passu with or subordinated in right of payment to the
Securities and has a scheduled maturity date subsequent to the maturity of the
Securities; or (iv) the making of any Investment in any Person other than a
Permitted Investment; provided, however, with respect to the Company and its
Subsidiaries, Restricted Payments shall not include (I) any payment described
(a) in clause (i), (ii) or (iii) above made (1) to the Company or any of its
Wholly Owned Subsidiaries by any of the Company's Subsidiaries or (2) by the
Company to any of its Wholly Owned Subsidiaries or (b) in clause (iii) above
made with the Net Proceeds from any Asset Sale remaining after completion of the
Asset Sale Offer made in connection with such Asset Sale, all as contemplated
under Section 4.11 hereof, (II) any payment described in clause (i) above made
by a Subsidiary that is not a Wholly Owned Subsidiary to all holders of Capital
Stock of such Subsidiary on a pro rata basis or (III) the purchase by the
Company of up to an aggregate of $50 million of the Company's Capital Stock
pursuant to one or more stock repurchase programs. Notwithstanding the
foregoing, the following shall not constitute Restricted Payments: (X) the
retirement, repurchase, redemption or other acquisition of Indebtedness of the
Company or any Subsidiary out of the net proceeds of a substantially concurrent
sale (other than to a Subsidiary of the Company) of new Indebtedness of the
Company; provided (a) the principal amount of such new Indebtedness does not
exceed the principal amount of Indebtedness so retired, repurchased, redeemed or
otherwise acquired (plus the amount of any premium required to be paid in
connection with such retirement, repurchase, redemption or acquisition), (b)
such Indebtedness has a ranking in priority relative to the Securities equal to
or junior to that of the Indebtedness so retired, repurchased, redeemed or
otherwise acquired, (c) such Indebtedness has a Stated Maturity for its final
scheduled principal payment later than the Stated Maturity for the final
scheduled principal payment of the Securities and (d) such Indebtedness has a
Weighted Average Life to Maturity equal to or greater than the remaining
Weighted Average Life to Maturity of the Securities; and (Y) the retirement,
repurchase, redemption or other acquisition of shares of the Company's Capital
Stock or Indebtedness of the Company or a Subsidiary of the Company out of the
proceeds of a substantially concurrent sale (other than to a Subsidiary of the
Company) of shares of the Company's Capital Stock (other than Disqualified
Stock); provided, however, that the proceeds of such a sale of Capital Stock
shall not be included in the calculation of aggregate net cash proceeds from the
issuance and sale of the Company's Capital Stock pursuant to clause (ii)(2) of
Section 4.7 hereof.
"Rule 144 A Notes" means the Company's 9 1/2% Senior Subordinated Notes due
2007, as initially issued under this Indenture.
"Sale and Leaseback Transaction" means, with respect to any Person, an
arrangement with any bank, insurance company or other lender or investor or to
which such lender or investor is a party, providing for the leasing by
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such Person or any of its Subsidiaries of any property or asset of such Person
or any of its Subsidiaries which has been or is being sold or transferred by
such Person or such Subsidiary to such lender or investor or to any Person to
whom funds have been or are to be advanced by such lender or investor on the
security of such property or asset.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Rule 144A Notes and Exchange Notes issued under this
Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" means the principal of and premium, if any, and
interest on and other amounts due on or in connection with any Indebtedness of
the Company permitted under Section 4.9 hereof (including, without limitation,
all Allowed and Disallowed Post-Commencement Interest and Expenses in respect of
such Indebtedness) and any amounts with respect to Hedging Obligations that fix
the interest rate on variable rate indebtedness otherwise permitted by this
Indenture, other than the Securities, the Company's 10 1/4% Senior Subordinated
Notes due 2006, the Company's 9-5/8% Senior Subordinated Notes due 2002, Series
A (to the extent outstanding upon completion of the tender offer being made
therefor by the Company pursuant to the Company's Offer to Purchase and Consent
Solicitation Statement dated May 1, 1997), the Company's 10 3/4% Senior
Subordinated Notes due 2004 (to the extent outstanding upon completion of the
tender offer being made therefor by the Company pursuant to the Company's Offer
to Purchase and Consent Solicitation Statement dated May 1, 1997), the Company's
5 3/4% Convertible Senior Subordinated Debentures due 2001 and the Company's 6%
Convertible Subordinated Debentures due 2003, whether outstanding on the date of
this Indenture or thereafter created, incurred or assumed, unless, in the case
of any particular Indebtedness, the instrument creating or evidencing the same
or pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the Securities; provided
that Senior Indebtedness will not include (i) any Indebtedness, liability or
obligation of the Company to (A) any of its Subsidiaries, (B) trade creditors or
(C) any person arising out of any lawsuit against the Company or any of its
Subsidiaries or any settlement thereof (other than any lawsuit or settlement
thereof respecting amounts payable with regard to Senior Indebtedness), (ii) any
redemption or other payments on Preferred Stock, (iii) any Indebtedness incurred
in violation of the provisions of this Indenture or (iv) amounts owing under
leases (other than Capitalized Lease Obligations).
"Shelf Registration Statement" means the Registration Statement with
respect to the Securities which the Company is required to file pursuant to the
Registration Rights Agreement.
"Significant Subsidiary" has the meaning ascribed to it under Regulation C
promulgated under the Securities Act of 1933, as amended.
"Stated Maturity" means, when used with respect to any security or any
installment of interest thereon, that date specified in such security as the
fixed date on which the principal of such security or such installment of
interest is due and payable.
"Subsidiary" of any Person means (i) any corporation of which Common Equity
having ordinary voting power to elect a majority of the directors of such
corporation is owned by such Person directly or through one or more other
Subsidiaries of such Person, and (ii) any entity other than a corporation in
which such Person, directly or indirectly, owns at least a majority of the
Common Equity of such entity. Notwithstanding the foregoing, an Unrestricted
Subsidiary shall not be deemed a Subsidiary of the Company other than for
purposes of the definition of Unrestricted Subsidiary, unless the Company shall
have designated such Unrestricted Subsidiary as a "Subsidiary" by written notice
to the Trustee. An Unrestricted Subsidiary may be designated as a Subsidiary at
any time by the Company by written notice to the Trustee; provided, however,
that (i) no Default or Event of Default shall have occurred and be continuing or
would arise therefrom and (ii) if such Unrestricted Subsidiary is an obligor of
any Indebtedness, any such designation shall be deemed to be an incurrence as of
the date of such designation by the Company of such Indebtedness and immediately
after giving effect to such designation, the Company could incur $1.00 of
additional Indebtedness pursuant to clause (a) of Section 4.9 hereof.
"TIA" means the Trust Indenture Act of 1939, as amended (15 U.S.C. ss.ss.
77aaa-77bbbb), as in effect on the date hereof (unless otherwise specifically
provided herein).
"Transfer Restricted Securities" means Securities that bear or are required
to bear the legend set forth
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in Section 2.5 hereof.
"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.
"Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer its corporate trust matters.
"U.S. Government Obligations" means direct obligations of the United States
of America for the payment of which the full faith and credit of the United
States of America is pledged.
"Unrestricted Subsidiary" means any Subsidiary of the Company which shall
have been designated as an Unrestricted Subsidiary in accordance with the
Indenture. An Unrestricted Subsidiary may be designated as a Subsidiary at a
later date in the manner provided in the definition of "Subsidiary" above.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
or portion thereof at any date, the number of years obtained by dividing (i) the
then outstanding principal amount of such Indebtedness or portion thereof (if
applicable) into (ii) the sum of the products obtained by multiplying (a) the
amount of each then remaining installment, sinking fund, serial maturity or
other required payment 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.
"Wholly Owned Subsidiary" of any Person means (i) a Subsidiary of which
100% of the Common Equity (except for directors' qualifying shares or certain
minority interests owned by other Persons solely due to local law requirements
that there be more than one stockholder, but which interest is not in excess of
what is required for such purpose) is owned directly by such Person or through
one or more other Wholly Owned Subsidiaries of such Person and (ii) any entity
other than a corporation in which such Person, directly or indirectly, owns all
of the Common Equity of such entity.
Section 1.2 Other Definitions
Defined
Term in Section
- ---- ----------
"Affiliate Transaction"........................................... 4.12
"Asset Sale Offer"................................................ 4.11
"Asset Sale Offer Period"......................................... 3.8
"Custodian"....................................................... 6.1
"Change in Control Repurchase".................................... 4.10
"Event of Default"................................................ 6.1
"incur"........................................................... 4.9(a)
"Legal Holiday"................................................... 11.6
"Payment Blockage Period"......................................... 10.4
"Paying Agent".................................................... 2.3
"Payment Account"................................................. 4.1
"Registrar"....................................................... 2.3
"Repurchase Date"................................................. 4.10
"Successor"....................................................... 5.1
Section 1.3 Incorporation by Reference of Trust Indenture Act
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
All terms used in this Indenture that are defined by the TIA, defined by
TIA reference to another statute or defined by SEC rule under the TIA have the
meanings so assigned to them.
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Section 1.4 Rules of Construction
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to it
in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural include the
singular;
(5) provisions apply to successive events and transactions;
(6) any amount may be negative; and
(7) "herein", "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or
Subdivision.
ARTICLE 2.
THE SECURITIES
Section 2.1 Form and Dating
The Rule 144A Notes and the Trustee's certificate of authentication shall
be substantially in the form of Exhibit A. Subject to Section 2.6, the Rule 144A
Notes shall be in an aggregate principal amount no greater than $450,000,000;
provided, that if Exchange Notes are issued hereunder pursuant to the Exchange
Offer, the aggregate maximum principal amount of Rule 144A Notes shall be
reduced by the principal amount of Exchange Notes so issued. The Exchange Notes,
when and if issued, and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit B. Subject to Section 2.6, the Exchange
Notes shall be in an aggregate principal amount no greater than $450,000,000
less the principal amount of Rule 144A Notes not exchanged for the Exchange
Notes in the Exchange Offer. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage. Each Security shall
be dated the date of its authentication. The Securities shall be in
denominations of $1,000 and integral multiples thereof.
The Securities may be initially issued either in the form of a Global
Security or Securities or in the form of Definitive Securities or both. A Global
Security shall represent such of the outstanding Securities as shall be
specified therein and shall provide that it shall represent the aggregate amount
of outstanding Securities from time to time endorsed thereon and that the
aggregate amount of outstanding Securities represented thereby may from time to
time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Security to reflect the amount of any
increase or decrease in the amount of outstanding Securities represented thereby
shall be made by the Trustee or an Agent thereof, at the direction of the
Trustee, in accordance with written instructions given by the Holder thereof.
Definitive Securities shall be printed, lithographed or engraved or produced by
any combination of these methods on steel engraved borders or may be produced in
any other manner permitted by the rules of any securities exchange on which the
Securities may be listed, all as determined by the officers executing such
Securities, as evidenced by their execution of such Securities.
The terms and provisions contained in the Securities shall constitute, and
are hereby expressly made, a part of this Indenture and to the extent
applicable, the Company and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
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Section 2.2 Execution and Authentication
Two Officers 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 nevertheless shall be
valid.
A Security shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Security has
been authenticated under this Indenture.
The Trustee shall authenticate Securities for original issue up to the
aggregate principal amount stated in paragraph 4 of the Securities, upon a
written order of the Company signed by two Officers. The aggregate principal
amount of Securities outstanding at any time may not exceed such amount except
as provided in Section 2.6.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Securities. An authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by 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.
Section 2.3 Registrar and Paying Agent
The Company shall maintain or cause to be maintained through the Trustee or
such other Person as may be appointed hereunder an office or agency where
Securities may be presented for registration of transfer or for exchange
("Registrar") and an office or agency where Securities may be presented for
payment ("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 "Registrar"
includes any co-registrar and the term "Paying Agent" includes any additional
paying agent. The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company shall notify the Trustee in writing of the
name and address of any Agent not a party to this Indenture, such notification
to be delivered, together with a certificate of such Agent that it agrees to
perform its duties in accordance with the procedures established by the Trustee
and with the terms of this Indenture, to the Trustee prior to the date such
Agent assumes its duties hereunder. 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 or Registrar.
Section 2.4 Paying Agent to Hold Money in Trust
The Company shall require each Paying Agent other than the Trustee to agree
in writing that the Paying Agent will 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 or premium, if any, or interest on the Securities, and will 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 or a Subsidiary) shall have no further
liability for the money. If the Company or a Subsidiary 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.
Section 2.5 Registration of Transfer and Exchange
(a) With respect to the transfer and exchange of Definitive Securities:
when Definitive Securities are presented to the Trustee with the request (x) to
register the transfer of the Definitive Securities or (y) to exchange such
Definitive Securities for an equal principal amount of Definitive Securities of
other authorized denominations, the Trustee shall register the transfer or make
the exchange as requested if its requirements for such transactions are met;
provided, however, that the Definitive Securities presented or surrendered for
register of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written instruction of
transfer in form
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satisfactory to the Trustee duly executed by the Holder thereof or by its
attorney, duly authorized in writing; and
(ii) shall, in the case of Transfer Restricted Securities that are
Definitive Securities, except if exchanged for an Exchange Note in the
Exchange Offer, be accompanied by the following additional information and
documents, as applicable
(A) if such Transfer Restricted Security is being delivered to
the Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that effect (in
substantially the form of Exhibit C hereto); or
(B) if such Transfer Restricted Security is being transferred to
a "qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in reliance on Rule 144A under the Securities Act or
pursuant to an exemption from registration in accordance with Rule 144
under the Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to that effect (in
substantially the form of Exhibit C hereto); or
(C) if such Transfer Restricted Security is being transferred in
reliance on another exemption from the registration requirements of
the Securities Act, a certification to that effect (in substantially
the form of Exhibit C hereto) and an opinion of counsel reasonably
acceptable to the Company and to the Registrar to the effect that such
transfer is in compliance with the Securities Act.
(b) The following restrictions apply to any transfer of a Definitive
Security for a beneficial interest in a Global Security. A Definitive Security
may not be exchanged for a beneficial interest in a Global Security except until
and upon satisfaction of the requirements set forth below. Upon receipt by the
Trustee of a Definitive Security, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Trustee, together with:
(i) if such Definitive Security is a Transfer Restricted Security and
such transfer is not being made in connection with the Exchange Offer,
certification, substantially in the form of Exhibit C hereto, that such
Definitive Security is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act) in accordance
with Rule 144A under the Securities Act; and
(ii) whether or not such Definitive Security is a Transfer Restricted
Security, written instructions directing the Trustee to make an endorsement
on the Global Security to reflect an increase in the aggregate principal
amount of the Securities represented by the Global Security,
then the Trustee shall cancel such Definitive Security and cause, in accordance
with the standing instructions and procedures existing between it and the
Depositary, the aggregate principal amount of Securities represented by the
Global Security to be increased accordingly. If no Global Securities are then
outstanding, the Company shall issue and, upon receipt of a written
authentication order in the form of an Officers' Certificate, the Trustee shall
authenticate a new Global Security in the appropriate principal amount.
(c) The transfer and exchange of Global Securities or beneficial interests
therein shall be effected through the Depositary, in accordance with this
Indenture (including the restrictions on transfer set forth herein) and the
procedures of the Depositary therefor.
(d) With respect to the transfer of a beneficial interest in a Global
Security for a Definitive Security:
(i) Any person having a beneficial interest in a Global Security may
upon request exchange such beneficial interest for a Definitive Security.
Upon receipt by the Trustee of written instructions or such other form of
instructions as is customary for the Depositary or its nominee on behalf of
any person having a beneficial interest in a Global Security constituting a
Transfer
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Restricted Security only, except if exchanged for an Exchange Note in the
Exchange Offer, the following additional information and documents (all of
which may be submitted by facsimile):
(A) if such beneficial interest is being transferred to the
person designated by the Depositary as being the beneficial owner, a
certification from such person to that effect (in substantially the
form of Exhibit C hereto); or ---------
(B) if such beneficial interest is being transferred to a
"qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities Act
or pursuant to an exemption from registration in accordance with Rule
144 under the Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to that effect
from the transferor (in substantially the form of Exhibit C hereto);
or
(C) if such beneficial interest is being transferred in reliance
on another exemption from the registration requirements of the
Securities Act, a certification to that effect from the transferee or
transferor (in substantially the form of Exhibit C hereto) and an
opinion of counsel from the transferee or transferor reasonably
acceptable to the Company and to the Registrar to the effect that such
transfer is in compliance with the Securities Act,
then the Trustee will cause, in accordance with the standing instructions and
procedures existing between it and the Depositary, the aggregate principal
amount of the Global Security to be reduced and, following such reduction, the
Company will execute and, upon receipt of a written authentication order in the
form of an Officers' Certificate, the Trustee will authenticate and deliver to
the transferee a Definitive Security.
(ii) Definitive Securities issued in exchange for a beneficial
interest in a Global Security pursuant to this Section 2.5 shall be
registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect
participants or otherwise, shall in writing instruct the Trustee. The
Trustee shall deliver such Definitive Securities to the persons in whose
name such Securities are so registered.
(e) Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.5), a Global Security
may not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) The following relates to the authentication of Definitive Securities in
the absence of the Depositary. If at any time: (i) the Depositary for the
Securities notifies the Company that the Depositary is unwilling or unable to
continue as Depositary for the Global Securities and a successor Depositary for
the Global Securities is not appointed by the Company within 90 days after
delivery of such notice; or (ii) the Company, at its sole discretion, notifies
the Trustee in writing that it elects to cause the issuance of Definitive
Securities under this Indenture, then the Company will execute, and the Trustee,
upon receipt of a written order in the form of an Officers' Certificate
requesting the authentication and delivery of Definitive Securities, will
authenticate and deliver Definitive Securities, in an aggregate principal amount
equal to the principal amount of the Global Securities, in exchange for such
Global Securities.
(g) (i) Except as otherwise agreed to by the Company, the Trustee and the
Holder thereof or as permitted by the following paragraph (ii), each Rule 144A
Note certificate evidencing the Global Securities and the Definitive Securities
(and all Securities other than Exchange Notes issued in exchange therefor or
substitution thereof) shall bear a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR
NOT SUBJECT TO, REGISTRATION UNDER SUCH LAWS.
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THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HERETO AGREES NOT TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATED PERSON OF THE COMPANY WAS THE OWNER OF THIS SECURITY UNLESS SUCH
OFFER, SALE OR OTHER TRANSFER IS (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A, TO A PERSON THE HOLDER REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (a)(2), (a)(3) OR
(a)(7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY
FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
"ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR
FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND IN EACH OF THE
FOREGOING CASES SUCH OFFER, SALE OR OTHER TRANSFER IS IN COMPLIANCE WITH
ANY APPLICABLE STATE SECURITIES LAWS, SUBJECT TO THE COMPANY'S AND THE
TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN
EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM
CONTAINED IN THE INDENTURE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO
THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE THEN
HOLDER OF THIS SECURITY AFTER THE RESALE RESTRICTION TERMINATION DATE. ANY
TRANSFEREE OF THIS SECURITY SHALL BE DEEMED TO HAVE REPRESENTED EITHER (A)
THAT IT IS NOT USING THE ASSETS OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT ("ERISA") OR THE INTERNAL REVENUE
CODE (THE "CODE") TO PURCHASE THIS SECURITY OR (B) THAT ITS PURCHASE AND
CONTINUED HOLDING OF THE SECURITY WILL BE COVERED BY A U.S. DEPARTMENT OF
LABOR CLASS EXEMPTION (WITH RESPECT TO PROHIBITED TRANSACTIONS UNDER
SECTION 406(a) OF ERISA).
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a Global
Security) pursuant to Rule 144 under the Securities Act or an
effective registration statement under the Securities Act (including
the Shelf Registration Statement):
(A) in the case of any Transfer Restricted Security that is
a Definitive Security, the Registrar shall permit the Holder
thereof to exchange such Transfer Restricted Security for a
Definitive Security that does not bear the legend set forth above
and rescind any restriction on the transfer of such Transfer
Restricted Security; and
(B) any such Transfer Restricted Security represented by a
Global Security shall not be subject to the provisions set forth
in (i) above (such sales or transfers being subject only to the
provisions of Section 2.5(c) hereof); provided, however, that
with respect to any request for an exchange of a Transfer
Restricted Security that is represented by a Global Security for
a Definitive Security that does not bear a legend, which request
is made in reliance upon Rule 144 or an effective registration
statement, the Holder thereof shall certify in writing to the
Registrar that such request is being made pursuant to Rule 144 or
an effective registration statement (such certification to be
substantially in the form of Exhibit C hereto.)
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(h) At such time as all beneficial interests in a Global Security have
either been exchanged for Definitive Securities, redeemed, repurchased or
cancelled, such Global Security shall be returned to or retained and cancelled
by the Trustee. At any time prior to such cancellation, if any beneficial
interest in a Global Security is exchanged for Definitive Securities, redeemed,
repurchased or cancelled, the principal amount of Securities represented by such
Global Security shall be reduced and an endorsement shall be made on such Global
Security, by the Trustee or the Securities Custodian, at the direction of the
Trustee, to reflect such reduction.
(i) All Definitive Securities and Global Securities issued upon any
registration of transfer or exchange of Definitive Securities or Global
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Definitive
Securities or Global Securities surrendered upon such registration of transfer
or exchange.
No service charge shall be made to a 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 and any other expenses (including the fees
and expenses of the Trustee) in connection therewith (other than such transfer
tax or similar governmental charge payable upon exchanges pursuant to Section
2.6 or 9.5).
Section 2.6 Replacement Securities
If any mutilated Security is surrendered to the Trustee, or the Company and
the Trustee receive evidence to their 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, shall authenticate a replacement
Security if the Trustee's requirements 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, the Agent or any authenticating agent from any loss which any of them
may suffer if a Security is replaced. The Company and the Trustee may charge for
their expenses in replacing a Security.
Every replacement Security is an additional obligation of the Company.
Section 2.7 Outstanding Securities
The Securities outstanding at any time are all the Securities authenticated
by the Trustee except for those canceled by it, those delivered to it for
cancellation and those described in this Section 2.7 as not outstanding.
If a Security is replaced pursuant to Section 2.6, 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
4.1, it ceases to be outstanding and interest on it ceases to accrue as of the
date it is deemed paid. Upon a "legal defeasance" pursuant to Section 8.1(b) or
a "covenant defeasance" pursuant to Section 8.1(c), the Securities shall be
deemed to be outstanding or not outstanding as provided in the applicable
Section 8.1(b) or 8.1(c).
Except as set forth in Section 2.8, a Security does not cease to be
outstanding because the Company or an Affiliate holds the Security.
Section 2.8 Treasury Securities
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company or by any Person directly or indirectly controlling or controlled
by or under direct or indirect common control with the Company shall be
considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Securities which the Trustee actually knows
are so owned shall be so disregarded.
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Section 2.9 Temporary Securities
Until definitive Securities are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Securities. Temporary Securities
shall be substantially in the form of definitive Securities but may have
variations that the Company considers appropriate for temporary Securities.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Securities in exchange for temporary Securities.
Section 2.10 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, upon request of
the Company, certification of their destruction shall be delivered to the
Company unless, by a written order signed by two Officers, the Company shall
direct that canceled Securities be returned to it. 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 2.11 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, in each case at the rate provided
in the Securities. The Company, with the consent of the Trustee, shall fix each
such special record date and payment date. At least 15 days before the special
record date, the Company (or, upon written request of the Company, 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 2.12 Securities Issuable in the Form of a Global Security
(a) If the Company shall establish that the Securities are to be issued in
whole or in part in the form of one or more Global Securities, then the Company
shall execute and the Trustee or an agent thereof shall, in accordance with
Section 2.2 and the written order of the Company delivered to the Trustee or its
agent thereunder, authenticate and deliver such Global Security or Securities,
which (i) shall represent, and shall be denominated in an amount equal to the
aggregate principal amount of the outstanding Securities to be represented by
such Global Security or Securities, or such portion thereof as the Company shall
specify in a written order of the Company signed by two Officers, (ii) shall be
registered in the name of the Depositary for such Global Security or Securities
or its nominee, (iii) shall be delivered by the Trustee or its agent to the
Depositary or pursuant to the Depositary's instruction and (iv) shall bear a
legend substantially to the following effect: "Unless and until it is exchanged
in whole or in part for securities in definitive form, this security may not be
transferred except as a whole by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary. Unless this certificate is presented by
an authorized representative of the Depositary to the Company or its agent for
registration of transfer, exchange, or payment, and any certificate issued is
registered in the name of the nominee of the Depositary or in such other name as
is requested by an authorized representative of the Depositary (and any payment
is made to the nominee of the Depositary or to such other entity as is requested
by an authorized representative of the Depositary), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, the nominee of the Depositary, has an interest
herein."
(b) Notwithstanding any other provision of this Section 2.12 or of Section
2.5, and subject to the provisions of paragraph (c) below, a Global Security may
be transferred, in whole but not in part and in the manner provided in Section
2.5, only to a nominee of the Depositary for such Global Security, or to the
Depositary, or a successor Depositary for such Global Security selected or
approved by the Company, or to a nominee of such successor Depositary.
(c) (i) If at any time the Depositary for a Global Security notifies the
Company that it is
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unwilling or unable to continue as Depositary for such Global Security or if at
any time the Depositary for the Securities shall no longer be eligible or in
good standing under the Exchange Act or any other applicable statute or
regulation, the Company shall appoint a successor Depositary with respect to
such Global Security. If a successor Depositary for such Global Security is not
appointed by the Company within 90 days after the Company receives such notice
or becomes aware of such ineligibility, the Company will execute, and the
Trustee or an agent thereof, upon receipt of a written order of the Company
signed by two Officers for the authentication and delivery of individual
Definitive Securities in exchange for such Global Security, will authenticate
and deliver, individual Definitive Securities of like tenor and terms in an
aggregate principal amount equal to the principal amount of the Global Security
in exchange for such Global Security.
(ii) The Company may at any time and in its sole discretion determine
that the Securities issued in the form of one or more Global Securities
shall no longer be represented by such Global Security or Securities. In
such event the Company will execute, and the Trustee, upon receipt of a
written order of the Company signed by two Officers for the authentication
and delivery of individual Definitive Securities in exchange in whole or in
part for such Global Security, will authenticate and deliver individual
Definitive Securities of like tenor and terms in an aggregate principal
amount equal to the principal amount of such Global Security or Securities
in exchange for such Global Security or Securities.
(iii) If specified by the Company pursuant to a written order of the
Company signed by two Officers, the Depositary for a Global Security may
surrender such Global Security in exchange in whole or in part for
individual Definitive Securities of like tenor and terms on such terms as
are acceptable to the Company and such Depositary. Thereupon the Company
shall execute, and the Trustee or an agent thereof, upon a written order of
the Company signed by two Officers, shall authenticate and deliver, without
service charge, (1) to each Person specified by such Depositary a new
Definitive Security or Securities of like tenor and terms and of any
authorized denomination as requested by such Person in an aggregate
principal amount equal to and in exchange for such Person's beneficial
interest as specified by such Depositary in the Global Security; and (2) to
such Depositary a new Global Security of like tenor and terms and in an
authorized denomination equal to the difference, if any, between the
principal amount of the surrendered Global Security and the aggregate
principal amount of Definitive Securities delivered to Holders thereof.
(iv) In any exchange provided for in (i), (ii) or (iii) of this
paragraph (c), the Company will execute and the Trustee or an agent thereof
will authenticate and deliver individual Definitive Securities in
registered form in authorized denominations. Upon the exchange of the
entire principal amount of a Global Security for individual Definitive
Securities, such Global Securities shall be cancelled by the Trustee or an
agent thereof. Except as provided in (iii) above, Definitive Securities
issued in exchange for a Global Security pursuant to this Section shall be
registered in such names and in such authorized denominations as the
Depositary for such Global Security, pursuant to instructions from its
direct or indirect participants or otherwise, shall instruct either the
Trustee or the Registrar. Such Trustee or the Registrar shall deliver such
Definitive Securities to the Persons in whose names such Securities are so
registered.
ARTICLE 3.
OPTIONAL REDEMPTION AND ASSET SALE OFFER
Section 3.1 Notices to Trustee
(a) If the Company elects to redeem Securities pursuant to the optional
redemption provisions of Section 3.7, it shall furnish to the Trustee, at least
45 days but not more than 60 days before a redemption date, an Officers'
Certificate stating that the Company has exercised its option to redeem
Securities pursuant to Section 3.7 and setting forth the redemption date, the
principal amount of Securities to be redeemed and the redemption price.
(b) If the Company offers to purchase Securities pursuant to the provisions
of Section 3.8, it shall furnish to the Trustee, on or before the fifth day
preceding the commencement of an Asset Sale Offer Period, an Officers'
Certificate stating that the Company is making an Asset Sale Offer pursuant to
Section 3.8 and setting forth the Asset Sale Payment Date, the principal amount
of Securities the Company is offering to purchase and the purchase price of such
Securities, and further setting forth a statement to the effect that (a) the
Company has consummated an Asset Sale and (b) the conditions set forth in the
first sentence of Section 4.11 have been satisfied.
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Section 3.2 Selection of Securities to Be Redeemed or Purchased
(a) If less than all of the Securities are to be redeemed pursuant to
Section 3.7, the Trustee shall select the Securities to be redeemed on a pro
rata basis, by lot or in such other manner as the Trustee shall deem fair and
equitable; provided, however, that in the case of a partial redemption of
Securities made with the proceeds of a Public Equity Offering, selection of the
Securities for redemption shall be made on a pro rata basis, unless such method
is otherwise prohibited (in which case the Securities to be purchased shall be
selected by lot or in such other manner as the Trustee shall deem fair and
equitable). The particular Securities to be redeemed shall be selected, unless
otherwise provided herein, prior to the date notice of redemption is required to
be sent by the Trustee, from the outstanding Securities not previously called
for redemption.
The Trustee promptly shall 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 integral multiples of $1,000.
Provisions of this Indenture that apply to Securities called for redemption also
apply to portions of Securities called for redemption.
(b) If less than all of the Securities are to be purchased pursuant to
Section 3.8, the Trustee shall select the Securities to be purchased on a pro
rata basis, unless such method is otherwise prohibited (in which case the
Securities to be purchased shall be selected by lot or in such other manner as
the Trustee shall deem fair and equitable). The particular Securities to be
purchased shall be selected, unless otherwise provided herein, prior to the date
notice of purchase is required to be sent by the Trustee, from the outstanding
Securities tendered pursuant to the Asset Sale Offer.
The Trustee promptly shall notify the Company in writing of the Securities
selected for purchase and, in the case of any Security selected for partial
purchase, the principal amount thereof to be purchased. Securities and portions
of them selected shall be in amounts of $1,000 or integral multiples of $1,000.
Provisions of this Indenture that apply to Securities called for purchase also
apply to portions of Securities called for purchase.
Section 3.3 Notices to Holders
(a) At least 30 days but not more than 60 days before a redemption date,
the Company shall mail a notice to each Holder whose Securities are to be
redeemed.
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 will be
issued;
(4) the name and address of the Paying Agent;
(5) that Securities called for redemption must be surrendered to the
Paying Agent at the address specified in such notice to collect the
redemption price;
(6) that interest on Securities called for redemption ceases to accrue
on and after the redemption date (unless the Company defaults on its
obligation to repurchase Securities);
(7) the paragraph of the Securities pursuant to which the Securities
are being redeemed; and
(8) the aggregate principal amount of Securities that are being
redeemed.
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(b) If the Company determines to make an Asset Sale Offer as provided in
Section 3.8, the Company shall promptly mail a notice to each Holder.
The Notice shall state:
(1) that an Asset Sale Offer is being made pursuant to Section 3.8 and
the length of time the Asset Sale Offer will remain open;
(2) the purchase price and the Asset Sale Payment Date;
(3) the aggregate principal amount of Securities the Company is
offering to purchase;
(4) that any Security not tendered or accepted for payment will
continue to accrue interest;
(5) that any Security accepted for payment pursuant to the Asset Sale
Offer shall cease to accrue interest on the Asset Sale Payment Date;
(6) that Holders electing to have a Security purchased pursuant to any
Asset Sale Offer will be required to surrender the Security, with the form
entitled "Option of Holder to Elect Purchase" on the reverse side 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
expiration of the Asset Sale Offer Period;
(7) that Holders will be entitled to withdraw their election if the
Company, depositary or Paying Agent, as the case may be, receives, not
later than the expiration of the Asset Sale Offer Period, or such longer
period as may be required by law, a telegram, telex, 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;
(8) that, if the aggregate principal amount of Securities surrendered
by Holders exceeds the aggregate principal amount of Securities offered to
be purchased, the Trustee shall select the Securities to be purchased on a
pro rata basis, unless such method is otherwise prohibited (in which case
the Securities to be purchased shall be selected by lot or in such other
manner as the Trustee shall deem fair and equitable); and
(9) that Holders whose Securities are purchased only in part will be
issued new Securities equal in principal amount to the unpurchased portion
of the Securities surrendered.
(c) At the Company's request, the Trustee shall give the notice required in
Section 3.3(a) or 3.3(b) in the Company's name and at its expense; provided,
however, that the Company shall deliver to the Trustee, at least 45 days prior
to the redemption date or not later than the fifth day preceding the
commencement of an Asset Sale Offer Period, as the case may be, an Officers'
Certificate requesting that the Trustee give such notice and setting forth the
information to be stated in such notice as provided in Section 3.3(a) or 3.3(b).
Section 3.4 Effect of Notice of Redemption
Once notice of redemption under Section 3.7 is mailed, Securities called
for redemption become due and payable on the redemption date at the redemption
price. However, if a redemption date is on or before an Interest Payment Date
and on or after the related record date, any interest accrued and unpaid to the
redemption date shall be paid on such Interest Payment Date to the person in
whose name the Security is registered at the close of business on
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such record date and the only remaining right of the Holders of Securities
called for redemption shall be to receive the redemption price (excluding such
interest) upon surrender of such Securities to the Paying Agent.
Section 3.5 Deposit of Redemption Price or Purchase Price
One Business Day prior to the redemption date or the Asset Sale Payment
Date, as the case may be, the Company shall deposit with the Trustee or with the
Paying Agent money sufficient to pay the redemption price or the purchase price
of, and accrued interest on, all Securities to be redeemed or purchased on that
date. The Trustee or the Paying Agent shall return to the Company any money not
required for that purpose.
If the Company complies with the preceding paragraph, interest on the
Securities or portions thereof to be redeemed or purchased (in the case of a
redemption, whether or not such Securities are presented for payment) will cease
to accrue on the applicable redemption date or Asset Sale Payment Date, as the
case may be. If any Security called for redemption shall not be so paid upon
surrender, or if any Security to be purchased shall not be so paid on the Asset
Sale Payment Date, because of the failure of the Company to comply with the
preceding paragraph, then interest will be paid on the unpaid principal from the
redemption date or the Asset Sale Payment Date, as the case may be, until such
principal is paid and on any interest not paid on such unpaid principal, in each
case, at the rate provided in the Securities and in Section 4.1.
Section 3.6 Securities Redeemed or Purchased in Part
Upon surrender of a Security that is redeemed or purchased 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 or the portion not purchased of the Security surrendered.
Section 3.7 Optional Redemption
The Company may redeem all or any of the Securities at any time on or after
September 15, 2002, at the following redemption prices (expressed as percentages
of principal amount), plus accrued and unpaid interest to the redemption date:
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If Redeemed During
the 12-month Period Commencing Redemption Price
- ------------------------------- ----------------
September 15, 2002 104.750%
September 15, 2003 103.167%
September 15, 2004 101.583%
September 15, 2005 and thereafter 100%
Notwithstanding the foregoing, the Company may redeem in the aggregate up
to $150,000,000 principal amount of Securities at any time and from time to time
prior to September 15, 2000 at a redemption price equal to 108.500% of the
aggregate principal amount so redeemed, plus accrued interest to the redemption
date, out of the net cash proceeds of one or more Public Equity Offerings;
provided that at least $300,000,000 aggregate principal amount of Securities
originally issued remains outstanding after the occurrence of any such
redemption and that any such redemption occurs within 60 days following the
closing of any such Public Equity Offering.
Any redemption pursuant to this Section 3.7 shall be made, to the extent
applicable, in accordance with the provisions of Sections 3.1 through 3.6.
Section 3.8 Asset Sale Offer
If the Company determines to make an Asset Sale Offer, the Company shall
promptly mail (with notice to the Trustee) or shall cause the Trustee to
promptly mail (in the Company's name and at its expense) notice of an Asset Sale
Offer to each Holder of Securities as set forth in Section 3.3(b). The Asset
Sale Offer shall be deemed to have commenced on the date of such mailing and
shall terminate 30 days after its commencement unless a longer offering period
is required by law (the "Asset Sale Offer Period"). On or prior to the fifth
Business Day following the termination of the Asset Sale Offer Period (the
"Asset Sale Payment Date"), the Company shall purchase, or cause the Trustee to
purchase, and mail or deliver payment for, as selected on a pro rata basis
(unless such method is otherwise prohibited, in which case the Securities to be
purchased shall be selected by lot, with such adjustments as may be deemed
appropriate by the Company so that only Securities in denominations of $1,000 or
integral multiples thereof shall be purchased, or in such other manner as the
Trustee shall deem fair and equitable) from Holders tendering their Securities
pursuant to the Asset Sale Offer, the amount of Securities required to be
purchased pursuant to Section 4.11. If the Asset Sale Payment Date is on or
after an interest payment record date and on or before the related interest
payment date, any accrued interest will 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 will be payable to Holders who tender Securities pursuant to
the Asset Sale Offer. Any Asset Sale Offer shall be conducted in compliance with
applicable tender offer rules, including Section 14(e) of the Exchange Act and
Rule 14e-1 thereunder.
On or before any Asset Sale Payment Date, the Company, to the extent
lawful, shall (i) accept for payment, as selected on a pro rata basis (unless
such method is otherwise prohibited, in which case the Securities to be
purchased shall be selected by lot, with such adjustment as may be deemed
appropriate by the Company so that only Securities in denominations of $1,000 or
integral multiples thereof shall be purchased, or in such other manner as the
Trustee shall deem fair and equitable), Securities or portions thereof tendered
pursuant to the Asset Sale Offer, (ii) if the Company appoints a depositary or
Paying Agent, deposit with such depositary or Paying Agent money sufficient to
pay the purchase price (including all accrued interest on the purchased
Securities) of all Securities or portions thereof so accepted, (iii) deliver or
cause the depositary or Paying Agent to deliver to the Trustee Securities so
accepted and (iv) deliver an Officers' Certificate identifying the Securities or
portions thereof accepted for payment by the Company in accordance with the
terms of this Section 3.8. The depositary, the Paying Agent or the Company, as
the case may be, promptly shall mail or deliver to each tendering Holder an
amount equal to the purchase price (including all accrued interest on the
purchased Securities) of the Securities tendered by such Holder and accepted by
the Company for purchase, and the Trustee promptly shall authenticate and mail
or deliver to such Holders a new Security equal in principal amount to any
unpurchased portion of the Security surrendered. Any Securities not so accepted
promptly shall be mailed or delivered by the Company to the Holder thereof. The
Company will publicly announce the results of the Asset Sale Offer on the Asset
Sale Payment Date.
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Other than as specifically provided in this Section 3.8, any offer to
purchase Securities pursuant to this Section 3.8 shall be made in accordance
with the other provisions of this Indenture.
ARTICLE 4.
COVENANTS
Section 4.1 Payment of Securities
The Company shall pay the principal of and premium, if any, and interest on
the Securities on the dates and in the manner provided in the Securities.
Principal, premium, if any, and interest shall be considered paid on the date
due if the Paying Agent, other than the Company or a Subsidiary of the Company,
holds on that date money deposited by the Company designated for and sufficient
to pay all principal, premium, if any, and interest then due.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
the interest rate on the Securities to the extent lawful; it shall pay interest
on overdue payments of premium, if any, or installments of interest (without
regard to any applicable grace period) at the same rate to the extent lawful.
On or prior to the effective date of this Indenture, the Trustee shall
establish a segregated non-interest-bearing corporate trust account (the
"Payment Account") maintained by the Trustee for the benefit of Holders in which
all amounts paid in respect of the Securities will be held and from which the
Trustee shall make payments to the Holders in accordance with this Indenture and
the Securities. The Trustee and any Agent of the Trustee shall have exclusive
control and sole right of withdrawal with respect to the Payment Account for the
purpose of making deposits in and withdrawals from the Payment Account in
accordance with this Indenture. All monies and other property deposited or held
from time to time in the Payment Account shall be held by the Trustee in the
Payment Account for the exclusive benefit of the Holders, subject to
subordination to Senior Indebtedness in accordance with Article 10 hereof.
Section 4.2 Maintenance of Office or Agency
The Company will maintain an office or agency where Securities may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company with respect of the Securities and this Indenture
may be served pursuant to Section 2.3. The Company hereby designates the
Corporate Trust Office of the Trustee as such office or agency of the Company.
The Company also from time to time may designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
such purposes and from time to time may rescind such designations. The Company
will 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.
Section 4.3 SEC Reports
(a) The Company shall remain subject to the reporting requirements of
Section 13 or Section 15(d) of the Exchange Act and shall continue to file with
the SEC such annual reports and such information, documents and other reports
which are specified in Sections 13 and 15(d) of the Exchange Act.
(b) The Company shall file with the Trustee and cause to be provided to the
Holders, within 15 days after it files the same with the SEC, copies of its
annual reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the SEC may by rules and regulations
prescribe) which the Company or any subsidiary of the Company is required to
file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. The
Company shall cause any annual report furnished to its stockholders generally
and any quarterly or other financial reports furnished by it to its stockholders
generally to be filed with the Trustee and mailed to the Holders at their
addresses appearing in the register of Securities maintained by the Registrar.
The Company will cause to be disclosed in an Officers' Certificate accompanying
any annual report filed with the Trustee and mailed to Holders or comparable
information as of the date of the most recent financial statements in each such
report or comparable information the amount available for payments pursuant to
Section 4.7. The Trustee shall have no obligation to furnish such information to
the Holders unless instructed to do so by the Company or requested by a Holder.
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Section 4.4 Compliance Certificate
(a) The Company shall deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company, 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 the Company 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 knowledge the Company has kept, observed, performed and fulfilled each
covenant contained in this Indenture and is not in default in the performance or
observance of any of the terms, provisions and conditions hereof (or, if a
Default or Event of Default shall have occurred, describing all such Defaults or
Events of Default of which he may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or premium, if any, or interest, if any,
on the Securities are prohibited or, if such event has occurred, a description
of the event and what action the Company is taking or proposes to take with
respect thereto.
(b) So long as (i) not contrary to the then current recommendations of the
American Institute of Certified Public Accountants or (ii) the Company's
independent public accountants do not have in effect a policy, of general
applicability with respect to their clients, that such accountants will not
prepare statements on the subjects specified below, the year-end financial
statements delivered pursuant to Section 4.3 shall be accompanied by a written
statement of the Company's 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
that would lead them to believe that the Company has violated any provisions of
Article 4 or 5 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.
(c) The Company, so long as any of the Securities are outstanding, will
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default under this Indenture, an Officers' Certificate specifying
such Default or Event of Default and what action the Company is taking or
proposes to take with respect thereto.
Section 4.5 Corporate Existence, Taxes, etc.
Subject to the provisions of Section 5.1, the Company shall do or cause to
be done all things necessary to preserve and keep in full force and effect its
rights (charter and statutory), licenses and franchises; provided, however, that
the Company shall not be required to preserve any such right or franchise 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 the loss thereof is
not disadvantageous in any material respect to the Holders.
Section 4.6 Stay, Extension and Usury Laws
The Company covenants (to the extent that it may lawfully do so) that it
will 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 Company's
obligation to pay the Securities; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
insofar as such law applies to the Securities, and covenants that it will not,
by resort to any such law, hinder, delay or impede the execution of any power,
right or remedy herein granted to the Trustee, but will suffer and permit the
execution of every such power, right or remedy as though no such law has been
enacted.
Section 4.7 Limitations on Restricted Payments
The Company shall not, and shall not permit any of its Subsidiaries,
directly or indirectly, to make any Restricted Payment if at the time of such
Restricted Payment:
(i) a Default or Event of Default shall have occurred and be continuing or
shall occur as a consequence thereof;
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(ii) after giving effect to the proposed Restricted Payment, the amount of
such Restricted Payment, when added to the aggregate amount of all Restricted
Payments made after May 15, 1996, exceeds the sum of (1) 50% of the Company's
Consolidated Net Income accrued during the period (taken as a single period)
commencing May 15, 1996, to and including the most recent fiscal quarter ended
immediately prior to the date of such Restricted Payment and for which financial
results have been reported (or, if such aggregate Consolidated Net Income shall
be a deficit, minus 100% of such aggregate deficit); (2) the net cash proceeds
from the issuance and sale of the Company's (a) Capital Stock that is not
Disqualified Stock, including net cash proceeds received upon the exercise of
any options or warrants to purchase shares of Capital Stock other than
Disqualified Stock (other than to a Subsidiary of the Company) and (b) debt
securities or other securities that are convertible or exercisable or
exchangeable for such Capital Stock that is not Disqualified Stock and that have
been so converted or exercised or exchanged, after May 15, 1996; (3) aggregate
net cash proceeds received by the Company after the date of the Indenture as
capital contributions to the Company; and (4) $20.0 million; or
(iii) the Company would not be able to incur an additional $1.00 of
Indebtedness under the Consolidated Coverage Ratio test in Section 4.9(a).
Notwithstanding the foregoing, the provisions of this Section 4.7 shall not
prevent the following Restricted Payments (provided, however, that such
Restricted Payments shall be included for purposes of computing the amount of
Restricted Payments previously made under clause (ii) of the preceding
paragraph): (x) the payment of any dividend within 60 days after the date of
declaration thereof if the payment thereof would have complied with the
limitations of this covenant on the date of declaration and (y) the purchase of
stock held by officers, directors or employees of the Company whose employment
or term with the Company has been terminated or who have died or become disabled
in an aggregate amount not to exceed $5.0 million in any fiscal year.
Section 4.8 Limitations on Restrictions on Distributions from Subsidiaries
The Company shall not, and shall not permit any of its Subsidiaries to,
create or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction (other than encumbrances or restrictions imposed by
law or by judicial or regulatory action or by provisions in leases or other
agreements that restrict the assignability thereof) on the ability of any
Subsidiary of the Company to (i) pay dividends or make any other distributions
on its Capital Stock or any other interest or participation in, or measured by,
its profits, owned by the Company or any of its other Subsidiaries, or pay
interest on or principal of any Indebtedness owed to the Company or any of its
other Subsidiaries, (ii) make loans or advances to the Company or any of its
other Subsidiaries or (iii) transfer any of its properties or assets to the
Company or any of its other Subsidiaries, except for encumbrances or
restrictions existing under or by reason of (a) applicable law, (b) Existing
Indebtedness, (c) any restrictions under any agreement evidencing any Acquired
Indebtedness that was permitted to be incurred pursuant to Section 4.9, provided
that such restrictions and encumbrances only apply to assets that were subject
to such restrictions and encumbrances prior to the acquisition of such assets by
the Company or its Subsidiaries, (d) restrictions or encumbrances replacing
those permitted by clause (b) or (c) which, taken as a whole, are not more
restrictive, (e) this Indenture, (f) any restrictions or encumbrances arising in
connection with Refinancing Indebtedness, provided that any restrictions and
encumbrances of the type described in this Section 4.8 that arise under such
Refinancing Indebtedness are not, taken as a whole, more restrictive than those
under the agreement creating or evidencing the Indebtedness being refunded or
refinanced, (g) any restrictions with respect to a Subsidiary of the Company
imposed pursuant to an agreement that has been entered into for the sale or
other disposition of all or substantially all of the Capital Stock or assets of
such Subsidiary, (h) any agreement restricting the sale or other disposition of
property securing Indebtedness if such agreement does not expressly restrict the
ability of a Subsidiary of the Company to pay dividends or make loans or
advances and (i) customary restrictions in purchase money debt or leases
relating to the property covered thereby.
Section 4.9 Limitations on Additional Indebtedness
(a) After the date hereof, the Company shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee, extend the maturity of, or otherwise become liable with respect to
(collectively, "incur"), any Indebtedness (including, without limitation,
Acquired Indebtedness), unless after giving effect thereto, the Company's
Consolidated Coverage Ratio on the date thereof would be at least:
(i) 2.00 to 1, if such date is on or prior to March 31, 1998,
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(ii) 2.25 to 1, if such date is after March 31, 1998 and on or prior
to March 31, 1999, and
(iii) 2.50 to 1, if such date is after March 31, 1999,
in each case determined on a pro forma basis as if the incurrence of such
additional Indebtedness and the application of the net proceeds therefrom, had
occurred at the beginning of the four-quarter period used to calculate the
Company's Consolidated Coverage Ratio.
(b) Notwithstanding the foregoing: (a) the Company and its Subsidiaries may
(i) incur Indebtedness under one or more Credit Facilities not to exceed $700.0
million at any one time outstanding; (ii) incur Refinancing Indebtedness; (iii)
incur any Indebtedness of the Company to any Wholly Owned Subsidiary or of any
Subsidiary to the Company or to any Wholly Owned Subsidiary; (iv) incur any
Indebtedness evidenced by letters of credit which are used in the ordinary
course of business of the Company and its Subsidiaries to secure workers'
compensation and other insurance coverages; and (v) incur Capitalized Lease
Obligations of the Company and its Subsidiaries such that the aggregate
principal amount of Capitalized Lease Obligations of the Company and its
Subsidiaries then outstanding, when added to the Capitalized Lease Obligations
to be incurred, does not exceed 5% of Consolidated Tangible Assets; and (b) the
Company and its Subsidiaries may incur additional Indebtedness (including
additional Indebtedness under any Credit Facility that is designated in such
Credit Facility as incurred under this clause (b)), provided that the aggregate
principal amount of any such additional Indebtedness outstanding under this
clause (b) at any time, together with the aggregate liquidation value of any
outstanding Preferred Stock issued by a Subsidiary of the Company, does not
exceed $75.0 million.
No Subsidiary of the Company shall Guarantee any Indebtedness of the
Company (including by way of a pledge of assets) that is subordinate in right of
payment to any Senior Indebtedness unless such Subsidiary also guarantees the
Securities and waives, and will not claim or take advantage of, any rights of
reimbursement, indemnity or subrogation against the Company as a result of any
payment by such Subsidiary under its Guarantee of the Securities. If such other
Indebtedness of the Company is (1) pari passu with the Securities, such
Guarantee of such pari passu Indebtedness shall be pari passu with or expressly
subordinated to such Guarantee of the Securities, or (2) subordinated in right
of payment to the Securities, such Guarantee of such subordinated Indebtedness
shall be expressly subordinated to such Guarantee of the Securities, at least to
the extent that such subordinated Indebtedness is subordinated or junior to the
Securities. Notwithstanding the foregoing, any Guarantee of the Securities by a
Subsidiary of the Company may provide by its terms that it shall be
automatically and unconditionally released and discharged upon the release or
discharge of the Guarantee which resulted in the creation of such Guarantee of
the Securities, except a discharge or release by or as a result of payment under
such Guarantee of such other Indebtedness or if any other Guarantee of other
Indebtedness is outstanding.
Section 4.10 Change in Control
(a) Following the occurrence of any Change in Control, each Holder will
have the right, at such Holder's option, to require that the Company purchase (a
"Change in Control Repurchase"), and upon the exercise of such right, the
Company shall, subject to the provisions of Section 10.3 hereof, purchase, all
or any part of such Holder's Securities on a date (the "Repurchase Date") that
is no earlier than 30 days nor later than 60 days after the date on which the
Company gives notice of a Change in Control as provided in (b) below at a
purchase price equal to 101% of the aggregate principal amount of the
Securities, plus accrued and unpaid interest thereon, if any, to the Repurchase
Date.
(b) Within 30 days after any Change in Control, the Company (with notice to
the Trustee), or the Trustee at the Company's request, will mail or cause to be
mailed to all Holders on the date of the Change in Control a notice of the
occurrence of such Change in Control and of the Holders' rights arising as a
result thereof. Such notice, which shall govern the terms of the Change in
Control Repurchase, shall state:
(1) that a Change in Control has occurred and that such Holder has the
right to require the Company to repurchase such Holder's Securities in
cash;
(2) the Repurchase Date (which will be no earlier than 30 days nor
later than 60 days from the date such notice is mailed);
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(3) the purchase price for the repurchase;
(4) the date by which the repurchase right must be exercised; and
(5) the instructions determined by the Company, consistent with this
Section 4.10, that a Holder must follow in order to have its Securities
repurchased.
(c) To exercise a repurchase right, a Holder shall deliver to the Company
(or a depositary or Paying Agent designated by the Company for such purpose in
the notice referred to in (b) above), on or before the close of business on the
Repurchase Date, the Security or Securities with respect to which the repurchase
right is being exercised, duly endorsed for transfer to the Company, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of each
Security so delivered completed. Holders shall be entitled to withdraw their
election if the Company (or the depositary or Paying Agent designated by the
Company for the purpose of receiving such election) receives, not later than
five Business Days prior to the Repurchase Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Security or Securities the Holder delivered for purchase and a
statement that such Holder is withdrawing its election to the have the Security
or Securities purchased.
(d) In the event a repurchase right shall be exercised in accordance with
the terms hereof, subject to Article 10, the Company shall on or promptly
following the Repurchase Date pay or cause to be paid in cash to the Holder
thereof the repurchase price of the Security or Securities as to which the
repurchase right has been exercised. In the event that the repurchase right is
exercised with respect to less than the entire principal amount of a surrendered
Security, the Company shall execute and deliver to the Trustee and the Trustee
shall authenticate for issuance in the name of the Holder a new Security or
Securities in the aggregate principal amount of the unrepurchased portion of
such surrendered security.
(e) If the Repurchase Date is on or before an Interest Payment Date and on
or after the related record date, any interest accrued and unpaid to the
Repurchase Date will be paid to the Person in whose name the Security is
registered at the close of business on such record date, and no additional
interest will be payable to Holders who exercise their repurchase right pursuant
to this Section 4.10.
(f) Any Change in Control Repurchase shall be conducted in compliance with
applicable tender offer rules, including Section 14(e) of the Exchange Act and
Rule 14(e)(1) thereunder. The Change in Control Repurchase may not be modified
or conditioned by the Company in any manner.
Section 4.11 Limitations on Asset Sales
The Company shall not, and shall not permit any of its Subsidiaries to,
consummate any Asset Sale unless (i) the Company or its Subsidiaries receive
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets or Capital Stock included in such Asset Sale (as determined
in good faith by the Board of Directors, whose determination shall be conclusive
and evidenced by a board resolution) and (ii) not less than 50% of such
consideration is in the form of cash or Cash Equivalents (provided, however,
that this clause (ii) shall not be applicable to a transaction involving assets
acquired and designated as held for sale, which assets represent in aggregate
since the date of the Indenture 5% or less of the net tangible assets previously
acquired by the Company or a Subsidiary pursuant to acquisitions since the date
of the Indenture and which assets are disposed of no later than one year
following their initial acquisition). The Net Proceeds of Asset Sales shall,
within 360 days of receipt thereof, (a) be reinvested in the lines of business
of the Company or any of its Subsidiaries immediately prior to such investment;
(b) be applied to the payment of the principal of, and interest on, Senior
Indebtedness; (c) be utilized to make any Investment in any other Person
permitted under this Indenture; or (d) be applied to an offer (an "Asset Sale
Offer") to purchase outstanding Securities. In any such Asset Sale Offer, the
Company shall offer to purchase Securities on a pro rata basis (unless such
method is otherwise prohibited, in which case the Securities to be purchased
shall be selected by lot, with such adjustments as may be deemed appropriate by
the Company so that only Securities in denominations of $1,000 or integral
multiples thereof shall be purchased, or in such other manner as the Trustee
shall deem fair and equitable), at a purchase price equal to 100% of the
aggregate principal amount of the Securities, plus accrued and unpaid interest
to the date of purchase, in the manner set forth in this Indenture. Any Asset
Sale Offer will be conducted in compliance with applicable tender offer rules,
including Section 14(e) of the Exchange Act and Rule 14e-1 thereunder. Any Net
Proceeds remaining immediately after the completion of any Asset Sale Offer may
be used by the Company or its Subsidiaries for any purpose not inconsistent with
the other provisions of this Indenture.
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Notwithstanding the provisions of the immediately preceding paragraph, the
Company and its Subsidiaries may, in the ordinary course of business (or, if
otherwise than in the ordinary course of business, upon receipt of a favorable
written opinion from an independent financial advisor of national reputation as
to the fairness from a financial point of view to the Company or such Subsidiary
of the proposed transaction), exchange all or a portion of its property,
businesses or assets for property, businesses or assets that, or Capital Stock
of a Person all or substantially all of whose assets, are of a type used in a
healthcare related business, or a combination of any such property, businesses
or assets, or Capital Stock of such a Person and cash or Cash Equivalents;
provided that (i) there shall not exist immediately prior or subsequent thereto
a Default or an Event of Default, (ii) a majority of the disinterested members
of the Board of Directors of the Company shall have approved a resolution of the
Board of Directors that such exchange is fair to the Company or such Subsidiary,
as the case may be, and (iii) any cash or Cash Equivalents received pursuant to
any such exchange shall be applied in the manner applicable to Net Proceeds of
Asset Sales as set forth pursuant to the provisions of the immediately preceding
paragraph; and provided, further, that any Capital Stock of a Person received in
such an exchange pursuant to this paragraph shall be owned directly by the
Company or a Subsidiary of the Company and, when combined with the Capital Stock
of such person already owned by the Company and its Subsidiaries, shall result
in such Person becoming a Wholly Owned Subsidiary of the Company.
Section 4.12 Limitations on Transactions with Affiliates
Neither the Company nor any of its Subsidiaries shall make any loan,
advance, guarantee or capital contribution to, or for the benefit of, or sell,
lease, transfer or otherwise dispose of any of its properties or assets to, or
for the benefit of, or purchase or lease any property or assets from, or enter
into or amend any contract, agreement or understanding with, or for the benefit
of, any Affiliate of the Company or any of its Subsidiaries or any Person (or
any Affiliate of such Person) holding 10% or more of the Common Equity of the
Company or any of its Subsidiaries (each an "Affiliate Transaction") unless (i)
such Affiliate Transactions are between or among the Company and its
Subsidiaries; (ii) such Affiliate Transactions are in the ordinary course of
business and consistent with past practice; or (iii) the terms of such Affiliate
Transactions are fair and reasonable to the Company or such Subsidiary, as the
case may be, and are at least as favorable as the terms which could be obtained
by the Company or such Subsidiary, as the case may be, in a comparable
transaction made on an arm's-length basis between unaffiliated parties. In the
event of any transaction or series of transactions occurring subsequent to the
date of this Indenture with an Affiliate of the Company which is not permitted
under clauses (i) or (ii) above and involves in excess of $5.0 million, the
terms of such transaction shall be in writing and a majority of the
disinterested members of the Board of Directors shall by resolution determine
that such business or transaction meets the criteria set forth in clause (iii)
above.
Section 4.13 Limitations on Liens
The Company shall not, and shall not permit any Subsidiary to, directly or
indirectly, create, incur or affirm any Lien of any kind securing any
Indebtedness which is pari passu or subordinate in right of payment to the
Securities (including any assumption, guarantee or other liability with respect
thereto by any Subsidiary) upon any property or assets (including any
intercompany notes) of the Company or any Subsidiary owned on the date hereof or
hereafter acquired, or any income or profits therefrom, unless the Securities
are directly secured equally and ratably with (or, in the case of subordinated
Indebtedness, prior or senior thereto, with the same relative priority as the
Securities shall have with respect to such subordinated Indebtedness) the
obligation or liability secured by such Lien except for Liens (A) securing any
Indebtedness which became Indebtedness pursuant to a transaction permitted under
Section 5.1 hereof or securing Acquired Indebtedness which, in each case, were
created prior to (and not created in connection with, or in contemplation of)
the incurrence of such pari passu Indebtedness or subordinated Indebtedness by
the Company or any Subsidiary and which Indebtedness is permitted under the
provisions of Section 5.1 hereof, (B) securing any Indebtedness incurred in
connection with any refinancing, renewal, substitutions or replacements of any
such Indebtedness described in clause (A) or (C) created in favor of the
Company; provided, however, that in the case of clauses (A) and (B), any such
Lien only extends to the assets that were subject to such Lien securing such
Indebtedness prior to the related acquisition by the Company or its
Subsidiaries.
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Section 4.14 Limitations on Subsidiary Preferred Stock
The Company shall not permit any of its Subsidiaries to issue any Preferred
Stock (other than to the Company or a Wholly Owned Subsidiary) or permit any
Person (other than the Company or a Wholly Owned Subsidiary) to own or hold any
interest in any Preferred Stock of any such Subsidiary (other than Preferred
Stock issued prior to the date of this Indenture), unless the Subsidiary would
be permitted to incur Indebtedness pursuant to the provisions of Section 4.9
hereof in the aggregate principal amount equal to the aggregate liquidation
value of such Preferred Stock.
Section 4.15 Limitations on Certain Other Subordinated Indebtedness
The Company shall not create, incur, assume or suffer to exist any
Indebtedness that is subordinate in right of payment to any Senior Indebtedness
unless such Indebtedness by its terms or the terms of the instrument creating or
evidencing such Indebtedness is subordinate in right of payment to, or ranks
pari passu with, the Securities.
Section 4.16 Limitations on Subsidiaries and Unrestricted Subsidiaries
The Company may, by written notice to the Trustee, designate any Subsidiary
(including a newly acquired or a newly formed Subsidiary) to be an Unrestricted
Subsidiary; provided, however, that (i) no Default or Event of Default shall
have occurred and be continuing or would arise therefrom, (ii) such designation,
when considered as an Investment as described in the next sentence, is at that
time permitted under the covenant described under Section 4.7 hereof and (iii)
immediately after giving effect to such designation, the Company could incur
$1.00 of additional Indebtedness pursuant to clause (a) of Section 4.9 hereof.
For purposes of Section 4.7 hereof, (i) an "Investment" shall be deemed to have
been made at the time any Subsidiary is designated as an Unrestricted Subsidiary
in an amount (proportionate to the Company's percentage Equity Interest in such
Subsidiary) equal to the net worth of such Subsidiary at the time that such
Subsidiary is designated as an Unrestricted Subsidiary; (ii) at any date the
aggregate amount of all Restricted Payments made as Investments since May 15,
1996 shall exclude and be reduced by an amount (proportionate to the Company's
percentage Equity Interest in such Subsidiary) equal to the net worth of any
Unrestricted Subsidiary from and after the date that such Unrestricted
Subsidiary is designated a Subsidiary, not to exceed, in the case of any such
redesignation of an Unrestricted Subsidiary as a Subsidiary, the amount of
Investments previously made by the Company and its Subsidiaries in such
Unrestricted Subsidiary (in the case of either clauses (i) or (ii) above, "net
worth" to be calculated based upon the fair market value of the assets of such
Subsidiary as of any such date of designation); and (iii) any property
transferred to or from an Unrestricted Subsidiary shall be valued at its fair
market value at the time of such transfer. As of the date of the original
issuance of the Securities, there shall exist no Unrestricted Subsidiaries.
Notwithstanding the foregoing, the Board of Directors of the Company may
not designate any Subsidiary of the Company to be an Unrestricted Subsidiary if,
after such designation, (a) the Company or any Subsidiary of the Company
provides credit support for, or a guarantee of, any Indebtedness or other
obligation (contingent or otherwise) of such Subsidiary (including any
undertaking, agreement or instrument evidencing such Indebtedness or obligation)
or is otherwise subject to recourse or obligated thereunder or therefor, (b) a
default with respect to any Indebtedness of such Subsidiary (including any right
which the holders thereof may have to take enforcement action against such
Subsidiary) would permit (upon notice, lapse of time or both) any holder of any
other Indebtedness of the Company or any Subsidiary of the Company to declare a
default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its final scheduled maturity (whether or not any
such default had occurred or was continuing as of the time of such designation),
(c) such Subsidiary owns any Equity Interests in, or owns or holds any Lien on
any property of, any Subsidiary which is not a Subsidiary of the Subsidiary to
be so designated, (d) such Subsidiary has any contract, arrangement, agreement
or understanding with the Company, or any Subsidiary of the Company, whether
written or oral, other than a transaction having terms no less favorable to the
Company or such Subsidiary of the Company than those which might be obtained at
the time from persons who are not Affiliates of the Company, or (e) the Company
or any Subsidiary of the Company has any obligation to subscribe for any Equity
Interest in such Subsidiary or to maintain or preserve such Subsidiary's
financial condition or to cause such Subsidiary to achieve specified levels of
operating results.
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ARTICLE 5.
SUCCESSORS
Section 5.1 Limitations on Mergers and Consolidations
The Company shall not consolidate or merge with or into, or sell, lease,
convey or otherwise dispose of all or substantially all of its assets, or assign
any of its obligations hereunder or under the Securities, to any Person unless:
(i) the Person formed by or surviving such consolidation or merger (if
other than the Company), or to which sale, lease, conveyance or other
disposition or assignment shall be made (collectively, the "Successor"), is a
corporation organized and existing under the laws of the United States or any
State thereof or the District of Columbia, and the Successor assumes by
supplemental indenture in a form satisfactory to the Trustee all of the
obligations of the Company hereunder and under the Securities;
(ii) immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction and the use of
any net proceeds therefrom on a pro forma basis, the Consolidated Net Worth of
the Company or the Successor, as the case may be, would be at least equal to the
Consolidated Net Worth of the Company immediately prior to such transaction; and
(iv) the Consolidated Coverage Ratio of the Company or the Successor, as
the case may be, immediately after giving effect to such transaction, would on a
pro forma basis be such that the Company or the Successor, as the case may be,
would be entitled to incur at least $1 of additional Indebtedness under the
Consolidated Coverage Ratio test in Section 4.9(a).
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 stating that the proposed transaction
and such supplemental indenture comply with this Indenture.
Section 5.2 Successor Corporation Substituted
Upon any consolidation or merger, or any sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company or any
assignment of its obligations under this Indenture or the Securities in
accordance with Section 5.1, the Successor formed by such consolidation or into
or with which the Company is merged or to which such sale, lease, conveyance or
other disposition or assignment is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this Indenture
with the same effect as if such Successor has been named as the Company herein
and the predecessor Company, in the case of a sale, lease, conveyance or other
disposition or assignment, shall be released from all obligations under this
Indenture and the Securities.
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.1 Events of Default
An "Event of Default" occurs if:
(1) the Company defaults in the payment of the principal of, or any premium
on, any Security when the same becomes due and payable, whether at Stated
Maturity, upon redemption, upon acceleration or otherwise;
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(2) the Company defaults in the payment of interest on any Security when
the same becomes due and payable and the Default continues for a period of 30
days (even if such payment is prohibited by Article 10 hereof);
(3) the Company fails to comply with any of its agreements or covenants in,
or provisions of, the Securities or this Indenture (other than a default in the
performance or breach of a covenant or agreement specifically addressed in
clause (1) or (2) of this Section) and such failure continues for the period and
after the notice specified below;
(4) any acceleration of the maturity of Indebtedness of the Company or its
Subsidiaries having in the aggregate an outstanding principal amount of at least
$10.0 million or a failure to pay such Indebtedness at its Stated Maturity;
provided that such acceleration or failure to pay is not cured within 10 days
after such acceleration or failure to pay;
(5) the Company or any of its Significant Subsidiaries 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,
(c) consents to the appointment of a Custodian of it or for all or
substantially all of its property, or
(d) makes a general assignment for the benefit of its creditors; or
(6) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(a) is for relief against the Company or any of its Significant
Subsidiaries as debtor in an involuntary case,
(b) appoints a Custodian of the Company or any of its Significant
Subsidiaries or a Custodian for all or substantially all of the property of
the Company or any of its Significant Subsidiaries, or
(c) orders the liquidation of the Company or any of its Significant
Subsidiaries,
and the order or decree remains unstayed and in effect for 60 days.
The term "Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
The Trustee shall not be deemed to know of a Default unless it has actual
knowledge of such Default or receives written notice of such Default with
specific reference to such Default.
A Default under clause (3) is not an Event of Default until the Trustee
notifies the Company, or the Holders of at least 25% in aggregate 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 45 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."
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Section 6.2 Acceleration
If an Event of Default (other than an Event of Default with respect to the
Company specified in clause (5) or (6) of Section 6.1) occurs and is continuing,
the Trustee by written notice to the Company, 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 Securities to be due and payable
immediately. Upon such declaration the amounts due and payable on the
Securities, as determined in the next succeeding paragraph, shall be due and
payable immediately. If an Event of Default with respect to the Company
specified in clause (5) or (6) of Section 6.1 occurs, such an amount shall ipso
facto become and be immediately due and payable without any declaration, notice
or other act on the part of the Trustee or any Holder. The Holders of a majority
in aggregate principal amount of the then outstanding Securities by written
notice to the Trustee may rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default (except nonpayment of principal of, or premium, if any, or
interest on the Securities or that resulted from a failure to comply with
Section 4.10) have been cured or waived.
In the event that the maturity of the Securities is accelerated pursuant to
this Section 6.2, 100% of the principal amount thereof and premium, if any,
shall become due and payable plus accrued interest to the date of payment plus
interest on defaulted interest to the extent provided herein.
Section 6.3 Other Remedies
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of the principal of, or premium, if any,
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 6.4 Waiver of Past Defaults
The Holders of a majority in aggregate principal amount of the then
outstanding Securities by notice to the Trustee may waive an existing Default or
Event of Default and its consequences, except a continuing Default or Event of
Default in the payment of the principal of, or premium, if any, or interest on
any Security or in respect of a provision under this Indenture which cannot be
modified or amended without the consent of the Holder of each Security then
outstanding. Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right or remedy consequent
thereon.
Section 6.5 Control by Majority
The Holders of a majority in aggregate 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, in each case as determined by the Trustee.
Section 6.6 Limitations on Suits
A Holder may pursue a remedy with respect to this Indenture or the
Securities only if:
(1) the Holder gives to the Trustee written notice of a continuing Event of
Default;
(2) the Holders of at least 25% in aggregate principal amount of the then
outstanding Securities make a written request to the Trustee to pursue the
remedy;
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(3) such Holder or Holders offer to the Trustee indemnity satisfactory to
the Trustee in its sole discretion against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and
(5) during such 60-day period the Holders of a majority in aggregate
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 6.7 Rights of Holders to Receive Payment
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security 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 6.8 Collection Suit by Trustee
If an Event of Default specified in Section 6.1(1) or (2) 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 for the amount of principal of,
premium, if any, and interest remaining unpaid on the Securities, determined in
accordance with Section 6.2, and interest on overdue principal and premium, if
any, and, to the extent lawful, interest on overdue installments of interest,
and such further amount as shall be sufficient to cover the costs and expenses
of collection, including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.
Section 6.9 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, 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 7.6. 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 7.6 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 of the Securities 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; provided, however, that the Trustee may, on behalf of the Holders,
vote for the election of a trustee (or similar official) in bankruptcy and may
be a member of the creditors' committee.
Section 6.10 Priorities
If the Trustee collects any money pursuant to this Article 6, it shall pay
out the money in the following order:
First: to the Trustee for amounts due under Section 7.6;
Second: to Holders for amounts due and unpaid on the Securities for
principal, premium, if any, and
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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.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Article.
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,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section 6.11
does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
6.7 or a suit by Holders of more than 10% in principal amount of the then
outstanding Securities.
ARTICLE 7.
TRUSTEE
Section 7.1 Duties of Trustee
(1) 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 such exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(2) Except during the continuance of an Event of Default:
(a) the Trustee need perform only those duties that are specifically
set forth in this Indenture 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, on their face, they appear to conform to the requirements
of this Indenture.
(3) 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 (2) of this
Section;
(b) the Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(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 6.5.
(4) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (1),
(2), (3) and (5) of this Section 7.1.
(5) 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 indemnity satisfactory to
it against any loss, liability or expense.
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(6) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
Section 7.2 Rights of Trustee
(1) Subject to Section 7.1, the Trustee may rely on any document believed
by it to be genuine and to have been signed or presented by the proper Person,
and the Trustee need not investigate any fact or matter stated in the document.
(2) 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 in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.
(3) The Trustee may act through agents and shall not be responsible for the
misconduct or negligence of any agent appointed with due care.
(4) 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.
(5) 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 7.3 Individual Rights of Trustee
The Trustee in its individual or any other capacity may become the owner or
pledgee of Securities and may otherwise deal with the Company or any of its
Affiliates with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights.
Section 7.4 Trustee's Disclaimer
The Trustee makes no representation as to the validity or adequacy of this
Indenture or the Securities or as to the Company's ability to pay the Securities
when and as due or perform its other obligations hereunder. It shall not 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
hereof. It shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee. It shall not be responsible
for any statement or recital herein or any statement in the Securities other
than its certificate of authentication.
Section 7.5 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 of the principal of, or premium, if any,
or interest on any Security or that resulted from a failure by the Company to
comply with Section 4.10, the Trustee may withhold the notice if it in good
faith determines that withholding the notice is in the interests of Holders.
Section 7.6 Compensation and Indemnity
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. 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 upon
request for all reasonable disbursements, advances and expenses incurred by it.
Such expenses shall include the reasonable compensation, disbursements and
expenses of the Trustee's agents and counsel.
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The Company shall indemnify the Trustee, its employees, officers, directors
and agents and any predecessor Trustee hereunder against any loss, liability or
expense incurred by it arising out of or in connection with the acceptance or
administration of its duties under this Indenture or in connection with
enforcing this indemnification provision, the offering and sale of the
Securities, any act of negligence or bad faith of the Company or of any of its
officers, employees, agents or licensees, except as set forth in the next
paragraph. The Trustee promptly shall notify the Company of any claim for which
it may seek indemnity. 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 Company need not reimburse any expense or indemnify against any loss or
liability incurred by the Trustee through negligence or bad faith.
To secure the Company's payment obligations in this Section 7.6, 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 of,
premium, if any, 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 6.1(5) or (6) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
Section 7.7 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 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. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 310(b) of the TIA;
(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.
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 fails to comply with Section 310 of the TIA, any 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, subject to the Lien provided for in Section 7.6.
Notwithstanding replacement of the Trustee pursuant to this Section 7.7, the
Company's obligations under Section 7.6 shall continue for the benefit of the
retiring Trustee.
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Section 7.8 Successor Trustee by Merger, etc.
Subject to Section 7.9, if the Trustee 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.
Section 7.9 Eligibility; Disqualification
There shall at all times be a Trustee hereunder which shall be a bank or
corporation organized and doing business under the laws of the United States of
America, any state thereof or the District of Columbia authorized under such
laws to exercise corporate trustee power, shall be subject to supervision or
examination by Federal or state (or the District of Columbia) authority and
shall have a combined capital and surplus of at least $50 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 TIAss. 310(a)(1) and 310(a)(2). The Trustee is subject to TIAss. 310(b). If
at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect specified in Section 7.7.
ARTICLE 8.
DISCHARGE OF INDENTURE
Section 8.1 Termination of Company's Obligations
(a) This Indenture shall cease to be of further effect (except that the
Company's obligations under Section 7.6 and the Trustee's and Paying Agent's
obligations under Section 8.3 shall survive) when all outstanding Securities
theretofore authenticated and issued have been delivered (other than destroyed,
lost or stolen Securities that have been replaced or paid) to the Trustee for
cancellation and the Company has paid all sums payable hereunder. In addition,
the Company may elect to have either paragraph (b) or paragraph (c) below be
applied to the outstanding Securities upon compliance with the conditions set
forth in paragraph (d).
(b) Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (b), the Company shall be deemed to have been
released and discharged from its obligations with respect to the 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 the Sections of and
matters under this Indenture referred to in (i) and (ii) below, and to have
satisfied all its other obligations under such Securities and this Indenture
insofar as such Securities are concerned (and the Trustee, 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 paragraph (d) below and as more fully set forth
in such paragraph, 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 2.5, 2.6 and 4.2,
and, with respect to the Trustee, under Section 7.6, (iii) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and (iv) this Section
8.1. Subject to compliance with this Section 8.1, the Company may exercise its
option under this paragraph (b) notwithstanding the prior exercise of its option
under paragraph (c) below with respect to the Securities.
(c) Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (c), the Company shall be released and discharged
from its obligations under any covenant contained in Article 5 and in Sections
4.3, 4.4 and 4.6 through 4.16 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 to be not
"outstanding" for the purpose 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. 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
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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 6.1, but, except as specified above, the remainder of this Indenture and
such Securities shall be unaffected thereby.
(d) The following shall be the conditions to the application of either
paragraph (b) or (c) above to the outstanding Securities:
(1) the Company has irrevocably deposited in trust with the
Trustee or, at the option of the Trustee, with a trustee satisfactory
to the Trustee and the Company under the terms of an irrevocable trust
agreement in form and substance satisfactory to the Trustee in its sole
discretion, money or U.S. Government Obligations sufficient to pay
principal of, premium, if any, and interest on the Securities to
maturity or redemption (in the opinion of a nationally recognized
accounting firm of independent certified public accountants expressed
in a written certificate delivered to the Trustee) and to pay all other
sums payable by it hereunder; provided that (i) the trustee of the
irrevocable trust shall have been irrevocably instructed to pay such
money or the proceeds of such U.S. Government Obligations to the
Trustee and (ii) the Trustee shall have been irrevocably instructed to
apply such money or the proceeds of such U.S. Government Obligations to
the payment of said principal, premium, if any, and interest with
respect to the Securities;
(2) the Company has delivered to the Trustee an Officer's
Certificate stating that (a) all conditions precedent provided for
relating to either the legal defeasance under paragraph (b) above or
the covenant defeasance under paragraph (c) above, as the case may be,
have been complied with and (b) if any other Indebtedness of the
Company shall then be outstanding or committed, such legal defeasance
or covenant defeasance will not violate the provisions of the
agreements or instruments evidencing such Indebtedness;
(3) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit;
(4) the Trustee shall not have received notice from any holder of
Bank Debt or any holder of Senior Indebtedness in an aggregate
principal amount in excess of $20 million that such legal defeasance
or covenant defeasance would violate the provisions of the agreements
or instruments evidencing such Senior Indebtedness;
(5) such legal defeasance or covenant defeasance shall not result
in a breach or violation of, or constitute a default or event of
default under, this Indenture or any other material agreement or
instrument to which the Company is a party or by which it is bound;
(6) in the case of an election under paragraph (b) above, the
Company shall have delivered to the Trustee an Opinion of Counsel from
nationally recognized counsel acceptable to the Trustee stating that
(x) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, (y) there exists controlling
precedent, or (z) since the date of this Indenture, there has been a
change in the applicable Federal income tax law, in any case to the
effect 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 amount and in the same manner and at the same time as
would have been the case if such legal defeasance had not occurred;
and
(7) in the case of an election under paragraph (c) above, the
Company shall have delivered to the Trustee an Opinion of Counsel from
nationally recognized counsel acceptable to the Trustee (i) to the
effect 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 on the same amount and in the same manner and at the same
time as would have been the case if such covenant defeasance had not
occurred or (ii) that the Company has received from, or there has been
published by, the Internal Revenue Service a ruling to the foregoing
effect.
After such irrevocable deposit made pursuant to this Section 8.1 and
satisfaction of the other conditions set forth herein, the Trustee upon request
shall acknowledge in writing the discharge of the Company's obligations under
this Indenture except for those surviving obligations specified above.
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The Company may make an irrevocable deposit pursuant to this Section 8.1
only if at such time it is not prohibited from doing so under the provisions of
Article 10 and the Company shall have delivered to the Trustee and any Paying
Agent an Officers' Certificate to that effect.
In order to have money available on a payment date to pay the principal of,
premium, if any, or interest on the Securities, the U.S. Government Obligations
shall be payable as to principal, premium, if any, or interest on or before such
payment date in such amounts as will provide the necessary money to effect the
applicable defeasance. U.S. Government Obligations shall not be callable at the
issuer's option.
Section 8.2 Application of Trust Money
The Trustee or a trustee satisfactory to the Trustee and the Company shall
hold in trust money or U.S. Government Obligations deposited with it pursuant to
Section 8.1. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of, premium, if any, and interest on the
Securities.
Section 8.3 Repayment to the Company
The Trustee and the Paying Agent shall promptly pay to the Company upon
written request any excess money or securities held by them at any time.
The Trustee and the Paying Agent shall pay to the Company at their option
or upon written request any money held by them for the payment of principal,
premium, if any, or interest that remains unclaimed for two years after the date
upon which such payment shall have become due; provided, however, that the
Company shall have either caused notice of such payment to be mailed to each
Holder entitled thereto no less than 30 days prior to such repayment or within
such period shall have published such notice in a financial newspaper of
widespread circulation published in The City of New York. After payment to the
Company, Holders entitled to the money must look to the Company for payment as
general creditors unless an applicable abandoned property law designates another
Person, and all liability of the Trustee and such Paying Agent with respect to
such money shall cease.
Section 8.4 Reinstatement
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 8.1 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.1 until
such time as the Trustee or Paying Agent is permitted to apply all such money or
U.S. Government Obligations in accordance with Section 8.1; provided, however,
that if the Company has made any payment of premium, if any, or interest on or
principal of any Securities because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Securities to
receive such payment from the money or U.S. Government Obligations held by the
Trustee or Paying Agent.
ARTICLE 9.
AMENDMENTS
Section 9.1 Without Consent of Holders
The Company and the Trustee may amend this Indenture or the Securities or
waive any provision hereof without the consent of any Holder:
(1) to comply with Section 5.1;
(2) to evidence and provide for the acceptance of appointment hereunder by
a successor Trustee with respect to the Securities;
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(3) to comply with a provision or provisions of the TIA applicable to this
Indenture;
(4) to add to the covenants of the Company for the benefit of the Holders
or an additional Event of Default or to provide for the surrender by the
Company of any right or power conferred upon it hereunder;
(5) to secure the Securities or provide for any Guarantee by a Subsidiary;
(6) to provide for the issuance of securities identical in all material
respects to the Rule 144A Notes pursuant to the Exchange Offer; or
(7) to cure any ambiguity, correct or supplement any provision which may be
defective or inconsistent with any other provision contained in this Indenture,
or make any provisions with respect to matters or questions arising under this
Indenture which shall not be inconsistent with the provisions of this Indenture,
provided that such modification or amendment does not adversely affect the
interests of the Holders.
Upon the request of the Company, accompanied by a resolution of the Board
of Directors authorizing the execution of any such supplemental indenture, and
upon receipt by the Trustee of the documents described in Section 9.6, the
Trustee shall join with the Company in the execution of any supplemental
indenture authorized or permitted by the terms of this Indenture and make any
further appropriate agreements and stipulations that may be therein contained,
but the Trustee shall not be obligated to enter into any supplemental indenture
that affects its own rights, duties or immunities under this Indenture or
otherwise. After an amendment or waiver under this Section becomes effective,
the Company shall mail to the Holders of each Security affected thereby a notice
briefly describing the amendment 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.
Section 9.2 With Consent of Holders
Except as provided in this Section 9.2, the Company and the Trustee may
amend this Indenture or the Securities with the written consent of the Holders
of at least a majority in principal amount of the then outstanding Securities.
Upon the request of the Company, accompanied by a resolution of the Board
of Directors authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence of the consent of the Holders as
aforesaid, and upon receipt by the Trustee of the documents described in Section
9.6, 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
to approve the particular form of any proposed amendment or waiver, but it shall
be sufficient if such consent approves the substance thereof.
The Holders of a majority in 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. However, (a) without the
consent of each Holder affected, an amendment or waiver under this Section may
not:
(1) change the Stated Maturity of the principal of, or any installment of
interest on, any Security;
(2) reduce the principal amount of, or premium, if any, or interest on, any
Security;
(3) change the place of payment where, or the coin or currency in which,
any Security or any premium or interest thereon is payable;
(4) impair the right of Holders to institute suit for the enforcement of
payment of the principal of and premium, if any, and interest on Securities on
or after the Stated Maturity thereof (or in
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the case of redemption, on or after the redemption date);
(5) reduce the percentage in principal amount of Securities, the consent of
whose Holders is required for any modification or amendment of the Indenture, or
the consent of whose Holders is required for any waiver of compliance with
certain provisions of this Indenture or certain Defaults or Events of Default
hereunder and their consequences provided for in this Indenture; or
(6) modify any of the provisions of Section 6.4 or clause (a) of this
sentence of this Section 9.2,
and (b) without the consent of the Holders of at least 66_% of the aggregate
principal amount of the outstanding Securities, an amendment or waiver may not:
(1) amend, change or modify the provisions of Article Three relating to the
optional redemption of Securities by the Company in accordance with Section 3.7
hereof;
(2) amend, change or modify the obligations of the Company with respect to
a Change in Control Repurchase pursuant to Section 4.10 hereof or modify any of
the provisions or definitions relating thereto; or
(3) modify or change any provision of Article 10 in a manner adverse to
Holders of the Securities; or
(4) modify any of the provisions of clause (b) of this sentence of this
Section 9.2.
The right of any Holder to participate in any consent required or sought
pursuant to any provision of this Indenture (and the obligation of the Company
to obtain any such consent otherwise required from such Holder) may be subject
to the requirement that such Holder shall have been the Holder of record of any
Securities with respect to which such consent is required or sought as of a date
identified by the Trustee in a notice furnished to Holders in accordance with
the terms of this Indenture.
Section 9.3 Compliance with Trust Indenture Act
Every amendment to this Indenture or the Securities shall comply in form
and substance with the TIA as then in effect.
Section 9.4 Revocation and Effect of Consents
Until an amendment (which includes any supplement) or waiver becomes
effective, a consent to it by a Holder of a Security 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
may revoke the consent as to his or her Security or portion of a Security if the
Trustee receives written notice of revocation before the date the amendment or
waiver becomes effective. An amendment or waiver becomes effective in accordance
with its terms and thereafter binds every Holder of a Security whether
theretofore or thereafter authenticated and delivered.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment or
waiver. If the Company elects to fix a record date for such purpose, 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, or (ii) such other date as the Company shall
designate. If a record date is fixed, then notwithstanding the provisions of the
immediately preceding paragraph, those Persons who were Holders at such record
date (or their duly designated proxies), and only those Persons, shall be
entitled to consent to such amendment or waiver or to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No consent shall be valid or effective for more than 90 days after
such record date unless consents from Holders of the principal amount of
Securities required hereunder for such amendment or waiver to be effective shall
have also been given and not revoked within such 90-day period.
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Section 9.5 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 the
Securities may issue and the Trustee shall authenticate new Securities that
reflect the amendment or waiver.
Section 9.6 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 7.1 and 7.2 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.
ARTICLE 10.
SUBORDINATION
Section 10.1 Securities Subordinated to Senior Indebtedness
The Company covenants and agrees, and each Holder of a Security, by his
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article 10, the indebtedness
represented by the Securities and all Payments or Distributions in Respect of
the Securities are hereby expressly made subordinate and subject in right of
payment to the prior payment in full of all Senior Indebtedness, whether
outstanding on the date of this Indenture or thereafter incurred.
If at any time following the payment of any amount to a holder of Senior
Indebtedness with respect to such Senior Indebtedness, such payment is rescinded
or must otherwise be returned by such holder upon the insolvency, bankruptcy,
reorganization, dissolution or liquidation of the Company or any other Person or
otherwise, and is so rescinded or returned to the party or parties making such
payment, such Senior Indebtedness shall be reinstated to the extent of such
payment and the provisions of this Article 10 shall be applicable as if such
payment were never made.
The provisions of this Article 10 are for the benefit of the holders of
Senior Indebtedness, and each Holder of the Securities, by his purchase or other
acquisition of the Securities, hereby agrees for the benefit of each holder of
Senior Indebtedness that his Securities are subject to the provisions of this
Article 10.
Section 10.2 Payment Over of Proceeds Upon Dissolution, Etc.
In the event of (a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding,
relative to the Company or to its creditors, as such, or to a substantial part
of its assets, or (b) any proceeding for the liquidation, dissolution or other
winding up of the Company, whether voluntary or involuntary and whether or not
involving insolvency or bankruptcy, or (c) any assignment for the benefit of
creditors or any other marshalling of assets and liabilities of the Company,
then and in any such event the holders of Senior Indebtedness shall be entitled
to receive payment in full of all amounts due or to become due on or in respect
of all Senior Indebtedness (including, without limitation, all Allowed and
Disallowed Post-Commencement Interest and Expenses), or provision shall be made
for such payment in cash or in a manner otherwise satisfactory to the holders of
Senior Indebtedness, before the Holders of the Securities are entitled to
receive any Payment or Distribution in Respect of the Securities (other than
payments of amounts deposited prior to any such case, proceeding, dissolution or
other winding up or event in accordance with the defeasance provisions of
Article 8 hereof), and to that end the holders of Senior Indebtedness shall be
entitled to receive, for application to the payment thereof, any payment or
distribution of any kind or character, whether in cash, property or securities,
including any such payment or distribution which may be payable or deliverable
by reason of the payment of any other indebtedness of the Company being
subordinated to the payment of the Securities, which may be payable or
deliverable in respect of the Securities in any such case, proceeding,
dissolution, liquidation or other winding up or event.
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In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received any
Payment or Distribution in Respect of the Securities in any such case,
proceeding, dissolution, liquidation or other winding up or event (other than
payments of amounts deposited prior to any such case, proceeding, dissolution or
other winding up or event in accordance with the defeasance provisions of
Article 8 hereof), including any such payment or distribution which may be
payable or deliverable by reason of the payment of any other indebtedness of the
Company being subordinated to the payment of the Securities, before all Senior
Indebtedness (including, without limitation, all Allowed and Disallowed
Post-Commencement Interest and Expenses) is paid in full or payment thereof
provided for, and, if (i) subject to Section 10.8, such fact shall, at or prior
to the time of such payment or distribution, have been made known to the
Trustee, then and in such event such payment or distribution shall be paid over
or delivered forthwith to the holders of Senior Indebtedness or to a
representative duly appointed by any such holder or holders of Senior
Indebtedness unless otherwise required by law or court order or (ii) such fact
shall have been made known to such Holder at any time before or after such
payment, then and in such event such Holder shall forthwith pay over and deliver
such payment to the holders of Senior Indebtedness or to a representative duly
appointed by any such holder or holders of such Senior Indebtedness unless
otherwise required by law or court order, in either such case for application to
the payment of all Senior Indebtedness remaining unpaid, to the extent necessary
to pay all Senior Indebtedness (including, without limitation, all Allowed and
Disallowed Post-Commencement Interest and Expenses) in full, after giving effect
to any concurrent payment or distribution to or for the holders of Senior
Indebtedness.
The consolidation of the Company with, or the merger of the Company into,
another Person or the liquidation or dissolution of the Company following the
conveyance or transfer of its properties and assets substantially as an entirety
to another Person upon the terms and conditions set forth in Article 5 shall not
be deemed a dissolution, winding up, liquidation, reorganization, assignment for
the benefit of creditors or marshalling of assets and liabilities of the Company
for the purposes of this Section if the Person formed by such consolidation or
into which the Company is merged or which acquires by conveyance or transfer
such properties and assets substantially as an entirety, as the case may be,
shall, as a part of such consolidation, merger, conveyance or transfer, comply
with the conditions set forth in Article 5.
Section 10.3 Prior Payment to Senior Indebtedness Upon Acceleration of
Securities
In the event that any Securities are declared due and payable before their
Stated Maturity, then and in such event the holders of Senior Indebtedness
outstanding at the time such Securities so become due and payable shall be
entitled to receive payment in full in cash, or in a manner otherwise
satisfactory to the holders of Senior Indebtedness, of all amounts due on or in
respect of such Senior Indebtedness (including, without limitation, all Allowed
and Disallowed Post-Commencement Interest and Expenses) before the Holders of
the Securities are entitled to receive any Payment or Distribution in Respect of
the Securities (including any payment which may be payable by reason of the
payment of any other indebtedness of the Company being subordinated to the
payment of the Securities), other than payment of amounts previously deposited
in accordance with the defeasance provisions of Article 8 hereof, by or for the
account of the Company.
In the event that, notwithstanding the foregoing, the Company shall make
any Payment or Distribution in Respect of the Securities to the Trustee or the
Holder of any Security prohibited by the foregoing provisions of this Section,
then if (i) subject to Section 10.8, such fact shall, prior to the time of such
payment, have been made known to the Trustee, then and in such event the Trustee
shall forthwith pay over and deliver such payment to the holders of such Senior
Indebtedness or to a representative duly appointed by any such holder or holders
of such Senior Indebtedness or (ii) such fact shall have been made known to such
Holder at any time before or after such payment, then and in such event such
Holder shall forthwith pay over and deliver such payment to the holders of
Senior Indebtedness or to a representative duly appointed by any such holder or
holders of such Senior Indebtedness, in either such case for application to the
payment of all Senior Indebtedness then remaining unpaid (including, without
limitation, all Allowed and Disallowed Post-Commencement Interest and Expenses),
after giving effect to any concurrent payment or distribution to or for the
benefit of holders of Senior Indebtedness.
The provisions of this Section shall not apply to any payment with respect
to which Section 10.2 is applicable.
Section 10.4 No Payment Upon Certain Defaults with Respect to Senior
Indebtedness
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(a) No Payment or Distribution in Respect of the Securities (other than
payments of amounts previously deposited in accordance with the defeasance
provisions of Article 8 hereof) shall be made by or for the account of the
Company or any other Person upon its behalf upon the occurrence of any default
in the payment of principal, premium, if any, interest on or any other amount
due under or with respect to any Bank Debt or any Senior Indebtedness (other
than Bank Debt) in excess of $20 million beyond any applicable grace period,
unless and until such default is cured or waived or ceases to exist or such
Senior Indebtedness has been paid in full or provision for such payment in cash
or in a manner otherwise satisfactory to holders of Senior Indebtedness has been
made.
(b) Upon any default with respect to the financial covenants under the
Credit Agreement as specified therein, or if any payment or distribution by the
Company with respect to any Security would, immediately after giving effect
thereto, result in such default, no Payment or Distribution in Respect of the
Securities (other than payments of amounts previously deposited in accordance
with the defeasance provisions of Article 8 hereof), including any payment which
may be payable by reason of the payment of any other indebtedness being
subordinated to the payment of the Securities, shall be made by or for the
account of the Company on account of principal of or premium, if any, or
interest on the Securities or on account of the purchase, redemption or other
acquisition of the Securities for the period specified below (the "Payment
Blockage Period"). The Payment Blockage Period shall commence upon the receipt
of notice by the Company or the Trustee from the Bank Agent and shall end on the
earlier of (i) 179 days thereafter, (ii) the date on which such default with
respect to the financial covenants under the Credit Agreement is cured or waived
or ceases to exist or on which such Bank Debt is paid in full or provision for
such payment in money or money's worth has been made, (iii) the date on which
the maturity of any Indebtedness (other than Senior Indebtedness) shall have
been accelerated by virtue of such event, or (iv) the date on which such Payment
Blockage Period shall have been terminated by written notice to the Company or
the Trustee from the Bank Agent, after which any and all required payments in
respect of the Securities, including any missed payments, may resume. Only one
Payment Blockage Period may be commenced during any period of 365 consecutive
days. No default with respect to the financial covenants under the Credit
Agreement that existed or was continuing on the date of the commencement of any
Payment Blockage Period will be, or can be, made the basis for the commencement
of a second Payment Blockage Period whether or not within a period of 365
consecutive days, unless such default has been cured or waived for a period of
not less than 90 consecutive days. In no event will a Payment Blockage Period
extend beyond 179 days from the receipt by the Trustee of notice initiating such
Payment Blockage Period and there must be a 186 consecutive day period in any
365 day period during which no Payment Blockage Period is in effect.
(c) In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, then (i) subject to Section 10.8, if such
fact shall, at or prior to the time of such payment, have been made known to the
Trustee, then and in such event the Trustee shall forthwith pay over and deliver
such payment to the holders of Senior Indebtedness or to a representative duly
appointed by any such holder or holders of such Senior Indebtedness or (ii) such
fact shall have been made known to such Holder at any time before or after such
payment, then and in such event such Holder shall forthwith pay over and deliver
such payment to the holders of Senior Indebtedness or to a representative duly
appointed by any such holder or holders of such Senior Indebtedness.
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The provisions of this Section shall not apply to any payment with respect
to which Section 10.2 is applicable.
Section 10.5 Payment Permitted If No Default
Nothing contained in this Article or elsewhere in this Indenture or in any
of the Securities shall prevent (a) the Company, at any time except during the
pendency of any case, proceeding, dissolution, liquidation or other winding up,
assignment for the benefit of creditors or other marshalling of assets and
liabilities of the Company referred to in Section 10.2 or under the conditions
described in Section 10.3 or Section 10.4, from making any Payment or
Distribution in Respect of the Securities, or (b) the application by the Trustee
of any money deposited with it hereunder with respect to any Payment or
Distribution in Respect of the Securities or the retention of such Payment or
Distribution in Respect of the Securities by the Holders, if, at the time of
such application by the Trustee, it had not been notified in accordance with
Section 10.8 that such payment was prohibited by the provisions of this Article
10.
Section 10.6 Subrogation to Rights of Holders of Senior Indebtedness
Subject to the payment in full in cash of all amounts due on or in respect
of Senior Indebtedness (including, without limitation, all Allowed and
Disallowed Post-Commencement Interest and Expenses, except to the extent
provided below), the Holders of the Securities shall be subrogated to the extent
of the payments or distributions made to the holders of such Senior Indebtedness
pursuant to the provisions of this Article 10 (equally and ratably with the
holders of all indebtedness of the Company which by its express terms is
subordinated to other indebtedness of the Company to substantially the same
extent as the Securities are subordinated and are entitled to like rights of
subrogation) to the rights of the holders of such Senior Indebtedness to receive
payments and distributions of cash, property and securities applicable to the
Senior Indebtedness until the principal of and premium, if any, and interest on
the Securities shall be paid in full. For purposes of such subrogation, no
payments or distributions to the holders of the Senior Indebtedness of any cash,
property or securities to which the Holders of the Securities or the Trustee
would be entitled except for the provisions of this Article 10, and no payments
over pursuant to the provisions of this Article to the holders of Senior
Indebtedness by Holders of the Securities or the Trustee, shall, as among the
Company, its creditors other than holders of Senior Indebtedness and the Holders
of the Securities, be deemed to be a payment or distribution by the Company to
or on account of the Senior Indebtedness.
Notwithstanding anything to the contrary in this Section 10.6, the Holders
of the Securities hereby agree that they shall have no rights of subrogation
with respect to amounts paid to the holders of Senior Indebtedness in payment of
any interest, reimbursements, costs, expenses or indemnities that are not
allowed claims enforceable against the Company in a case or proceeding under
Bankruptcy Law.
Section 10.7 Provisions Solely to Define Relative Rights
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The provisions of this Article 10 are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities on the
one hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Article or elsewhere in this Indenture or in the Securities is
intended to or shall (a) impair, as among the Company, its creditors other than
holders of Senior Indebtedness and the Holders of the Securities, the obligation
of the Company, which is absolute and unconditional, to pay to the Holders of
the Securities the principal of and premium, if any, and interest on the
Securities as and when the same shall become due and payable in accordance with
their terms; or (b) affect the relative rights against the Company of the
Holders of the Securities and creditors of the Company other than the holders of
Senior Indebtedness; or (c) prevent the Trustee or the Holder of any Security
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article 10 of
the holders of Senior Indebtedness to receive cash, property and securities
otherwise payable or deliverable to the Trustee or such Holder. The failure to
make a payment on account of principal of, premium, if any, or interest on, or
any other amounts then payable with respect to, the Securities by any reason of
this Article 10 shall not be construed as preventing the occurrence of an Event
of Default under Section 6.1.
Section 10.8 Application by Trustee of Monies Deposited With It
Money and U.S. Government Obligations deposited in trust with the Trustee
pursuant to Section 8.2 and in compliance with Section 8.1 shall be for the sole
benefit of the Holders and, to the extent allocated for the payment of
Securities, shall not be subject to the subordination provisions of this Article
10. Otherwise, any deposit of monies by the Company with the Trustee or any
Paying Agent (whether or not in trust) for payment on account of principal of,
premium, if any, and interest on the Securities or that otherwise constitutes a
Payment or Distribution in Respect of the Securities shall be subject to the
provisions of Sections 10.1, 10.2, 10.3 and 10.4 except that, if at least three
Business Days prior to the date on which by the terms of this Indenture any such
monies may become payable for any purpose (including, without limitation, the
payment of the principal of, premium, if any, or the interest on any Security)
the Trustee shall not have received with respect to such monies the notice
provided for in Section 10.4(b) or 10.11, then the Trustee shall have full power
and authority to receive such monies and to apply the same to the purpose for
which they were received, and shall not be affected by any notice to the
contrary which may be received by it within three Business Days of such date.
This Section shall be construed solely for the benefit of the Trustee and Paying
Agent and shall not otherwise affect the rights of holders of Senior
Indebtedness.
Section 10.9 Trustee to Effectuate Subordination
Each holder of a Security by his acceptance thereof authorizes and directs
the Trustee on his behalf to take such action as may be necessary or appropriate
to effectuate the subordination provided in this Article and appoints the
Trustee his attorney-in-fact for any and all such purposes.
Section 10.10 No Waiver of Subordination Provisions
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness may, at any time and from time to time, without
the consent of or notice to the Trustee or the Holders of the Securities,
without incurring responsibility to the Holders of the Securities and without
impairing or releasing the subordination provided in this Article or the
obligations hereunder of the Holders of the Securities to the holders of Senior
Indebtedness, do any one or more of the following: (i) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter,
compromise, accelerate, extend or refinance Senior Indebtedness, or otherwise
amend or supplement in any manner Senior Indebtedness or any instrument
evidencing the same or any agreement under which Senior Indebtedness is
outstanding; (ii) sell, exchange, release, foreclose upon or otherwise deal with
any property pledged, mortgaged or otherwise securing Senior Indebtedness; (iii)
release any Person liable in any manner for the payment or collection of Senior
Indebtedness; (iv) exercise or refrain from exercising any rights against the
Company and any other Person; (v) increase or reduce the rate of interest or
amount of principal payable on any Senior Indebtedness; (vi) release or
discharge the Company, by acceptance of a deed or assignment in lieu of
foreclosure or otherwise, as to all or any portion of the Senior Indebtedness;
or (vii) release, substitute or add any one or more
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guarantors or endorsers, accept additional or substituted security for payment
or performance of the Senior Indebtedness, or release or subordinate any
security therefor. No exercise, delay in exercise or failure to exercise by any
holder of any Senior Indebtedness of any right hereby given it, no dealing by
any holder of any Senior Indebtedness with the Company or any other guarantor,
endorser or other person, no change, impairment or suspension of any right or
remedy of any holder of any Senior Indebtedness, and no act or thing which but
for this provision could act as a release or exoneration of the Holders of the
Securities hereunder, shall in any way affect, decrease, diminish or impair any
of the obligations of the Holders of the Securities and the Trustee or give to
the Holders of the Securities, the Trustee or any other person or entity any
recourse or defense against any holder of any Senior Indebtedness.
Section 10.11 Notice to Trustee
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Securities. Notwithstanding the provisions of this
Article or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof from the
Company or a holder of Senior Indebtedness or from any trustee or other
representative therefor; and, prior to the receipt of any such written notice,
the Trustee, subject to the provisions of Sections 7.1 and 7.2, shall be
entitled in all respects to assume that no such facts exist.
Subject to the provisions of Sections 7.1 and 7.2, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a trustee
therefor) to establish that such notice has been given by a holder of Senior
Indebtedness (or a trustee therefor). In the event that the Trustee determines
in good faith that further evidence is required with respect to the right of any
Person as a holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article 10, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article 10, and if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
Section 10.12 Reliance on Judicial Order or Certificate of Liquidating Agent
Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Trustee, subject to the provisions of Sections 7.1 and 7.2,
and the Holders of the Securities shall be entitled to rely upon any order or
decree entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
10.
Section 10.13 Trustee Not Fiduciary for Holders of Senior Indebtedness
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Indebtedness and shall not be liable to any such holders if it shall in
good faith mistakenly pay over or distribute to Holders of Securities or to the
Company or to any other Person cash, property or securities to which holders of
Senior Indebtedness shall be entitled by virtue of this Article 10 or otherwise.
Section 10.14 Rights of Trustee as Holder of Senior Indebtedness; Preservation
of Trustee's Rights
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article with respect to any Senior Indebtedness which may at
any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 7.6.
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ARTICLE 11.
MISCELLANEOUS
Section 11.1 Trust Indenture Act Controls
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA ss. 318(c), the imposed duties shall control.
Section 11.2 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:
Integrated Health Services, Inc.
10065 Red Run Boulevard
Owings Mills, Maryland 21117
Attention: General Counsel
If to the Trustee:
First Union National Bank of Virginia
901 East Cary Street Second Floor
Richmond, Virginia 23219
Attn: Corporate Trust
The Company or the Trustee by notice to the other may designate additional
or different addresses for subsequent notices or communications.
All notices and communications 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
to the Holder's address shown on the register kept by the Registrar. 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 11.3 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 11.4) stating
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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 complied with; and
(2) an Opinion of Counsel (which shall include the statements set forth in
Section 11.4) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been complied with.
Section 11.4 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 ss. 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
complied with; and
(4) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been complied with.
Section 11.5 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 11.6 Legal Holidays
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in The City of New York or the City of Richmond, Virginia 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 11.7 No Recourse Against Others
A director, officer, employee or stockholder of the Company or the Trustee,
as such, shall not have any liability for any obligations of the Company under
the Securities or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability.
Section 11.8 Governing Law
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW.
Section 11.9 No Adverse Interpretation of Other Agreements
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or a Subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
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Section 11.10 Successors
All agreements of the Company in this Indenture and the Securities shall
bind its successor. All agreements of the Trustee in this Indenture shall bind
its successor.
Section 11.11 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.
Section 11.12 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 11.13 Trustee as Paying Agent and Registrar
The Company initially appoints the Trustee as Paying Agent and Registrar.
Section 11.14 Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof and shall in no way modify or
restrict any of the terms or provisions hereof.
[Signatures on Next Page]
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<PAGE>
SIGNATURES
Dated as of May 30, 1997
(SEAL)
INTEGRATED HEALTH SERVICES, INC.
By: /s/
-------------------------------
Name:
Title:
Attest:
/s/
- ---------------------------------
Dated as of May 30, 1997
(SEAL)
FIRST UNION NATIONAL BANK of VIRGINIA
as Trustee
By: /s/
-------------------------------
Name:
Title:
Attest:
/s/
- ---------------------------------
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EXHIBIT A
LEGENDS FOR GLOBAL SECURITY:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO
THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION UNDER SUCH LAWS.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATED PERSON OF THE COMPANY WAS THE OWNER OF THIS SECURITY UNLESS SUCH
OFFER, SALE OR OTHER TRANSFER IS (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
144A, TO A PERSON THE HOLDER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a)(1),
(a)(2), (a)(3) OR (a)(7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING
THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
"ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN EACH OF THE FOREGOING
CASES SUCH OFFER, SALE OR OTHER TRANSFER IS IN COMPLIANCE WITH ANY APPLICABLE
STATE SECURITIES LAWS, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE
OF TRANSFER IN THE FORM PROVIDED FOR IN THE INDENTURE (A COPY OF WHICH MAY BE
OBTAINED FROM THE TRUSTEE) IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE THEN HOLDER OF THIS
SECURITY AFTER THE RESALE RESTRICTION TERMINATION DATE. ANY TRANSFEREE OF THIS
SECURITY SHALL BE DEEMED TO HAVE REPRESENTED EITHER (A) THAT IT IS NOT USING THE
ASSETS OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT ("ERISA") OR THE INTERNAL REVENUE CODE
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<PAGE>
(THE "CODE") TO PURCHASE THIS SECURITY OR (B) THAT ITS PURCHASE AND CONTINUED
HOLDING OF THE SECURITY WILL BE COVERED BY A U.S. DEPARTMENT OF LABOR CLASS
EXEMPTION (WITH RESPECT TO PROHIBITED TRANSACTIONS UNDER SECTION 406(a) OF
ERISA).
LEGENDS FOR DEFINITIVE SECURITY
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION UNDER SUCH LAWS.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATED PERSON OF THE COMPANY WAS THE OWNER OF THIS SECURITY UNLESS SUCH
OFFER, SALE OR OTHER TRANSFER IS (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
144A, TO A PERSON THE HOLDER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a)(1),
(a)(2), (a)(3) OR (a)(7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING
THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
"ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN EACH OF THE FOREGOING
CASES SUCH OFFER, SALE OR OTHER TRANSFER IS IN COMPLIANCE WITH ANY APPLICABLE
STATE SECURITIES LAWS, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE
OF TRANSFER IN THE FORM PROVIDED FOR IN THE INDENTURE (A COPY OF WHICH MAY BE
OBTAINED FROM THE TRUSTEE) IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE THEN HOLDER OF THIS
SECURITY AFTER THE RESALE RESTRICTION TERMINATION DATE. ANY TRANSFEREE OF THIS
SECURITY SHALL BE DEEMED TO HAVE REPRESENTED EITHER (A) THAT IT IS NOT USING THE
ASSETS OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT ("ERISA") OR THE INTERNAL REVENUE CODE (THE "CODE") TO PURCHASE
THIS SECURITY OR (B) THAT ITS PURCHASE AND CONTINUED HOLDING OF THE SECURITY
WILL BE COVERED BY A U.S. DEPARTMENT OF LABOR CLASS EXEMPTION (WITH RESPECT TO
PROHIBITED TRANSACTIONS UNDER SECTION 406(a) OF ERISA).
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<PAGE>
9 1/2% SENIOR SUBORDINATED NOTES DUE 2007
Cusip No. $
INTEGRATED HEALTH SERVICES, INC.
promises to pay to
or registered assigns,
the principal sum of
Dollars [or such greater or lesser amount as indicated on the Schedule of
Exchanges of Definitive Securities on the reverse hereof] on September 15, 2007
Interest Payment Dates: March 15 and September 15
Record Dates: February 28 and August 31
Authentication: Dated: , 1997
This is one of the Securities referred
to in the within-mentioned Indenture.
FIRST UNION NATIONAL BANK
OF VIRGINIA,
as Trustee INTEGRATED HEALTH SERVICES, INC.
By: By:
--------------------------- --------------------------------
Authorized Officer Authorized Officer
By:
--------------------------------
(SEAL)
- ----------
1 This phrase should be included only if the Security is issued on global form.
A-3
<PAGE>
9 1/2% SENIOR SUBORDINATED NOTES DUE 2007
1. Interest. INTEGRATED HEALTH SERVICES, INC., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Security at
9 1/2% per annum from the date this Security is issued until maturity. The
Company will pay interest semiannually on March 15 and September 15 of each
year, or if any such day is not a Business Day, on the next succeeding Business
Day (each an "Interest Payment Date") and any Penalty Interest payable pursuant
to Section 6 of the Registration Rights Agreement on such Interest Payment Date.
Interest on the Securities will accrue from the most recent date on which
interest has been paid or, if no interest has been paid, from the date of
issuance; provided, that if there is no existing Default in the payment of
interest, and if this Security is authenticated between a record date referred
to on the face hereof and the next succeeding Interest Payment Date, interest
shall accrue from such next succeeding Interest Payment Date; provided, further,
that the first Interest Payment Date shall be September 15, 1997. Interest will
be computed on the basis of a 360-day year of twelve 30-day months.
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 canceled after such record
date and on or before such Interest Payment Date. In the case of a Security to
be repurchased by the Company in connection with a Change in Control Repurchase
pursuant to paragraph 6, on or after an interest payment record date and prior
to the next Interest Payment Date, the registered holder of such Security as of
such record date shall be entitled to accrued and unpaid interest to the
repurchase date, as provided in paragraph 6 below. The Holder must surrender
this Security to a Paying Agent to collect principal payments. The Company will
pay the principal of, premium, if any, and interest on the Securities in money
of the United States of America that at the time of payment is legal tender for
payment of public and private debts. Such amounts will be payable (i) in respect
of Securities in book-entry form held of record by the Depository Trust Company
("DTC") or its nominee, in same day funds on or prior to the payment dates with
respect to such amounts and (ii) in respect of Securities issued in certificated
form, at the office of the Trustee, and the Securities may be presented for
registration of transfer or exchange, at the offices of the Trustee. The
Company, however, may pay such amounts in respect of the Securities issued in
certificated form by check payable in such money mailed to a Holder's registered
address.
3. Paying Agent and Registrar. Initially, FIRST UNION NATIONAL BANK OF
VIRGINIA, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent, Registrar or co-registrar
without notice to any Holder. The Company or any of its Subsidiaries may act in
any such capacity.
4. Indenture. The Company issued the Securities under an Indenture dated as
of May 30, 1997 ("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 ss.ss. 77aaa-77bbbb), as in effect on the date of execution 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
Securities are unsecured general obligations of the Company limited to
$450,000,000 in aggregate principal amount, plus amounts, if any, sufficient to
pay interest on outstanding Securities as set forth in Paragraph 2 hereof. The
Securities will rank pari passu with the Exchange Notes, the Company's 10 1/4%
Senior Subordinated Notes due 2006, the Company's 9 5/8% Senior Subordinated
Notes due 2002, Series A and the Company's 10 3/4% Senior Subordinated Notes due
2004.
5. Optional Redemption. The Company may redeem all or any of the Securities
at any time on or after September 15, 2002 at the following redemption prices
(expressed as percentages of principal amount), plus accrued and unpaid interest
to the redemption date:
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If Redeemed During
the 12-Month Period Commencing Redemption Price
- ------------------------------ ----------------
September 15, 2002 104.750%
September 15, 2003 103.167%
September 15, 2004 101.583%
September 15, 2005 and thereafter 100%
Notwithstanding the foregoing, the Company may redeem in the aggregate up
to $150,000,000 principal amount of Securities at any time and from time to time
prior to September 15, 2000 at a redemption price equal to 108.500% of the
aggregate principal amount so redeemed, plus accrued interest to the redemption
date, out of the net cash proceeds of one or more Public Equity Offerings;
provided that at least $300,000,000 aggregate principal amount of Securities
originally issued remains outstanding after the occurrence of any such
redemption and that any such redemption occurs within 60 days following the
closing of any such Public Equity Offering.
6. Right to Require Repurchase. Following the occurrence of any Change in
Control, each Holder will have the right to require that the Company repurchase
(a "Change in Control Repurchase") such Holder's Securities at a purchase price
equal to 101% of the aggregate principal amount of the Securities, plus accrued
and unpaid interest thereon, if any, to the date of repurchase. Within 30 days
after any Change in Control, the Company or, at the Company's request, the
Trustee, shall cause to be mailed a notice to all Holders notifying such Holders
of the occurrence of such Change in Control, the Holder's rights arising as a
result thereof and the procedures to be followed by Holders wishing to exercise
such rights.
A Holder of Securities may exercise the right to require a Change in
Control Repurchase after receipt of notice of the existence of such right by
completing the form entitled "OPTION OF HOLDER TO ELECT PURCHASE" appearing on
this Security and by complying with the other procedures set forth in such
notice. Any portion of Securities with respect to which the Holder wishes to
exercise such right must be in integral multiples of $1,000.
7. Mandatory Offer to Repurchase. If the Company consummates an Asset Sale
(as such term is defined in the Indenture), the Company may, under certain
circumstances, be required to utilize a portion of the net proceeds received
from such Asset Sale to offer to purchase Securities at a purchase price equal
to 100% of the aggregate principal amount of the Securities, plus accrued
interest to the date fixed for redemption (the "Asset Sale Offer"). Holders of
Securities that are the subject of an offer to purchase will receive an Asset
Sale Offer from the Company or the Trustee. The Asset Sale Offer shall remain
open for a period of 30 days after its commencement unless a longer offering
period is required by law (the "Asset Sale Offer Period"). On or prior to the
fifth Business Day following the termination of the Asset Sale Offer Period (the
"Asset Sale Payment Date"), the Company shall purchase, or cause the Trustee to
purchase, and mail or deliver payment for the amount of Securities required to
be purchased pursuant to the Asset Sale Offer or, if less than the amount of
Securities required to be purchased pursuant to the Asset Sale Offer has been
tendered, all Securities tendered in response to the Asset Sale Offer
A Holder of Securities may tender or refrain from tendering all or any
portion of his Securities at his discretion by completing the form entitled
"OPTION OF HOLDER TO ELECT PURCHASE" appearing on this Security. Any portion of
Securities tendered must be in integral multiples of $1,000.
8. Notice of Redemption. Notice of Redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at his registered address. Securities in denominations
larger than $1,000 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 will cease to accrue on Securities or
portions thereof called for redemption (unless the Company defaults on its
obligation to repurchase Securities).
9. Subordination. The indebtedness evidenced by this Security is, to the
extent provided in the Indenture, subordinate and subject in right of payment to
the prior payment in full of all Senior Indebtedness (as defined in the
Indenture), and this Security is issued subject to the provisions of the
Indenture with respect thereto. Each Holder of this Security, by accepting the
same, (a) agrees to and shall be bound by such provisions, (b) authorizes and
directs
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the Trustee on his behalf to take such action as may be necessary or appropriate
to effectuate the subordination so provided, and (c) appoints the Trustee his
attorney-in-fact for any and all such purposes.
10. Denominations, Transfer, Exchange. The Securities are in registered
form without coupons 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.
11. Persons Deemed Owners. The registered Holder of a Security may be
treated as its owner for all purposes.
12. Amendments and Waivers. Subject to certain exceptions, 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, and
any existing default under, or compliance with any provision of, the Indenture
may be waived (other than any continuing Default or Event of Default in the
payment of interest or premium, if any, on or the principal of the Securities or
in respect of a provision under the Indenture which cannot be modified or
amended without the consent of the Holder of each Security then outstanding)
with the consent of the Holders of a majority in principal amount of the
Securities then outstanding. Without the consent of any Holder, the Company and
the Trustee may amend or supplement the Indenture or the Securities to provide
for the assumption of the Company's obligations to Holders in the case of a
merger or acquisition; to evidence and provide for the acceptance of appointment
of any successor Trustee under the Indenture; to comply with the requirements of
the Trust Indenture Act of 1939, as amended; to add to the covenants of the
Company for the benefit of the Holders or an additional Event of Default or to
provide for the surrender by the Company of any right or power conferred upon it
under the Indenture; secure the Securities or provide for any Guarantee by a
Subsidiary; to provide for the issuance of securities identical in all material
respects to the Securities pursuant to the Exchange Offer; or to cure any
ambiguity, correct or supplement any provision which may be defective or
inconsistent with any other provision in the Indenture, or make any provisions
with respect to matters or questions arising under the Indenture which shall not
be inconsistent with the provisions of the Indenture, provided that such
modification or amendment does not adversely affect the interests of the
holders.
The right of any Holder to participate in any consent required or sought
pursuant to any provision of the Indenture (and the obligation of the Company to
obtain any such consent otherwise required from such Holder) may be subject to
the requirement that such Holder shall have been the Holder of record of any
Securities with respect to which such consent is required or sought as of a date
identified by the Trustee in a notice furnished to Holders in accordance with
the terms of the Indenture.
Without the consent of each Holder affected, the Company may not, among
other things, (i) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, (ii) reduce the principal amount of,
or premium, if any, or interest on, any Security, (iii) change the place of
payment where, or the coin or currency in which, any Security or any premium or
interest thereon is payable, (iv) impair the right of a Holder to institute suit
for the enforcement of payment of the principal of and premium, if any, and
interest on any Security on or after the Stated Maturity thereof (or in the case
of a redemption, on or after the redemption date) or (v) reduce the percentage
in principal amount of Securities the consent of whose Holders is required for
any modification or amendment of the Indenture, or the consent of whose Holders
is required for any waiver of compliance with certain provisions of the
Indenture or certain Defaults or Events of Default thereunder.
Without the consent of at least 66_% of the aggregate principal amount of
outstanding Securities, the Company may not (i) amend, change or modify the
provisions of Article Three of the Indenture relating to the optional redemption
of the Securities by the Company in accordance with Section 3.7 thereof, (ii)
amend, change or modify the obligations of the Company with respect to a Change
in Control Repurchase pursuant to Section 4.10 of the Indenture or modify any of
the provisions or definitions relating thereto or (iii) modify or change any
provision of the Indenture affecting the subordination or ranking of the
Securities in a manner adverse to Holders of the Securities.
13. Defaults and Remedies. Events of Default include: (i) default in
payment of principal or premium on the Securities; (ii) default in payment of
interest on the Securities for 30 days; (iii) failure by the Company for 45 days
after notice to it to comply with any of its other agreements in the Indenture
or the Securities; (iv) any acceleration of Indebtedness of the Company or its
Subsidiaries having an outstanding principal amount of $10 million
A-6
<PAGE>
in the aggregate or a failure to pay such Indebtedness at its stated maturity if
such acceleration or failure to pay is not cured within 10 days of such
acceleration or failure to pay; and (v) certain events of bankruptcy or
insolvency. If an 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 may declare all the Securities to be immediately due and payable for
an amount equal to 100% of the principal amount of the Securities, and premium,
if any, plus accrued interest to the date of payment, except that in the case of
an Event of Default arising from certain events of bankruptcy or insolvency, all
outstanding Securities become due and payable immediately without further action
or notice. Holders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may require indemnity satisfactory to it
before it enforces the Indenture or the Securities. Subject to certain
limitations, 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 notice of any continuing default (except a
default in payment of principal or interest or that resulted from the failure of
the Company to comply with its obligations with respect to Holders' rights to
require repurchase of Securities upon a Change in Control) if it determines that
withholding notice is in their interests. The Company must furnish an annual
compliance certificate to the Trustee.
14. Trustee Dealings with Company. The Trustee, 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.
15. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. Each Holder by accepting a Security waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Securities.
16. ERISA Matters. Each Holder of Securities, by its acceptance thereof,
will be deemed to certify that (i) no part of the funds used by such Holder to
purchase the Securities constitutes assets of an employee benefit plan or (ii)
the acquisition and continued holding of the Securities will be covered by a
U.S. Department of Labor class exemption (with respect to prohibited
transactions set forth under Section 406(a) of ERISA).
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).
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Request may be made to:
Integrated Health Services, Inc.
10065 Red Run Boulevard
Owings Mills, Maryland 21117
Attention: Secretary
A-7
<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 ________________________________________ 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:____________________________
A-8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 3.8 or 4.10 of the Indenture, check the appropriate box:
|_| Section 3.8 |_| Section 4.10
If you want to elect to have only part of the Security purchased by the
Company pursuant to Section 3.8 or 4.10 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:____________________
A-9
<PAGE>
[FORM OF SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES2]
The following exchanges of a part of this Global Security for Definitive
Securities have been made.
<TABLE>
<CAPTION>
Amount of Amount in Principal Amount of
decrease in increase in this Global Security
Principal Amount Principal Amount following such Signature of autho-
Date of of this Global of this Global decrease or (increase) rized officer of
Exchange Security Security Trustee
-------- ---------------- ---------------- ---------------------- -------------------
<S> <C>
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
- ----------
2 This schedule should be included only if the Security is issued in global
form.
</TABLE>
A-10
<PAGE>
EXHIBIT B
LEGEND FOR GLOBAL SECURITY:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO
THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
B-1
<PAGE>
9 1/2% SENIOR SUBORDINATED NOTES DUE 2007, SERIES A
Cusip No. $
INTEGRATED HEALTH SERVICES, INC.
promises to pay to
or registered assigns,
the principal sum of
Dollars [or such greater or lesser amount as indicated on the Schedule of
Exchanges of Definitive Securities on the reverse hereof] on 2007
Interest Payment Dates: March 15 and September 15
Record Dates: February 28 and August 31
Authentication: Dated: , 1997
This is one of the Securities referred to in the within-mentioned Indenture.
FIRST UNION NATIONAL BANK
OF VIRGINIA,
as Trustee INTEGRATED HEALTH SERVICES, INC.
By: By:
----------------------------- --------------------------------
Authorized Officer
By:
--------------------------------
(SEAL)
- ----------
*This phrase should be included only if the Security is issued in global
form.
B-2
<PAGE>
9 1/2% SENIOR SUBORDINATED NOTES DUE 2007, SERIES A
1. Interest. INTEGRATED HEALTH SERVICES, INC. a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of his Security
(which has been exchanged for one of the Company's 9 1/2% Senior Subordinated
Notes due 2007 (the "Rule 144A Notes)) at 9 1/2% per annum from the date this
security is issued until maturity. The Company will pay interest semiannually on
March 15 and September 15 of each year, or if any such day is not a Business
Day, on the next succeeding Business Day (each an "Interest Payment Date").
Interest on the Securities will accrue from the most recent date on which
interest has been paid or, if no interest has been paid, from the most recent
date on which interest was paid on the Rule 144A Notes or, if no interest was
paid on the Rule 144A Notes, from the date of original issuance of the Rule 144A
Notes; provided, that if there is no existing Default in the payment of
interest, and if this Security is authenticated between a record date referred
to on the face hereof and the next succeeding Interest Payment Date, interest
shall accrue from such next succeeding Interest Payment Date; provided, further,
that the first Interest Payment Date shall be September 15, 1997. Interest will
be computed on the basis of a 360-day year of twelve 30-day months.
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 canceled after such record
date and on or before such Interest Payment Date. In the case of a Security to
be repurchased by the Company in connection with a Change in Control Repurchase
pursuant to paragraph 6, on or after an interest payment record date and prior
to the next Interest Payment Date, the registered holder of such Security as of
such record date shall be entitled to accrued and unpaid interest to the
repurchase date, as provided in paragraph 6 below. The Holder must surrender
this Security to a Paying Agent to collect principal payments. The Company will
pay the principal of, premium, if any, and interest on the Securities in money
of the United States of America that at the time of payment is legal tender for
payment of public and private debts. Such amounts will be payable (i) in respect
of Securities in book-entry form held of record by the Depository Trust Company
("DTC") or its nominee, in same day funds on or prior to the payment dates with
respect to such amounts and (ii) in respect of Securities issued in certificated
form, at the office of the Trustee, and the Securities may be presented for
registration of transfer or exchange, at the offices of the Trustee. The
Company, however, may pay such amounts in respect of the Securities issued in
certificated form by check payable in such money mailed to a Holder's registered
address.
3. Paying Agent and Registrar. Initially, FIRST UNION NATIONAL BANK OF
VIRGINIA, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent, Registrar or co-registrar
without notice to any Holder. The Company or any of its Subsidiaries may act in
any such capacity.
4. Indenture. The Company issued the Securities under an Indenture dated as
of May 30, 1997 ("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 ss.ss. 77aaa-77bbbb), as in effect on the date of execution 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
Securities are unsecured general obligations of the Company limited to
$450,000,000 in aggregate principal amount, plus amounts, if any, sufficient to
pay interest on outstanding Securities as set forth in Paragraph 2 hereof. The
Securities will rank pari passu with the Rule 144A Notes, the Company's 10 1/4%
Senior Subordinated Notes due 2006, the Company's 9_% Senior Subordinated Notes
due 2002, Series A and the Company's 10 3/4% Senior Subordinated Notes due 2004.
5. Optional Redemption. The Company may redeem all or any of the Securities
at any time on or after September 15, 2002 at the following redemption prices
(expressed as percentages of principal amount), plus accrued and unpaid interest
to the redemption date:
B-3
<PAGE>
If Redeemed During Redemption Price
the 12-month Period Commencing ----------------
- -------------------------------
September 15, 2002 104.750%
September 15, 2003 103.167%
September 15, 2004 101.583%
September 15, 2005 and thereafter 100%
Notwithstanding the foregoing, the Company may redeem in the aggregate up
to $150,000,000 principal amount of Securities at any time and from time to time
prior to September 15, 2000 at a redemption price equal to 108.500% of the
aggregate principal amount so redeemed, plus accrued interest to the redemption
date, out of the net cash proceeds of one or more Public Equity Offerings;
provided that at least $300,000,000 aggregate principal amount of Securities
originally issued remains outstanding after the occurrence of any such
redemption and that any such redemption occurs within 60 days following the
closing of any such Public Equity Offering.
6. Right to Require Repurchase. Following the occurrence of any Change in
Control, each Holder will have the right to require that the Company repurchase
(a "Change in Control Repurchase") such Holder's Securities at a purchase price
equal to 101% of the aggregate principal amount of the Securities, plus accrued
and unpaid interest thereon, if any, to the date of repurchase. Within 30 days
after any Change in Control, the Company or, at the Company's request, the
Trustee, shall cause to be mailed a notice to all Holders notifying such Holders
of the occurrence of such Change in Control, the Holder's rights arising as a
result thereof and the procedures to be followed by Holders wishing to exercise
such rights.
A Holder of Securities may exercise the right to require a Change in
Control Repurchase after receipt of notice of the existence of such right by
completing the form entitled "OPTION OF HOLDER TO ELECT PURCHASE" appearing on
this Security and by complying with the other procedures set forth in such
notice. Any portion of Securities with respect to which the Holder wishes to
exercise such right must be in integral multiples of $1,000.
7. Mandatory Offer to Repurchase. If the Company consummates an Asset Sale
(as such term is defined in the Indenture), the Company may, under certain
circumstances, be required to utilize a portion of the net proceeds received
from such Asset Sale to offer to purchase Securities at a purchase price equal
to 100% of the aggregate principal amount of the Securities, plus accrued
interest to the date fixed for redemption (the "Asset Sale Offer"). Holders of
Securities that are the subject of an offer to purchase will receive an Asset
Sale Offer from the Company or the Trustee. The Asset Sale Offer shall remain
open for a period of 30 days after its commencement unless a longer offering
period is required by law (the "Asset Sale Offer Period"). On or prior to the
fifth Business Day following the termination of the Asset Sale Offer Period (the
"Asset Sale Payment Date"), the Company shall purchase, or cause the Trustee to
purchase, and mail or deliver payment for the amount of Securities required to
be purchased pursuant to the Asset Sale Offer or, if less than the amount of
Securities required to be purchased pursuant to the Asset Sale Offer has been
tendered, all Securities tendered in response to the Asset Sale Offer
A Holder of Securities may tender or refrain from tendering all or any
portion of his Securities at his discretion by completing the form entitled
"OPTION OF HOLDER TO ELECT PURCHASE" appearing on this Security. Any portion of
Securities tendered must be in integral multiples of $1,000.
8. Notice of Redemption. Notice of Redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at his registered address. Securities in denominations
larger than $1,000 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 will cease to accrue on Securities or
portions thereof called for redemption (unless the Company defaults on its
obligation to repurchase Securities).
9. Subordination. The indebtedness evidenced by this Security is, to the
extent provided in the Indenture, subordinate and subject in right of payment to
the prior payment in full of all Senior Indebtedness (as defined in the
Indenture), and this Security is issued subject to the provisions of the
Indenture with respect thereto. Each
B-4
<PAGE>
Holder of this Security, by accepting the same, (a) agrees to and shall be bound
by such provisions, (b) authorizes and directs the Trustee on his behalf to take
such action as may be necessary or appropriate to effectuate the subordination
so provided, and (c) appoints the Trustee his attorney-in-fact for any and all
such purposes.
10. Denominations, Transfer, Exchange. The Securities are in registered
form without coupons 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.
11. Persons Deemed Owners. The registered Holder of a Security may be
treated as its owner for all purposes.
12. Amendments and Waivers. Subject to certain exceptions, 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, and
any existing default under, or compliance with any provision of, the Indenture
may be waived (other than any continuing Default or Event of Default in the
payment of interest or premium, if any, on or the principal of the Securities or
in respect of a provision under the Indenture which cannot be modified or
amended without the consent of the Holder of each Security then outstanding)
with the consent of the Holders of a majority in principal amount of the
Securities then outstanding. Without the consent of any Holder, the Company and
the Trustee may amend or supplement the Indenture or the Securities to provide
for the assumption of the Company's obligations to Holders in the case of a
merger or acquisition; to evidence and provide for the acceptance of appointment
of any successor Trustee under the Indenture; to comply with the requirements of
the Trust Indenture Act of 1939, as amended; to add to the covenants of the
Company for the benefit of the Holders or an additional Event of Default or to
provide for the surrender by the Company of any right or power conferred upon it
under the Indenture; secure the Securities or provide for any Guarantee by a
Subsidiary; to provide for the issuance of securities identical in all material
respects to the Securities pursuant to the Exchange Offer; or to cure any
ambiguity, correct or supplement any provision which may be defective or
inconsistent with any other provision in the Indenture, or make any provisions
with respect to matters or questions arising under the Indenture which shall not
be inconsistent with the provisions of the Indenture, provided that such
modification or amendment does not adversely affect the interests of the
holders.
The right of any Holder to participate in any consent required or sought
pursuant to any provision of the Indenture (and the obligation of the Company to
obtain any such consent otherwise required from such Holder) may be subject to
the requirement that such Holder shall have been the Holder of record of any
Securities with respect to which such consent is required or sought as of a date
identified by the Trustee in a notice furnished to Holders in accordance with
the terms of the Indenture.
Without the consent of each Holder affected, the Company may not, among
other things, (i) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, (ii) reduce the principal amount of,
or premium, if any, or interest on, any Security, (iii) change the place of
payment where, or the coin or currency in which, any Security or any premium or
interest thereon is payable, (iv) impair the right of a Holder to institute suit
for the enforcement of payment of the principal of and premium, if any, and
interest on any Security on or after the Stated Maturity thereof (or in the case
of a redemption, on or after the redemption date) or (v) reduce the percentage
in principal amount of Securities the consent of whose Holders is required for
any modification or amendment of the Indenture, or the consent of whose Holders
is required for any waiver of compliance with certain provisions of the
Indenture or certain Defaults or Events of Default thereunder.
Without the consent of at least 66_% of the aggregate principal amount of
outstanding Securities, the Company may not (i) amend, change or modify the
provisions of Article Three of the Indenture relating to the optional redemption
of the Securities by the Company in accordance with Section 3.7 thereof, (ii)
amend, change or modify the obligations of the Company with respect to a Change
in Control Repurchase pursuant to Section 4.10 of the Indenture or modify any of
the provisions or definitions relating thereto or (iii) modify or change any
provision of the Indenture affecting the subordination or ranking of the
Securities in a manner adverse to Holders of the Securities.
13. Defaults and Remedies. Events of Default include: (i) default in
payment of principal or premium on the Securities; (ii) default in payment of
interest on the Securities for 30 days; (iii) failure by the Company for 45 days
after notice to it to comply with any of its other agreements in the Indenture
or the Securities; (iv) any
B-5
<PAGE>
acceleration of Indebtedness of the Company or its Subsidiaries having an
outstanding principal amount of $10 million in the aggregate or a failure to pay
such Indebtedness at its stated maturity if such acceleration or failure to pay
is not cured within 10 days of such acceleration or failure to pay; and (v)
certain events of bankruptcy or insolvency. If an 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 may declare all the Securities to be
immediately due and payable for an amount equal to 100% of the principal amount
of the Securities, and premium, if any, plus accrued interest to the date of
payment, except that in the case of an Event of Default arising from certain
events of bankruptcy or insolvency, all outstanding Securities become due and
payable immediately without further action or notice. Holders may not enforce
the Indenture or the Securities except as provided in the Indenture. The Trustee
may require indemnity satisfactory to it before it enforces the Indenture or the
Securities. Subject to certain limitations, 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 notice of any
continuing default (except a default in payment of principal or interest or that
resulted from the failure of the Company to comply with its obligations with
respect to Holders' rights to require repurchase of Securities upon a Change in
Control) if it determines that withholding notice is in their interests. The
Company must furnish an annual compliance certificate to the Trustee.
14. Trustee Dealings with Company. The Trustee, 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.
15. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. Each Holder by accepting a Security waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Securities.
16. ERISA Matters. Each Holder of Securities, by its acceptance thereof,
will be deemed to certify that (i) no part of the funds used by such Holder to
purchase the Securities constitutes assets of an employee benefit plan or (ii)
the acquisition and continued holding of the Securities will be covered by a
U.S. Department of Labor class exemption (with respect to prohibited
transactions set forth under Section 406(a) of ERISA).
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).
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Request may be made to:
Integrated Health Services, Inc.
10065 Red Run Boulevard
Owings Mills, Maryland 21117
Attention: Secretary
B-6
<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 ________________________________________ 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:____________________________
B-7
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 3.8 or 4.10 of the Indenture, check the appropriate
box:
|_| Section 3.8 |_| Section 4.10
If you want to elect to have only part of the Security purchased by the
Company pursuant to Section 3.8 or 4.10 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:____________________
B-8
<PAGE>
[FORM OF SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES*]
The following exchanges of a part of this Global Security for Definitive
Securities have been made.
<TABLE>
<CAPTION>
Amount of Amount of Principal Amount of
decrease in increase in this Global Security
Principal Amount Principal Amount following such Signature of autho-
Date of of this Global of this Global decrease or (increase) rized officer of
Exchange Security Security Trustee
-------- ---------------- ---------------- ---------------------- -------------------
<S> <C>
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
- ----------
*This schedule should be included only if the Security is issued in global
form.
</TABLE>
B-9
<PAGE>
EXHIBIT C
[FORM OF CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER
OF RULE 144A NOTES]
CERTIFICATE FOR EXCHANGE OR TRANSFER
Re: 9 1/2% Senior Subordinated Notes due 2007 ("Rule 144A Notes")
This Certificate relates to $_________ Principal amount of Securities held
in *__________ book-entry or *__________ definitive form by _________________
(the "Transferor").
The Transferor*:
o has requested the Trustee by written order to deliver in exchange for its
beneficial interest in the Global Security held by the Depositary a
Security or Securities in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its beneficial
interest in such Global Security (or the portion thereof indicated above);
or
o has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
In connection with such request and in respect of each such security, the
Transferor does hereby certify that Transferor is familiar with the Indenture
relating to the above-captioned Notes and as provided in Section 2.5 of such
Indenture, the transfer of this Security does not require registration under the
Securities Act (as defined below) because*:
o Such Security is being acquired for the Transferor's own account, without
transfer (in satisfaction of Section 2.5(a)(ii)(A) or Section 2.5(d)(i)(A)
of the Indenture).
o Such Security is being transferred to a "qualified institutional buyer" (as
defined in rule 144A under the Securities Act of 1933, as amended (the
"Securities Act") in reliance on Rule 144A (in satisfaction of Section
2.5(a)(ii)(B), section 2.5(b)(i) or Section 2.5(d)(i)(B) of the Indenture).
o Such Security is being transferred in accordance with Rule 144 under the
Securities Act, or pursuant to an effective registration statement under
the Securities Act.
o Such Security is being transferred in reliance and in compliance with an
exemption from the registration requirements of the Securities Act, other
than Rule 144A or Rule 144 under the Securities Act. An opinion of counsel
to the effect that such transfer does not require registration under the
Securities Act accompanies this Certificate.
- ------------------------------------------------------
[INSERT NAME OF TRANSFEROR]
By:___________________________________________________
Date:________________________
- -----------------------------
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*Check applicable box.
C-1
EXECUTION COPY
$700,000,000
REVOLVING CREDIT AGREEMENT
Dated as of May 15, 1996
Among
INTEGRATED HEALTH SERVICES, INC.,
as Borrower,
The Lenders from time to time party hereto,
and
CITIBANK, N.A.
as Administrative Agent
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms......................................... 1
SECTION 1.02. Accounting Terms.............................................. 27
SECTION 1.03. Other Definitional Provisions................................. 27
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. Revolving Facility............................................ 28
(a) Advances................................................... 28
(b) Borrowings................................................. 28
(c) Notice of Borrowing........................................ 28
(d) Telephonic Notice of Borrowing............................. 28
(e) Funding of Advances........................................ 29
(f) Notice of Borrowing Irrevocable............................ 29
(g) Assumption of Funding...................................... 29
(h) Failure of Lender to Fund.................................. 29
SECTION 2.02. Letter of Credit Subfacility.................................. 29
(a) Issuance of the Letters of Credit.......................... 29
(b) LC Application............................................. 30
(c) Reimbursement.............................................. 30
(d) Reimbursement Obligation Absolute.......................... 30
(e) Lender Participation....................................... 31
(f) Commercial Practices....................................... 31
(g) Replacement of LC Bank..................................... 32
SECTION 2.03. Promissory Notes.............................................. 32
(a) Notes...................................................... 32
(b) Recording of Amounts....................................... 32
SECTION 2.04. Fees.......................................................... 33
(a) Closing Fees............................................... 33
(b) Commitment Fees............................................ 33
(c) Letter of Credit Fees...................................... 33
(d) Facing Fees................................................ 33
(e) Letter of Credit Administration............................ 33
(f) Agent's Fees............................................... 33
(g) Contingent Fees............................................ 33
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SECTION 2.05. Voluntary and Scheduled Facility Reductions................... 33
SECTION 2.06. Principal Payments............................................ 34
(a) Final Maturity............................................. 34
(b) Excess Revolving Credit Exposure........................... 34
(c) Excess LC Exposure......................................... 34
(d) Payment on Date of Change of Control....................... 34
(e) Facility Reduction for Receivables Sale Program............ 35
(f) Application of LC Cash Collateral.......................... 35
SECTION 2.07. Interest...................................................... 35
(a) Base Rate Advances......................................... 35
(b) Eurodollar Rate Advances................................... 36
(c) Default Interest........................................... 36
SECTION 2.08. Additional Interest on Eurodollar Rate Advances............... 36
SECTION 2.09. Interest Rate Determination and Protection.................... 36
(a) Determination of Eurodollar Rate........................... 36
(b) Notice of Eurodollar Rate.................................. 36
(c) Failure to Provide Information............................. 37
(d) Suspension of Eurodollar Rate Advances..................... 37
(e) Failure to Specify Duration................................ 37
(f) Agent's Determination Conclusive........................... 37
SECTION 2.10. Voluntary Conversion of Advances.............................. 37
(a) Notice of Continuance/Conversion........................... 37
(b) Telephonic Notice.......................................... 38
(c) Requirements............................................... 38
(d) Base Rate Advances......................................... 38
SECTION 2.11. Prepayments................................................... 38
SECTION 2.12. Funding Losses................................................ 39
SECTION 2.13. Increased Costs............................................... 39
(a) Increase in Cost........................................... 39
(b) Increase in Capital Requirements........................... 39
(c) Replacement Lenders and Participants....................... 40
SECTION 2.14. Illegality.................................................... 41
SECTION 2.15. Payments and Computations..................................... 41
(a) Payments................................................... 41
(b) Charging of Accounts....................................... 41
(c) Computations............................................... 41
(d) Payment on Business Day.................................... 42
(e) Presumption of Payment..................................... 42
SECTION 2.16. Taxes......................................................... 42
(a) Net Payments............................................... 42
(b) Payment of Other Taxes..................................... 42
(c) Indemnification............................................ 43
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(d) Evidence of Payments....................................... 43
(e) Withholding Tax Exemption.................................. 43
(f) Withholding Taxes.......................................... 44
(g) Indemnification of the Agent............................... 44
(h) Subsequent Lenders......................................... 44
(i) Refund, Deduction or Credit of Taxes....................... 45
(j) Exclusion of Certain Taxes................................. 45
(k) Additional Cooperation..................................... 45
SECTION 2.17. Sharing of Payments........................................... 45
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent on the Closing Date...................... 46
(a) Loan Documents............................................. 46
(b) Corporate Documents........................................ 47
(c) Governmental Consents...................................... 47
(d) No Injunction.............................................. 48
(e) Other Deliveries........................................... 48
(f) Legal Opinions............................................. 48
(g) Payout and Release Agreement............................... 49
(h) Payment of Existing Facility............................... 49
(i) Payment of Fees and Expenses............................... 49
(j) Section 3.02 Conditions.................................... 49
SECTION 3.02. Conditions Precedent to Each Extension of Credit.............. 49
(a) Notice..................................................... 49
(b) Certification.............................................. 49
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower................ 50
(a) Organization............................................... 50
(b) Power and Authority........................................ 50
(c) Due Authorization.......................................... 51
(d) Subsidiaries and Ownership of Capital Stock................ 51
(e) Health Care Facilities..................................... 51
(f) Governmental Approval...................................... 52
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(g) Binding and Enforceable.................................... 52
(h) Financial Information...................................... 52
(i) Material Adverse Change.................................... 52
(j) Compliance................................................. 52
(k) Litigation................................................. 52
(l) No Conflict................................................ 53
(m) No Default................................................. 53
(n) Payment of Taxes........................................... 53
(o) Margin Regulations......................................... 53
(p) Conduct of Business........................................ 53
(q) Health Care Permits........................................ 53
(r) Environmental Matters...................................... 54
(s) ERISA Compliance........................................... 55
(t) Title to Assets............................................ 55
(u) Collateral Documents....................................... 56
(v) Senior Indebtedness........................................ 56
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Financial Covenants........................................... 56
(a) Maximum Debt/EBITDAR Ratio................................. 56
(b) Minimum Cash Flow Coverage Ratio........................... 57
(c) Minimum Interest&Rent Coverage Ratio....................... 58
(d) Minimum Net Worth.......................................... 58
SECTION 5.02. Affirmative Covenants......................................... 58
(a) Compliance with Laws....................................... 58
(b) Inspection of Property and Books and Records............... 58
(c) Reporting Requirements..................................... 59
(d) Preservation of Corporate Existence, Etc................... 62
(e) New Subsidiaries........................................... 62
(f) Maintenance of Property.................................... 62
(g) Insurance.................................................. 62
(h) Payment of Obligations..................................... 63
(i) Environmental Laws......................................... 64
(j) Use of Proceeds............................................ 64
(k) Health Care Permits and Approvals.......................... 64
(l) Further Assurances......................................... 64
SECTION 5.03. Negative Covenants............................................ 65
(a) Liens...................................................... 65
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(b) Disposition of Assets...................................... 67
(c) Investments................................................ 68
(d) Limitation on Indebtedness................................. 73
(e) Transactions with Affiliates............................... 74
(f) Accommodation Obligations.................................. 75
(g) Leases of Health Care Facilities........................... 75
(h) Restricted Junior Payments................................. 76
(i) Mergers, Etc............................................... 77
(j) Capital Expenditures....................................... 78
(k) Conduct of Business........................................ 79
(l) Unpledged Assets........................................... 79
(m) Compliance with ERISA...................................... 79
(n) Health Care Permits and Approvals.......................... 79
(o) Retained Interest Criteria................................. 80
(p) Payment Restrictions Affecting Subsidiaries................ 80
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default............................................. 80
(a) Non-Payment of Principal................................... 80
(b) Non-Payment of Interest or Fees............................ 80
(c) Representations and Warranties............................. 80
(d) Financial, Lien and Debt Covenants......................... 81
(e) Reporting and Negative Covenants........................... 81
(f) Covenants.................................................. 81
(g) Debt....................................................... 81
(h) Leases..................................................... 81
(i) Bankruptcy................................................. 82
(j) Judgments.................................................. 82
(k) Guaranty................................................... 82
(l) Collateral Documents....................................... 82
(m) ERISA...................................................... 82
SECTION 6.02. Rights Not Exclusive.......................................... 83
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ARTICLE VII
THE AGENT
SECTION 7.01. Authorization and Action...................................... 84
SECTION 7.02. Agent Not Liable.............................................. 84
SECTION 7.03. Rights as Lender.............................................. 85
SECTION 7.04. Lender Credit Decision........................................ 85
SECTION 7.05. Indemnification............................................... 85
SECTION 7.06. Successor Agent............................................... 86
SECTION 7.07. Release of Collateral......................................... 86
SECTION 7.08. Release of Guarantor upon Sale of Stock....................... 86
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments.................................................... 87
SECTION 8.02. Notices....................................................... 88
SECTION 8.03. No Waiver; Remedies........................................... 88
SECTION 8.04. Costs and Expenses............................................ 89
SECTION 8.05. Right of Set-off.............................................. 89
SECTION 8.06. Indemnity..................................................... 89
(a) General Indemnity.......................................... 89
(b) Environmental Indemnity.................................... 90
SECTION 8.07. Assignments and Participations................................ 90
(a) Permitted Assignment....................................... 90
(b) Effect of Assignment....................................... 91
(c) Maintenance of Agreements.................................. 91
(d) Procedure.................................................. 92
(e) Participations............................................. 92
(f) Additional Information..................................... 92
(g) Permitted Assignments...................................... 92
SECTION 8.08. Binding Effect................................................ 93
SECTION 8.09. Governing Law; Consent to Jurisdiction; Venue................. 93
SECTION 8.10. Waiver of Jury Trial.......................................... 93
SECTION 8.11. Limitation of Liability....................................... 94
SECTION 8.12. Entire Agreement.............................................. 94
SECTION 8.13. Survival...................................................... 94
SECTION 8.14. Execution in Counterparts..................................... 94
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EXHIBITS
Exhibit A Form of Note
Forms of Loan Administration Documents
Exhibit B-1 Form of Notice of Borrowing
Exhibit B-2 Form of Notice of Continuance/Conversion
Exhibit B-3 Form of LC Application
Exhibit B-4 Form of Pricing Certificate
Forms of Certain Loan Documents
Exhibit C-1 Form of Subsidiary Guaranty
Exhibit C-2 Form of IHS Pledge and Security Agreement
Exhibit C-3 Form of Subsidiary Pledge and Security Agreement
Exhibit C-4 Form of Confirmation and Agreement of Guarantors
Forms of Opinion of Counsel
Exhibit D-1 Form of Opinion of Counsel for the Borrower and the Guarantors
Exhibit D-2 Form of Opinion of Special Local Counsel for a Guarantor
Other Forms
Exhibit E-1 Form of Compliance Certificate
Exhibit E-2 Form of Assignment and Acceptance
Exhibit E-3 Form of Payment and Release Agreement
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SCHEDULES
Schedule I List of Lenders, Commitments and Pro Rata Shares
Schedule 1.01(a) List of Senior Debt Excluded from Current Portion of
Long-Term Debt
Schedule 1.01(b) List of "Schedule 1.01(b) Assets" Designated for Sale
Schedule 1.01(c) List of "Schedule 1.01(c) Assets" Designated for Sale
Schedule 2.04(a) Itemization of Closing Fees
Schedule 4.01(d) List of Subsidiaries
Schedule 4.01(e) List of Health Care Facilities
Schedule 4.01(f) List of Government Approvals
Schedule 4.01(k) List of Litigation
Schedule 4.01(r) List of Environmental Matters
Schedule 4.01(s) List of ERISA Matters
Schedule 5.03(c) List of Loans and Investments
Schedule 5.03(c)(xv) List of Permitted Acquisitions
Schedule 5.03(d) List of Liens and Debt
Schedule 5.03(f) List of Accommodation Obligations
<PAGE>
REVOLVING CREDIT AGREEMENT
REVOLVING CREDIT AGREEMENT, dated as of May 15, 1996, among INTEGRATED
HEALTH SERVICES, INC., a Delaware corporation, the financial institutions
signatory hereto as Lenders, and CITIBANK, N.A., a national banking association,
as Administrative Agent for the Lenders.
In consideration of the mutual agreements set forth herein, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement:
"ACCOMMODATION OBLIGATION" means, as applied to any Person, any direct or
indirect guaranty, endorsement or other liability of that Person with respect to
any Debt, lease, dividend, letter of credit or other obligation (the "PRIMARY
OBLIGATION") of another Person (the "PRIMARY OBLIGOR"), including any obligation
of that Person, whether or not contingent, (i) to purchase, repurchase or
otherwise acquire any such primary obligation or any property constituting
direct or indirect security therefor, or (ii) to advance or provide funds (A)
for the payment or discharge of any such primary obligation, or (B) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet item, level of income or
financial condition of the primary obligor, or (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation, or (iv) otherwise to assure or hold harmless the holder
of any such primary obligation against loss in respect thereof. The amount of
any Accommodation Obligation shall be deemed to be an amount equal to the
maximum stated or determinable amount of the primary obligation in respect of
which such Accommodation Obligation is made or, if not stated or if
indeterminable, the maximum reasonably estimated potential liability in respect
thereof.
"ADVANCE" means a loan by a Lender to the Borrower pursuant to Article II.
"ADJUSTED STOCKHOLDERS' EQUITY" means the sum of (i) net stockholders'
equity of the Borrower and its Subsidiaries, determined as of a particular time
on a consolidated basis in accordance with GAAP, and (ii) the principal amount
of Convertible Subordinated Debt then outstanding.
"AFFILIATE" of a specified Person means any other Person that directly or
indirectly through one or more intermediaries controls, is controlled by or is
under common control with the Person specified. For this purpose, "control,"
"controlled by" and "under common control
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2
with" with respect to any Person mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities or by contract
or otherwise.
"AGENT" means Citibank, in its capacity as administrative agent for the
Lenders hereunder, and any successor appointed pursuant to Section 7.06.
"AGREEMENT" means this Revolving Credit Agreement, as hereafter amended,
modified or supplemented.
"APPLICABLE LENDING OFFICE" means, with respect to each Lender, such
Lender's Domestic Lending Office in the case of a Base Rate Advance and such
Lender's Eurodollar Lending Office in the case of a Eurodollar Rate Advance.
"ASSET SALE" means the sale, transfer or other disposition of any asset,
business or property of the Borrower or any of its Subsidiaries, or the issuance
or sale of any capital stock of or other equity, ownership or profit interest in
any Subsidiary of the Borrower (except a dividend on any such stock or interest
declared and payable solely in additional shares of such stock or interest), to
any Person other than the Borrower or a wholly-owned Subsidiary of the Borrower,
for a total consideration in an amount greater than $5,000,000 in a single
transaction or series of related transactions. A disposition of accounts
receivable (i) shall not be an Asset Sale if made pursuant to a Receivables Sale
Program permitted under this Agreement and (ii) shall be an Asset Sale only if
disposed of as part of a disposition of all or substantially all of the
operating assets of the business from which such accounts receivable arose.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered into
by a Lender and an Eligible Assignee, in substantially the form of Exhibit E-2,
and accepted by the Agent.
"AUTHORIZED OFFICER" means the principal financial officer, the chief
accounting officer, the controller, the treasurer or the vice president-finance
of the Borrower.
"BASE RATE" means, for any day, a fluctuating interest rate per annum equal
to the higher of (i) the then effective rate of interest announced publicly by
Citibank in New York, New York, from time to time, as Citibank's base rate, or
(ii) the then Federal Funds Rate plus one percent per annum.
"BASE RATE ADVANCE" means an Advance which bears interest by reference to
the Base Rate as provided in Section 2.07(a).
"BASE RATE MARGIN" means, for any Pricing Period, the rate per annum set
forth below opposite the Pricing Ratio determined for that Pricing Period:
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Pricing Ratio Base Rate Margin
------------- ----------------
greater than or equal to 6.00 1.25%
greater than or equal to 5.50 but less than 6.00 0.75%
greater than or equal to 5.00 but less than 5.50 0.50%
greater than or equal to 4.25 but less than 5.00 0.25%
greater than 4.25 0.00%
"BORROWER" means Integrated Health Services, Inc., a Delaware corporation.
"BORROWING" means a Base Rate Advance or Eurodollar Rate Advance made by
the Lenders on a Borrowing Date.
"BORROWING DATE" means the Closing Date or any subsequent Business Day on
which a Borrowing is requested from the Lenders.
"BREAKAGE COSTS" is defined in Section 2.12.
"BUSINESS DAY" means any day except a Saturday or Sunday or a day when
commercial banks are authorized or required by law to be closed in New York, New
York, Hartford, Connecticut, San Francisco, California or Baltimore, Maryland
and, where used in reference to any Eurodollar Rate Advance, means such a day on
which dealings are carried on in the London interbank market.
"CAPITAL EXPENDITURES" means expenditures for Hard Costs, whether paid in
cash or accrued as liabilities, made by the Borrower or any Subsidiary of the
Borrower.
"CAPITAL LEASE" means, with respect to any Person, any lease of any
property by that Person as lessee which, in accordance with GAAP, is required to
be accounted for as a capital lease on the balance sheet of that Person.
"CASH FLOW COVERAGE RATIO" means the ratio, as of the last day of any
Quarter, of (i) Cash Flow from Operations of the Borrower and its Subsidiaries
for the 12- month period then ending to (ii) the sum of (A) Interest Expense,
Receivables Program Charges and Lease Expense counted in determining such Cash
Flow from Operations, (B) the then Current Portion of Long-Term Debt, and (C)
all cash dividends paid on the Borrower's common stock during the 12-month
period then ending.
"CASH FLOW FROM OPERATIONS" means, with respect to any Person, the sum,
determined as of the last day of any Quarter for such Person and its
subsidiaries on a
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consolidated basis for the 12-month period including such Quarter and the
immediately preceding three Quarters (taken as a single period), of (i) net
income after taxes minus any extraordinary gain and any non-recurring gain on
any divestiture and plus any extraordinary loss and any non-recurring loss on
any divestiture, (ii) depreciation, amortization, and other non-cash charges
deducted in determining net income, (iii) Interest Expense, (iv) Lease Expense
and (v) with respect to Cash Flow from Operations of the Borrower and its
Subsidiaries only, Receivables Program Charges, all determined in accordance
with GAAP; provided, however, that (A) income attributable to any other Person
or business that is not at least 50% owned, directly or indirectly, by such
Person shall be counted, in determining net income, only to the extent such
income is received in cash by such Person or a subsidiary of such Person in such
period and is not reinvested in such other Person or business (other than as a
loan payable on demand) within six months thereafter, except that, with respect
to the Borrower only, income from minority Investments existing on the Closing
Date and described in Schedule 5.03(c) shall be counted in accordance with the
Borrower's past practice, and (B) no adjustments shall be made to reflect
minority interests in subsidiaries.
"CASH PROCEEDS OF SALE" means all cash and cash equivalents received by the
Borrower or any of its Subsidiaries as the cash consideration in any Asset Sale
or from any payment or distribution on, or sale or liquidation of, any
promissory note or other property received as non-cash consideration in any
Asset Sale.
"CHANGE OF CONTROL" means (i) a "change in control" as that term is defined
in any of the Subordinated Debt Indentures, (ii) a transaction or series of
transactions whereby any Person or group within the meaning of Section 13(d)(3)
of the 1934 Act and the rules and regulations promulgated thereunder (other than
Robert N. Elkins, M.D. or a group managed by Robert N. Elkins, M.D.) acquires
beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act),
directly or indirectly, of securities of the Borrower (or other securities
convertible into such securities) representing 40% of the combined voting power
of all securities of the Borrower entitled to vote in the election of directors
(a "CONTROLLING PERSON") or (iii) at any time, a majority of the Borrower's
directors are persons who were not (A) in office on the Closing Date, (B)
initially nominated by directors who were in office on the Closing Date or by
successor directors elected or appointed upon the initial nomination of such
directors or successor directors or (C) initially nominated by a group managed
by Robert N. Elkins, M.D. For this purpose, a Person or group shall not be a
Controlling Person if such Person or group holds voting power in good faith and
not for the purpose of circumventing the effect of the occurrence of a Change of
Control as an agent, bank, broker, nominee, trustee, or holder of revocable
proxies given in response to a solicitation pursuant to the 1934 Act, for one or
more beneficial owners who do not individually, or, if they are a group acting
in concert, as a group, have the voting power specified in the previous
sentence.
"CITIBANK" means Citibank, N.A., a national banking association.
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"CLOSING DATE" means the date on which all of the conditions precedent set
forth in Section 3.01 are satisfied or waived in writing by the Lenders.
"CODE" means the Internal Revenue Code of 1986 and the regulations
thereunder.
"COLLATERAL" means all property which at any time is subject or is to
become subject to any Lien granted or created under any of the Collateral
Documents.
"COLLATERAL DOCUMENTS" means the Pledge and Security Agreements and all
other security agreements, collateral assignments and other instruments,
documents and agreements at any time delivered to the Agent to create or
evidence Liens to secure the Obligations.
"COMMITMENT FEE RATE" means, for commitment fees accruing in any Pricing
Period, the rate per annum set forth below opposite the Pricing Ratio determined
for such Pricing Period:
Pricing Ratio Commitment Fee Rate
------------- -------------------
greater than or equal to 5.00 0.50%
greater than or equal to 4.25 but less than 5.00 0.375%
greater than or equal to 3.75 but less than 4.25 0.25%
less than 3.75 0.20%
"CONSENT SOLICITATION" means the solicitation of the consent of the holders
of Debt outstanding under the 1994 Subordinated Debt Indenture and the 1995
Subordinated Debt Indenture to certain amendments to such indentures pursuant to
the consent, dated and mailed to such holders on May 3, 1996, as thereafter
amended with the approval of the Agent in its sole discretion.
"CONVERTIBLE SUBORDINATED DEBT" means the Debt outstanding under the 1992
Convertible Subordinated Debt Indenture and the 1993 Convertible Subordinated
Debt Indenture.
"CURRENT PORTION OF LONG-TERM DEBT" means that portion of Debt of the
Borrower and its Subsidiaries on a consolidated basis (including, without
limitation, the Advances, but excluding the Subordinated Debt and the senior
Debt listed on Schedule 1.01(a)) that is, at the end of any Quarter, due and
payable within the next 12 months.
"DEBT," as applied to any Person and in each case determined on a
consolidated basis in conformity with GAAP, means (without duplication) (i) all
indebtedness for borrowed money (whether by loan or the issuance of debt
securities or otherwise); (ii) all obligations issued, undertaken or assumed as
the deferred purchase price of property or services or interest
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6
thereon, except accounts and accrued expenses currently payable; (iii) all
reimbursement obligations with respect to surety bonds, letters of credit,
bankers' acceptances and similar instruments, whether or not contingent; (iv)
all monetary obligations under any Capital Lease; (v) all obligations
(contingent or otherwise) to purchase, retire or redeem any capital stock or any
other equity interest of such Person; (vi) all monetary obligations measured by,
or determined on the basis of, the value of any capital stock of such Person;
and (vii) all obligations, whether or not such obligations constitute Debt as
defined in clauses (i) through (vi) above, secured by (or for which the holder
of the obligation has an existing right, contingent or otherwise, to be secured
by) any Lien upon any property of such Person or any Subsidiary of such Person,
except any such obligation secured by a Lien that is imposed by law and not
voluntarily granted.
"DEBT/EBITDAR RATIO" means the ratio, as of the last day of any Quarter,
of:
(i) the sum of:
(A) the difference, if any, between (x) the sum of (1) Funded
Debt and (2) eight times the Specified Lease Expense of the Borrower
and its Subsidiaries for the 12-month period then ending, less (y) the
lesser of (1) Quarter-End Excess Cash and (2) the Advances then
outstanding, and
(B) the Purchasers' Aggregate Net Investment outstanding on such
day; to
(ii) EBITDAR of the Borrower and such Subsidiaries for the 12- month
period then ending, after pro forma (1) adding to Specified Lease Expense
of the Borrower and such Subsidiaries, all amounts that would constitute
additional Specified Lease Expense of the Borrower and such Subsidiaries
for such period if any acquisition of a company that was made at any time
during such period by the Borrower or any of its Subsidiaries had been
consummated at the commencement of such period; (2) adding to Specified
Lease Expense of the Borrower and such Subsidiaries, all amounts that would
constitute additional Specified Lease Expense of the Borrower and such
Subsidiaries for such period if any lease of a Health Care Facility that
was entered into by the Borrower or any of its Subsidiaries at any time
during such period had been so entered into at the commencement of such
period; (3) adding to EBITDAR of the Borrower and such Subsidiaries, the
EBITDAR and Non-Recurring Charges determined solely for any such acquired
company or Health Care Facility, for the portion of such period that
preceded the acquisition; provided, however, that for Quarters ending
during the 12-month period immediately following the closing of the First
American Merger, EBITDAR of First American for the period from the closing
to the date of determination, annualized for the 12-month period then ended
shall be added to EBITDAR of the Borrower and such Subsidiaries; (4)
subtracting from Specified Lease Expense of the Borrower and such
Subsidiaries, the Specified Lease Expense for such period attributable to
any business or
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7
facility that was sold or closed by the Borrower or any of its Subsidiaries
in such period; and (5) subtracting from EBITDAR of the Borrower and such
Subsidiaries, the EBITDAR for such period of any business or facility that
was so sold or closed.
"DOLLARS" and "$" mean United States dollars or such coin or currency of
the United States of America as at the time of payment shall be legal tender for
the payment of public and private debts in the United States of America.
"DOMESTIC LENDING OFFICE" means, with respect to any Lender, the office of
such Lender specified as its "Domestic Lending Office" opposite its name on
Schedule I hereto or in the Assignment and Acceptance by which it became a
Lender or such other office of such Lender as such Lender may from time to time
specify to the Borrower and the Agent.
"EBITDAR" means, with respect to any Person, the sum of (i) Cash Flow from
Operations of such Person for any period and (ii) all charges for taxes counted
in determining the consolidated net income of such Person for such period.
"ELIGIBLE ASSIGNEE" means (i) a commercial bank organized under the laws of
the United States, or any State thereof, and having total assets in excess of
$5,000,000,000; (ii) a savings and loan association or savings bank organized
under the laws of the United States, or any State thereof, and having total
assets in excess of $3,000,000,000; (iii) a commercial bank organized under the
laws of any other country which is a member of the OECD, or a political
subdivision of any such country, and having total assets in excess of
$5,000,000,000, if such bank is acting through a branch or agency located in the
United States; (iv) the central bank of any country which is a member of the
OECD; (v) a finance company, insurance or other financial institution that is
engaged in making, purchasing or otherwise investing in commercial loans in the
ordinary course of its business and having total assets in excess of
$3,000,000,000; (vi) a fund that is engaged in making, purchasing or otherwise
investing in commercial loans in the ordinary course of its business and having
total assets in excess of $200,000,000; (vii) Affiliates of an existing Lender;
and (viii) any other Person approved by the Agent, the LC Bank and the Borrower,
which approval shall not be unreasonably withheld; provided, however, that no
Person who is a non-resident alien or a foreign entity for United States income
tax purposes (except a commercial bank of the type described in clause (iii)
above), may be an Eligible Assignee unless each Note to be acquired by such
Person is reissued in registered form prior to transfer.
"ENVIRONMENTAL CLAIMS" means any and all administrative, regulatory or
judicial claims, demands, directives, proceedings, orders, decrees and judgments
relating in any way to any Environmental Law or any Environmental Permit.
"ENVIRONMENTAL LAWS" means all federal, state and local laws, statutes,
rules, regulations, ordinances and codes, and any binding judicial or
administrative interpretation thereof or requirement thereunder, including any
judicial or administrative order, by any
<PAGE>
8
Governmental Authority, relating to the regulation or protection of human
health, safety, the environment and natural resources.
"ENVIRONMENTAL PERMIT" means any license, permit, authorization,
registration or approval issued or required under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA AFFILIATE" means any entity which is (or at any relevant time was) a
member of a "controlled group of corporations," under "common control" or a
member of an "affiliated service group" with the Borrower as defined in Section
414(b), (c) or (m) of the Code.
"ERISA EVENT" means (i) any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder, with respect to a Pension Plan; (ii) a
withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA); (iii) a complete or partial
withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan;
(iv) the filing of a notice of intent to terminate, the treatment of a plan
amendment as a termination under Section 4041 or 4041A of ERISA or the
commencement of proceedings by the PBGC to terminate a Pension Plan or
Multiemployer Plan subject to Title IV of ERISA; (v) a failure to make required
contributions to a Pension Plan or Multiemployer Plan; (vi) the imposition of
any liability under Title VI of ERISA, other than PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA
Affiliate; (vii) an application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code with respect to any
Pension Plan; (viii) the Borrower or ERISA Affiliate engages in a nonexempt
prohibited transaction or otherwise becomes liable with respect to a nonexempt
prohibited transaction, the consequences of which, in the aggregate, constitute
or could reasonably be expected to result in a Material Adverse Change; or (ix)
a violation of the applicable requirements of Section 404 or 405 of ERISA or the
exclusive benefit rule under Section 401(a) of the Code by the Borrower or any
ERISA Affiliate with respect to any Pension Plan for which the Borrower or any
of its Subsidiaries may be liable, the consequences of which, in the aggregate,
constitute or could reasonably be expected to result in a Material Adverse
Change.
"EUROCURRENCY LIABILITIES" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"EURODOLLAR LENDING OFFICE" means, with respect to any Lender, the office
of such Lender specified as its "Eurodollar Lending Office" opposite its name on
Schedule I hereto or in the Assignment and Acceptance by which it became a
Lender (or, if no such office is specified, its Domestic Lending Office) or such
other office of such Lender as such Lender may from time to time specify to the
Borrower and the Agent as its Eurodollar Lending Office.
<PAGE>
9
"EURODOLLAR RATE" means, for any Interest Period for each Eurodollar Rate
Advance comprising part of the same Borrowing, an interest rate per annum equal
to the average (rounded upward to the nearest whole multiple of 1/16 of 1% per
annum, if such average is not such a multiple) of the rate per annum at which
deposits in U.S. dollars are offered by the principal office of each of the
Reference Banks in London to prime banks in the interbank market for U.S. Dollar
Deposits at 11:00 a.m. (London time) two Business Days before the first day of
such Interest Period in an amount substantially equal to such Reference Bank's
Eurodollar Rate Advance comprising part of such Borrowing (or, if such Reference
Bank is not a Lender, 10% of such Borrowing) and for a period equal to such
Interest Period.
"EURODOLLAR RATE ADVANCE" means an Advance which bears interest by
reference to the Eurodollar Rate as provided in Section 2.07(b).
"EURODOLLAR RATE MARGIN" means, for any Pricing Period, the rate per annum
set forth below opposite the Pricing Ratio determined for that Pricing Period:
Pricing Ratio Eurodollar Rate Margin
------------- ----------------------
greater than or equal to 6.00 2.50%
greater than or equal to 5.50 but less than 6.00 2.00%
greater than or equal to 5.00 but less than 5.50 1.75%
greater than or equal to 4.25 but less than 5.00 1.50%
greater than or equal to 3.75 but less than 4.25 1.25%
greater than or equal to 3.25 but less than 3.75 1.00%
greater than or equal to 2.75 but less than 3.25 0.875%
less than 2.75 0.75%
"EURODOLLAR RATE RESERVE PERCENTAGE" of any Lender for any day in the
Interest Period for any Eurodollar Rate Advance means the reserve percentage
applicable for such day under regulations issued from time to time by the Board
of Governors of the Federal Reserve System (or any successor) for determining
the maximum reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) for such Lender with respect to liabilities or
assets consisting of or including Eurocurrency liabilities having a term equal
to such Interest Period.
"EVENTS OF DEFAULT" has the meaning provided in Section 6.01.
"EXISTING FACILITY" means the Revolving Credit and Term Loan Agreement,
dated as of April 20, 1995, by and among the Borrower, Citicorp USA, Inc., a
Delaware corporation, as
<PAGE>
10
administrative agent thereunder, and the other financial institutions signatory
thereto as lenders, as amended.
"FACILITY AMOUNT" means, on any date of determination, $700,000,000 less
all Facility Reductions which are then effective.
"FACILITY REDUCTION" means each temporary or permanent reduction of the
credit available to the Borrower under this Agreement, whether voluntarily made
or scheduled to be made pursuant to Section 2.05 or required to be made pursuant
to Section 2.06, Section 6.01 or any other provision of this Agreement or
otherwise becoming effective in accordance with this Agreement.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by Citibank from three Federal funds brokers of recognized
standing selected by it.
"FEE LETTER" means the letter dated April 8, 1996 from Citibank to the
Borrower.
"FIRST AMERICAN" means First American Health Care of Georgia, Inc., a
Georgia corporation.
"FIRST AMERICAN MERGER" means the proposed merger of a wholly-owned
Subsidiary of the Borrower with and into First American pursuant to which, on
the terms and conditions set forth in the First American Merger Agreement, First
American will become a wholly-owned Subsidiary of the Borrower.
"FIRST AMERICAN MERGER AGREEMENT" means the merger agreement, dated as of
February 21, 1996, among the Borrower, IHS Acquisition XIV, Inc., a Delaware
corporation and wholly-owned Subsidiary of the Borrower, First American and
certain principal shareholders thereof, as amended by Amendment No. 1, dated as
of March 12, 1996, and as thereafter further amended in accordance with Section
5.03(c)(xii).
"FUNDED DEBT" means all Debt of the type described in clauses (i), (ii) and
(iv) of the definition of "Debt," plus all Accommodation Obligations, except
those described in clauses (i) through (vi) of Section 5.03(f), owed by the
Borrower or any of its Subsidiaries and outstanding, on a consolidated basis, on
the last day of any Quarter.
<PAGE>
11
"FUNDED LC EXPOSURE" means the aggregate principal amount, as of any date
of determination, of all payments that were made by the LC Bank under any Letter
of Credit but have not been reimbursed to the LC Bank by the Borrower pursuant
to Section 2.02(c) or converted into Advances pursuant to Section 2.02(e).
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the accounting profession), or in such
other statements by such entity as may be in general use by significant segments
of the U.S. accounting profession, which are applicable to the facts and
circumstances on the date of determination.
"GOVERNMENTAL AUTHORITY" means any nation, state, sovereign or government,
any political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"GUARANTOR" means each Subsidiary of the Borrower that executes, or joins
in, the Guaranty.
"GUARANTOR CONFIRMATION" means a Confirmation and Agreement of Guarantors
in substantially the form of Exhibit C-4, duly authorized, executed and
delivered by the Guarantors, setting forth the Guarantor Liability Limit as to a
particular Guarantor.
"GUARANTOR LIABILITY LIMIT" means:
(i) In respect of any Subsidiary that is (either directly or
indirectly through one or more wholly-owned Subsidiaries of the
Borrower) a wholly-owned Subsidiary of the Borrower, an unlimited
amount, and
(ii) In respect of any Subsidiary that is not such a wholly-owned
Subsidiary of the Borrower, an amount determined as of the last day of
the then most recently ended Quarter for which financial statements
are available by multiplying (A) EBITDAR plus any Non-Recurring
Charges, determined solely for such Subsidiary and its Subsidiaries
and any business, assets or entity directly or indirectly owned by
such Subsidiary at such time, on a consolidated basis, for the four
Quarters most recently ended prior to the date on which such
Subsidiary first became a Subsidiary not (directly or indirectly)
wholly-owned by the Borrower by (B) six and further by (C) a fraction,
the numerator of which is the number of shares of capital stock or
other equity, ownership or profit interests in such Subsidiary
directly or indirectly owned by the Borrower at such time and after
giving effect to any transaction then being consummated and the
denominator of which is the total number of all such shares and
interests outstanding at
<PAGE>
12
such time and after giving effect to any such transaction; provided,
however, that if the Borrower elects, in respect of any such
Subsidiary no later than the date that is 10 Business Days after such
Subsidiary first became a Subsidiary not (directly or indirectly)
wholly-owned by the Borrower, voluntarily to reduce the Facility
Amount effective as of such date in accordance with Section 2.05 by an
amount equal to the amount so determined, then the Guarantor Liability
Limit as to such Subsidiary (and only as to such Subsidiary) shall be
zero.
"GUARANTY" means the guaranty by the Borrower's Subsidiaries, except
Inactive Subsidiaries, delivered pursuant to Section 3.01(a) and each joinder
therein by any other Subsidiary of the Borrower and all Guarantor Confirmations,
guaranties, instruments and agreements at any time delivered by any Subsidiary
of the Borrower in respect of or in exchange or substitution for or in
replacement of such guaranty or to evidence its guaranty of payment of any of
the Obligations.
"HARD COSTS" means the direct costs of building, improving or maintaining
any Health Care Facility or other property used by the Borrower or any of its
Subsidiaries (including the cost of land, construction, bricks, mortar, painting
and related building maintenance, carpeting, roof repair and replacement,
parking lot replacement and maintenance, landscaping, HVAC equipment and
sprinkler systems and other items generally considered hard costs under
construction industry practice but not including the purchase price of an
existing Health Care Facility or any allocated overhead and administrative
expenses and other items generally considered soft costs under construction
industry practice) and the purchase price of any fixed, movable or mobile
equipment located on or used in connection with any such Health Care Facility or
otherwise used in conducting business if such equipment is or is required to be
reflected as property, plant and equipment on the consolidated balance sheet of
the Borrower and its Subsidiaries.
"HAZARDOUS MATERIALS" means (i) flammable explosives, radioactive
materials, friable asbestos, urea formaldehyde foam insulation, transformers or
other equipment that contain dielectric fluid containing regulated levels of
polychlorinated biphenyls and petroleum products, and (ii) chemicals, materials,
substances or wastes which are now or hereafter become defined as or included in
the definition, listing or identification of "hazardous substances," "hazardous
wastes," hazardous materials," "extremely hazardous wastes," "restricted
hazardous wastes," "toxic substances," "toxic pollutants," "medical waste,"
"infectious waste," "biomedical waste," "biohazardous waste," or words of
similar import, under any applicable Environmental Law.
"HEALTH CARE COMPANY" means a Person that is principally engaged, directly
or indirectly through its Subsidiaries, in the business of owning, operating or
managing Health Care Facilities or healthcare operations or providing healthcare
services.
<PAGE>
13
"HEALTH CARE FACILITY" means a facility which provides any healthcare
services, whether licensed as a skilled nursing facility, intermediate care
facility, personal care facility or a hospital or otherwise.
"HEALTH CARE PERMIT" means every accreditation, authorization, certificate
of need, license or permit that is required pursuant to applicable federal or
state law to own, lease, operate or manage a Health Care Facility or conduct the
business of a Health Care Company.
"INACTIVE SUBSIDIARY" means a Subsidiary of the Borrower that carries on no
business operations or other activities and has an aggregate capitalization of
$1,500 or less.
"INDEMNIFIED LIABILITIES" is defined in Section 8.06(a).
"INDEMNIFIED PERSON" is defined in Section 8.06(a).
"INTANGIBLE ASSETS" means, with respect to the Borrower and its
Subsidiaries on a consolidated basis, all assets properly classified as
intangible assets under GAAP, including goodwill, patents, copyrights,
trademarks, trade names, franchises, licenses, organization costs, deferred
charges, and deferred pre-opening costs, but excluding all intangible assets
classified as such under the provisions of Statements 87, 88 and 106 of the
Financial Accounting Standards Board relating to Accounting for Pensions and
Post- Retirement Benefits other than Pensions, so long as such intangible asset
has a related liability under GAAP of equal or substantially equal amount on the
consolidated balance sheet of the Borrower and its Subsidiaries as of the date
of determination.
"INTEREST&RENT COVERAGE RATIO" means the ratio, as of the last day of any
Quarter, of (A) EBITDAR of the Borrower and its Subsidiaries for the 12-month
period then ending to (B) the sum of Interest Expense, Receivables Program
Charges and Lease Expense counted in determining such EBITDAR.
"INTEREST EXPENSE" means, with respect to any Person, for any period for
such Person and its subsidiaries on a consolidated basis, interest expense net
of interest income, determined in conformity with GAAP.
"INTEREST PERIOD" means, for each Eurodollar Rate Advance comprising part
of the same Borrowing, the period commencing on the date of such Advance or the
date of the conversion of any Advance into such an Advance and ending on the
last day of the period selected by the Borrower pursuant to the provisions below
and, thereafter, each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the last day of the period
selected by the Borrower pursuant to the provisions below. The duration of each
such Interest Period shall be 1, 2, 3 or 6 months, as the Borrower may select by
<PAGE>
14
notice received by the Agent not later than 11:00 a.m. (New York City time)
three Business Days prior to the first day of such Interest Period; provided,
however, that:
(a) the Borrower may not select any Interest Period which ends after
the Maturity Date;
(b) the Borrower may not select any Interest Period which ends after
any date on which any payment on any Advances is due unless, after giving
effect to such selection, the aggregate unpaid principal amount of Base
Rate Advances and Eurodollar Rate Advances having Interest Periods which
end on or prior to such date is at least equal to the principal amount of
Advances due and payable on and prior to such date;
(c) Interest Periods commencing on the same date for Advances
comprising part of the same Borrowing shall be of the same duration;
(d) whenever the last day of any Interest Period would otherwise occur
on a day that is not a Business Day, the last day of such Interest Period
shall be extended to the next succeeding Business Day, except that if such
extension would cause the last day of such Interest Period to occur in the
next following calendar month, the last day of such Interest Period shall
be the next preceding Business Day; and
(e) the Borrower may not have more than 15 Interest Periods in effect
at any one time.
"INVESTMENT" means (i) the acquisition of any interest in any property,
assets or business from any Person, whether by sale, lease or otherwise, (ii)
the funding of any loan, extension of credit, accommodation or capital
contribution to or for the benefit of any Person, and (iii) the acquisition of
any debt or equity securities of or claim against or interest in any Person,
whether upon original issuance, by purchase or otherwise.
"LC APPLICATION" means an application for a Letter of Credit in
substantially the form of Exhibit B-3, setting forth the information described
therein and such other information as the LC Bank may reasonably request and
signed by an Authorized Officer.
"LC BANK" means The Bank of Nova Scotia and any Lender which agrees to
become, and is designated as, a replacement LC Bank pursuant to Section 2.02(g).
"LC CASH COLLATERAL ACCOUNT" means a general deposit account established at
and maintained by Citibank in the name of and for the benefit of the Agent on
behalf of the Lenders and under the exclusive dominion and control of the Agent.
<PAGE>
15
"LC EXPOSURE" means the sum, as of any date of determination, of the
Unfunded LC Exposure and the Funded LC Exposure.
"LC FEE RATE" means, for any day, the then Eurodollar Rate Margin less
0.025% per annum.
"LC SUBCOMMITMENT" means the lesser, as of any date of determination, of
(i) $100,000,000 and (ii) the Facility Amount.
"LEASE EXPENSE" means, with respect to any Person, for any period for such
Person and its subsidiaries on a consolidated basis, lease and rental expense
accrued during such period under all leases and rental agreements, other than
Capital Leases and leases of personal property, of Health Care Facilities,
determined in conformity with GAAP.
"LENDER" means each financial institution signatory hereto, including the
LC Bank, and any other financial institution that pursuant to Section 8.07
becomes a party to this Agreement.
"LETTER OF CREDIT" means a letter of credit that (i) is available for
funding in Dollars until an expiry date no later than the Maturity Date, (ii) is
issued by the LC Bank at the request and for the account of the Borrower, (iii)
is governed by the Uniform Customs and Practices for Documentary Credits (1994
Revision), International Chamber of Commerce Publication 500, except as
otherwise agreed by the LC Bank, and (iv) is in form reasonably satisfactory to
the LC Bank.
"LIEN" means any mortgage, deed of trust, lien, pledge, charge, security
interest, hypothecation, assignment, deposit arrangement or encumbrance of any
kind in respect of any asset, whether or not filed, recorded or otherwise
perfected or effective under applicable law, as well as the interest of a vendor
or lessor under any conditional sale agreement, capital or finance lease or
other title retention agreement relating to such asset.
"LOAN AVAILABILITY" means the difference, as of any date of determination,
between (i) the Facility Amount, and (ii) the Outstanding Revolving Credit.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Guaranty, the Letters
of Credit, the Collateral Documents, each Rate Contract and all other guaranties
and other agreements, instruments and written indicia of the Obligations
delivered to the Agent or any Lender by or on behalf of the Borrower or any
other Loan Party pursuant to or in connection with the transactions contemplated
hereby.
"LOAN PARTIES" means the Borrower and each Subsidiary of the Borrower that
is a party to any Loan Document.
<PAGE>
16
"MATERIAL ADVERSE CHANGE" means any materially adverse change in the
financial condition, assets, nature of the assets, liabilities, operations or
prospects of the Borrower and its Subsidiaries, taken as a whole.
"MATERIAL ENVIRONMENTAL CLAIM" means any Environmental Claim, regardless of
merit, which does or can reasonably be expected to (i) result in the Borrower or
any of its Subsidiaries expending in the aggregate an amount in excess of
$10,000,000 to defend against, settle or satisfy, or (ii) prevent or enjoin the
Borrower or any of its Subsidiaries from operating a Health Care Facility on any
property on which it conducts operations.
"MATERIAL LEASE" means any lease agreement with respect to a Health Care
Facility or Facilities for which during the most recent four Quarters either (i)
total revenues from such Health Care Facility or Facilities represent ten
percent or more of the consolidated revenues of the Borrower and its
Subsidiaries, or (ii) net income from the operation of such Health Care Facility
or Facilities represents ten percent or more of the consolidated net income of
the Borrower and its Subsidiaries.
"MATERIAL SUBSIDIARY" means each Subsidiary of the Borrower which has (i)
as of the end of the most recent Quarter, total assets (other than Intangible
Assets) representing ten percent or more of the consolidated total assets (other
than Intangible Assets) of the Borrower and its Subsidiaries, (ii) for the most
recent four Quarters, total revenues representing ten percent or more of the
consolidated revenues of the Borrower and its Subsidiaries, or (iii) for the
most recent four Quarters, net income representing ten percent or more of the
consolidated net income of the Borrower and its Subsidiaries.
"MATURITY DATE" means June 30, 2002.
"MINIMUM NET WORTH" means the sum, as of the last day of any Quarter, of
(i) $590,000,000 less up to $10,000,000 of extraordinary losses (determined in
accordance with GAAP) of the Borrower and its Subsidiaries on a consolidated
basis incurred at any time after December 31, 1995, plus (ii) 75% of the
aggregate net income (determined in accordance with GAAP) of the Borrower and
its Subsidiaries on a consolidated basis earned in the Quarter ended March 31,
1996 and in each Quarter thereafter, if net income was earned in such Quarter
(and not reduced for a net loss in any Quarter), plus (iii) 100% of all
additions to Adjusted Stockholders' Equity resulting at any time after December
31, 1995 from the sale or issuance of any common or preferred stock of the
Borrower, except upon conversion of any Convertible Subordinated Debt.
"MOODY'S" means Moody's Investor Service, Inc., and its successors.
"MULTIEMPLOYER PLAN" means any Plan which is a "multiemployer plan," as
defined in Section 4001(a)(3) of ERISA.
<PAGE>
17
"NET CASH PROCEEDS OF SALE" means, with respect to any Asset Sale, the Cash
Proceeds of Sale of such sale less (i) all reasonable brokerage, legal and
accounting fees and disbursements, and any governmental fees and taxes incurred
(or reasonably expected to be incurred) in connection with such sale which are
not payable to Affiliates of the Borrower (or, if to Affiliates, are in amounts
no greater than would be payable in an arm's-length transaction); (ii) any Debt
secured by the assets subject to such Asset Sale repaid with such proceeds (to
the extent such repayment is permitted under the Loan Documents); and (iii)
reserves against any liabilities incurred as a result of such Asset Sale
reflected on the balance sheet of the Borrower or any of its Subsidiaries in
accordance with GAAP; provided, however, that in the event any such reserve is
subsequently decreased, other than as a result of the accrual or payment of any
liability for which such reserve was established, Net Cash Proceeds of Sale with
respect to such Asset Sale shall be increased by a like amount.
"1934 ACT" means the Securities Exchange Act of 1934 and the regulations
thereunder.
"1992 CONVERTIBLE SUBORDINATED DEBT INDENTURE" means the Indenture, dated
as of December 1, 1992, between the Borrower, as Issuer, and Signet Trust
Company, as Trustee.
"1993 CONVERTIBLE SUBORDINATED DEBT INDENTURE" means the Amended and
Restated Supplemental Indenture dated as of September 15, 1994, between the
Borrower, as Issuer, and NationsBank of Virginia, N.A., as Trustee.
"1994 SUBORDINATED DEBT INDENTURE" means the Indenture dated as of July 1,
1994, between the Borrower, as Issuer, and Signet Trust Company, as Trustee.
"1995 SUBORDINATED DEBT INDENTURE" means the Indenture, dated as of May 15,
1995, between the Borrower, as Issuer and Signet Trust Company, as Trustee.
"1996 SUBORDINATED DEBT INDENTURE" means the Indenture to be entered into
after the Closing between the Borrower, as Issuer, and the trustee thereunder in
connection with the proposed senior subordinated note offering.
"NON-RECURRING CHARGES" means all charges against the income of a company
or facility acquired by the Borrower or one of its Subsidiaries that (i) were
taken by the owners of such company or facility prior to or concurrently with
the acquisition, on the initiative solely of such owners or their management or
accountants and without any demand or influence from the Borrower or any of its
Affiliates or any Person acting for any of them, and (ii) either (A) reflect the
direct costs of the acquisition, including fees and expenses of attorneys,
accountants, advisors, architects, engineers, consultants and agents, and
environmental and travel costs, or (B) are charges taken in the current year to
make adjustments for charges for accruals, bad debt provisions or valuation
allowances in a prior year, if (x) the charges in the current year would be
<PAGE>
18
entirely eliminated if the prior year's income was restated, in accordance with
GAAP, to reflect such adjustments, and (y) the Borrower provides such
information relating to the adjustments and the restatement of the prior year's
income as the Agent or Requisite Lenders may reasonably request.
"NOTES" means the promissory notes of the Borrower delivered pursuant to
Section 3.01(a) and all promissory notes and other evidence of indebtedness at
any time delivered by the Borrower in exchange or substitution therefor or in
replacement thereof or as additional evidence of the Borrower's indebtedness for
the Advances.
"NOTICE OF BORROWING" means a notice substantially in the form of Exhibit
B-1.
"NOTICE OF CONTINUANCE/CONVERSION" means a notice substantially in the form
of Exhibit B-2.
"OBLIGATIONS" means all present and future Debts, obligations and
liabilities of every type and description of the Borrower or any other Loan
Party at any time arising under or in connection with this Agreement, any other
Loan Document or any Rate Contract, due or to become due to the Agent, any
Lender, any Person required to be indemnified under any Loan Document or any
other Person and shall include (i) all liability for principal of and interest
on any Advances, (ii) all liability for principal of and interest on any
reimbursement owed to the LC Bank for a payment made by it under a Letter of
Credit, and (iii) all liability under the Loan Documents for any additional
interest, fees, taxes, compensation, costs, losses, expense reimbursements and
indemnification.
"OECD" means the Organization for Economic Cooperation and Development.
"OTHER TAXES" is defined in Section 2.16(b).
"OUTSTANDING REVOLVING CREDIT" means the sum, as of any date of
determination, of (i) the aggregate outstanding principal amount of the
Advances, and (ii) the LC Exposure.
"PARTIAL DISPOSITION LIMIT" means, in respect of any proposed Retained
Interest Sale in which the Retained Interest Criteria are not met, that (i) the
sum of (A) that portion of EBITDAR of the Borrower and its Subsidiaries
(determined for the four Quarters most recently ended prior to the consummation
of such Retained Interest Sale) that is attributable to the businesses and
entities that are to be sold or disposed of in such Retained Interest Sale, and
(B) the amount of such portion of EBITDAR of the Borrower and such Subsidiaries
so computed as of the time of each prior Retained Interest Sale in which the
Retained Interest Criteria were not met is less than (ii) 15% of EBITDAR of the
Borrower and such Subsidiaries for the four Quarters most recently ended prior
to the consummation of such proposed Retained Interest Sale.
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19
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any of its functions under ERISA.
"PENSION PLAN" means any Plan which is (i) an "employee pension benefit
plan" as defined in Section 3(2) of ERISA and (ii) not a Multiemployer Plan.
"PERMITTED CASH INVESTMENTS" means:
(a) securities issued or fully guaranteed or insured by the United
States Government or any agency thereof and backed by the full faith and
credit of the United States maturing not more than one year from the date
of acquisition;
(b) certificates of deposit, time deposits, Eurodollar time deposits,
bankers' acceptances or deposit accounts having in each case a remaining
term to maturity of not more than one year, which are either (i) fully
insured by the Federal Deposit Insurance Corporation or (ii) issued by any
Lender or by any commercial bank under the laws of any State or any
national banking association that has combined capital and surplus of not
less than $800,000,000 and whose short-term securities are rated at least
A-1 by S&P or P-1 by Moody's;
(c) commercial paper that is rated at least A-1 by S&P or P-1 by
Moody's, issued by a company that is incorporated under the laws of the
United States or of any State and directly issues its own commercial paper,
and has a remaining term to maturity of not more than one year;
(d) a repurchase agreement with (i) any commercial bank that is
organized or licensed under the laws of any State or any national banking
association and that has total assets of at least $1,000,000,000, or (ii)
any investment bank that is organized under the laws of any State and that
has total assets of at least $1,000,000,000, if such agreement is secured
by any one or more of the securities and obligations described in clauses
(a), (b) or (c) of this definition having a market value (exclusive of
accrued interest and valued at least monthly) at least equal to the
principal amount of such investment;
(e) any money market or other investment fund the investments of which
are limited to investments described in clauses (a), (b), (c) and (d) of
this definition and which is managed by (i) a commercial bank that is
organized under the laws of any State or any national banking association
and that has total assets of at least $1,000,000,000, or (ii) an investment
bank that is organized under the laws of any State and that has total
assets of at least $1,000,000,000;
<PAGE>
20
(f) obligations, debentures, notes, bonds or other evidences of
indebtedness rated at least A- by S&P or A3 by Moody's, so long as the
aggregate amount of investments held under this clause (f) does not exceed
25% of the total amount then invested by the Borrower and its Subsidiaries
in Permitted Cash Investments;
(g) investments in investment grade auction rate and adjustable rate
preferred equities for issuers whose actual or implied senior long-term
debt is rated at least A- by S&P or A3 by Moody's;
(h) investments in investment grade fixed rate preferred equities for
issuers whose actual or implied senior long-term debt is rated at least A-
by S&P or A3 by Moody's, so long as the aggregate amount of investments
held under this clause (h) does not exceed 10% of the total amount invested
by the Borrower and its Subsidiaries in Permitted Cash Investments;
(i) adjustable rate mortgage-backed securities rated at least AA by
S&P or Aa by Moody's; and
(j) fixed rate mortgage-backed securities rated at least AA by S&P or
Aa by Moody's, so long as the aggregate amount of investments held under
this clause (j) does not exceed 25% of the total amount invested by the
Borrower and its Subsidiaries in Permitted Cash Investments.
"PERMITTED LIENS" means Liens permitted under Section 5.03(a).
"PERSON" means an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture or other entity, or a government or any political subdivision or
agency thereof.
"PLAN" means any "employee benefit plan" as defined in Section 3(3) of
ERISA (i) which the Borrower or any ERISA Affiliate maintains, administers,
contributes to or is required to contribute to, or, within the six years prior
to the Closing Date, maintained, administered, contributed to or was required to
contribute to, or under which the Borrower or any ERISA Affiliate may incur any
liability and (ii) which covers any employee or former employee of the Borrower
or any ERISA Affiliate (with respect to their relationship with such entities).
"PLEDGE AND SECURITY AGREEMENTS" means the pledge and security agreements
executed by the Borrower and certain of the Borrower's Subsidiaries and
delivered pursuant to Section 3.01(a) and each joinder therein by any other
Subsidiary of the Borrower and each other security agreement at any time
delivered by the Borrower or any Subsidiary of the Borrower to create a Lien
that secures any of the Obligations.
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21
"POTENTIAL DEFAULT" means any event or condition described in Section 6.01
which, with any notice or passage of time (or both) expressly described in
Section 6.01, would constitute an Event of Default.
"PRICING CERTIFICATE" means a certificate in substantially the form of
Exhibit B-4.
"PRICING PERIOD" means the period that commences on the Closing Date and
ends on August 20, 1996, and each consecutive period thereafter that commences
on the expiration of the prior period and ends on the 20th day of the next
following November, February, May or August.
"PRICING RATIO" means, for any Pricing Period, the Debt/EBITDAR Ratio as of
the Pricing Test Date for such Pricing Period. If a Pricing Certificate for the
Pricing Test Date for a particular Pricing Period is not delivered prior to the
commencement of such Pricing Period, then until (but only until) the Business
Day on which such Pricing Certificate is delivered to the Agent, the Pricing
Ratio shall be deemed to be the Pricing Ratio for the immediately preceding
Pricing Period.
"PRICING TEST DATE" means, for a particular Pricing Period, the last day of
the Quarter most recently ended prior to the commencement of such Pricing
Period.
"PRO RATA SHARE" means, in respect of any Lender, the ratio of (i) such
Lender's commitment to participate in the extension of credit hereunder, to (ii)
all such commitments, expressed as a percentage, as set forth in Schedule I or,
if such Lender has entered into one or more Assignments and Acceptances, in the
Register.
"PURCHASE LIMIT" is defined in Section 5.03(h).
"PURCHASERS' AGGREGATE NET INVESTMENT" means the net unrecovered investment
in the accounts receivable of the Borrower and its Subsidiaries, and proceeds
thereof, held by the purchasers in any Receivables Sale Program or their
transferees, without counting any Receivables Program Charges.
"QUALIFIED PLAN" means a pension plan (as defined in Section 3(2) of ERISA)
intended to be tax-qualified under Section 401(a) of the Code and which the
Borrower or any ERISA Affiliate sponsors, maintains, or to which it makes or is
obligated to make contributions, or in the case of a multiple employer plan (as
described in Section 4064(a) of ERISA) has made contributions at any time during
the immediately preceding period covering at least five plan years, but
excluding any Multiemployer Plan.
"QUARTER" means, with respect to any Person, a fiscal quarter of such
Person.
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22
"QUARTER-END EXCESS CASH" means the excess, determined as of the last day
of any Quarter (but only if it is a positive number), of (i) cash and Permitted
Cash Investments held by the Borrower and its Subsidiaries, less (ii) 2% of the
sum of the following operating expenses of the Borrower and its Subsidiaries for
the 12-month period then ending, determined and recorded in accordance with the
Borrower's current practice: "salaries, wages and benefits," "corporate,
administrative and general" and "other operating expenses."
"RATE CONTRACT" means any interest rate swap agreement, cap, floor or
collar agreement, interest rate insurance or other agreement or arrangement
designed to provide protection against fluctuations in interest rates entered
into by the Borrower and the Agent or any Lender.
"RECEIVABLES PROGRAM CHARGES" means the discount or yield of any
Receivables Sale Program and all program and administrative costs, back-stop
costs and other related costs, fees and expenses incurred by or charged to the
Borrower or any of its Subsidiaries, and when determined for any period shall
include all such discount, yield, costs, fees and expenses accrued or amortized
during such period.
"RECEIVABLES SALE PROGRAM" means a sale or other disposition of an interest
in the accounts receivable of any of the Borrower's Subsidiaries and the
proceeds thereof and records related thereto to one or more purchasers or
investors, if the sale or other disposition (i) is made without recourse to the
seller, (ii) is not guaranteed by the Borrower or any of its Subsidiaries,
except a guaranty that the seller will perform its obligations in respect of its
representations and warranties, indemnities and servicing commitments, and (iii)
is structured so that the Purchasers' Aggregate Net Investment in respect of any
and all such accounts receivable and proceeds outstanding at any one time will
not exceed $100,000,000.
"REFERENCE BANKS" means Citibank, Bank of America, N.T.&S.A. and
NationsBank, N.A. (Carolinas).
"REGISTER" is defined in Section 8.07(c).
"REPORTABLE EVENT" means any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder, a withdrawal from a plan described in
Section 4063 of ERISA or a cessation of operations described in Section 4062(e)
of ERISA.
"REQUISITE LENDERS" means Lenders at the time in the aggregate holding more
than 66 2/3% in Pro Rata Shares.
"RETAINED INTEREST" means the stock or equity, ownership or profit interest
which the Borrower or any Subsidiary of the Borrower retains, acquires or has
the right to acquire in any Retained Interest Sale.
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23
"RETAINED INTEREST CRITERIA" means, in respect of any Retained Interest and
the assets, operations, governance, income and profits of any business or entity
to which such Retained Interest directly or indirectly relates, each and all of
the following requirements:
(i) The Borrower or a wholly-owned Subsidiary of the Borrower must
have the exclusive right and power, subject to duties imposed by law, to
manage and control the ordinary business operations and assets of such
business or entity and freely to control and distribute the cash, income,
profits, and asset sale proceeds of such entity or business and, as to any
such entity that is a Subsidiary of the Borrower, to borrow from such
entity;
(ii) The Borrower or a wholly-owned Subsidiary of the Borrower must
effectively have the exclusive right and power, subject to duties imposed
by law, to determine whether, when and on what terms such business or
entity shall be financed, sold, dissolved, liquidated or merged and to make
all other decisions requiring approval of the owners of such business or
entity, either by reason of lawful and enforceable provisions in the
governing documents for such entity or under a voting trust arrangement, an
irrevocable proxy, an option to acquire or sell the interests of all other
Persons that hold or have the right to acquire an equity or ownership
interest in such business or entity, or other similar arrangements;
(iii) The exercise of such rights and powers by the Borrower or its
wholly-owned Subsidiary must not be barred, limited or restricted by
contract or agreement, except for provisions requiring performance of
duties imposed by law;
(iv) The terms on which the requirements in clauses (i), (ii) and
(iii) herein are met must be such that the Borrower or a wholly-owned
Subsidiary of the Borrower has the exclusive right and power to maintain
such conditions for as long as the Borrower or any Subsidiary of the
Borrower holds such Retained Interest;
(v) At the consummation of the transaction in which such Retained
Interest was kept or acquired, each Subsidiary of the Borrower to which
such Retained Interest directly or indirectly relates must reaffirm its
liability under the Guaranty by executing a Guarantor Confirmation setting
forth its Guarantor Liability Limit after giving effect to such transaction
and each other Guarantor must confirm its consent and agreement thereto by
executing such Guarantor Confirmation;
(vi) No later than the tenth Business Day following the consummation
of the transaction in which such Retained Interest was kept or acquired,
the Borrower must deliver to the Agent and Lenders written notice of the
structure and material terms of the agreements and arrangements relating to
the foregoing and the Retained Interest and related Retained Interest Sale,
accompanied by:
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24
(A) A certificate of an Authorized Officer of the Borrower
stating that at the time of such consummation the Retained Interest
Criteria were met in respect of such transaction, and
(B) A Guarantor Confirmation signed by the Guarantors, setting
forth the Guarantor Liability Limit of each Subsidiary affected by
such transaction, after giving effect to such transaction; and
(vii) The Borrower must not receive from the Requisite Lenders, within
20 Business Days after such notice, certificate and Guarantor Confirmation
were delivered to the Agent and Lenders, a written statement to the effect
that, in the opinion of the Lenders giving such notice and for reasons
generally set forth in such statement (which opinion, reasons and statement
shall be conclusive and binding on the Borrower and the other Loan Parties
if held, determined and presented by such Lenders in good faith), either:
(A) The Retained Interest Criteria are not met in respect of such
transaction, or
(B) Such Lenders notified the Borrower at least five Business
Days prior to the date of such statement that the Guarantor Liability
Limit of any Subsidiary affected by such transaction, after giving
effect to such transaction, was not properly determined, set forth or
acknowledged in the Guarantor Confirmation so delivered, and a
Guarantor Confirmation properly determining, setting forth and
acknowledging such Guarantor Liability Limit, duly executed by such
Subsidiary and all other Guarantors, was not received by the Agent and
Lenders within five Business Days after such notice was given to the
Borrower.
"RETAINED INTEREST SALE" means a sale or other disposition of less than all
of the stock of or other equity, ownership or profit interest in a Subsidiary,
or less than the entire ownership of any business, asset or entity, that was
directly or indirectly owned by the Borrower or any of its Subsidiaries on the
Closing Date or any Asset Sale, merger, consolidation, sale and repurchase,
exchange or other transaction in which, after giving effect to such transaction
and all related transactions, the Borrower or any of its Subsidiaries directly
or indirectly retains or acquires or has the right to acquire any stock of or
any equity, ownership or profit interest in any such Subsidiary, business, asset
or entity.
"SCHEDULE 1.01(B) ASSETS" means the assets described in Schedule 1.01(b)
and owned by the Borrower or any wholly-owned Subsidiary thereof and designated
for sale thereby.
"SCHEDULE 1.01(C) ASSETS" means the assets described in Schedule 1.01(c)
and owned by the Borrower or any wholly-owned Subsidiary thereof and designated
for sale thereby.
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25
"S&P" means Standard & Poor's Ratings Group, a division of McGraw-Hill
Corporation, and its successors.
"SPECIFIED LEASE EXPENSE" means, with respect to any Person, for any
period, Lease Expense of such Person for such period less that portion of such
Lease Expense representing payments for real estate and personal property taxes
and insurance.
"STATE" means the District of Columbia or any state of the United States of
America.
"SUBORDINATED DEBT" means the Debt outstanding under the Subordinated Debt
Indentures.
"SUBORDINATED DEBT INDENTURES" means the 1992 Convertible Subordinated Debt
Indenture, the 1993 Convertible Subordinated Debt Indenture, the 1994
Subordinated Debt Indenture, the 1995 Subordinated Debt Indenture and, upon the
effectiveness thereof, the 1996 Subordinated Debt Indenture.
"SUBSIDIARY" means, with respect to any Person, any corporation,
association, partnership, joint venture or other business entity of which more
than 50% of the voting stock or other equity interests is owned or controlled
directly or indirectly by such Person or one or more Subsidiaries of such Person
or a combination thereof.
"TANGIBLE ASSETS" means the difference, as of any date of determination,
between (i) the total consolidated assets of the Borrower and its Subsidiaries
as determined in accordance with GAAP and required under GAAP to be shown on a
consolidated balance sheet of the Borrower and its Subsidiaries, and (ii) all
such assets that are Intangible Assets.
"TAXES" is defined in Section 2.16(a).
"TERMINATION DATE" means the Maturity Date or such earlier date as the
commitments of the Lenders to extend credit under this Agreement shall be
terminated in whole pursuant to Section 2.05 or the obligation of each Lender to
make Advances and the LC Bank to issue Letters of Credit shall be terminated
pursuant to Section 6.01.
"'34 ACT COMPANY" means a Person that is a reporting company under the 1934
Act.
"UNFUNDED LC EXPOSURE" means the maximum amount which the LC Bank may be
required, under all Letters of Credit outstanding as of any date of
determination, to pay on such date or at any future time.
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26
"UNFUNDED PENSION LIABILITY" means, with respect to any Pension Plan that
is subject to Title IV of ERISA, the excess of such Pension Plan's accrued
benefits, as defined in Section 3(23) of ERISA, over the current value of such
Pension Plan's assets, as defined in Section 3(26) of ERISA (but excluding from
the definition of "current value" of "assets" of such Pension Plan, accrued but
unpaid contributions).
"UNITED STATES" and "U.S." mean the United States of America.
"WELFARE PLAN" means any Plan which is an "employee welfare benefit plan"
as defined in Section 3(1) of ERISA.
"WITHDRAWAL LIABILITIES" means the aggregate amount of the liabilities, if
any, pursuant to Section 4201 of ERISA if the Borrower and each ERISA Affiliate
made a complete withdrawal from all Multiemployer Plans and any increase in
contributions pursuant to Section 4243 of ERISA.
SECTION 1.02. Accounting Terms. All accounting terms not expressly defined
herein shall be construed, except where the context otherwise requires, and all
financial computations required under this Agreement shall be made in accordance
with GAAP applied on a consistent basis. If GAAP changes during the term of this
Agreement so as to affect the calculation of any term defined herein or any
measure of financial performance or financial condition employed or referred to
herein, the Borrower and the Lenders agree to negotiate in good faith toward an
amendment of this Agreement which shall approximate, to the extent possible, the
economic effect of the original provisions hereof after taking into account such
change in GAAP, but until the parties are able to agree upon such amendment (i)
the Borrower shall be deemed in compliance with the provisions hereof only if
and to the extent it would have been in compliance if such change in GAAP had
not occurred and (ii) the Borrower shall deliver to the Agent, with each
financial report delivered by the Borrower hereunder, information sufficient to
confirm such compliance as if such change in GAAP had not occurred.
SECTION 1.03. Other Definitional Provisions. (a) Unless otherwise specified
herein or therein, all terms defined in this Agreement shall have the defined
meanings when used in any other Loan Document or in any certificate or other
document made or delivered pursuant hereto.
(b) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement, and section, schedule and exhibit
references are to this Agreement unless otherwise specified. The meaning of
defined terms shall be equally applicable to the singular and plural forms of
the defined terms. The term "including" is not limiting and means "including
without limitation."
<PAGE>
27
(c) In the computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including"; the words "to" and
"until" each mean "to but excluding"; and the word "through" means "to and
including."
(d) References to agreements and other documents shall be deemed to include
all subsequent amendments and other modifications thereto, but only to the
extent such amendments and other modifications are not prohibited by the terms
of any Loan Document.
(e) References to statutes or regulations shall be construed as including
all statutory and regulatory provisions consolidating, amending or replacing the
statute or regulation.
(f) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the construction of this Agreement.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. Revolving Facility. (a) Advances. Subject to the terms and
conditions herein, each Lender severally agrees to lend to the Borrower, from
time to time on any Borrowing Date until the Termination Date, an amount in
Dollars equal to such Lender's Pro Rata Share of a Borrowing that (i) is
requested by the Borrower for such Borrowing Date and (ii) when aggregated with
all other Lenders' Pro Rata Shares, does not exceed the Loan Availability as of
such Borrowing Date.
(b) Borrowings. Each Borrowing shall be in an aggregate amount not less
than $1,000,000 or an integral multiple of $500,000 in excess thereof and shall
consist of either Base Rate Advances or Eurodollar Rate Advances. The Borrower
may reborrow under Section 2.01(a) any Advances that it has voluntarily prepaid
pursuant to Section 2.11 or was required to prepay pursuant to Section 2.06(e).
(c) Notice of Borrowing. To request a Borrowing, the Borrower shall deliver
a Notice of Borrowing to the Agent not later than 11:00 a.m. New York City time
(i) three Business Days prior to the requested Borrowing Date, in the case of
Eurodollar Rate Advances, and (ii) one Business Day prior to the requested
Borrowing Date, in the case of Base Rate Advances. The Agent shall give each
Lender prompt notice thereof by telecopier, telex or cable. The Notice of
Borrowing shall specify (A) the requested Borrowing Date, (B) the amount of the
Borrowing and whether it will consist of Base Rate Advances or Eurodollar Rate
Advances, and (C) in the case of a Borrowing comprised of Eurodollar Rate
Advances, the initial Interest Period for such Eurodollar Rate Advances.
<PAGE>
28
(d) Telephonic Notice of Borrowing. The Borrower may give the Agent
telephonic notice of any proposed Borrowing by the time required under Section
2.01(c) and in such event shall promptly (but in no event later than the
Borrowing Date for the requested Borrowing) deliver a confirmatory Notice of
Borrowing to the Agent. The Agent shall give each Lender prompt notice thereof
by telecopier, telex or cable. If the telephonic request differs in any respect
from the written Notice of Borrowing subsequently delivered, the telephonic
request shall govern as to the terms of all Advances made in accordance with
such telephonic request. The Agent's determination of the contents of any
telephonic request shall, absent manifest error, be conclusive and binding on
all parties hereto.
(e) Funding of Advances. Upon fulfillment of the applicable conditions set
forth in Article III, each Lender shall, before 12:00 noon New York City time on
the Borrowing Date, make available for the account of its Applicable Lending
Office to the Agent at its address referred to in Section 8.02, in same day
funds, such Lender's Pro Rata Share of a Borrowing. After the Agent receives
such funds, the Agent will, not later than 5:00 p.m. New York City time on the
Borrowing Date, make such funds available to the Borrower at the Agent's
aforesaid address.
(f) Notice of Borrowing Irrevocable. Each Notice of Borrowing and
telephonic request shall be irrevocable and binding on the Borrower.
(g) Assumption of Funding. Unless the Agent receives notice from a Lender
prior to any Borrowing Date that such Lender will not make available to the
Agent such Lender's Pro Rata Share of the Borrowing to be made on such Borrowing
Date, the Agent may assume that such Lender has made its Pro Rata Share
available to the Agent on such Borrowing Date in accordance with Section 2.01(e)
and the Agent may, in reliance upon such assumption, make available to the
Borrower on such Borrowing Date a corresponding amount. If and to the extent
that such Lender fails to make its Pro Rata Share available to the Agent, such
Lender and the Borrower severally agree to repay to the Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to the Agent, at (i) in the case of the Borrower, the interest
rate applicable at the time to such Borrowing and (ii) in the case of such
Lender, the Federal Funds Rate until the third Business Day after demand by the
Agent to such Lender for such repayment and thereafter at the rate applicable at
the time to such Borrowing. If such Lender shall repay to the Agent such
corresponding amount, such amount so repaid shall constitute such Lender's
Advance as part of such Borrowing for purposes of this Agreement and the
Borrower shall thereupon be excused from making the repayment described in the
preceding sentence.
(h) Failure of Lender to Fund. All obligations of the Lenders hereunder
shall be several, but not joint. The failure of any Lender to make the Advance
to be made by it as part of any Borrowing shall not relieve any other Lender of
its obligation, if any, hereunder to make
<PAGE>
29
its Advance as part of such Borrowing, but no Lender shall be responsible for
the failure of any other Lender to make an Advance on any Borrowing Date.
SECTION 2.02. Letter of Credit Subfacility. (a) Issuance of the Letters of
Credit. Subject to the terms and conditions set forth herein, the LC Bank agrees
to issue one or more Letters of Credit, at the request and for the account of
the Borrower, on any Business Day on or after the Closing Date and prior to the
Termination Date, so long as (i) after giving effect to the issuance of any
Letter of Credit so requested, (A) the Outstanding Revolving Credit does not
exceed the then Facility Amount, and (B) the LC Exposure does not exceed the
then LC Subcommitment, and (ii) the LC Bank has not received written notice from
the Agent or Requisite Lenders that an Event of Default or Potential Default is
continuing.
(b) LC Application. The Borrower may request issuance of a Letter of Credit
by delivering an LC Application to the Agent not later than two Business Days
prior to the date the Letter of Credit is to be issued. The Agent shall promptly
deliver a copy of the LC Application to the LC Bank and each Lender.
(c) Reimbursement. Any payment made by the LC Bank of a draft drawn under
any Letter of Credit shall constitute for all purposes of this Agreement the
making by the LC Bank of an Advance in the amount of such draft, which Advance
shall (i) constitute a Base Rate Advance until converted, at the Borrower's
election, into a Eurodollar Rate Advance pursuant to Section 2.10, and (ii)
satisfy the Borrower's obligation to reimburse the LC Bank under this Section
2.02 . With respect to each Advance made pursuant to this Section 2.02(c), the
Borrower shall be deemed to have certified the statements contained in Section
3.02(b) as of the date the payment constituting such Advance was made by the LC
Bank; provided that in the event any such statement was not true and correct as
of such date, such Advance shall be repayable on demand; provided further that
upon any such repayment on demand, the failure of any such statement to be true
and correct as of such date shall not constitute an Event of Default under
Section 6.01, unless the failure of any such statement to be true and correct as
of such date would have constituted an Event of Default under Section 6.01 even
if such repaid Advance had never been made.
(d) Reimbursement Obligation Absolute. The obligation of the Borrower to
reimburse the LC Bank for each payment made by the LC Bank under any Letter of
Credit, and to pay interest thereon as provided herein, shall be absolute,
unconditional and irrevocable and shall be performed strictly in accordance with
the terms of this Agreement under and without regard to any circumstances,
including (i) any lack of validity or enforceability of any of the Loan
Documents; (ii) any amendment or waiver of or any consent to departure from all
or any terms of any of the Loan Documents; (iii) the existence of any claim,
setoff, defense or other right which the Borrower may have at any time against
any beneficiary or any transferee of any Letter of Credit (or any Persons for
whom any such beneficiary or transferee may be acting), the LC Bank, the Agent,
any Lender or any other Person, whether in connection with this Agreement, the
<PAGE>
30
transactions contemplated herein or any unrelated transaction; (iv) any breach
of contract or dispute among or between the Borrower, the Agent, the LC Bank,
any Lender, or any other Person; (v) any demand, statement, certificate, draft
or other document presented under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect; (vi) payment by the LC Bank under any
Letter of Credit against presentation of any demand, statement, certificate,
draft or other document which does not strictly comply with the terms of any
Letter of Credit; (vii) any non-application or misapplication by any beneficiary
or transferee of the proceeds of any amount paid under anyLetter of Credit or
any other act or omission of such beneficiary or such transferee in connection
with any Letter of Credit; (viii) any extension of time for or delay, renewal or
compromise of or other indulgence or modification granted or agreed to by the LC
Bank, the Agent or any Lender, with or without notice to or approval by the
Borrower; (ix) any failure to preserve or protect any Collateral, any failure to
perfect or preserve the perfection of any Lien thereon, or the release of any
Collateral; or (x) any other circumstance or event whatsoever relating to the
Borrower or such Letter of Credit or the reimbursement due therefor, whether or
not similar to any of the foregoing.
(e) Lender Participation. Each Lender severally agrees to participate with
the LC Bank in the extension of credit arising from the issuance of any Letter
of Credit in conformity with Section 2.02(a), in an amount equal to such
Lender's Pro Rata Share of the amount available for payment under such Letter of
Credit. Upon written demand by the LC Bank, with a copy of such demand to the
Agent, each Lender shall promptly fund its participation by paying to the LC
Bank Dollars in an amount equal to such Lender's Pro Rata Share of the payment
made by the LC Bank under any Letter of Credit, together with all interest
accrued and unpaid thereon for the period from the day on which the payment to
be reimbursed was demanded by the LC Bank until the Business Day on which such
funding from such Lender is received by the LC Bank at the rate per annum equal
to the Federal Funds Rate until the second Business Day following such demand,
and thereafter the rate per annum then applicable to Base Rate Advances. Upon
funding its participation in accordance with this Section 2.02(e), each Lender
shall be deemed to have made an Advance as of the date the relevant Letter of
Credit was drawn, and the Advance deemed pursuant to Section 2.02(c) to have
been made by the LC Bank upon any such payment shall be reduced, in an amount
equal to such Lender's participation. Each Lender's obligation to make such
payment to the LC Bank shall be absolute, unconditional and irrevocable and
shall not be affected by any circumstance whatsoever, including the occurrence
or continuance of any Potential Default or Event of Default, the failure to meet
any condition that otherwise must be met for the funding of any Advance, or the
failure of any other Lender to make any payment under this Section 2.02(e), and
each Lender further agrees that such payment shall be made without any offset,
abatement, withholding or reduction whatsoever. If after receipt of such funding
from any Lender the LC Bank receives payment from the Borrower or any other
source on account of the reimbursement obligation that was so funded, or the
interest accrued thereon, the LC Bank shall promptly remit such payment to the
Agent for prompt distribution to the Lenders to the extent of their
participation therein.
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(f) Commercial Practices. The Borrower assumes all risks of the acts or
omissions of any beneficiary or transferee of any Letter of Credit with respect
to the use of any Letter of Credit. The Borrower agrees that the LC Bank, the
Agent, the Lenders and their respective directors, officers or employees shall
not be liable or responsible for (i) the use which may be made of any Letter of
Credit or for any acts or omissions of any beneficiary or transferee in
connection therewith; (ii) any reference which may be made to this Agreement or
to any Letter of Credit in any agreements, instruments or other documents; (iii)
the validity, sufficiency or genuineness of any document other than a Letter of
Credit, or of any endorsement thereon, even if such document or endorsement
should in fact prove to be in any or all respects invalid, insufficient,
fraudulent or forged or any statement therein prove to be untrue or inaccurate
in any respect whatsoever; (iv) payment by the LC Bank against presentation of
documents which do not strictly comply with the terms of any Letter of Credit;
or (v) any other circumstances whatsoever in making or failing to make payment
under any Letter of Credit, except only that the LC Bank shall be liable to the
Borrower for acts or events described in clauses (i) through (v) above, to the
extent, but only to the extent, of any direct (as opposed to indirect, special
or consequential) damages suffered by the Borrower which the Borrower proves
were caused by (A) the LC Bank's willful misconduct or gross negligence in
determining whether a draft or demand presented under any Letter of Credit
strictly complies with the terms and conditions therefor stated in such Letter
of Credit or (B) the LC Bank's willful failure to pay any draft or demand
presented under any Letter of Credit that strictly complies with the terms and
conditions thereof. The LC Bank may accept any document that appears on its face
to be in order, without responsibility for further investigation. The
determination whether a draft or demand is properly presented under any Letter
of Credit prior to its expiration or whether a draft or demand presented under
any Letter of Credit is in proper and sufficient form may be made by the LC Bank
in its sole discretion, and such determination shall be conclusive and binding
upon the Borrower to the extent permitted by law. The Borrower hereby waives any
right to object to any payment made under any Letter of Credit on presentation
of any draft or demand that is in the form provided in the Letter of Credit but
varies with respect to punctuation, capitalization, spelling or similar matters
of form.
(g) Replacement of LC Bank. The Borrower may at any time, upon at least
five Business Days' prior written notice to the Agent and Lenders, designate as
a replacement LC Bank any Lender that has agreed in writing to act as LC Bank.
Thereupon, (i) the obligation, right and authority of the Lender that was
previously acting as LC Bank to issue Letters of Credit hereunder shall be
terminated, (ii) such Lender shall remain entitled to enforce all provisions
hereof applicable to all Letters of Credit theretofore issued by or requested
from such Lender, and (iii) the Lender designated as the replacement LC Bank
shall thenceforth issue Letters of Credit on the terms and subject to the
conditions herein.
SECTION 2.03. Promissory Notes. (a) Notes. The Advances made by each Lender
shall be evidenced by the Notes delivered pursuant to Section 3.01(a).
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(b) Recording of Amounts. Each Lender is hereby authorized (but shall not
be obligated), at its option, to either (i) endorse the date and amount of each
Advance made by such Lender and each payment of principal of Advances made on
such Lender's Note on a schedule annexed to and constituting a part of such Note
or (ii) record such Advances and payments in its books and records, and such
schedule or such books and records, as the case may be, shall constitute prima
facie evidence of the accuracy of the information contained therein.
SECTION 2.04. Fees. (a) Closing Fees. On the Closing Date, the Borrower
will pay to the Agent, for account of the Lenders, the closing fees described in
Schedule 2.04(a).
(b) Commitment Fees. On the first day of each Quarter, commencing July 1,
1996 and continuing thereafter until the Facility Amount is permanently reduced
to zero, and on the Termination Date, the Borrower shall pay to the Agent, for
the account of the Lenders in accordance with their Pro Rata Shares, a
commitment fee computed by applying the Commitment Fee Rate to the difference,
from day to day in the prior Quarter or partial Quarter, as the case may be,
between (i) the sum of (A) the then Facility Amount and (B) the then Purchasers'
Aggregate Net Investment, less (ii) the then Outstanding Revolving Credit.
(c) Letter of Credit Fees. On the first day of each Quarter, commencing
July 1, 1996 and continuing thereafter until the Facility Amount and Unfunded LC
Exposure have both been reduced to zero, and on the Termination Date, the
Borrower shall pay to the Agent for the account of the Lenders in accordance
with their Pro Rata Shares a letter of credit fee computed by applying the LC
Fee Rate to the Unfunded LC Exposure from day to day in the prior Quarter or
partial Quarter, as the case may be.
(d) Facing Fees. On the first day of each Quarter, commencing July 1, 1996
and continuing thereafter until the Facility Amount and Unfunded LC Exposure
have both been reduced to zero, and on the Termination Date, the Borrower shall
pay to the Agent for the account of the LC Bank a facing fee computed by
applying 0.125% per annum to the Unfunded LC Exposure from day to day in the
prior Quarter or partial Quarter, as the case may be.
(e) Letter of Credit Administration. The Borrower shall pay the LC Bank's
usual and customary charges for opening, amending or honoring any Letter of
Credit and for any wire transfers.
(f) Agent's Fees. The Borrower shall pay when due all fees payable under
the Fee Letter.
(g) Contingent Fees. The Borrower shall pay to the Agent, for the account
of the Lenders, when due the contingent fees payable under the Fee Letter.
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33
SECTION 2.05. Voluntary and Scheduled Facility Reductions. (a) The Borrower
at any time may terminate in whole, and from time to time may reduce ratably in
part, the unused portions of the commitments of the Lenders to extend credit
hereunder, by giving the Agent at least three Business Days' prior written
notice that, effective as of a Business Day set forth in the notice, the
Facility Amount shall be reduced by an amount that (i) does not exceed the Loan
Availability as of such Business Day and (ii) is equal to either (A) the then
Facility Amount or (B) an integral multiple of $1,000,000. Such notice, once
given, shall be irrevocable, and the Facility Amount, once reduced, may not be
increased under any circumstances.
(b) The Facility Amount shall be automatically and permanently reduced (i)
on June 30, 2000 to $560,000,000, (ii) on June 30, 2001 to $315,000,000 and
(iii) on the Termination Date as provided in Section 2.06(a) below.
SECTION 2.06. Principal Payments. The Borrower agrees to repay the Advances
and reduce the Facility Amount as follows:
(a) Final Maturity. On the Termination Date, all outstanding Advances
shall be due and payable and the Facility Amount and LC Subcommitment shall
be automatically and permanently reduced to zero.
(b) Excess Revolving Credit Exposure. If at any time, by reason of any
voluntary or mandatory Facility Reduction or for any other reason, the
Outstanding Revolving Credit exceeds the then Facility Amount, the Borrower
shall immediately, without notice or demand, repay Advances or, if no
Advances are outstanding, deposit Dollars to the LC Cash Collateral
Account, in an amount equal to such excess.
(c) Excess LC Exposure. If at any time, by reason of any voluntary or
mandatory Facility Reduction or for any other reason, the LC Exposure
exceeds the then LC Subcommitment, the Borrower shall immediately deposit
Dollars in an amount equal to such excess to the LC Cash Collateral
Account.
(d) Payment on Date of Change of Control. If, within the period
commencing on the date of a Change of Control and ending 30 Business Days
after the Borrower gives the Agent written notice of such Change of
Control, the Requisite Lenders shall demand in writing that the Borrower
repay all Advances, then on the 30th day following such demand (i) all
Advances then outstanding shall be due and payable in full, and (ii) the
Facility Amount and the LC Subcommitment shall be automatically and
permanently reduced to zero; and if any LC Exposure remains outstanding on
such day the Borrower on such day shall deposit Dollars to the LC Cash
Collateral Account as necessary to cause the amount on deposit therein to
be equal to the then LC Exposure.
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34
(e) Facility Reduction for Receivables Sale Program. Whenever any
Receivables Sale Program is in effect, the Facility Amount shall be reduced
(but in no event by more than $100,000,000) by an amount equal to the
Purchasers' Aggregate Net Investment, as certified from time to time
pursuant to Section 5.02(c)(xv) or 5.02(c)(xvi) for as long, but only for
as long, as the Receivables Sale Program is in effect. If after giving
effect to any such reduction the Outstanding Revolving Credit exceeds the
reduced Facility Amount, prepayment shall be made pursuant to Section
2.06(b) when such reduction becomes effective.
(f) Application of LC Cash Collateral. With respect to Dollars
deposited to the LC Cash Collateral Account:
(i) At any time when no Event of Default or Potential Default has
occurred and is continuing, the Agent may (and shall, if so directed
in writing by the Borrower or the Requisite Lenders) cause such
deposit to be applied to repay any or all Funded LC Exposure, in any
order of application;
(ii) Whenever any Event of Default has occurred and is
continuing, the Agent may (and shall if so directed in writing by the
Requisite Lenders) cause such deposit to be applied to repay or retire
any or all of the Obligations, whether or not then due, in any order
of application;
(iii) If at any time when no Event of Default or Potential
Default is continuing the Dollars on deposit in the LC Cash Collateral
Account exceed the then LC Exposure, the Agent shall, if so directed
in writing by the Borrower, cause such deposit to be released to the
Borrower to the extent, but only to the extent, such deposit exceeds
the then LC Exposure; and
(iv) Interest shall accrue and be payable on deposits to the LC
Cash Collateral Account.
SECTION 2.07. Interest. The Borrower agrees to pay interest on the unpaid
principal amount of each Advance made by each Lender (or, in the case of an
Advance made pursuant to Section 2.02(c), by the LC Bank) from the date of such
Advance until such principal amount shall be repaid in full, at the following
rates per annum:
(a) Base Rate Advances. Whenever such Advance is a Base Rate Advance,
a rate per annum equal on each day to the sum of the Base Rate as in effect
on such day plus the Base Rate Margin determined for such day, with all
such interest accrued in any one month payable monthly on the first day of
the next following month and in any case when the Facility Amount has been
reduced to zero and all Advances are repaid in full.
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35
(b) Eurodollar Rate Advances. Whenever such Advance is a Eurodollar
Rate Advance, a rate per annum equal on each day during the Interest Period
for such Eurodollar Rate Advance to the sum of the Eurodollar Rate for such
Interest Period plus the Eurodollar Rate Margin determined for such day,
with all interest so accrued payable on the last day of such Interest
Period and, if such Interest Period has a duration of more than three
months, on the day which occurs three months after the first day of such
Interest Period.
(c) Default Interest. For any period of time during which an Event of
Default under Section 6.01(a), (b), (d), (e), (f), (g), (h), (i), (j), (k),
(l) (with respect to Material Subsidiaries only) or (m) has occurred and is
continuing, the principal amount of all Advances then outstanding shall
bear interest payable upon demand at a rate per annum equal to the sum of
(i) 2.0% per annum plus (ii) the rate otherwise payable pursuant to
subsection (a) or (b) above, but not to exceed the maximum rate permitted
by applicable law.
SECTION 2.08. Additional Interest on Eurodollar Rate Advances. The Borrower
shall pay each Lender additional interest on the unpaid principal amount of each
Advance of such Lender for each day that such Advance is outstanding as a
Eurodollar Rate Advance, at a rate per annum equal to the remainder obtained by
subtracting (i) the Eurodollar Rate for such Interest Period for such Eurodollar
Rate Advance from (ii) the rate determined by dividing such Eurodollar Rate by a
percentage equal to 100% minus the Eurodollar Rate Reserve Percentage of such
Lender for such day. Such additional interest shall be determined by such
Lender, notified to the Borrower through the Agent and payable when and as
interest is payable on such Eurodollar Rate Advance or, if later, five Business
Days after the Borrower receives notice thereof. If the Borrower so requests,
such Lender shall provide the Borrower through the Agent a certificate setting
forth the calculation and supporting information for such additional interest,
which shall be conclusive and binding for all purposes, absent manifest error.
SECTION 2.09. Interest Rate Determination and Protection. (a) Determination
of Eurodollar Rate. The Eurodollar Rate for each Interest Period for Eurodollar
Rate Advances comprising part of the same Borrowing shall be determined by the
Agent on the basis of applicable rates furnished to and received by the Agent
from the Reference Banks two Business Days before the first day of such Interest
Period.
(b) Notice of Eurodollar Rate. The Agent shall give prompt notice to the
Borrower and the Lenders of the Eurodollar Rate for any Interest Period when
determined by the Agent.
(c) Failure to Provide Information. If any one of the Reference Banks does
not furnish to the Agent timely information sufficient to enable the Agent to
determine a Eurodollar Rate, the Agent shall determine such interest rate on the
basis of timely information
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36
furnished by the remaining Reference Banks. If fewer than two Reference Banks
furnish timely information to the Agent for determining the Eurodollar Rate for
any Eurodollar Rate Advances, the Agent shall determine the Eurodollar Rate
based on information furnished by Citibank. If Citibank is unable to obtain
timely information for determining the Eurodollar Rate for any Eurodollar Rate
Advances, the Agent shall forthwith notify the Borrower and the Lenders that the
interest rate cannot be determined for such Eurodollar Rate Advances and the
obligation of the Lenders to make or continue, or to convert Advances into,
Eurodollar Rate Advances shall be suspended until the Agent shall notify the
Borrower and the Lenders that the circumstances causing such suspension no
longer exist.
(d) Suspension of Eurodollar Rate Advances. If, with respect to any
Eurodollar Rate Advances, the Requisite Lenders notify the Agent that either (i)
the Eurodollar Rate for any Interest Period for such Eurodollar Rate Advances is
at least two basis points less than the cost to such Lenders of obtaining funds
in Dollars in the London interbank market in the amounts substantially equal to
such Lenders' Eurodollar Rate Advances and for a period equal to such Interest
Period or (ii) funding is not available to such Lenders in such market in
Dollars, then the Agent shall forthwith so notify the Borrower and the Lenders
and thereupon (A) each Eurodollar Rate Advance will automatically, on the last
day of the then existing Interest Period therefor, convert into a Base Rate
Advance, and (B) the obligation of the Lenders to make or continue, or to
convert Advances into, Eurodollar Rate Advances shall be suspended until the
Agent shall notify the Borrower and the Lenders that the circumstances causing
such suspension no longer exist.
(e) Failure to Specify Duration. If the Borrower fails, prior to the date
the Eurodollar Rate for any Interest Period is determined by the Agent, to
specify the duration of any Interest Period for any Eurodollar Rate Advances,
the Interest Period shall be one month.
(f) Agent's Determination Conclusive. Each determination by the Agent of an
interest rate hereunder shall be conclusive and binding for all purposes, absent
manifest error.
SECTION 2.10. Voluntary Conversion of Advances. (a) Notice of
Continuance/Conversion. Subject to the provisions of Sections 2.09 and 2.14, the
Borrower may on any Business Day, by giving the Agent a Notice of
Continuance/Conversion not later than 11:00 a.m. (New York City time) on the
third preceding Business Day, (i) convert Base Rate Advances comprising the same
Borrowing into Eurodollar Rate Advances, (ii) convert Eurodollar Rate Advances
comprising the same Borrowing into Base Rate Advances or (iii) continue
Eurodollar Rate Advances as Eurodollar Rate Advances, but (A) the Borrower may
convert a Eurodollar Rate Advance into a Base Rate Advance only on the last day
of an Interest Period for such Eurodollar Rate Advance, (B) the Borrower may
continue a Eurodollar Rate Advance as a Eurodollar Rate Advance only as of the
last day of an Interest Period for such Eurodollar Rate Advance, and (C) no
Advance may be converted into or continued as a
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37
Eurodollar Rate Advance at any time when an Event of Default or Potential
Default has occurred and is continuing.
(b) Telephonic Notice. In lieu of delivering a Notice of
Continuance/Conversion, the Borrower may give the Agent telephonic notice of any
proposed conversion or continuance by the time required under Section 2.10(a)
and in such event shall promptly (but in no event later than the date of the
requested conversion or continuance) deliver a confirmatory Notice of
Continuance/Conversion to the Agent. If the telephonic request differs in any
respect from the written Notice of Continuance/Conversion subsequently
furnished, the telephonic request shall govern as to the terms of such notice.
The Agent's determination of the contents of any telephonic request shall,
absent manifest error, be conclusive and binding on all parties hereto.
(c) Requirements. Each Notice of Continuance/Conversion or telephonic
request shall specify (i) the date of the continuance or conversion, (ii) the
Advances to be converted or continued and (iii) when Advances are converted into
or continued as Eurodollar Rate Advances, the duration of the Interest Period
for such Advances.
(d) Base Rate Advances. Unless a Eurodollar Rate has been determined for a
particular Advance and applies to such Advance on a particular day in accordance
with the provisions hereof, such Advance shall be a Base Rate Advance and shall
accrue interest at the rate then applicable to Base Rate Advances.
SECTION 2.11. Prepayments. The Borrower from time to time may prepay,
without premium or penalty, the outstanding principal amounts of Advances
comprising part of the same Borrowing, in whole or ratably in part, so long as
(i) the Borrower gives one Business Day's prior written notice to the Agent
stating the proposed date and aggregate principal amount of the prepayment, (ii)
each partial prepayment is made in an aggregate principal amount of $1,000,000
or an integral multiple of $500,000 in excess thereof, (iii) if any Eurodollar
Rate Advance is paid prior to the last day of the Interest Period for such
Advances, all unpaid interest accrued to the date of prepayment on the principal
amount prepaid and all Breakage Costs incurred as a result of the prepayment are
also paid, and (iv) all unpaid interest accrued to the date of prepayment is
paid concurrently with any prepayment in full. Notice of prepayment, once given,
shall be irrevocable, and the amount of the prepayment specified in the notice
shall accordingly be due and payable on the prepayment date specified therein.
SECTION 2.12. Funding Losses. If (i) any Eurodollar Rate Advance is repaid
or converted to a Base Rate Advance on any day other than the last day of an
Interest Period for such Eurodollar Rate Advance (whether as a result of any
optional prepayment, mandatory prepayment, payment upon acceleration, mandatory
conversion or otherwise), (ii) the Borrower fails to borrow any Eurodollar Rate
Advance in accordance with a Notice of Borrowing or a telephonic request
delivered to the Agent (whether as a result of the failure to satisfy any
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38
applicable conditions or otherwise), (iii) any Base Rate Advance is not
converted into a Eurodollar Rate Advance or any Eurodollar Rate Advance is not
continued as a Eurodollar Rate Advance in accordance with a Notice of
Continuance/Conversion or telephonic request delivered to the Agent (whether as
a result of the failure to satisfy any applicable conditions or otherwise), or
(iv) the Borrower fails to make any prepayment in accordance with any notice of
prepayment delivered to the Agent, the Borrower shall, upon demand by any
Lender, reimburse such Lender for all costs and losses incurred by such Lender
as a result of such repayment, prepayment or failure ("BREAKAGE COSTS"),
including costs and losses incurred by a Lender as a result of funding
arrangements or contracts entered into by such Lender to fund Eurodollar Rate
Advances. Breakage Costs shall be payable only if demanded within 90 days after
the end of the applicable Interest Period and shall be due 30 days after demand.
Demand shall be made by delivery to the Borrower and the Agent of a certificate
of the Lender making the demand, setting forth in reasonable detail the
calculation of the Breakage Costs for which demand is made. Such certificate
shall, in the absence of manifest error, be conclusive and binding on the
Borrower.
SECTION 2.13. Increased Costs. (a) Increase in Cost. If, due to either (i)
the introduction of or any change (other than any change by way of imposition or
increase of reserve requirements, in the case of Eurodollar Rate Advances,
included in the Eurodollar Rate Reserve Percentage) in or in the interpretation
of any law or regulation or (ii) the compliance with any guideline or request
from any central bank or other Governmental Authority (whether or not having the
force of law), there shall be any increase in the cost to any Lender or any
participant under Section 8.07(e) of agreeing to make or making, funding or
maintaining Eurodollar Rate Advances, then the Borrower shall from time to time
pay to the Agent for the account of such Lender or participant additional
amounts sufficient to compensate such Lender or participant for such increased
cost. Such costs shall be payable only if demanded within six months after they
were incurred and shall be due 30 days after demand. Demand shall be made by
delivery to the Borrower and the Agent of a certificate of the Lender or
participant making the demand, setting forth in reasonable detail the
calculation of the costs for which demand is made. Such certificate shall, in
the absence of manifest error, be conclusive and binding on the Borrower.
(b) Increase in Capital Requirements. If any Lender determines that
compliance with any law or regulation or any guideline or request from any
central bank or other Governmental Authority (whether or not having the force of
law) affects or would affect the amount of capital required or expected to be
maintained by such Lender or any corporation controlling such Lender and that
the amount of such capital is increased by or based upon the existence of such
Lender's commitment to lend or funding hereunder and other commitments or
funding of this type, then, upon demand by such Lender, the Borrower shall,
within 30 days after demand from time to time by such Lender, pay to the Agent
for the account of such Lender additional amounts sufficient to compensate such
Lender or such corporation in the light of such circumstances, to the extent
that such Lender determines such increase in capital to be allocable to the
existence of such Lender's commitment to lend or funding hereunder. Demand for
such payment may be made at any time but must be made in writing, with a copy to
the Agent. No
<PAGE>
39
such compensation may be demanded as to increased capital maintained by a Lender
more than 12 months before compensation was first demanded by such Lender under
this Section 2.13(b). Demand for such compensation shall be made by delivery to
the Borrower and the Agent of a certificate of the Lender making the demand,
setting forth the amount demanded. Such certificate shall, in the absence of
manifest error, be conclusive and binding on the Borrower.
(c) Replacement Lenders and Participants. If, and on each occasion that,
(i) a Lender or a participant under Section 8.07(e) makes a demand for
compensation pursuant to Section 2.08, Section 2.13(a) or Section 2.13(b) with
respect to Eurodollar Rate Advances or (ii) a Lender is excused from funding
Eurodollar Rate Advances pursuant to Section 2.14 or (iii) Taxes are required,
pursuant to Section 2.16(a), to be deducted from or with respect to any amount
payable to any Lender or the Agent, the Borrower may in whole permanently
replace such Lender or participant, as the case may be, with an Eligible
Assignee willing to become a Lender hereunder, on the following terms:
(A) The replacement Lender must be satisfactory to the LC Bank in its
reasonable discretion;
(B) The Borrower shall give the Agent and the Lender or participant
being replaced at least five Business Days' prior written notice of the
replacement. The notice must be given within 180 days after the date of the
event specified in clause (i), (ii) or (iii) above, as the case may be,
pursuant to which such replacement is made, and must state the day (which
must be a Business Day not more than 10 days after the notice is given) on
which the replacement will be effective.
(C) On the effective date of the replacement, (1) the replacement
Lender shall purchase the Advances owed to such replaced Lender or
participant for a purchase price equal to the principal amount thereof and
all interest accrued thereon as of such effective date, payable in cash on
such effective date, (2) an Assignment and Acceptance covering such
Advances shall be delivered to the replacement Lender by the Lender being
replaced or by the participant being replaced and the Lender from which it
holds its participation, and (3) the Borrower shall pay to the Agent for
the account of the replaced Lender or participant all Breakage Costs
resulting from the replacement and all additional interest, fees,
compensation, costs, losses, taxes, expense reimbursements, indemnities and
other Obligations due to the Lender or participant being replaced.
(D) The Borrower will remain liable to each replaced Lender or
participant for all Obligations that survive the repayment of the Advances.
SECTION 2.14. Illegality. Notwithstanding any other provision of this
Agreement, if any Lender shall notify the Agent that the introduction of or any
change in or in the interpretation of any law or regulation makes it unlawful,
or any central bank or other
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40
Governmental Authority asserts that it is unlawful, for any Lender or its
Eurodollar Lending Office to perform its obligations hereunder to make
Eurodollar Rate Advances or to fund or maintain Eurodollar Rate Advances
hereunder, then (i) the obligation of such Lender to make or continue, or to
convert Advances into, Eurodollar Rate Advances shall be suspended until the
Agent shall notify the Borrower and the Lenders that the circumstances causing
such suspension no longer exist, and (ii) the Borrower shall forthwith either
(A) prepay in full all Eurodollar Rate Advances of such Lender then outstanding,
together with interest accrued thereon and Breakage Costs related thereto or (B)
convert all Eurodollar Rate Advances of such Lender then outstanding into Base
Rate Advances and pay all interest accrued thereon to the date of conversion and
all Breakage Costs related thereto.
SECTION 2.15. Payments and Computations. (a) Payments. The Borrower shall
make each payment hereunder and under the Notes not later than 11:00 a.m. (New
York City time) on the day payment is due, in Dollars received by the Agent at
its address referred to in Section 8.02 in same day funds. Any payment due to a
Lender shall be paid to the Agent for account of such Lender. When the Agent
receives a payment for account of a Lender, the Agent will promptly cause like
funds to be distributed to such Lender for account of its Applicable Lending
Office.
(b) Charging of Accounts. If and to the extent any payment owed to the
Agent or any Lender is not made within three Business Days after the date it was
due hereunder or under the Note held by such Lender, the Borrower hereby
authorizes the Agent and such Lender to setoff and charge any amount so due
against any deposit account maintained by the Borrower with the Agent or such
Lender, whether or not the deposit therein is then due.
(c) Computations. All computations of interest, additional interest and
fees accruing at a per annum rate shall be made on the basis of the actual
number of days (including the first day but excluding the last day) occurring in
the period for which such interest, additional interest or commitment fees are
payable and a year of 360 days.
(d) Payment on Business Day. Whenever any payment hereunder or under the
Notes is due on a day other than a Business Day, such payment shall be made on
the next succeeding Business Day, and such extension of time shall be included
in the computation of interest or fees. If, however, such extension would cause
payment of interest on or principal of Eurodollar Rate Advances to be made in
the next following calendar month, such payment shall be made on the next
preceding Business Day.
(e) Presumption of Payment. Unless the Agent receives notice from the
Borrower prior to the date on which any payment is due to the Agent for the
benefit of the Lenders hereunder that the Borrower will not make such payment in
full, the Agent may assume that the Borrower has made such payment in full to
the Agent on such date and the Agent may, in reliance upon such assumption,
cause to be distributed to each Lender on such due date an
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41
amount equal to the amount then due such Lender. If and to the extent the
Borrower does not make such payment to the Agent in full when due, each Lender
shall repay to the Agent forthwith on demand such amount distributed to such
Lender, together with interest thereon for each day from the date such amount
was distributed to such Lender until the Business Day such Lender repays such
amount to the Agent, at the Federal Funds Rate until the third Business Day
after such demand and thereafter at the rate applicable to Base Rate Advances.
SECTION 2.16. Taxes. (a) Net Payments. Any and all payments by the Borrower
hereunder or under the Notes shall be made free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding, in
the case of each Lender and the Agent, taxes imposed on its net income, and
franchise taxes imposed on it, by the jurisdiction under the laws of which such
Lender or the Agent (as the case may be) is organized or any political
subdivision thereof and, in the case of each Lender, taxes imposed on its net
income, and franchise taxes imposed on it, by the jurisdiction of such Lender's
Applicable Lending Office or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities, collectively, are "TAXES"). If the Borrower is required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under any
Note to any Lender or the Agent, (i) the sum payable shall be increased as may
be necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.16) such Lender or
the Agent (as the case may be) receives an amount equal to the sum it would have
received if no such deductions had been made, (ii) the Borrower shall make such
deductions, and (iii) the Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.
(b) Payment of Other Taxes. In addition, the Borrower agrees to pay any
present or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies which arise from any payment made hereunder or
under the Notes or from the execution, delivery or registration of, or otherwise
similarly with respect to, this Agreement, the Notes or any other Loan Document
("OTHER TAXES").
(c) Indemnification. The Borrower will indemnify each Lender and the Agent
for the full amount of Taxes or Other Taxes (including any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section 2.16) paid by
such Lender or the Agent (as the case may be) and any liability (including
penalties, interest and expenses, but excluding any liability arising from the
gross negligence or willful misconduct of such Person) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. Payment under this indemnity shall be due 30 days after
written demand therefor. Any Person entitled to indemnification by the Borrower
pursuant to this Section 2.16(c) shall give the Borrower written notice of any
matter which such Person has determined has given rise to a right of
indemnification hereunder within 120 days after the earlier of (i) the date on
which such Person makes payment of the Taxes or Other Taxes giving rise to such
right or
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42
(ii) the date on which such Person receives written demand for payment of such
Taxes or Other Taxes from the applicable Governmental Authority; provided,
however, that the failure by any Person timely to provide such notice (A) shall
not release the Borrower from any of its obligations under this Section 2.16(c)
except to the extent the Borrower is materially prejudiced by such failure, or
such notice was provided more than 240 days after the latest date such notice
could have been timely given, and (B) shall not relieve the Borrower from any
other obligation or liability that it may have to such Person otherwise than
under this Section 2.16(c).
(d) Evidence of Payments. Within 30 days after the date of any payment of
Taxes hereunder by the Borrower, the Borrower will furnish to the Agent, at its
address referred to in Section 8.02, the original or a certified copy of any
receipt issued to the Borrower evidencing payment thereof.
(e) Withholding Tax Exemption. If any Lender is a "foreign person" within
the meaning of the Code, such Lender shall deliver to the Agent (i) (A) if such
Lender qualifies for an exemption from, or a reduction of, United States
withholding tax under a tax treaty, a properly completed and executed Internal
Revenue Service Form 1001 (or applicable successor form) before the payment of
any interest in the first calendar year and in each third succeeding calendar
year during which interest may be paid under this Agreement, (B) if such Lender
qualifies for an exemption from United States withholding tax for interest paid
under this Agreement because it is effectively connected with a United States
trade or business of such Lender, two properly completed and executed copies of
Internal Revenue Service Form 4224 (or applicable successor form) before the
payment of any interest is due in the first taxable year of such Lender, and in
each succeeding taxable year of such Lender, during which interest may be paid
under this Agreement, or (C) if such Lender is not a "bank" as defined in
Section 881(c)(3)(A) of the Code, a properly completed and executed Internal
Revenue Service Form W- 8 (or applicable successor form) before the payment of
any interest is due in the first taxable year of such Lender, and in each
succeeding taxable year of such Lender, during which interest may be paid under
this Agreement, certifying that such Lender is a foreign corporation,
partnership, estate or trust, together with a certificate of a duly authorized
officer representing that such Lender is not a "bank" for purposes of Section
881(c) of the Code, is not a 10% shareholder (within the meaning of Section
871(h)(3)(B) of the Code) of the Borrower and is not a controlled foreign
corporation related to the Borrower (within the meaning of Section 864(d)(4) of
the Code), and (ii) such other form or forms as may be required or reasonably
requested by the Agent to establish or substantiate exemption from, or reduction
of, United States withholding tax under the Code or other laws of the United
States. Each Lender agrees to notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction. If any
form or document referred to in this subsection (e) requires the disclosure of
information, other than information necessary to compute the tax payable and
information required on the date hereof by Internal Revenue Service Form 1001,
4224 or W-8 (or applicable successor forms) (or the related certificate
described above), that the Lender reasonably considers
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43
to be confidential, the Lender shall give notice thereof to the Borrower and
shall not be obligated to include in such form or document such confidential
information.
(f) Withholding Taxes. Where any Lender which is a "foreign person" is
entitled to a reduction in the applicable withholding tax, the Agent may
withhold from any interest payment to such Lender an amount equivalent to the
applicable withholding tax after taking into account such reduction. If the
forms or other documentation required by Section 2.16(e) are not delivered to
the Agent, then the Agent may withhold from any interest payment to any Lender
not providing such forms or other documentation, an amount equivalent to the
applicable withholding tax.
(g) Indemnification of the Agent. If the Internal Revenue Service or any
authority of the United States or other jurisdiction asserts a claim that the
Agent did not properly withhold tax from amounts paid to or for the account of
any Lender which is a "foreign person" (because the appropriate form was not
delivered, was not properly executed, or because such Lender failed to notify
the Agent of a change in circumstances which rendered the exemption from, or
reduction of, withholding tax ineffective, or for any other reason) such Lender
shall indemnify the Agent fully for all amounts paid, directly or indirectly, by
the Agent as tax or otherwise, including penalties and interest, together with
all reasonable expenses incurred, including reasonable legal expenses and
allocated staff costs and any other reasonable out-of-pocket expenses.
(h) Subsequent Lenders. For purposes of this Section 2.16, the term
"Lender" shall include any assignee pursuant to, and after compliance with the
requirements of, Section 8.07; provided that no Person acquiring any
participation pursuant to Section 8.07(e) shall be deemed a "Lender" for
purposes of this Section 2.16 unless and until the Borrower has been notified of
such participation. If any Lender grants participations in or otherwise
transfers its rights under this Agreement, the participant or transferee shall
be bound by the terms of Sections 2.16(e), (f) and (g) as though it were such
Lender.
(i) Refund, Deduction or Credit of Taxes. If any Lender determines, in its
sole good faith discretion, that it has actually and finally realized, by reason
of a refund, deduction or credit of any Taxes paid or reimbursed by the Borrower
pursuant to subsection (a), (b) or (c) above in respect of payments under the
Loan Documents, a current monetary benefit that it would otherwise not have
obtained, and that would result in the total payments under this Section 2.16
exceeding the amount needed to make such Lender whole, such Lender shall pay to
the Borrower, with reasonable promptness following the date on which it actually
realizes such benefit, an amount equal to the lesser of the amount of such
benefit or the amount of such excess, in each case net of all reasonable
out-of-pocket expenses in securing such refund, deduction or credit.
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44
(j) Exclusion of Certain Taxes. Notwithstanding any other provision of this
Agreement, the Borrower shall not be required to pay any amount hereunder to any
Lender or the Agent in respect of any Taxes to the extent that, on the date
hereof or any other date such Lender became a party to (or participant with
respect to) this Agreement or (with respect to payments to an Applicable Lending
Office) the date such Lender designated such Applicable Lending Office with
respect to this Agreement or any Notes, the obligation to withhold or pay such
Taxes existed or would exist upon the payment of an amount by the Borrower under
this Agreement or any Note; provided, however, that this paragraph shall not
apply (i) to any Lender or Applicable Lending Office that became a Lender or
Applicable Lending Office as a result of an assignment, transfer, or designation
made at the request of the Borrower, or (ii) to the extent that the amount
otherwise payable by the Borrower pursuant to this Section 2.16 to any Lender
that is an assignee pursuant to (and in compliance with the requirements of)
Section 8.07 does not exceed the amount that would have been payable under this
Section 2.16 to the assigning Lender in the absence of such assignment.
(k) Additional Cooperation. Any Lender claiming any amount pursuant this
Section 2.16 shall use reasonable efforts (consistent with legal and regulatory
restrictions) to file any certificate or document reasonably requested by the
Borrower or to change the jurisdiction of such Lender's Applicable Lending
Office if such a filing or change would avoid the need for or reduce the amount
payable by the Borrower under this Section 2.16 and would not, in the good-faith
determination of such Lender, otherwise be disadvantageous to such Lender.
SECTION 2.17. Sharing of Payments. If after the occurrence and during the
continuance of any Event of Default any Lender shall obtain any payment (whether
voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) on account of any Advances owed to it in excess of its Pro Rata Share
of all such payments, such Lender shall forthwith purchase from the other
Lenders such participations in the Advances made by them as shall be necessary
to cause such purchasing Lender to share the excess payment ratably with each of
them. If all or any portion of such excess payment is thereafter recovered from
such purchasing Lender, such purchase from the other Lenders shall be rescinded
and each such other Lender shall repay to the purchasing Lender the purchase
price to the extent of its allocable share of such recovery together with its
allocable share of any interest required to be paid by the purchasing Lender on
the amount so recovered. The Borrower agrees that any Lender purchasing a
participation from another Lender pursuant to this Section 2.17 may, to the
fullest extent permitted by law, exercise collection rights (including the right
of set-off) with respect to such participation as fully as if such Lender were
the direct creditor of the Borrower in the amount of such participation.
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45
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent on the Closing Date. This Agreement
shall become effective and binding upon the parties hereto only if each of the
following conditions precedent is satisfied no later than May 15, 1996:
(a) Loan Documents. The Agent must have received, with sufficient
copies for each Lender:
(i) this Agreement duly executed by the Borrower, the Agent and
each of the Lenders;
(ii) a promissory note, in substantially the form of Exhibit A,
payable to the order of each Lender in an original principal amount
equal to such Lender's Pro Rata Share of the Facility Amount on the
Closing Date, duly executed by the Borrower;
(iii) a guaranty, in substantially the form of Exhibit C-1, duly
executed by each Subsidiary of the Borrower that is not, on the
Closing Date, an Inactive Subsidiary;
(iv) a pledge and security agreement duly executed and delivered
in substantially the form of Exhibit C-2 by the Borrower and in
substantially the form of Exhibit C-3 by each Subsidiary of the
Borrower that owns, as of the Closing Date, any shares of the stock of
or other equity, ownership or profit interest in any Subsidiary of the
Borrower, together with (A) certificates representing the Pledged
Shares referred to in Schedule A to each such Pledge and Security
Agreement, other than shares in respect of Inactive Subsidiaries,
accompanied by undated stock powers executed in blank, and (B)
evidence satisfactory to the Lenders that all other actions necessary
or, in the opinion of the Lenders, desirable to perfect and protect
the security interests created by the Pledge and Security Agreements
have been taken, including delivery to the Agent of all instruments
constituting Collateral, duly endorsed, and delivery of UCC-1
financing statements duly executed by each Grantor under a Pledge and
Security Agreement and in form sufficient for filing in all offices in
which the Agent or any Lender may consider filing to be appropriate;
and
(v) the schedules to this Agreement and the Loan Documents.
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46
(b) Corporate Documents. The Agent must have received, with sufficient
copies for each Lender:
(i) copies of the articles or certificate of incorporation and
by-laws or other governing documents of each Loan Party as in effect
on the Closing Date, certified as of the Closing Date by a Secretary
or an Assistant Secretary of such Loan Party;
(ii) copies of resolutions of the Board of Directors of each Loan
Party approving the transactions contemplated hereby and authorizing
the execution, delivery and performance of each Loan Document to which
it is a party, certified as of the Closing Date by a Secretary or an
Assistant Secretary of such Loan Party;
(iii) a certificate of the Secretary or an Assistant Secretary of
each Loan Party certifying the names and true signatures of the
officers of such Loan Party authorized to sign each Loan Document to
which it is a party and, in the case of the Borrower, to request an
extension of credit hereunder; and
(iv) a good standing certificate for each Loan Party, issued as
of a recent date by the Secretary of State of the state in which such
Loan Party is incorporated or formed and each state in which it is
qualified to do business.
(c) Governmental Consents. Each Loan Party must have obtained all
consents, approvals and authorizations required from any Governmental
Authority in connection with the execution, delivery and performance of its
obligations under the Loan Documents.
(d) No Injunction. No law or regulation shall prohibit, and no order,
judgment or decree of any Governmental Authority shall enjoin, prohibit or
restrain, and no litigation shall be pending or threatened which in the
reasonable judgment of the Agent or Requisite Lenders would enjoin,
prohibit or restrain (i) the making of the Advances, (ii) the issuance of
any Letter of Credit or (iii) the consummation of the transactions
contemplated by the Loan Documents.
(e) Other Deliveries. The Agent must have received, with sufficient
copies for each Lender:
(i) a copy of the Borrower's financial statements on Form 10-K
for the year ended December 31, 1995, certified in a manner acceptable
to the Requisite Lenders by KPMG Peat Marwick;
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47
(ii) a certificate dated as of the Closing Date and signed by the
Chairman, Chief Executive Officer or Authorized Officer of the
Borrower, certifying that, as of the Closing Date, (A) the
representations and warranties contained in Article IV of this
Agreement are true and correct on and as of the Closing Date, as
though made on and as of such date, (B) no Event of Default or
Potential Default has occurred and is continuing, (C) since December
31, 1995, there has been no Material Adverse Change, and (D) each of
the other conditions precedent set forth in this Article III has been
satisfied;
(iii) all documents evidencing other necessary corporate action
and governmental approvals, if any, with respect to this Agreement or
any other Loan Document; and
(iv) such other certificates, agreements, documents or
instruments as the Agent or the Requisite Lenders may reasonably
request in writing.
(f) Legal Opinions. The Agent must have received, with sufficient
copies for each Lender:
(i) an opinion of Hunton & Williams, counsel for the Borrower and
the Guarantors, substantially in the form of Exhibit D-1 hereto and as
to such other matters as any Lender through the Agent may reasonably
request; and
(ii) an opinion of special local counsel for each of the
Guarantors substantially in the form of Exhibit D-2 hereto and as to
such other matters as any Lender through the Agent may reasonably
request.
(g) Payout and Release Agreement. The Agent must have received (with
sufficient copies for each Lender) a payout and release agreement, in
substantially the form of Exhibit E-3, duly executed by the Borrower and
its Subsidiaries and the other parties identified therein.
(h) Payment of Existing Facility. The first Borrowing must have been
requested by the Borrower, in an amount sufficient to pay in full the
"Amount Outstanding" set forth in the payout and release agreement
delivered pursuant to Section 3.01(g), the Agent must have received
irrevocable instructions from the Borrower to apply proceeds from such
Borrowing to pay such Amount Outstanding in full, and the Agent must have
received an LC Application for all Letters of Credit outstanding under the
Existing Facility duly executed by the Borrower and accepted by the LC
Bank, confirming that all such Letters of Credit shall be deemed applied
for, issued and
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48
outstanding under this Agreement and that all participation obligations
arising in respect thereof under the Existing Facility are discharged.
(i) Payment of Fees and Expenses. All fees and expense reimbursements
due to the Agent and the Lenders under this Agreement and the Fee Letter
must have been paid.
(j) Section 3.02 Conditions. Each of the conditions set forth in
Section 3.02 must be satisfied.
SECTION 3.02. Conditions Precedent to Each Extension of Credit. The
obligation of each Lender to make an Advance on the occasion of any Borrowing
and the obligation of the LC Bank to issue any Letter of Credit is subject to
the conditions precedent that on the date the Borrowing is to be made or Letter
of Credit is to be issued:
(a) Notice. The Borrower shall have delivered a fully completed Notice
of Borrowing or LC Application, as the case may be, dated such date.
(b) Certification. Each of the following statements shall be true, and
the Agent shall have received for the account of each Lender a certificate
dated such date and signed by an Authorized Officer, certifying that:
(i) the representations and warranties contained in Article IV of
this Agreement and in Article III of the Pledge and Security
Agreements are correct on and as of such date, before and after giving
effect to the extension of credit to be made hereunder on such date
and the application of the proceeds therefrom, as though made on and
as of such date;
(ii) no event has occurred and is continuing, or would result
from such extension of credit or from the application of the proceeds
therefrom, which constitutes an Event of Default or a Potential
Default; and
(iii) the incurrence of indebtedness by the Borrower in the
amount of such Borrowing or for the LC Exposure resulting from the
issuance of such Letter of Credit is permitted under each of the
Subordinated Debt Indentures (and if after such Borrowing is made or
Letter of Credit is issued the aggregate principal amount of Advances
and LC Exposure outstanding under this Agreement is greater than
$154,000,000 (or such other amount as determined pursuant to the
Consent Solicitation), such certificate shall include information
sufficient to confirm specifically that such incurrence is permitted
under Section 4.9 of the 1994 Subordinated Debt Indenture, under
Section 3.9 of the 1995
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49
Subordinated Debt Indenture and, upon the effectiveness thereof, under
of the terms of the 1996 Subordinated Debt Indenture).
The delivery of a Notice of Borrowing or LC Application and the acceptance by
the Borrower of the proceeds of a Borrowing or of a Letter of Credit shall
constitute a representation and warranty by the Borrower that, on the date such
Advance is made or Letter of Credit is issued, the foregoing statements are
true.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower. The Borrower
represents and warrants as follows:
(a) Organization. Each Loan Party is a corporation or partnership duly
organized, validly existing and in good standing (except where the failure
of one or more Loan Parties, other than the Borrower and its Material
Subsidiaries, to be in good standing after the Closing Date could not
reasonably be expected to result in a Material Adverse Change) under the
laws of the jurisdiction in which it is organized and is duly qualified to
do business in each jurisdiction where the character of its properties or
the nature of its activities makes such qualification necessary.
(b) Power and Authority. Each Loan Party has the corporate or
partnership power (i) to carry on its business as now being conducted and
as proposed to be conducted by it, (ii) to execute, deliver and perform
each Loan Document to which it is a party, and (iii) to take all action
necessary to consummate the transactions contemplated under each Loan
Document to which it is a party.
(c) Due Authorization. The execution, delivery and performance by each
Loan Party of each Loan Document to which it is or will be a party have
been duly authorized by all necessary action of its board of directors (or,
in case of a partnership, of its governing authority) and do not contravene
(i) its certificate or articles of incorporation (or, in case of a
partnership, governing agreements) or (ii) any law or any indenture, lease
or written agreement binding on or affecting it and do not result in or
require the creation of any Lien (other than pursuant to the Collateral
Documents) upon any of its property or assets.
(d) Subsidiaries and Ownership of Capital Stock. Set forth in Schedule
4.01(d), as such schedule may be amended pursuant to Section 5.02(c)(xiii),
is a complete list, as of the latest of (i) the date hereof, (ii) the
Closing Date, (iii) the date of
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delivery to the Agent of the then most recently required amended Schedule
4.01(d) pursuant to Section 5.02(c)(xiii), and (iv) in the event an amended
Schedule 4.01(d) is not timely delivered to the Agent pursuant to Section
5.02(c)(xiii), the date of the last day on which such amended schedule
could have been timely delivered, of all direct and indirect Subsidiaries
of the Borrower. Such schedules also set forth the number of issued and
authorized shares of each class of capital stock of and other equity,
ownership or profit interests in such Subsidiary and the identity of the
holders of all such shares. Except as set forth in such schedules, no
capital stock of or other equity, ownership or profit interest in any such
Subsidiary is subject to issuance or sale under any warrant, option or
purchase right, conversion or exchange right, call, commitment or claim of
any right, title or interest therein or thereto. The outstanding capital
stock of each such Subsidiary is duly authorized, validly issued, fully
paid and nonassessable and is not "margin stock," as that term is defined
in Regulations G, T, U and X of the Board of Governors of the Federal
Reserve System.
(e) Health Care Facilities. Set forth in Schedule 4.01(e), as such
schedule may be amended pursuant to Section 5.02(c)(xiv), is a complete
list, as of the latest of (i) the date hereof, (ii) the Closing Date, (iii)
the date of delivery to the Agent of the then most recently required
amended Schedule 4.01(e) pursuant to Section 5.02(c)(xiv) and (iv) in the
event an amended Schedule 4.01(e) is not timely delivered to the Agent
pursuant to Section 5.02(c)(xiv), the date of the last day on which such
amended schedule could have been timely delivered, of each Health Care
Facility owned, leased, managed or operated by the Borrower or any
Subsidiary of the Borrower which is a skilled nursing facility, hospital,
assisted living facility or retirement facility, and Schedule 4.01(e), as
it may be so amended, specifically sets forth, with respect to each such
Health Care Facility, whether such Health Care Facility is a leased
facility or an owned facility.
(f) Governmental Approval. No authorization or approval or other
action by, and no notice to or filing with, any Governmental Authority is
required for the due execution, delivery and performance by each of the
Loan Parties of any Loan Document to which it is or will be a party, except
for those listed on Schedule 4.01(f), each of which has been duly obtained
or made and is in full force and effect.
(g) Binding and Enforceable. This Agreement is, and each other Loan
Document to which any Loan Party will be a party is or when delivered will
be, legal, valid and binding obligations of the Loan Parties enforceable
against the Loan Parties in accordance with their respective terms, subject
to laws generally affecting the enforcement of creditors' rights.
(h) Financial Information. The consolidated balance sheets of the
Borrower and its Subsidiaries as at December 31, 1994 and December 31, 1995
and their
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51
related income and cash flow statements for the periods then ended, each
other financial statement of the Borrower and its Subsidiaries delivered to
the Agent or Lenders on or prior to the Closing Date, and each financial
statement delivered to the Lenders pursuant to Section 5.02(c), as and when
delivered to the Agent or Lenders fairly presents the consolidated
financial condition of the Borrower and its Subsidiaries as at the date
thereof and the consolidated results of their operations for the period
then ended, all in accordance with GAAP consistently applied.
(i) Material Adverse Change. Since December 31, 1995, there has been
no Material Adverse Change.
(j) Compliance. Except as permitted pursuant to Section 5.02(k) and
Section 5.03(n), each Loan Party is in compliance in all material respects
with all material applicable laws, rules, regulations and orders.
(k) Litigation. Set forth on Schedule 4.01(k) is a list, as of the
Closing Date, of all pending or overtly threatened actions or proceedings
affecting any Loan Party before any court, governmental agency or
arbitrator, and all loss contingencies within the meaning of GAAP, other
than any action or proceeding that would not subject the Loan Parties to
liability in excess of $5,000,000 individually or $30,000,000 in the
aggregate in the case of two or more related actions or proceedings. Except
as identified on Schedule 4.01(k), there is no pending or overtly
threatened action or proceeding affecting any Loan Party before any court,
governmental agency or arbitrator, which would, if adversely determined,
result in a Material Adverse Change or which relates to or could reasonably
be expected to affect the legality, validity or enforceability of any Loan
Document.
(l) No Conflict. The execution, delivery and performance by each Loan
Party of each of the Loan Documents to which it is a party do not and will
not (i) conflict with, result in a breach of, or constitute (with or
without notice or the lapse of time or both) a default under, any
instrument, lease, indenture, agreement or other contractual obligation
issued by any Loan Party or enforceable against it or any of its property
or assets, except under immaterial agreements for supplies or services
which are readily replaceable without any adverse effect on such Loan Party
or its business or (ii) require any approval of its stockholders.
(m) No Default. No event has occurred and is continuing which
constitutes an Event of Default or a Potential Default.
(n) Payment of Taxes. Each Loan Party has filed all federal income tax
returns and all other tax returns required to be filed by it and has paid
all taxes and
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52
assessments payable by it which have become due except to the extent being
contested in accordance with the provisions of Section 5.02(h).
(o) Margin Regulations. No proceeds of any Advance or Letter of Credit
will be used for any purpose that requires any Lender to deliver or obtain
any certification under, or to comply with any margin requirement or other
provision of, Regulations G, T, U or X of the Board of Governors of the
Federal Reserve System.
(p) Conduct of Business. The Borrower is a holding company engaged
primarily in the business of (i) holding stock of and claims against its
Subsidiaries; (ii) managing and developing corporate opportunities related
to the business of its Subsidiaries; (iii) administering and coordinating
the overall operating business of its Subsidiaries and other investments
permitted hereunder; (iv) obtaining of financing for the business of its
Subsidiaries; and (v) holding interests in and title to assets and property
necessary or appropriate to conduct such business in the ordinary course.
The Subsidiaries of the Borrower (other than any such Subsidiaries engaged
in the insurance business as permitted under Section 5.03(c)(xiii)) are
principally engaged in the business of a Healthcare Company, including
making Investments in Subsidiaries or Persons that are Healthcare
Companies.
(q) Health Care Permits. (i) Except as permitted pursuant to Section
5.02(k) and Section 5.03(n), (A) each Loan Party now has, and has no reason
to believe it will not be able to maintain in effect, all Health Care
Permits necessary for the lawful conduct of its business or operations
wherever now conducted and as planned to be conducted, including the
ownership and operation of its Health Care Facilities, pursuant to all
applicable laws and all requirements of Governmental Authorities having
jurisdiction over such Loan Party or over any part of its operations; (B)
all such Health Care Permits are in full force and effect and have not been
amended or otherwise modified (except for modifications which do not
constitute and cannot reasonably be expected to result in a Material
Adverse Change), rescinded, revoked or assigned; (C) no Loan Party is in
default in any material respect under, or in violation in any material
respect of, any such Health Care Permit (and to the best knowledge of the
Borrower, no event has occurred, and no condition exists, which, with the
giving of notice or passage of time or both, would constitute a default
thereunder or violation thereof) that has caused or could reasonably be
expected to cause the loss of any such Health Care Permit; (D) neither the
Borrower nor any other Loan Party has received any notice of any violation
of applicable laws which has caused or could reasonably be expected to
cause any such Health Care Permit to be modified (except for modifications
not amounting to a Material Adverse Change), rescinded or revoked; (E) to
the best knowledge of the Borrower, no condition exists or event has
occurred which could reasonably be expected to result in the suspension,
revocation, impairment, forfeiture or non-renewal of such Health Care
Permit; and (F) the continuation, validity and effectiveness of all such
Health
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53
Care Permits will not in any way be adversely affected by the transactions
contemplated by this Agreement, except that the exercise by the Agent of
its rights and remedies in respect of the Collateral is subject to the
licensing power of health care regulatory authorities.
(ii) Except as permitted pursuant to Section 5.02(k) and Section
5.03(n), all Health Care Facilities owned, leased, managed or operated by
any Loan Party are entitled to participate in, and receive payment under,
the appropriate Medicare, Medicaid and related reimbursement programs and
in any similar state or local government-sponsored program, to the extent
that such Loan Party has decided to participate in any such state or local
program, and to receive reimbursement from private and commercial payors
and health maintenance organizations to the extent applicable thereto.
(r) Environmental Matters. Except as set forth in Schedule 4.01(r), as
it may from time to time be amended by the Borrower, (i) no Material
Environmental Claim is pending or, to the knowledge of the Borrower,
overtly threatened against the Borrower or any of its Subsidiaries, or any
property or assets currently owned or leased thereby, and (ii) to the
knowledge of the Borrower, no Material Environmental Claim is pending or
overtly threatened against any property or assets previously owned or
leased by the Borrower or any of its Subsidiaries. Except as set forth in
Schedule 4.01(r), and except in respect of matters that, in the aggregate,
are not and cannot reasonably be expected to result in a Material
Environmental Claim or a Material Adverse Change, the operations of the
Borrower and its Subsidiaries comply and have complied in all material
respects with all applicable Environmental Laws.
(s) ERISA Compliance. (i) Each Plan is in compliance in all material
respects with the applicable provisions of ERISA, the Code and other
applicable Federal or state law.
(ii) Each Pension Plan which is intended to be tax-qualified under
Section 401(a) of the Code has been determined by the IRS to qualify under
Section 401 of the Code, and the trusts created thereunder have been
determined to be exempt from tax under the provisions of Section 501 of the
Code, and to the best knowledge of the Borrower nothing has occurred which
would cause the loss of such qualification or tax-exempt status.
(iii) Except as set forth in Schedule 4.01(s), (A) none of the Pension
Plans which is subject to Title IV of ERISA has any material Unfunded
Pension Liability as to which the Borrower or any ERISA Affiliate is or may
be liable; (B) neither the Borrower nor any ERISA Affiliate has nor
reasonably expects to incur any material liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA,
would result in such material liability) under Section 4201 or 4243 of
ERISA with respect to any
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54
Multiemployer Plan; (C) no ERISA Event has occurred or, to the best
knowledge of the Borrower, is reasonably expected to occur; and (D) neither
the Borrower nor any ERISA Affiliate has maintained any Welfare Plan which
provides, or requires the Borrower or any ERISA Affiliate to provide,
medical or other welfare benefits to any participant after the termination
of such participant's employment with the Borrower or such ERISA Affiliate
(except to the extent required by the provisions of Part 6 of Title I,
Subtitle B of ERISA or Sections 162(k) and 4980B of the Code).
(iv) Each Welfare Plan which is a "group health plan," as defined in
Section 607(1) of ERISA, has been operated in compliance with provisions of
Part 6 of Title I of ERISA and Sections 162(k) and 4980B of the Code at all
times.
(v) Neither the Borrower nor any ERISA Affiliate has engaged, directly
or indirectly, in a prohibited transaction (as defined in Section 4975 of
the Code or Section 406 of ERISA) for which no statutory or administrative
exemption is applicable in connection with any Plan the consequences of
which, in the aggregate, constitute or can reasonably be expected to result
in a Material Adverse Change.
(t) Title to Assets. Each Loan Party has title, as of the date of each
of its financial statements delivered hereunder, to all of its material
assets reflected therein, except assets leased to it under a Capital Lease,
free and clear of all Liens except Permitted Liens.
(u) Collateral Documents. On and after the Closing Date and, with
respect to perfection upon the filing of the financing statements delivered
pursuant to Section 3.01(a), the provisions of each Collateral Document are
effective to create in favor of the Agent, for the benefit of the Lenders,
legal, valid and perfected security interests in all right, title and
interest in the Collateral described therein, enforceable against each Loan
Party that owns an interest in such Collateral, subject to laws generally
affecting the enforcement of creditors' rights.
(v) Senior Indebtedness. This Agreement is a "Bank Credit Agreement"
within the meaning of the 1992 Convertible Subordinated Debt Indenture and
the 1993 Convertible Subordinated Debt Indenture and a "Credit Agreement"
within the meaning of the 1994 Subordinated Debt Indenture, the 1995
Subordinated Debt Indenture and, upon the effectiveness thereof, the 1996
Subordinated Debt Indenture. The Obligations when incurred will be "Senior
Indebtedness" within the meaning of the Subordinated Debt Indentures.
<PAGE>
55
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Financial Covenants. So long as any Obligation remains
unpaid, any Letter of Credit remains outstanding or any Lender is obligated to
extend credit hereunder, unless the Requisite Lenders otherwise consent in
writing the Borrower will:
(a) Maximum Debt/EBITDAR Ratio. Maintain a Debt/EBITDAR Ratio,
determined as of the last day of each Quarter, at an amount not greater
than that set forth for such Quarter below:
Quarter(s) Ended Debt/EBITDAR Ratio
---------------- ------------------
March 31, 1996 6.00
June 30, 1996 6.50
September 30, 1996 6.50
December 31, 1996 6.00
March 31, 1997 5.75
June 30, 1997 5.75
September 30, 1997 5.50
December 31, 1997 5.35
March 31, 1998 5.25
June 30, 1998 5.25
September 30, 1998 5.00
December 31, 1998 4.75
In 1999 and thereafter 4.50
(b) Minimum Cash Flow Coverage Ratio. Maintain a Cash Flow Coverage
Ratio, determined as of the last day of each Quarter, at an amount not less
than that set forth for such Quarter below:
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56
Cash Flow
Quarter(s) Ended Coverage Ratio
---------------- --------------
In 1996 1.10
March 31, 1997 1.25
June 30, 1997 1.25
September 30, 1997 1.50
December 31, 1997 1.50
March 31, 1998 1.60
June 30, 1998 1.60
September 30, 1998 1.70
December 31, 1998 1.70
In 1999 and thereafter 2.00
(c) Minimum Interest&Rent Coverage Ratio. Maintain an Interest&Rent
Coverage Ratio, determined as of the last day of each Quarter, at an amount
not less than that set forth for such Quarter below:
Interest & Rent
Quarter(s) Ended Coverage Ratio
---------------- --------------
In 1996 1.50
In 1997 1.75
In 1998 2.10
In 1999 2.50
In 2000 and thereafter 3.00
(d) Minimum Net Worth. Maintain Adjusted Stockholders' Equity,
determined as of the last day of each Quarter, at an amount not less than
the then Minimum Net Worth.
SECTION 5.02. Affirmative Covenants. So long as any Obligation remains
unpaid, any Letter of Credit remains outstanding or any Lender is obligated to
extend credit hereunder, unless the Requisite Lenders otherwise consent in
writing the Borrower will, and will cause its Subsidiaries to:
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57
(a) Compliance with Laws. Comply in all material respects with all
applicable laws, rules, regulations and orders.
(b) Inspection of Property and Books and Records. Except in the case
of Inactive Subsidiaries, (i) maintain proper books of record and account,
in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all financial transactions and
matters involving its assets and business, and (ii) permit representatives
of the Agent or any Lender to visit and inspect any of its properties, to
examine its corporate, financial and operating records and make copies
thereof or abstracts therefrom, and to discuss its affairs, finances and
accounts with its officers, employees and independent public accountants,
all at the expense of the Borrower, in the case of visits or inspections by
the Agent and, if an Event of Default is then continuing, by any Lender,
and at such reasonable times during normal business hours and as often as
may be reasonably requested, upon reasonable advance notice to the
Borrower, except that when an Event of Default exists the Agent or any
Lender may take any such action at any time during business hours and on
same-day notice.
(c) Reporting Requirements. Furnish to the Lenders:
(i) as soon as available and in any event within 50 days after
the end of each of the first three Quarters in each fiscal year, the
consolidated balance sheet of the Borrower and its Subsidiaries as at
the end of such Quarter and their consolidated income and cash flow
statements for such Quarter and for the fiscal year to date, certified
by an Authorized Officer;
(ii) as soon as available and in any event within 95 days after
the end of each fiscal year of the Borrower, a copy of the annual
report on Form 10-K for such year for the Borrower and its
Subsidiaries, containing financial statements for such year certified
in a manner acceptable to the Requisite Lenders by KPMG Peat Marwick
or other independent public accountants acceptable to the Requisite
Lenders;
(iii) as soon as possible and in any event within 10 Business
Days after becoming aware of any (A) Change of Control or (B) Event of
Default or Potential Default continuing on the date of such statement,
a statement of an Authorized Officer or the office of the General
Counsel of the Borrower setting forth details of such Change of
Control or Event of Default or Potential Default, as the case may be,
and the action which the Borrower has taken and proposes to take with
respect thereto;
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58
(iv) promptly after the filing thereof, copies of all reports and
all registration statements for the sale of newly issued stock filed
with the Securities and Exchange Commission or any national securities
exchange;
(v) notice when, but in no event later than ten days after, it
becomes aware of any Material Environmental Claim or the presence of
any Hazardous Material in, on or under any of its property that is
likely to prohibit or restrict materially the occupancy,
transferability or use of such property under any Environmental Laws;
(vi) notice upon, but in no event later than ten days after, the
occurrence of any ERISA Event affecting the Borrower or any ERISA
Affiliate, together with (A) a copy of any notice with respect to such
ERISA Event that may be required to be filed with the PBGC and (B) any
notice delivered by the PBGC to the Borrower or any ERISA Affiliate
with respect to such ERISA Event;
(vii) concurrently with the delivery of the financial statements
referred to in clause (i) and (ii) above, a compliance certificate of
an Authorized Officer in substantially the form of Exhibit E-1 (A)
stating that, to the best of such officer's knowledge, the Borrower,
during such period, has observed or performed all covenants and
agreements and satisfied all conditions required under this Agreement
to be observed, performed or satisfied by it, and that such officer
has obtained no knowledge of any Event of Default or Potential Default
except as specified in such certificate, (B) showing in detail the
calculations supporting such statement in respect of Section 5.01, and
(C) setting forth, and showing in detail the calculations supporting,
the Pricing Ratio determined as of the most recent Pricing Test Date
in the period covered by such certificate;
(viii) within 50 days after the end of each Quarter, a Pricing
Certificate setting forth the Pricing Ratio as calculated as of the
last day of such Quarter;
(ix) prior to the consummation of any acquisition of a Health
Care Company or Health Care Facility for aggregate consideration of
$50,000,000 or more, a term sheet describing such acquisition;
provided that the Borrower shall not be required to deliver a term
sheet hereunder with respect to the First American Merger; and
promptly, and in any case within 10 Business Days of any such request,
any additional information relating to such acquisition reasonably
requested by the Agent or the Requisite Lenders;
(x) prior to the consummation of any acquisition of a Health Care
Company or Health Care Facility for which a pro forma calculation of
the
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59
Interest&Rent Coverage Ratio is required under Section 5.03(c)(xi), a
term sheet describing such acquisition, and such pro forma calculation
of the Interest&Rent Coverage Ratio; and promptly, and in any case
within 10 Business Days of any such request, any additional
information relating to such acquisition reasonably requested by the
Agent or the Requisite Lenders;
(xi) within 10 Business Days after the consummation of any
acquisition of a Health Care Company or Health Care Facility for
aggregate consideration of less than $50,000,000 and for which a pro
forma calculation of the Interest&Rent Coverage Ratio is not required
under Section 5.03(c)(xi), a term sheet describing such acquisition;
and promptly, and in any case within 10 Business Days of any such
request, any additional information relating to such acquisition
reasonably requested by the Agent or the Requisite Lenders;
(xii) as soon as possible, and in any event within five Business
Days (A) after becoming aware thereof, notice of the occurrence of any
event that is or would (with the passage of time, notice or both) be a
default under or a violation of any Health Care Permit necessary for
the lawful conduct of the business or operations of any Loan Party,
including the ownership and operation of its Health Care Facilities,
and that is or can reasonably be expected to result in a Material
Adverse Change; (B) after receipt thereof, any notice of any violation
of applicable laws that causes or could reasonably be expected to
cause any such Health Care Permit to be modified (except for
modifications which do not constitute and cannot reasonably be
expected to result in a Material Adverse Change), rescinded or
revoked; and (C) after becoming aware thereof, notice of the
occurrence of any event that constitutes or can reasonably be expected
to result in a Material Adverse Change;
(xiii) concurrently with the delivery of the financial statements
referred to in clause (i) and (ii) above, Schedule 4.01(d), as amended
to reflect the formation, acquisition or disposition of any Subsidiary
of the Borrower during the Quarter then ended;
(xiv) concurrently with the delivery of the financial statements
referred to in clause (i) and (ii) above, Schedule 4.01(e), as amended
to reflect the acquisition or disposition of any Health Care Facility
which is a skilled nursing facility, hospital, assisted living
facility or retirement facility during the Quarter then ended;
(xv) at least 10 Business Days prior to entering into any
Receivables Sale Program, a written description of the material terms
and provider of such program, the method of determining the
Purchasers' Aggregate
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60
Net Investment and the Receivables Program Charges of such program,
the maximum amount of the Purchasers' Aggregate Net Investment under
such program, and the amount and due date of any Facility Reduction or
repayment required under Section 2.06(e) in respect of such program;
(xvi) no later than the effective date of any change in the
Purchasers' Aggregate Net Investment under any Receivables Sale
Program, written notice of the amount and effective date of such
change and the amount of any Facility Reduction and prepayment
required under Section 2.06(e) after giving effect to such change; and
(xvii) such other information respecting the condition or
operations, financial or otherwise, of the Borrower or any of its
Subsidiaries as the Agent or any Lender through the Agent from time to
time may reasonably request.
(d) Preservation of Corporate Existence, Etc. Subject to Section
5.03(i) and except in the case of Inactive Subsidiaries, (i) preserve and
maintain in full force and effect its corporate or partnership existence
and good standing under the laws of its State or jurisdiction of
incorporation or organization and all rights, privileges, qualifications,
permits, licenses and franchises necessary or desirable in the normal
conduct of its business (provided that the failure at any one time to
maintain Health Care Permits with respect to any three Health Care
Facilities owned or leased by any one or more Subsidiaries of the Borrower
shall not constitute a failure to comply with this Section 5.02(d)(i)),
(ii) use its reasonable efforts, in the ordinary course and consistent with
past practice, to preserve its business organization and preserve the
goodwill and business of the customers, suppliers and others doing business
with it, and (iii) preserve or renew all of its registered trademarks,
trade names and services marks, the non-preservation of which constitutes
or could reasonably be expected to result in a Material Adverse Change.
(e) New Subsidiaries. Promptly, and in any event within 10 Business
Days, of (i) the formation or acquisition of a new Subsidiary of the
Borrower (other than an Inactive Subsidiary), (ii) the date a Subsidiary
ceases to be an Inactive Subsidiary, or (iii) the date on which any
Subsidiary of the Borrower that has not executed and delivered a Pledge and
Security Agreement acquires any stock of or other equity, ownership or
profit interest in, or debt or liability of or other claim against, any
other Subsidiary, (A) notify the Agent of such event; (B) amend Schedule A
of the relevant Pledge and Security Agreement as appropriate in light of
such event; (C) cause such Subsidiary to execute and deliver a Pledge and
Security Agreement in substantially the form of Exhibit C-3 and all
financing statements and other documents required thereunder or appropriate
to perfect the security interest created thereby; (D) deliver to the Agent
all stock certificates and other instruments added to the Collateral
thereby, accompanied by
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61
an undated stock power or transfer document executed in blank; and (E)
cause such Subsidiary to deliver an executed counterpart of the Guaranty
and deliver to the Agent a Guarantor Confirmation setting forth the
Guarantor Liability Limit as to such Subsidiary.
(f) Maintenance of Property. Maintain and preserve all its property
which is necessary for use in its business in good working order and
condition, except ordinary wear and tear and except as permitted under
Section 5.03(b), and use the standard of care typical in the industry in
the operation of the Health Care Facilities.
(g) Insurance. Maintain insurance with financially sound and reputable
insurers with respect to its properties and business against loss or damage
of the kinds customarily insured against by Persons engaged in the same or
similar business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons, including
workers' compensation insurance, public liability and property and casualty
insurance, except that (i) the Borrower shall be permitted to maintain self
insurance with respect to health care benefits provided to employees and
with respect to workers' compensation insurance so long as the Borrower
also maintains, with financially sound and reputable insurers, stop loss
insurance of the type and in amounts customarily maintained by Persons
engaged in the same or similar business as are customarily carried under
similar circumstances by such other Persons and (ii) insurance need not be
maintained by or for the benefit of Inactive Subsidiaries. Upon request of
the Agent, the Borrower shall furnish the Agent, with copies for each
Lender, at reasonable intervals (but not more than once per calendar year),
a certificate of an Authorized Officer (and, if requested by the Agent, any
insurance broker of the Borrower) setting forth the nature and extent of
all insurance maintained by the Borrower and its Subsidiaries in accordance
with this Section 5.02(g) (and which, in the case of a certificate of a
broker, was placed through such broker).
(h) Payment of Obligations. Pay and discharge all of its obligations
and liabilities, including:
(i) as they become due and payable, all claims for tax
liabilities, assessments and governmental charges or levies against it
or upon its properties or assets;
(ii) as they become due and payable, all lawful claims which, if
unpaid, would, with the passage of time or notice or both, by law
become a Lien upon its property;
(iii) before expiration of any period of grace expressly
provided, all claims for payments due under any lease of a Health Care
Facility or any equipment therein; and
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62
(iv) before expiration of any period of grace expressly provided,
all claims for Debts as and when due and payable (subject to any
subordination provisions contained in any instrument evidencing, or
indenture or agreement governing, such Debt);
except that it may contest in good faith any claims and may permit the
claims so contested to remain unpaid during any period, including appeals,
when it is in good faith contesting the same, so long as (A) adequate
reserves have been established to the extent required by GAAP or other
adequate provision for the payment thereof has been made, (B) enforcement
of the contested claim is effectively stayed for the entire duration of
such contest, and (C) any claim determined to be due, together with any
interest or penalties thereon, is paid promptly, and in any event within
three Business Days, after resolution of such contest.
(i) Environmental Laws. Conduct its operations and keep and maintain
its property in compliance in all material respects with all applicable
Environmental Laws and Environmental Permits; and prepare at the Borrower's
sole cost and expense and deliver to the Agent and the Lenders such updates
as the Agent or the Requisite Lenders may reasonably request relating to
any Material Environmental Claim.
(j) Use of Proceeds. Use the proceeds of the Advances first to pay all
obligations under the Existing Facility and from time to time to retire all
Funded LC Exposure and other Obligations then due hereunder and thereafter
for working capital, acquisitions (provided that any such acquisition is
approved by the board of directors or equivalent governing body of the
target of such acquisition at the time of the initial offer by the Borrower
or one or more of its Subsidiaries) and other general corporate purposes of
the Borrower and its Subsidiaries not in contravention of any law or this
Agreement.
(k) Health Care Permits and Approvals. Take all action necessary (i)
to maintain in full force and effect all Health Care Permits necessary for
the lawful conduct of its business or operations wherever now conducted and
as planned to be conducted, including the ownership and operation of its
Health Care Facilities, pursuant to all applicable laws and all
requirements of Governmental Authorities having jurisdiction over it or any
part of its operations; and (ii) ensure that all Health Care Facilities
owned or leased by it are entitled to participate in, and receive payment
under, the appropriate Medicare, Medicaid and related reimbursement
programs, and any similar state or local government-sponsored program to
the extent that it has decided to participate in any such state or local
program, and to receive reimbursement from private and commercial payors
and health maintenance organizations to the extent applicable thereto;
provided that the failure at any one time to maintain Health Care Permits
with respect to any three Health Care Facilities owned or leased by any one
or more
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63
Subsidiaries of the Borrower shall not constitute a failure to comply with
this Section 5.02(k).
(l) Further Assurances. (i) Promptly and in no event later than five
Business Days after becoming aware thereof, notify the Lenders if any
written information, exhibits and reports furnished to the Lenders contain
any untrue statement of a material fact or omit to state any material fact
or any fact necessary to make the statements contained therein not
misleading in light of the circumstances in which made, and correct any
defect or error that may be discovered therein or in the execution,
acknowledgement or recordation of any Loan Document.
(ii) Promptly upon request by the Agent or the Requisite Lenders,
execute, deliver, acknowledge, file, re-file, register and re-register any
and all such further acts, security agreements, assignments, estoppel
certificates, financing statements and continuations thereof, termination
statements, notices of assignment, transfers, certificates, assurances and
other instruments as the Agent or the Requisite Lenders may reasonably
require from time to time in order (A) to carry out more effectively the
purposes of this Agreement or any other Loan Document, (B) to subject to
the Liens created by any of the Collateral Documents any of the properties,
rights or interests described in or intended to be covered by any
Collateral Document, (C) to comply with Section 5.03(1), (D) to establish
and maintain the validity, effectiveness, perfection and priority of any
Collateral Document or any Liens intended to be created thereby, or (E) to
better assure, convey, grant, assign, transfer, preserve, protect and
confirm to the Agent and the Lenders the rights granted or now or hereafter
intended to be granted to the Lenders under any Loan Document or under any
other instrument executed in connection therewith.
SECTION 5.03. Negative Covenants. So long as any Obligation remains unpaid,
any Letter of Credit remains outstanding or any Lender is obligated to extend
credit hereunder, without the written consent of the Requisite Lenders the
Borrower will not, and will not cause or permit any Subsidiary of the Borrower
to:
(a) Liens. Directly or indirectly make, create, incur, assume or
suffer to exist any Lien upon or with respect to any part of its property
or assets, whether now owned or hereafter acquired, or become or remain
bound by any agreement to do so, except:
(i) any Lien (other than a Lien on the Collateral) (A) existing
on the Closing Date and described in Schedule 5.03(d), securing Debt
permitted under Section 5.03(d)(ii), or (B) granted to secure any
extension, renewal, refinancing or replacement of any such Debt if (1)
the principal amount secured thereby is not increased and (2) the
property subject to the Lien so granted is
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64
limited to the property that was subject to the original Lien and any
accessions, fixtures, improvements or equipment added thereto in the
ordinary course of business;
(ii) any Lien created under any Loan Document;
(iii) any Lien for taxes, fees, assessments or other governmental
charges which are not delinquent and remain payable without penalty or
which are being contested as permitted under Section 5.02(h);
(iv) any carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Lien arising in the
ordinary course of business which is not delinquent or remains payable
without penalty or which is being contested as permitted under Section
5.02(h);
(v) any Lien (other than a Lien imposed by Environmental Laws or
by ERISA) on the property of the Borrower or any of its Subsidiaries
imposed by law, or pledges or deposits required by law pursuant to
worker's compensation, unemployment insurance and other social
security legislation;
(vi) any easement, right-of-way, restriction and other similar
encumbrance with respect to real property incurred in the ordinary
course of business if, in the aggregate, such items are not
substantial in amount and do not constitute and cannot reasonably be
expected to result in a Material Adverse Change;
(vii) any Lien arising out of any judgment or award against it,
if (A) such Lien is being contested as permitted under Section
5.02(h), (B) there is no material likelihood of the sale, forfeiture
or loss of any part of its properties, and (C) such Lien does not
materially interfere with the use of any material part of its
properties;
(viii) any Lien on property of a Person which becomes a
Subsidiary after the date of this Agreement if such Lien existed at
the time such Person became a Subsidiary of the Borrower and was not
created in anticipation thereof;
(ix) any Lien upon property of a Subsidiary of the Borrower
securing Debt of such Subsidiary permitted under Section 5.03(d)(iv),
if with respect to such Lien each of the conditions set forth in
Section 5.03(d)(iv) is satisfied;
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65
(x) the interest of the purchasers, and their transferees, under
any Receivables Sale Program in the accounts receivable of the
Borrower's Subsidiaries and proceeds thereof and records related
thereto; provided that the Facility Reduction required under Section
2.06(e) is in effect;
(xi) any Lien upon property of the Borrower or any Subsidiary
thereof securing Debt permitted under Section 5.03(d)(iii)(A); and
(xii) any Lien held by a third party insurance company with which
the Borrower or any Subsidiary thereof has established a dedicated
cash collateral account and deposited therein an amount not in excess
of $15,000,000 less the aggregate amount of any Investments made by
the Borrower or any Subsidiary thereof pursuant to Section
5.03(c)(xiii); provided that such account shall not collateralize any
obligations of any Person other than the Borrower and wholly-owned
Subsidiaries thereof;
or become or remain bound by any agreement restricting its ability to
grant, create, incur, assume or suffer to exist any Lien upon or with
respect to any part of its property or assets, whether now owned or
hereafter acquired, except (A) restrictions set forth in the Loan
Documents, (B) restrictions set forth in the Subordinated Debt Indentures,
(C) restrictions on the enforcement of junior Liens on property secured by
a Lien permitted under clauses (i) or (ix) of this Section 5.03(a), if such
restrictions are enforceable solely by the holder of the Lien so permitted,
(D) restrictions on the creation of a Lien on the lessee's interest under a
lease, if such restrictions are enforceable solely by the lessor (or any
lender to such lessor providing financing secured by assignment of such
lease) under such lease, and (E) restrictions on the creation of a Lien on
the accounts receivable subject to a Receivables Sale Program, and the
proceeds thereof and records related thereto, if such restrictions are
enforceable solely by the purchasers under such Receivables Sale Program
and their transferees.
(b) Disposition of Assets. Engage in any Asset Sale or otherwise
directly or indirectly sell, assign, lease, convey, transfer or otherwise
dispose of all or any portion of its assets, business or property, or agree
to do any of the foregoing, except:
(i) the disposition of inventory or used, worn-out or surplus
property or equipment or Permitted Cash Investments in the ordinary
course of business;
(ii) the sale of equipment for credit against the purchase price
of similar replacement equipment or if the proceeds of the sale are
reasonably promptly applied to the purchase price of similar
replacement equipment;
<PAGE>
66
(iii) the disposition of accounts receivable of the Borrower's
Subsidiaries pursuant to a Receivables Sale Program; provided that the
Facility Reduction required under Section 2.06(e) is in effect;
(iv) the sale of Schedule 1.01(b) Assets, so long as (A) the
entire consideration for such Asset Sale consists of cash received at
the closing thereof, (B) the consideration received for such assets is
not less than the sales price specified therefor in Schedule 1.01(b)
and (C) at the time of or after giving effect to such Asset Sale, no
Event of Default or Potential Default exists;
(v) the sale of Schedule 1.01(c) Assets which is made for fair
market value, so long as (A) at least 70% of the total consideration
for such Asset Sale consists of cash received at the closing thereof,
(B) the Agent concurrently acquires, on the terms set forth in the
Pledge and Security Agreements, a legal, valid and perfected security
interest in any and all non-cash consideration received in such Asset
Sale, (C) at the time of or after giving effect to such Asset Sale, no
Event of Default or Potential Default exists, and (D) if such Asset
Sale is a Retained Interest Sale, then, after giving effect to such
transaction and all related transactions, either (1) the Retained
Interest Criteria shall be met with respect to such transactions at
the time of consummation thereof, or (2) the Partial Disposition Limit
shall not be exceeded;
(vi) any other Asset Sale which is made for fair market value, so
long as (A) the sum of the aggregate consideration received pursuant
to such Asset Sale plus the aggregate consideration received pursuant
to all such other Asset Sales in any calendar year is less than
$30,000,000, (B) the Agent concurrently acquires, on the terms set
forth in the Pledge and Security Agreements, a legal, valid and
perfected security interest in any and all non-cash consideration
received in such Asset Sale, (C) at the time of or after giving effect
to such Asset Sale, no Event of Default or Potential Default exists,
and (D) if such Asset Sale is a Retained Interest Sale, then, after
giving effect to such transaction and all related transactions, either
(1) the Retained Interest Criteria shall be met with respect to such
transactions at the time of consummation thereof, or (2) the Partial
Disposition Limit shall not be exceeded; and
(vii) the sale for fair market value or liquidation of any assets
acquired or Investments made pursuant to Section 5.03(c)(xiii), so
long as the entire consideration therefor consists of cash received at
the closing thereof.
(c) Investments. Directly or indirectly make, acquire, carry or
maintain any Investment, or become or remain bound by any agreement to
make, acquire, carry or maintain any Investment, except:
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67
(i) Investments in Permitted Cash Investments;
(ii) Investments in accounts or notes receivable or other claims
arising from the sale or lease of goods or services in the ordinary
course of business;
(iii) Investments by the Borrower in a wholly-owned Subsidiary of
the Borrower, for purposes related to the business and operations
conducted by such Subsidiary in the ordinary course and not to acquire
any new business, Health Care Facility or Health Care Company;
(iv) loans and advances, in an aggregate amount not greater than
$10,000,000 in any calendar year, to employees of the Borrower or of
any Subsidiary of the Borrower;
(v) Investments held on the Closing Date and described in
Schedule 5.03(c);
(vi) loans made to the Borrower, any wholly-owned Subsidiary of
the Borrower or any Subsidiary of the Borrower then satisfying the
Retained Interest Criteria by a Subsidiary of the Borrower;
(vii) Investments in the construction or improvement of a Health
Care Facility and other Investments in assets added to property, plant
or equipment, but (A) only if the Hard Costs associated with such
Investments are counted as Capital Expenditures and (B) excluding a
purchase or other acquisition of a Health Care Facility;
(viii) Investments (A) in the common stock of companies that are
'34 Act Companies if the aggregate amount so invested at any one time
does not exceed $50,000, or (B) in the stock of Health Care Companies
that are '34 Act Companies if the aggregate amount so invested at any
one time does not exceed $20,000,000; provided that, except as
otherwise permitted under Sections 5.03(c)(x) and 5.03(c)(xiv), the
Borrower and its Subsidiaries shall not hold more than 4.9% of the
outstanding stock of any '34 Act Company at any one time;
(ix) Investments in promissory notes and other non-cash
consideration received in connection with any Asset Sale permitted
under Section 5.03(b)(v) or Section 5.03(b)(vi);
(x) Investments in Persons that are not wholly-owned Subsidiaries
of the Borrower (including, without limitation, joint ventures) and
<PAGE>
68
that are not '34 Act Companies at the time of any such Investment;
provided that (A) the aggregate amount of such Investments in any
calendar year shall not exceed (1) $40,000,000 plus the lesser of (x)
$40,000,000 minus the amount so invested in the prior calendar year or
(y) $15,000,000, or (2) in the event that the Debt/EBITDAR Ratio is
less than 5.50 for two consecutive Quarters, $60,000,000 plus the
lesser of (x) $60,000,000 minus the amount so invested in the prior
calendar year or (y) $20,000,000; provided, however, that in the event
that the Debt/EBITDAR Ratio is thereafter greater than 5.50 for any
two consecutive Quarters, the limitation set forth in subclause (1)
above shall apply until the Debt/EBITDAR Ratio is again less than 5.50
for two consecutive Quarters; provided further that neither the
Borrower nor any Subsidiary thereof shall be obligated to dispose of
any Investment permitted under this clause (A) in the event that the
aggregate amount of Investments hereunder in any calendar year exceeds
the limitation set forth in subclause (1) above, so long as any
Investments made in excess of such limitation were, at the time such
Investments were made, permitted under and made within the limitation
set forth in subclause (2) above; (B) any such Investment shall be
made by the Borrower through a wholly-owned Subsidiary of the Borrower
that (1) is engaged only in activities related to the Person in which
such Investment is made and (2) complies with the provisions of
Section 5.02(e) (except that any such Investment which is a loan may
be made directly by the Borrower so long as the Borrower complies with
Section 5.03(1) and Section 5.02(l)), and neither the Borrower nor any
of its Subsidiaries nor any of their properties shall be or become
bound by or subject to any contractual obligation that is or would be
violated or put in default by reason of such compliance or by reason
of the enforcement of the claims and Liens of the Agent and Lenders
arising from such compliance; and (C) at the time of or after giving
effect to any such Investment, no Event of Default or Potential
Default exists or would result; provided further that the Borrower or
any Subsidiary thereof may continue to carry such Investment in the
event such Person becomes a '34 Act Company;
(xi) Investments by existing, newly-formed or acquired
wholly-owned Subsidiaries of the Borrower in one or more Health Care
Companies or Health Care Facilities; provided that (A) the aggregate
cash portion of the aggregate consideration for all such Investments
shall not exceed an amount equal to 50% of the Net Cash Proceeds of
Sale of (1) Schedule 1.01(b) Assets, (2) Schedule 1.01(c) Assets and
(3) assets sold pursuant to Section 5.03(b)(vi); provided further
that, notwithstanding the foregoing limitations, the Borrower or any
wholly-owned Subsidiary thereof may make Investments under this
Section 5.03(c)(xi) for consideration (exclusive of the value of any
equity interests of the Borrower or such Subsidiary thereof issued as
part of such Investments) of up to an aggregate for all such
Investments of $150,000,000 if, on a pro forma basis,
<PAGE>
69
after giving effect to any such Investment (including Interest Expense
arising from Debt incurred in connection with any such Investment),
the Interest&Rent Coverage Ratio for the 12-month period ending at the
end of the most recently ended Quarter exceeds:
Year Minimum Pro Forma Ratio
---- -----------------------
1996 1.75
1997 2.00
1998 2.25
1999 2.65
2000 and thereafter 3.15
(B) at the time of or after giving effect to any such Investment, no
Event of Default or Potential Default exists or results; and (C) each
entity that becomes a Subsidiary of the Borrower in connection with or
as a result of any such Investment shall comply with the provisions of
Section 5.02(e), and neither the Borrower nor any of its Subsidiaries
nor any of their properties shall be or become bound by or subject to
any contractual obligation that is or would be violated or put in
default by reason of such compliance or by reason of the enforcement
of the claims and Liens of the Agent and Lenders arising from such
compliance;
(xii) The First American Merger; provided that (A) (x) the
Settlement Releases (as defined in the First American Merger
Agreement) shall have been received and (y) the order confirming the
plan of reorganization in the bankruptcy proceeding of First American
shall be final and nonappealable and the terms and conditions of such
order, plan of reorganization and any amendment, modification or
waiver of any provision of the First American Merger Agreement after
the date hereof shall be satisfactory to the Agent in its sole
discretion; provided further that, to the extent any term or condition
of any such order, plan of reorganization or any such amendment,
modification or waiver (x) increases (1) the aggregate purchase price
payable by the Borrower or any of its Subsidiaries in connection with
such merger, (2) the cash portion of such purchase price payable by
the Borrower or any of its Subsidiaries at the closing of such merger
or (3) by more than $10,000,000 the aggregate amount of any
obligations assumed by the Borrower or any of its Subsidiaries in
connection with such merger, or (y) accelerates the timing of any
payment of consideration (deferred, contingent or otherwise) in excess
of $10,000,000 in the aggregate under the First American Merger
Agreement, such terms or conditions or amendment, modification or
waiver shall be satisfactory to the Requisite Lenders in their sole
discretion; (B) at the time of or after giving effect to the First
American Merger, no Event of
<PAGE>
70
Default or Potential Default shall exist or result; and (C) the
Borrower shall comply with the provisions of Section 5.02(e), and
neither the Borrower nor any of its subsidiaries nor any of their
properties shall be or become bound by or subject to any contractual
obligation that is or would be violated or put in default by reason of
such compliance or by reason of the enforcement of the claims and
Liens of the Agent and Lenders arising from such compliance;
(xiii) Investments in one or more insurance company Subsidiaries
in an aggregate amount not greater than $15,000,000 less the aggregate
amount of all deposits by the Borrower or any subsidiary thereof with
one or more third party insurance companies, and with respect to which
deposits Liens are permitted pursuant to Section 5.03(a)(xii);
provided that (A) in the case of any such insurance company
Subsidiary, it shall be formed as an insurance company solely to do
business as such under and in accordance with all laws, regulations,
directives and administrative orders applicable to insurance companies
in its jurisdiction of organization; (B) no such Subsidiary shall
insure obligations of any Person other than the Borrower and
wholly-owned Subsidiaries thereof; and (C) the aggregate potential
liability of the Borrower and its subsidiaries in connection with such
Investment shall not exceed the aggregate amount of Investments
permitted under this Section 5.03(c)(xiii);
(xiv) Investments carried or maintained in Affiliates arising out
of Retained Interest Sales, including any such Investment carried or
maintained in a Person that becomes a '34 Act Company; and
(xv) The acquisitions described in Schedule 5.03(c)(xv); provided
that (A) the aggregate cash portion of the consideration for any such
acquisition shall not exceed the cash purchase price specified
therefor in Schedule 5.03(c)(xv); (B) at the time of or after giving
effect to any such acquisition, no Event of Default or Potential
Default shall exist or result; and (C) the Borrower shall comply with
the provisions of Section 5.02(e), and neither the Borrower nor any of
its Subsidiaries nor any of their properties shall be or become bound
by or subject to any contractual obligation that is or would be
violated or put in default by reason of such compliance or by reason
of the enforcement of the claims and Liens of the Agent and Lenders
arising from such compliance.
(d) Limitation on Indebtedness. Directly or indirectly create, incur,
assume, guarantee or suffer to exist, or otherwise become or remain
directly or indirectly liable with respect to, any Debt, except:
(i) the Obligations;
<PAGE>
71
(ii) Debt existing on the Closing Date and described in Schedule
5.03(d) and any extension, renewal or refinancing of such Debt so long
as either (A) the principal amount of such Debt is not increased or
(B) any increase in the principal amount of such Debt is permitted
pursuant to another clause of this Section 5.03(d);
(iii) any intercompany loan made (A) by the Borrower or any
wholly-owned Subsidiary thereof to any Person that is a Subsidiary of
the Borrower at the time such loan is made; provided that any such
loan made by the Borrower or any wholly-owned Subsidiary thereof to
any Person that is a wholly-owned Subsidiary of the Borrower at the
time such loan is made shall be repayable on demand; provided further
that, in the case of any loan to a non-wholly-owned Subsidiary of the
Borrower, (1) the Investment in such loan is permitted under Section
5.03(c) and (2) such loan shall be subject to the limitations on
Investments provided for therein; or (B) to the Borrower or any
wholly-owned Subsidiary thereof by any Subsidiary of the Borrower;
(iv) Debt (A) owed by a Health Care Company acquired in an
acquisition permitted under Section 5.03(c)(xi), Section 5.03(c)(xii)
or Section 5.03(c)(xv), if such Debt was outstanding prior to the
acquisition, (B) owed by a Subsidiary of the Borrower, if the
Subsidiary makes an acquisition permitted under Section 5.03(c)(xi),
Section 5.03(c)(xii) or Section 5.03(c)(xv) and incurs and uses such
Debt for the purpose of paying the purchase price or other
consideration for the acquisition, or (C) incurred or used by any
Subsidiary of the Borrower to purchase or otherwise acquire any
equipment for its business, but such Debt shall be permitted only if
and so long as the following conditions are met:
(1) such Debt (I) may be secured only by assets of the
Subsidiary that incurred it, (II) may be incurred and owed only
by a single Subsidiary that, if it owes Debt of the type
described at (A) and (B) in this clause (iv), has no significant
assets except those acquired in such acquisition, and equipment,
fixtures and improvements thereon, replacements thereof,
inventory therefor, and assets generated by operation thereof,
(III) must not be subject to terms that are violated, or pursuant
to which such Debt is put into default, by reason of any breach,
default or event of default under any indenture or agreement
governing any other Debt or lease binding on the Borrower or any
of its other Subsidiaries, (IV) must permit the Borrower and such
Subsidiary to comply with Section 5.02(e), and (V) must not be
violated or put into default or require any prepayment or
repurchase of such Debt by reason of any change in control over
the Borrower or such Subsidiary except, if required by the holder
of
<PAGE>
72
such Debt despite best efforts by the Borrower to the contrary, a
right to consent to a change of ownership of such Subsidiary if
such consent may not unreasonably be withheld; and
(2) the aggregate principal amount of all such Debt incurred
at any time after the Closing Date and outstanding at any one
time in a particular year must not exceed:
Year Maximum Amount
---- --------------
1996 $45,000,000
1997 $55,000,000
1998 $65,000,000
1999 and thereafter $75,000,000
; and
(v) Subordinated Debt incurred under the 1996 Subordinated Debt
Indenture, and any extension, renewal or refinancing of such Debt so
long as either (A) the principal amount of such Debt is not increased
or (B) any increase in the principal amount of such Debt is permitted
pursuant to another clause of this Section 5.03(d); provided that the
terms and conditions of such 1996 Subordinated Debt Indenture shall be
(1) substantially similar to the terms and conditions contained in the
1994 Subordinated Debt Indenture and the 1995 Subordinated Debt
Indenture and (2) satisfactory to the Agent in its sole discretion.
(e) Transactions with Affiliates. Enter or agree to enter into any
transaction with any Affiliate of the Borrower or of any Subsidiary of the
Borrower except (i) under the Loan Documents or (ii) in the ordinary course
of business and pursuant to the reasonable requirements of the business of
the Borrower or such Subsidiary and upon fair and reasonable terms no less
favorable to the Borrower or such Subsidiary than the Borrower or such
Subsidiary would obtain in a comparable arm's-length transaction with a
Person not an Affiliate of the Borrower or such Subsidiary.
(f) Accommodation Obligations. Create, incur, assume or suffer to
exist any Accommodation Obligations except:
(i) endorsements of checks for collection or deposit in the
ordinary course of business;
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73
(ii) Accommodation Obligations of the Borrower and its
Subsidiaries existing as of the Closing Date and described in Schedule
5.03(f);
(iii) the Obligations;
(iv) a guaranty by the Borrower of Debt of a Subsidiary permitted
under Section 5.03(d)(iv);
(v) a guaranty by the Borrower of the obligations of a Subsidiary
under a lease agreement permitted under Section 5.03(g);
(vi) a guaranty of the performance of the representations and
warranties, indemnities and servicing commitments of a Subsidiary (A)
to the purchasers under a Receivables Sale Program and their
transferees, (B) contained in any purchase or sale agreement entered
into in connection with any Investment or Asset Sale permitted under
this Agreement, and (C) contained in any management agreement entered
into in the ordinary course of such Subsidiary's business; and
(vii) any other Accommodation Obligation to the extent the same
does not cause an Event of Default under Section 5.01(a).
(g) Leases of Health Care Facilities. Enter into or become obligated
as lessee under any lease of a Health Care Facility, whether or not it is a
Capital Lease, unless (i) the lease is free from provisions pursuant to
which the lease is violated or put into default by reason of any breach,
default or event of default under any indenture or agreement governing any
Debt of, or other lease binding on, the Borrower or any of its other
Subsidiaries, except another lease entered into by the same lessor or by
one of its Affiliates, (ii) the lease permits the Borrower and such
Subsidiary to comply with Section 5.02(e) and does not include any
provision that is or would be violated or put in default by reason of such
compliance or by reason of the enforcement of the claims and Liens of the
Agent and Lenders arising from such compliance, and (iii) the lease is free
from provisions pursuant to which the lease is or would be violated or put
into default, or any prepayment would be required, by reason of any change
in control of the Borrower or such Subsidiary except, if required by the
lessor despite best efforts by the Borrower to the contrary, a right to
consent to a change of ownership of such Subsidiary if such consent may not
unreasonably be withheld; provided that at any one time the Borrower or any
of its Subsidiaries may be obligated as a lessee under one or more leases
of Health Care Facilities not otherwise permitted under this Section
5.03(g) so long as the aggregate annual rent payment obligations under all
such leases is less than $10,000,000.
<PAGE>
74
(h) Restricted Junior Payments. Directly or indirectly (i) declare or
make any dividend payment or other distribution of assets, properties,
cash, rights, obligations or securities on account of any shares of any
class of its capital stock or any other equity, ownership or profit
interests; (ii) purchase, redeem or otherwise acquire for value any shares
of any class of capital stock of, or other equity, ownership or profit
interests in, the Borrower or any of its Subsidiaries or any warrants,
rights or options to acquire any such shares or interests, now or hereafter
outstanding; (iii) enter into any agreement restricting the ability of any
Subsidiary of the Borrower to declare or make any dividend payment or other
distribution of assets, properties, cash, rights, obligations or securities
to its stockholders; (iv) agree to or permit any amendment or modification
of, or change in, any of the terms of the Subordinated Debt Indentures,
except as contemplated by and pursuant to the Consent Solicitation; or (v)
pay, prepay, redeem, or purchase or otherwise acquire any Subordinated
Debt, or make any deposit to provide for the payment of any Subordinated
Debt when due, or exchange any Subordinated Debt, or give any notice in
respect thereof; except that:
(A) the Borrower may declare and pay cash dividends on its common
stock, so long as (1) no Event of Default or Potential Default is
continuing at the time any such dividend is declared or paid or would
result from the payment and (2) the aggregate amount of all such cash
dividends paid in any one calendar year does not exceed the lesser of
(x) $0.05 per share and (y) $10,000,000 in the aggregate;
(B) the Borrower from time to time may purchase outstanding
shares of the Borrower's common stock, so long as (1) the aggregate
amount expended for all such purchases at any time after the Closing
Date does not exceed $20,000,000 (the "PURCHASE LIMIT") and (2) the
purchase is made in compliance with all applicable laws and no
Potential Default or Event of Default exists at the time of, or would
result from, any such purchase (and, for this purpose, the amounts
counted toward the Purchase Limit shall not be reduced by or on
account of any subsequent resale of the Borrower's common stock);
(C) the Borrower may declare and make any dividend payments or
other distributions payable solely by the Borrower in common stock of
the Borrower;
(D) so long as no Event of Default exists or would result, any
Subsidiary may (1) make any lawful distribution to the holders of
shares of its stock or other equity, ownership or profit interests and
(2) purchase, acquire or retire any such shares or interests that are
not held by the Borrower or a wholly-owned Subsidiary of the Borrower,
if the Investment in such shares or
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75
interests is permitted at the time under Section 5.03(c)(x),
5.03(c)(xi) or Section 5.03(c)(xii);
(E) the Borrower may pay when due the interest on the
Subordinated Debt if such interest is permitted to be paid at the time
under the subordination provisions of the governing Subordinated Debt
Indenture;
(F) the Borrower may give notice of a redemption with respect to
any issue of Convertible Subordinated Debt, if and only if (1) the
purpose of such notice is to force the holders of such Convertible
Subordinated Debt to convert their Convertible Subordinated Debt into
common stock of the Borrower and (2) at the time of the giving of such
notice no Event of Default or Potential Default has occurred and is
continuing; provided, however, that the Borrower may make any
redemption payment by reason of tenders actually made pursuant to such
notice only if either (x) the conversion of such Convertible
Subordinated Debt to common stock is underwritten by a third party
acceptable to the Agent and the Requisite Lenders or (y) any
redemption payment required to be made pursuant to such notice would
not cause Adjusted Stockholders' Equity to be less than Minimum Net
Worth and no Event of Default or Potential Default is continuing at
the time of, or would exist after giving effect to, any such
redemption payment; and
(G) so long as no Event of Default exists or would result and
unless otherwise prohibited under this Agreement, the 1993 Convertible
Subordinated Debt Indenture or the 1995 Subordinated Debt Indenture,
the Borrower may pay on January 1, 2001 and May 15, 2002,
respectively, any principal amount then due and payable under the 1993
Convertible Subordinated Debt Indenture and the 1995 Subordinated Debt
Indenture.
(i) Mergers, Etc. Merge or consolidate with or into or enter into any
agreement to merge or consolidate with or into any Person except that:
(i) a wholly-owned Subsidiary of the Borrower may engage in a
merger or consolidation with any one or more other wholly-owned
Subsidiaries of the Borrower if the surviving corporation is a
wholly-owned Subsidiary of the Borrower (A) that has executed the
Guaranty and (B) all the stock of which is held by the Agent in pledge
pursuant to the Collateral Documents;
(ii) a non-wholly-owned Subsidiary of the Borrower may engage in
a merger or consolidation with any one or more other non-wholly- owned
Subsidiaries of the Borrower; provided that the surviving corporation
is a Subsidiary of the Borrower, (A) that has executed the Guaranty
and (B) the stock
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76
of which, to the extent owned by the Borrower or any Subsidiary
thereof, is held by the Agent in pledge pursuant to the Collateral
Documents; and provided further that, after giving effect to any such
merger or consolidation, (1) the Borrower shall, directly or
indirectly, own an equity interest in the surviving corporation
substantially equivalent in aggregate value to its prior equity
interests in the non-wholly-owned Subsidiaries party to such merger or
consolidation, and (2) the surviving corporation shall satisfy the
Retained Interest Criteria as if such merger or consolidation had been
a Retained Interest Sale;
(iii) a wholly-owned Subsidiary of the Borrower may engage in a
merger or consolidation in connection with an acquisition permitted
under Section 5.03(c)(xi) or Section 5.03(c)(xii), but only if the
surviving corporation is a wholly-owned Subsidiary of the Borrower (A)
that has executed the Guaranty and (B) all the stock of which is held
by the Agent in pledge pursuant to the Collateral Documents; and
(iv) a Subsidiary of the Borrower may engage in a merger or
consolidation if the purpose and effect thereof is solely to
consummate a transaction permitted under Section 5.03(b)(iv), Section
5.03(b)(v) or Section 5.03(b)(vi).
(j) Capital Expenditures. Make Capital Expenditures during any
calendar year in an amount in excess of the amount set forth below opposite
such year:
Year Amount
---- ------
1996 $100,000,000
1997 $ 90,000,000
1998 and thereafter $ 80,000,000
plus in each calendar year the lesser of (i) $10,000,000 and (ii) the
excess, if any, of (A) the amount set forth above for the prior year over
(B) the Capital Expenditures made in the prior year.
(k) Conduct of Business. Engage in any business other than the
businesses of the Borrower and its Subsidiaries described in Section
4.01(p) and any business or activity substantially similar thereto.
(l) Unpledged Assets. In the case of the Borrower, own or hold any
assets, Investments or property upon which the Agent does not hold a valid,
perfected and sole Lien as security for the Obligations, except (i)
Investments permitted under clauses (i) and (iv) of Section 5.03(c), (ii)
Investments permitted under Section 5.03(c)(xiii), but
<PAGE>
77
only to the extent that the perfection of the Agent's Lien on such
Investments is prohibited by applicable law, (iii) other assets and
property having an aggregate value not greater than $30,000,000, and (iv)
shares of Inactive Subsidiaries.
(m) Compliance with ERISA. Directly or indirectly (or permit any ERISA
Affiliate directly or indirectly to) (i) terminate any Plan subject to
Title IV of ERISA so as to result in liability to the Borrower or any ERISA
Affiliate in excess of $2,000,000; (ii) permit any ERISA Event to exist;
(iii) make a complete or partial withdrawal (within the meaning of ERISA
Section 4201) from any Multiemployer Plan so as to result in liability to
the Borrower or any ERISA Affiliate in excess of $2,000,000; or (iv) permit
the total Unfunded Pension Liabilities (using the actuarial assumptions
utilized by the PBGC) for all Pension Plans (other than Pension Plans which
have no Unfunded Pension Liabilities) to exceed $2,000,000.
(n) Health Care Permits and Approvals. Engage in any activity that (i)
is or could reasonably be expected to result in a material default under or
violation of any Health Care Permit necessary for the lawful conduct of its
business or operations or (ii) causes or could reasonably be expected to
cause the loss by any Health Care Company or Health Care Facility owned,
leased, managed or operated by it of the right to participate in, and
receive payment under, the appropriate Medicare, Medicaid and related
reimbursement programs, and any similar state or local government-sponsored
program to the extent that it has decided to participate in any such state
or local program, or to receive reimbursement from private and commercial
payors and health maintenance organizations to the extent applicable
thereto; provided that the failure at any one time to maintain Health Care
Permits with respect to any three Health Care Facilities owned or leased by
one or more Subsidiaries of the Borrower shall not constitute a failure to
comply with this Section 5.03(n).
(o) Retained Interest Criteria. Cause, permit or suffer any of the
Retained Interest Criteria not to be met and maintained continuously after
the consummation of any transaction permitted under Section 5.03(b)(v)(D)
or Section 5.03(b)(vi)(D), for as long as the Retained Interest surviving
such transaction, or any portion thereof or non-cash proceeds therefrom, is
held by the Borrower or any of its subsidiaries.
(p) Payment Restrictions Affecting Subsidiaries. Cause, permit or
suffer any Subsidiary to become or remain subject to any contractual
obligation that in any manner limits or restricts its right to pay
dividends or make distributions, whether in cash or in property, to its
stockholders or to make loans or sell assets to the Borrower or any of its
Subsidiaries or to enter into any other lawful transaction with the
Borrower or any of its Subsidiaries, except limitations and restrictions
set forth in the Subordinated Debt Indentures or the Loan Documents.
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ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events ("EVENTS OF
DEFAULT") shall occur and be continuing:
(a) Non-Payment of Principal. The Borrower fails to pay when due any
principal of any Advance; or
(b) Non-Payment of Interest or Fees. The Borrower fails to pay when
due any interest payable under Section 2.07, any additional interest
payable under Section 2.08, any fee payable under Section 2.04 or any other
amount payable hereunder and such failure continues for five days or such
other period of grace provided for herein; or
(c) Representations and Warranties. Any representation or warranty
made by any Loan Party under or in connection with any Loan Document proves
to have been incorrect in any material respect when made and either (i)
such representation or warranty cannot be remedied or (ii) such
representation or warranty continues to be incorrect in any material
respect for ten days after either (A) such incorrectness is acknowledged in
writing by the Borrower or (B) written notice thereof is given to the
Borrower by the Agent or any Lender; or
(d) Financial, Lien and Debt Covenants. The Borrower fails to perform
or observe any term, covenant or agreement set forth in Section 5.01,
Section 5.03(a) or Section 5.03(d); or
(e) Reporting and Negative Covenants. The Borrower fails to perform or
observe any term, covenant or agreement set forth in Section 5.02(c) or
Section 5.03 (other than Sections 5.03(a) or 5.03(d)) and such failure
continues for ten days after either (i) it is acknowledged in writing by
the Borrower or (ii) written notice thereof is given to the Borrower by the
Agent or any Lender; or
(f) Covenants. The Borrower or any Loan Party fails to perform or
observe any term, covenant or agreement contained in this Agreement or any
other Loan Document (other than those specifically referred to in
subsections (a), (b), (c), (d) and (e) of this Section 6.01) and such
failure continues for 30 days after either (i) it is acknowledged in
writing by the Borrower or (ii) written notice thereof is given to the
Borrower by the Agent or any Lender; or
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(g) Debt. The Borrower or any of its Subsidiaries (i) fails to pay,
when due and payable (whether at the scheduled maturity or upon any
required prepayment, acceleration, demand or otherwise), any principal of
or premium or interest on any Debt (except the Notes) outstanding in a
principal amount of at least $10,000,000, and such failure continues for
longer than the period of grace, if any, specified for such failure in the
indenture or agreement governing such Debt, or (ii) commits or permits a
breach or default under any financial test or covenant which, under the
terms of the indenture or agreement governing any Debt (except the Notes)
outstanding in a principal amount of at least $20,000,000, requires the
maintenance of a specified net worth or working capital or any other
quantifiable measure of financial condition or financial performance, and
such breach or default continues for longer than the period of grace, if
any, specified for such failure in such indenture or agreement; or any such
Debt of at least $20,000,000 is declared to be due and payable or is
required to be prepaid prior to the stated maturity thereof; or
(h) Leases. (i) Except as otherwise permitted pursuant to Section
5.02(h), the Borrower or any of its Subsidiaries (A) fails to make any
payment within the period required under any Material Lease, and such
failure continues for longer than the period of grace, if any, specified
for such failure in such Material Lease, or (B) fails to perform or observe
any other term, covenant or agreement that (1) is contained in any Material
Lease and (2) requires the payment of money or can be performed or observed
by the payment of money, and such failure continues for longer than the
period of grace, if any, specified for such failure in such Material Lease;
or (ii) any Material Lease is terminated as a result of any failure by the
Borrower or any of its Subsidiaries to perform or observe any term,
covenant or agreement contained therein; or
(i) Bankruptcy. The Borrower or any Material Subsidiary is generally
not paying its debts as they become due or admits in writing its inability
to pay its debts generally or makes a general assignment for the benefit of
creditors; or any proceeding is instituted by or against any Loan Party or
any Subsidiary of a Loan Party seeking an order for relief under the United
States Bankruptcy Code or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its
debts or the appointment of a receiver, trustee, custodian or other similar
official for it or for any substantial part of its property under any law
relating to bankruptcy, insolvency, liquidation or reorganization or relief
of debtors and either (i) any such relief in any such proceeding is sought
or consented to by it or an order for any such relief is entered against
it, or (ii) any such proceeding instituted against it remains undismissed
and unstayed for a period of 60 days; or any Loan Party or any Material
Subsidiary takes any corporate action to authorize any of the actions set
forth above in this Section 6.01(i); or
(j) Judgments. Any judgment or order for the payment of money is
rendered against any of the Loan Parties or any of their Subsidiaries in an
amount in
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excess of $10,000,000 for any single judgment or order or in excess of
$50,000,000 for all such judgments or orders and either (i) enforcement
proceedings are commenced by any creditor upon such judgment or order and
not stayed, or (ii) there is any period of 60 consecutive days during which
a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, is not in effect; or
(k) Guaranty. Any provision of the Guaranty after delivery thereof for
any reason ceases to be valid and binding on each Loan Party that is party
thereto, or any Loan Party shall repudiate or purport to revoke the
Guaranty; or
(l) Collateral Documents. The Collateral Documents, after delivery
thereof pursuant to Section 3.01, for any reason (other than pursuant to
the terms thereof) cease to create a valid and perfected first priority
security interest in any material portion of the Collateral purported to be
covered thereby; or
(m) ERISA. (i) The Borrower or any ERISA Affiliate fails to satisfy
its contribution requirements under Section 412(c)(11) of the Code, whether
or not it has sought a waiver under Section 412(d) of the Code; or (ii) in
the case of an ERISA Event involving the withdrawal from a Pension Plan of
a "substantial employer" (as defined in Section 4001(a)(2) or Section
4062(e) of ERISA), the withdrawing employer's proportionate share of that
Pension Plan's Unfunded Pension Liabilities is more than $2,000,000; or
(iii) in the case of an ERISA Event involving the complete or partial
withdrawal from a Multiemployer Plan, the withdrawing employer incurs a
withdrawal liability in an aggregate amount exceeding $2,000,000; or (iv) a
Plan that is intended to be qualified under Section 401(a) of the Code
loses its qualification, and with respect to such loss of qualification,
the Borrower or any ERISA Affiliate can reasonably be expected to be
required to pay (for additional taxes, payments to or on behalf of Plan
participants, or otherwise) an aggregate amount exceeding $2,000,000; or
(v) any combination of events listed in clauses (ii) through (iv) occurs
that involves a net increase in aggregate Unfunded Pension Liabilities and
unfunded liabilities in excess of $5,000,000;
then, and in any such event, the Agent (A) shall at the request, or may with the
consent, of the Requisite Lenders, by notice to the Borrower, declare the
obligation of each Lender to make Advances and the obligation of the LC Bank to
issue Letters of Credit to be terminated, whereupon the same shall forthwith
terminate and the Facility Amount and LC Subcommitment shall be automatically
and permanently reduced to zero, and (B) shall at the request, or may with the
consent, of the Requisite Lenders, by notice to the Borrower, declare the
Advances and all fixed and contingent obligations of the Borrower to reimburse
the LC Bank for any payment that has been or may be made under any Letter of
Credit, together with all interest thereon and all other amounts payable under
this Agreement, to be immediately due and payable, and thereupon the Advances
and all such fixed and contingent reimbursement obligations, interest and other
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amounts shall become and be immediately due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower; provided, however, that if an order for relief under the
United States Bankruptcy Code is entered at the request or upon the consent of
the Borrower or involuntarily against the Borrower (x) the obligation of each
Lender to make Advances and the obligation of the LC Bank to issue Letters of
Credit shall automatically be terminated and the Facility Amount and LC
Subcommitment shall be automatically and permanently reduced to zero, and (y)
the Advances and all such fixed and contingent obligations, interest and other
amounts shall automatically become and be immediately due and payable, without
presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by the Borrower.
SECTION 6.02. Rights Not Exclusive. The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not exclusive of
any other rights, powers or privileges or remedies provided by law or in equity,
or under any other instrument, document or agreement.
ARTICLE VII
THE AGENT
SECTION 7.01. Authorization and Action. Each Lender hereby appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto. As to
any matters not expressly provided for by this Agreement (including enforcement
or collection of the Notes), the Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Requisite Lenders, and such instructions shall be
binding upon all Lenders and all holders of Notes; provided, however, that the
Agent shall not be required to take any action which exposes the Agent to
personal liability or which is contrary to this Agreement or applicable law. The
Agent shall not be liable to any Lender if, in accordance with the terms of this
Agreement, it takes or omits to take any action pursuant to the instructions of
the Requisite Lenders. The Agent agrees to give to each Lender prompt notice of
each notice given to it by the Borrower pursuant to the terms of this Agreement.
The Agent agrees to perform and discharge the duties and powers delegated to it
under this Agreement and the other Loan Documents in accordance with the terms
hereof and thereof.
SECTION 7.02. Agent Not Liable. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or omitted to
be taken by it or any of them under or in connection with this Agreement, except
for its or their own gross negligence or willful misconduct. Without limiting
the generality of the foregoing, the Agent
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(i) may treat the payee of any Note as the holder thereof until the Agent
receives written notice of the assignment or transfer thereof signed by such
payee and including the agreement of the assignee or transferee to be bound
hereby as it would have been if it had been an original Lender party hereto, in
form satisfactory to the Agent; (ii) may consult with legal counsel (including
counsel for the Borrower), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations (whether written or oral) made in or in connection with this
Agreement; (iv) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement on the part of the Borrower or to inspect the property (including the
books and records) of the Borrower; (v) shall not be responsible to any Lender
for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document or any other
instrument or document furnished pursuant to any Loan Document or for the
creation, validity, enforceability, sufficiency, value, perfection or priority
of any Lien purported to be granted to the Agent, whether pursuant to any of the
Collateral Documents or otherwise; and (vi) shall incur no liability under or in
respect of this Agreement by acting upon any notice, consent, certificate or
other instrument or writing (which may be by telecopier, telegram, cable or
telex) believed by it in good faith to be genuine and signed or sent by the
proper party or parties.
SECTION 7.03. Rights as Lender. With respect to its commitment and Pro Rata
Share hereunder, the Advances and Notes held by it and all other rights, claims
and interests accorded it as Lender, Citibank shall have the same rights and
powers under this Agreement as any other Lender and may exercise the same as
though it were not the Agent; and the term "Lender" or "Lenders" shall include
Citibank in its individual capacity. Citibank and its Affiliates may accept
deposits from, lend money to, act as trustee under indentures of, and generally
engage in any kind of business with, the Borrower, any of its Subsidiaries and
any Person who may do business with or own securities of the Borrower or any
such Subsidiary, all as if Citibank were not the Agent and without any duty to
account therefor to the Lenders. Any Lender and its respective Affiliates may
accept deposits from, lend money to, act as trustee under indentures of, and
generally engage in any kind of business with, the Borrower, any of its
Subsidiaries and any Person who may do business with or own securities of the
Borrower or any such Subsidiary, all as if such Lender were not a Lender
hereunder and without any duty to account therefor to the other Lenders.
SECTION 7.04. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on the financial statements referred to in Section 4.01(h) and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender and based on such documents and information as it deems
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appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
SECTION 7.05. Indemnification. The Lenders agree to indemnify the Agent (to
the extent not reimbursed by the Borrower) ratably according to their Pro Rata
Shares from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted
against the Agent in any way relating to or arising out of this Agreement or the
other Loan Documents or any action taken or omitted by the Agent under this
Agreement or the other Loan Documents; provided that no Lender shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
Agent's gross negligence or willful misconduct. Without limiting the foregoing,
each Lender agrees to reimburse the Agent promptly upon demand for its ratable
share of any reasonable out-of-pocket expenses (including reasonable fees and
expenses of counsel) incurred by the Agent in connection with the preparation,
execution, delivery, modification, amendment, protection or enforcement (whether
through negotiations, by legal proceedings, in bankruptcy or otherwise) of, or
legal advice in respect of rights or responsibilities under, this Agreement or
the other Loan Documents, to the extent that the Agent is not reimbursed for
such expenses by the Borrower.
SECTION 7.06. Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower and may be removed at any
time with or without cause by the Requisite Lenders. Upon any such resignation
or removal, the Requisite Lenders shall, subject to the written consent of the
Borrower, which consent shall not be unreasonably withheld or delayed, have the
right to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Requisite Lenders, and shall have accepted such appointment,
within 30 days after the retiring Agent's giving of notice of resignation or the
Requisite Lenders' removal of the retiring Agent, then the retiring Agent may,
on behalf of the Lenders, appoint a successor Agent, which shall be a commercial
bank organized under the laws of the United States of America or of any State
and having total assets of at least $20,000,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under this Agreement. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this Article VII
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement.
SECTION 7.07. Release of Collateral. The Agent is hereby irrevocably
authorized to release any Lien granted to or held by the Agent upon (i) any and
all Collateral when the Facility Amount has been permanently reduced to zero,
all Letters of Credit issued hereunder have expired or been discharged, all
outstanding Advances and LC Exposure have been repaid, and all other Obligations
that are then due and payable and of which the Agent then
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has written notice demanding payment prior to release of Collateral have been
paid, (ii) any Collateral constituting property sold or to be sold or disposed
of as part of or in connection with any disposition permitted under Section
5.03(b), or (iii) any Collateral consisting of an instrument evidencing Debt or
other debt instrument, if the indebtedness evidenced thereby has been paid in
full. Upon request by the Agent or the Borrower at any time, each Lender shall
confirm in writing the Agent's authority to release Collateral, or particular
types or items of Collateral, as set forth in this Section 7.07. Subject to
Section 8.01(g), the Agent shall not be obligated to release any Collateral
unless it receives such written confirmation from the Requisite Lenders.
SECTION 7.08. Release of Guarantor upon Sale of Stock. If (i) either (A)
all of the outstanding shares of capital stock and other equity, ownership and
profit interests in any Guarantor are sold to a Person not an Affiliate of the
Borrower in a transaction which is permitted under Section 5.03(b)(iv), Section
5.03(b)(v) or Section 5.03(b)(vi) and which is not a Retained Interest Sale or
(B) the Guarantor Liability Limit of any Guarantor is reduced to zero as part of
a Retained Interest Sale and by reason of a voluntary reduction of the Facility
Amount that is elected by the Borrower at the time and in the manner set forth
in the definition of "Guarantor Liability Limit," and if (ii) the conditions set
forth in Section 5.03(b)(iv), Section 5.03(b)(v) or Section 5.03(b)(vi), as the
case may be, are met in respect of such transaction, then upon request by the
Agent or the Borrower each Lender shall confirm in writing that the liability of
such Guarantor under the Guaranty is released and discharged effective when such
transaction is consummated and such requirements are met, as set forth in
Section 2.13 of the Guaranty. Such confirmation from the Requisite Lenders (1)
shall establish conclusively that the liability of such Guarantor under the
Guaranty is released and discharged as set forth in Section 2.13 of the Guaranty
and (2) may be relied on, without further inquiry, by the purchaser in such
transaction and each of its transferees.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments. No amendment or waiver of any provision of this
Agreement or the Notes, nor consent to any departure by the Borrower therefrom,
shall be effective unless it is in writing and signed by the Requisite Lenders
(and any such waiver or consent shall in any case be effective only in the
specific instance and for the specific purpose for which given), but no
amendment, waiver or consent shall, unless in writing and signed by the Lender
to be bound or affected thereby, do any of the following:
(a) change the obligation of such Lender to extend credit hereunder or
subject such Lender to any additional obligations;
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(b) reduce the principal of or interest on the Notes or any fees or
other amounts payable to such Lender hereunder or under any other Loan
Document;
(c) postpone any date fixed for any payment (including any mandatory
prepayment) of principal of or interest on any Advances or LC Exposure held
by such Lender or any fees or other amounts payable to such Lender under
any Loan Document;
(d) waive, reduce or postpone any Facility Reduction required
hereunder;
(e) amend the definition of "Facility Amount," "Pro Rata Share" or
"Requisite Lenders";
(f) waive any Event of Default that is continuing under Section
6.01(a) or 6.01(b) in respect of a payment due to such Lender;
(g) release any substantial portion of the Collateral other than in
accordance with the terms of this Agreement;
(h) release or limit the liability of any Guarantor under the Guaranty
other than in accordance with the terms of the Guaranty;
(i) amend Section 2.13, Section 2.17 or Section 6.01(a); or
(j) amend this Section 8.01;
and (x) no amendment, waiver or consent shall, unless in writing and signed by
the Agent in addition to the Lenders required above to take such action, affect
the rights or duties of the Agent under this Agreement or any Loan Document and
(y) no amendment, waiver or consent shall, unless in writing and signed by the
LC Bank in addition to the Lenders required above to take such action, affect
the rights or duties of the LC Bank under this Agreement.
SECTION 8.02. Notices. All notices and other communications provided for
hereunder shall be in writing (including telecopier, telegraphic, telex or cable
communication) and mailed, telecopied, telegraphed, telexed, cabled or
delivered, if to the Borrower, at Integrated Health Services, Inc., 10065 Red
Run Boulevard, Owings Mills, Maryland 21117, Attention: General Counsel and
Attention: Eleanor Harding, Senior Vice President, with a copy to: Hunton &
Williams, 43rd Floor, MetLife Building, 200 Park Avenue, New York, New York
10166, Attention: John R. Fallon, Jr.; if to any Lender, at its Domestic Lending
Office specified opposite its name on Schedule I hereto; and if to the Agent, at
Citibank, N.A., 399 Park Avenue, New York, New York 10043, Attention: Margaret
A. Brown, Vice President, with a copy to: Shearman & Sterling, 555 California
Street, 20th Floor, San Francisco, California 94104,
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Attention: Steven E. Sherman; or, as to each party, at such other address as
shall be designated by such party in a written notice to the other parties. All
such notices and communications shall, when mailed, telecopied, telegraphed,
telexed or cabled, be effective when deposited in the mails, telecopied,
delivered to the telegraph company, confirmed by telex answerback or delivered
to the cable company, respectively, except that notices and communications to
the Agent pursuant to Article II or VII shall not be effective until received by
the Agent.
SECTION 8.03. No Waiver; Remedies. No failure on the part of any Lender,
the LC Bank or the Agent to exercise, and no delay in exercising, any right
under any Loan Document shall operate as a waiver thereof; nor shall any single
or partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 8.04. Costs and Expenses. The Borrower agrees to pay on demand all
reasonable costs and expenses incurred by the Agent in connection with the
preparation, negotiation, execution, delivery, modification and amendment of the
Loan Documents and the other documents to be delivered under the Loan Documents,
including the reasonable fees and out-of-pocket expenses of counsel for the
Agent with respect thereto and with respect to advising the Agent as to its
rights and responsibilities under the Loan Documents. The Borrower further
agrees to pay on demand all reasonable costs and expenses, including reasonable
fees and expenses of attorneys (including allocable costs of in-house counsel),
accountants, advisors and other experts, incurred by the Agent or the Lenders in
respect of any Event of Default or while any Event of Default is continuing or
in connection with the protection, resolution or enforcement (whether through
negotiations, by legal proceedings, in bankruptcy or otherwise) of the
Obligations or the Collateral or any right, remedy, power, interest or claim of
the Agent or any Lender under any Loan Document.
SECTION 8.05. Right of Set-off. Whenever any Event of Default is
continuing, each Lender may at any time or from time to time, with the consent
of the Requisite Lenders but without any prior notice to the Borrower or any
other Person, set off and apply any and all deposits (general or special, time
or demand, provisional or final) at any time held and other debt at any time
owing by such Lender to or for the credit or the account of the Borrower,
whether or not then due, and whether or not then fully secured, against any and
all Advances, LC Exposure and other Obligations then owing to such Lender,
whether or not then due. After any such set-off and application is made, the
Lender that made it shall promptly notify the Borrower thereof, but the failure
to do so shall not affect the validity of the set-off and application and shall
not expose such Lender to any liability. The Lenders' right of setoff under this
Section 8.05 is cumulative with and additional to all other rights and remedies
(including other rights of set-off) of the Lenders.
SECTION 8.06. Indemnity. (a) General Indemnity. The Borrower shall pay,
defend, indemnify, and hold each Lender, the Agent, their respective Affiliates
and each of their
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respective officers, directors, employees, counsel, agents and attorneys-in-fact
(each, an "INDEMNIFIED PERSON") harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, charges, expenses or disbursements (including reasonable fees and
expenses of counsel and allocated costs of internal counsel incurred in
defending any such action or incurred in enforcing this Section 8.06(a)) of any
kind or nature whatsoever with respect to the execution, delivery, enforcement
and performance of this Agreement and any other Loan Document or the
transactions contemplated herein, and with respect to any investigation,
litigation or proceeding related to this Agreement or the Advances or the
Letters of Credit or the use of the proceeds thereof, whether or not any
Indemnified Person is a party thereto (all the foregoing, collectively, the
"INDEMNIFIED LIABILITIES"), except that the Borrower shall have no obligation
hereunder to any Indemnified Person with respect to Indemnified Liabilities
arising from the gross negligence or willful misconduct of such Indemnified
Person.
(b) Environmental Indemnity. The Borrower shall pay, defend, indemnify, and
hold harmless each Indemnified Person from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses or disbursements (including reasonable fees and expenses of
counsel and the allocated cost of internal counsel), which may be incurred by or
asserted against any Indemnified Person in connection with or arising out of any
pending or threatened investigation or Environmental Claim arising out of or
related to any acts or omissions or any property of the Borrower or any of its
Subsidiaries. In no event shall any site visit, observation, or testing by the
Agent or any Lender be a representation that Hazardous Materials are or are not
present in, on, or under the site, or that there has been or shall be compliance
with any Environmental Law. Neither the Borrower nor any other party is entitled
to rely on any site visit, observation, or testing by the Agent or any Lender.
Neither the Agent nor any Lender owes any duty of care to protect the Borrower
or any other Person against, or to inform the Borrower or any other Person of,
any adverse condition affecting any site or property.
SECTION 8.07. Assignments and Participations. (a) Permitted Assignment.
Each Lender may assign to one or more banks or other entities all or a portion
of its rights and obligations under this Agreement, but (i) each such assignment
shall be of a constant, and not a varying, percentage of all of the assigning
Lender's rights and obligations under this Agreement, unless otherwise consented
to by the Agent; (ii) the amount of the commitment and outstanding Advances of
the assigning Lender being assigned pursuant to each such assignment (determined
as of the date of the Assignment and Acceptance with respect to such assignment)
shall not be less than $5,000,000 or the total amount of the remaining
commitment and outstanding Advances of such Lender, except that an assignment to
an existing Lender may be in an amount less than $5,000,000, (iii) each such
assignment shall be to an Eligible Assignee, and (iv) the parties to each such
assignment shall execute and deliver to the Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, together with any Note
or Notes subject to such assignment and a processing and recordation fee payable
to the Agent of $2,500. Upon such
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88
execution, delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, (A) the assignee thereunder shall
be a party hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder and (B) the Lender assignor thereunder
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto).
(b) Effect of Assignment. By executing and delivering an Assignment and
Acceptance, the Lender assignor thereunder and the assignee thereunder confirm
to and agree with each other and the other parties hereto that (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto or as to the Collateral or the validity,
enforceability, perfection or priority of any Lien upon the Collateral; (ii)
such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under this
Agreement or any other instrument or document furnished pursuant hereto; (iii)
such assignee confirms that it has received a copy of this Agreement, together
with copies of the financial statements referred to in Section 4.01(h) and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (iv)
such assignee will, independently and without reliance upon the Agent, such
assigning Lender or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement; (v) such assignee
confirms that it is an Eligible Assignee; (vi) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto; (vii)
such assignee agrees that it will perform in accordance with their terms all of
the obligations which by the terms of this Agreement are required to be
performed by it as a Lender; and (viii) such assignee confirms and agrees that
it shall have no greater indemnification rights pursuant to Section 2.16(c) than
its Lender assignor.
(c) Maintenance of Agreements. The Agent, acting for this purpose (but only
for this purpose) as the agent of the Borrower (and in such capacity neither the
Agent nor any of its directors, officers, agents or employees shall be liable
for any action taken or omitted to be taken by it or any of them under or in
connection with this Section 8.07(c), except for its or their own gross
negligence or willful misconduct), shall maintain at its address referred to in
Section 8.02 a copy of each Assignment and Acceptance delivered to and accepted
by it and a register for
<PAGE>
89
the recordation of the names and addresses of the Lenders and the commitments
and Pro Rata Shares of, and principal amount of the Advances owing to, each
Lender from time to time (the "REGISTER"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Agent and the Lenders shall treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
(d) Procedure. Upon its receipt of an Assignment and Acceptance executed by
an assigning Lender and an assignee Lender representing that it is an Eligible
Assignee, together with any Note or Notes subject to such assignment, the Agent
shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit E-2 hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrower. Within five Business Days
after its receipt of such notice, the Borrower, at its own expense, shall
execute and deliver to the Agent in exchange for the surrendered Note or Notes a
new Note or Notes to the order of such Eligible Assignee in an aggregate amount
equal to the interest in the surrendered Note or Notes assigned to it pursuant
to such Assignment and Acceptance and, if the assigning Lender has retained an
interest in the surrendered Note or Notes, a new Note or Notes to the order of
the assigning Lender in an aggregate amount equal to the interest so retained.
Such new Note or Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Note or Notes, shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of Exhibit A.
(e) Participations. Each Lender may sell participations to one or more
banks or other entities in all or a portion of its rights and obligations under
this Agreement, but (i) such Lender's obligations under this Agreement
(including its commitment to the Borrower hereunder) shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, (iii) such Lender shall remain the holder
of any such Note or Notes for all purposes of this Agreement, and (iv) the
Borrower, the Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement.
(f) Additional Information. Any Lender may, in connection with any
assignment or participation or proposed assignment or participation pursuant to
this Section 8.07, disclose to the assignee or participant or proposed assignee
or participant, any information relating to the Borrower furnished to such
Lender by or on behalf of the Borrower, but only if the assignee or participant
or proposed assignee or participant is obligated to preserve the confidentiality
of any confidential information relating to the Borrower received by it from
such Lender.
<PAGE>
90
(g) Permitted Assignments. Any Lender may assign any of its rights and
obligations under this Agreement to any of its Affiliates without notice to or
consent of the Borrower or the Agent, and such Lender or any of its Affiliates
may assign any of its rights (including, without limitation, rights to payment
of principal and/or interest under the Notes) under this Agreement to any
Federal Reserve Bank without notice to or consent of the Borrower or the Agent.
SECTION 8.08. Binding Effect. This Agreement shall become effective when it
has been executed by the parties hereto and the conditions set forth in Section
3.01 have been satisfied and thereafter shall be binding upon and inure to the
benefit of the Borrower, the Agent and each Lender and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of each of the Lenders and the Agent. When (and only when) this
Agreement becomes effective, the commitments of the financial institutions that
are party to the Existing Facility to extend credit under the Existing Facility
shall be terminated, but all claims against the Borrower or any of its
Subsidiaries under or in respect of the Existing Facility, and all Liens
securing any such claim, shall remain in full force and effect until paid and
released as set forth in the payout and release agreement delivered pursuant to
Section 3.01(g).
SECTION 8.09. Governing Law; Consent to Jurisdiction; Venue. This Agreement
and the other Loan Documents shall be governed by, and construed in accordance
with, the laws of the State of New York. Any legal action or proceeding with
respect to any Loan Document may be brought in the courts of the State of New
York or of the United States for the Southern District of New York, and by
execution and delivery of this Agreement, each of the Borrower, the Agent and
the Lenders consents, for itself and in respect of its property, to the
jurisdiction of those courts. Each of the Borrower, the Agent and the Lenders
irrevocably waives any objection, including any objection to the laying of venue
or based on the grounds of forum non conveniens, which it may now or hereafter
have to the bringing of any action or proceeding in such jurisdiction in respect
of any Loan Document. The Borrower, the Agent and the Lenders each waive
personal service of any summons, complaint or other process, which may be made
by any other means permitted by New York law.
SECTION 8.10. Waiver of Jury Trial. THE BORROWER, THE LENDERS AND THE AGENT
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR PARTIES, WHETHER BASED ON CONTRACT, TORT, STATUTORY LIABILITY
OR OTHERWISE. THE BORROWER, THE LENDERS AND THE AGENT AGREE THAT ANY SUCH CLAIM
OR CAUSE OF ACTION SHALL BE TRIED BY THE COURT WITHOUT A JURY. THIS WAIVER
<PAGE>
91
SHALL APPLY TO EACH FUTURE AMENDMENT, RENEWAL, SUPPLEMENT OR MODIFICATION OF ANY
LOAN DOCUMENT AND TO EACH FUTURE LOAN DOCUMENT.
SECTION 8.11. Limitation of Liability. No claim may be made by the
Borrower, any Subsidiary of the Borrower, any Lender, the Agent or any other
Person against the Agent or any other Lender or the Affiliates, directors,
officers, employees, attorneys or agents of any of them for any special,
indirect or consequential damages or, to the fullest extent permitted by law,
for any punitive damages in respect of any claim or cause of action (whether
based on contract, tort, statutory liability, or any other ground) based on,
arising out of or related to any Loan Document or the transactions contemplated
hereby or any act, omission or event occurring in connection therewith, and the
Borrower (for itself and on behalf of each of its Subsidiaries), the Agent and
each Lender hereby waive, release and agree never to sue upon any claim for any
such damages, whether such claim now exists or hereafter arises and whether or
not it is now known or suspected to exist in its favor.
SECTION 8.12. Entire Agreement. This Agreement, together with the other
Loan Documents, embodies the entire Agreement and understanding among the
Borrower, the Lenders and the Agent and supersedes all prior or contemporaneous
agreements and understandings of such persons, verbal or written, relating to
the subject matter hereof and thereof except for the Fee Letter and any prior
arrangements made with respect to the payment by the Borrower of (or any
indemnification for) any fees, costs or expenses payable to or incurred (or to
be incurred) by or on behalf of the Agent or any Lender.
SECTION 8.13. Survival. The Borrower's liability for any and all additional
interest, fees, taxes, compensation, costs, losses, expense reimbursements,
indemnification and other similar Obligations arising under any Loan Document
shall survive the expiration or termination of the commitments of the Lenders to
extend credit hereunder and the repayment and retirement of all Advances and LC
Exposure at any time outstanding hereunder.
SECTION 8.14. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
S-1
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
INTEGRATED HEALTH SERVICES, INC.
By: /s/
------------------------------------
Name:
Title:
CITIBANK, N.A.,
as Administrative Agent and Lender
By: /s/
------------------------------------
Name:
Title:
BANK OF AMERICA N.T.&S.A.
as a Lender and Co-Agent
By: /s/
------------------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA,
as LC Bank, a Lender and Co-Agent
By: /s/
------------------------------------
Name:
Title:
<PAGE>
S-2
CORESTATES BANK, N.A.,
as a Lender and Co-Agent
By: /s/
------------------------------------
Name:
Title:
CREDIT LYONNAIS
NEW YORK BRANCH,
as a Lender and Co-Agent
By: /s/
------------------------------------
Name:
Title:
DEUTSCHE BANK AG,
NEW YORK BRANCH AND/OR
CAYMAN ISLANDS BRANCH
as a Lender and Co-Agent
By: /s/
------------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA,
as a Lender and Co-Agent
By: /s/
------------------------------------
Name:
Title:
<PAGE>
S-3
NATIONSBANK, N.A.,
as a Lender and Co-Agent
By: /s/
------------------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION,
as a Lender and Co-Agent
By: /s/
------------------------------------
Name:
Title:
TORONTO DOMINION (TEXAS), INC.,
as a Lender and Co-Agent
By: /s/
------------------------------------
Name:
Title:
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST,
as a Lender and Co-Agent
By: /s/
------------------------------------
Name:
Title:
<PAGE>
S-4
CREDITANSTALT CORPORATE
FINANCE, INC.,
as a Lender
By: /s/
------------------------------------
Name:
Title:
FLEET NATIONAL BANK,
as a Lender
By: /s/
------------------------------------
Name:
Title:
GENERAL ELECTRIC CAPITAL
CORPORATION,
as a Lender
By: /s/
------------------------------------
Name:
Title:
HIBERNIA NATIONAL BANK,
as a Lender
By: /s/
------------------------------------
Name:
Title:
<PAGE>
S-5
AMSOUTH BANK,
as a Lender
By: /s/
------------------------------------
Name:
Title:
THE BANK OF TOKYO-MITSUBISHI
TRUST COMPANY,
as a Lender
By: /s/
------------------------------------
Name:
Title:
THE SANWA BANK, LIMITED,
as a Lender
By: /s/
------------------------------------
Name:
Title:
SIGNET BANK,
as a Lender
By: /s/
------------------------------------
Name:
Title:
<PAGE>
S-6
THE SUMITOMO BANK, LIMITED,
as a Lender
By: /s/
------------------------------------
Name:
Title:
FIRST AMERICAN NATIONAL BANK,
as a Lender
By: /s/
------------------------------------
Name:
Title:
<PAGE>
INTEGRATED HEALTH SERVICES, INC.
10065 Red Run Boulevard
Owings Mills, Maryland 21117
September 6, 1996
To the Administrative Agent and
the Lenders parties to the Revolving
Credit Agreement referred to below
Amendment No. 1 to Revolving Credit Agreement
Consent of Administrative Agent and Requisite Lenders
-----------------------------------------------------
Ladies and Gentlemen:
Reference is made to the revolving credit agreement, dated as of May 15,
1996 (the "Credit Agreement"), among Integrated Health Services, Inc. ("IHS"),
Citibank N.A., as administrative agent thereunder (the "Agent"), and the other
financial institutions party thereto, as lenders thereunder. Capitalized terms
used and not otherwise defined herein are used herein as defined in the Credit
Agreement.
First American and IHS have amended the First American Merger Agreement
pursuant to an amendment, dated as of September 9, 1996 (the "Amendment"), and
the plan of reorganization (the "Plan of Reorganization") in the bankruptcy
proceeding of First American in order to incorporate settlements among First
American, the Health Care Financing Administration and the Department of
Justice. The Amendment, among other things, increases the purchase price
potentially payable by IHS in connection with the First American Merger by $35
million, so that the aggregate purchase price could be as high as $312 million.
Copies of the Amendment and the amended Plan of Reorganization have been
provided to you under separate cover.
Pursuant to Section 5.03(c)(xii)(A) of the Credit Agreement, in order for
IHS to consummate the First American Merger pursuant to the First American
Merger Agreement, as amended by the Amendment, and the amended Plan of
Reorganization, (i) the terms and conditions of the Amendment and the amended
Plan of Reorganization must be satisfactory to the Agent in its sole discretion,
and (ii) the terms of the Amendment and the amended Plan of Reorganization
relating to the increase in the aggregate purchase price potentially payable by
IHS in connection therewith must be satisfactory to the Requisite Lenders in
their sole discretion. IHS hereby requests that you consent to the terms and
conditions of the Amendment and the amended Plan of Reorganization and to the
consummation of the First American Merger
<PAGE>
2
pursuant to the First American Merger Agreement, as amended by the Amendment,
and the amended Plan of Reorganization.
IHS also hereby requests that you agree (i) to amend the definition of
"Debt" in the Credit Agreement by adding to the end of such definition the
proviso "; provided, however, that the contingent payments which may become
payable in accordance with the First American Merger Agreement, including any
payments made to the Health Care Financing Administration or the Department of
Justice as required under the First American Merger Agreement, in a total amount
not in excess of $162 million, shall not consitute Debt for purposes of this
Agreement"; and (ii) to amend Section 5.03(c)(xii) of the Credit Agreement by
deleting in the fourth line of such section the words "be final and
nonappealable" and inserting in their place the words "have been entered, and
its effectiveness shall not have been stayed or enjoined in any manner,".
Please evidence your acknowledgement of and agreement and consent to the
foregoing by executing and returning not later than close of business on
September 11, 1996 the three counterparts of this Amendment No. 1 and consent
enclosed herewith to Citicorp Securities, Inc., 399 Park Avenue, 9th Floor, New
York, New York 10043, Attention: Rosemary Bell. This Amendment No. 1 and consent
shall become effective as of the date first above written when and if
counterparts of this Amendment No. 1 and consent shall have been executed by the
Requisite Lenders and the consent attached hereto shall have been executed by
the Guarantors. This Amendment No. 1 and consent is subject to the provisions of
Section 8.01 of the Credit Agreement.
This Amendment No. 1 and consent may be executed in any number of
counterparts and by any combination of the parties hereto in separate
counterparts, each of which counterparts shall be an original and all of which
taken together shall constitute one and the same Amendment No. 1 and consent.
Very truly yours,
INTEGRATED HEALTH
SERVICES, INC.
By: /s/
--------------------------------
Name:
Title:
<PAGE>
3
ACKNOWLEDGED, AGREED AND CONSENTED TO as of the date first above written:
CITIBANK, N.A.,
as Administrative Agent and as a Lender
By: /s/
-------------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA,
as LC Bank, a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
CORESTATES BANK, N.A.,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
4
CREDIT LYONNAIS,
NEW YORK BRANCH,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
DEUTSCHE BANK AG,
NEW YORK BRANCH AND/OR
CAYMAN ISLANDS BRANCH,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
NATIONSBANK, N.A.,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
5
PNC BANK, NATIONAL ASSOCIATION,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
TORONTO DOMINION (TEXAS), INC.,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
CREDITANSTALT CORPORATE
FINANCE, INC.,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
6
FLEET NATIONAL BANK,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
GENERAL ELECTRIC
CAPITAL CORPORATION,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
HIBERNIA NATIONAL BANK,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
AMSOUTH BANK OF ALABAMA,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
7
THE BANK OF TOKYO-MITSUBISHI
TRUST COMPANY,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
THE SANWA BANK, LIMITED,
NEW YORK BRANCH
as a Lender
By: /s/
-------------------------------------
Name:
Title:
SIGNET BANK,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
THE SUMITOMO BANK, LIMITED,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
8
FIRST AMERICAN NATIONAL BANK,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
CONSENT
The undersigned, as Guarantors under the Subsidiary Guaranty, dated as of
May 15, 1996 (the "Guaranty"), in favor of the Agent for the Lenders parties to
the Credit Agreement referred to in the foregoing letter waiver and consent,
hereby consent to such letter waiver and consent and hereby confirm and agree
that notwithstanding the effectiveness of such letter waiver and consent, the
Guaranty is, and shall continue to be, in full force and effect and is hereby
confirmed and ratified in all respects.
ALABAMA SENIOR LIFE CARE, INC.
ALPINE MANOR, INC.
AMCARE HEALTH SERVICES, INC.
AMCARE, INC.
ARBOR LIVING CENTERS OF FLORIDA, INC.
ARBOR LIVING CENTERS OF TEXAS, INC.
ASIA CARE, INC.
BETHAMY LIVING CENTER MANAGEMENT COMPANY
BETHAMY LIVING CENTERS LIMITED PARTNERSHIP
BRIAR HILL, INC.
BRIARCLIFF NURSING HOME, INC.
CAMBRIDGE CARE CENTERS, INC.
CAMBRIDGE GROUP OF INDIANA, INC.
CAMBRIDGE GROUP OF PENNSYLVANIA, INC.
CAMBRIDGE GROUP OF TEXAS, INC.
CARE CENTERS HOLDING, INC.
CARRIAGE-By: -THE-LAKE OF IHS, INC.
CEDARCROFT HEALTH SERVICES, INC.
CENTRAL PARK LODGES, INC.
CENTRAL PARK LODGES OF WEST PALM BEACH, INC.
CENTRAL PARK LODGES (TARPON SPRINGS), INC.
CLARA BURKE NURSING HOME, INC.
CLAREMONT INTEGRATED HEALTH, INC.
COMPREHENSIVE POSTACUTE SERVICES, INC.
DERRY INTEGRATED HEALTH, INC.
ELIZABELL CO., INC.
ELM CREEK OF IHS, INC.
F.L.C. BENEVA NURSING PAVILION, INC.
F.L.C. SARASOTA NURSING PAVILION, INC.
FERRIGAN MOBILE X-RAY, INC.
FIRELANDS OF IHS, INC.
FLORIDA LIFE CARE, INC.
FLORIDA LIFE CARE, INC.
GAINESVILLE HEALTH CARE CENTER, INC.
GRAVOIS HEALTH CARE, INC.
<PAGE>
2
HEALTH CARE SYSTEMS, INC.
HEALTHCARE PHARMACY SERVICES OF FLORIDA, INC.
HEALTHCARE PHARMACY SERVICES OF PENNSYLVANIA, INC.
HEALTHCARE PHARMACY SERVICES OF TEXAS, INC.
HOME HEALTH INTEGRATED HEALTH SERVICES OF FLORIDA, INC.
HOSPICE INTEGRATED HEALTH SERVICES OF DISTRICT I, INC.
HOSPICE INTEGRATED HEALTH SERVICES OF DISTRICT VII-B, INC.
HOSPICE INTEGRATED HEALTH SERVICES OF FLORIDA, INC.
HOSPICE OF INTEGRATED HEALTH SERVICES, INC.
IHS ACQUISITION XIII, INC.
IHS AT LANSING, INC.
IHS OF DANA, INC.
INTEGRACARE, INC.
INTEGRATED-BALLARD, INC.
INTEGRATED HEALTH GROUP LIMITED PARTNERSHIP
INTEGRATED HEALTH OF LOCUST VALLEY ROAD, INC.
INTEGRATED HEALTH OF WATERFORD COMMONS, INC.
INTEGRATED HEALTH SERVICES AT ALEXANDRIA, INC.
INTEGRATED HEALTH SERVICES AT BIG SAIL, INC.
INTEGRATED HEALTH SERVICES AT BLUE RIDGE MANOR, INC.
INTEGRATED HEALTH SERVICES AT BRIARCLIFF HAVEN, INC.
INTEGRATED HEALTH SERVICES AT CADIZ, INC.
INTEGRATED HEALTH SERVICES AT CENTRAL FLORIDA, INC.
INTEGRATED HEALTH SERVICES AT CHEYENNE, INC.
INTEGRATED HEALTH SERVICES AT COLORADO SPRINGS, INC.
INTEGRATED HEALTH SERVICES AT COLUMBUS, INC.
INTEGRATED HEALTH SERVICES AT DAYTON, INC.
INTEGRATED HEALTH SERVICES AT DRIFTWOOD, INC.
INTEGRATED HEALTH SERVICES AT EASTERN MASSACHUSETTS, INC.
INTEGRATED HEALTH SERVICES AT GRANDVIEW CARE CENTER, INC.
INTEGRATED HEALTH SERVICES AT GREAT BEND, INC.
INTEGRATED HEALTH SERVICES AT HOPEDALE, INC.
INTEGRATED HEALTH SERVICES AT HOUSTON, INC.
INTEGRATED HEALTH SERVICES AT INDIAN CREEK, INC.
INTEGRATED HEALTH SERVICES AT KEN, INC.
INTEGRATED HEALTH SERVICES AT NEWARK, INC.
INTEGRATED HEALTH SERVICES AT ORMOND BEACH, INC.
INTEGRATED HEALTH SERVICES AT PARK REGENCY, INC.
INTEGRATED HEALTH SERVICES AT PENN, INC.
INTEGRATED HEALTH SERVICES AT SILVERCREST, INC.
INTEGRATED HEALTH SERVICES AT SOMERSET VALLEY, INC.
INTEGRATED HEALTH SERVICES AT SOUTHERN HILLS, INC.
<PAGE>
3
INTEGRATED HEALTH SERVICES AT STEUBENVILLE
INTEGRATED HEALTH SERVICES AT SYCARMORE CREEK, INC.
INTEGRATED HEALTH SERVICES AT THREE RIVERS, INC.
INTEGRATED HEALTH SERVICES AT TREYBURN, INC.
INTEGRATED HEALTH SERVICES FINANCIAL HOLDINGS, INC.
INTEGRATED HEALTH SERVICES HOLDINGS, INC.
INTEGRATED HEALTH SERVICES NPR, INC.
INTEGRATED HEALTH SERVICES OF ARCADIA, INC.
INTEGRATED HEALTH SERVICES OF ATHENS, INC.
INTEGRATED HEALTH SERVICES OF BRENTWOOD, INC.
INTEGRATED HEALTH SERVICES OF CALIFORNIA, INC.
INTEGRATED HEALTH SERVICES OF CLIFF MANOR, INC.
INTEGRATED HEALTH SERVICES OF COLORADO AT CHERRY CREEK,
INC.
INTEGRATED HEALTH SERVICES OF EAGLE CREEK, INC.
INTEGRATED HEALTH SERVICES OF GREEN BRIAR, INC.
INTEGRATED HEALTH SERVICES OF HERITAGE MANOR, INC.
INTEGRATED HEALTH SERVICES OF HICKORY CREEK, INC.
INTEGRATED HEALTH SERVICES OF INDIAN HILLS, INC.
INTEGRATED HEALTH SERVICES OF JACKSONVILLE, INC.
INTEGRATED HEALTH SERVICES OF KURT, INC.
INTEGRATED HEALTH SERVICES OF LESTER, INC.
INTEGRATED HEALTH SERVICES OF MELISSA, INC.
INTEGRATED HEALTH SERVICES OF MISSOURI, INC.
INTEGRATED HEALTH SERVICES OF ORANGE PARK, INC.
INTEGRATED HEALTH SERVICES OF RIVERBEND, INC.
INTEGRATED HEALTH SERVICES OF SCENIC HILLS, INC.
INTEGRATED HEALTH SERVICES OF SKYVIEW, INC.
INTEGRATED HEALTH SERVICES OF SKYVIEW II, INC.
INTEGRATED LIVING COMMUNITIES AT DENTON (MARYLAND), INC.
INTEGRATED LIVING COMMUNITIES OF SARASOTA, INC.
INTEGRATED LIVING COMMUNITIES RETIREMENT MANAGEMENT, INC.
INTEGRATED MANAGEMENT-CARRINGTON PONTE, INC.
INTEGRATED MANAGEMENT-GOVERNOR'S PARK, INC.
INTEGRATED OF AMARILLO, INC.
INTEGRATED PHYSICIAN GROUP SERVICES, INC.
ISABETH CO., INC.
LPC BETHAMY HEALTH CORPORATION
MANCHESTER INTEGRATED HEALTH, INC.
MOBILE RAY OF NEW ORLEANS, INC.
MOUNTAIN VIEW NURSING CENTER, INC.
NEW SOUTHWOOD ASSOCIATES, INC.
PALESTINE NURSING CENTER, INC.
<PAGE>
4
PALESTINE NURSING CENTER, INC.
PATIENT CARE PHARMACY, INC.
PATIENT CARE PHARMACY - COLORADO SPRINGS, INC.
PHARMACEUTICAL DOSE SERVICE, INC.
PINELLAS PARK NURSING HOME, INC.
PROFESSIONAL REVIEW NETWORK, INC.
REHAB MANAGEMENT SYSTEMS, INC.
REST HAVEN NURSING CENTERS, INC.
REST HAVEN NURSING CENTERS (CHESTNUT HILL), INC.
REST HAVEN NURSING CENTERS (WHITEMARSH), INC.
RIKAD PROPERTIES, INC.
SAMARITAN CARE, INC.
SAMARITAN CARE, INC.
SAMARITAN MANAGEMENT, INC.
SENIOR LIFE CARE, INC.
SENIOR LIFE CARE OF CALIFORNIA, INC.
SENIOR LIFE CARE OF LOUISIANA, INC.
SENIOR LIFE CARE OF OKLAHOMA, INC.
SENIOR LIFE CARE OF TENNESSEE, INC.
SENIOR LIFE CARE OF TEXAS, INC.
SLC COMMUNITY CARE, INC.
SOUTHWOOD HOLDINGS, INC.
SPRING CREEK OF IHS, INC.
SYMPHONY ANCILLARY SERVICES, INC.
SYMPHONY DIAGNOSTIC SERVICES, INC.
SYMPHONY DIAGNOSTIC SERVICES NO. 1, INC.
SYMPHONY DIAGNOSTIC SERVICES NO. 2, INC.
SYMPHONY HEALTH CARE CONSULTING, INC.
SYMPHONY HEALTH SERVICES, INC.
SYMPHONY HOME CARE SERVICES, INC.
SYMPHONY HOME CARE SERVICES NO. 1, INC.
SYMPHONY HOME CARE SERVICES NO. 2, INC.
SYMPHONY HOME CARE SERVICES NO. 3, INC.
SYMPHONY HOME CARE SERVICES NO. 4, INC.
SYMPHONY HOME CARE SERVICES NO. 5, INC.
SYMPHONY HOME CARE SERVICES NO. 6, INC.
SYMPHONY HOME CARE SERVICES NO. 7, INC.
SYMPHONY HOME CARE SERVICES NO. 8, INC.
SYMPHONY HOME CARE SERVICES NO. 9, INC.
SYMPHONY HOME CARE SERVICES NO. 10, INC.
SYMPHONY HOME CARE SERVICES NO. 11, INC.
SYMPHONY HOME CARE SERVICES NO. 12, INC.
SYMPHONY HOME CARE SERVICES NO. 13, INC.
<PAGE>
5
SYMPHONY HOME CARE SERVICES NO. 14, INC.
SYMPHONY HOME CARE SERVICES NO. 15, INC.
SYMPHONY HOME CARE SERVICES NO. 16, INC.
SYMPHONY HOME CARE SERVICES NO. 17, INC.
SYMPHONY HOME CARE SERVICES NO. 100, INC.
SYMPHONY HOME CARE SERVICES NO. 101, INC.
SYMPHONY HOME CARE SERVICES NO. 102, INC.
SYMPHONY HOME CARE SERVICES NO. 103, INC.
SYMPHONY HOME CARE SERVICES NO. 104, INC.
SYMPHONY HOME CARE SERVICES NO. 105, INC.
SYMPHONY HOME CARE SERVICES NO. 106, INC.
SYMPHONY HOME CARE SERVICES NO. 107, INC.
SYMPHONY HOME CARE SERVICES NO. 108, INC.
SYMPHONY HOME CARE SERVICES NO. 109, INC.
SYMPHONY HOME CARE SERVICES NO. 110, INC.
SYMPHONY HOME CARE SERVICES NO. 113, INC.
SYMPHONY HOME CARE SERVICES NO. 114, INC.
SYMPHONY HOME CARE SERVICES NO. 115, INC.
SYMPHONY HOME CARE SERVICES NO. 116, INC.
SYMPHONY HOME CARE SERVICES NO. 117, INC.
SYMPHONY HOME CARE SERVICES NO. 118, INC.
SYMPHONY HOME CARE SERVICES NO. 119, INC.
SYMPHONY HOME CARE SERVICES NO. 120, INC.
SYMPHONY HOME CARE SERVICES NO. 121, INC.
SYMPHONY HOME CARE SERVICES NO. 122, INC.
SYMPHONY PHARMACY SERVICES, INC.
SYMPHONY REHABILITATION SERVICES, INC.
SYMPHONY REHABILITATION SERVICES NO. 1, INC.
SYMPHONY REHABILITATION SERVICES NO. 2, INC.
SYMPHONY REHABILITATION SERVICES NO. 3, INC.
SYMPHONY REHABILITATION SERVICES NO. 4, INC.
SYMPHONY RESPIRATORY SERVICES, INC.
TEXAS LPC, INC.
WEST COAST CAMBRIDGE, INC.
WOODRIDGE CONVALESCENT CENTER, INC.
By: /s/
---------------------------------
Name:
Title:
of Each Guarantor or of the
General Partner of such Guarantor
<PAGE>
INTEGRATED HEALTH SERVICES, INC.
10065 Red Run Boulevard
Owings Mills, Maryland 21117
November 8, 1996
To the Administrative Agent and
the Lenders parties to the Revolving
Credit Agreement referred to below
Amendment No.2 to Revolving Credit Agreement
--------------------------------------------
Ladies and Gentlemen:
Reference is made to the Revolving Credit Agreement, dated as of May 15,
1996, as amended by Amendment No. 1 dated September 6, 1996 (such Revolving
Credit Agreement as so amended being the "Credit Agreement"), among Integrated
Health Services, Inc. ("IHS"), Citibank N.A., as administrative agent thereunder
(the "Agent"), and the other financial institutions party thereto, as lenders
thereunder. Capitalized terms used and not otherwise defined herein are used
herein as defined in the Credit Agreement.
IHS has proposed to acquire Coram Healthcare Corporation ("Coram") pursunt
to an Agreement and Plan of Merger entered into as of October 19, 1996 (the
"Merger Agreement") and in connection therewith has requested that the Requisite
Lenders agree to amend certain covenants contained in Article V of the Credit
Agreement to permit such acquisition. We understand that the Requisite Lenders
are, on the terms and conditions stated below, willing to grant our request, and
the Requisite Lenders have agreed to amend the Credit Agreement as hereinafter
set forth.
Effective as of the date hereof and subject to the satisfaction of the
condition precedents set forth below, the Credit Agreement is hereby amended as
follows:
(a) Section 5.03(c) is amended by deleting the period at the end of
subsection (xv) thereof and substituting therefor "; and" and adding a new
subsection (xvi) following such subsection (xv) to read as follows:
"(xvi) The merger pursuant to the Agreement and Plan of Merger
('Merger Agreement') entered into as of October 19, 1996 among
Coram Healthcare Corporation ('Coram'), the Borrower and IHS
Acquisition XIX, Inc. (the 'Coram Merger'), provided that (A) any
amendment or modification of such Merger Agreement after November
8,1996 which increases the Debt assumed
<PAGE>
2
thereunder by the Borrower or any of its Subsidiaries or the cash
consideration payable by the Borrower or any of its Subsidiaries
in connection therewith in excess of $10,000,000 shall be
satisfactory to the Requisite Lenders in their sole discretion,
(B) at the time of or after giving effect to the Coram Merger, no
Event of Default or Potential Default shall exist or result and
(C) the Borrower shall comply with the provisions of Section
5.02(e), and neither the Borrower nor any of its Subsidiaries nor
any of their properties shall be or become bound by or subject to
any contractual obligation that is or would be violated or put in
default by reason of such compliance or by reason of the
enforcement of the claims and Liens of the Agent and the Lenders
arising from such compliance."
(b) Section 5.03(d) is amended by deleting the period at the end of
subsection (v) thereof and substituting therefor "; and" and adding a new
subsection (vi) following such subsection (v) to read as follows:
"(vi) In connection with the Coram Merger, (A) Debt owed by the
Borrower to Coram Funding, Inc. ('Coram Funding') in an aggregate
principal amount not in excess of the amount equal to the sum of
$172,300,000 plus interest at the rate of 11% per annum from
January 1, 1997 to the date of the cloisng of the Coram Merger
divided by 0.98625 and which shall mature in full no earlier than
the tenth anniversary of its issuance, bear interest at rate no
greater than 11% per annum, have subordination provisions,
covenants and other terms and conditions identical to those in
the 1996 Subordinated Debt Indenture (except certain exceptions
thereto as set forth in the Agreement dated as of October 19,
1996 between the Borrower and Coram Funding) and have no
scheduled principal payments until maturity, and (B) Debt owed by
Coram to MedPartners, Inc. in an aggregate principal amount not
in excess of $52,687,000 (plus an amount equal to the accrued
interest from September 30, 1996 through the date of closing of
the Coram Merger on the 7% Convertible Subordinated Notes of
Coram to Caremark Inc. due October 1, 2005 and the 12%
Non-Convertible Subordinated Notes of Coram to Caremark, Inc. due
October 1, 2005) and which shall mature no earlier than the
second anniversary of its issuance and bear interest at a rate no
greater that the lesser of (1) 8% per annum or (2) one-half
percent below the interest rate in effect from time to time under
this Agreement."
This Amendment shall become effective when and only when the Agent shall
have received (A) counterparts of this Amendment executed by IHS and the
Requisite Lenders, or as to any of such Lenders, advice satisfactory to the
Agent that such Lender has executed this Amendment, (B) an amendment fee for the
ratable account of each Lender in an aggregate amount equal to .0005 of the
Facility Amount and the supplemental fee as set forth in a letter dated November
8, 1996 from the
<PAGE>
3
Agent to IHS (the "Agent's Letter") and (C) counterparts of the Consent appended
hereto (the "Consent"), executed by each Guarantor. In addition, this Amendment
shall be of no force or effect if (i) the Agent does not receive on or before
the date of the closing of the acquisition of Coram pursuant to the Merger
Agreement an additional fee for the ratable account of each Lender in an
aggregate amount equal to .001375 of the Facility Amount and (ii) the Agent does
not receive the additional fee as set forth in the Agent's Letter by the due
date therefor.
IHS represents and warrants as follows:
(a) IHS is duly organized, validly existing and in good standing under
the laws of Delaware. Each Guarantor is a corporation or partnership duly
organized and validly existing under the laws of the jurisdiction in which
it is organized.
(b) Each of IHS and each Guarantor has the corporate or partnership
power to execute, deliver and perform this Amendment and the Consent, as
the case may be, and to take all action necessary to consummate the
transactions contemplated hereunder. The execution, delivery and
performance by IHS and each Guarantor of this Amendment and the Consent,
respectively, have been duly authorized by all necessary action and do not
contravene (i) its certificate or articles of incorporation (or, in case of
a partnership, governing agreements) or (ii) any law or any indenture,
lease or written agreement binding on or affecting it.
(c) No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority is required for the due
execution, delivery and performance by IHS or any Guarantor of this
Amendment or the Consent, respectively.
(d) This Amendment and the Consent constitutes legal, valid and
binding obligations of IHS and each Guarantor, respectively, enforceable
against IHS and each Guarantor, respectively, in accordance with their
respective terms subject to laws generally affecting the enforcement of
creditors' rights.
Upon the effectiveness of this Amendment, on and after the date hereof each
reference in the Credit Agreement to "this Agreement", "hereunder", "hereof" of
words of like import referring to the Credit Agreement, and each reference in
the other Loan Documents to "the Credit Agreement", "thereunder", "thereof" or
words of like import referring to the Credit Agreement, shall mean and be a
reference to the Credit Agreement as amended hereby. Except as specifically
amended above, the Credit Agreement, and all other Loan Documents, are and shall
continue to be in full force and effect and are hereby in all respects ratified
and confirmed. The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of any Lender or the Agent under any of the Loan Documents, not
constitute a waiver of any provision of any of the Loan Documents. This
Amendment shall be governed by, and construed in accordance with, the laws of
the State of New York.
<PAGE>
4
Please evidence your acknowledgement of and agreement to the foregoing by
executing and returning not later than close of business on November 13, 1996
the three counterparts of this Amendment No. 2 and consent enclosed herewith to
Citicorp Securities, Inc., 399 Park Avenue, 9th Floor, New York, New York 10043,
Attention: Rosemary Bell. This Amendment No. 2 and consent is subject to the
provisions of Section 8.01 of the Credit Agreement.
This Amendment No. 2 and consent may be executed in any number of
counterparts and by any combination of the parties hereto in separate
counterparts, each of which counterparts shall be an original and all of which
taken together shall constitute one and the same Amendment No. 2 and consent.
Very truly yours,
INTEGRATED HEALTH
SERVICES, INC.
By: /s/
------------------------------
Name:
Title:
ACKNOWLEDGED, AGREED
AND CONSENTED TO as of
the date first above written:
CITIBANK, N.A.,
as Administrative Agent and as a Lender
By: /s/
-------------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
5
THE BANK OF NOVA SCOTIA,
as LC Bank, a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
CORESTATES BANK, N.A.,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
CREDIT LYONNAIS,
NEW YORK BRANCH,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
DEUTSCHE BANK AG,
NEW YORK BRANCH AND/OR
CAYMAN ISLANDS BRANCH,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
6
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
NATIONSBANK, N.A.,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
TORONTO DOMINION (TEXAS), INC.,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
7
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
CREDITANSTALT CORPORATE
FINANCE, INC.,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
By: /s/
-------------------------------------
Name:
Title:
FLEET NATIONAL BANK,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
GENERAL ELECTRIC
CAPITAL CORPORATION,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
8
HIBERNIA NATIONAL BANK,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
AMSOUTH BANK OF ALABAMA,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
THE BANK OF TOKYO-MITSUBISHI
TRUST COMPANY,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
THE SANWA BANK, LIMITED,
NEW YORK BRANCH
as a Lender
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
9
SIGNET BANK,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
THE SUMITOMO BANK, LIMITED,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
FIRST AMERICAN NATIONAL BANK,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
10
ALLIED IRISH BANK,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
PROVIDENT BANK OF MARYLAND,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
BANK OF AMERICA ILLINOIS
as a Lender
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
CONSENT
The undersigned, as Guarantors under the Subsidiary Guaranty, dated as of
May 15, 1996 (the "Guaranty"), in favor of the Agent for the Lenders parties to
the Credit Agreement referred to in the foregoing Amendment No. 2 hereby consent
to such Amendment No. 2 and hereby confirm and agree that notwithstanding the
effectiveness of such Amendment No. 2, the Guaranty is, and shall continue to
be, in full force and effect and is hereby confirmed and ratified in all
respects.
ABC GP, INC.
ABC HOME HEALTH AND HOSPICE OF ALBANY, INC.
ABC HOME HEALTH AND HOSPICE OF ATHENS, INC.
ABC HOME HEALTH AND HOSPICE OF BRUNSWICK, INC.
ABC HOME HEALTH AND HOSPICE OF DUBLIN, INC.
ABC HOME HEALTH AND HOSPICE OF MACON, INC.
ABC HOME HEALTH AND HOSPICE OF SAVANNAH, INC.
ABC HOME HEALTH AND HOSPICE OF TIFTON, INC.
ABC HOME HEALTH AND HOSPICE OF VIDALIA, INC.
ABC HOME HEALTH AND HOSPICE OF WAYCROSS, INC.
ABC HOME NURSING, INC.
ABC NEWCO, INC.
ABC PHARMACEUTICALS, INC.
ALABAMA SENIOR LIFE CARE, INC.
ALPINE MANOR, INC.
AMCARE HEALTH SERVICES, INC.
AMCARE, INC.
ARBOR LIVING CENTERS OF FLORIDA, INC.
ARBOR LIVING CENTERS OF TEXAS, INC.
ASIA CARE, INC.
BETHAMY LIVING CENTER MANAGEMENT COMPANY
BETHAMY LIVING CENTERS LIMITED PARTNERSHIP
BRIAR HILL, INC.
BRIARCLIFF NURSING HOME, INC.
CAMBRIDGE CARE CENTERS, INC.
CAMBRIDGE GROUP OF INDIANA, INC.
CAMBRIDGE GROUP OF PENNSYLVANIA, INC.
CAMBRIDGE GROUP OF TEXAS, INC.
CARE CENTERS HOLDING, INC.
CARRIAGE-By-THE-LAKE OF IHS, INC.
CEDARCROFT HEALTH SERVICES, INC.
CENTRAL PARK LODGES, INC.
CENTRAL PARK LODGES OF WEST PALM BEACH, INC.
CENTRAL PARK LODGES (TARPON SPRINGS), INC.
CLARA BURKE NURSING HOME, INC.
<PAGE>
CLAREMONT INTEGRATED HEALTH, INC.
COMPREHENSIVE POSTACUTE SERVICES, INC.
DERRY INTEGRATED HEALTH, INC.
ELIZABELL CO., INC.
ELM CREEK OF IHS, INC.
F.L.C. BENEVA NURSING PAVILION, INC.
F.L.C. SARASOTA NURSING PAVILION, INC.
FERRIGAN MOBILE X-RAY, INC.
FIRELANDS OF IHS, INC.
FIRST AMERICAN HOME CARE OF ALABAMA, INC.
FIRST AMERICAN HOME CARE OF ARKANSAS, INC.
FIRST AMERICAN HOME CARE OF CALIFORNIA, INC.
FIRST AMERICAN HOME CARE OF COLORADO, INC.
FIRST AMERICAN HOME CARE OF FLORIDA, INC.
FIRST AMERICAN HOME CARE OF FT. LAUDERDALE, INC.
FIRST AMERICAN HOME CARE OF GEORGIA, INC.
FIRST AMERICAN HOME CARE OF ILLINOIS, INC.
FIRST AMERICAN HOME CARE OF INDIANA, INC.
FIRST AMERICAN HOME CARE OF LOUISIANA, INC.
FIRST AMERICAN HOME CARE OF MICHIGAN, INC.
FIRST AMERICAN HOME CARE OF MISSISSIPPI, INC.
FIRST AMERICAN HOME CARE OF MISSOURI, INC.
FIRST AMERICAN HOME CARE OF NAPLES, INC.
FIRST AMERICAN HOME CARE OF NEBRASKA, INC.
FIRST AMERICAN HOME CARE OF NEW MEXICO, INC.
FIRST AMERICAN HOME CARE OF NORTH CAROLINA, INC.
FIRST AMERICAN HOME CARE OF PENNSYLVANIA, INC.
FIRST AMERICAN HOME CARE OF OHIO, INC.
FIRST AMERICAN HOME CARE OF OKLAHOMA, INC.
FIRST AMERICAN HOME CARE OF SOUTH CAROLINA, INC.
FIRST AMERICAN HOME CARE OF TENNESSEE, INC.
FIRST AMERICAN HOME CARE OF TEXAS, INC.
FIRST AMERICAN HOME CARE OF VALDOSTA, INC.
FIRST AMERICAN HOME CARE OF VIRGINIA, INC.
FIRST AMERICAN HOME CARE OF WEST VIRGINIA, INC.
FIRST AMERICAN INTERNATIONAL, INC.
FLORIDA LIFE CARE, INC.
GAINESVILLE HEALTH CARE CENTER, INC.
GRAVOIS HEALTH CARE, INC.
HEALTH CARE SYSTEMS, INC.
HEALTHCARE PHARMACY SERVICES OF FLORIDA, INC.
HEALTHCARE PHARMACY SERVICES OF PENNSYLVANIA, INC.
HEALTHCARE PHARMACY SERVICES OF TEXAS, INC.
HOME HEALTH INTEGRATED HEALTH SERVICES OF FLORIDA, INC.
<PAGE>
HOSPICE INTEGRATED HEALTH SERVICES OF DISTRICT I, INC.
HOSPICE INTEGRATED HEALTH SERVICES OF DISTRICT VII-B, INC.
HOSPICE INTEGRATED HEALTH SERVICES OF FLORIDA, INC.
HOSPICE OF INTEGRATED HEALTH SERVICES, INC.
IHS ACQUISITION XIII, INC.
IHS ACQUISITION XVIII, INC.
IHS AT LANSING, INC.
IHS CHICAGO POST-ACUTE NETWORK, INC.
IHS OF DANA, INC.
INTEGRACARE, INC.
INTEGRATED-BALLARD, INC.
INTEGRATED HEALTH GROUP LIMITED PARTNERSHIP
INTEGRATED HEALTH OF LOCUST VALLEY ROAD, INC.
INTEGRATED HEALTH OF WATERFORD COMMONS, INC.
INTEGRATED HEALTH SERVICES AT ALEXANDRIA, INC.
INTEGRATED HEALTH SERVICES AT BIG SAIL, INC.
INTEGRATED HEALTH SERVICES AT BLUE RIDGE MANOR, INC.
INTEGRATED HEALTH SERVICES AT BRIARCLIFF HAVEN, INC.
INTEGRATED HEALTH SERVICES AT CADIZ, INC.
INTEGRATED HEALTH SERVICES AT CENTRAL FLORIDA, INC.
INTEGRATED HEALTH SERVICES AT CHEYENNE, INC.
INTEGRATED HEALTH SERVICES AT CINCINNATI, INC.
INTEGRATED HEALTH SERVICES AT COLORADO SPRINGS, INC.
INTEGRATED HEALTH SERVICES AT COLUMBUS, INC.
INTEGRATED HEALTH SERVICES AT DAYTON, INC.
INTEGRATED HEALTH SERVICES AT DRIFTWOOD, INC.
INTEGRATED HEALTH SERVICES AT EASTERN MASSACHUSETTS, INC.
INTEGRATED HEALTH SERVICES AT GRANDVIEW CARE CENTER, INC.
INTEGRATED HEALTH SERVICES AT GREAT BEND, INC.
INTEGRATED HEALTH SERVICES AT HOPEDALE, INC.
INTEGRATED HEALTH SERVICES AT HOUSTON, INC.
INTEGRATED HEALTH SERVICES AT INDIAN CREEK, INC.
INTEGRATED HEALTH SERVICES AT KENT, INC.
INTEGRATED HEALTH SERVICES AT KING DAVID CENTER, INC.
INTEGRATED HEALTH SERVICES AT NEWARK, INC.
INTEGRATED HEALTH SERVICES AT ORMOND BEACH, INC.
INTEGRATED HEALTH SERVICES AT PARK REGENCY, INC.
INTEGRATED HEALTH SERVICES AT PENN, INC.
INTEGRATED HEALTH SERVICES AT SILVERCREST, INC.
INTEGRATED HEALTH SERVICES AT SOMERSET VALLEY, INC.
INTEGRATED HEALTH SERVICES AT SOUTHERN HILLS, INC.
INTEGRATED HEALTH SERVICES AT STEUBENVILLE
INTEGRATED HEALTH SERVICES AT SYCARMORE CREEK, INC.
INTEGRATED HEALTH SERVICES AT THREE RIVERS, INC.
<PAGE>
INTEGRATED HEALTH SERVICES AT TREYBURN, INC.
INTEGRATED HEALTH SERVICES FINANCIAL HOLDINGS, INC.
INTEGRATED HEALTH SERVICES HOLDINGS, INC.
INTEGRATED HEALTH SERVICES NPR, INC.
INTEGRATED HEALTH SERVICES OF ARCADIA, INC.
INTEGRATED HEALTH SERVICES OF ATHENS, INC.
INTEGRATED HEALTH SERVICES OF BRENTWOOD, INC.
INTEGRATED HEALTH SERVICES OF BRUNSWICK, INC.
INTEGRATED HEALTH SERVICES OF CALIFORNIA, INC.
INTEGRATED HEALTH SERVICES OF CLIFF MANOR, INC.
INTEGRATED HEALTH SERVICES OF COLORADO AT CHERRY CREEK, INC.
INTEGRATED HEALTH SERVICES OF EAGLE CREEK, INC.
INTEGRATED HEALTH SERVICES OF GREEN BRIAR, INC.
INTEGRATED HEALTH SERVICES OF HERITAGE MANOR, INC.
INTEGRATED HEALTH SERVICES OF HICKORY CREEK, INC.
INTEGRATED HEALTH SERVICES OF INDIAN HILLS, INC.
INTEGRATED HEALTH SERVICES OF JACKSONVILLE, INC.
INTEGRATED HEALTH SERVICES OF KURT, INC.
INTEGRATED HEALTH SERVICES OF LESTER, INC.
INTEGRATED HEALTH SERVICES OF MELISSA, INC.
INTEGRATED HEALTH SERVICES OF MISSOURI, INC.
INTEGRATED HEALTH SERVICES OF ORANGE PARK, INC.
INTEGRATED HEALTH SERVICES OF RIVERBEND, INC.
INTEGRATED HEALTH SERVICES OF SCENIC HILLS, INC.
INTEGRATED HEALTH SERVICES OF SKYVIEW, INC.
INTEGRATED HEALTH SERVICES OF SKYVIEW II, INC.
INTEGRATED HEALTH SERVICES OF SUNSET, INC.
INTEGRATED MANAGEMENT-GOVERNOR'S PARK, INC.
INTEGRATED OF AMARILLO, INC.
INTEGRATED PHYSICIAN GROUP SERVICES, INC.
ISABETH CO., INC.
J.R. REHAB ASSOCIATES, INC.
LPC BETHAMY HEALTH CORPORATION
MANCHESTER INTEGRATED HEALTH, INC.
MOBILE RAY OF NEW ORLEANS, INC.
MOUNTAIN VIEW NURSING CENTER, INC.
NEW SOUTHWOOD ASSOCIATES, INC.
PALESTINE NURSING CENTER, INC.
PATIENT CARE PHARMACY, INC.
PATIENT CARE PHARMACY - COLORADO SPRINGS, INC.
PHARMACEUTICAL DOSE SERVICE, INC.
PINELLAS PARK NURSING HOME, INC.
PROFESSIONAL REVIEW NETWORK, INC.
REHAB MANAGEMENT SYSTEMS, INC.
<PAGE>
REST HAVEN NURSING CENTERS, INC.
REST HAVEN NURSING CENTERS (CHESTNUT HILL), INC.
REST HAVEN NURSING CENTERS (WHITEMARSH), INC.
RIKAD PROPERTIES, INC.
SAMARITAN CARE, INC. (Illinois Domestic)
SAMARITAN CARE, INC. (Michigan Domestic)
SAMARITAN MANAGEMENT, INC.
SLC COMMUNITY CARE, INC.
SOUTHWOOD HOLDINGS, INC.
SPRING CREEK OF IHS, INC.
SYMPHONY ANCILLARY SERVICES, INC.
SYMPHONY DIAGNOSTIC SERVICES, INC.
SYMPHONY DIAGNOSTIC SERVICES NO. 1, INC.
SYMPHONY DIAGNOSTIC SERVICES NO. 2, INC.
SYMPHONY HEALTH CARE CONSULTING, INC.
SYMPHONY HEALTH SERVICES, INC.
SYMPHONY HOME CARE SERVICES, INC.
SYMPHONY HOME CARE SERVICES NO. 1, INC.
SYMPHONY HOME CARE SERVICES NO. 2, INC.
SYMPHONY HOME CARE SERVICES NO. 3, INC.
SYMPHONY HOME CARE SERVICES NO. 4, INC.
SYMPHONY HOME CARE SERVICES NO. 5, INC.
SYMPHONY HOME CARE SERVICES NO. 6, INC.
SYMPHONY HOME CARE SERVICES NO. 7, INC.
SYMPHONY HOME CARE SERVICES NO. 8, INC.
SYMPHONY HOME CARE SERVICES NO. 9, INC.
SYMPHONY HOME CARE SERVICES NO. 10, INC.
SYMPHONY HOME CARE SERVICES NO. 11, INC.
SYMPHONY HOME CARE SERVICES NO. 12, INC.
SYMPHONY HOME CARE SERVICES NO. 13, INC.
SYMPHONY HOME CARE SERVICES NO. 14, INC.
SYMPHONY HOME CARE SERVICES NO. 15, INC.
SYMPHONY HOME CARE SERVICES NO. 16, INC.
SYMPHONY HOME CARE SERVICES NO. 17, INC.
SYMPHONY HOME CARE SERVICES NO. 18- CALIFORNIA, INC.
SYMPHONY HOME CARE SERVICES NO. 18- LOUISIANA, INC.
SYMPHONY HOME CARE SERVICES NO. 18- OKLAHOMA, INC.
SYMPHONY HOME CARE SERVICES NO. 18- TENNESSEE, INC.
SYMPHONY HOME CARE SERVICES NO. 18- TEXAS. INC.
SYMPHONY HOME CARE SERVICES NO. 19, INC.
SYMPHONY HOME CARE SERVICES NO. 100, INC.
SYMPHONY HOME CARE SERVICES NO. 101, INC.
SYMPHONY HOME CARE SERVICES NO. 102, INC.
SYMPHONY HOME CARE SERVICES NO. 103, INC.
<PAGE>
SYMPHONY HOME CARE SERVICES NO. 104, INC.
SYMPHONY HOME CARE SERVICES NO. 105, INC.
SYMPHONY HOME CARE SERVICES NO. 106, INC.
SYMPHONY HOME CARE SERVICES NO. 107, INC.
SYMPHONY HOME CARE SERVICES NO. 108, INC.
SYMPHONY HOME CARE SERVICES NO. 109, INC.
SYMPHONY HOME CARE SERVICES NO. 110, INC.
SYMPHONY HOME CARE SERVICES NO. 113, INC.
SYMPHONY HOME CARE SERVICES NO. 114, INC.
SYMPHONY HOME CARE SERVICES NO. 115, INC.
SYMPHONY HOME CARE SERVICES NO. 116, INC.
SYMPHONY HOME CARE SERVICES NO. 117, INC.
SYMPHONY HOME CARE SERVICES NO. 118, INC.
SYMPHONY HOME CARE SERVICES NO. 119, INC.
SYMPHONY HOME CARE SERVICES NO. 120, INC.
SYMPHONY HOME CARE SERVICES NO. 121, INC.
SYMPHONY HOME CARE SERVICES NO. 122, INC.
SYMPHONY PHARMACY SERVICES, INC.
SYMPHONY REHABILITATION SERVICES, INC.
SYMPHONY REHABILITATION SERVICES NO. 1, INC.
SYMPHONY REHABILITATION SERVICES NO. 2, INC.
SYMPHONY REHABILITATION SERVICES NO. 3, INC.
SYMPHONY REHABILITATION SERVICES NO. 4, INC.
SYMPHONY RESPIRATORY SERVICES, INC.
TEXAS LPC, INC.
WEST COAST CAMBRIDGE, INC.
WOODRIDGE CONVALESCENT CENTER, INC.
By: /s/
---------------------------------
Name:
Title:
of Each Guarantor or of the
General Partner of such Guarantor
<PAGE>
INTEGRATED HEALTH SERVICES, INC.
10065 Red Run Boulevard
Owings Mills, Maryland 21117
March 24, 1997
To the Administrative Agent and
the Lenders parties to the Revolving
Credit Agreement referred to below
Amendment No.3 to Revolving Credit Agreement
--------------------------------------------
Ladies and Gentlemen:
Reference is made to the Revolving Credit Agreement, dated as of May 15,
1996, as amended by Amendment No. 1 dated September 6, 1996 and Amendment No. 2
dated November 8, 1996 (such Revolving Credit Agreement as so amended being the
"Credit Agreement"), among Integrated Health Services, Inc. ("IHS"), Citibank
N.A., as administrative agent thereunder (the "Agent"), and the other financial
institutions party thereto, as lenders thereunder. Capitalized terms used and
not otherwise defined herein are used herein as defined in the Credit Agreement.
IHS has proposed to (i) issue senior subordinated notes in an aggregate
principal amount of up to $450,000,000 and (ii) purchase the indebtedness
outstanding under the 1994 Subordinated Debt Indenture and the 1995 Subordinated
Debt Indenture. In connection with the foregoing, IHS has requested that the
Lenders agree to amend certain covenants contained in Article V of the Credit
Agreement to permit such transactions. We understand that the Requisite Lenders
are, on the terms and conditions stated below, willing to grant our request, and
the Requisite Lenders have agreed to amend the Credit Agreement as hereinafter
set forth.
Effective as of the date hereof and subject to the satisfaction of the
condition precedents set forth below, the Credit Agreement is hereby amended as
follows:
(a) The definition of "1996 Subordinated Debt Indenture" in Section
1.01 is amended in full to read as follows:
"'1996 SUBORDINATED DEBT INDENTURE' means the Indenture, dated as
of May 15, 1996, between the Borrower, as Issuer, and Signet Trust
Company, as Trustee."
(b) In Section 1.01, the following definition of "1997 Subordinated
Debt Indenture" is added in the appropriate alphabetical order:
<PAGE>
2
"'1997 SUBORDINATED DEBT INDENTURE' means the Indenture to be
entered into after April 7, 1997 between the Borrower, as Issuer, and
the trustee thereunder in connection with a proposed senior
subordinated note offering."
(c) The definition of "Subordinated Debt Indentures" in Section 1.01
is amended in full to read as follows:
"'SUBORDINATED DEBT INDENTURES' means the 1992 Convertible
Subordinated Debt Indenture, the 1993 Convertible Subordinated Debt
Indenture, the 1994 Subordinated Debt Indenture, the 1995 Subordinated
Debt Indenture, the 1996 Subordinated Debt Indenture and, upon the
effectiveness thereof, the 1997 Subordinated Debt Indenture"
(d) Section 5.03(d) is amended by deleting the period at the end of
subsection (v) thereof and substituting therefor "; and" and adding a new
subsection (vi) following such subsection (v) to read as follows:
"(vi) Subordinated Debt incurred under the 1997 Subordinated Debt
Indenture in an aggregate principal amount of up to $450,000,000, with
an interest rate not in excess of 10.25%, and any extension, renewal
or refinancing of such Debt so long as either (A) the principal amount
of such Debt is not increased or (B) any increase in the principal
amount of such Debt is permitted pursuant to another clause of this
Section 5.03(d); provided that the terms and conditions of such 1997
Subordinated Debt Indenture shall be (1) substantially similar to the
terms and conditions contained in the 1996 Subordinated Debt Indenture
and (2) satisfactory to the Agent in its sole discretion."
(e) Section 5.03(h)(G) is amended in full to read as follows:
"(G) so long as no Event of Default exists or would result and
unless otherwise prohibited under this Agreement and the 1993
Convertible Subordinated Debt Indenture, the Borrower may pay on
January 1, 2001 any principal amount then due and payable under the
1993 Convertible Subordinated Debt Indenture; and"
(f) Section 5.03(h) is amended by adding a new subsection (H)
following subsection (G) to read as follows:
"(H) purchase by tender or otherwise any or all of the
indebtedness outstanding under the 1994 Subordinated Debt
Indenture and the 1995 Subordinated Debt Indenture for an amount
not in excess of 116% of the principal amount purchased, provided
that the aggregate amount of such purchases cannot be in excess
of the aggregate net proceeds of the Subordinated Debt referred
to in Section 5.03(d)(vi)."
<PAGE>
3
This Amendment shall become effective on the date when and only when the
Agent shall have received (A) counterparts of this Amendment executed by IHS and
the Requisite Lenders, or as to any of such Lenders, advice satisfactory to the
Agent that such Lender has executed this Amendment and (B) counterparts of the
Consent appended hereto (the "Consent"), executed by each Guarantor.
IHS represents and warrants as follows:
(a) IHS is duly organized and validly existing under the laws of
Delaware. Each Guarantor is a corporation or partnership duly organized and
validly existing under the laws of the jurisdiction in which it is
organized.
(b) Each of IHS and each Guarantor has the corporate or partnership
power to execute, deliver and perform this Amendment and the Consent, as
the case may be, and to take all action necessary to consummate the
transactions contemplated hereunder. The execution, delivery and
performance by IHS and each Guarantor of this Amendment and the Consent,
respectively, have been duly authorized by all necessary action and do not
contravene (i) its certificate or articles of incorporation (or, in case of
a partnership, governing agreements) or (ii) any law or any indenture,
lease or written agreement binding on or affecting it.
(c) No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority is required for the due
execution, delivery and performance by IHS or any Guarantor of this
Amendment or the Consent, respectively.
(d) This Amendment and the Consent constitutes legal, valid and
binding obligations of IHS and each Guarantor, respectively, enforceable
against IHS and each Guarantor, respectively, in accordance with their
respective terms subject to laws generally affecting the enforcement of
creditors' rights.
(e) The Credit Agreement is a "Credit Agreement" within the meaning of
the 1997 Subordinated Debt Indenture, upon its effectiveness, and the
obligations under the Credit Agreement when incurred will be "Senior
Indebtedness" within the meaning of the 1997 Subordinated Debt Indenture.
Upon the effectiveness of this Amendment, on and after the date hereof each
reference in the Credit Agreement to "this Agreement", "hereunder", "hereof" of
words of like import referring to the Credit Agreement, and each reference in
the other Loan Documents to "the Credit Agreement", "thereunder", "thereof" or
words of like import referring to the Credit Agreement, shall mean and be a
reference to the Credit Agreement as amended hereby. Except as specifically
amended above, the Credit Agreement, and all other Loan Documents, are and shall
continue to be in full force and effect and are hereby in all respects ratified
and confirmed. The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of any Lender or the Agent under any of the Loan Documents,
<PAGE>
4
not constitute a waiver of any provision of any of the Loan Documents. This
Amendment shall be governed by, and construed in accordance with, the laws of
the State of New York.
Please evidence your acknowledgement of and agreement to the foregoing by
executing and returning not later than the close of business on April 4, 1997
three counterparts of this Amendment No. 3 to Citicorp Securities, Inc., 399
Park Avenue, 9th Floor, New York, New York 10043, Attention: Rosemary Bell. This
Amendment No. 3 is subject to the provisions of Section 8.01 of the Credit
Agreement.
This Amendment No. 3 may be executed in any number of counterparts and by
any combination of the parties hereto in separate counterparts, each of which
counterparts shall be an original and all of which taken together shall
constitute one and the same Amendment No. 3.
Very truly yours,
INTEGRATED HEALTH
SERVICES, INC.
By: /s/
-----------------------------
Name:
Title:
ACKNOWLEDGED, AGREED
AND CONSENTED TO as of
the date first above written:
CITIBANK, N.A.,
as Administrative Agent and as a Lender
By: /s/
-------------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
5
THE BANK OF NOVA SCOTIA,
as LC Bank, a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
CORESTATES BANK, N.A.,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
CREDIT LYONNAIS,
NEW YORK BRANCH,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
DEUTSCHE BANK AG,
NEW YORK BRANCH AND/OR
CAYMAN ISLANDS BRANCH,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
6
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
NATIONSBANK, N.A.,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
TORONTO DOMINION (TEXAS), INC.,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
7
CREDITANSTALT CORPORATE
FINANCE, INC.,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
By: /s/
-------------------------------------
Name:
Title:
FLEET NATIONAL BANK,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
GENERAL ELECTRIC
CAPITAL CORPORATION,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
HIBERNIA NATIONAL BANK,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
8
AMSOUTH BANK OF ALABAMA,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
THE BANK OF TOKYO-MITSUBISHI
TRUST COMPANY,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
THE SANWA BANK, LIMITED,
NEW YORK BRANCH
as a Lender
By: /s/
-------------------------------------
Name:
Title:
SIGNET BANK,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
THE SUMITOMO BANK, LIMITED,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
9
FIRST AMERICAN NATIONAL BANK,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
ALLIED IRISH BANK,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
PROVIDENT BANK OF MARYLAND,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
BANK OF AMERICA ILLINOIS
as a Lender
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
CONSENT
The undersigned, as Guarantors under the Subsidiary Guaranty, dated as of
May 15, 1996 or under Agreements to be Bound by such Subsidiary Guaranty
(collectively, the "Guaranty"), in favor of the Agent for the Lenders parties to
the Credit Agreement referred to in the foregoing Amendment No. 3 hereby consent
to such Amendment No. 3 and hereby confirm and agree that notwithstanding the
effectiveness of such Amendment No. 3, the Guaranty is, and shall continue to
be, in full force and effect and is hereby confirmed and ratified in all
respects.
ABC GP, INC.
ABC HOME HEALTH AND HOSPICE OF ALBANY, INC.
ABC HOME HEALTH AND HOSPICE OF ATHENS, INC.
ABC HOME HEALTH AND HOSPICE OF BRUNSWICK, INC.
ABC HOME HEALTH AND HOSPICE OF DUBLIN, INC.
ABC HOME HEALTH AND HOSPICE OF MACON, INC.
ABC HOME HEALTH AND HOSPICE OF SAVANNAH, INC.
ABC HOME HEALTH AND HOSPICE OF TIFTON, INC.
ABC HOME HEALTH AND HOSPICE OF VIDALIA, INC.
ABC HOME HEALTH AND HOSPICE OF WAYCROSS, INC.
ABC HOME NURSING, INC.
ABC NEWCO, INC.
ABC PHARMACEUTICALS, INC.
ALABAMA SENIOR LIFE CARE, INC.
ALPINE MANOR, INC.
ARBOR LIVING CENTERS OF FLORIDA, INC.
ARBOR LIVING CENTERS OF TEXAS, INC.
ASIA CARE, INC.
BETHAMY LIVING CENTER MANAGEMENT COMPANY
BETHAMY LIVING CENTERS LIMITED PARTNERSHIP
BRIAR HILL, INC.
BRIARCLIFF NURSING HOME, INC.
CAMBRIDGE CARE CENTERS, INC.
CAMBRIDGE GROUP OF INDIANA, INC.
CAMBRIDGE GROUP OF PENNSYLVANIA, INC.
CAMBRIDGE GROUP OF TEXAS, INC.
CARE CENTERS HOLDING, INC.
CARRIAGE-By-THE-LAKE OF IHS, INC.
CEDARCROFT HEALTH SERVICES, INC.
CENTRAL PARK LODGES, INC.
CENTRAL PARK LODGES OF WEST PALM BEACH, INC.
CENTRAL PARK LODGES (TARPON SPRINGS), INC.
CLARA BURKE NURSING HOME, INC.
CLAREMONT INTEGRATED HEALTH, INC.
COMPREHENSIVE POSTACUTE SERVICES, INC.
DERRY INTEGRATED HEALTH, INC.
ELIZABELL CO., INC.
<PAGE>
3
ELM CREEK OF IHS, INC.
F.L.C. BENEVA NURSING PAVILION, INC.
F.L.C. SARASOTA NURSING PAVILION, INC.
FERRIGAN MOBILE X-RAY, INC.
FIRELANDS OF IHS, INC.
FIRST AMERICAN HOME CARE OF ALABAMA, INC.
FIRST AMERICAN HOME CARE OF ARKANSAS, INC.
FIRST AMERICAN HOME CARE OF CALIFORNIA, INC.
FIRST AMERICAN HOME CARE OF COLORADO, INC.
FIRST AMERICAN HOME CARE OF FLORIDA, INC.
FIRST AMERICAN HOME CARE OF FT. LAUDERDALE, INC.
FIRST AMERICAN HOME CARE OF GEORGIA, INC.
FIRST AMERICAN HOME CARE OF ILLINOIS, INC.
FIRST AMERICAN HOME CARE OF INDIANA, INC.
FIRST AMERICAN HOME CARE OF LOUISIANA, INC.
FIRST AMERICAN HOME CARE OF MICHIGAN, INC.
FIRST AMERICAN HOME CARE OF MISSISSIPPI, INC.
FIRST AMERICAN HOME CARE OF MISSOURI, INC.
FIRST AMERICAN HOME CARE OF NAPLES, INC.
FIRST AMERICAN HOME CARE OF NEBRASKA, INC.
FIRST AMERICAN HOME CARE OF NEW MEXICO, INC.
FIRST AMERICAN HOME CARE OF NORTH CAROLINA, INC.
FIRST AMERICAN HOME CARE OF OHIO, INC.
FIRST AMERICAN HOME CARE OF OKLAHOMA, INC.
FIRST AMERICAN HOME CARE OF PENNSYLVANIA, INC.
FIRST AMERICAN HOME CARE OF SOUTH CAROLINA, INC.
FIRST AMERICAN HOME CARE OF TENNESSEE, INC.
FIRST AMERICAN HOME CARE OF TEXAS, INC.
FIRST AMERICAN HOME CARE OF VALDOSTA, INC.
FIRST AMERICAN HOME CARE OF VIRGINIA, INC.
FIRST AMERICAN HOME CARE OF WEST VIRGINIA, INC.
FIRST AMERICAN INTERNATIONAL, INC.
FLORIDA LIFE CARE, INC.
GAINESVILLE HEALTH CARE CENTER, INC.
GRAVOIS HEALTH CARE, INC.
HEALTH CARE SYSTEMS, INC.
HOME HEALTH INTEGRATED HEALTH SERVICES OF FLORIDA, INC.
HOSPICE INTEGRATED HEALTH SERVICES OF DISTRICT I, INC.
HOSPICE INTEGRATED HEALTH SERVICES OF DISTRICT VII-B, INC.
HOSPICE INTEGRATED HEALTH SERVICES OF FLORIDA, INC.
HOSPICE OF INTEGRATED HEALTH SERVICES, INC.
IHS ACQUISITION XIII, INC.
IHS ACQUISITION XV, INC.
IHS ACQUISITION XVIII, INC.
IHS ACQUISITION XIX, INCL
<PAGE>
4
IHS ACQUISITION XXII, INC.
IHS AT LANSING, INC.
IHS CHICAGO POST-ACUTE NETWORK, INC.
IHS DEVELOPMENT-HIGHLANDS PARK, INC.
IHS HOME CARE, INC.
IHS LAND ACQUISITION-HIGHLANDS PARK, INC.
IHS MANAGEMENT GROUP, INC.
IHS NETWORK SERVICES, INC.
IHS OF DANA, INC.
IN-HOME HEALTH CARE, INC.
INTEGRACARE, INC.
INTEGRATED-BALLARD, INC.
INTEGRATED HEALTH GROUP LIMITED PARTNERSHIP
INTEGRATED HEALTH OF LOCUST VALLEY ROAD, INC.
INTEGRATED HEALTH OF WATERFORD COMMONS, INC.
INTEGRATED HEALTH SERVICES AT ALEXANDRIA, INC.
INTEGRATED HEALTH SERVICES AT BIG SAIL, INC.
INTEGRATED HEALTH SERVICES AT BLUE RIDGE MANOR, INC.
INTEGRATED HEALTH SERVICES AT BRIARCLIFF HAVEN, INC.
INTEGRATED HEALTH SERVICES AT CADIZ, INC.
INTEGRATED HEALTH SERVICES AT CENTRAL FLORIDA, INC.
INTEGRATED HEALTH SERVICES AT CHEYENNE, INC.
INTEGRATED HEALTH SERVICES AT COLORADO SPRINGS, INC.
INTEGRATED HEALTH SERVICES AT COLUMBUS, INC.
INTEGRATED HEALTH SERVICES AT DAYTON, INC.
INTEGRATED HEALTH SERVICES AT DRIFTWOOD, INC.
INTEGRATED HEALTH SERVICES AT EASTERN MASSACHUSETTS, INC.
INTEGRATED HEALTH SERVICES AT GRANDVIEW CARE CENTER, INC.
INTEGRATED HEALTH SERVICES AT GREAT BEND, INC.
INTEGRATED HEALTH SERVICES AT HIGHLANDS PARK, INC.
INTEGRATED HEALTH SERVICES AT HOPEDALE, INC.
INTEGRATED HEALTH SERVICES AT HOUSTON, INC.
INTEGRATED HEALTH SERVICES AT INDIAN CREEK, INC.
INTEGRATED HEALTH SERVICES AT KENT, INC.
INTEGRATED HEALTH SERVICES AT KING DAVID CENTER, INC.
INTEGRATED HEALTH SERVICES AT NEWARK, INC.
INTEGRATED HEALTH SERVICES AT ORMOND BEACH, INC.
INTEGRATED HEALTH SERVICES AT PARK REGENCY, INC.
INTEGRATED HEALTH SERVICES AT PENN, INC.
INTEGRATED HEALTH SERVICES AT SILVERCREST, INC.
INTEGRATED HEALTH SERVICES AT SOMERSET VALLEY, INC.
INTEGRATED HEALTH SERVICES AT SOUTHERN HILLS, INC.
INTEGRATED HEALTH SERVICES AT STEUBENVILLE
INTEGRATED HEALTH SERVICES AT SYCARMORE CREEK, INC.
INTEGRATED HEALTH SERVICES AT THREE RIVERS, INC.
<PAGE>
5
INTEGRATED HEALTH SERVICES AT TREYBURN, INC.
INTEGRATED HEALTH SERVICES FINANCIAL HOLDINGS, INC.
INTEGRATED HEALTH SERVICES HOLDINGS, INC.
INTEGRATED HEALTH SERVICES NPR, INC.
INTEGRATED HEALTH SERVICES OF ARCADIA, INC.
INTEGRATED HEALTH SERVICES OF ATHENS, INC.
INTEGRATED HEALTH SERVICES OF BRENTWOOD, INC.
INTEGRATED HEALTH SERVICES OF BRUNSWICK, INC.
INTEGRATED HEALTH SERVICES OF CALIFORNIA, INC.
INTEGRATED HEALTH SERVICES OF CLIFF MANOR, INC.
INTEGRATED HEALTH SERVICES OF COLORADO AT CHERRY CREEK, INC.
INTEGRATED HEALTH SERVICES OF EAGLE CREEK, INC.
INTEGRATED HEALTH SERVICES OF GREEN BRIAR, INC.
INTEGRATED HEALTH SERVICES OF HERITAGE MANOR, INC.
INTEGRATED HEALTH SERVICES OF HICKORY CREEK, INC.
INTEGRATED HEALTH SERVICES OF INDIAN HILLS, INC.
INTEGRATED HEALTH SERVICES OF JACKSONVILLE, INC.
INTEGRATED HEALTH SERVICES OF KURT, INC.
INTEGRATED HEALTH SERVICES OF LESTER, INC.
INTEGRATED HEALTH SERVICES OF MELISSA, INC.
INTEGRATED HEALTH SERVICES OF MISSOURI, INC.
INTEGRATED HEALTH SERVICES OF ORANGE PARK, INC.
INTEGRATED HEALTH SERVICES OF RIVERBEND, INC.
INTEGRATED HEALTH SERVICES OF SCENIC HILLS, INC.
INTEGRATED HEALTH SERVICES OF SKYVIEW, INC.
INTEGRATED HEALTH SERVICES OF SKYVIEW II, INC.
INTEGRATED HEALTH SERVICES OF SUNSET, INC.
INTEGRATED MANAGED CARE, INC. (formerly Isabeth Co., Inc.)
INTEGRATED MANAGEMENT-GOVERNOR'S PARK, INC.
INTEGRATED OF AMARILLO, INC.
INTEGRATED PHYSICIAN GROUP SERVICES, INC.
J.R. REHAB ASSOCIATES, INC.
LIFEWAY, INC.
LPC BETHAMY HEALTH CORPORATION, L.P.
MANCHESTER INTEGRATED HEALTH, INC.
MOBILE RAY OF NEW ORLEANS, INC.
MOUNTAIN VIEW NURSING CENTER, INC.
NEW SOUTHWOOD ASSOCIATES, INC.
PALESTINE NURSING CENTER, INC.
PINELLAS PARK NURSING HOME, INC.
PREFERRED HOME HEALTH SERVICES, INC.
PROFESSIONAL REVIEW NETWORK, INC.
REHAB MANAGEMENT SYSTEMS, INC.
REST HAVEN NURSING CENTERS, INC.
REST HAVEN NURSING CENTERS (CHESTNUT HILL), INC.
<PAGE>
6
REST HAVEN NURSING CENTERS (WHITEMARSH), INC.
RIKAD PROPERTIES, INC.
SAMARITAN CARE, INC. (Illinois Domestic)
SAMARITAN CARE, INC. (Michigan Domestic)
SAMARITAN MANAGEMENT, INC.
SHC OF ARIZONA, L.P.
SHC SERVICES OF ARIZONA, L.P.
SIGNATURE HOME CARE GROUP, INC.
SIGNATURE HOME CARE, INC.
SIGNATURE HOME CARE OF ARLINGTON, INC.
SIGNATURE HOME CARE OF FLORIDA, INC.
SIGNATURE HOME CARE OF GEORGIA, INC.
SIGNATURE HOME CARE OF KANSAS, INC.
SIGNATURE HOME CARE OF NEW JERSEY, INC.
SIGNATURE HOME CARE OF NEW JERSEY GENERAL PARTNERSHIP
SIGNATURE HOME CARE OF SAN ANTONIO, INC.
SIGNATURE HOME CARE SERVICES OF FLORIDA, INC.
SIGNATURE HOME CARE SERVICES OF SAN ANTONIO, INC.
SIGNATURE MANAGEMENT SERVICES, INC.
SIGNATURE RECEIVABLES CORP.
SLC COMMUNITY CARE, INC.
SOUTHWOOD HOLDINGS, INC.
SPRING CREEK OF IHS, INC.
SYMPHONY ANCILLARY SERVICES, INC.
SYMPHONY DIAGNOSTIC SERVICES, INC.
SYMPHONY DIAGNOSTIC SERVICES NO. 1, INC.
SYMPHONY DIAGNOSTIC SERVICES NO. 2, INC.
SYMPHONY HEALTH CARE CONSULTING, INC.
SYMPHONY HEALTH SERVICES, INC.
SYMPHONY HOME CARE SERVICES, INC.
SYMPHONY HOME CARE SERVICES NO. 1, INC.
SYMPHONY HOME CARE SERVICES NO. 2, INC.
SYMPHONY HOME CARE SERVICES NO. 3, INC.
SYMPHONY HOME CARE SERVICES NO. 4, INC.
SYMPHONY HOME CARE SERVICES NO. 5, INC.
SYMPHONY HOME CARE SERVICES NO. 6, INC.
SYMPHONY HOME CARE SERVICES NO. 7, INC.
SYMPHONY HOME CARE SERVICES NO. 8, INC.
SYMPHONY HOME CARE SERVICES NO. 9, INC.
SYMPHONY HOME CARE SERVICES NO. 10, INC.
SYMPHONY HOME CARE SERVICES NO. 11, INC.
SYMPHONY HOME CARE SERVICES NO. 12, INC.
SYMPHONY HOME CARE SERVICES NO. 13, INC.
SYMPHONY HOME CARE SERVICES NO. 14, INC.
SYMPHONY HOME CARE SERVICES NO. 15, INC.
<PAGE>
7
SYMPHONY HOME CARE SERVICES NO. 16, INC.
SYMPHONY HOME CARE SERVICES NO. 17, INC.
SYMPHONY HOME CARE SERVICES NO. 18- CALIFORNIA, INC.
SYMPHONY HOME CARE SERVICES NO. 18- LOUISIANA, INC.
SYMPHONY HOME CARE SERVICES NO. 18- OKLAHOMA, INC.
SYMPHONY HOME CARE SERVICES NO. 18- TEXAS. INC.
SYMPHONY HOME CARE SERVICES NO. 19, INC.
SYMPHONY HOME CARE SERVICES NO. 100, INC.
SYMPHONY HOME CARE SERVICES NO. 101, INC.
SYMPHONY HOME CARE SERVICES NO. 102, INC.
SYMPHONY HOME CARE SERVICES NO. 103, INC.
SYMPHONY HOME CARE SERVICES NO. 104, INC.
SYMPHONY HOME CARE SERVICES NO. 105, INC.
SYMPHONY HOME CARE SERVICES NO. 106, INC.
SYMPHONY HOME CARE SERVICES NO. 107, INC.
SYMPHONY HOME CARE SERVICES NO. 108, INC.
SYMPHONY HOME CARE SERVICES NO. 109, INC.
SYMPHONY HOME CARE SERVICES NO. 110, INC.
SYMPHONY HOME CARE SERVICES NO. 113, INC.
SYMPHONY HOME CARE SERVICES NO. 114, INC.
SYMPHONY HOME CARE SERVICES NO. 115, INC.
SYMPHONY HOME CARE SERVICES NO. 116, INC.
SYMPHONY HOME CARE SERVICES NO. 117, INC.
SYMPHONY HOME CARE SERVICES NO. 118, INC.
SYMPHONY HOME CARE SERVICES NO. 119, INC.
SYMPHONY HOME CARE SERVICES NO. 120, INC.
SYMPHONY HOME CARE SERVICES NO. 121, INC.
SYMPHONY HOME CARE SERVICES NO. 122, INC.
SYMPHONY REHABILITATION SERVICES, INC.
SYMPHONY REHABILITATION SERVICES NO. 1, INC.
SYMPHONY REHABILITATION SERVICES NO. 2, INC.
SYMPHONY REHABILITATION SERVICES NO. 3, INC.
SYMPHONY REHABILITATION SERVICES NO. 4, INC.
SYMPHONY RESPIRATORY SERVICES, INC.
TEXAS LPC, INC.
<PAGE>
8
THE BESTON CORPORATION
WEST COAST CAMBRIDGE, INC.
WOODRIDGE CONVALESCENT CENTER, INC.
By: /s/
---------------------------------
Name:
Title:
of Each Guarantor or of the
General Partner of such Guarantor
<PAGE>
INTEGRATED HEALTH SERVICES, INC.
10065 Red Run Boulevard
Owings Mills, Maryland 21117
July 3, 1997
To the Administrative Agent and
the Lenders parties to the Revolving
Credit Agreement referred to below
Amendment No. 4 to Revolving Credit Agreement
---------------------------------------------
Ladies and Gentlemen:
Reference is made to the Revolving Credit Agreement, dated as of May 15,
1996, as amended by Amendment No. 1 dated September 6, 1996, Amendment No. 2
dated November 8, 1996 and Amendment No. 3 dated March 24, 1997 (such Revolving
Credit Agreement as so amended being the "Credit Agreement"), among Integrated
Health Services, Inc. ("IHS"), Citibank N.A., as administrative agent thereunder
(the "Agent"), and the other financial institutions party thereto, as lenders
thereunder. Capitalized terms used and not otherwise defined herein are used
herein as defined in the Credit Agreement.
IHS has proposed to enter into a lease financing facility (the "Synthetic
Lease Facility") pursuant to which one or more of its Subsidiaries will enter
into one or more leases for its headquarters facility and other properties. As
part of such lease financings, IHS and its Subsidiaries (other than Inactive
Subsidiaries) propose to guaranty certain obligations of such Subsidiaries under
such leases and grant a security interest in the Collateral to secure those
guaranties, with such security interest to be pari passu with the security
interest of the Lenders. In addition, IHS has proposed to sell certain assets
which sales require the consent of the Requisite Lenders, to amend the
definition of "Cash Flow from Operations", to amend the Credit Agreement
covenant relating to stock repurchases and to acquire Community Care of America,
Inc. In connection with the foregoing, IHS has requested that the Requisite
Lenders agree to amend certain covenants contained in Article V of the Credit
Agreement and to amend the definition of "Debt/EBITDAR Ratio" to permit such
transactions, to amend Schedule 1.01 (c) to the Credit Agreement and to replace
the Pledge and Security Agreements heretofore executed by IHS or its
Subsidiaries with the Pledge and Security Agreements in the forms attached
hereto. We understand that the Requisite Lenders are, on the terms and
conditions stated below, willing to grant our requests, and the Requisite
Lenders have agreed to amend the Credit Agreement as hereinafter set forth.
Effective as of the date hereof and subject to the satisfaction of the
condition precedents set forth below, the Credit Agreement is hereby amended as
follows:
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2
(a) Section 1.01 is amended by adding the following definitions in the
appropriate alphabetical order:
"'CCA' means Community Care of America, Inc."
"'SYNTHETIC LEASE FACILITY' means the lease to be entered into between
State Street Bank and Trust Company, as Corporate Owner Trustee, and
Integrated Health Services at Highlands Park, Inc., as Lessee, and the
other leases to be entered into by Subsidiaries of the Borrower
pursuant to the Participation Agreement to be entered into among the
Borrower, Integrated Health Services at Highlands Park, Inc., IHS
Development - Highlands Park, Inc., State Street Bank and Trust
Company, as Corporate Owner Trustee, an Individual Owner Trustee, the
Certificate Holder party thereto, the Note Holders thereto and
Citibank, N. A., as Agent."
(b) The definition of "CASH FLOW FROM OPERATIONS" in Section 1.01 is
amended in full to read as follows:
"'CASH FLOW FROM OPERATIONS' means, with respect to any Person, the
sum, determined as of the last day of any Quarter for such Person and
its subsidiaries on a consolidated basis for the 12-month period
including such Quarter and the immediately preceding three Quarters
(taken as a single period), of (i) net income after taxes minus any
extraordinary gain and any non-recurring gain on any divestiture and
plus any extraordinary loss and any non-recurring loss on any
divestiture, (ii) depreciation, amortization, and other non-cash
charges deducted in determining net income, (iii) Interest Expense,
(iv) Lease Expense and (v) with respect to Cash Flow from Operations
of the Borrower and its Subsidiaries only, Receivables Program
Charges, all determined in accordance with GAAP; provided, however,
that (A) income attributable to any other Person or business that is
not at least 50% owned, directly or indirectly, by such Person shall
be counted, in determining net income, only to the extent such income
is received in cash by such Person or a subsidiary of such Person in
such period and is not reinvested in such other Person or business
(other than as a loan payable on demand) within six months thereafter,
except that, with respect to the Borrower only, income from minority
Investments existing on the Closing Date and described in Schedule
5.03(c) shall be counted in accordance with the Borrower's past
practice, (B) no adjustments shall be made to reflect minority
interests in subsidiaries and (C) non-recurring cash charges in an
aggregate amount not in excess of $30,000,000 in connection with the
terminated acquisition
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3
of Coram shall be included as an addback to net income for purposes of
this definition."
(c) The definition of "DEBT" in Section 1.01 is amended in full to
read as follows:
"'DEBT' as applied to any Person and in each case determined on a
consolidated basis in conformity with GAAP, means (without
duplication) (i) all indebtedness for borrowed money (whether by loan
or the issuance of debt securities or otherwise); (ii) all obligations
issued, undertaken or assumed as the deferred purchase price of
property or services or interest thereon, except accounts and accrued
expenses currently payable; (iii) all monetary obligations under the
Synthetic Lease Facility, (iv) all reimbursement obligations with
respect to surety bonds, letters of credit, bankers' acceptances and
similar instruments, whether or not contingent; (v) all monetary
obligations under any Capital Lease; (vi) all obligations (contingent
or otherwise) to purchase, retire or redeem any capital stock or any
other equity interest of such Person; (vii) all monetary obligations
measured by, or determined on the basis of, the value of any capital
stock of such Person; and (viii) all obligations, whether or not such
obligations constitute Debt as defined in clauses (i) through (vii)
above, secured by (or for which the holder of the obligation has an
existing right, contingent or otherwise, to be secured by) any Lien
upon any property of such Person or any Subsidiary of such Person,
except any such obligation secured by a Lien that is imposed by law
and not voluntarily granted; provided, however, that the contingent
payments which may become payable in connection with the First
American Merger, including any payments made to the Health Care
Financing Administration or the Department of Justice as required
under the First American Merger Agreement in a total amount not in
excess of $162 million, shall not constitute Debt for purposes of this
Agreement."
(d) Subparagraph (3) in the definition of "DEBT/EBITDAR RATIO" in
Section 1.01 is amended in full to read as follows:
"(3) adding to EBITDAR of the Borrower and such Subsidiaries, the
EBITDAR and Non-Recurring Charges determined solely for any such
acquired company or Health Care Facility, for the portion of such
period that preceded the acquisition; provided, however, that for
Quarters ending during the 12-month period immediately following the
closing of the First American Merger, EBITDAR of First American for
the period from the closing to the date of determination,
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4
annualized for the 12-month period then ended shall be added to
EBITDAR of the Borrower and such Subsidiaries; provided, further, that
for Quarters ending during the 12-month period immediately following
the closing of the acquisition of CCA, EBITDAR of CCA for the period
from the closing to the date of determination, annualized for the
12-month period then ended shall be added to EBITDAR of the Borrower
and such Subsidiaries."
(e) Section 5.03(a) is amended by deleting the period at the end of
subsection (xii) thereof and substituting therefor "; and" and adding a new
subsection (xiii) following such subsection (xii) to read as follows:
"(xiii) any Liens upon (a) stock of Subsidiaries and certain related
assets granted by the Borrower or one or more Subsidiaries of the
Borrower and (b) real property interests and certain related assets
granted by one or more Subsidiaries of the Borrower, in each case in
connection with the Synthetic Lease Facility."
(f) Section 5.03(c)(viii) is amended by adding to the end thereof the
following provision:
"provided, further, that the acquisition of CCA will not be deemed an
Investment for purposes of this Subsection 5.03(c)(viii);"
(g) Section 5.03(c) is amended by deleting the period at the end of
subsection (xv) thereof and substituting "; and" and adding a new
subsection (xvi) following such subsection (xv) to read as follows:
"(xvi) The acquisition of CCA by the Borrower or any of its
Subsidiaries substantially on the terms set forth in the letter dated
June 24, 1997 from the Borrower to the Lenders, provided, that (A) the
purchase price for the shares of CCA does not exceed $4.50 per share,
(B) at the time of or after giving effect to such acquisition, no
Event of Default or Potential Default shall exist or result, and (C)
the Borrower shall comply with the provisions of Section 5.02(e), and
neither the Borrower nor any of its Subsidiaries nor any of their
properties shall be or become bound by or subject to any contractual
obligation that is or would be violated or put in default by reason of
such compliance or by reason of the enforcement of the claims and
Liens of the Agent and Lenders arising from such compliance; provided,
further, that the acquisition of CCA shall not be deemed an Investment
for purposes of Section 5.03(c)(xi)."
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5
(h) Section 5.03(d) is amended by deleting the period at the end of
subsection (vi) thereof and substituting therefor "; and" and adding a new
subsection (vii) following such subsection (vi) to read as follows:
"(vii) Debt in an aggregate principal amount not in excess of
$100,000,000 incurred by the Borrower or any of its Subsidiaries in
connection with the Synthetic Lease Facility."
(i) Section 5.03 (f) is amended by deleting the period at the end of
subsection (vi) thereof and substituting therefor "; and" and adding a new
subsection (vii) following such subsection (vi) to read as follows:
"(vii) Accommodation Obligations incurred by the Borrower or any of
its Subsidiaries in connection with the Synthetic Lease Facility."
(j) Section 5.03(h)(B) is amended in full to read as follows:
"(B) The Borrower from time to time may purchase outstanding shares of
the Borrower's common stock or purchase options, or enter into other
transactions, to purchase such stock, so long as (1) the aggregate
amount expended for all such purchases, options and other transactions
at any time after the Closing Date does not exceed $50,000,000 (the
"Purchase Limit") and (2) any such purchase, option or other
transaction is made in compliance with all applicable laws and no
Potential Default or Event of Default exists at the time of, or would
result from, any such purchase, option or other transaction (and, for
this purpose, the amounts counted toward the Purchase Limit shall not
be reduced by or on account of any subsequent resale of the Borrower's
Common Stock);"
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6
(k) Schedule 1.01(c) is amended by adding to the end thereof the
following assets:
Health Care Facilities Assets Designated for Sale
-------------------------------------------------
Facility Name Location # Units
- ------------- -------- -------
Avenel (Owned) Plantation, FL 120
Auburndale (Owned) Auburndale, FL 120
Sarasota Pavillion (Owned) Sarasota, FL 180
Central Florida at Orlando
(Owned) Orlando, FL 120
Central Florida at Vero Beach (
(Owned) Vero Beach, FL 110
Chestnut Hill (Owned) Philadelphia, PA 200
Claremont (Owned) Claremont, NH 62
Clearwater (Owned) Clearwater, FL 150
Derry (Owned) Derry, NH 112
Jacksonville (Owned) Jacksonville, FL 120
Pinellas Park (Owned) Pinellas Park, FL 120
William & Mary (Owned) St. Petersburg, FL 96
Tarpon Springs (Owned) Tarpon Springs, FL 120
Venice North (Owned) Venice, FL 178
In connection with the Synthetic Lease Facility, the Lenders hereby
instruct the Agent, coincidentally with the closing of the Synthetic Lease
Facility, to enter into the Intercreditor Agreement and the Pledge and Security
Agreements to be delivered as provided in this Amendment. Upon the delivery
thereof, the Pledge and Security Agreements, in the forms attached hereto,
thereafter shall be deemed Pledge and Security Agreements for all purposes of
the Loan Documents and each Lender shall be bound by the terms of such
Intercreditor Agreement.
This Amendment shall become effective on the date when and only when the
Agent shall have received (A) counterparts of this Amendment executed by IHS and
the Requisite Lenders, or as to any of such Lenders, advice satisfactory to the
Agent that such Lender has executed this Amendment, (B) counterparts of the
Consent appended hereto (the "Consent"), executed by each Guarantor and (C)
evidence that all amounts due and payable under Section 8.04 of the Credit
Agreement have been paid in full, provided, that the closing of the Synthetic
Lease Facility shall not occur until and unless the Agent shall have received
(1) counterparts of the Intercreditor and Collateral Agency Agreement,
substantially in the form of Exhibit A hereto, executed by the parties thereto,
(2) a pledge and security agreement, duly executed and delivered, substantially
in the form of Exhibit B-1 in the case of IHS and substantially in the form of
Exhibit B-2 in the case of each Subsidiary that has prior hereto executed and
delivered a Pledge and Security Agreement, together with (a) the certificates or
other instruments pledged under each respective existing Pledge and Security
Agreement, accompanied by undated stock powers or transfer documents executed in
blank, and (b) evidence satisfactory to the Lenders that all other actions
necessary or, in the opinion of the
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7
Lenders, desirable to perfect and protect the security interests created by such
pledge and security agreements have been taken, including delivery to the Agent
of all instruments constituting Collateral, duly endorsed, and delivery of UCC-1
financing statements or amendments thereto duly executed by each Grantor under a
pledge and security agreement and in form sufficient for filing in all offices
in which the Agent or any Lender may consider filing to be appropriate and (3)
an opinion of LeBoeuf, Lamb Greene & MacRae, LLP, counsel to the Borrower, in
form and substance satisfactory to the Agent.
IHS represents and warrants as follows:
(a) IHS is duly organized and validly existing under the laws of
Delaware. Each Guarantor is a corporation or partnership duly organized and
validly existing under the laws of the jurisdiction in which it is
organized.
(b) Each of IHS and each Guarantor has the corporate or partnership
power to execute, deliver and perform this Amendment and the Consent, as
the case may be, and to take all action necessary to consummate the
transactions contemplated hereunder. The execution, delivery and
performance by IHS and each Guarantor of this Amendment and the Consent,
respectively, have been duly authorized by all necessary action and do not
contravene (i) its certificate or articles of incorporation (or, in case of
a partnership, governing agreements) or (ii) any law or any indenture,
lease or written agreement binding on or affecting it.
(c) No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority is required for the due
execution, delivery and performance by IHS or any Guarantor of this
Amendment or the Consent, respectively.
(d) This Amendment and the Consent constitutes legal, valid and
binding obligations of IHS and each Guarantor, respectively, enforceable
against IHS and each Guarantor, respectively, in accordance with their
respective terms subject to laws generally affecting the enforcement of
creditors' rights.
(e) The Guarantors executing the Consent are all of the Subsidiaries
(other than Inactive Subsidiaries) of IHS.
Upon the effectiveness of this Amendment, on and after the date hereof each
reference in the Credit Agreement to "this Agreement", "hereunder", "hereof" or
words of like import referring to the Credit Agreement, and each reference in
the other Loan Documents to "the Credit Agreement", "thereunder", "thereof" or
words of like import referring to the Credit Agreement, shall mean and be a
reference to the Credit Agreement as amended hereby. Except as specifically
amended above, the Credit Agreement, and all other Loan Documents, are and shall
continue to be in full force and effect and are hereby in all respects ratified
and confirmed. The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of any Lender or the Agent under any of the Loan Documents, not
constitute a waiver of any provision of any of the Loan Documents. This
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8
Amendment shall be governed by, and construed in accordance with, the laws of
the State of New York.
Please evidence your acknowledgement of and agreement to the foregoing by
executing and returning not later than the close of business on July 8, 1997
three counterparts of this Amendment No. 4 to Citicorp Securities, Inc., 399
Park Avenue, 9th Floor, New York, New York 10043, Attention: Rosemary Bell. This
Amendment No. 4 is subject to the provisions of Section 8.01 of the Credit
Agreement.
This Amendment No. 4 may be executed in any number of counterparts and by
any combination of the parties hereto in separate counterparts, each of which
counterparts shall be an original and all of which taken together shall
constitute one and the same Amendment No. 4.
Very truly yours,
INTEGRATED HEALTH
SERVICES, INC.
By: /s/
-----------------------------
Name:
Title:
ACKNOWLEDGED, AGREED
AND CONSENTED TO as of
the date first above written:
CITIBANK, N.A.,
as Administrative Agent and as a Lender
By: /s/
-------------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
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9
THE BANK OF NOVA SCOTIA,
as LC Bank, a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
CORESTATES BANK, N.A.,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
CREDIT LYONNAIS,
NEW YORK BRANCH,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
DEUTSCHE BANK AG,
NEW YORK BRANCH AND/OR
CAYMAN ISLANDS BRANCH,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
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10
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
NATIONSBANK, N.A.,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
TORONTO DOMINION (TEXAS), INC.,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST,
as a Lender and Co-Agent
By: /s/
-------------------------------------
Name:
Title:
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11
CREDITANSTALT CORPORATE
FINANCE, INC.,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
By: /s/
-------------------------------------
Name:
Title:
FLEET NATIONAL BANK,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
GENERAL ELECTRIC
CAPITAL CORPORATION,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
HIBERNIA NATIONAL BANK,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
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12
AMSOUTH BANK OF ALABAMA,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
THE BANK OF TOKYO-MITSUBISHI
TRUST COMPANY,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
THE SANWA BANK, LIMITED,
NEW YORK BRANCH
as a Lender
By: /s/
-------------------------------------
Name:
Title:
SIGNET BANK,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
THE SUMITOMO BANK, LIMITED,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
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13
FIRST AMERICAN NATIONAL BANK,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
ALLIED IRISH BANK,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
PROVIDENT BANK OF MARYLAND,
as a Lender
By: /s/
-------------------------------------
Name:
Title:
BANK OF AMERICA ILLINOIS
as a Lender
By: /s/
-------------------------------------
Name:
Title:
CRESTAR BANK
as a Lender
By: /s/
-------------------------------------
Name:
Title:
<PAGE>
CONSENT
The undersigned, as Guarantors under the Subsidiary Guaranty, dated as of
May 15, 1996 or under Agreements to be Bound by such Subsidiary Guaranty
(collectively, the "Guaranty"), in favor of the Agent for the Lenders parties to
the Credit Agreement referred to in the foregoing Amendment No. 4 hereby consent
to such Amendment No. 4 and hereby confirm and agree that notwithstanding the
effectiveness of such Amendment No. 4, the Guaranty is, and shall continue to
be, in full force and effect and is hereby confirmed and ratified in all
respects.
ABC GP, INC.
ABC HOME HEALTH AND HOSPICE OF ALBANY, INC.
ABC HOME HEALTH AND HOSPICE OF ATHENS, INC.
ABC HOME HEALTH AND HOSPICE OF BRUNSWICK, INC.
ABC HOME HEALTH AND HOSPICE OF DUBLIN, INC.
ABC HOME HEALTH AND HOSPICE OF MACON, INC.
ABC HOME HEALTH AND HOSPICE OF SAVANNAH, INC.
ABC HOME HEALTH AND HOSPICE OF TIFTON, INC.
ABC HOME HEALTH AND HOSPICE OF VIDALIA, INC.
ABC HOME HEALTH AND HOSPICE OF WAYCROSS, INC.
ABC HOME NURSING, INC.
ABC NEWCO, INC.
ABC PHARMACEUTICALS, INC.
ALABAMA SENIOR LIFE CARE, INC.
ALPINE MANOR, INC.
ARBOR LIVING CENTERS OF FLORIDA, INC.
ARBOR LIVING CENTERS OF TEXAS, INC.
ASIA CARE, INC.
BETHAMY LIVING CENTER MANAGEMENT COMPANY
BETHAMY LIVING CENTERS LIMITED PARTNERSHIP
BRIAR HILL, INC.
BRIARCLIFF NURSING HOME, INC.
CAMBRIDGE CARE CENTERS, INC.
CAMBRIDGE GROUP OF INDIANA, INC.
CAMBRIDGE GROUP OF PENNSYLVANIA, INC.
CAMBRIDGE GROUP OF TEXAS, INC.
CARE CENTERS HOLDING, INC.
CARRIAGE-BY-THE-LAKE OF IHS, INC.
CEDARCROFT HEALTH SERVICES, INC.
CENTRAL PARK LODGES, INC.
CENTRAL PARK LODGES OF WEST PALM BEACH, INC.
CENTRAL PARK LODGES (TARPON SPRINGS), INC.
CLARA BURKE NURSING HOME, INC.
CLAREMONT INTEGRATED HEALTH, INC.
COMPREHENSIVE POSTACUTE SERVICES, INC.
DERRY INTEGRATED HEALTH, INC.
ELIZABELL CO., INC.
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2
ELM CREEK OF IHS, INC.
F.L.C. BENEVA NURSING PAVILION, INC.
F.L.C. SARASOTA NURSING PAVILION, INC.
FERRIGAN MOBILE X-RAY, INC.
FIRELANDS OF IHS, INC.
FIRST AMERICAN HOME CARE OF ALABAMA, INC.
FIRST AMERICAN HOME CARE OF ARKANSAS, INC.
FIRST AMERICAN HOME CARE OF CALIFORNIA, INC.
FIRST AMERICAN HOME CARE OF COLORADO, INC.
FIRST AMERICAN HOME CARE OF FLORIDA, INC.
FIRST AMERICAN HOME CARE OF FT. LAUDERDALE, INC.
FIRST AMERICAN HOME CARE OF GEORGIA, INC.
FIRST AMERICAN HOME CARE OF ILLINOIS, INC.
FIRST AMERICAN HOME CARE OF INDIANA, INC.
FIRST AMERICAN HOME CARE OF LOUISIANA, INC.
FIRST AMERICAN HOME CARE OF MICHIGAN, INC.
FIRST AMERICAN HOME CARE OF MISSISSIPPI, INC.
FIRST AMERICAN HOME CARE OF MISSOURI, INC.
FIRST AMERICAN HOME CARE OF NAPLES, INC.
FIRST AMERICAN HOME CARE OF NEBRASKA, INC.
FIRST AMERICAN HOME CARE OF NEW MEXICO, INC.
FIRST AMERICAN HOME CARE OF NORTH CAROLINA, INC.
FIRST AMERICAN HOME CARE OF OHIO, INC.
FIRST AMERICAN HOME CARE OF OKLAHOMA, INC.
FIRST AMERICAN HOME CARE OF PENNSYLVANIA, INC.
FIRST AMERICAN HOME CARE OF SOUTH CAROLINA, INC.
FIRST AMERICAN HOME CARE OF TENNESSEE, INC.
FIRST AMERICAN HOME CARE OF TEXAS, INC.
FIRST AMERICAN HOME CARE OF VALDOSTA, INC.
FIRST AMERICAN HOME CARE OF VIRGINIA, INC.
FIRST AMERICAN HOME CARE OF WEST VIRGINIA, INC.
FIRST AMERICAN INTERNATIONAL, INC.
FLORIDA LIFE CARE, INC.
GAINESVILLE HEALTH CARE CENTER, INC.
GRAVOIS HEALTH CARE, INC.
HEALTH CARE SYSTEMS, INC.
HOME HEALTH INTEGRATED HEALTH SERVICES OF FLORIDA, INC.
HOSPICE INTEGRATED HEALTH SERVICES OF DISTRICT I, INC.
HOSPICE INTEGRATED HEALTH SERVICES OF DISTRICT VII-B, INC.
HOSPICE INTEGRATED HEALTH SERVICES OF FLORIDA, INC.
HOSPICE OF INTEGRATED HEALTH SERVICES, INC.
IHS ACQUISITION XIII, INC.
IHS ACQUISITION XV, INC.
IHS ACQUISITION XVIII, INC.
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3
IHS ACQUISITION XIX, INC.
IHS ACQUISITION XXII, INC.
IHS AT LANSING, INC.
IHS CHICAGO POST-ACUTE NETWORK, INC.
IHS DEVELOPMENT-HIGHLANDS PARK, INC.
IHS HOME CARE, INC.
IHS LAND ACQUISITION-HIGHLANDS PARK, INC.
IHS MANAGEMENT GROUP, INC.
IHS NETWORK SERVICES, INC.
IHS OF DANA, INC.
IN-HOME HEALTH CARE, INC.
INTEGRACARE, INC.
INTEGRATED-BALLARD, INC.
INTEGRATED HEALTH GROUP LIMITED PARTNERSHIP
INTEGRATED HEALTH OF LOCUST VALLEY ROAD, INC.
INTEGRATED HEALTH OF WATERFORD COMMONS, INC.
INTEGRATED HEALTH SERVICES AT ALEXANDRIA, INC.
INTEGRATED HEALTH SERVICES AT BIG SAIL, INC.
INTEGRATED HEALTH SERVICES AT BLUE RIDGE MANOR, INC.
INTEGRATED HEALTH SERVICES AT BRIARCLIFF HAVEN, INC.
INTEGRATED HEALTH SERVICES AT CADIZ, INC.
INTEGRATED HEALTH SERVICES AT CENTRAL FLORIDA, INC.
INTEGRATED HEALTH SERVICES AT CHEYENNE, INC.
INTEGRATED HEALTH SERVICES AT COLORADO SPRINGS, INC.
INTEGRATED HEALTH SERVICES AT COLUMBUS, INC.
INTEGRATED HEALTH SERVICES AT DAYTON, INC.
INTEGRATED HEALTH SERVICES AT DRIFTWOOD, INC.
INTEGRATED HEALTH SERVICES AT EASTERN MASSACHUSETTS, INC.
INTEGRATED HEALTH SERVICES AT GRANDVIEW CARE CENTER, INC.
INTEGRATED HEALTH SERVICES AT GREAT BEND, INC.
INTEGRATED HEALTH SERVICES AT HIGHLANDS PARK, INC.
INTEGRATED HEALTH SERVICES AT HOPEDALE, INC.
INTEGRATED HEALTH SERVICES AT HOUSTON, INC.
INTEGRATED HEALTH SERVICES AT INDIAN CREEK, INC.
INTEGRATED HEALTH SERVICES AT KENT, INC.
INTEGRATED HEALTH SERVICES AT KING DAVID CENTER, INC.
INTEGRATED HEALTH SERVICES AT NEWARK, INC.
INTEGRATED HEALTH SERVICES AT ORMOND BEACH, INC.
INTEGRATED HEALTH SERVICES AT PARK REGENCY, INC.
INTEGRATED HEALTH SERVICES AT PENN, INC.
INTEGRATED HEALTH SERVICES AT SILVERCREST, INC.
INTEGRATED HEALTH SERVICES AT SOMERSET VALLEY, INC.
INTEGRATED HEALTH SERVICES AT SOUTHERN HILLS, INC.
INTEGRATED HEALTH SERVICES AT STEUBENVILLE
INTEGRATED HEALTH SERVICES AT SYCAMORE CREEK, INC.
<PAGE>
4
INTEGRATED HEALTH SERVICES AT THREE RIVERS, INC.
INTEGRATED HEALTH SERVICES AT TREYBURN, INC.
INTEGRATED HEALTH SERVICES FINANCIAL HOLDINGS, INC.
INTEGRATED HEALTH SERVICES HOLDINGS, INC.
INTEGRATED HEALTH SERVICES NPR, INC.
INTEGRATED HEALTH SERVICES OF ARCADIA, INC.
INTEGRATED HEALTH SERVICES OF ATHENS, INC.
INTEGRATED HEALTH SERVICES OF BRENTWOOD, INC.
INTEGRATED HEALTH SERVICES OF BRUNSWICK, INC.
INTEGRATED HEALTH SERVICES OF CALIFORNIA, INC.
INTEGRATED HEALTH SERVICES OF CLIFF MANOR, INC.
INTEGRATED HEALTH SERVICES OF COLORADO AT CHERRY CREEK, INC.
INTEGRATED HEALTH SERVICES OF EAGLE CREEK, INC.
INTEGRATED HEALTH SERVICES OF GREEN BRIAR, INC.
INTEGRATED HEALTH SERVICES OF HERITAGE MANOR, INC.
INTEGRATED HEALTH SERVICES OF HICKORY CREEK, INC.
INTEGRATED HEALTH SERVICES OF INDIAN HILLS, INC.
INTEGRATED HEALTH SERVICES OF JACKSONVILLE, INC.
INTEGRATED HEALTH SERVICES OF KURT, INC.
INTEGRATED HEALTH SERVICES OF LESTER, INC.
INTEGRATED HEALTH SERVICES OF MELISSA, INC.
INTEGRATED HEALTH SERVICES OF MISSOURI, INC.
INTEGRATED HEALTH SERVICES OF ORANGE PARK, INC.
INTEGRATED HEALTH SERVICES OF RIVERBEND, INC.
INTEGRATED HEALTH SERVICES OF SCENIC HILLS, INC.
INTEGRATED HEALTH SERVICES OF SKYVIEW, INC.
INTEGRATED HEALTH SERVICES OF SKYVIEW II, INC.
INTEGRATED HEALTH SERVICES OF SUNSET, INC.
INTEGRATED MANAGED CARE, INC. (formerly Isabeth Co., Inc.)
INTEGRATED MANAGEMENT-GOVERNOR'S PARK, INC.
INTEGRATED OF AMARILLO, INC.
INTEGRATED PHYSICIAN GROUP SERVICES, INC.
J.R. REHAB ASSOCIATES, INC.
LIFEWAY, INC.
LPC BETHAMY HEALTH CORPORATION, L.P.
MANCHESTER INTEGRATED HEALTH, INC.
MOBILE RAY OF NEW ORLEANS, INC.
MOUNTAIN VIEW NURSING CENTER, INC.
NEW SOUTHWOOD ASSOCIATES, INC.
PALESTINE NURSING CENTER, INC.
PINELLAS PARK NURSING HOME, INC.
PREFERRED HOME HEALTH SERVICES, INC.
PROFESSIONAL REVIEW NETWORK, INC.
REHAB MANAGEMENT SYSTEMS, INC.
REST HAVEN NURSING CENTER, INC.
<PAGE>
5
REST HAVEN NURSING CENTER (CHESTNUT HILL), INC.
REST HAVEN NURSING CENTER (WHITEMARSH), INC.
RIKAD PROPERTIES, INC.
SAMARITAN CARE, INC. (Illinois Domestic)
SAMARITAN CARE, INC. (Michigan Domestic)
SAMARITAN MANAGEMENT, INC.
SHC OF ARIZONA, L.C.
SHC SERVICES OF ARIZONA, L.C.
SIGNATURE HOME CARE GROUP, INC.
SIGNATURE HOME CARE, INC.
SIGNATURE HOME CARE OF ARLINGTON, INC.
SIGNATURE HOME CARE OF FLORIDA, INC.
SIGNATURE HOME CARE OF GEORGIA, INC.
SIGNATURE HOME CARE OF KANSAS, INC.
SIGNATURE HOME CARE OF NEW JERSEY, INC.
SIGNATURE HOME CARE OF NEW JERSEY GENERAL PARTNERSHIP
SIGNATURE HOME CARE OF SAN ANTONIO, INC.
SIGNATURE HOME CARE SERVICES OF FLORIDA, INC.
SIGNATURE HOME CARE SERVICES OF SAN ANTONIO, INC.
SIGNATURE MANAGEMENT SERVICES, INC.
SIGNATURE RECEIVABLES CORP.
SLC COMMUNITY CARE, INC.
SOUTHWOOD HOLDINGS, INC.
SPRING CREEK OF IHS, INC.
SYMPHONY ANCILLARY SERVICES, INC.
SYMPHONY DIAGNOSTIC SERVICES, INC.
SYMPHONY DIAGNOSTIC SERVICES NO. 1, INC.
SYMPHONY DIAGNOSTIC SERVICES NO. 2, INC.
SYMPHONY HEALTH CARE CONSULTING, INC.
SYMPHONY HEALTH SERVICES, INC.
SYMPHONY HOME CARE SERVICES, INC.
SYMPHONY HOME CARE SERVICES NO. 1, INC.
SYMPHONY HOME CARE SERVICES NO. 2, INC.
SYMPHONY HOME CARE SERVICES NO. 3, INC.
SYMPHONY HOME CARE SERVICES NO. 4, INC.
SYMPHONY HOME CARE SERVICES NO. 5, INC.
SYMPHONY HOME CARE SERVICES NO. 6, INC.
SYMPHONY HOME CARE SERVICES NO. 7, INC.
SYMPHONY HOME CARE SERVICES NO. 8, INC.
SYMPHONY HOME CARE SERVICES NO. 9, INC.
SYMPHONY HOME CARE SERVICES NO. 10, INC.
SYMPHONY HOME CARE SERVICES NO. 11, INC.
SYMPHONY HOME CARE SERVICES NO. 12, INC.
SYMPHONY HOME CARE SERVICES NO. 13, INC.
SYMPHONY HOME CARE SERVICES NO. 14, INC.
<PAGE>
6
SYMPHONY HOME CARE SERVICES NO. 15, INC.
SYMPHONY HOME CARE SERVICES NO. 16, INC.
SYMPHONY HOME CARE SERVICES NO. 17, INC.
SYMPHONY HOME CARE SERVICES NO. 18, INC.
SYMPHONY HOME CARE SERVICES NO. 18- CALIFORNIA, INC.
SYMPHONY HOME CARE SERVICES NO. 18- LOUISIANA, INC.
SYMPHONY HOME CARE SERVICES NO. 18- OKLAHOMA, INC.
SYMPHONY HOME CARE SERVICES NO. 18- TEXAS. INC.
SYMPHONY HOME CARE SERVICES NO. 19, INC.
SYMPHONY HOME CARE SERVICES NO. 100, INC.
SYMPHONY HOME CARE SERVICES NO. 101, INC.
SYMPHONY HOME CARE SERVICES NO. 102, INC.
SYMPHONY HOME CARE SERVICES NO. 103, INC.
SYMPHONY HOME CARE SERVICES NO. 104, INC.
SYMPHONY HOME CARE SERVICES NO. 105, INC.
SYMPHONY HOME CARE SERVICES NO. 106, INC.
SYMPHONY HOME CARE SERVICES NO. 107, INC.
SYMPHONY HOME CARE SERVICES NO. 108, INC.
SYMPHONY HOME CARE SERVICES NO. 109, INC.
SYMPHONY HOME CARE SERVICES NO. 110, INC.
SYMPHONY HOME CARE SERVICES NO. 113, INC.
SYMPHONY HOME CARE SERVICES NO. 114, INC.
SYMPHONY HOME CARE SERVICES NO. 115, INC.
SYMPHONY HOME CARE SERVICES NO. 116, INC.
SYMPHONY HOME CARE SERVICES NO. 117, INC.
SYMPHONY HOME CARE SERVICES NO. 118, INC.
SYMPHONY HOME CARE SERVICES NO. 119, INC.
SYMPHONY HOME CARE SERVICES NO. 120, INC.
SYMPHONY HOME CARE SERVICES NO. 121, INC.
SYMPHONY HOME CARE SERVICES NO. 122, INC.
SYMPHONY REHABILITATION SERVICES, INC.
SYMPHONY REHABILITATION SERVICES NO. 1, INC.
SYMPHONY REHABILITATION SERVICES NO. 2, INC.
SYMPHONY REHABILITATION SERVICES NO. 3, INC.
SYMPHONY REHABILITATION SERVICES NO. 4, INC.
SYMPHONY RESPIRATORY SERVICES, INC.
TEXAS LPC, INC.
<PAGE>
7
THE BESTON CORPORATION
WEST COAST CAMBRIDGE, INC.
WOODRIDGE CONVALESCENT CENTER, INC.
By: /s/
-------------------------------------
Name:
Title:
of Each Guarantor or of the
General Partner of such Guarantor
$450,000,000
INTEGRATED HEALTH SERVICES, INC.
9 1/2% Senior Subordinated Notes due 2007
PURCHASE AGREEMENT
May 22, 1997
SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
277 Park Avenue
New York, New York 10022
MORGAN STANLEY & CO. INCORPORATED
1585 Broadway
New York, New York 10036
SALOMON BROTHERS INC
7 World Trade Center
New York, New York 10048
Dear Sirs:
Integrated Health Services, Inc., a Delaware corporation (the "Company"),
proposes, upon the terms and conditions set forth herein, to issue and sell to
you, as the initial purchasers (the "Initial Purchasers"), $450,000,000
aggregate principal amount of its 9 1/2% Senior Subordinated Notes due 2007 (the
"Notes"). The Notes will be issued pursuant to the provisions of an Indenture,
to be dated as of May 30, 1997 (the "Indenture"), between the Company and First
Union National Bank of Virginia, as Trustee (the "Trustee").
The Company wishes to confirm as follows its agreement with the Initial
Purchasers in connection with the purchase and resale of the Notes.
1. Preliminary Offering Memorandum and Offering Memorandum. The Notes will
be offered and sold to the Initial Purchasers without registration under the
Securities Act of 1933, as amended (the "Act"), in reliance on an exemption
pursuant to Section 4(2) under the Act. The Company has prepared a preliminary
offering memorandum, dated May 15, 1997 (the "Preliminary Offering Memorandum"),
and an offering memorandum, dated May 22, 1997 (the "Offering Memorandum"),
setting forth information regarding the Company and the Notes. Any references
herein to the Preliminary Offering Memorandum and the Offering Memorandum shall
be deemed to include all amendments and supplements thereto and any documents
filed under the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Securities and Exchange Commission (the "Commission")
thereunder (collectively, the "Exchange Act") which are incorporated by
reference therein. As used herein, the term "Incorporated Documents" means the
documents which at the time are incorporated by reference in the Preliminary
Offering Memorandum, the Offering Memorandum or any amendment or supplement
thereto. The Company hereby confirms that it has authorized the use of the
Preliminary Offering Memorandum and the Offering Memorandum in connection with
the offering and resale of the Notes by the Initial Purchasers.
<PAGE>
The Company understands that the Initial Purchasers propose to make offers
and sales (the "Exempt Resales") of the Notes purchased by the Initial
Purchasers hereunder only on the terms and in the manner set forth in the
Offering Memorandum and Section 2 hereof, as soon as the Initial Purchasers deem
advisable after this Agreement has been executed and delivered to persons whom
the Initial Purchasers reasonably believe to be qualified institutional buyers
("Qualified Institutional Buyers") as defined in Rule 144A under the Act, as
such rule may be amended from time to time ("Rule 144A"), in transactions under
Rule 144A (such persons being referred to herein as the "Eligible Purchasers").
It is understood and acknowledged that upon original issuance thereof, and
until such time as the same is no longer required under the applicable
requirements of the Act, the Notes (and all securities issued in exchange
therefor or in substitution thereof) shall bear the following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR
NOT SUBJECT TO, REGISTRATION UNDER SUCH LAWS.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATED PERSON OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY) UNLESS SUCH OFFER, SALE OR OTHER TRANSFER IS
(A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON THE
HOLDER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT
THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (a)(2),
(a)(3) OR (a)(7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
"ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND IN EACH OF THE FOREGOING
CASES SUCH OFFER, SALE OR OTHER TRANSFER IS IN COMPLIANCE WITH ANY APPLICABLE
STATE SECURITIES LAWS, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR
TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, A
CERTIFICATE OF TRANSFER IN THE FORM PROVIDED FOR IN THE INDENTURE (A COPY OF
WHICH MAY BE OBTAINED FROM THE TRUSTEE) IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF
THE THEN HOLDER OF THIS SECURITY AFTER THE RESALE RESTRICTION TERMINATION
DATE. ANY TRANSFEREE OF THIS SECURITY SHALL BE DEEMED TO HAVE REPRESENTED
EITHER (A) THAT IT IS NOT USING THE ASSETS OF AN EMPLOYEE BENEFIT PLAN
SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT ("ERISA") OR THE
INTERNAL REVENUE CODE (THE "CODE") TO PURCHASE THIS SECURITY OR (B) THAT ITS
PURCHASE AND CONTINUED HOLDING OF THE SECURITY WILL BE COVERED BY A U.S.
DEPARTMENT OF LABOR CLASS EXEMPTION WITH RESPECT TO PROHIBITED TRANSACTIONS
UNDER SECTION 406(a) OF ERISA.
-2-
<PAGE>
It is also understood and acknowledged that holders (including subsequent
transferees) of the Notes will have the registration rights set forth in the
registration rights agreement (the "Registration Rights Agreement"), to be dated
the date hereof, in substantially the form of Exhibit A hereto. Pursuant to the
Registration Rights Agreement, the Company will agree (i) to file with the
Commission, under the circumstances set forth therein, a registration statement
on the appropriate form under the Act relating to a proposed exchange offer (the
"Registered Exchange Offer") to the holders of the Notes to issue and deliver to
such holders, in exchange for the Notes, a like principal amount of debt
securities of the Company identical in all material respects to the Notes (the
"New Notes") and (ii) to use its reasonable best efforts to cause such
registration statement to be declared effective. If (a) the Company is not
permitted to effect the Registered Exchange Offer because the Registered
Exchange Offer would violate any applicable law or the applicable
interpretations of the Commission's staff or because of any change in currently
prevailing interpretations of the Commission's staff or (b) the Registered
Exchange Offer has not been consummated for any other reason within 240 days
after the Closing Date (as defined herein), then the Company shall file and use
its reasonable best efforts to cause to be declared effective a registration
statement on an appropriate form under the Act relating to the offer and sale of
the Notes by the holders thereof from time to time in accordance with the
methods of distribution set forth in such registration statement and Rule 415
under the Act. The registration statement to be filed under the Act pursuant to
the Registration Rights Agreement is hereinafter referred to as the
"Registration Statement." This Agreement, the Indenture and the Registration
Rights Agreement are hereinafter referred to collectively as the "Operative
Documents".
Capitalized terms used herein without definition have the respective
meanings specified therefor in the Indenture or the Offering Memorandum.
2. Agreements to Sell, Purchase and Resell. (a) The Company hereby agrees,
subject to all the terms and conditions set forth herein, to issue and sell to
each Initial Purchaser and, upon the basis of the representations, warranties
and agreements of the Company herein contained and subject to all the terms and
conditions set forth herein, each Initial Purchaser agrees, severally and not
jointly, to purchase from the Company, at a purchase price of 97.375% of the
principal amount thereof, the principal amount of Notes set forth opposite the
name of such Initial Purchaser in Schedule I hereto.
(b) The Initial Purchasers have advised the Company that they propose to
offer the Notes for sale upon the terms and conditions set forth in this
Agreement and in the Offering Memorandum. Each Initial Purchaser hereby
represents and warrants to, and agrees with, the Company that such Initial
Purchaser (i) is purchasing the Notes pursuant to a private sale exempt from
registration under the Act, (ii) will not solicit offers for, or offer or sell,
the Notes by means of any form of general solicitation or general advertising or
in any manner involving a public offering within the meaning of Section 4(2) of
the Act, and (iii) will solicit offers for the Notes only from, and will offer,
sell or deliver the Notes as part of its initial offering, only to persons whom
the Initial Purchasers reasonably believe to be Qualified Institutional Buyers,
or if any such person is buying for one or more institutional accounts for which
such person is acting as fiduciary or agent, only when such person has
represented to the Initial Purchasers that each such account is a Qualified
Institutional Buyer, to whom notice has been given that such sale or delivery is
being made in reliance on Rule 144A and in each case, in transactions under Rule
144A. The Initial Purchasers have advised the Company that they will offer the
Notes to Eligible Purchasers at a price initially equal to 100% of the principal
amount thereof, plus accrued interest, if any, from the date of issuance of the
Notes. Such price may be changed by the Initial Purchasers at any time
thereafter without notice.
The Initial Purchasers understand that the Company and, for purposes of the
opinions to be delivered to the Initial Purchasers pursuant to Sections
7(c)(xiii) and 7(e) hereof, counsel to the Company and counsel to the Initial
Purchasers, will rely upon the accuracy and truth of the foregoing
representations and agreements and the Initial Purchasers hereby consent to such
reliance.
3. Delivery of the Notes and Payment Therefor. Delivery to the Initial
Purchasers of and payment for the Notes shall be made at the office of Smith
Barney Inc., 388 Greenwich Street, New York, NY 10013, at 10:00 A.M., New York
City time, on May 30, 1997 (the "Closing Date"). The place of closing for
-3-
<PAGE>
the Notes and the Closing Date may be varied by agreement between the Initial
Purchasers and the Company.
The Notes will be delivered to the Initial Purchasers against payment of
the purchase price therefor by wire transfer of federal or other same day funds
to an account or accounts designated by the Company. The Notes will be evidenced
by one or more global securities in definitive form (the "Global Note") and will
be registered in the name of Cede & Co. as nominee of The Depository Trust
Company ("DTC"). The Notes to be delivered to the Initial Purchasers shall be
made available to the Initial Purchasers in New York City for inspection not
later than 9:30 a.m., New York City time, on the business day next preceding the
Closing Date.
4. Agreements of the Company. The Company agrees with the Initial
Purchasers as follows:
(a) The Company will advise the Initial Purchasers promptly and, if
requested by them, will confirm such advice in writing, within the period of
time referred to in paragraph (e) below, of any change in the Company's
condition (financial or other), business, prospects, properties, net worth or
results of operations, or of the happening of any event, which makes any
statement made in the Offering Memorandum (as then amended or supplemented)
untrue or which requires the making of any additions to or changes in the
Offering Memorandum (as then amended or supplemented) in order to make the
statements therein not misleading, or of the necessity to amend or supplement
the Offering Memorandum (as then amended or supplemented) to comply with any
law.
(b) The Company will furnish to the Initial Purchasers, without charge, as
of the date of the Offering Memorandum, such number of copies of the Offering
Memorandum as may then be amended or supplemented as they may reasonably
request.
(c) The Company will not make any amendment or supplement to the
Preliminary Offering Memorandum or to the Offering Memorandum of which the
Initial Purchasers shall not previously have been advised or to which they shall
reasonably object after being so advised or file any document which upon filing
becomes an Incorporated Document, without delivering a copy of such document to
the Initial Purchasers, prior to or concurrently with such filing.
(d) Prior to the execution and delivery of this Agreement, the Company has
delivered or will deliver to the Initial Purchasers, without charge, in such
quantities as the Initial Purchasers shall have requested or may hereafter
reasonably request, copies of the Preliminary Offering Memorandum. The Company
consents to the use, in accordance with the securities or Blue Sky laws of the
jurisdictions in which the Notes are offered by the Initial Purchasers and by
dealers, prior to the date of the Offering Memorandum, of each Preliminary
Offering Memorandum so furnished by the Company. The Company consents to the use
of the Offering Memorandum (and of any amendment or supplement thereto) in
accordance with the securities or Blue Sky laws of the jurisdictions in which
the Notes are offered by the Initial Purchasers and by all dealers to whom Notes
may be sold, in connection with the offering and sale of the Notes.
(e) If, at any time prior to completion of the distribution of the Notes by
the Initial Purchasers to Eligible Purchasers, any event shall occur that in the
judgment of the Company or in the opinion of counsel for the Initial Purchasers
should be set forth in the Offering Memorandum (as then amended or supplemented)
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary to supplement or
amend the Offering Memorandum, or to file under the Exchange Act any document
which upon filing becomes an Incorporated Document, to comply with any law, the
Company will forthwith prepare an appropriate supplement or amendment thereto or
such document, and will expeditiously furnish to the Initial Purchasers and
dealers a reasonable number of copies thereof. In the event that the Company and
the Initial Purchasers agree that the Offering Memorandum should be amended or
supplemented, or that a document should be filed under the Exchange Act which
upon filing becomes an Incorporated Document, the Company, if requested by the
Initial Purchasers, will promptly issue a press release announcing or disclosing
the matters to be covered by the proposed amendment or supplement or such
document.
-4-
<PAGE>
(f) The Company will cooperate with the Initial Purchasers and with their
counsel in connection with the qualification of the Notes for offering and sale
by the Initial Purchasers and by dealers under the securities or Blue Sky laws
of such jurisdictions as the Initial Purchasers may designate and will file such
consents to service of process or other documents necessary or appropriate in
order to effect such qualification; provided that in no event shall the Company
be obligated to qualify to do business in any jurisdiction where it is not now
so qualified or to take any action which would subject it to service of process
in suits, other than those arising out of the offering or sale of the Notes, in
any jurisdiction where it is not now so subject.
(g) So long as any of the Notes are outstanding, the Company will furnish
to the Initial Purchasers (i) as soon as available, a copy of each report of the
Company mailed to stockholders or filed with the Commission, and (ii) from time
to time such other information concerning the Company as the Initial Purchasers
may request.
(h) If this Agreement shall terminate or shall be terminated after
execution and delivery pursuant to any provisions hereof (otherwise than
pursuant to Section 10 hereof or by notice given by the Initial Purchasers
terminating this Agreement pursuant to Section 9 or Section 11 hereof) or if
this Agreement shall be terminated by the Initial Purchasers because of any
failure or refusal on the part of the Company to comply with the terms or
fulfill any of the conditions of this Agreement, the Company agrees to reimburse
the Initial Purchasers for all out-of-pocket expenses (including fees and
expenses of its counsel) reasonably incurred by it in connection herewith, but
without any further obligation on the part of the Company for loss of profits or
otherwise.
(i) The Company will apply the net proceeds from the sale of the Notes to
be sold by it hereunder substantially in accordance with the description set
forth in the Offering Memorandum.
(j) Except as stated in this Agreement and in the Preliminary Offering
Memorandum and Offering Memorandum, the Company has not taken, nor will it take,
directly or indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of the
Notes to facilitate the sale or resale of the Notes. Except as permitted by the
Act, the Company will not distribute any offering material in connection with
the Exempt Resales.
(k) The Company will use its best efforts to cause the Notes to be eligible
for trading on The PORTAL Market.
(l) From and after the Closing Date, so long as any of the Notes are
outstanding and are "Restricted Securities" within the meaning of the Rule
144(a)(3) under the Act or, if earlier, until two years after the Closing Date,
and during any period in which the Company is not subject to Section 13 or 15(d)
of the Exchange Act, the Company will furnish to holders of the Notes and
prospective purchasers of Notes designated by such holders, upon request of such
holders or such prospective purchasers, the information required to be delivered
pursuant to Rule 144A(d)(4) under the Act to permit compliance with Rule 144A in
connection with resale of the Notes.
(m) The Company agrees not to sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any security (as defined in the Act) that
would be integrated with the sale of the Notes in a manner that would require
the registration under the Act of the sale to the Initial Purchasers or the
Eligible Purchasers of the Notes.
(n) The Company agrees to comply with all of the terms and conditions of
the Registration Rights Agreement, and all agreements set forth in
representation letters of the Company to DTC relating to the approval of the
Notes by DTC for "book entry" transfer.
(o) The Company agrees that prior to any registration of the Notes pursuant
to the Registration Rights Agreement, or at such earlier time as may be so
required, the Indenture shall be qualified
-5-
<PAGE>
under the Trust Indenture Act of 1939 (the "1939 Act") and will cause to be
entered into any necessary supplemental indentures in connection therewith.
5. Representations and Warranties of the Company. The Company represents
and warrants to the Initial Purchasers that:
(a) The Preliminary Offering Memorandum and Offering Memorandum with
respect to the Notes have been prepared by the Company for use by the Initial
Purchasers in connection with the Exempt Resales. No order or decree preventing
the use of the Preliminary Offering Memorandum or the Offering Memorandum or any
amendment or supplement thereto, or any order asserting that the transactions
contemplated by this Agreement are subject to the registration requirements of
the Act, has been issued and no proceeding for that purpose has commenced or is
pending or, to the knowledge of the Company, is contemplated.
(b) The Preliminary Offering Memorandum and the Offering Memorandum as of
their respective dates and the Offering Memorandum as of the Closing Date, did
not or will not at any time contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, except that this representation and
warranty does not apply to statements in or omissions from the Preliminary
Offering Memorandum and Offering Memorandum made in reliance upon and in
conformity with information relating to the Initial Purchasers furnished to the
Company in writing by or on behalf of the Initial Purchasers expressly for use
therein.
(c) The Incorporated Documents heretofore filed were filed in a timely
manner and, when they were filed (or, if any amendment with respect to any such
document was filed, when such document was filed), conformed in all material
respects to the requirements of the Exchange Act and did not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading; and
any further Incorporated Documents will, when so filed, be filed in a timely
manner and conform in all material respects to the requirements of the Exchange
Act and will not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading.
(d) The Indenture has been duly and validly authorized by the Company and,
upon its execution, delivery and performance by the Company and assuming due
authorization, execution, delivery and performance by the Trustee, will be a
valid and binding agreement of the Company, enforceable in accordance with its
terms, except as enforcement thereof may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights generally, and conforms in all
material respects to the description thereof in the Offering Memorandum; and no
qualification of the Indenture under the 1939 Act is required in connection with
the offer and sale of the Notes contemplated hereby or in connection with the
Exempt Resales.
(e) The Notes have been duly authorized by the Company and, when executed
by the Company and authenticated by the Trustee in accordance with the Indenture
and delivered to the Initial Purchasers against payment therefor in accordance
with the terms hereof, will have been validly issued and delivered, and will
constitute valid and binding obligations of the Company entitled to the benefits
of the Indenture and enforceable in accordance with their terms, except as
enforcement thereof may be limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors' rights generally, and the Notes
will conform in all material respects to the description thereof in the Offering
Memorandum.
(f) All the outstanding shares of capital stock of the Company have been
duly authorized and validly issued, are fully paid and nonassessable and are
free of any preemptive or, except as set forth in the Offering Memorandum,
similar rights and were issued and sold in compliance with all applicable
Federal and state securities laws; and the authorized capital stock of the
Company conforms to the description thereof in the Offering Memorandum.
-6-
<PAGE>
(g) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware with full corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum, and is duly registered and
qualified to conduct its business and is in good standing in each jurisdiction
or place where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure so to
register or qualify does not have a material adverse effect on the condition
(financial or other), business, prospects, properties, net worth or results of
operations of the Company and the Subsidiaries (as hereinafter defined) taken as
a whole (a "Material Adverse Effect").
(h) All the Company's subsidiaries (as defined in the Act) included in
Exhibit 21 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1996, are referred to herein individually as a "Subsidiary" and
collectively as the "Subsidiaries." Each Subsidiary is a corporation or limited
partnership duly organized, validly existing and in good standing in the
jurisdiction of its organization, with full corporate or partnership power and
authority to own, lease and operate its properties and to conduct its business
as described in the Offering Memorandum, and is duly registered and qualified to
conduct its business and is in good standing in each jurisdiction or place where
the nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure so to register or
qualify or be in good standing does not have a Material Adverse Effect. None of
the subsidiaries of the Company other than the Subsidiaries is engaged in any
business activities or operations or has any material assets or liabilities. All
the outstanding shares of capital stock of each of the Subsidiaries which is a
corporation have been duly authorized and validly issued, are fully paid and
nonassessable, and are wholly owned by the Company directly or indirectly
through one of the other Subsidiaries, free and clear of any lien, adverse
claim, security interest, equity or other encumbrance, except as described in
the Offering Memorandum and except for the shares of capital stock of certain
Subsidiaries pledged to Citibank, N.A., as administrative agent ("Citibank"), in
connection with the Company's Revolving Credit Agreement dated as of May 15,
1996 with Citibank and the lenders from time to time party thereto (the "Credit
Agreement") and/or to Meditrust Mortgage Investments, Inc. and/or any of its
affiliates (collectively, "Meditrust"). Each limited partnership agreement
pursuant to which the Company or a Subsidiary holds a general partnership
interest in a limited partnership which is a Subsidiary is in full force and
effect and constitutes the legal, valid and binding agreement of the parties
thereto, enforceable against such parties in accordance with the terms thereof,
except as enforcement thereof may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles; and there has been no material breach of or
default under, and no event which with notice or lapse of time would constitute
a material breach of or default under, such agreements by the Company or any
Subsidiary or, to the Company's best knowledge, any other party to such
agreements.
(i) There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened, against the Company or any of the
Subsidiaries, or to which the Company or any of the Subsidiaries, or to which
any of their respective properties, is subject, that are not disclosed in the
Offering Memorandum and which, if adversely decided, are reasonably likely to
cause a Material Adverse Effect or materially affect the issuance of the Notes
or the consummation of the transactions contemplated by the Operative Documents.
There are no material agreements, contracts, indentures, leases or other
instruments that are not described in the Offering Memorandum or that are
required to be filed as an exhibit to any Incorporated Document that are not so
filed. Neither the Company nor any Subsidiary is involved in any strike, job
action or labor dispute with any group of employees, and, to the Company's
knowledge, no such action or dispute is threatened, which is reasonably likely
to have a Material Adverse Effect.
(j) Neither the Company nor any of the Subsidiaries is (i) in violation of
its certificate or articles of incorporation or by-laws or other organizational
documents, or of any law, ordinance, administrative or governmental rule or
regulation applicable to the Company or any of the Subsidiaries or of any decree
of any court or governmental agency or body having jurisdiction over the Company
or any of the Subsidiaries, except where any such violation or violations in the
aggregate would not have a Material Adverse Effect or (ii) in default in any
material respect in the performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of indebtedness or
in any material agreement, indenture,
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lease or other instrument to which the Company or any of the Subsidiaries is a
party or by which any of them or any of their respective properties may be
bound, except as may be disclosed in the Offering Memorandum.
(k) Neither the issuance, offer, sale or delivery of the Notes, the
execution, delivery or performance of this Agreement, the Indenture or the
Registration Rights Agreement by the Company nor the consummation by the Company
of the transactions contemplated hereby or thereby (i) requires any consent,
approval, authorization or other order of, or registration or filing with, any
court, regulatory body, administrative agency or other governmental body, agency
or official (except such as may be required in connection with the registration
under the Act of the Notes and/or the New Notes in accordance with the
Registration Rights Agreement, the qualification of the Indenture under the 1939
Act and except for compliance with the securities or Blue Sky laws of various
jurisdictions) or conflicts or will conflict with or constitutes or will
constitute a breach of, or a default under, the certificate or articles of
incorporation or bylaws, or other organizational documents, of the Company or
any of the Subsidiaries or (ii) conflicts or will conflict with or constitutes
or will constitute a breach of, or a default under, in any material respect, any
material agreement, indenture, lease or other instrument to which the Company or
any of the Subsidiaries is a party or by which any of them or any of their
respective properties may be bound, or violates or will violate in any material
respect any statute, law, regulation or filing or judgment, injunction, order or
decree applicable to the Company or any of the Subsidiaries or any of their
respective properties, or will result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of the
Subsidiaries pursuant to the terms of any agreement or instrument to which any
of them is a party or by which any of them may be bound or to which any of the
property or assets of any of them is subject.
(l) The accountants, KPMG Peat Marwick LLP, who have certified or shall
certify the financial statements included as part of the Offering Memorandum (or
any amendment or supplement thereto), are independent certified public
accountants under Rule 101 of the AICPA's Code of Professional Conduct, and its
interpretation and rulings.
(m) The historical financial statements, together with the related
schedules and notes forming part of the Offering Memorandum (and any amendment
or supplement thereto), comply as to form with the requirements of the Exchange
Act and present fairly in all material respects the consolidated financial
position, results of operations and changes in stockholders' equity and cash
flows of the Company and the Subsidiaries on the basis stated in the Offering
Memorandum at the respective dates or for the respective periods to which they
apply; such statements and related schedules and notes have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved, except as disclosed therein; and the other
financial and statistical information and data set forth in the Offering
Memorandum (and any amendment or supplement thereto) is accurately presented
and, to the extent such information and data is derived from the financial books
and records of the Company, is prepared on a basis consistent with such
financial statements and the books and records of the Company. The pro forma
financial statements and other pro forma financial information included or
incorporated by reference in the Offering Memorandum have been prepared in
accordance with the Commission's rules and guidelines with respect to pro forma
financial information and have been properly compiled on the basis described
therein, and the assumptions used in the preparation thereof are, in the
Company's opinion, reasonable.
(n) The Company has all requisite power and authority to execute, deliver
and perform its obligations under this Agreement and the Registration Rights
Agreement; the execution and delivery of, and the performance by the Company of
its obligations under, this Agreement and the Registration Rights Agreement have
been duly and validly authorized by the Company, and this Agreement and the
Registration Rights Agreement have been duly executed and delivered by the
Company and constitute the valid and legally binding agreements of the Company,
enforceable against the Company in accordance with their terms, except as the
enforcement hereof and thereof may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights generally and
subject to the applicability of general principles of equity, and except as
rights to indemnity and contribution hereunder and thereunder may be limited by
Federal or state securities laws or principles of public policy.
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(o) Except as disclosed in the Offering Memorandum (or any amendment or
supplement thereto), subsequent to the date as of which such information is
given in the Offering Memorandum (or any amendment or supplement thereto),
neither the Company nor any of the Subsidiaries has incurred any liability or
obligation, direct or contingent, or entered into any transaction, not in the
ordinary course of business, that is material to the Company and the
Subsidiaries taken as a whole, and there has not been any material change in the
capital stock, or material increase in the short-term or long-term debt, of the
Company or any of the Subsidiaries, or any material adverse change, or any
development involving or which could reasonably be expected to involve a
prospective material adverse change, in the condition (financial or other),
business, properties, net worth or results of operations of the Company and the
Subsidiaries taken as a whole.
(p) Each of the Company and the Subsidiaries has good and marketable title
to all property (real and personal) described in the Offering Memorandum as
being owned by it, free and clear of all liens, claims, security interests or
other encumbrances except such as are described in the Offering Memorandum or in
an Incorporated Document or exhibit thereto, and all the property described in
the Offering Memorandum as being held under lease by each of the Company and the
Subsidiaries is held by it under valid, subsisting and enforceable leases, with
only such exceptions as in the aggregate are not materially burdensome and do
not interfere in any material respect with the conduct of the business of the
Company and the Subsidiaries taken as a whole.
(q) Except as permitted by the Act, the Company has not distributed and,
prior to the later to occur of the Closing Date and completion of the
distribution of the Notes, will not distribute any offering material in
connection with the offering and sale of the Notes other than the Preliminary
Offering Memorandum and Offering Memorandum.
(r) Each of the Company and the Subsidiaries and, to the Company's
knowledge, the owners of the facilities and other businesses managed by the
Company or any Subsidiary have such permits, licenses, franchises, certificates
and other approvals or authorizations of governmental or regulatory authorities
("Permits") as are necessary under applicable law to own their respective
properties and to conduct their respective business in the manner described in
the Offering Memorandum (including, without limitation, such Permits as are
required under such federal, state and other health care laws, and under such
HMO or similar licensure laws and such insurance laws and regulations, as are
applicable thereto), and with respect to those facilities and other businesses
that participate in Medicare and/or Medicaid, to receive reimbursement under
Medicare and Medicaid, subject in each case to such qualifications as may be set
forth in the Offering Memorandum and except to the extent that the failure to
have such Permits would not have a Material Adverse Effect; the Company and each
of the Subsidiaries have fulfilled and performed in all material respects, all
their respective material obligations with respect to the Permits, and no event
has occurred which allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other material impairment of
the rights of the holder of any such Permit, subject in each case to such
qualification as may be set forth in the Offering Memorandum and except to the
extent that any such revocation or termination would not have a Material Adverse
Effect; and, except as described in the Offering Memorandum, none of the Permits
contains any restriction that is materially burdensome to the Company or any of
the Subsidiaries.
(s) The business practices of the Company and each of its Subsidiaries do
not violate in any material respect any applicable provisions of federal or
state law governing Medicare or any state Medicaid program, including without
limitation, Sections 1320a-7a and 1320a-7b of Title 42 of the United States
Code, and no individual with an ownership or control interest, as defined in 42
U.S.C. ss.1320a-3(a)(3), in the Company or any of its Subsidiaries, or who is an
officer, director, or managing employee, as defined in 42 U.S.C. ss.1320a-5(b),
of the Company or any of its Subsidiaries is a person described in 42 U.S.C.
ss.1320a- 7(b)(8)(B), and the Company's and each of its Subsidiaries' business
practices do not violate in any material respect any applicable provisions of
federal or state law regarding physician ownership of, or financial relationship
with, or referral to entities providing health care related goods or services,
or laws requiring disclosure of financial interests held by physicians in
entities to which they may refer patients for the provision of health care
related goods or services.
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<PAGE>
(t) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (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 existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(u) Neither the Company nor any of the Subsidiaries nor, to the Company's
knowledge, any employee or agent of the Company or any Subsidiary has made any
payment of funds of the Company or any Subsidiary or received or retained any
funds in violation of any law, rule or regulation, which violation would have a
Material Adverse Effect.
(v) Except as disclosed in the Offering Memorandum, the Company and each of
the Subsidiaries have filed all tax returns required to be filed, which returns
are true and correct in all material respects, and neither the Company nor any
Subsidiary is in default in the payment of any taxes which were payable pursuant
to said returns or any assessments with respect thereto, except where the
failure to file such returns and make such payments would not have a Material
Adverse Effect.
(w) The Company and the Subsidiaries own or possess all patents,
trademarks, trademark registration, service marks, service mark registrations,
trade names, copyrights, licenses, inventions, trade secrets and rights
described in the Offering Memorandum as being owned by any of them or necessary
for the conduct of their respective businesses, and the Company is not aware of
any claim to the contrary or any challenge by any other person to the rights of
the Company and the Subsidiaries with respect to the foregoing.
(x) The Company is not and, upon sale of the Notes to be issued and sold
thereby in accordance herewith and the application of the net proceeds to the
Company of such sale as described in the Offering Memorandum under the caption
"Use of Proceeds," will not be an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(y) When the Notes are issued and delivered pursuant to this Agreement,
such Notes will not be of the same class (within the meaning of Rule 144A(d)(3)
under the Act) as any security of the Company that is listed on a national
securities exchange registered under Section 6 of the Exchange Act or that is
quoted in a United States automated interdealer quotation system.
(z) Neither the Company nor any affiliate (as defined in Rule 501(b) of
Regulation D ("Regulation D") under the Act) of the Company has directly, or
through any agent (provided that no representation is made as to the Initial
Purchasers or any person acting on their behalf), (i) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any security (as
defined in the Act) which is or will be integrated with the offering and sale of
the Notes in a manner that would require the registration of the Notes under the
Act or (ii) engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with the offering of the
Notes.
(aa) The Company is not required to deliver the information specified in
Rule 144A(d)(4) in connection with the offering and resale of the Notes by the
Initial Purchasers.
(bb) Assuming (i) that the representations and warranties in Section 2
hereof are true, (ii) the Initial Purchasers comply with the covenants set forth
in Section 2 hereof and (iii) that each person to whom the Initial Purchasers
offer, sell or deliver the Notes is a Qualified Institutional Buyer, the
purchase and sale of the Notes pursuant hereto (including the Initial
Purchasers' proposed offering of the Notes on the terms and in the manner set
forth in the Offering Memorandum and Section 2 hereof) is exempt from the
registration requirements of the Act.
(cc) The execution and delivery of this Agreement, the other Operative
Documents and the sale of the Notes to the Initial Purchasers or by the Initial
Purchasers to Eligible Purchasers will not involve any prohibited transaction
within the meaning of Section 406 of ERISA or Section 4975 of the Code. The
representation made by the Company in the preceding sentence is made in reliance
upon and subject to the accuracy of, and compliance with, the representations
and covenants made or deemed made by the Eligible Purchasers as set forth in the
Offering Memorandum under the section entitled "Notice to Investors."
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6. Indemnification and Contribution. (a) The Company agrees to indemnify
and hold harmless each Initial Purchaser and each person, if any, who controls
any Initial Purchaser within the meaning of Section 15 of the Act or Section 20
of the Exchange Act, from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation) arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact contained in the Preliminary Offering Memorandum or Offering
Memorandum or in any amendment or supplement thereto, or arising out of or based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses arise
out of or are based upon any untrue statement or omission or alleged untrue
statement or omission which has been made therein or omitted therefrom in
reliance upon and in conformity with the information relating to such Initial
Purchaser furnished in writing to the Company by or on behalf of such Initial
Purchaser expressly for use in connection therewith; provided, however, that the
indemnification contained in this paragraph (a) with respect to the Preliminary
Offering Memorandum shall not inure to the benefit of any Initial Purchaser (or
to the benefit of any person controlling any Initial Purchaser) on account of
any such loss, claim, damage, liability or expense arising from the sale of the
Notes by such Initial Purchaser to any person if the untrue statement or alleged
untrue statement or omission or alleged omission of a material fact contained in
the Preliminary Offering Memorandum was corrected in the Offering Memorandum and
such Initial Purchaser sold Notes to that person without sending or giving at or
prior to the written confirmation of such sale, a copy of the Offering
Memorandum (as then amended or supplemented) if the Company has previously
furnished sufficient copies thereof to such Initial Purchaser. The foregoing
indemnity agreement shall be in addition to any liability which the Company may
otherwise have.
(b) If any action, suit or proceeding shall be brought against any Initial
Purchaser or any person controlling any Initial Purchaser in respect of which
indemnity may be sought against the Company, such Initial Purchaser or such
controlling person shall promptly notify the parties against whom
indemnification is being sought (the "indemnifying parties"), and such
indemnifying parties shall assume the defense thereof, including the employment
of counsel and payment of all fees and expenses. Such Initial Purchaser or any
such controlling person shall have the right to employ separate counsel in any
such action, suit or proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such Initial
Purchaser or such controlling person unless (i) the indemnifying parties have
agreed in writing to pay such fees and expenses, (ii) the indemnifying parties
have failed to assume the defense and employ counsel, or (iii) the named parties
to any such action, suit or proceeding (including any impleaded parties) include
both such Initial Purchaser or such controlling person and the indemnifying
parties and such Initial Purchaser or such controlling person shall have been
advised by its counsel that representation of such indemnified party and any
indemnifying party by the same counsel would be inappropriate under applicable
standards of professional conduct (whether or not such representation by the
same counsel has been proposed) due to actual or potential differing interests
between them (in which case the indemnifying party shall not have the right to
assume the defense of such action, suit or proceeding on behalf of such Initial
Purchaser or such controlling person). It is understood, however, that the
indemnifying parties shall, in connection with any one such action, suit or
proceeding or separate but substantially similar or related actions, suits or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of only one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Initial Purchasers and controlling persons not having actual or
potential differing interests with the Initial Purchasers or among themselves,
which firm shall be designated in writing by Smith Barney Inc., and that all
such fees and expenses shall be reimbursed as they are incurred. The
indemnifying parties shall not be liable for any settlement of any such action,
suit or proceeding effected without their written consent, but if settled with
such written consent, or if there be a final judgment for the plaintiff in any
such action, suit or proceeding, the indemnifying parties agree to indemnify and
hold harmless any Initial Purchaser, to the extent provided in
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paragraph (a), and any such controlling person from and against any loss, claim,
damage, liability or expense by reason of such settlement or judgment.
(c) Each Initial Purchaser agrees, severally and not jointly, to indemnify
and hold harmless the Company, and its directors and officers, and any person
who controls the Company within the meaning of Section 15 of the Act or Section
20 of the Exchange Act to the same extent as the indemnity from the Company to
each Initial Purchaser set forth in paragraph (a) hereof, but only with respect
to information relating to such Initial Purchaser furnished in writing by or on
behalf of such Initial Purchaser expressly for use in the Preliminary Offering
Memorandum or Offering Memorandum or any amendment or supplement thereto. If any
action, suit or proceeding shall be brought against the Company, any of its
directors or officers, or any such controlling person based on the Preliminary
Offering Memorandum or Offering Memorandum, or any amendment or supplement
thereto, and in respect of which indemnity may be sought against such Initial
Purchaser pursuant to this paragraph (c), such Initial Purchaser shall have the
rights and duties given to the Company by paragraph (b) above (except that if
the Company shall have assumed the defense thereof such Initial Purchaser 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 such Initial Purchaser's expense), and the Company, its directors
and officers, and any such controlling person shall have the rights and duties
given to the Initial Purchasers by paragraph (b) above. The foregoing indemnity
agreement shall be in addition to any liability which the Initial Purchasers may
otherwise have.
(d) If the indemnification provided for in this Section 6 is unavailable to
an indemnified party under paragraphs (a) or (c) hereof in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then an
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company on
the one hand and the Initial Purchasers on the other hand from the offering of
the Notes, 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 on the one hand and the Initial Purchasers on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Initial Purchasers on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total discounts and commissions
received by the Initial Purchasers, in each case as set forth in the table on
the cover page of the Offering Memorandum. The relative fault of the Company on
the one hand and the Initial Purchasers on the other hand 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
relates to information supplied by the Company on the one hand or by the Initial
Purchasers on the other hand and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
(e) The Company and the Initial Purchasers agree that it would not be just
and equitable if contribution pursuant to this Section 6 were determined by a
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in paragraph (d) above
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 6, no Initial
Purchaser shall be required to contribute any amount in excess of the amount by
which the total price of the Notes purchased and resold by it as contemplated
hereby exceeds the amount of any damages which such Initial Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
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(f) No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened action,
suit or proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 6 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 6 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Initial Purchaser or any person
controlling any Initial Purchaser, the Company, its directors or officers or any
person controlling the Company, (ii) acceptance of any Notes and payment
therefor hereunder, and (iii) any termination of this Agreement. A successor to
any Initial Purchaser or any person controlling any Initial Purchaser, or to the
Company, its directors or officers or any person controlling the Company, shall
be entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 6.
7. Conditions of the Initial Purchasers' Obligations. The several
obligations of the Initial Purchasers to purchase the Notes hereunder are
subject to the following conditions:
(a) At the time of execution of this Agreement and on the Closing Date, no
order or decree preventing the use of the Offering Memorandum or any amendment
or supplement thereto, or any order asserting that the transactions contemplated
by this Agreement are subject to the registration requirements of the Act shall
have been issued and no proceedings for that purpose shall have been commenced
or shall be pending or, to the knowledge of the Company, be contemplated. No
stop order suspending the sale of the Notes in any jurisdiction designated by
the Initial Purchasers shall have been issued and no proceedings for that
purpose shall have been commenced or shall be pending or, to the knowledge of
the Company, shall be contemplated.
(b) Subsequent to the effective date of this Agreement, there shall not
have occurred (i) any change, or any development involving a prospective change,
in or affecting the condition (financial or other), business, properties, net
worth, or results of operations of the Company or the Subsidiaries not
contemplated by the Offering Memorandum, which in the opinion of the Initial
Purchasers, would materially adversely affect the market for the Notes, or (ii)
any event or development relating to or involving the Company or any officer or
director of the Company which makes any statement made in the Offering
Memorandum untrue or which, in the opinion of the Company and its counsel or the
Initial Purchasers and their counsel, requires the making of any addition to or
change in the Offering Memorandum in order to state a material fact required by
any law to be stated therein or necessary in order to make the statements
therein not misleading, if amending or supplementing the Offering Memorandum to
reflect such event or development would, in the opinion of the Initial
Purchasers, materially adversely affect the market for the Notes.
(c) The Initial Purchasers shall have received on the Closing Date an
opinion of Fulbright & Jaworski L.L.P., counsel for the Company, dated the
Closing Date and addressed to the Initial Purchasers, to the effect that:
(i) The Company is a corporation duly incorporated and validly existing
in good standing under the laws of the State of Delaware with full corporate
power and authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum (and any amendment or
supplement thereto);
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(ii) Each Significant Subsidiary (as defined in Section 1.02(w) of
Regulation S-X promulgated under the Act) is a corporation validly existing and
in good standing under the laws of the jurisdiction of its organization, with
full corporate power and authority to own, lease, and operate its properties and
to conduct its business as described in the Offering Memorandum (and any
amendment or supplement thereto); and all the outstanding shares of capital
stock of each of the Significant Subsidiaries have been duly authorized and
validly issued, are fully paid and nonassessable, and to the knowledge of such
counsel, are wholly owned by the Company directly, or indirectly through one of
the other Subsidiaries, free and clear of any security interest, lien, adverse
claim, equity or other encumbrance, except as described in the Offering
Memorandum and except for the shares of capital stock of certain Subsidiaries
pledged to Citibank as agent in connection with the Credit Agreement and/or to
Meditrust;
(iii) The authorized capital stock of the Company is as set forth under
the caption "Capitalization" in the Offering Memorandum;
(iv) The Company has corporate power and authority to enter into this
Agreement and the Registration Rights Agreement and to issue, sell and deliver
the Notes to be sold by it to the Initial Purchasers as provided herein, and
this Agreement and the Registration Rights Agreement have been duly authorized,
executed and delivered by the Company and are valid, legal and binding
agreements of the Company, enforceable against the Company in accordance with
their terms, except (A) as enforcement of rights to indemnity and contribution
hereunder and thereunder may be limited by Federal or state securities laws or
principles of public policy and (B) subject to the qualification that the
enforceability of the Company's obligations hereunder and thereunder may be
limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium, and other laws relating to or affecting creditors' rights generally
and by general equitable principles;
(v) The Indenture has been duly and validly authorized, executed and
delivered by the Company and, assuming due authorization, execution and delivery
by the Trustee, is a valid and binding agreement of the Company, enforceable in
accordance with its terms, subject to the qualification that the enforceability
of the Company's obligations thereunder may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other laws relating to
or affecting creditors' rights generally and by general equitable principles;
and no qualification of the Indenture under the 1939 Act is required in
connection with the offer and sale of the Notes contemplated hereby or in
connection with the Exempt Resales;
(vi) The Notes have been duly and validly authorized by the Company and
when executed by the Company in accordance with the Indenture and, assuming due
authentication of the Notes by the Trustee, upon delivery to the Initial
Purchasers against payment therefor in accordance with the terms hereof, will
have been validly issued and delivered, and will constitute valid and binding
obligations of the Company entitled to the benefits of the Indenture, subject to
the qualification that the enforceability of the Company's obligations
thereunder may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium, and other laws relating to or affecting creditors'
rights generally and by general equitable principles;
(vii) Neither the offer, sale or delivery of the Notes, the execution,
delivery or performance by the Company of this Agreement, the Registration
Rights Agreement or the Indenture, compliance by the Company with the provisions
hereof or thereof nor consummation by the Company of the transactions
contemplated hereby or thereby constitutes or will constitute a breach or
violation of, or a default under, in any material respect, the certificate or
articles of incorporation or bylaws or other organizational documents of the
Company or any of the Significant Subsidiaries or any material agreement,
indenture, lease or other instrument to which the Company or any of the
Significant Subsidiaries is a party or by which any of them or any of their
respective properties is bound that is an exhibit to any Incorporated Document
or is known to such counsel, or will result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any of
the Significant Subsidiaries pursuant to the terms of any material agreement or
instrument to which any of them is a party or by which any of them may be bound
or to which any of the property or assets of any of them is subject that is an
exhibit to any Incorporated Document or is
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<PAGE>
known to such counsel, nor will any such action result in any violation in any
material respect of any existing law, or any regulation, ruling (assuming
compliance with all applicable state securities and Blue Sky laws and, in the
case of the Registration Rights Agreement, the Act and the Exchange Act and the
1939 Act), judgment, injunction, order or decree known to such counsel,
applicable to the Company or the Significant Subsidiaries or any of their
respective properties;
(viii) No consent, approval, authorization or other order of, or
registration or filing with, any court, regulatory body, administrative agency
or other governmental body, agency, or official is required on the part of the
Company (except as have been obtained under the Exchange Act, or such as may be
required under state securities or Blue Sky laws governing the purchase and
distribution of the Notes, or such as may be required to qualify the Indenture
under the 1939 Act, and such as may be required in connection with the
performance by the Company of its obligations under the Registration Rights
Agreement, as to which such counsel need not express an opinion) for the valid
issuance and sale of the Notes to the Initial Purchasers as contemplated by this
Agreement;
(ix) The Incorporated Documents (except for the financial statements
and the notes thereto and the schedules and other financial and statistical data
included therein, as to which such counsel need not express any opinion), at the
time they were filed, appear on their face to have complied as to form in all
material respects with the requirements of the Exchange Act;
(x) To the knowledge of such counsel, (A) there are no legal or
governmental proceedings pending or threatened against the Company or any of the
Subsidiaries, or to which the Company or any of the Subsidiaries, or any of
their property, are subject, which are not disclosed in the Offering Memorandum
and which, if adversely decided, are reasonably likely to cause a Material
Adverse Effect or materially affect the issuance of the Notes or the
consummation of the transactions contemplated by the Operative Documents and (B)
there are no material agreements, contracts, indentures, leases or other
instruments, that are not described in the Offering Memorandum (or any amendment
or supplement thereto) or that are required to be filed as an exhibit to any
Incorporated Document that are not filed as required;
(xi) The statements in the Offering Memorandum, insofar as they are
descriptions of contracts, agreements or other legal documents, or refer to
statements of law or legal conclusions, are accurate in all material respects
and present fairly the information required to be shown;
(xii) When the Notes are issued and delivered pursuant to this
Agreement, such Notes will not be of the same class (within the meaning of Rule
144A(d)(3) under the Act) as any security of the Company that is listed on a
national securities exchange registered under Section 6 of the Exchange Act or
that is quoted in a United States automated interdealer quotation system;
(xiii) No registration of the Notes under the Act is required for the
sale of the Notes to the Initial Purchasers as contemplated in this Agreement or
for the Exempt Resales (assuming (A) that any Eligible Purchaser who buys the
Notes in the Exempt Resales is a Qualified Institutional Buyer and (B) the
accuracy of the Initial Purchasers' representations and those of the Company in
this Agreement regarding the absence of general solicitation in connection with
the Exempt Resales);
(xiv) The Company is not required to deliver the information specified
in Rule 144A(d)(4) in connection with the offering and resale of the Notes by
the Initial Purchasers; and
(xv) Although such counsel has not undertaken, except as otherwise
indicated in their opinion, to determine independently, and does not assume any
responsibility for, the accuracy, completeness or fairness of the statements in
the Offering Memorandum, such counsel has participated in the preparation of the
Offering Memorandum, including review and discussion of the contents thereof,
and has reviewed the Incorporated Documents, and, relying as to materiality to a
large extent upon the opinions of officers and other representatives of the
Company, nothing has come to the attention of such counsel that has caused them
to believe that the Offering Memorandum, as of its date and as of the Closing
Date contained an
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<PAGE>
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 or that any
amendment or supplement to the Offering Memorandum, as of its respective date,
and as of the Closing Date contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading (it being understood that such counsel need
express no opinion with respect to the financial statements and the notes
thereto and the schedules and other financial and statistical data included or
incorporated by reference in the Offering Memorandum and information furnished
by or on behalf of the Initial Purchasers).
The opinion of such counsel shall be limited to the laws of the United
States, the State of New York and the internal corporation law of the State of
Delaware.
(d) The Initial Purchasers shall have received on the Closing Date an
opinion of Marshall A. Elkins, Esq., General Counsel of the Company, dated the
Closing Date and addressed to the Initial Purchasers to the effect that:
(i) The Company is duly registered and qualified to conduct its
business and is in good standing as a foreign corporation in each jurisdiction
or place where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure so to
register or qualify or to be in good standing does not have a Material Adverse
Effect;
(ii) All the shares of capital stock of the Company outstanding prior
to the issuance of the Notes have been duly authorized and validly issued, are
fully paid and nonassessable;
(iii) Each Subsidiary is duly registered and qualified to conduct its
business and is in good standing as a foreign corporation or limited partnership
in each jurisdiction or place where the nature of its properties or the conduct
of its business requires such registration or qualification, except where the
failure so to register or qualify or to be in good standing does not have a
Material Adverse Effect; (iv) Neither the Company nor any of the Subsidiaries is
in violation in any material respect of its respective certificate or articles
of incorporation or bylaws, or other organizational documents, or to the best
knowledge of such counsel after reasonable inquiry, is in default in any
material respect in the performance of any material obligation, agreement or
condition contained in any bond, debenture, note or other evidence of
indebtedness or in any material agreement, indenture, lease or other instrument
to which the Company or any of the Subsidiaries is a party or by which any of
them or any of their respective properties may be bound, except as disclosed in
the Offering Memorandum and except to the extent that any such violation or
default would not have a Material Adverse Effect;
(v) Such counsel has no reason to believe that the Company and its
Subsidiaries do not have all Permits (including, without limitation, such
Permits as are necessary under such federal and state health care laws and under
such HMO and similar licensure laws and such insurance laws and regulations as
are applicable to the Company and its Subsidiaries) as are necessary to own,
lease and operate its properties and conduct its business, except to the extent
that the failure to have such Permits would not have a Material Adverse Effect;
and to the best knowledge of such counsel after reasonable inquiry there are no
proceedings pending or threatened against the Company or any of its Subsidiaries
that may cause any such Permit that is material to the conduct of the business
of the Company or any of its Subsidiaries to be revoked, withdrawn, cancelled,
suspended or not renewed;
(vi) Such counsel has no reason to believe that (a) the business
practices of the Company or any of its Subsidiaries violate in any material
respect any applicable provisions of federal or state law governing Medicare or
any state Medicaid program, including without limitation, Sections 1320a-7a and
1320a-7b of Title 42 of the United States Code, or that any individual with an
ownership or control interest, as defined in 42 U.S.C. ss.1320a-3(a)(3), in the
Company or any of its Subsidiaries or who is an officer, director, or managing
employee as defined in 42 U.S.C. ss.1320a-5(b), of the Company or any of its
Subsidiaries is a
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<PAGE>
person described in 42 U.S.C. ss.1320a-7(b)(8)(B), or that (b) the Company's or
any Subsidiary's business practices violate in any material respect any
applicable provisions of federal or state law regarding physician ownership of,
or financial relationship with, or referral to entities providing health care
related goods or services, or laws requiring disclosure of financial interests
held by physicians in entities to which they may refer patients for the
provision of health care related goods or services; and to the best knowledge of
such counsel after reasonable inquiry, neither the Company nor any of its
Subsidiaries is in violation of any other law, ordinance, administrative or
governmental rule or regulation applicable to the Company or any of its
Subsidiaries or of any decree of any court or governmental agency or body having
jurisdiction over the Company or any of its Subsidiaries, except to the extent
that any such violation would not have a Material Adverse Effect; and
(vii) Although such counsel has not undertaken, except as otherwise
indicated in such counsel's opinion, to determine independently, and does not
assume any responsibility for, the accuracy, completeness or fairness of the
statements in the Offering Memorandum, such counsel has participated in the
preparation of the Offering Memorandum and the Incorporated Documents, and
nothing has come to the attention of such counsel that has caused such counsel
to believe that the Offering Memorandum, as of its date and as of the Closing
Date, contained an untrue statement of 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 or that any amendment or supplement to the Offering Memorandum, as of
its respective date, and as of the Closing Date contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading (it being understood
that such counsel need express no opinion with respect to the financial
statements and the notes thereto and the schedules and other financial and
statistical data included or incorporated by reference in the Offering
Memorandum and information furnished by or on behalf of the Initial Purchasers).
(e) The Initial Purchasers shall have received on the Closing Date an
opinion of Dewey Ballantine, counsel for the Initial Purchasers, dated the
Closing Date, and addressed to the Initial Purchasers, with respect to the
matters referred to in clauses (iv), (v), (vi), (xiii) and (xv) of the foregoing
paragraph (c) and such other related matters as the Initial Purchasers may
request.
(f) The Initial Purchasers shall have received letters addressed to the
Initial Purchasers, and dated the date hereof and the Closing Date from KPMG
Peat Marwick LLP, independent certified public accountants, substantially in the
forms heretofore approved by the Initial Purchasers.
(g)(i) There shall not have been any material change in the capital stock
of the Company nor any material increase in the short-term or long-term debt of
the Company (other than in the ordinary course of business) from that set forth
or contemplated in the Offering Memorandum (or any amendment or supplement
thereto); (ii) there shall not have been, since the respective dates as of which
information is given in the Offering Memorandum (or any amendment or supplement
thereto), except as may otherwise be stated in the Offering Memorandum (or any
amendment or supplement thereto), any material adverse change in the condition
(financial or other), business, prospects, properties, net worth or results of
operations of the Company and the Subsidiaries taken as a whole; (iii) the
Company and the Subsidiaries shall not have any liabilities or obligations,
direct or contingent (whether or not in the ordinary course of business), that
are material to the Company and the Subsidiaries, taken as a whole, other than
those reflected in the Offering Memorandum (or any amendment or supplement
thereto); and (iv) all the representations and warranties of the Company
contained in this Agreement shall be true and correct in all material respects
on and as of the date hereof and on and as of the Closing Date as if made on and
as of the Closing Date, and the Initial Purchasers shall have received a
certificate, dated the Closing Date and signed by the chief executive officer
and the chief accounting officer of the Company (or such other officers as are
acceptable to the Initial Purchasers), to the effect set forth in this Section
7(g) and in Section 7(h) hereof.
(h) The Company shall not have failed at or prior to the Closing Date to
have performed or complied with any of its agreements herein contained and
required to be performed or complied with by it
-17-
<PAGE>
hereunder at or prior to the Closing Date.
(i) The Initial Purchasers shall have received certificates dated the date
hereof and the Closing Date signed by the chief accounting officer of the
Company substantially in the forms heretofore approved by the Initial
Purchasers, respecting the Company's compliance with the financial covenants set
forth in each of the Company's indentures, the Credit Agreement and certain
other agreements of the Company.
(j) There shall not have been any announcement by any "nationally
recognized statistical rating organization," as defined for purposes of Rule
436(g) under the Act, that (i) it is downgrading its rating assigned to any
class of securities of the Company, or (ii) it is reviewing its ratings assigned
to any class of securities of the Company with a view to possible downgrading,
or with negative implications, or direction not determined.
(k) The Notes shall have been approved for trading on PORTAL.
(l) Prior to the date of this Agreement, the Company shall have received
and shall have furnished to the Initial Purchasers copies of the requisite
written consent of the lenders party to the Credit Agreement to the consummation
by the Company of the transactions contemplated by the Operative Documents and
the Offering Memorandum.
(m) The Company shall have furnished or caused to be furnished to the
Initial Purchasers such further certificates and documents as the Initial
Purchasers shall have requested.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to the Initial Purchasers and counsel for the Initial
Purchasers.
Any certificate or document signed by any officer of the Company and
delivered to the Initial Purchasers, or to counsel for the Initial Purchasers,
shall be deemed a representation and warranty by the Company to the Initial
Purchasers as to the statements made therein.
8. Expenses. The Company agrees to pay the following costs and expenses and
all other costs and expenses incident to the performance by it of its
obligations hereunder: (i) the preparation, printing or reproduction of the
Offering Memorandum (including financial statements thereto), and each amendment
or supplement thereto; (ii) the printing (or reproduction) and delivery
(including postage, air freight charges and charges for counting and packaging)
of such copies of the Offering Memorandum, the Preliminary Offering Memorandum,
the Incorporated Documents, and all amendments or supplements to any of them as
may be reasonably requested for use in connection with the offering and sale of
the Notes; (iii) the preparation, printing, authentication, issuance and
delivery of certificates for the Notes, including any stamp taxes in connection
with the original issuance and sale of the Notes; (iv) the printing (or
reproduction) and delivery of this Agreement, the Indenture, the Registration
Rights Agreement, the preliminary and supplemental Blue Sky Memoranda and all
other agreements or documents printed (or reproduced) and delivered in
connection with the offering of the Notes; (v) the application for quotation of
the Notes on PORTAL; (vi) the qualification of the Notes for offer and sale
under the securities or Blue Sky laws of the several states as provided in
Section 4(f) hereof (including the reasonable fees, expenses and disbursements
of counsel for the Initial Purchasers relating to the preparation, printing or
reproduction, and delivery of the preliminary and supplemental Blue Sky
Memoranda and such qualification); (vii) the performance by the Company of its
obligations under the Registration Rights Agreement; (viii) the fees and
expenses of the Company's accountants and the fees and expenses of counsel
(including local and special counsel) for the Company; and (ix) the
transportation and other expenses incurred by or on behalf of Company
representatives in connection with presentations to prospective purchasers of
the Notes. The Company hereby agrees that it will pay in full on the Closing
Date the fees and expenses referred to in clause (vi) of this Section 8 by
delivering to counsel for the Initial Purchasers on such date a check payable to
such counsel in the requisite amount.
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<PAGE>
9. Effective Date of Agreement. This Agreement shall become effective upon
the execution and delivery hereof by all the parties hereto. Until such time as
this Agreement shall have become effective, it may be terminated by the Company,
by notifying the Initial Purchasers, or by the Initial Purchasers, by notifying
the Company.
Any notice under this Section 9 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
10. Default by an Initial Purchaser. If any Initial Purchaser shall fail or
refuse to purchase the Notes which it is obligated to purchase on the Closing
Date, and arrangements satisfactory to the non-defaulting Initial Purchasers and
the Company for the purchase of such Notes by the non-defaulting Initial
Purchasers or by another party or parties satisfactory to the non-defaulting
Initial Purchasers and the Company are not made within thirty-six (36) hours
after such default, this Agreement shall terminate without liability on the part
of the non-defaulting Initial Purchasers or the Company. In any such case which
does not result in termination of this Agreement, either the non-defaulting
Initial Purchasers or the Company shall have the right to postpone the Closing
Date, but in no event for longer than seven (7) days, in order that the required
changes, if any, in the Offering Memorandum or any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve a defaulting Initial Purchaser from liability in respect of such default
under this Agreement. The term "Initial Purchaser" as used in this Agreement
includes, for all purposes of this Agreement, any party not identified in this
Agreement who purchases Notes which a defaulting Initial Purchaser is obligated,
but fails or refuses, to purchase.
11. Termination of Agreement. This Agreement shall be subject to
termination in the absolute discretion of the Initial Purchasers, without
liability on the part of the Initial Purchasers to the Company, by notice to the
Company, if prior to the Closing Date (i) trading in securities generally on the
New York Stock Exchange, American Stock Exchange or the Nasdaq National Market
shall have been suspended or materially limited, (ii) a general moratorium on
commercial banking activities in New York shall have been declared by either
Federal or state authorities, or (iii) there shall have occurred any outbreak or
escalation of hostilities or other international or domestic calamity, crisis or
change in political, financial or economic conditions, the effect of which on
the financial markets of the United States is such as to make it, in the
judgment of the Initial Purchasers, impracticable or inadvisable to commence or
continue the offering of the Notes on the terms set forth on the cover page of
the Offering Memorandum or to enforce contracts for the resale of the Notes by
the Initial Purchasers. Notice of such termination may be given to the Company
by telegram, telecopy or telephone and shall be subsequently confirmed by
letter.
12. Information Furnished by the Initial Purchasers. The statements set
forth in the stabilization legend on the inside front cover, the last paragraph
on the cover page and in the third paragraph under the caption "Plan of
Distribution" in the Preliminary Offering Memorandum and Offering Memorandum,
constitute the only information furnished by or on behalf of the Initial
Purchasers as such information is referred to in Sections 5(b) and 6 hereof,
except that Smith Barney Inc. has furnished the information contained in the
eighth paragraph under the caption "Plan of Distribution" contained in the
Preliminary Offering Memorandum and the Offering Memorandum.
13. Miscellaneous. Except as otherwise provided in Sections 4, 9 and 11
hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Company, at the office of the
Company at 10065 Red Run Boulevard, Owings Mills, MD 21117, Attention: General
Counsel, with a copy to Fulbright & Jaworski L.L.P., 666 Fifth Avenue, New York,
NY 10103, Attention: Roy L. Goldman, Esq. or (ii) if to the Initial Purchasers,
to Smith Barney Inc., 388 Greenwich Street, New York, NY 10013, Attention:
Manager, Investment Banking Division, with a copy to Dewey Ballantine, 1301
Avenue of the Americas, New York, NY 10019, Attention: Frederick W. Kanner, Esq.
This Agreement has been and is made solely for the benefit of the Initial
Purchasers, the Company, its directors, its officers and the controlling persons
referred to in Section 6 hereof and their respective successors and assigns, to
the extent provided herein, and no other person shall acquire or have any
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<PAGE>
right under or by virtue of this Agreement. Neither the term "successor" nor the
term "successors and assigns" as used in this Agreement shall include a
purchaser from the Initial Purchasers of any of the Notes in his status as such
purchaser.
14. Applicable Law; Counterparts. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York without giving
effect to the choice of laws or conflict of laws principles thereof.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
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<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the Initial Purchasers.
Very truly yours,
INTEGRATED HEALTH SERVICES, INC.
By: /s/
---------------------------------
Name:
Title:
Confirmed as of the date first above mentioned.
SMITH BARNEY INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MORGAN STANLEY & CO. INCORPORATED
SALOMON BROTHERS INC
By: SMITH BARNEY INC.
By: /s/
---------------------------------
Name:
Title:
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<PAGE>
SCHEDULE I
INTEGRATED HEALTH SERVICES, INC.
Initial Purchaser Principal Amount
of Notes
-------------
Smith Barney Inc........................................... $247,500,000
Donaldson, Lufkin & Jenrette
Securities Corporation................................... 67,500,000
Morgan Stanley & Co. Incorporated.......................... 67,500,000
Salomon Brothers Inc....................................... 67,500,000
-------------
Total......................................................
$450,000,000
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$450,000,000
INTEGRATED HEALTH SERVICES, INC.
9 1/2% Senior Subordinated Notes due 2007
REGISTRATION RIGHTS AGREEMENT
May 22, 1997
SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
277 Park Avenue
New York, New York 10022
MORGAN STANLEY & CO. INCORPORATED
1585 Broadway
New York, New York 10036
SALOMON BROTHERS INC
7 World Trade Center
New York, New York 10048
Dear Sirs:
Integrated Health Services, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to Smith Barney Inc., Donaldson, Lufkin & Jenrette
Securities Corporation, Morgan Stanley & Co. Incorporated and Salomon Brothers
Inc (the "Initial Purchasers"), upon the terms set forth in a purchase agreement
of even date herewith (the "Purchase Agreement"), an aggregate of $450,000,000
principal amount of its 9 1/2% Senior Subordinated Notes due 2007 (the "Notes").
The Notes will be issued pursuant to an indenture (the "Indenture") dated as of
May 30, 1997, between the Company and First Union National Bank of Virginia, as
trustee (the "Trustee"). As an inducement to the Initial Purchasers to enter
into the Purchase Agreement and in satisfaction of a condition to the
obligations of the Initial Purchasers thereunder, the Company agrees with the
Initial Purchasers, for the benefit of the holders of the Notes (including,
without limitation, the Initial Purchasers), as follows:
<PAGE>
1. Registered Exchange Offer. The Company shall prepare and, as promptly as
reasonably practicable after the date on which the Company delivers the Notes to
the Initial Purchasers (the "Closing Date"), file with the Securities and
Exchange Commission (the "Commission") a registration statement on an
appropriate form under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to a proposed offer (the "Registered Exchange Offer") to the
holders of the Notes to issue and deliver to such holders, in exchange for the
Notes, a like principal amount of debt securities of the Company identical in
all material respects to, and entitled to substantially the same benefits of,
the Notes (the "New Notes"), shall use all reasonable efforts to cause such
registration statement to become effective under the Securities Act and,
following the declaration of the effectiveness of that registration statement,
shall use all reasonable efforts to commence the Registered Exchange Offer and
shall cause the same to remain open for a period of not less than the period
required under applicable Federal and state securities laws, and to be conducted
in accordance with such procedures as may be required by the applicable
provisions of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), it being the objective of such Registered Exchange Offer to enable each
holder of Notes electing to exchange Notes for New Notes (assuming that such
holder is not an affiliate of the Company within the meaning of the Securities
Act, acquires the New Notes in the ordinary course of such holder's business and
has no arrangements with any person to participate in the distribution of the
New Notes) to trade such New Notes from and after their receipt without any
limitations or restrictions under the Securities Act (subject to any applicable
requirement that broker-dealers deliver a prospectus meeting the requirements of
the Securities Act in connection with sales of New Notes received by them in the
Registered Exchange Offer). In connection with such Registered Exchange Offer,
the Company shall take such other action, including, without limitation,
appropriate filings under state securities laws, as may be necessary to realize
the foregoing objective. The New Notes may be issued in the Registered Exchange
Offer under (i) the Indenture or (ii) an indenture substantially similar to the
Indenture, and will not be subject to the transfer restrictions described in the
Offering Memorandum (subject to any applicable requirement that broker-dealers
deliver a prospectus meeting the requirements of the Securities Act in
connection with sales of New Notes received by them in the Registered Exchange
Offer), and the New Notes and the Notes will vote and consent together on all
matters as one class and neither the New Notes nor the Notes will have the right
to vote or consent as a separate class on any matter. The Company agrees that
for a period of 90 days after consummation of the Registered Exchange Offer it
will make available a prospectus meeting the requirements of the Securities Act
(which may be the prospectus used in connection with the Registered Exchange
Offer) to any broker-dealer for use in connection with any resale of New Notes
acquired by such broker-dealer in the Registered Exchange Offer.
2. Shelf Registration. If, because the Registered Exchange Offer would
violate any applicable law or the applicable interpretations of the Commission's
staff or because of any change in currently prevailing interpretations of the
Commission's staff, the Company is not permitted to effect the Registered
Exchange Offer as contemplated by Section 1 hereof or in the event the
Registered Exchange Offer is not for any other reason consummated within 240
days after the Closing Date, the Company shall take the following actions:
(a) The Company shall, as promptly as reasonably practicable after (i) the
Closing Date, in the event the Company is not permitted to effect the Registered
Exchange Offer as contemplated by Section 1 hereof because the Registered
Exchange Offer would violate an applicable law or an applicable interpretation
of the Commission's staff or because of a change in a currently prevailing
interpretation of the Commission's staff or (ii) 240 days after the Closing
Date,
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<PAGE>
if the Registered Exchange Offer is not for any other reason consummated by such
date, file with the Commission and thereafter shall use all reasonable efforts
to cause to be declared effective a registration statement on an appropriate
form under the Securities Act relating to the offer and sale of the Notes by the
holders thereof from time to time in accordance with the methods of distribution
set forth in such registration statement and Rule 415 under the Securities Act
(hereafter, the "Shelf Registration").
(b) The Company shall use all reasonable efforts to keep the registration
statement relating to the Shelf Registration continuously effective in order to
permit the prospectus included therein to be usable by the holders of the Notes
for a period of two years from the date the registration statement is declared
effective or such shorter period that will terminate when all the Notes covered
by the registration statement have been sold pursuant to such registration
statement; provided, that the Company shall be deemed not to have used all
reasonable efforts to keep the registration statement effective during the
requisite period if it voluntarily takes any action that would result in holders
of Notes covered thereby not being able to offer and sell such securities during
that period, unless such action is required by applicable law, including, but
not limited to, reasonable periods necessary to prepare appropriate disclosure.
The foregoing proviso shall not apply to actions taken (or contemplated to be
taken) by the Company in good faith and for business reasons (a "Suspension
Event"), including, without limitation, the acquisition or divestiture of assets
or the offering or sale of securities, so long as the Company promptly
thereafter complies with the requirements of Section 3(h) hereof, if applicable.
Any such period during which the Company fails to keep the registration
statement effective and usable for offers and sales of Notes is referred to as a
"Suspension Period." A Suspension Period shall commence on and include the date
that the Company gives notice that the registration statement is no longer
effective or the prospectus included therein is no longer usable for offers and
sales of Notes and shall end on the date when each seller of Notes covered by
such registration statement either receives the copies of the supplemented or
amended prospectus contemplated by Section 3(h) hereof or is advised in writing
by the Company that use of the prospectus may be resumed.
(c) Notwithstanding any other provisions of this Agreement to the contrary,
the Company shall cause the registration statement and the related prospectus
and any amendment or supplement thereto, as of the effective date of such
registration statement, amendment or supplement, (i) to comply in all material
respects with the applicable requirements of the Securities Act and the rules
and regulations of the Commission and (ii) not to contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading other than
statements or omissions made in reliance upon and in conformity with information
furnished to the Company in writing by the Initial Purchasers expressly for use
in such registration statement and the related prospectus and any amendment or
supplement thereto.
3. Registration Procedures. In connection with any Shelf Registration
contemplated by Section 2 hereof and, to the extent applicable, the Registered
Exchange Offer contemplated by Section 1 hereof, the following provisions shall
apply:
(a) The Company shall furnish to the Initial Purchasers, prior to the
filing thereof with the Commission, a copy of the registration statement and
each amendment thereof and each supplement, if any, to the prospectus included
therein and shall obtain the consent (which shall not be unreasonably withheld
or delayed) of the Initial Purchasers to any such filing.
-3-
<PAGE>
(b) The Company shall advise the Initial Purchasers and the holders of the
Notes and the New Notes (to the extent applicable) in writing:
(i) when the registration statement and any amendment thereto has been
filed with the Commission and when the registration statement or any
post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or supplements to
the registration statement or the prospectus included therein or for
additional information;
(iii) of the issuance by the Commission of any stop order suspending
the effectiveness of the registration statement or the initiation of any
proceedings for that purpose;
(iv) of the receipt by the Company of any notification with respect to
the suspension of the qualification of the Notes and New Notes for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose; and
(v) of the happening of any event (other than a Suspension Event, in
which case the Company need only notify the Initial Purchasers and the
holders of the Notes that a Suspension Event exists) that requires the
Company to make changes in the registration statement or the prospectus in
order to make the statements therein not misleading (which advice shall be
accompanied by an instruction that such notice constitutes material nonpublic
information, and to suspend the use of the prospectus until the requisite
changes have been made, and which instruction shall require that such holders
shall not communicate such material nonpublic information to any third party
and shall not sell or purchase, or offer to sell or purchase, any securities
of the Company after receipt of such advice and prior to the effectiveness of
any action required to be taken by the Company pursuant to Section 3(h)
hereof).
(c) The Company shall use all reasonable efforts to prevent the issuance or
obtain the withdrawal of any order suspending the effectiveness of the
registration statement at the earliest possible time.
(d) The Company shall furnish to each holder of Notes included within the
coverage of the Shelf Registration, without charge, at least one copy of the
registration statement and any post-effective amendment thereto, including
financial statements and schedules, and, if the holder so requests in writing,
all exhibits (including those incorporated by reference).
(e) The Company shall deliver to each holder of Notes included within the
coverage of the Shelf Registration, if any, without charge, as many copies of
the prospectus (including each preliminary prospectus) included in the
registration statement with respect to the Shelf Registration and any amendment
or supplement thereto as such persons may reasonably request. The Company
consents, subject to the provisions of the Agreement, to the use of the
prospectus or any amendment or supplement thereto by each of the selling holders
of Notes in connection with the offering and sale of the Notes covered by the
prospectus, or any amendment or supplement thereto, included in such
registration statement.
(f) Prior to any public offering of Notes pursuant to the Shelf
Registration, the
-4-
<PAGE>
Company shall register or qualify or cooperate with the holders of securities
included therein and their respective counsel in connection with the
registration or qualification of such Notes for offer and sale under the
securities or blue sky laws of such jurisdictions in the United States as any
holder of Notes reasonably requests in writing and do any and all other acts or
things necessary or advisable to enable the offer and sale in such jurisdictions
of the securities covered by the Shelf Registration; provided that the Company
shall not be required to (i) qualify generally to do business in any
jurisdiction where it is not then so qualified, (ii) take any action that would
subject it to the service of process in suits, other than as to matters and
transactions relating to the Shelf Registration, in any jurisdiction where it is
not now subject or (iii) take any action which would subject it to general
service of process or to taxation in any jurisdiction where it is not then so
subject.
(g) The Company shall cooperate with the holders of the Notes to facilitate
the timely preparation and delivery of certificates representing Notes to be
sold in the Shelf Registration free of any restrictive legends and in such
denominations and registered in such names as the holders may request a
reasonable period of time prior to sales of Notes pursuant to the Shelf
Registration.
(h) Upon the occurrence of any event contemplated by Section 3(b)(v) above
(including, without limitation, any Suspension Event), the Company shall, as
promptly as reasonably practicable, prepare a post-effective amendment to the
registration statement or a supplement to the related prospectus or file any
other required document so that, as thereafter delivered to purchasers of the
Notes, the prospectus will not contain an untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein not
misleading.
(i) Not later than the effective date of the applicable registration
statement, the Company will provide a CUSIP number for the New Notes and provide
the applicable trustee with printed certificates for the Notes or New Notes, as
the case may be, in a form eligible for deposit with The Depository Trust
Company.
(j) The Company will use all reasonable efforts to comply with all rules
and regulations of the Commission to the extent and so long as they are
applicable to the Registered Exchange Offer or the Shelf Registration and will
make generally available to its security holders (or otherwise provide in
accordance with Section 11(a) of the Securities Act) an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act, no later than
45 days after the end of a 12-month period (or 90 days, if such period is a
fiscal year) beginning with the first month of the Company's first fiscal
quarter commencing after the effective date of the Shelf Registration, which
statement shall cover such 12-month period.
(k) The Company shall cause the Indenture (or an indenture substantially
identical to the Indenture in the case of a Registered Exchange Offer) to be
qualified under the Trust Indenture Act of 1939, as amended.
(l) The Company may require each holder of Notes to be sold pursuant to the
Shelf Registration to furnish to the Company such information regarding the
holder and the distribution of such Notes as the Company may from time to time
reasonably require for inclusion in the registration statement. The Company may
also require each holder of Notes participating in the Registered Exchange Offer
to represent to the Company that at the time of the consummation of the
Registered Exchange Offer (i) such holder is not an affiliate of the Company,
(ii) any New Notes received by such holder will be acquired in the ordinary
course of its business and (iii) such holder will have no arrangement or
understanding with any person to participate in the distribution of the
-5-
<PAGE>
Notes or the New Notes within the meaning of the Securities Act. Each holder
agrees by acquisition of Notes that, upon receipt of any notice from the Company
of the existence of any fact of the kind described in Section 3(b)(v) hereof,
such holder will forthwith discontinue disposition of Notes until such holder's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 3(h) hereof, or until it is advised in writing by the Company that the
use of the prospectus may be resumed, and has received copies of any additional
or supplemental filings with respect to the Prospectus. If so directed by the
Company, each holder will deliver to the Company (at the Company's expense) all
copies, other than permanent file copies then in such holder's possession, of
the prospectus covering such Notes current at the time of receipt of such
notice.
4. Registration Expenses. The Company shall bear all expenses incurred in
connection with the performance of its obligations under Sections 1 through 3
hereof and, in the event of a Shelf Registration, shall bear or reimburse the
holders of the Notes for the reasonable fees and disbursements of one firm of
counsel designated by the holders of a majority in principal amount of the Notes
to act as counsel for the holders of the Notes in connection therewith.
5. Indemnification. (a) The Company agrees to indemnify and hold harmless
(i) each Initial Purchaser, (ii) each holder of Notes and/or New Notes
(including broker-dealers receiving New Notes in the Registered Exchange Offer)
(each a "Holder"), (iii) each person, if any, who controls (within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act) any Initial
Purchaser or any Holder (any of the persons referred to in this clause (iii)
being hereinafter referred to as a "controlling person") and (iv) the respective
officers, directors, partners, employees, representatives and agents of any
Initial Purchaser or any Holder or any controlling person (any person referred
to in clause (i), (ii), (iii) or (iv) may hereinafter be referred to as a "Non-
Company Indemnitee"), to the fullest extent lawful, from and against any and all
losses, claims, damages, liabilities and judgments caused by any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement or prospectus (or any amendments or supplements thereto)
prepared in accordance with this Agreement, including any document incorporated
by reference therein, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except, with respect to any Non-Company
Indemnitee, insofar as such losses, claims, damages, liabilities or judgments
(1) are caused by any such untrue statement or omission or alleged untrue
statement or omission based upon information furnished in writing to the Company
by such Non- Company Indemnitee expressly for use therein or (2) with respect to
any preliminary prospectus, result from the fact that such Non-Company
Indemnitee sold Notes or New Notes to a person to whom there was not sent or
given, at or prior to the written confirmation of such sale, a copy of the final
prospectus, as amended or supplemented, if required under the Securities Act and
if the Company shall have previously furnished copies thereof to such
Non-Company Indemnitee in accordance with this Agreement and the final
prospectus, as amended or supplemented, would have corrected such untrue
statement or omission.
(b) In case any action shall be brought against any Non-Company Indemnitee
based upon any registration statement or prospectus, or any amendment or
supplement thereto, and with respect to which indemnity may be sought against
the Company, such Non-Company Indemnitee shall promptly notify the Company in
writing and the Company shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to such Non-Company Indemnitee and
payment of all fees and expenses. Such Non-Company Indemnitee shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of counsel shall be paid by such
Non-Company Indemnitee, unless (i) the employment of such
-6-
<PAGE>
counsel shall have been specifically authorized in writing by the Company, (ii)
the Company shall have failed to assume the defense and employ counsel or (iii)
the named parties to any such action (including any impleaded parties) include
both such Non-Company Indemnitee and the Company and such Non-Company Indemnitee
shall have been advised by counsel that it would be inappropriate for the same
counsel to represent such Non-Company Indemnitee and the Company (in which case
the Company shall not have the right to assume the defense of such action on
behalf of such Non-Company Indemnitee, it being understood, however, that the
Company shall not, in connection with any one such action 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 the Non-Company Indemnitees, which firm shall be designated in
writing by the Non-Company Indemnitees and whose fees and expenses reasonably
incurred shall be reimbursed as they are incurred). The Company shall not be
liable for any settlement of any such action effected without the written
consent of the Company, but if settled with the written consent of the Company,
the Company agrees to indemnify and hold harmless any Non-Company Indemnitee
from and against any amounts payable pursuant to such written consent in
connection with such settlement. Notwithstanding the immediately preceding
sentence, if in any case where the fees and expenses of counsel are at the
expense of the Company and a Non-Company Indemnitee shall have requested the
Company to reimburse such Non-Company Indemnitee for such fees and expenses of
counsel as incurred, the Company agrees that it shall be liable for any
settlement of any action effected without its written consent if (i) such
settlement is entered into more than 30 business days after the receipt by the
Company of the aforesaid request and (ii) the Company shall have failed to
reimburse such Non-Company Indemnitee in accordance with such request for
reimbursement prior to the date of such settlement. The Company shall not,
without the prior written consent of such Non-Company Indemnitee, effect any
settlement of any pending or threatened proceeding in respect of which such
Non-Company Indemnitee is or could have been a party and indemnity could have
been sought hereunder by such Non-Company Indemnitee, unless such settlement
includes an unconditional release of such Non-Company Indemnitee from all
liability on claims that are the subject matter of such proceeding.
(c) Each Holder agrees to indemnify and hold harmless (i) the Company, (ii)
each of the Initial Purchasers, (iii) each other Holder, (iv) any person
controlling (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) the Company, any Initial Purchaser and each other Holder and (v)
the respective officers, directors, partners, employees, representatives and
agents of each of the parties referred to in clauses (i), (ii), (iii) and (iv),
to the same extent as the foregoing indemnity from the Company to each of the
Non-Company Indemnitees, but only with respect to information relating to such
Holder that was furnished in writing by such Holder expressly for use in any
registration statement (or any amendment or supplement thereto) prepared in
accordance with this Agreement. In no event shall the liability of any Holder
hereunder be greater in amount than the dollar amount of the proceeds received
by such Holder upon the sales of the Notes or New Notes giving rise to such
indemnification obligation.
(d) If the indemnification provided for in this Section 5 is unavailable to
an indemnified party in respect of any losses, claims, damages, liabilities or
judgments referred to herein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities and judgments in such proportion as is appropriate to reflect the
relative fault of the indemnifying party, on the one hand, and the indemnified
party, on the other hand, in connection with the statements or omissions which
resulted in such losses, claims, damages,
-7-
<PAGE>
liabilities or judgments, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party, on the one hand,
and the indemnified party, on the other hand, 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
relates to information supplied by the indemnifying party, on the one hand, or
the indemnified party, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company, each Initial Purchaser and each Holder agree that it would not
be just and equitable if contribution pursuant to this Section 5(d) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The losses, claims, damages, liabilities or
judgments of an indemnified party referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim prior to
the indemnifying party's assumption of the defense thereof or subsequent thereto
to the extent permitted by the second sentence of Section 5(b) hereof.
Notwithstanding the provisions of this Section 5, none of the Holders shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the total amount received by such Holder with respect to the sale of Notes
or New Notes exceeds the amount of any damages which such Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations of Holders to contribute pursuant to this
Section 5(d) are several in proportion to the respective principal amount of
Notes and/or New Notes held by each of the Holders hereunder and not joint.
6. Additional Interest Under Certain Circumstances.
(a) Additional interest (the "Penalty Interest") shall be assessed as
follows:
(i) If a registration statement with respect to a Registered Exchange
Offer or a Shelf Registration is not filed with the Commission within 90 days
following the Closing Date, then commencing on the 91st day after the Closing
Date, Penalty Interest shall be accrued on the Notes over and above the
accrued interest at a rate of .25% per annum for the first 90 days
immediately following the 90th day after the Closing Date, such Penalty
Interest rate increasing by an additional .25% per annum at the beginning of
each subsequent 90-day period;
(ii) If a registration statement with respect to a Registered Exchange
Offer or a Shelf Registration is filed as contemplated by subsection 6(a)(i)
above and is not declared effective by the Commission within 180 days
following the Closing Date, then, commencing on the 181st day after the
Closing Date, Penalty Interest shall be accrued on the Notes over and above
the accrued interest at a rate of .25% per annum for the first 90 days
immediately following the 180th day after the Closing Date, such Penalty
Interest rate increasing by an additional .25% per annum at the beginning of
each subsequent 90 day period; and
(iii) If either (A) the Company has not exchanged New Notes for all
-8-
<PAGE>
Notes validly tendered in accordance with the terms of the Registered
Exchange Offer on or prior to 40 days after the date on which the
registration statement with respect to the Registered Exchange Offer was
declared effective, or (B) if applicable, a registration statement with
respect to a Shelf Registration has been declared effective and such
registration statement ceases to be effective prior to two years from its
original effective date (other than by reason of the occurrence of a
Suspension Event), then Penalty Interest shall be accrued on the Notes over
and above the accrued interest at a rate of .25% per annum for the first 60
days immediately following (x) the 40th day after such effective date in the
case of (A) above, or (y) the day such registration statement with respect to
a Shelf Registration ceases to be effective (other than by reason of the
occurrence of a Suspension Event) in the case of (B) above, such Penalty
Interest rate increasing by an additional .25% per annum at the beginning of
each subsequent 60-day period;
provided, however, that the Penalty Interest rate on the Notes may not exceed
1.0% per annum at any time; and provided, further, that (1) upon the filing of
the registration statement with respect to a Registered Exchange Offer or a
Shelf Registration (in the case of (i) above), (2) upon the effectiveness of the
registration statement filed with respect to a Registered Exchange Offer or a
Shelf Registration (in the case of (ii) above), or (3) upon the exchange of New
Notes for all Notes validly tendered in accordance with the terms of the
Registered Exchange Offer, or upon the effectiveness of the registration
statement filed with respect to a Shelf Registration which had ceased to remain
effective prior to two years from its original effective date (in the case of
(iii) above), Penalty Interest on the Notes as a result of such clause (i),
(ii), or (iii) shall immediately cease to accrue. The Penalty Interest specified
in this Section 6(a) shall be payable by the Company to the holders of Notes at
the times, in the manner and subject to the same terms and conditions set forth
in the Indenture, as nearly as may be, as though the rate set out in the Notes
had been increased, which payments shall be calculated pursuant to Section 6(b)
below. The interest rate on the Notes, inclusive of Penalty Interest, shall in
no event exceed 10 1/2% per annum.
(b) Any amounts of Penalty Interest due pursuant to clauses (i), (ii), or
(iii) of Section 6(a) above will be payable in cash on the interest payment
dates of the Notes.
The amount of Penalty Interest will be determined by multiplying the
applicable Penalty Interest rate by the principal amount of the Notes,
multiplied by a fraction, the numerator of which is the number of days such
Penalty Interest rate was applicable during such period (determined on the basis
of a 360-day year comprised of twelve 30-day months), and the denominator of
which is 360.
(c) If the Company effects the Registered Exchange Offer, the Company will
be entitled to close the Registered Exchange Offer provided that it has accepted
all Notes theretofore validly tendered in accordance with the terms of the
Registered Exchange Offer. Notes not tendered in the Registered Exchange Offer
shall bear interest at the same rates in effect at the time of issuance of the
Notes.
7. Miscellaneous.
(a) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, unless the Company has obtained the
written consent of holders of a majority in aggregate principal amount of the
Notes.
-9-
<PAGE>
(b) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail, telex,
telecopier or air courier which guarantees overnight delivery:
(1) If to a holder of Notes or New Notes, at the most current address
given by such holder to the Company in accordance with the provisions of
this Section 7(b), which address initially is, with respect to each holder,
the address of such holder to which confirmation of the sale of Notes or
New Notes to such holder was first sent, with a copy in like manner to the
Initial Purchasers c/o Smith Barney Inc. at 388 Greenwich Street, New York,
New York 10013.
(2) If to an Initial Purchaser, to the address specified in 7(b)(1);
(3) If to the Company, at the following address:
Integrated Health Services, Inc.
10065 Red Run Boulevard
Owings Mills, Maryland 21117
Attention: General Counsel
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged by recipient's telecopy
operator, if telecopied; and on the day delivered, if sent by overnight air
courier guaranteeing next day delivery.
(c) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties,
including, without limitation, and without the need for an express assignment,
subsequent holders of the Notes and the New Notes.
(d) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(e) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to its
conflicts of laws rules.
(g) Severability. If any one or more of the provisions contained herein, or
the application thereof in any circumstance, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.
-10-
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the Initial Purchasers.
Very truly yours,
INTEGRATED HEALTH SERVICES, INC.
By: /s/
---------------------------------
Name:
Title:
Accepted in New York, New York
May 22, 1997
SMITH BARNEY INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MORGAN STANLEY & CO. INCORPORATED
SALOMON BROTHERS INC
By: SMITH BARNEY INC.
By: /s/
-----------------------------------
Name:
Title:
-11-
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 43,105
<SECURITIES> 2,367
<RECEIVABLES> 383,025
<ALLOWANCES> 34,881
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<PP&E> 910,772
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<CURRENT-LIABILITIES> 294,122
<BONDS> 600,000
0
0
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<TOTAL-LIABILITY-AND-EQUITY> 2,146,647
<SALES> 457,973
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