Exhibit 4.4
SELECT MEDICAL ESCROW, INC.
(to be assumed by SELECT MEDICAL CORPORATION, and
THE SUBSIDIARY GUARANTORS)
and
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee
-------
INDENTURE
Dated as of August 12, 2003
-------
7 1/2% Senior Subordinated Notes Due 2013
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions......................................................................... 2
Section 102. Other Definitions................................................................... 36
Section 103. Rules of Construction............................................................... 37
Section 104. Incorporation by Reference of TIA................................................... 37
Section 105. Conflict with TIA................................................................... 38
Section 106. Compliance Certificates and Opinions................................................ 38
Section 107. Form of Documents Delivered to Trustee.............................................. 39
Section 108. Acts of Noteholders; Record Dates................................................... 40
Section 109. Notices, etc., to Trustee and Company............................................... 42
Section 110. Notices to Holders; Waiver.......................................................... 42
Section 111. Effect of Headings and Table of Contents............................................ 43
Section 112. Successors and Assigns.............................................................. 43
Section 113. Separability Clause................................................................. 43
Section 114. Benefits of Indenture............................................................... 43
Section 115. Governing Law....................................................................... 43
Section 116. Legal Holidays...................................................................... 43
Section 117. No Personal Liability of Directors, Officers, Employees, Incorporators and
Stockholders........................................................................ 44
Section 118. Exhibits and Schedules.............................................................. 44
Section 119. Counterparts........................................................................ 44
ARTICLE 2
NOTE FORMS
Section 201. Forms Generally..................................................................... 44
Section 202. Form of Trustee's Certificate of Authentication..................................... 46
Section 203. Restrictive and Global Note Legends................................................. 47
ARTICLE 3
THE NOTES
Section 301. Title and Terms..................................................................... 48
Section 302. Denominations....................................................................... 49
Section 303. Execution, Authentication and Delivery and Dating................................... 49
Section 304. Temporary Notes..................................................................... 50
Section 305. Registration, Registration of Transfer and Exchange................................. 51
i
Section 306. Mutilated, Destroyed, Lost and Stolen Notes......................................... 52
Section 307. Payment of Interest Rights Preserved................................................ 53
Section 308. Persons Deemed Owners............................................................... 54
Section 309. Cancellation........................................................................ 54
Section 310. Computation of Interest............................................................. 55
Section 311. CUSIP Numbers....................................................................... 55
Section 312. Book-Entry Provisions for Global Notes.............................................. 55
Section 313. Special Transfer Provisions......................................................... 57
Section 314. Payment of Additional Interest...................................................... 62
ARTICLE 4
COVENANTS
Section 401. Payment of Principal, Premium and Interest.......................................... 62
Section 402. Maintenance of Office or Agency..................................................... 62
Section 403. Money for Payments to Be Held in Trust.............................................. 63
Section 404. SEC Reports......................................................................... 64
Section 405. Statement as to Default............................................................. 66
Section 406. Limitation on Indebtedness.......................................................... 66
Section 407. Limitation on Layering.............................................................. 70
Section 408. Limitation on Restricted Payments................................................... 70
Section 409. Limitation on Restrictions on Distributions from Restricted Subsidiaries............ 76
Section 410. Limitation on Sales of Assets and Subsidiary Stock.................................. 78
Section 411. Limitation on Affiliate Transactions................................................ 81
Section 412. Limitation on Liens................................................................. 82
Section 413. Future Subsidiary Guarantors........................................................ 83
Section 414. Purchase of Notes Upon a Change in Control.......................................... 84
Section 415. Limitation on Sale of Capital Stock of Restricted Subsidiaries...................... 85
Section 416. Limitation on Lines of Business..................................................... 86
Section 417. Payments for Consent................................................................ 86
Section 418. Corporate Existence................................................................. 86
Section 419. Payment of Taxes and Other Claims................................................... 87
ARTICLE 5
SUCCESSOR COMPANY
Section 501. When the Company May Merge, etc..................................................... 88
Section 502. Successor Company Substituted....................................................... 89
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ARTICLE 6
REMEDIES
Section 601. Events of Default................................................................... 90
Section 602. Acceleration of Maturity; Rescission and Annulment.................................. 93
Section 603. Other Remedies; Collection Suit by Trustee.......................................... 93
Section 604. Trustee May File Proofs of Claim.................................................... 94
Section 605. Trustee May Enforce Claims Without Possession of Notes.............................. 94
Section 606. Application of Money Collected...................................................... 94
Section 607. Limitation on Suits................................................................. 95
Section 608. Unconditional Right of Holders to Receive Principal, Premium and Interest........... 95
Section 609. Restoration of Rights and Remedies.................................................. 95
Section 610. Rights and Remedies Cumulative...................................................... 96
Section 611. Delay or Omission Not Waiver........................................................ 96
Section 612. Control by Holders.................................................................. 96
Section 613. Waiver of Past Defaults............................................................. 97
Section 614. Undertaking for Costs............................................................... 97
Section 615. Waiver of Stay, Extension or Usury Laws............................................. 97
ARTICLE 7
THE TRUSTEE
Section 701. Certain Duties and Responsibilities................................................. 98
Section 702. Notice of Defaults.................................................................. 99
Section 703. Certain Rights of Trustee........................................................... 99
Section 704. Not Responsible for Recitals or Issuance of Notes................................... 100
Section 705. May Hold Notes...................................................................... 101
Section 706. Money Held in Trust................................................................. 101
Section 707. Compensation and Reimbursement...................................................... 101
Section 708. Conflicting Interests............................................................... 102
Section 709. Corporate Trustee Required; Eligibility............................................. 102
Section 710. Resignation and Removal; Appointment of Successor................................... 102
Section 711. Acceptance of Appointment by Successor.............................................. 104
Section 712. Merger, Conversion, Consolidation or Succession to Business......................... 104
Section 713. Preferential Collection of Claims Against the Company............................... 105
Section 714. Appointment of Authenticating Agent................................................. 105
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ARTICLE 8
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND THE COMPANY
Section 801. The Company to Furnish Trustee Names and Addresses of Holders....................... 105
Section 802. Preservation of Information; Communications to Holders.............................. 106
Section 803. Reports by Trustee.................................................................. 106
ARTICLE 9
AMENDMENT, SUPPLEMENT OR WAIVER
Section 901. Without Consent of Holders.......................................................... 106
Section 902. With Consent of Holders............................................................. 107
Section 903. Execution of Amendments, Supplements or Waivers..................................... 109
Section 904. Revocation and Effect of Consents................................................... 109
Section 905. Conformity with TIA................................................................. 110
Section 906. Notation on or Exchange of Notes.................................................... 110
ARTICLE 10
REDEMPTION OF NOTES
Section 1001. Redemption.......................................................................... 110
Section 1002. Applicability of Article............................................................ 111
Section 1003. Election to Redeem; Notice to Trustee............................................... 111
Section 1004. Selection by Trustee of Notes to Be Redeemed........................................ 111
Section 1005. Notice of Redemption................................................................ 112
Section 1006. Deposit of Redemption Price......................................................... 113
Section 1007. Notes Payable on Redemption Date.................................................... 113
Section 1008. Notes Redeemed in Part.............................................................. 114
ARTICLE 11
SATISFACTION AND DISCHARGE
Section 1101. Satisfaction and Discharge of Indenture............................................. 114
Section 1102. Application of Trust Money.......................................................... 116
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ARTICLE 12
DEFEASANCE OR COVENANT DEFEASANCE
Section 1201. The Company's Option to Elect Defeasance or Covenant Defeasance..................... 116
Section 1202. Defeasance and Discharge............................................................ 116
Section 1203. Covenant Defeasance................................................................. 117
Section 1204. Conditions to Defeasance or Covenant Defeasance..................................... 117
Section 1205. Deposited Money and U.S. Government Obligations to Be Held in Trust; Other
Miscellaneous Provisions............................................................ 118
Section 1206. Reinstatement....................................................................... 119
Section 1207. Repayment to the Company............................................................ 119
ARTICLE 13
SUBSIDIARY GUARANTEES
Section 1301. Guarantees Generally................................................................ 120
Section 1302. Continuing Guarantees............................................................... 121
Section 1303. Release of Subsidiary Guarantees.................................................... 122
Section 1304. Agreement to Subordinate............................................................ 122
Section 1305. Waiver of Subrogation............................................................... 123
Section 1306. Notation Not Required............................................................... 123
Section 1307. Successors and Assigns of the Subsidiary Guarantors................................. 123
Section 1308. Execution and Delivery of Subsidiary Guarantees..................................... 123
Section 1309. Notices............................................................................. 124
ARTICLE 14
SUBORDINATION
Section 1401. Agreement To Subordinate............................................................ 124
Section 1402. Liquidation, Dissolution, Bankruptcy................................................ 124
Section 1403. Default on Designated Senior Indebtedness........................................... 124
Section 1404. Acceleration of Payment of Notes.................................................... 125
Section 1405. When a Distribution Must Be Paid Over............................................... 125
Section 1406. Subrogation......................................................................... 126
Section 1407. Relative Rights..................................................................... 126
Section 1408. Subordination May Not Be Impaired by Issuers........................................ 126
Section 1409. Rights of Trustee and Paying Agent.................................................. 126
Section 1410. Distribution or Notice to Representative............................................ 127
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Section 1411. Article 14 Not to Prevent Events of Default or Limit Right to Accelerate............ 127
Section 1412. Trust Moneys and Permitted Junior Securities Not Subordinated....................... 127
Section 1413. Trustee Entitled to Rely............................................................ 127
Section 1414. Trustee to Effectuate Subordination................................................. 128
Section 1415. Trustee Not Fiduciary for Holders of Senior Indebtedness............................ 128
Section 1416. Reliance by Holders of Senior Indebtedness on Subordination Provisions.............. 128
Section 1417. Trustee's Compensation Not Prejudiced............................................... 128
ARTICLE 15
SUBORDINATION OF SUBSIDIARY GUARANTEES
Section 1501. Agreement to Subordinate............................................................ 129
Section 1502. Liquidation, Dissolution, Bankruptcy................................................ 129
Section 1503. Default on Designated Guarantor Senior Indebtedness................................. 129
Section 1504. Acceleration of Payment of Notes.................................................... 131
Section 1505. When a Distribution Must Be Paid Over............................................... 131
Section 1506. Subrogation......................................................................... 131
Section 1507. Relative Rights..................................................................... 131
Section 1508. Subordination May Not Be Impaired by Subsidiary Guarantors.......................... 131
Section 1509. Rights of Trustee and Paying Agent.................................................. 132
Section 1510. Distribution or Notice to Representative............................................ 132
Section 1511. Article 15 Not to Prevent Events of Default or Limit Right to Accelerate............ 132
Section 1512. Trust Moneys Not Subordinated....................................................... 133
Section 1513. Trustee Entitled to Rely............................................................ 133
Section 1514. Trustee to Effectuate Subordination................................................. 133
Section 1515. Trustee Not Fiduciary for Holders of Guarantor Senior Indebtedness.................. 133
Section 1516. Reliance by Holders of Senior Indebtedness on Subordination Provisions.............. 134
Section 1517. Trustee's Compensation Not Prejudiced............................................... 134
Exhibit A Form of Note
Exhibit B Form of Supplemental Indenture
Exhibit C Form of Institutional Accredited Investor Certificate
Exhibit D Form of Regulation S Certificate
Exhibit E Form of Certificate of Beneficial Ownership
Schedule 1 Existing Joint Ventures
Schedule 2 Seller Notes
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Certain Sections of this Indenture relating to Sections 310 through 318
inclusive of the Trust Indenture Act of 1939:
Trust Indenture Act Section Indenture Section
--------------------------- -----------------
Section 310(a)(1).............................................. 709
(a)(2).............................................. 709
(a)(3).............................................. Not Applicable
(a)(4).............................................. Not Applicable
(b)................................................. 708
Section 311(a)................................................. 713
(b)................................................. 713
(b)(2).............................................. 803
803
Section 312(a)................................................. 801
802
(b)................................................. 802
(c)................................................. 802
Section 313(a)................................................. 803
(b)................................................. 803
(c)................................................. 803
803
(d)................................................. 803
Section 314(a)................................................. 404
(a)(4).............................................. 102
405
(b)................................................. Not Applicable
(c)(1).............................................. 102
(c)(2).............................................. 102
(c)(3).............................................. Not Applicable
(d)................................................. Not Applicable
(e)................................................. 102
Section 315(a)................................................. 701
(b)................................................. 702
803
(c)................................................. 701
(d)................................................. 701
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Trust Indenture Act Section Indenture Section
--------------------------- -----------------
(d)(1)............................................. 701
(d)(2)............................................. 701
(d)(3)............................................. 701
(e)................................................ 614
Section 316(a)................................................ 101
612
(a)(1)(A).......................................... 602
612
(a)(1)(B).......................................... 613
(a)(2)............................................. Not Applicable
(b)................................................ 608
(c)................................................ 104
Section 317(a)(1)............................................. 603
(a)(2)............................................. 604
(b)................................................ 403
Section 318(a)................................................ 107
----------------------
This cross-reference table shall not for any purpose be deemed to be part of
this Indenture.
viii
INDENTURE, dated as of August 12, 2003 (as amended, supplemented or
otherwise modified from time to time, the "Indenture"), among Select Medical
Escrow, Inc., a Delaware corporation ("Select Medical Escrow") and U.S. Bank
Trust National Association, a national banking association, as trustee.
RECITALS OF SELECT MEDICAL ESCROW
Select Medical Escrow has duly authorized the execution and delivery of
this Indenture to provide for the issuance of the Notes.
All things necessary to make the Original Notes, when executed and
delivered by Select Medical Escrow and authenticated and delivered by the
Trustee hereunder and duly issued by Select Medical Escrow, the valid obligation
of Select Medical Escrow, and to make this Indenture a valid agreement of Select
Medical Escrow as of the date hereof, in accordance with the terms of the
Original Notes and this Indenture, have been done.
RECITALS OF THE COMPANY AND THE SUBSIDIARY GUARANTORS
The Company has duly authorized the execution and delivery of a
supplemental indenture to this Indenture to provide for the assumption of the
obligations under the Notes following the Select Medical Escrow Merger. At the
Effective Time, all Domestic Subsidiaries of the Company, other than Existing
Joint Venture Subsidiaries, will be Subsidiary Guarantors. Each Subsidiary
Guarantor has (or, in the case of Subsidiary Guarantors acquired in the Xxxxxxx
Acquisition, at the Effective Time will have) duly authorized the execution and
delivery of a supplemental indenture to this Indenture to provide for its
guarantee of the Notes, as provided in this Indenture. At the Effective Time,
each Subsidiary Guarantor will have received good and valuable consideration for
its execution and delivery of a supplemental indenture to this Indenture and its
guarantee of the Notes.
At the Effective Time, all things necessary to make the Original Notes
the valid obligation of the Company, and to make this Indenture a valid
agreement of each of the Company and each Subsidiary Guarantor as of the
Effective Date, in accordance with the terms of the Original Notes and this
Indenture, will have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Notes
by the Holders thereof, it is mutually agreed, for the equal and ratable benefit
of all Holders of the Notes, as follows:
ARTICLE 1
DEFINITIONS AND OTHER
PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions.
"Additional Assets" means:
(1) any property or assets (other than Indebtedness and
Capital Stock) to be used by the Company or a Restricted Subsidiary in
a Related Business;
(2) the Capital Stock of a Person that becomes a
Restricted Subsidiary as a result of the acquisition of such Capital
Stock by the Company or a Restricted Subsidiary of the Company; or
(3) Capital Stock constituting a minority interest in any
Person that at such time is a Restricted Subsidiary of the Company;
provided, however, that, in the case of clauses (2) and (3), such Restricted
Subsidiary is not engaged in any business other than a Related Business.
"Additional Notes" means any notes issued under this Indenture in
addition to the Original Notes (other than any Notes issued pursuant to Section
304, 305, 306, 312(c), 312(d) or 1008).
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any 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;
provided that beneficial ownership of 10% or more of the Voting Stock of a
Person shall be deemed to be control.
"Asset Disposition" means any direct or indirect sale, lease, transfer,
issuance or other disposition, or a series of related sales, leases, transfers,
issuances or dispositions, of shares of Capital Stock of a Subsidiary (other
than directors' qualifying shares to the extent required by applicable law),
property or other assets (each referred to for the purposes of this definition
as a "disposition") by the Company or any of its Restricted Subsidiaries,
including any disposition by means of a merger, consolidation or similar
transaction.
2
Notwithstanding the preceding, the following items shall not be deemed
to be Asset Dispositions:
(1) a disposition by a Restricted Subsidiary to the Company or by
the Company or a Restricted Subsidiary to a Wholly-Owned
Subsidiary;
(2) the sale of cash or Cash Equivalents in the ordinary course of
business;
(3) a disposition of inventory in the ordinary course of business;
(4) a disposition of obsolete or worn out equipment or equipment
that is no longer useful in the conduct of the business of the
Company and its Restricted Subsidiaries and that in each case
is disposed of in the ordinary course of business;
(5) transactions governed by and permitted under Article 5;
(6) an issuance of Capital Stock by a Restricted Subsidiary of the
Company to the Company or to a Wholly-Owned Subsidiary;
(7) for purposes of Section 410 only, the making of a disposition
governed by and subject to Section 408;
(8) any disposition or series of related dispositions of assets
with an aggregate fair market value, and for net proceeds, of
less than $1.0 million; and
(9) the licensing or sublicensing of intellectual property or
other general intangibles and any license, lease or sublease
of other property, in each case that is in the ordinary course
of business and does not materially interfere with the
business of the Company and its Restricted Subsidiaries.
"Assumption" means the assumption by the Company of the rights and
obligations of Select Medical Escrow under this Indenture, the Securities, the
Purchase Agreement and the Escrow Agreement and the guarantee by the Subsidiary
Guarantors of the Guaranteed Obligations pursuant to the Assumption Agreement.
"Assumption Agreement" means the Assumption Agreement to be entered
into between the Company, Select Medical Escrow and certain Subsidiaries of the
Company immediately prior to the Select Medical Escrow Merger.
"Attributable Indebtedness" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the Notes, compounded semi-annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
3
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 714 to act on behalf of the Trustee to authenticate Notes of
one or more series.
"Average Life" means, as of the date of determination, with respect to
any Indebtedness or Preferred Stock, the quotient obtained by dividing (1) the
sum of the products of the numbers of years from the date of determination to
the dates of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (2) the sum of all such payments.
"Bank Indebtedness" means any and all amounts, whether outstanding on
the Issue Date or Incurred after the Issue Date, payable under or in respect of
the Senior Credit Agreement and any related notes, collateral documents, letters
of credit and guarantees and any Interest Rate Agreement entered into in
connection with the Senior Credit Agreement, including principal, any premium,
interest (including interest accruing after or that would accrue but for the
filing of any petition in bankruptcy or for reorganization relating to the
Company or any Subsidiary thereof at the rate specified therein whether or not a
claim for post filing interest is allowed in such proceedings), fees, charges,
expenses, reimbursement obligations, guarantees and all other amounts payable
thereunder or in respect thereof.
"Board of Directors" means, as to any Person, the board of directors of
such Person.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banking institutions are authorized or required by law to
close in New York City.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participation or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities exchangeable for or convertible into
such equity.
"Capitalized Lease Obligation" means an obligation that is required to
be classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented by
such obligation will be the capitalized amount of such obligation at the time
any determination thereof is to be made as determined in accordance with GAAP,
and the Stated Maturity thereof will be the date of the last payment of rent or
any other amount due under such lease prior to the first date such lease may be
terminated without penalty.
4
"Cash Equivalents" means:
(1) securities issued or directly and fully guaranteed or insured
by the United States Government or any agency or
instrumentality thereof (provided that the full faith and
credit of the United States is pledged in support thereof),
having maturities of not more than one year from the date of
acquisition;
(2) marketable general obligations issued by any state of the
United States of America or any political subdivision of any
such state or any public instrumentality thereof maturing
within one year from the date of acquisition thereof (provided
that the full faith and credit of the United States is pledged
in support thereof) and, at the time of acquisition thereof,
having one of the two highest credit ratings obtainable from
both S&P and Xxxxx'x;
(3) certificates of deposit, time deposits, eurodollar time
deposits, overnight bank deposits or bankers' acceptances
having maturities of not more than one year from the date of
acquisition thereof issued by any commercial bank organized in
the United States of America, the long-term debt of which is
rated at the time of acquisition thereof in one of the two
highest categories obtainable from both S&P and Xxxxx'x, and
having combined capital and surplus in excess of $500.0
million;
(4) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses
(1), (2) and (3) entered into with any bank meeting the
qualifications specified in clause (3) above;
(5) commercial paper rated at the time of acquisition thereof in
one of the two highest categories obtainable from both S&P and
Xxxxx'x, or carrying an equivalent rating by a nationally
recognized rating agency, if both of the two named rating
agencies cease publishing ratings of investments, and in any
case maturing within one year after the date of acquisition
thereof; and
(6) interests in any investment company or money market fund which
invests solely in instruments of the type specified in clauses
(1) through (5) above.
"Change of Control" means:
(1) any "person" or "group" of related persons (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act), other
than Permitted Holders, is or becomes the beneficial owner (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that such person or group shall be deemed to have
"beneficial ownership" of all shares that any such
5
person or group has the right to acquire, whether such right
is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 35% of the total voting
power of the Voting Stock of the Company (or its successor by
merger, consolidation or purchase of all or substantially all
of its assets) (for the purposes of this clause, such person
or group shall be deemed to beneficially own any Voting Stock
of the Company held by an entity, if such person or group
"beneficially owns" (as defined above), directly or
indirectly, more than 35% of the voting power of the Voting
Stock of such entity; or
(2) the first day on which a majority of the members of the Board
of Directors of the Company are not Continuing Directors; or
(3) the sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a
series of related transactions, of all or substantially all of
the assets of the Company and its Restricted Subsidiaries
taken as a whole to any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act); or
(4) the adoption by the stockholders of the Company of a plan or
proposal for the liquidation or dissolution of the Company.
Notwithstanding the foregoing, a Change of Control shall not be deemed
to occur solely as a result of the Select Medical Escrow Merger.
"Clearstream" means Clearstream Banking, societe anonyme (formerly
Cedelbank).
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Select Medical Corporation, a Delaware corporation, and
any successor thereto. For the avoidance of doubt, the Company shall not have
any rights or obligations under this Indenture prior to the Assumption.
"Company Request," "Company Order" and "Company Consent" mean,
respectively, a written request, order or consent signed in the name of the
Company (or Select Medical Escrow prior to the Select Medical Escrow Merger) by
two Officers of the Company (or Select Medical Escrow prior to the Select
Medical Escrow Merger).
"Consolidated Coverage Ratio" means as of any date of determination,
with respect to any Person, the ratio of (x) the aggregate amount of
Consolidated EBITDA of such Person for the period of the most recent four
consecutive fiscal quarters ending prior to the date of such determination for
which consolidated financial statements of the Company have been delivered to
the Trustee in accordance with Section 404 to (y) Consolidated Interest Expense
for such four fiscal quarters, provided, however, that:
6
(1) if the Company or any Restricted Subsidiary:
(a) has Incurred any Indebtedness since the beginning of
such period that remains outstanding on such date of
determination or if the transaction giving rise to
the need to calculate the Consolidated Coverage Ratio
is an Incurrence of Indebtedness, Consolidated EBITDA
and Consolidated Interest Expense for such period
will be calculated after giving effect on a pro forma
basis to such Indebtedness as if such Indebtedness
had been Incurred on the first day of such period
(except that in making such computation, the amount
of Indebtedness under any revolving credit facility
outstanding on the date of such calculation will be
computed based on (i) the average daily balance of
such Indebtedness during such four fiscal quarters or
such shorter period for which such facility was
outstanding or (ii) if such facility was created
after the end of such four fiscal quarters, the
average daily balance of such Indebtedness during the
period from the date of creation of such facility to
the date of such calculation) and the discharge of
any other Indebtedness repaid, repurchased, defeased
or otherwise discharged with the proceeds of such new
Indebtedness as if such discharge had occurred on the
first day of such period; or
(b) has repaid, repurchased, defeased or otherwise
discharged any Indebtedness since the beginning of
the period that is no longer outstanding on such date
of determination or if the transaction giving rise to
the need to calculate the Consolidated Coverage Ratio
involves a discharge of Indebtedness (in each case
other than Indebtedness incurred under any revolving
credit facility unless such Indebtedness has been
permanently repaid and the related commitment
terminated), Consolidated EBITDA and Consolidated
Interest Expense for such period will be calculated
after giving effect on a pro forma basis to such
discharge of such Indebtedness, including with the
proceeds of such new Indebtedness, as if such
discharge had occurred on the first day of such
period;
(2) if since the beginning of such period the Company or any
Restricted Subsidiary will have made any Asset Disposition or
if the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio is an Asset Disposition:
(a) the Consolidated EBITDA for such period will be
reduced by an amount equal to the Consolidated EBITDA
(if positive) directly attributable to the assets
which are the subject of such Asset
7
Disposition for such period or increased by an amount
equal to the Consolidated EBITDA (if negative)
directly attributable thereto for such period; and
(b) Consolidated Interest Expense for such period will be
reduced by an amount equal to the Consolidated
Interest Expense directly attributable to any
Indebtedness of the Company or any Restricted
Subsidiary repaid, repurchased, defeased or otherwise
discharged with respect to the Company and its
continuing Restricted Subsidiaries in connection with
such Asset Disposition for such period (or, if the
Capital Stock of any Restricted Subsidiary is sold,
the Consolidated Interest Expense for such period
directly attributable to the Indebtedness of such
Restricted Subsidiary so long as the Company and its
continuing Restricted Subsidiaries have been
completely and unconditionally released from all
liability with respect to such Indebtedness after
such sale);
(3) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger or otherwise) will have made
an Investment in any Restricted Subsidiary (or any Person that
becomes a Restricted Subsidiary or is merged with or into the
Company) or an acquisition of assets, including any
acquisition of assets occurring in connection with a
transaction causing a calculation to be made hereunder, that
constitutes all or substantially all of an operating unit,
division or line of business, Consolidated EBITDA and
Consolidated Interest Expense for such period will be
calculated after giving pro forma effect thereto (including
the Incurrence of any Indebtedness) as if such Investment or
acquisition occurred on the first day of such period; and
(4) if since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with
or into the Company or any Restricted Subsidiary since the
beginning of such period) will have made any Asset Disposition
or any Investment or acquisition of assets that would have
required an adjustment pursuant to clause (2) or (3) above if
made by the Company or a Restricted Subsidiary during such
period, Consolidated EBITDA and Consolidated Interest Expense
for such period will be calculated after giving pro forma
effect thereto as if such Asset Disposition or Investment or
acquisition of assets occurred on the first day of such
period.
If any Indebtedness bears a floating rate of interest and is being
given pro forma effect, the interest expense on such Indebtedness will be
calculated as if the rate in effect on the date of determination had been the
applicable rate for the entire period (taking into
8
account any Interest Rate Agreement applicable to such Indebtedness if such
Interest Rate Agreement has a remaining term in excess of 12 months).
"Consolidated EBITDA" for any period means, without duplication, the
Consolidated Net Income for such period, plus the following to the extent
deducted in calculating such Consolidated Net Income:
(1) Consolidated Interest Expense;
(2) Consolidated Income Taxes;
(3) consolidated depreciation expense;
(4) consolidated amortization of intangibles;
(5) minority interest in consolidated subsidiary companies (minus
the amount of any mandatory cash distribution with respect to
any minority interest other than in connection with a
proportionate discretionary cash distribution with respect to
the interest held by the Company or any Restricted
Subsidiary); and
(6) other non-cash charges reducing Consolidated Net Income
(excluding any such non-cash charge to the extent it
represents an accrual of or reserve for cash charges in any
future period or amortization of a prepaid cash expense that
was paid in a prior period not included in the calculation).
Notwithstanding the preceding sentence, clauses (2) through (6) relating to
amounts of a Restricted Subsidiary of a Person will be added to Consolidated Net
Income to compute Consolidated EBITDA of such Person only to the extent (and in
the same proportion) that the net income (loss) of such Restricted Subsidiary
was included in calculating the Consolidated Net Income of such Person and, to
the extent the amounts set forth in clauses (2) through (6) are in excess of
those necessary to offset a net loss of such Restricted Subsidiary or if such
Restricted Subsidiary has net income for such period included in Consolidated
Net Income, only if a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Restricted Subsidiary
without prior approval (that has not been obtained), pursuant to the terms of
its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to that Restricted
Subsidiary or its stockholders.
"Consolidated Income Taxes" means, with respect to any Person for any
period, taxes imposed upon such Person or other payments required to be made by
such Person by any governmental authority, which taxes or other payments are
calculated by reference to the income or profits of such Person or such Person
and its Restricted Subsidiaries (to the extent such income or profits were
included in computing
9
Consolidated Net Income for such period), regardless of whether such taxes or
payments are required to be remitted to any governmental authority.
"Consolidated Interest Expense" means, for any period, the total
interest expense of the Company and its consolidated Restricted Subsidiaries,
whether paid or accrued, plus, to the extent not included in such interest
expense:
(1) interest expense attributable to Capitalized Lease Obligations
and the interest portion of rent expense associated with
Attributable Indebtedness in respect of the relevant lease
giving rise thereto, determined as if such lease were a
capitalized lease in accordance with GAAP and the interest
component of any deferred payment obligations;
(2) amortization of debt discount;
(3) non-cash interest expense;
(4) commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance
financing;
(5) the interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted
Subsidiaries or secured by a Lien on assets of such Person or
one of its Restricted Subsidiaries;
(6) net costs associated with Hedging Obligations (including
amortization of fees);
(7) the consolidated interest expense of such Person and its
Restricted Subsidiaries that was capitalized during such
period;
(8) the product of (a) all dividends paid or payable in cash, Cash
Equivalents or Indebtedness or accrued during such period on
any series of Disqualified Stock of such Person or on
Preferred Stock of its Restricted Subsidiaries, payable to a
Person other than the Company or a Wholly-Owned Subsidiary,
times (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined
federal, state, provincial and local statutory tax rate of
such Person, expressed as a decimal, in each case, on a
consolidated basis and in accordance with GAAP; and
(9) the cash contributions to any employee stock ownership plan or
similar trust to the extent such contributions are used by
such plan or trust to pay interest or fees to any Person
(other than the Company) in connection with Indebtedness
Incurred by such plan or trust; provided, however, that there
will be excluded therefrom any such interest expense of any
Unrestricted
10
Subsidiary to the extent the related Indebtedness is not
Guaranteed or paid by the Company or any Restricted
Subsidiary.
For purposes of the foregoing, total interest expense will be
determined after giving effect to any net payments made or received by
the Company and its Subsidiaries with respect to Interest Rate
Agreements.
"Consolidated Net Income" means, for any period, the net income (loss)
of the Company and its consolidated Restricted Subsidiaries determined in
accordance with GAAP; provided, however, that there will not be included in such
Consolidated Net Income:
(1) any net income (loss) of any Person if such Person is not a
Restricted Subsidiary, except that:
(a) subject to the limitations contained in clauses (4),
(5) and (6) below, the Company's equity in the net
income of any such Person for such period will be
included in such Consolidated Net Income up to the
aggregate amount of cash that could have been
distributed by such Person during such period to the
Company or a Restricted Subsidiary as a dividend or
other distribution (subject, in the case of a
dividend or other distribution to a Restricted
Subsidiary, to the limitations contained in clause
(3) below); and
(b) the Company's equity in a net loss of any such Person
(other than an Unrestricted Subsidiary) for such
period will be included in determining such
Consolidated Net Income;
(2) any net income (loss) of any Person acquired by the Company or
a Subsidiary in a pooling of interests transaction for any
period prior to the date of such acquisition;
(3) any net income (but not loss) of any Restricted Subsidiary if
such Subsidiary is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of
distributions by such Restricted Subsidiary, directly or
indirectly, to the Company, except that:
(a) subject to the limitations contained in clauses (4),
(5) and (6) below, the Company's equity in the net
income of any such Restricted Subsidiary for such
period will be included in such Consolidated Net
Income up to the aggregate amount of cash that could
have been distributed by such Restricted Subsidiary
during such period to the Company or another
Restricted Subsidiary as a
11
dividend (subject, in the case of a dividend to
another Restricted Subsidiary, to the limitation
contained in this clause); and
(b) the Company's equity in a net loss of any such
Restricted Subsidiary for such period will be
included in determining such Consolidated Net Income;
(4) any gain (loss) realized upon the sale or other disposition of
any property, plant or equipment of the Company or its
consolidated Restricted Subsidiaries (including pursuant to
any Sale/Leaseback Transaction) that is not sold or otherwise
disposed of in the ordinary course of business and any gain
(loss) realized upon the sale or other disposition of any
Capital Stock of any Person;
(5) any extraordinary gain or loss; and
(6) the cumulative effect of a change in accounting principles.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who:
(1) was a member of such Board of Directors on the date of the
Indenture; or
(2) was nominated for election or elected to such Board of
Directors with the approval of a majority of the Continuing
Directors who were members of such Board at the time of such
nomination or election.
"Corporate Trust Office" means the office of the Trustee or an
Affiliate of the Trustee in the Borough of Manhattan, the City of New York, at
which at any particular time its corporate trust business shall be administered,
which office on the Issue Date is located at 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000.
"Currency Agreement" means, in respect of a Person, any foreign
exchange contract, currency swap agreement or other similar agreement or
arrangements as to which such Person is a party or a beneficiary.
"Default" means any event that is, or after notice or passage of time
or both would be, an Event of Default.
"Depositary" means The Depository Trust Company, its nominees and
successors.
"Designated Guarantor Senior Indebtedness" means any obligation of a
Subsidiary Guarantor with respect to the Bank Indebtedness.
12
"Designated Senior Indebtedness" means the Bank Indebtedness.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock of such Person 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:
(1) matures or is mandatorily redeemable pursuant to a sinking
fund obligation or otherwise;
(2) is convertible or exchangeable for Indebtedness or
Disqualified Stock (excluding Capital Stock that is
convertible or exchangeable solely at the option of the
Company or a Restricted Subsidiary); or
(3) is redeemable at the option of the holder of the Capital
Stock, in whole or in part,
in each case on or prior to the date that is 91 days after the date (a)
on which the Notes mature or (b) on which there are no Notes
outstanding.
"Domestic Subsidiary" means any Restricted Subsidiary that is organized
under the laws of, or conducts a majority of its business or operations in, the
United States of America or any state thereof or the District of Columbia.
"EBITDA" for any period means, without duplication, the net income
(loss) of the Company and its Subsidiaries on a combined basis, plus the
following to the extent deducted in calculating such net income (loss), in each
case determined in accordance with GAAP: (1) total interest expense, whether
paid or accrued, (2) taxes imposed upon income or profits included in such net
income (loss), (3) depreciation expense, (4) amortization of intangibles and (5)
other non-cash charges reducing such net income (excluding any such non-cash
charge to the extent it represents an accrual of or reserve for cash charges in
any future period or amortization of a prepaid cash expense that was paid in a
prior period not included in the calculation).
"Effective Date" means the closing date of the Select Medical Escrow
Merger.
"Effective Time" means the closing of the Select Medical Escrow Merger.
"Equity Offering" means an underwritten primary public offering for
cash by the Company of its common stock, or options, warrants or rights with
respect to its common stock, pursuant to an effective registration statement
under the Securities Act (whether alone or in connection with any secondary
public offering).
"Escrow Agent" means the escrow agent from time to time under the
Escrow Agreement.
13
"Escrow Agreement" means the Escrow Agreement, dated as of August 12,
2003, between Select Medical Escrow, the Company, the Trustee and U.S. Bank
Trust National Association, as escrow agent thereunder, as amended from time to
time.
"Escrowed Property" means all funds and other property held in the
escrow account pursuant to the Escrow Agreement.
"Euroclear" means Xxxxxx Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange and Registration Rights Agreement" means the Exchange and
Registration Rights Agreement dated August 12, 2003, among Select Medical
Escrow, Inc., Select Medical Corporation, each of the Subsidiary Guarantors
listed on Schedule I thereto, X.X. Xxxxxx Securities Inc., Xxxxxxx Lynch,
Pierce, Xxxxxx & Xxxxx Incorporated, Wachovia Capital Markets, LLC, XX Xxxxx
Securities Corporation, CIBC World Markets Corp., Fleet Securities, Inc. and
Xxxxxxxxx & Company, Inc.
"Exchange Notes" means the Company's 7 1/2% Senior Subordinated Notes
Due 2013, containing terms identical to the Initial Notes or any Initial
Additional Notes (except that (i) such Exchange Notes shall not contain terms
with respect to transfer restrictions and shall be registered under the
Securities Act, and (ii) certain provisions relating to an increase in the
stated rate of interest thereon shall be eliminated), that are issued and
exchanged for (a) the Initial Notes, as provided for in the Exchange and
Registration Rights Agreement, or (b) such Initial Additional Notes as may be
provided in any registration rights agreement relating to such Additional Notes
and this Indenture (including any amendment or supplement hereto).
"Existing Indenture" means the Indenture, dated as of June 11, 2001,
among the Company, the subsidiary guarantors party thereto and U.S. Bank Trust
National Association, as successor in interest to State Street Bank and Trust
Company, as trustee, pursuant to which the Existing Notes were issued.
"Existing Joint Venture Subsidiary" means any Domestic Subsidiary in
existence on the Issue Date that is not engaged in any business other than a
Related Business and is not "100% owned" (as defined in Section 3-10(h)(1) of
Regulation S-X (Title 17, Code of Federal Regulations, Part 210)) by the
Company, and is listed on Schedule 1 to this Indenture.
"Existing Note Issue Date" means June 11, 2001.
"Existing Notes" means all notes issued under the Existing Indenture.
14
"Existing Subsidiary Guarantee" means, individually, each of the
guarantees of payment of the Existing Notes by each Subsidiary Guarantor (as
defined in the Existing Indenture) pursuant to the terms of the Existing
Indenture and any supplemental indenture thereto, and, collectively, all such
guarantees.
"Foreign Subsidiary" means any Restricted Subsidiary that is not a
Domestic Subsidiary.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the date of the Indenture, including those
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations based on GAAP contained in
the Indenture will be computed in conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing or in effect guaranteeing any
Indebtedness of any other Person and any obligation, direct or indirect,
contingent or otherwise, of such Person:
(1) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness of such other Person
(whether arising by virtue of partnership arrangements, or by
agreement to keep-well, to purchase assets, goods, securities
or services, to take-or-pay, or to maintain financial
statement conditions or otherwise); or
(2) entered into for purposes of assuring in any other manner the
obligee of such Indebtedness of the payment thereof or to
protect such obligee against loss in respect thereof (in whole
or in part);
provided, however, that the term "Guarantee" will not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Guarantor Senior Indebtedness" means, with respect to a Subsidiary
Guarantor, the following whether outstanding on the Issue Date or thereafter
issued, created, Incurred or assumed, without duplication:
(1) the Bank Indebtedness Incurred by such Subsidiary Guarantor;
(2) all Guarantees by such Subsidiary Guarantor of Senior
Indebtedness of the Company or Guarantor Senior Indebtedness
of any other Subsidiary Guarantor; and
15
(3) all obligations consisting of principal of, premium on, if
any, accrued and unpaid interest on, and fees and other
amounts relating to, all other Indebtedness of the Subsidiary
Guarantor.
Guarantor Senior Indebtedness includes interest accruing after, or that
would accrue but for, the filing of any petition in bankruptcy or for
reorganization relating to the Subsidiary Guarantor at the rate specified in the
documentation with respect thereto, whether or not post-filing interest is
allowed in such proceeding.
Notwithstanding anything to the contrary in the preceding paragraph,
Guarantor Senior Indebtedness will not include:
(1) any Indebtedness with respect to which, in the instrument
creating or evidencing the same or pursuant to which the same
is outstanding, it is provided that the obligations in respect
of such Indebtedness are not superior in right of, or are
subordinate to, payment of the Notes or any Subsidiary
Guarantee;
(2) any obligations of such Subsidiary Guarantor to another
Subsidiary or to the Company;
(3) any liability for Federal, state, local, foreign or other
taxes owed or owing by such Subsidiary Guarantor;
(4) any accounts payable or other liability to trade creditors
arising in the ordinary course of business (including
Guarantees thereof or instruments evidencing such
liabilities);
(5) any Indebtedness, Guarantee or obligation of such Subsidiary
Guarantor that is subordinate or junior in right of payment to
any other Indebtedness, Guarantee or obligation of such
Subsidiary Guarantor, including, without limitation, any
Guarantor Senior Subordinated Indebtedness and Guarantor
Subordinated Obligations of such Guarantor;
(6) any obligations in respect of Capital Stock or Attributable
Indebtedness;
(7) any Indebtedness Incurred in violation of this Indenture; or
(8) any Indebtedness described in the last paragraph of the
definition of the term "Indebtedness."
"Guarantor Senior Subordinated Indebtedness" means, with respect to a
Subsidiary Guarantor, the obligations of such Subsidiary Guarantor under the
Subsidiary Guarantee and any other Indebtedness of such Subsidiary Guarantor
(whether outstanding on the Issue Date or thereafter Incurred) that specifically
provides that such Indebtedness
16
is to rank equally in right of payment with the obligations of such Subsidiary
Guarantor under the Subsidiary Guarantee and is not subordinated in right of
payment to any Indebtedness of such Subsidiary Guarantor that is not Guarantor
Senior Indebtedness of such Subsidiary Guarantor.
"Guarantor Subordinated Obligations" means, with respect to a
Subsidiary Guarantor, any Indebtedness of such Subsidiary Guarantor (whether
outstanding on the Issue Date or thereafter Incurred) that is subordinate or
junior in right of payment to the obligations of such Subsidiary Guarantor under
its Subsidiary Guarantee (including without limitation each of the seller notes
identified on Schedule 2).
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered in the Note Register.
"Incur" means issue, create, assume, Guarantee, incur or otherwise
become liable for; provided, however, that any Indebtedness or Capital Stock of
a Person existing at the time such Person becomes a Restricted Subsidiary
(whether by merger, consolidation, acquisition or otherwise) will be deemed to
be Incurred by such Restricted Subsidiary at the time it becomes a Restricted
Subsidiary; and the terms "Incurred" and "Incurrence" have meanings correlative
to the foregoing.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(1) the principal of and premium, if any, in respect of
indebtedness of such Person for borrowed money;
(2) the principal of and premium, if any, in respect of
obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments;
(3) all obligations of such Person in respect of letters of
credit, bankers' acceptances or other similar instruments
(including reimbursement obligations with respect thereto
except to the extent such reimbursement obligation relates to
a trade payable and such obligation is satisfied within 10
days of Incurrence);
(4) all obligations of such Person to pay the deferred and unpaid
purchase price of property (or services), which purchase price
is due more than six months after the date of placing such
property in service or taking delivery and title thereto or
completion of such services;
17
(5) Capitalized Lease Obligations and all Attributable
Indebtedness of such Person;
(6) all obligations of such Person with respect to the redemption,
repayment or other repurchase of any Disqualified Stock or,
with respect to any Subsidiary, any Preferred Stock (but
excluding, in each case, any accrued dividends);
(7) Indebtedness of other Persons secured by a Lien on any asset
of such Person, whether or not such Indebtedness is assumed by
such Person; provided, however, that the amount of such
Indebtedness will be the lesser of (a) the fair market value
of such asset at such date of determination and (b) the amount
of such Indebtedness of such other Persons;
(8) Indebtedness of other Persons to the extent Guaranteed by such
Person; and
(9) to the extent not otherwise included in this definition, net
obligations of such Person under Currency Agreements and
Interest Rate Agreements (the amount of any such obligations
to be equal at any time to the termination value of such
agreement or arrangement giving rise to such obligation that
would be payable by such Person at such time).
The amount of Indebtedness of any Person at any date will be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date.
In addition, "Indebtedness" of any Person shall include Indebtedness of
a type described in the preceding paragraph that would not appear as a liability
on the balance sheet of such Person if:
(1) such Indebtedness is the obligation of a partnership or joint
venture that is not a Restricted Subsidiary (a "Joint
Venture");
(2) such Person or a Restricted Subsidiary of such Person is a
general partner of the Joint Venture (a "General Partner");
and
(3) there is recourse, by contract or operation of law, with
respect to the payment of such Indebtedness to property or
assets of such Person or a Restricted Subsidiary of such
Person;
18
and then such Indebtedness shall be included in an amount not to
exceed:
(a) the lesser of (i) the net assets of the General
Partner and (ii) the amount of such obligations to
the extent that there is recourse, by contract or
operation of law, to the property or assets of such
Person or a Restricted Subsidiary of such Person; or
(b) if less than the amount determined pursuant to clause
(a) immediately above, the actual amount of such
Indebtedness that is recourse to such Person or a
Restricted Subsidiary of such Person, if the
Indebtedness is evidenced by a writing and is for a
determinable amount and the related interest expense
shall be included in Consolidated Interest Expense.
"Initial Additional Notes" means Additional Notes issued in an offering
not registered under the Securities Act.
"Initial Notes" means Select Medical Escrow's 7 1/2% Senior
Subordinated Notes Due 2013, issued on the Issue Date (and any Notes issued in
respect thereof pursuant to Section 304, 305, 306, 312(c), 312(d) or 1008).
"Interest Payment Date" means, when used with respect to any Note and
any installment of interest thereon, the date specified in such Note as the
fixed date on which such installment of interest is due and payable, as set
forth in such Note.
"Interest Rate Agreement" means, with respect to any Person, any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.
"Investment" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) including (a) any direct or
indirect advance, loan (other than advances to customers in the ordinary course
of business) or other extension of credit (including by way of Guarantee or
similar arrangement, but excluding any bank deposit (other than a time deposit)
in the ordinary course of business, to the extent the same may be deemed an
extension of credit to the depository bank) or capital contribution to (by means
of any transfer of cash or other property to others or any payment for property
or services for the account or use of others), or any purchase or acquisition of
Capital Stock, Indebtedness or other similar instruments issued by, any other
Person, and (b) all other items that are or would be classified as investments
on a balance sheet prepared in accordance with GAAP.
19
For purposes of Section 408,
(1) "Investment" will include the portion (proportionate to the
Company's equity interest in a Restricted Subsidiary to be
designated as an Unrestricted Subsidiary) of the fair market
value of the net assets (computed excluding any liability or
obligation owing to the Company or any Restricted Subsidiary)
of such Restricted Subsidiary of the Company at the time that
such Restricted Subsidiary is designated an Unrestricted
Subsidiary; provided, however, that upon a redesignation of
such Subsidiary as a Restricted Subsidiary, the Company will
be deemed to continue to have a permanent "Investment" in an
Unrestricted Subsidiary in an amount (if positive) equal to
(a) the Company's "Investment" in such Subsidiary at the time
of such redesignation less (b) the portion (proportionate to
the Company's equity interest in such Subsidiary) of the fair
market value of the net assets (as determined by the Board of
Directors of the Company in good faith, as evidenced by a
resolution in writing delivered to the Trustee) of such
Subsidiary at the time that such Subsidiary is so
re-designated a Restricted Subsidiary;
(2) any property transferred to or from an Unrestricted Subsidiary
will be valued at its fair market value at the time of such
transfer, in each case as determined in good faith by the
Board of Directors of the Company; and
(3) if the Company or any Restricted Subsidiary of the Company
sells or otherwise disposes of any Voting Stock of any
Restricted Subsidiary of the Company such that, after giving
effect to any such sale or disposition, such entity is no
longer a Subsidiary of the Company, the Company shall be
deemed to have made an Investment on the date of any such sale
or disposition equal to the fair market value (as determined
by the Board of Directors of the Company in good faith, as
evidenced by a resolution in writing delivered to the Trustee)
of the Capital Stock of such Subsidiary not sold or disposed
of (computed excluding any liability or obligation owing to
the Company or any Restricted Subsidiary).
"Issue Date" means the first date on which the Notes are originally
issued.
"Xxxxxxx" means Xxxxxxx Rehabilitation Corporation, a Delaware
corporation.
"Xxxxxxx Acquisition" means the acquisition of all of the issued and
outstanding capital stock of Xxxxxxx by the Company or a Wholly-Owned Subsidiary
pursuant to the Stock Purchase Agreement and on the terms set forth in the Stock
Purchase Agreement and described in the offering memorandum dated July 29, 2003
relating to the offering of the Notes.
20
"Lien" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Moody's" means Xxxxx'x Investor Service, Inc. and its successors.
"Net Available Cash" from an Asset Disposition means cash payments
received (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise, but only as
and when received) therefrom, in each case net of:
(1) all legal, accounting, investment banking, title and recording
tax expenses, commissions and other fees and expenses
reasonably incurred, and all Federal, state, provincial,
foreign and local taxes required to be paid or accrued as a
liability under GAAP (after taking into account any available
tax credits or deductions and any tax sharing agreements), as
a consequence of such Asset Disposition;
(2) all payments made on any Indebtedness that is secured by any
assets subject to such Asset Disposition, in accordance with
and as required by the terms of any Lien upon such assets;
(3) all distributions and other payments required to be made to
minority interest holders in Subsidiaries or joint ventures as
a result of such Asset Disposition; and
(4) the deduction of reasonable and appropriate amounts to be
provided by the seller as a reserve, in accordance with GAAP,
against any liabilities associated with the assets disposed of
in such Asset Disposition and retained by the Company or any
Restricted Subsidiary after such Asset Disposition (provided
that upon any reduction or reversal of any such reserve, the
amount of such resolution or reversal shall constitute Net
Available Cash).
"Net Cash Proceeds," with respect to any issuance or sale of Capital
Stock, means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, listing fees,
discounts or commissions and brokerage, consultant and other fees and charges
reasonably incurred in connection with such issuance or sale and net of taxes
paid or payable as a result of such issuance or sale (after taking into account
any available tax credit or deductions and any tax sharing arrangements).
"New Joint Venture Subsidiary" means any Person acquired by the Company
or any Restricted Subsidiary after the Issue Date that (1) is a Domestic
Subsidiary, (2) is not
21
engaged in any business other than a Related Business, (3) is not "100% owned"
(as defined in Section 3-10(h)(1) of Regulation S-X (Title 17, Code of Federal
Regulations, Part 210)) by the Company and (4) has no Capital Stock owned by any
Person other than the Company, a Subsidiary Guarantor, a physician, a physician
group, or one or more other medical professionals.
"Non-Guarantor Subsidiary" means any Restricted Subsidiary that is not
a Subsidiary Guarantor.
"Non-Recourse Debt" means Indebtedness:
(1) as to which neither the Company nor any Restricted Subsidiary
(a) provides any Guarantee or credit support of any kind
(including any undertaking, guarantee, indemnity, agreement or
instrument that would constitute Indebtedness) or (b) is
directly or indirectly liable (as a guarantor or otherwise);
(2) no default with respect to which (including any rights that
the holders thereof may have to take enforcement action
against an Unrestricted Subsidiary) would permit (upon notice,
lapse of time or both) any holder of any other Indebtedness of
the Company or any Restricted Subsidiary to declare a default
under such other Indebtedness or cause the payment thereof to
be accelerated or payable prior to its stated maturity; and
(3) in the case of Indebtedness having a principal amount in
excess of $100,000 in the aggregate, the express terms of
which provide there is no recourse against any of the Company
or its Restricted Subsidiaries or any of their respective
property or assets.
"Non-U.S. Person" means a Person who is not a U.S. person, as defined
in Regulation S.
"Notes" means the Initial Notes, any Additional Notes, and the Exchange
Notes.
"Officer" means the Chairman of the Board, the Chief Executive Officer,
the President, the Chief Operating Officer, any Executive Vice President or
Senior Vice President, the Treasurer, Controller and Chief Accounting Officer or
the Secretary of the Company (or Select Medical Escrow prior to the Select
Medical Escrow Merger, unless the context otherwise requires).
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
22
"Original Notes" means the Initial Notes and any Exchange Notes issued
in exchange therefor.
"Outstanding" when used with respect to Notes means, as of the date of
determination, all Notes theretofore authenticated and delivered under this
Indenture, except:
(i) Notes theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Notes for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent in trust for the Holders of such Notes, provided that, if
such Notes are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision therefor reasonably
satisfactory to the Trustee has been made; and
(iii) Notes in exchange for or in lieu of which other Notes
have been authenticated and delivered pursuant to this Indenture.
A Note does not cease to be Outstanding because the Company or any
Affiliate of the Company holds the Note, provided that in determining whether
the Holders of the requisite amount of Outstanding Notes have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, Notes
owned by the Company or any Affiliate of the Company shall be disregarded and
deemed not to be Outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such request, demand,
authorization, direction, notice, consent or waiver, only Notes which the
Trustee actually knows are so owned shall be so disregarded. Notes so owned that
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the reasonable satisfaction of the Trustee the pledgee's right to
act with respect to such Notes and that the pledgee is not the Company or an
Affiliate of the Company.
"Paying Agent" means any Person authorized by the Company (or Select
Medical Escrow prior to the Select Medical Escrow Merger) (including the Company
and any of its Domestic Subsidiaries) to pay the principal of (and premium, if
any) or interest on any Notes on behalf of the Company (or Select Medical Escrow
prior to the Select Medical Escrow Merger).
"Permitted Holder" means any of Welsh, Carson, Xxxxxxxx & Xxxxx VII,
L.P., Golder, Thoma, Cressey, Rauner, Inc., GTCR Xxxxxx Xxxxxx, LLC, and their
respective investment fund Affiliates.
23
"Permitted Investment" means an Investment by the Company or any
Restricted Subsidiary in:
(1) the Company;
(2) a Restricted Subsidiary or a Person that will, upon the making
of such Investment, become a Restricted Subsidiary; provided,
however, that the primary business of such Person is a Related
Business;
(3) another Person if as a result of such Investment such other
Person is merged or consolidated with or into, or transfers or
conveys all or substantially all its assets to, the Company or
a Subsidiary Guarantor; provided, however, that such Person's
primary business is a Related Business;
(4) cash and Cash Equivalents;
(5) receivables owing to the Company or any Restricted Subsidiary
created or acquired in the ordinary course of business and
payable or dischargeable in accordance with customary trade
terms;
(6) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated
as expenses for accounting purposes and that are made in the
ordinary course of business;
(7) loans or advances to employees made in the ordinary course of
business consistent with past practices of the Company or such
Restricted Subsidiary;
(8) stock, obligations or securities received in settlement of
debts created in the ordinary course of business and owing to
the Company or any Restricted Subsidiary or in satisfaction of
judgments or pursuant to any plan of reorganization or similar
arrangement upon the bankruptcy or insolvency of a debtor;
(9) Investments arising from the receipt of non-cash consideration
from an Asset Disposition that was made pursuant to and in
compliance with Section 410;
(10) Investments in existence on the Issue Date;
(11) Currency Agreements, Interest Rate Agreements and related
Hedging Obligations, which transactions or obligations are
Incurred in compliance with Section 406;
24
(12) Hedging Obligations entered into in the ordinary course of
business and in compliance with this Indenture;
(13) endorsements of negotiable instruments and documents in the
ordinary course of business; and
(14) assets, Capital Stock or other securities by the Company or a
Restricted Subsidiary to the extent the consideration therefor
consists solely of common stock of the Company (other than
Disqualified Stock).
"Permitted Junior Securities" means (1) Capital Stock of the Company or
any Subsidiary Guarantor or (2) debt securities of the Company or any Subsidiary
Guarantor that are subordinated to all Senior Indebtedness and any debt
securities issued in exchange for Senior Indebtedness to substantially the same
extent as, or to a greater extent than, the Notes and the Subsidiary Guarantees
are subordinated to Senior Indebtedness and Guarantor Senior Indebtedness
pursuant to the Indenture.
"Permitted Liens" means, with respect to any Person:
(1) pledges or deposits by such Person under worker's compensation
laws, unemployment insurance laws or similar legislation, or
good faith deposits in connection with bids, tenders,
contracts (other than for Indebtedness) or operating leases to
which such Person is a party, or deposits to secure public or
statutory obligations of such Person or deposit of cash or
United States government bonds to secure surety, performance
or appeal bonds to which such Person is a party, or deposits
as security for contested taxes or import or customs duties or
for the payment of rent, in each case in the ordinary course
of business;
(2) Liens imposed by law and arising in the ordinary course of
business, including carriers', warehousemen's and mechanics'
Liens, in each case for sums not yet due or being contested in
good faith by appropriate proceedings if a reserve or other
appropriate provisions, if any, as shall be required by GAAP
shall have been made in respect thereof;
(3) Liens for taxes, assessments or other governmental charges not
yet subject to penalties for non-payment or which are being
contested in good faith by appropriate proceedings provided
appropriate reserves required pursuant to GAAP have been made
in respect thereof;
(4) encumbrances, easements or reservations of, or rights of
others for, licenses, rights of way, sewers, electric lines,
telegraph and telephone lines and other similar purposes, or
zoning or other restrictions as to the use of real properties
or liens incidental to the conduct of the business of such
25
Person or to the ownership of its properties that do not in
the aggregate materially adversely affect the value of said
properties or materially impair their use in the operation of
the business of the Company and its Restricted Subsidiaries;
(5) Liens securing Hedging Obligations so long as the related
Indebtedness is, and is permitted to be under this Indenture,
secured by a Lien on the same property securing such Hedging
Obligation;
(6) leases and subleases of real property that do not materially
interfere with the ordinary conduct of the business of the
Company or any of its Restricted Subsidiaries;
(7) judgment Liens not giving rise to an Event of Default so long
as such Lien is adequately bonded and any appropriate legal
proceedings that may have been duly initiated for the review
of such judgment have not been finally terminated or the
period within which such proceedings may be initiated has not
expired;
(8) Liens arising solely by virtue of any statutory or common law
provisions relating to banker's Liens, rights of set-off or
similar rights and remedies as to deposit accounts or other
funds maintained with a depositary institution; provided that:
(a) such deposit account is not a dedicated cash
collateral account and is not subject to restrictions
against access by the Company in excess of those set
forth by regulations promulgated by the Federal
Reserve Board; and
(b) such deposit account is not intended by the Company
or any Restricted Subsidiary to provide collateral to
the depository institution;
(9) Liens on property or shares of stock of a Person at the time
such Person becomes a Restricted Subsidiary; provided,
however, that such Liens are not created, incurred or assumed
in connection with, or in contemplation of, such other Person
becoming a Restricted Subsidiary; provided further, however,
that any such Lien may not extend to any other property owned
by the Company or any Restricted Subsidiary;
(10) Liens on property at the time the Company or a Restricted
Subsidiary acquired the property, including any acquisition by
means of a merger or consolidation with or into the Company or
any Restricted Subsidiary; provided, however, that such Liens
are not created, incurred or assumed in
26
connection with, or in contemplation of, such acquisition;
provided further, however, that such Liens may not extend to
any other property owned by the Company or any Restricted
Subsidiary;
(11) Liens securing Indebtedness or other obligations of a
Restricted Subsidiary owing to the Company or a Subsidiary
Guarantor;
(12) Liens securing the Notes and the Subsidiary Guarantees; and
(13) Liens securing Refinancing Indebtedness incurred to refinance
Indebtedness that was previously so secured, provided that any
such Lien is limited to all or part of the same property or
assets (plus improvements, accessions, proceeds or dividends
or distributions in respect thereof) that secured (or, under
the written arrangements under which the original Lien arose,
could secure) the Indebtedness being refinanced.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization, limited liability company, government or any agency
or political subdivision thereof or any other entity.
"Place of Payment" means a city or any political subdivision thereof
referred to in Article 3 and initially designated under Section 402.
"Predecessor Notes" of any particular Note means every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 306 in lieu of a mutilated, destroyed,
lost or stolen Note shall be deemed to evidence the same debt as the mutilated,
destroyed, lost or stolen Note.
"Preferred Stock" as applied to the Capital Stock of any Person means
Capital Stock of any class or classes (however designated) that is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over shares
of Capital Stock of any other class of such Person.
"Purchase Money Indebtedness" means Indebtedness:
(1) consisting of the deferred purchase price of property,
conditional sale obligations, obligations under any title
retention agreement, other purchase money obligations and
obligations in respect of industrial revenue bonds or similar
Indebtedness, in each case where the maturity of such
Indebtedness does not exceed the anticipated useful life of
the asset being financed; and
27
(2) incurred to finance the acquisition by the Company or a
Restricted Subsidiary of such asset, including additions and
improvements;
provided, however, that any Lien arising in connection with any such
Indebtedness shall be limited to the specified asset being financed or, in the
case of real property or fixtures, including additions and improvements, the
real property on which such asset is attached; and provided further, however,
that such Indebtedness is Incurred within 90 days after such acquisition of such
asset by the Company or a Restricted Subsidiary.
"QIB" or "Qualified Institutional Buyer" means a "qualified
institutional buyer," as that term is defined in Rule 144A under the Securities
Act.
"Redemption Date" when used with respect to any Note to be redeemed or
purchased means the date fixed for such redemption or purchase by or pursuant to
this Indenture and the Notes, including any Special Redemption Date, as
applicable.
"Redemption Price" when used with respect to any Note to be redeemed or
purchased means the price at which it is to be redeemed or purchased pursuant to
this Indenture and the Notes, including any Special Redemption Price, as
applicable.
"Refinancing Indebtedness" means Indebtedness that is Incurred to
refund, refinance, renew, repay or extend (including pursuant to any defeasance
or discharge mechanism) (collectively, "refinance", "refinances", and
"refinanced" shall have a correlative meaning) any Indebtedness existing on the
date of this Indenture or Incurred in compliance with this Indenture including
Indebtedness that refinances Refinancing Indebtedness, provided, however, that:
(1) (a) if the Stated Maturity of the Indebtedness being
refinanced is earlier than or the same as the Stated Maturity
of the Notes, the Refinancing Indebtedness has a Stated
Maturity no earlier than the Stated Maturity of the
Indebtedness being refinanced or (b) if the Stated Maturity of
the Indebtedness being refinanced is later than the Stated
Maturity of the Notes, the Refinancing Indebtedness has a
Stated Maturity at least 91 days later than the Stated
Maturity of the Notes;
(2) the Refinancing Indebtedness has an Average Life at the time
such Refinancing Indebtedness is Incurred that is equal to or
greater than the Average Life of the Indebtedness being
refinanced;
(3) such Refinancing Indebtedness is Incurred in an aggregate
principal amount (or if issued with original issue discount,
an aggregate issue price) that is equal to or less than the
sum of the aggregate principal amount (or if issued with
original issue discount, the aggregate accreted value) then
outstanding of the Indebtedness being refinanced (plus,
without
28
duplication, any additional Indebtedness incurred to pay
reasonable fees in connection therewith); and
(4) if the Indebtedness being refinanced is subordinated in right
of payment to the Notes or the Subsidiary Guarantee, such
Refinancing Indebtedness is subordinated in right of payment
to the Notes or the Subsidiary Guarantee on terms at least as
favorable to the Holders as those contained in the
documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded;
provided that Refinancing Indebtedness shall not include (x) Indebtedness of a
Non-Guarantor Subsidiary that refinances Indebtedness of the Company or a
Subsidiary Guarantor or (y) Indebtedness of the Company or a Restricted
Subsidiary that refinances Indebtedness of an Unrestricted Subsidiary.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Certificate" means a certificate substantially in the
form attached hereto as Exhibit D.
"Related Business" means any of the businesses of the Company and its
Restricted Subsidiaries on the Issue Date, any other business of providing
health care services, and any business that is related, ancillary or
complementary to any thereof.
"Related Business Assets" means assets used or useful in a Related
Business.
"Representative" means any trustee, agent or representative (if any) of
an issue of Senior Indebtedness; provided that when used in connection with the
Senior Credit Agreement, the term "Representative" shall refer to the
administrative agent under the Senior Credit Agreement (so long as there shall
be an administrative agent).
"Resale Restriction Termination Date" means, with respect to any Note,
the date that is two years (or such other period as may hereafter be provided
under Rule 144(k) under the Securities Act or any successor provision thereto as
permitting the resale by non-affiliates of Restricted Securities without
restriction) after the later of the original issue date in respect of such Note
and the last date on which the Company or any Affiliate of the Company was the
owner of such Note (or any Predecessor Note thereto).
"Responsible Officer" when used with respect to the Trustee means any
vice president or assistant vice president, the secretary, any assistant
secretary, the treasurer, any assistant treasurer, the cashier, any assistant
cashier, any trust officer or assistant trust officer, the controller and any
assistant controller working in its Corporate Trust Office or any other officer
of the Trustee working in its Corporate Trust Office customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to
29
whom such matter is referred because of his knowledge of and familiarity with
the particular subject.
"Restricted Investment" means any Investment other than a Permitted
Investment.
"Restricted Security" has the meaning assigned to such term in Rule
144(a)(3) under the Securities Act; provided, however, that the Trustee shall be
entitled to receive, at its request, and conclusively rely on an Opinion of
Counsel with respect to whether any Note constitutes a Restricted Security.
"Restricted Subsidiary" means any Subsidiary of the Company other than
an Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to property
now owned or hereafter acquired whereby the Company or a Restricted Subsidiary
transfers such property to a Person and the Company or a Restricted Subsidiary
leases it from such Person.
"SEC" means the Securities and Exchange Commission.
"Securities Account Control Agreement" means the Securities Account
Control Agreement, dated August 12, 2003, among Select Medical Escrow, U.S. Bank
Trust National Association, in its capacity as trustee under the Indenture, as
pledgee, assignee and secured party, and U.S. Bank Trust National Association,
in its capacity as escrow agent and securities intermediary thereunder and under
the Escrow Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Select Medical Escrow" means Select Medical Escrow, Inc., a Delaware
corporation.
"Select Medical Escrow Merger" means the merger of Select Medical
Escrow with and into the Company immediately prior to the Xxxxxxx Acquisition,
provided that the Xxxxxxx Acquisition occurs.
"Senior Credit Agreement" means one or more debt facilities (including,
without limitation, the Credit Agreement, dated as of September 22, 2000 among
the Company, Canadian Back Institute Limited, the Lenders party thereto, The
Chase Manhattan Bank, as Administrative Agent for the US Facilities, The Chase
Manhattan Bank of Canada, as Administrative Agent for the Canadian Facilities,
Banc of America Securities LLC, as Syndication Agent and CIBC, Inc., as
Documentation Agent) or commercial paper facilities to which the Company is a
party with banks or other institutional lenders providing for revolving credit
loans, term loans, or letters of credit, in each case, as amended, restated,
modified, renewed, refunded, replaced or refinanced in whole or in part from
time to time (and whether or not with the original administrative agent and
30
lenders or another administrative agent or agents or other lenders and whether
provided under the original credit agreement or any other credit or other
agreement or indenture).
"Senior Indebtedness" means, with respect to the Company, the
following, whether outstanding on the Issue Date or thereafter issued, created,
Incurred or assumed, without duplication:
(1) the Bank Indebtedness Incurred by the Company, and
(2) all obligations consisting of principal of, premium on, if
any, accrued and unpaid interest on, and fees and other
amounts relating to, all other Indebtedness of the Company.
Senior Indebtedness includes interest accruing after, or that would
accrue but for, the filing of any petition in bankruptcy or for reorganization
relating to the Company at the rate specified in the documentation with respect
thereto, whether or not a claim for post-filing interest is allowed in such
proceeding) and fees relating thereto.
Notwithstanding anything to the contrary in the preceding paragraph,
Senior Indebtedness will not include:
(1) any Indebtedness with respect to which, in the instrument
creating or evidencing the same or pursuant to which the same
is outstanding, it is provided that the obligations in respect
of such Indebtedness are not superior in right of, or are
subordinate to, payment of the Notes or any Subsidiary
Guarantee;
(2) any obligation of the Company to any Subsidiary;
(3) any liability for Federal, state, foreign, local or other
taxes owed or owing by the Company;
(4) any accounts payable or other liability to trade creditors
arising in the ordinary course of business (including
Guarantees thereof or instruments evidencing such
liabilities);
(5) any Indebtedness, Guarantee or obligation of the Company that
is subordinate or junior in right of payment to any other
Indebtedness, Guarantee or obligation of the Company,
including, without limitation, any Senior Subordinated
Indebtedness and any Subordinated Obligations;
(6) any obligations in respect of Capital Stock or Attributable
Indebtedness;
(7) any Indebtedness Incurred in violation of this Indenture; or
31
(8) any Indebtedness described in the last paragraph of the
definition of the term "Indebtedness."
"Senior Subordinated Indebtedness" means the Notes, the Existing Notes
and any other Indebtedness of the Company that specifically provides that such
Indebtedness is to rank equally with the Notes in right of payment and is not
subordinated by its terms in right of payment to any Indebtedness or other
obligation of the Company that is not Senior Indebtedness.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
"Special Redemption" means redemption of the Notes pursuant to Section
1001(c).
"Special Redemption Date" means the earlier of (i) December 11, 2003 if
the Xxxxxxx Acquisition has not been consummated on or prior to November 27,
2003 or (ii) the twelfth Business Day following the termination of the Stock
Purchase Agreement on or prior to November 27, 2003.
"Special Redemption Price" means 101% of the aggregate principal amount
of the Notes plus accrued and unpaid interest thereon, if any, to the Special
Redemption Date.
"S&P" means Standard and Poor's Ratings Service, a division of The
McGraw Hill Companies, Inc., and its successors.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision, but shall not include any contingent obligations to repay,
redeem or repurchase any such principal prior to the date originally scheduled
for the payment thereof.
"Stock Purchase Agreement" means the Stock Purchase Agreement, dated
June 30, 2003, by and among Xxxxxxx, Xxxxx X. Xxxxxxx Foundation, Inc. and the
Company.
"Subordinated Obligation" means any Indebtedness of the Company
(whether outstanding on the Issue Date or thereafter Incurred) that is
subordinate or junior in right of payment to the Notes (including without
limitation each of the seller notes identified on Schedule 2).
"Subsidiary" of any Person means any corporation, association,
partnership, joint venture, limited liability company or other business entity
32
(1) of which more than 50% of the total voting power of shares of
Capital Stock or other interests (including partnership and
joint venture interests) entitled (without regard to the
occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned
or controlled, directly or indirectly, by (a) such Person, (b)
such Person and one or more Subsidiaries of such Person or (c)
one or more Subsidiaries of such Person, or
(2) that is a third party professional corporation or similar
entity controlled by the Company with which the Company or any
Subsidiary has an exclusive management arrangement under which
it manages the business of such entity, provided that any such
entity shall be treated as a consolidated Subsidiary of Select
for purposes of calculating Consolidated EBITDA, Consolidated
Interest Expense and Consolidated Net Income.
Unless otherwise specified herein, each reference to a Subsidiary will refer to
a Subsidiary of the Company.
"Subsidiary Guarantee" means, individually, any Guarantee of payment of
the Notes by a Subsidiary Guarantor pursuant to the terms of this Indenture and
any supplemental indenture hereto, and, collectively, all such Guarantees. Each
such Subsidiary Guarantee will be in the form prescribed by this Indenture.
"Subsidiary Guarantor" means each Restricted Subsidiary after the Issue
Date, that provides a Subsidiary Guarantee in accordance with the terms of this
Indenture. For the avoidance of doubt, no Subsidiary Guarantor shall have any
rights or obligations under this Indenture prior to the Assumption.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-7bbbb) as in effect on the date of this Indenture; provided, however, that
in the event the Trust Indenture Act of 1939 is amended after such date, then
"TIA" means, to the extent such amendment to the TIA is required by such
amendment to be incorporated into this Indenture, the Trust Indenture Act of
1939 as so amended.
"Trust Officer" means the Chairman of the Board, the President or any
other officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
33
"Unrestricted Subsidiary" means:
(1) any Subsidiary of the Company that at the time of
determination shall be designated an Unrestricted Subsidiary
by the Board of Directors of the Company in the manner
provided below; and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors of the Company may designate any Subsidiary of
the Company (including any newly acquired or newly formed Subsidiary or a Person
becoming a Subsidiary through merger or consolidation or Investment therein) to
be an Unrestricted Subsidiary only if:
(1) such Subsidiary or any of its Subsidiaries does not own any
Capital Stock or Indebtedness of or have any Investment in, or
own or hold any Lien on any property of, any other Subsidiary
of the Company that is not a Subsidiary of the Subsidiary to
be so designated or otherwise an Unrestricted Subsidiary;
(2) all the Indebtedness of such Subsidiary and its Subsidiaries
shall, at the date of designation, and will at all times
thereafter, consist of Non-Recourse Debt;
(3) such designation and the Investment of the Company and its
Restricted Subsidiaries in such Subsidiary complies with
Section 408;
(4) such Subsidiary, either alone or in the aggregate with all
other Unrestricted Subsidiaries, does not operate, directly or
indirectly, all or substantially all of the business of the
Company and its Subsidiaries;
(5) such Subsidiary is a Person with respect to which neither the
Company nor any of its Restricted Subsidiaries has any direct
or indirect obligation:
(a) to subscribe for additional Capital Stock of such
Person; or
(b) to maintain or preserve such Person's financial
condition or to cause such Person to achieve any
specified levels of operating results; and
(6) on the date such Subsidiary is designated an Unrestricted
Subsidiary, such Subsidiary is not a party to any agreement,
contract, arrangement or understanding with the Company or any
Restricted Subsidiary with terms substantially less favorable
to the Company than those that might have been obtained from
Persons who are not Affiliates of the Company.
34
Any such designation by the Board of Directors of the Company shall be
evidenced to the Trustee by filing with the Trustee a resolution of the Board of
Directors of the Company giving effect to such designation and an Officers'
Certificate certifying that such designation complies with the foregoing
conditions. If, at any time, any Unrestricted Subsidiary would fail to meet the
foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease
to be an Unrestricted Subsidiary for purposes of the Indenture and any
Indebtedness of such Subsidiary shall be deemed to be Incurred as of such date.
The Board of Directors of the Company may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that immediately after giving
effect to such designation, no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof and the Company could
incur at least $1.00 of additional Indebtedness under Section 406(a)(ii) on a
pro forma basis taking into account such designation.
Notwithstanding anything herein to the contrary, for such time as any
of the Existing Notes are outstanding, the Company shall not permit any
Subsidiary to be an Unrestricted Subsidiary for purposes of this Indenture
unless such Subsidiary is also an Unrestricted Subsidiary under and as defined
in the Existing Indenture.
"U.S. Government Obligation" means (x) any security that is (i) a
direct obligation of the United States of America for the payment of which the
full faith and credit of the United States of America is pledged or (ii) an
obligation of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, which, in either case under the preceding clause (i) or (ii),
is not callable or redeemable at the option of the issuer thereof, and (y) any
depositary receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act) as custodian with respect to any U.S. Government Obligation that
is specified in clause (x) above and held by such bank for the account of the
holder of such depositary receipt, or with respect to any specific payment of
principal of or interest on any U.S. Government Obligation that is so specified
and held, provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the holder of such
depositary receipt from any amount received by the custodian in respect of the
U.S. Government Obligation or the specific payment of principal or interest
evidenced by such depositary receipt.
"Voting Stock" of a Person means all classes of Capital Stock of such
Person then outstanding and normally entitled to vote in the election of
directors or other governing body.
35
"Wholly-Owned Subsidiary" means a Restricted Subsidiary of the Company,
all of the Capital Stock of which (other than directors' qualifying shares
required by applicable law) is owned by the Company or another Wholly-Owned
Subsidiary.
Section 102. Other Definitions.
Defined in
Term Section
---- -------
"Act"....................................................... 108
"Affiliate Transaction"..................................... 411
"Agent Members"............................................. 312
"Asset Sale Offer".......................................... 410
"Asset Sale Offer Amount"................................... 410
"Asset Sale Offer Period"................................... 410
"Asset Sale Purchase Date".................................. 410
"Authentication Order"...................................... 303
"Bankruptcy Law"............................................ 601
"Blockage Notice"........................................... 1403
"Change of Control Offer"................................... 414
"Change of Control Payment Date"............................ 414
"Covenant Defeasance"....................................... 1203
"Custodian"................................................. 601
"Defaulted Interest"........................................ 307
"Defeasance"................................................ 1202
"Defeased Notes"............................................ 1201
"Event of Default".......................................... 601
"Excess Proceeds"........................................... 410
"Expiration Date"........................................... 108
"Global Notes".............................................. 201
"Guaranteed Obligations".................................... 1301
"IAI"....................................................... 201
"Institutional Accredited Investor Global Note"............. 201
"Institutional Accredited Investor Physical Note"........... 201
"Non-payment Default"....................................... 1403
"Note Register" and "Note Registrar" ....................... 305
"Notice of Default"......................................... 601
"Offer"..................................................... 410
"Pari Passu Notes".......................................... 410
"pay the Notes"............................................. 1503
"pay its Subsidiary Guarantee".............................. 1403
"Payment Blockage Period"................................... 1403
"Payment Default"........................................... 1403
"Permitted Joint Venture"................................... 408
36
"Physical Notes"............................................ 201
"Private Placement Legend".................................. 203
"Regular Record Date"....................................... 301
"Regulation S Global Note".................................. 201
"Regulation S Note Exchange Date"........................... 313
"Regulation S Physical Notes"............................... 201
"Restricted Payment"........................................ 408
"Rule 144A Global Note"..................................... 201
"Rule 144A Physical Note"................................... 201
"Subsidiary Guarantor Blockage Notice"...................... 1503
"Subsidiary Guarantor Non-payment Default".................. 1503
"Subsidiary Guarantor Payment Blockage Period".............. 1503
"Subsidiary Guarantor Payment Default"...................... 1503
"Successor Company"......................................... 501
Section 103. Rules of Construction. For all purposes of this Indenture,
except as otherwise expressly provided or unless the context otherwise requires:
(1) the terms defined in this Indenture have the meanings
assigned to them in this Indenture;
(2) "or" is not exclusive;
(3) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with GAAP;
(4) the words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a whole and
not to any particular Article, Section or other subdivision;
(5) all references to "$" or "dollars" shall refer to the
lawful currency of the United States of America;
(6) the words "include," "included" and "including" as
used herein shall be deemed in each case to be followed by the phrase
"without limitation," if not expressly followed by such phrase or the
phrase "but not limited to";
(7) words in the singular include the plural, and words
in the plural include the singular; and
(8) any reference to a Section or Article refers to such
Section or Article of this Indenture.
Section 104. Incorporation by Reference of TIA. Whenever this Indenture
refers to a provision of the TIA, the provision is incorporated by reference in
and made a
37
part of this Indenture. This Indenture is subject to the mandatory provisions
of the TIA, which are incorporated by reference in and made a part of this
Indenture. Any terms incorporated by reference in this Indenture that are
defined by the TIA, defined by any TIA reference to another statute or defined
by SEC rule under the TIA, have the meanings so assigned to them therein. The
following TIA terms have the following meanings:
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company, any
Subsidiary Guarantor and any other obligor on the Notes.
Section 105. Conflict with TIA. If any provision hereof limits,
qualifies or conflicts with a provision of the TIA that is required under the
TIA to be a part of and govern this Indenture, the provision of the TIA shall
control. If any provision of this Indenture modifies or excludes any provision
of the TIA that may be so modified or excluded, the provision of the TIA shall
be deemed (i) to apply to this Indenture as so modified or (ii) to be excluded,
as the case may be.
Section 106. Compliance Certificates and Opinions. Upon any application
or request by Select Medical Escrow, the Company, any Subsidiary Guarantor or by
any other obligor upon the Notes to the Trustee to take any action under any
provision of this Indenture, Select Medical Escrow, the Company, such Subsidiary
Guarantor or such other obligor upon the Notes, as the case may be, shall
furnish to the Trustee an Officers' Certificate in form and substance reasonably
acceptable to the Trustee stating that all conditions precedent, if any,
provided for in this Indenture (including any covenant, compliance with which
constitutes a condition precedent) relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with; together
with, if applicable, such other certificates and opinions as may be required
under the TIA. Each such certificate or opinion shall be given in the form of
one or more Officers' Certificates, if to be given by one or more Officers, or
an Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the TIA and any other requirements set forth in this Indenture.
Notwithstanding the foregoing, in the case of any such request or application as
to which the furnishing of any Officers' Certificate or Opinion of Counsel is
specifically required by any provision of this Indenture relating to such
particular request or application, no additional certificate or opinion need be
furnished.
38
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (except for certificates
provided for in Section 405) shall include:
(1) a statement that the individual signing such
certificate or opinion has read such covenant or condition and the
definitions herein relating thereto;
(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 individual,
he or she made such examination or investigation as is necessary to
enable him or her to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of such
individual, such condition or covenant has been complied with.
Section 107. Form of Documents Delivered to Trustee. In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified by,
or covered by the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Persons as to
other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate or opinion of one or more Officers may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless any such Officer knows, or in the exercise
of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion of counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an Officer or Officers stating that the
information with respect to such factual matters is in the possession of the
Company or Select Medical Escrow, as the case may be, unless such counsel knows,
or in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
39
Section 108. Acts of Noteholders; Record Dates.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee, and, where it is hereby expressly required, to the Company or
Select Medical Escrow, as the case may be. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section 701)
conclusive in favor of the Trustee, Select Medical Escrow, the Company, any
Subsidiary Guarantor and any other obligor upon the Notes, if made in the manner
provided in this Section 108.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by an officer of a corporation or a member of a partnership or
other entity, on behalf of such corporation or partnership or other entity, such
certificate or affidavit shall also constitute sufficient proof of such Person's
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the person executing the same, may also be proved in any
other manner that the Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Note shall bind the Holder
of every Note issued upon the transfer thereof or in exchange therefor or in
lieu thereof, in respect of anything done or suffered to be done by the Trustee,
Select Medical Escrow, the Company, any Subsidiary Guarantor or any other
obligor upon the Notes in reliance thereon, whether or not notation of such
action is made upon such Note.
(e) (i) The Company (or Select Medical Escrow prior to the Select
Medical Escrow Merger) may set any day as a record date for the purpose of
determining the Holders of Outstanding Notes entitled to give, make or take any
request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by
40
this Indenture to be given, made or taken by Holders of Notes, provided that the
Company or Select Medical Escrow may not set a record date for, and the
provisions of this paragraph shall not apply with respect to, the giving or
making of any notice, declaration, request or direction referred to in subclause
(e)(ii) of this Section 108. If any record date is set pursuant to this
paragraph, the Holders of Outstanding Notes on such record date (or their duly
designated proxies), and no other Holders, shall be entitled to take the
relevant action, whether or not such Persons remain Holders after such record
date; provided that no such action shall be effective hereunder unless taken on
or prior to the applicable Expiration Date by Holders of the requisite principal
amount of Outstanding Notes on such record date. Nothing in this paragraph shall
be construed to prevent the Company or Select Medical Escrow from setting a new
record date for any action for which a record date has previously been set
pursuant to this paragraph (whereupon the record date previously set shall
automatically and with no action by any Person be cancelled and of no effect),
and nothing in this paragraph shall be construed to render ineffective any
action taken by Holders of the requisite principal amount of Outstanding Notes
on the date such action is taken. Promptly after any record date is set pursuant
to this paragraph, the Company (or Select Medical Escrow prior to the Select
Medical Escrow Merger), at its own expense, shall cause notice of such record
date, the proposed action by Holders and the applicable Expiration Date to be
given to the Trustee in writing and to each Holder of Notes in the manner set
forth in Section 110.
(ii) The Trustee may set any day as a record date for the purpose
of determining the Holders of Outstanding Notes entitled to join in the giving
or making of (i) any Notice of Default, (ii) any declaration of acceleration
referred to in Xxxxxxx 000, (xxx) any request to institute proceedings referred
to in Section 607(2) or (iv) any direction referred to in Section 612, in each
case with respect to Notes. If any record date is set pursuant to this
paragraph, the Holders of Outstanding Notes on such record date, and no other
Holders, shall be entitled to join in such notice, declaration, request or
direction, whether or not such Holders remain Holders after such record date;
provided that no such action shall be effective hereunder unless taken on or
prior to the applicable Expiration Date by Holders of the requisite principal
amount of Outstanding Notes on such record date. Nothing in this paragraph shall
be construed to prevent the Trustee from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be cancelled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Notes on the date such action
is taken. Promptly after any record date is set pursuant to this paragraph, the
Trustee, at the Company's (or prior to the Select Medical Escrow Merger, Select
Medical Escrow's) expense, shall cause notice of such record date, the proposed
action by Holders and the applicable Expiration Date to be given to the Company
(or Select Medical Escrow prior to the Select Medical Escrow Merger) in writing
and to each Holder of Notes in the manner set forth in Section 110.
41
(iii) With respect to any record date set pursuant to this Section
108, the party hereto that sets such record dates may designate any day as the
"Expiration Date" and from time to time may change the Expiration Date to any
earlier or later day; provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the Company (or Select
Medical Escrow prior to the Select Medical Escrow Merger) or the Trustee,
whichever such party is not setting a record date pursuant to this Section
108(e) in writing, and to each Holder of Notes in the manner set forth in
Section 110, on or prior to the existing Expiration Date. If an Expiration Date
is not designated with respect to any record date set pursuant to this Section,
the party hereto that set such record date shall be deemed to have initially
designated the 120th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be
later than the 120th day after the applicable record date.
(iv) Without limiting the foregoing, a Holder entitled hereunder to
take any action hereunder with regard to any particular Note may do so with
regard to all or any part of the principal amount of such Note or by one or more
duly appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount.
Section 109. Notices, etc., to Trustee and Company. Any request,
demand, authorization, direction, notice, consent, waiver or Act of Holders or
other document provided or permitted by this Indenture to be made upon, given or
furnished to, or filed with,
(1) the Trustee by any Holder or by Select Medical
Escrow, the Company, any Subsidiary Guarantor or any other obligor upon
the Notes shall be sufficient for every purpose hereunder if made,
given, furnished or filed in writing to or with the Trustee at U.S.
Bank Trust National Association, Corporate Trust Services, 000 Xxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx Xxxxxx
(telephone: (000) 000-0000; facsimile: (000) 000-0000 or at any other
address furnished in writing to the Company by the Trustee, or
(2) the Company or Select Medical Escrow by the Trustee
or by any Holder shall be sufficient for every purpose hereunder if in
writing and mailed, first-class postage prepaid, to the Company or
Select Medical Escrow, as the case may be, at 0000 Xxx Xxxxxxxxxx Xxxx,
X.X. Xxx 0000, Xxxxxxxxxxxxx, Xxxxxxxxxxxx 00000, attention of Xxxxxxx
X. Xxxxxx, Senior Vice President, Secretary and General Counsel
(facsimile (000) 000-0000) or at any other address furnished in writing
to the Trustee by the Company.
Section 110. Notices to Holders; Waiver. Where this Indenture provides
for notice to Holders of any event, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each
42
Holder affected by such event, at such Holder's address as it appears in the
Note Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impossible to mail notice of any event as
required by any provision of this Indenture, then such notification as shall be
made with the approval of the Trustee shall constitute a sufficient notification
for every purpose hereunder.
Section 111. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 112. Successors and Assigns. All covenants and agreements in
this Indenture by the Company (or Select Medical Escrow prior to the Select
Medical Escrow Merger) shall bind its respective successors and assigns, whether
so expressed or not.
Section 113. Separability Clause. In case any provision in this
Indenture or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 114. Benefits of Indenture. Nothing in this Indenture or in the
Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, any Paying Agent and the Holders, any
benefit or any legal or equitable right, remedy or claim under this Indenture,
except as provided in Article 14 and Article 15.
Section 115. Governing Law. THIS INDENTURE, THE NOTES AND THE
SUBSIDIARY GUARANTEES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK. THE TRUSTEE, THE COMPANY, THE SUBSIDIARY
GUARANTORS, SELECT MEDICAL ESCROW, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND
(BY THEIR ACCEPTANCE OF THE NOTES) THE HOLDERS, AGREE TO SUBMIT TO THE
JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE BOROUGH
OF MANHATTAN, IN THE CITY OF NEW YORK
43
IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE
NOTES.
Section 116. Legal Holidays. In any case where any Interest Payment
Date, Redemption Date or Stated Maturity of any Note shall not be a Business Day
at any Place of Payment, then (notwithstanding any other provision of this
Indenture or of the Notes) payment of interest or principal and premium (if any)
need not be made at such Place of Payment on such date, but may be made on the
next succeeding Business Day at such Place of Payment with the same force and
effect as if made on the Interest Payment Date or Redemption Date, or at the
Stated Maturity.
Section 117. No Personal Liability of Directors, Officers, Employees,
Incorporators and Stockholders. No director, officer, employee, incorporator or
stockholder, as such, of the Company, Select Medical Escrow or any Subsidiary
Guarantor shall have any liability for any obligation of the Company, Select
Medical Escrow or any Subsidiary Guarantor under this Indenture, the Notes or
any Subsidiary Guarantee, or for any claim based on, in respect of, or by reason
of, any such obligation or its creation. Each Noteholder, by accepting the
Notes, waives and releases all such liability. The waiver and release are part
of the consideration for issuance of the Notes.
Section 118. Exhibits and Schedules. All exhibits and schedules
attached hereto are by this reference made a part hereof with the same effect as
if herein set forth in full.
Section 119. Counterparts. This Indenture may be executed in any number
of counterparts, each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
ARTICLE 2
NOTE FORMS
Section 201. Forms Generally. The Notes and the Trustee's certificate
of authentication relating thereto shall be in substantially the forms set
forth, or referenced, in this Article 2 and Exhibit A annexed hereto, which
Exhibit is hereby incorporated in and expressly made a part of this Indenture.
The Notes may have such appropriate insertions, omissions, substitutions,
notations, legends, endorsements, identifications and other variations as are
required or permitted by law, stock exchange rule or Depository rule or usage,
agreements to which the Company (or Select Medical Escrow prior to the Select
Medical Escrow Merger) is subject, if any, or other customary usage, or as may
consistently herewith be determined by the Officers of the Company (or Select
Medical Escrow prior to the Select Medical Escrow Merger) executing such Notes,
as evidenced by such execution. Each Note shall be dated the date of its
authentication. The terms of the Notes set forth in Exhibit A are part of the
terms of this Indenture. Any portion of the
44
text of any Note may be set forth on the reverse thereof, with an appropriate
reference thereto on the face of the Note.
Initial Notes and any Additional Notes offered and sold in reliance on
Rule 144A under the Securities Act shall be issued in the form of one or more
permanent global Notes in substantially the form set forth in Exhibit A (each, a
"Rule 144A Global Note"), deposited with the Trustee, as custodian for the
Depositary or its nominee, duly executed by the Company (or Select Medical
Escrow prior to the Select Medical Escrow Merger) and authenticated by the
Trustee as hereinafter provided. The aggregate principal amount of a Rule 144A
Global Note may from time to time be increased or decreased by adjustments made
on the records of the Trustee, as custodian for the Depositary or its nominee,
as hereinafter provided.
Initial Notes and any Additional Notes offered and sold in offshore
transactions in reliance on Regulation S shall be issued in the form of one or
more permanent global Notes in substantially the form set forth in Exhibit A
(each, a "Regulation S Global Note"), deposited with the Trustee, as custodian
for the Depositary or its nominee, duly executed by the Company (or Select
Medical Escrow prior to the Select Medical Escrow Merger) and authenticated by
the Trustee as hereinafter provided. The aggregate principal amount of a
Regulation S Global Note, if any, may from time to time be increased or
decreased by adjustments made in the records of the Trustee, as custodian for
the Depositary or its nominee, as hereinafter provided.
Initial Notes and any Additional Notes resold to institutional
"accredited investors" (as defined in Rules 501(a)(1), (2), (3) and (7) under
the Securities Act) who are not QIBs ("IAIs") in the United States of America,
upon the effectiveness of such resale, shall be represented by one or more
permanent global Notes substantially in the form set forth in Exhibit A (each,
an "Institutional Accredited Investor Global Note"), deposited with the Trustee,
as custodian for the Depository or its nominee, duly executed by the Company (or
Select Medical Escrow prior to the Select Medical Escrow Merger) and
authenticated by the Trustee as hereinafter provided. The aggregate principal
amount of an Institutional Accredited Investor Global Note, if any, may from
time to time be increased or decreased by adjustments made in the records of the
Trustee, as custodian for the Depositary or its nominee, as hereinafter
provided.
Subject to the limitations on the issuance of certificated Notes set
forth in Sections 312 and 313, Initial Notes and any Initial Additional Notes
issued pursuant to Section 305 in exchange for or upon transfer of beneficial
interests (x) in a Rule 144A Global Note shall be in the form of permanent
certificated Notes substantially in the form set forth in Exhibit A and shall
contain the Private Placement Legend as set forth in Section 203 (the "Rule 144
Physical Notes"), (y) in a Regulation S Global Note (if any), on or after the
Regulation S Note Exchange Date with respect to such Regulation S Global Note,
shall be in the form of permanent certificated Notes substantially in the form
set forth in Exhibit A (the "Regulation S Physical Notes") or (z) in an
Institutional
45
Accredited Investor Global Note (if any), shall be in the form of permanent
certificated Notes substantially in the form set forth in Exhibit A (the
"Institutional Accredited Investor Physical Notes"), respectively, as
hereinafter provided.
The 144A Physical Notes, the Regulation S Physical Notes, the
Institutional Accredited Investor Physical Notes are sometimes collectively
herein referred to as the "Physical Notes." The Rule 144A Global Note, the
Regulation S Global Note and the Institutional Accredited Investor Global Note
are sometimes collectively referred to as the "Global Notes."
Exchange Notes shall be issued substantially in the form set forth in
Exhibit A and, subject to Section 312(b), shall be in the form of one or more
Global Notes.
The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of Clearstream" and "Customer Handbook" of Clearstream (or, in each
case, equivalent documents setting forth the procedures of Euroclear and
Clearstream) shall be applicable to transfers of beneficial interests in the
Regulation S Global Notes that are held by participants through Euroclear or
Clearstream.
Section 202. Form of Trustee's Certificate of Authentication. The
Trustee's certificate of authentication shall be substantially in the following
form:
This is one of the Notes described in the within-mentioned Indenture.
_____________________________________
as Trustee
By___________________________________
Authorized Officer
Dated:
If an appointment of an Authenticating Agent is made pursuant to
Section 714, the Notes may have endorsed thereon, in lieu of the Trustee's
certificate of authentication, an alternative certificate of authentication in
the following form:
46
This is one of the Notes described in the within-mentioned Indenture.
U.S. BANK TRUST NATIONAL ASSOCIATION
_____________________________________
As Trustee
By___________________________________
As Authenticating Agent
By_________________________________
Authorized Officer
Dated:
Section 203. Restrictive and Global Note Legends. Each Global Note and
Physical Note shall bear the following legend set forth below (the "Private
Placement Legend") on the face thereof until the Private Placement Legend is
removed in accordance with Section 313(5):
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. NEITHER THIS NOTE 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, SUCH
REGISTRATION. THE HOLDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, AGREES
ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT
HAS PURCHASED NOTES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH NOTE,
PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") THAT IS
TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE
LAST DATE ON WHICH THE ISSUER OF THE NOTES OR ANY AFFILIATE OF THE
ISSUER OF THE NOTES WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF
SUCH SECURITY) ONLY (A) TO THE ISSUER OF THE NOTES, (B) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE
PURSUANT TO
47
RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES
IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A QUALIFIED INSTITUTIONAL BUYER TO 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 RULE 501(a)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT THAT IS AN "INSTITUTIONAL ACCREDITED
INVESTOR" ACQUIRING THE NOTE FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM
PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, 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 ISSUER'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. THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE.
Each Global Note, whether or not an Initial Note, shall also bear the
following legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC") TO THE
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO 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.
48
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN SECTIONS 312 AND 313 OF THE INDENTURE.
ARTICLE 3
THE NOTES
Section 301. Title and Terms. The aggregate principal amount of Notes
that may be authenticated and delivered and Outstanding under this Indenture is
not limited, except as provided in Section 406 and except as may be limited by
applicable law. The Initial Notes will be issued in an aggregate principal
amount of $175,000,000. All the Original Notes shall vote and consent together
on all matters as one class, and none of the Original Notes will have the right
to vote or consent as a class separate from one another on any matter.
Additional Notes (including any Exchange Notes issued in exchange therefor) may
vote as a class with the other Notes and otherwise be treated as Notes for
purposes of this Indenture.
The Notes shall be known and designated as the "7-1/2% Senior
Subordinated Notes Due 2013" of Select Medical Escrow prior to the Select
Medical Escrow Merger, and of the Company following the Select Medical Escrow
Merger. The Company shall provide written notice of the Assumption to the
Holders of the Notes promptly following such Assumption. The final Stated
Maturity of the Notes shall be August 1, 2013. Interest on the Outstanding
principal amount of Notes will accrue at the rate of 7-1/2% per annum and will
be payable semi-annually in arrears on August 1 and February 1 in each year,
commencing on February 1, 2004, to holders of record on the immediately
preceding July 15 and January 15, respectively (each such July 15 and January
15, a "Regular Record Date"). Interest on the Original Notes will accrue from
the most recent date to which interest has been paid or duly provided for or, if
no interest has been paid, from the Issue Date; and interest on any Additional
Notes (and Exchange Notes issued in exchange therefor) will accrue from the most
recent date to which interest has been paid or duly provided for or, if no
interest has been paid on such Additional Notes, from the date of issuance of
such Additional Notes; provided that if any Note is surrendered for exchange on
or after a record date for an Interest Payment Date that will occur on or after
the date of such exchange, interest on the Note received in exchange thereof
will accrue from the date of such Interest Payment Date.
The principal of, and premium, if any, and interest, on the Notes shall
be payable at the office or agency of the Company (or Select Medical Escrow
prior to the Select Medical Escrow Merger) maintained for that purpose in the
Borough of Manhattan, The
49
City of New York (the "Place of Payment"); provided, however, that at the option
of the Company (or Select Medical Escrow prior to the Select Medical Escrow
Merger) payment of interest on a Note may be made by check mailed to the address
of the Person entitled thereto as such address shall appear in the Note
Register.
Section 302. Denominations. The Notes shall be issuable only in
registered form without coupons and only in denominations of $1,000 and any
integral multiple thereof.
Section 303. Execution, Authentication and Delivery and Dating. The
Notes shall be executed on behalf of the Company (or Select Medical Escrow prior
to the Select Medical Escrow Merger) by its chairman of the Board of Directors,
its chief executive officer, its president, or one of its executive vice
presidents or senior vice presidents, in each case, attested by its Secretary or
one of its assistant secretaries. The signature of such Officer on the Notes may
be manual or facsimile.
Notes bearing the manual or facsimile signatures of individuals who
were at any time the proper Officers of the Company (or Select Medical Escrow
prior to the Select Medical Escrow Merger) shall bind the Company (or Select
Medical Escrow prior to the Select Medical Escrow Merger), notwithstanding that
such individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Notes or did not hold such offices at the
date of such Notes.
At any time and from time to time after the execution and delivery of
this Indenture, the Company (or Select Medical Escrow prior to the Select
Medical Escrow Merger) may deliver Notes executed by the Company (or Select
Medical Escrow prior to the Select Medical Escrow Merger) to the Trustee for
authentication; and the Trustee shall authenticate and deliver (i) Initial Notes
for original issue in the aggregate principal amount not to exceed $175,000,000
and (ii) following the Select Medical Escrow Merger, Additional Notes from time
to time for original issue in aggregate principal amounts specified by the
Company and (iii) Exchange Notes from time to time for issue in exchange for a
like principal amount of Initial Notes or Initial Additional Notes, in each case
specified in clauses (i) through (iii) above, upon a written order of the
Company (or Select Medical Escrow, as the case may be) in the form of an
Officers' Certificate of the Company (or Select Medical Escrow, as the case may
be) (an "Authentication Order"). Such Officers' Certificate shall specify the
amount of Notes to be authenticated and the date on which the Notes are to be
authenticated, whether the Notes are to be Initial Notes, Additional Notes or
Exchange Notes and whether the Notes are to be issued as one or more Global
Notes or Physical Notes and such other information as the Company (or Select
Medical Escrow, as the case may be) may include or the Trustee may reasonably
request.
All Notes shall be dated the date of their authentication.
50
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any Note
shall be conclusive evidence, and the only evidence, that such Note has been
duly authenticated and delivered hereunder.
Section 304. Temporary Notes. Until definitive Notes are ready for
delivery, the Company (or Select Medical Escrow prior to the Select Medical
Escrow Merger) may prepare and execute and upon receipt of an Authentication
Order the Trustee shall authenticate and deliver temporary Notes. Temporary
Notes shall be substantially in the form of definitive Notes but may have
variations that the Officers executing such temporary Notes consider appropriate
for temporary Notes, as evidenced by their execution of such temporary Notes and
as may be reasonably acceptable to the Trustee. If temporary Notes are issued,
the Company (or Select Medical Escrow prior to the Select Medical Escrow Merger)
will cause definitive Notes to be prepared without unreasonable delay. After the
preparation of definitive Notes, the temporary Notes shall be exchangeable for
definitive Notes upon surrender of the temporary Notes at the office or agency
of the Company (or Select Medical Escrow prior to the Select Medical Escrow
Merger) in a Place of Payment, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Notes, the Company (or Select Medical
Escrow prior to the Select Medical Escrow Merger) shall execute and upon receipt
of an Authentication Order the Trustee shall authenticate and deliver in
exchange therefor a like principal amount of definitive Notes of authorized
denominations. Until so exchanged the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as definitive Notes of the
same series and tenor.
Section 305. Registration, Registration of Transfer and Exchange. The
Company (or Select Medical Escrow prior to the Select Medical Escrow Merger)
shall cause to be kept at the Corporate Trust Office of the Trustee a register
(the "Note Register") in which, subject to such reasonable regulations as it may
prescribe, the Company (or Select Medical Escrow prior to the Select Medical
Escrow Merger) shall provide for the registration of Notes and of transfers of
Notes. The Trustee is hereby appointed "Note Registrar" for the purpose of
registering Notes and transfers of Notes as herein provided. Following the
Select Medical Escrow Merger, the Company may change the Note Registrar without
prior notice to the Holders, and the Company or any of its Domestic Subsidiaries
may act as Note Registrar, in which event the Note Register may be kept at an
office of the Company or any such Domestic Subsidiary.
Upon surrender for transfer of any Note at the office or agency of the
Company (or Select Medical Escrow prior to the Select Medical Escrow Merger) in
a Place of Payment, in compliance with all applicable requirements of this
Indenture and applicable law, the Company (or Select Medical Escrow prior to the
Select Medical Escrow Merger) shall execute, and the Trustee shall authenticate
and deliver, in the name of the
51
designated transferee or transferees, one or more new Notes, of any authorized
denominations and of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes, of
any authorized denominations and of a like tenor and aggregate principal amount,
upon surrender of the Notes to be exchanged at such office or agency. Whenever
any Notes are so surrendered for exchange, the Company (or Select Medical Escrow
prior to the Select Medical Escrow Merger) shall execute, and the Trustee shall
authenticate and deliver, the Notes that the Holder making the exchange is
entitled to receive.
All Notes issued upon any transfer or exchange of Notes shall be the
valid obligations of the Company (or Select Medical Escrow prior to the Select
Medical Escrow Merger), evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Notes surrendered upon such transfer or
exchange.
Every Note presented or surrendered for transfer or exchange shall (if
so required by the Company (or Select Medical Escrow prior to the Select Medical
Escrow Merger) or the Trustee) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company (or Select Medical
Escrow prior to the Select Medical Escrow Merger) and the Note Registrar duly
executed, by the Holder thereof or such Holder's attorney duly authorized in
writing.
No service charge shall be made for any transfer or exchange of Notes,
but the Company (or Select Medical Escrow prior to the Select Medical Escrow
Merger) may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any transfer or
exchange of Notes under this Section 305, other than exchanges pursuant to
Section 304 or 906 not involving any transfer.
The Company (or Select Medical Escrow prior to the Select Medical
Escrow Merger) shall not be required (i) to issue, transfer or exchange any Note
during a period beginning at the opening of business 15 days before the day of
the mailing of a notice of redemption (or purchase) of Notes selected for
redemption (or purchase) under Section 1004 and ending at the close of business
on the day of such mailing, or (ii) to transfer or exchange any Note so selected
for redemption (or purchase) in whole or in part.
Section 306. Mutilated, Destroyed, Lost and Stolen Notes. If (i) any
mutilated Note is surrendered to the Trustee, or the Company (or Select Medical
Escrow prior to the Select Medical Escrow Merger) and the Trustee receive
evidence to their satisfaction of the destruction, loss or theft of any Note,
and (ii) there is delivered to the Company (or Select Medical Escrow prior to
the Select Medical Escrow Merger) and the Trustee such security or indemnity as
may be required by them to save each of them harmless, then, in the absence of
notice to the Company (or Select Medical Escrow prior to the Select
52
Medical Escrow Merger) or the Trustee that such Note has been acquired by a bona
fide purchaser, the Company (or Select Medical Escrow prior to the Select
Medical Escrow Merger) shall execute and upon receipt of an Authentication Order
the Trustee shall authenticate and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Note, a new Note of like tenor and
principal amount, bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become
or is about to become due and payable, the Company (or Select Medical Escrow
prior to the Select Medical Escrow Merger) in its discretion may, instead of
issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section 306, the Company
(or Select Medical Escrow prior to the Select Medical Escrow Merger) may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the
fees and expenses of the Trustee) connected therewith.
Every new Note issued pursuant to this Section 306 in lieu of any
mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Company (or Select Medical Escrow prior
to the Select Medical Escrow Merger), whether or not the mutilated, destroyed,
lost or stolen Note shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and ratably with any and
all other Notes duly issued hereunder.
The provisions of this Section 306 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
Section 307. Payment of Interest Rights Preserved. Interest on any Note
that is payable, and is punctually paid or duly provided for, on any Interest
Payment Date shall be paid to the Person in whose name that Note (or one or more
Predecessor Notes) is registered at the close of business on the Regular Record
Date for such interest specified in Section 301.
Any interest on any Note that is payable, but is not punctually paid or
duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the registered Holder on the
relevant Regular Record Date by virtue of having been such Holder; and such
Defaulted Interest may be paid by the Company (or Select Medical Escrow prior to
the Select Medical Escrow Merger), as provided in clause (1) or clause (2)
below:
(1) The Company (or Select Medical Escrow prior to the
Select Medical Escrow Merger) may elect to make payment of any
Defaulted Interest to
53
the Persons in whose names the Notes (or their respective Predecessor
Notes) are registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company (or Select Medical Escrow prior to the
Select Medical Escrow Merger) shall notify the Trustee in writing of
the amount of Defaulted Interest proposed to be paid on each Note and
the date of the proposed payment, and at the same time the Company (or
Select Medical Escrow prior to the Select Medical Escrow Merger) shall
deposit with the Trustee an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest or
shall make arrangements reasonably satisfactory to the Trustee for such
deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled
to such Defaulted Interest as provided in this clause (1). Thereupon
the Trustee shall fix a Special Record Date for the payment of such
Defaulted Interest which shall be not more than 15 nor less than 10
days prior to the date of the proposed payment and not less than 10
days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company (or Select
Medical Escrow prior to the Select Medical Escrow Merger) of such
Special Record Date and, in the name and at the expense of the Company
(or Select Medical Escrow prior to the Select Medical Escrow Merger),
shall cause notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor to be mailed, first class postage
prepaid, to each Holder at such Holder's address as it appears in the
Note Register, not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed, such Defaulted
Interest shall be paid to the Persons in whose names the Notes (or
their respective Predecessor Notes) are registered on such Special
Record Date and shall no longer be payable pursuant to the following
clause (2).
(2) The Company (or Select Medical Escrow prior to the
Select Medical Escrow Merger) may make payment of any Defaulted
Interest in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Notes may be
listed, and upon such notice as may be required by such exchange, if,
after notice given by the Company (or Select Medical Escrow prior to
the Select Medical Escrow Merger) to the Trustee of the proposed
payment pursuant to this clause (2), such payment shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section 307, each Note
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Note shall carry the rights to interest accrued and unpaid, and to
accrue, that were carried by such other Note.
54
Section 308. Persons Deemed Owners. Select Medical Escrow, the Company,
any Subsidiary Guarantor, any other obligor upon the Notes, the Trustee and any
agent of any of them may treat the Person in whose name any Note is registered
as the owner of such Note for the purpose of receiving payment of principal of
(and premium, if any), and (subject to Section 307) interest on, such Note and
for all other purposes whatsoever, whether or not such Note be overdue, and none
of Select Medical Escrow, the Company, any Subsidiary Guarantor any other
obligor upon the Notes, the Trustee nor any agent of any of them shall be
affected by notice to the contrary.
Section 309. Cancellation. All Notes surrendered for payment,
redemption, transfer, exchange or conversion shall, if surrendered to any Person
other than the Trustee, be delivered to the Trustee and, if not already
cancelled, shall be promptly cancelled by it. The Company or Select Medical
Escrow may at any time deliver to the Trustee for cancellation any Notes
previously authenticated and delivered hereunder that the Company or Select
Medical Escrow may have acquired in any manner whatsoever, and all Notes so
delivered shall be promptly cancelled by the Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes cancelled as provided in
this Section 309, except as expressly permitted by this Indenture. All cancelled
Notes held by the Trustee shall be disposed of as directed by a Company Order.
Section 310. Computation of Interest. Interest on the Notes shall be
computed on the basis of a 360-day year of twelve 30-day months.
Section 311. CUSIP Numbers. The Company (or Select Medical Escrow prior
to the Select Medical Escrow Merger) in issuing the Notes may use "CUSIP"
numbers (if then generally in use), and if so, the Trustee may use the CUSIP
numbers in notices of redemption or exchange as a convenience to Holders;
provided, however, that any such notice may state that no representation is made
as to the correctness or accuracy of the CUSIP number printed in the notice or
on the Notes, and that reliance may be placed only on the other identification
numbers printed on the Notes. The Company (or Select Medical Escrow prior to the
Select Medical Escrow Merger) shall promptly notify the Trustee of any change in
CUSIP numbers.
Section 312. Book-Entry Provisions for Global Notes.
(a) Each Global Note initially shall (i) be registered in the name
of the Depositary for such Global Note or the nominee of such Depositary and
(ii) be delivered to the Trustee as custodian for such Depositary.
Prior to the expiration of the 40-day distribution compliance period
set forth in Regulation S, beneficial interests in any Regulation S Global Note
may be held only through Euroclear or Clearstream unless transferred in
accordance with Section 313(3).
55
Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any Global Note, and the
Depositary may be treated by Select Medical Escrow, the Company, any Subsidiary
Guarantor, any other obligor upon the Notes, the Trustee and any agent of any of
them as the absolute owner of such Global Note for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent Select Medical
Escrow, the Company, any Subsidiary Guarantor, any other obligor upon the Notes,
the Trustee or any agent of any of them from giving effect to any written
certification, proxy or other authorization furnished by the Depositary or
impair, as between the Depositary and its Agent Members, the operation of
customary practices governing the exercise of the rights of a beneficial owner
of any Note. The registered holder of a Global Note may grant proxies and
otherwise authorize any Person, including Agent Members and Persons that may
hold interests through Agent Members, to take any action that a Holder is
entitled to take under this Indenture or the Notes.
(b) Transfers of a Global Note shall be limited to transfers of
such Global Note in whole, but, subject to the immediately succeeding sentence,
not in part, to the Depositary, its successors or their respective nominees.
Interests of beneficial owners in a Global Note may not be transferred or
exchanged for Physical Notes, unless (i) the Company (or Select Medical Escrow
prior to the Select Medical Escrow Merger) has consented thereto in writing, or
such transfer or exchange is made pursuant to the next sentence, and (ii) such
transfer or exchange is in accordance with the applicable rules and procedures
of the Depositary and the provisions of Sections 305 and 313. Rule 144A Physical
Notes, Regulation S Physical Notes or Institutional Accredited Investor Physical
Notes, shall be transferred to all beneficial owners in exchange for their
beneficial interests in the relevant Rule 144A Global Note, the relevant
Regulation S Global Note or the relevant Institutional Accredited Investor
Global Note, respectively, if (i) the Depositary notifies the Company (or Select
Medical Escrow prior to the Select Medical Escrow Merger) that it is unwilling
or unable to continue as Depositary for the applicable Global Note and a
successor depositary is not appointed by the Company (or Select Medical Escrow
prior to the Select Medical Escrow Merger) within 90 days, (ii) the Depositary
ceases to be a "Clearing Agency" registered under the Exchange Act and a
successor depositary is not appointed by the Company (or Select Medical Escrow
prior to the Select Medical Escrow Merger) within 90 days, (iii) the Company (or
Select Medical Escrow prior to the Select Medical Escrow Merger), at its option,
notifies the Trustee in writing that it elects to cause the issuance of Physical
Notes under this Indenture or (iv) an Event of Default has occurred and is
continuing and the Note Registrar has received a written request from the
Depositary to issue Physical Notes (with appropriate registration and delivery
instructions).
(c) In connection with any transfer or exchange of a portion of
the beneficial interest in any Global Note to beneficial owners for Physical
Notes pursuant to paragraph (b) of this Section 312, the Note Registrar shall
record on its books and records the date
56
and a decrease in the principal amount of such Global Note in an amount equal to
the beneficial interest in the Global Note being transferred, and the Company
(or Select Medical Escrow prior to the Select Medical Escrow Merger) shall
execute, and the Trustee shall authenticate and deliver, one or more Physical
Notes of like tenor and principal amount of authorized denominations.
(d) In connection with a transfer of an entire Global Note to
beneficial owners pursuant to paragraph (b) of this Section 312, the applicable
Global Note shall be deemed to be surrendered to the Trustee for cancellation,
and the Company (or Select Medical Escrow prior to the Select Medical Escrow
Merger) shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depositary in exchange for its beneficial
interest in the applicable Global Note, an equal aggregate principal amount at
maturity of U.S. Physical Notes (in the case of any Rule 144A Global Note),
Regulation S Physical Notes (in the case of any Regulation S Global Note) or
Institutional Accredited Investor Physical Notes (in the case of any
Institutional Accredited Investor Global Note) as the case may be, of authorized
denominations.
(e) The transfer and exchange of a Global Note or beneficial
interests therein shall be effected through the Depositary, in accordance with
this Indenture (including applicable restrictions on transfer set forth in
Section 313) and the procedures of the Depositary therefor. Any beneficial
interest in one of the Global Notes that is transferred to a Person who takes
delivery in the form of an interest in a different Global Note will, upon
transfer, cease to be an interest in the Global Note from which the interest is
being transferred and become an interest in the other Global Note and,
accordingly, will thereafter be subject to all transfer restrictions, if any,
and other procedures applicable to beneficial interests in such other Global
Note for as long as it remains such an interest. A transferor of a beneficial
interest in a Global Note to be transferred to a Person taking delivery in the
form of an interest in another Global Note shall deliver to the Registrar a
written order given in accordance with the Depositary's procedures containing
information regarding the participant account of the Depositary to be credited
with a beneficial interest in the relevant Global Note. Subject to Section 313,
the Registrar shall, in accordance with such instructions, instruct the
Depositary to credit to the account of the Person specified in such instructions
a beneficial interest in such other Global Note and to debit the account of the
Person making the transfer of the beneficial interest in the Global Note being
transferred.
(f) Any Physical Note delivered in exchange for an interest in a
Global Note pursuant to paragraph (b) of this Section 312 shall, unless such
exchange is made on or after the Resale Restriction Termination Date applicable
to such Note and except as otherwise provided in Section 203 and Section 313,
bear the Private Placement Legend.
57
Any request to remove the Private Placement Legend shall be subject to the terms
of Section 313(5).
(g) Select Medical Escrow, the Company, any Subsidiary Guarantor,
any other obligor upon the Notes or the Trustee, in the discretion of any of
them, may treat as the Act of a Holder any instrument or writing of any Person
that is identified by the Depositary as the owner of a beneficial interest in
the Global Note, provided that the fact and date of the execution of such
instrument or writing is proved in accordance with Section 108(b).
Section 313. Special Transfer Provisions.
(1) Transfers of Rule 144A Global Notes. The following provisions
shall apply with respect to any proposed transfer of a Rule 144A Global Note
that is a Restricted Security or a beneficial interest therein prior to the
Resale Restriction Termination Date:
(a) a transfer of a Rule 144A Global Note or a beneficial
interest therein to a QIB shall be made upon the representation of the
transferee, in accordance with the form set forth on the reverse of the
Note, that it is purchasing for its own account or an account with
respect to which it exercises sole investment discretion and that it
and any such account is a "qualified institutional buyer" within the
meaning of Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such
information regarding the Company and Select Medical Escrow as it has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon
its foregoing representations in order to claim the exemption from
registration provided by Rule 144A;
(b) a transfer of a Rule 144A Global Note or a beneficial
interest therein to an IAI shall be made upon receipt by the Trustee or
its agent of a certificate substantially in the form set forth in
Exhibit C from the proposed transferee and, if requested by the Company
(or Select Medical Escrow prior to the Select Medical Escrow Merger) or
the Trustee, the delivery of an opinion of counsel, certification
and/or other information satisfactory to each of them; and
(c) a transfer of a Rule 144A Global Note or a beneficial
interest therein to a Non-U.S. Person shall be made upon receipt by the
Trustee or its agent of a certificate substantially in the form set
forth in Exhibit D from the proposed transferor and, if requested by
the Company (or Select Medical Escrow prior to the Select Medical
Escrow Merger) or the Trustee, the delivery of an
58
opinion of counsel, certification and/or other information satisfactory
to each of them.
(2) Transfers of Institutional Accredited Investor Global Notes.
The following provisions shall apply with respect to any proposed transfer of an
Institutional Accredited Investor Global Note that is a Restricted Security or a
beneficial interest therein prior to Resale Restriction Termination Date:
(a) a transfer of an Institutional Accredited Investor
Global Note or a beneficial interest therein to a QIB shall be made
upon the representation of the transferee, in accordance with the form
as set forth on the reverse of the Note, that it is purchasing for its
own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A, and is aware that
the sale to it is being made in reliance on Rule 144A and acknowledges
that it has received such information regarding the Company and Select
Medical Escrow as it has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that
the transferor is relying upon its foregoing representations in order
to claim the exemption from registration provided by Rule 144A;
(b) a transfer of an Institutional Accredited Investor
Global Note or a beneficial interest therein to an IAI shall be made
upon receipt by the Trustee or its agent of a certificate substantially
in the form set forth in Exhibit C from the proposed transferee and, if
requested by the Company (or Select Medical Escrow prior to the Select
Medical Escrow Merger) or the Trustee, the delivery of an opinion of
counsel, certification and/or other information satisfactory to each of
them; and
(c) a transfer of an Institutional Accredited Investor
Global Note or a beneficial interest therein to a Non-U.S. Person shall
be made upon receipt by the Trustee or its agent of a certificate
substantially in the form set forth in Exhibit D from the proposed
transferor and, if requested by the Company (or Select Medical Escrow
prior to the Select Medical Escrow Merger) or the Trustee, the delivery
of an opinion of counsel, certification and/or other information
satisfactory to each of them.
(3) Transfer of Regulation S Global Notes. The following
provisions shall apply with respect to any proposed transfer of a Regulation S
Global Note Global Note that is a Restricted Security or a beneficial interest
therein prior to the expiration of the distribution compliance period set forth
in Regulation S:
(a) a transfer of a Regulation S Global Note Global Note
or a beneficial interest therein to a QIB shall be made upon the
representation of the
59
transferee, in accordance with the form set forth on the reverse of the
Note, that it is purchasing the Note for its own account or an account
with respect to which it exercises sole investment discretion and that
it and any such account is a "qualified institutional buyer" within the
meaning of Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such
information regarding the Company and Select Medical Escrow as it has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon
its foregoing representations in order to claim the exemption from
registration provided by Rule 144A;
(b) a transfer of a Regulation S Global Note Global Note
or a beneficial interest therein to an IAI shall be made upon receipt
by the Trustee or its agent of a certificate substantially in the form
set forth in Exhibit C from the proposed transferee and, if requested
by the Company (or Select Medical Escrow prior to the Select Medical
Escrow Merger) or the Trustee, the delivery of an opinion of counsel,
certification and/or other information satisfactory to each of them;
and
(c) a transfer of a Regulation S Global Note Global Note
or a beneficial interest therein to a Non- U.S. Person shall be made
upon receipt by the Trustee or its agent of a certificate substantially
in the form set forth in Exhibit D hereof from the proposed transferee
and, if requested by the Company (or Select Medical Escrow prior to the
Select Medical Escrow Merger) or the Trustee, receipt by the Trustee or
its agent of an opinion of counsel, certification and/or other
information satisfactory to each of them.
After the expiration of the distribution compliance period set forth in
Regulation S, interests in the Regulation S Global Note Global Note may be
transferred without requiring certification set forth in Exhibit C, Exhibit D or
any additional certification. The Trustee and Note Registrar shall be entitled
to request and receive, and may rely upon conclusively, a certificate or other
written confirmation from the Company (or Select Medical Escrow prior to the
Select Medical Escrow Merger) as to the date of expiration of such distribution
compliance period; and until it receives such certification or confirmation, the
Trustee shall be entitled to presume that such distribution compliance period
has not expired.
(4) Limitation on Issuance of Physical Notes. No Physical Note
shall be exchanged for a beneficial interest in any Global Note, except in
accordance with Section 312 and this Section 313.
A beneficial owner of an interest in a Regulation S Global Note shall
not be permitted to exchange such interest for a Physical Note until a date,
which must be after the expiration of the distribution compliance period set
forth in Regulation S, on which
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the Company (or Select Medical Escrow prior to the Select Medical Escrow Merger)
receives a certificate of beneficial ownership substantially in the form of
Exhibit E from such beneficial owner (a "Certificate of Beneficial Ownership").
Such date, as it relates to a Regulation S Global Note, is herein referred to as
the "Regulation S Note Exchange Date." The Trustee and Note Registrar shall be
entitled to request and receive, and may rely upon conclusively, a certificate
or other written confirmation from the Company (or Select Medical Escrow prior
to the Select Medical Escrow Merger) as to the date of the Registration S Note
Exchange Date, and until it receives such certification or confirmation, the
Trustee and Note Registrar shall be entitled to presume that the Regulation S
Note Exchange Date has not occurred.
(5) Private Placement Legend. Upon the transfer, exchange or
replacement of Notes not bearing the Private Placement Legend, the Note
Registrar shall deliver Notes that do not bear the Private Placement Legend.
Upon the transfer, exchange or replacement of Notes bearing the Private
Placement Legend, the Note Registrar shall deliver only Notes that bear the
Private Placement Legend, unless (i) the requested transfer is after the
relevant Resale Restriction Termination Date with respect to such Notes, or (ii)
upon written request of the Company (or Select Medical Escrow prior to the
Select Medical Escrow Merger) after there is delivered to the Note Registrar an
opinion of counsel (which opinion and counsel are satisfactory to the Company
and the Trustee) to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with the
provisions of the Securities Act, or (iii) with respect to a Regulation S Global
Note or Regulation S Physical Note only, with the agreement of the Company (or
Select Medical Escrow prior to the Select Medical Escrow Merger) on or after the
Regulation S Note Exchange Date with respect to such Note, or (iv) such Notes
are sold or exchanged pursuant to an effective registration statement under the
Securities Act.
(6) Other Transfers. The Note Registrar shall effect and register,
upon receipt of a written request from the Company (or Select Medical Escrow
prior to the Select Medical Escrow Merger) so to do, a transfer not otherwise
permitted by this Section 313, such registration to be done in accordance with
the otherwise applicable provisions of this Section 313, upon the furnishing by
the proposed transferor or transferee of a written opinion of counsel (which
opinion and counsel are satisfactory to the Company (or Select Medical Escrow
prior to the Select Medical Escrow Merger) and the Trustee) to the effect that,
and such other certifications or information as the Company (or Select Medical
Escrow prior to the Select Medical Escrow Merger) may require to confirm that,
the proposed transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act.
A Note that is a Restricted Security may not be transferred other than
as provided in this Section 313. A beneficial interest in a Global Note that is
a Restricted Security may not be exchanged for a beneficial interest in another
Global Note other than through a transfer in compliance with this Section 313.
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(7) General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Note Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 312 or this Section
313 (including all Notes received for transfer pursuant to this Section 313).
The Company (or Select Medical Escrow prior to the Select Medical Escrow Merger)
shall have the right to require the Note Registrar to deliver to the Company (or
Select Medical Escrow prior to the Select Medical Escrow Merger), at the
Company's (or prior to the Select Medical Escrow Merger, Select Medical
Escrow's) expense, copies of all such letters, notices or other written
communications at any reasonable time upon the giving of reasonable written
notice to the Note Registrar.
In connection with any transfer of any Note, the Trustee, the Note
Registrar, Select Medical Escrow and the Company shall be entitled to receive,
shall be under no duty to inquire into, may conclusively presume the correctness
of, and shall be fully protected in relying upon the certificates, opinions and
other information referred to herein (or in the forms provided herein, attached
hereto or to the Notes, or otherwise) received from any Holder and any
transferee of any Note regarding the validity, legality and due authorization of
any such transfer, the eligibility of the transferee to receive such Note and
any other facts and circumstances related to such transfer.
Neither the Trustee nor the Note Registrar shall be under any
obligation or duty to determine or inquire as to compliance with the Securities
Act (including any rules or regulations promulgated thereunder) or any state
securities laws that may be applicable in connection with or with respect to any
transfer of any interest in any Note (including any transfers between or among
beneficial owners of interests in any Global Note) or to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture with respect to transfers of interests in any security (including any
transfers between or among beneficial owners of interests in any Global Note);
except that the Trustee shall be under a duty to require delivery of such
certificates and other documentation, if any, as are expressly required in the
applicable circumstance, and to do so if and when expressly required by, the
terms of this Indenture, and to examine the same to determine substantial
compliance on their face with the express requirements hereof. The Trustee shall
have no responsibility for (i) the actions or omissions of the Depositary, or
for the accuracy of the books or records of the Depositary and (ii) transfers,
of which it has no knowledge, between or among beneficial owners of interests in
the same Global Note.
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Section 314. Payment of Additional Interest.
(a) Under certain circumstances the Company and Select Medical
Escrow will be obligated to pay certain additional amounts of interest to the
Holders of certain Initial Notes, as more particularly set forth in such Initial
Notes.
(b) Under certain circumstances the Company and Select Medical
Escrow may be obligated to pay certain additional amounts of interest to the
Holders of certain Initial Additional Notes, as may be more particularly set
forth in such Initial Additional Notes.
ARTICLE 4
COVENANTS
Section 401. Payment of Principal, Premium and Interest. Prior to the
Select Medical Escrow Merger, Select Medical Escrow, and following the Select
Medical Escrow Merger, the Company, will duly and punctually pay the principal
of (and premium, if any) and interest on the Notes in accordance with the terms
of the Notes and this Indenture.
Section 402. Maintenance of Office or Agency. Prior to the Select
Medical Escrow Merger, Select Medical Escrow, and following the Select Medical
Escrow Merger, the Company, will maintain in the Borough of Manhattan, The City
of New York an office or agency where Notes may be presented or surrendered for
payment, where Notes may be surrendered for transfer or exchange and where
notices and demands to or upon Select Medical Escrow or the Company, as the case
may be, in respect of the Notes and this Indenture may be served. Prior to the
Select Medical Escrow Merger, Select Medical Escrow, and following the Select
Medical Escrow Merger, the Company, will give prompt written notice to the
Trustee of the location, and of any change in the location, of such office or
agency. If at any time Select Medical Escrow or the Company, as the case may be,
shall fail to maintain such office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee.
Prior to the Select Medical Escrow Merger, Select Medical Escrow, and following
the Select Medical Escrow Merger, the Company, hereby designates the Corporate
Trust Office as the initial Place of Payment and appoints the Trustee its agent
to receive all such presentations, surrenders, notices and demands so long as
such Corporate Trust Office remains the Place of Payment.
Section 403. Money for Payments to Be Held in Trust. If, prior to the
Select Medical Escrow Merger, Select Medical Escrow, and following the Select
Medical
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Escrow Merger, the Company, shall at any time act as its own Paying Agent, it
will, on or before each due date of the principal of (and premium, if any) or
interest on, any of the Notes, segregate and hold in trust for the benefit of
the Persons entitled thereto a sum sufficient to pay the principal (and premium,
if any) or interest so becoming due until such sums shall be paid to such
Persons or otherwise disposed of as herein provided, and will promptly notify
the Trustee of its action or failure so to act.
If, prior to the Select Medical Escrow Merger, Select Medical Escrow,
and following the Select Medical Escrow Merger, the Company, is not acting as
its own Paying Agent, it will, prior to each due date of the principal of (and
premium, if any) or interest on, any Notes, deposit with a Paying Agent a sum
sufficient to pay the principal (and premium, if any) or interest, so becoming
due, such sum to be held in trust for the benefit of the Persons entitled to
such principal, premium or interest, and (unless such Paying Agent is the
Trustee) Select Medical Escrow or the Company, as the case may be, will promptly
notify the Trustee of its action or failure so to act.
If, prior to the Select Medical Escrow Merger, Select Medical Escrow,
and following the Select Medical Escrow Merger, the Company, is not acting as
its own Paying Agent, prior to the Select Medical Escrow Merger, Select Medical
Escrow, and following the Select Medical Escrow Merger, the Company, will cause
any Paying Agent other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section 403, that such Paying Agent will
(1) hold all sums held by it for the payment of principal
of (and premium, if any) or interest on Notes in trust for the benefit
of the Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by Select
Medical Escrow or the Company, as the case may be, (or any Subsidiary
Guarantor or other obligor upon the Notes) in the making of any such
payment of principal (and premium, if any) or interest;
(3) at any time during the continuance of any such
default, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such Paying Agent; and
(4) acknowledge, accept and agree to comply in all
respects with the provisions of this Indenture and TIA relating to the
duties, rights and liabilities of such Paying Agent.
Prior to the Select Medical Escrow Merger, Select Medical Escrow, and
following the Select Medical Escrow Merger, the Company, may at any time, for
the purpose of
64
obtaining the satisfaction and discharge of this Indenture or for any other
purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee
all sums held in trust by Select Medical Escrow or the Company, as the case may
be, or such Paying Agent, such sums to be held by the Trustee upon the same
trusts as those upon which such sums were held by Select Medical Escrow or the
Company, as the case may be, or such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held,
prior to the Select Medical Escrow Merger, by Select Medical Escrow, and
following the Select Medical Escrow Merger, by the Company, in trust for the
payment of the principal of (and premium, if any) or interest on any Note and
remaining unclaimed for two years after such principal (and premium, if any) or
interest has become due and payable shall be paid in the appropriate proportion
to Select Medical Escrow or the Company, as the case may be, on Company Request,
or (if then held by Select Medical Escrow or the Company, as the case may be)
shall be discharged from such trust; and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to Select Medical Escrow
or the Company, as the case may be, for payment thereof, and all liability of
the Trustee or such Paying Agent with respect to such trust money, and all
liability of Select Medical Escrow or the Company, as the case may be, as
trustee thereof, shall thereupon cease.
Section 404. SEC Reports.
(a) Following the Select Medical Escrow Merger, notwithstanding
that the Company may not be subject to the reporting requirements of Section 13
or 15(d) of the Exchange Act, to the extent permitted by the Exchange Act or the
SEC, the Company will file with the SEC, and provide the Trustee and the Holders
of the Notes with, the annual reports and 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) that are specified in Sections 13 and 15(d) of
the Exchange Act (or the rules of the SEC promulgated thereunder) within the
time periods specified therein. In the event that the Company is not permitted
to file such reports, documents and information with the SEC pursuant to the
Exchange Act, the Company will nevertheless provide such Exchange Act
information to the Trustee and the Holders of the Notes as if the Company were
subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act
within the time periods specified therein.
The Trustee shall not be under a duty to review or evaluate such
reports and information, delivery to the Trustee being for the purpose of making
such reports and information available to it and to Holders of Notes who may
request such information.
65
(b) If the Company has designated any of its Subsidiaries as
Unrestricted Subsidiaries under this Indenture, then the quarterly and annual
financial information required by the preceding paragraph shall include a
reasonably detailed presentation, either on the face of the financial statements
or in the footnotes to the financial, statements, and in Management's Discussion
and Analysis of Results of Operations and Financial Condition, of the financial
condition and results of operations of the Company and its Restricted
Subsidiaries.
Section 405. Statement as to Default. Prior to the Select Medical
Escrow Merger, Select Medical Escrow will deliver to the Trustee, within 120
days after the end of each fiscal year of Select Medical Escrow ending after the
date hereof, an Officers' Certificate, stating that to the best knowledge of the
signers thereof Select Medical Escrow is or is not in default in the performance
and observance of any of the terms, provisions and conditions of this Indenture
(without regard to any period of grace or requirement of notice provided
hereunder) and, if Select Medical Escrow shall be in default, specifying all
such defaults and the nature and status thereof of which such signer may have
knowledge. Following the Select Medical Escrow Merger, the Company will deliver
to the Trustee, within 120 days after the end of each fiscal year of the Company
ending after the date hereof, an Officers' Certificate, stating that to the best
knowledge of the signers thereof the Company is or is not in default in the
performance and observance of any of the terms, provisions and conditions of
this Indenture (without regard to any period of grace or requirement of notice
provided hereunder) and, if the Company shall be in default, specifying all such
defaults and the nature and status thereof of which such signer may have
knowledge. To the extent required by the TIA, each Subsidiary Guarantor shall
comply with TIA Section 314(a)(4). At least one of the individuals signing any
certificate given by any Person pursuant to this Section 405 shall be the
principal executive, financial or accounting officer of such Person, in
compliance with TIA Section 314(a)(4).
Section 406. Limitation on Indebtedness.
(a) (i) Prior to the Select Medical Escrow Merger, Select Medical
Escrow will not Incur any Indebtedness except Notes in an aggregate principal
amount not to exceed $175.0 million.
(ii) Following the Select Medical Escrow Merger, the Company will
not, and will not permit any of its Restricted Subsidiaries to, Incur any
Indebtedness; provided, however, that the Company and the Subsidiary Guarantors
may Incur Indebtedness if on the date of the Incurrence:
(1) the Consolidated Coverage Ratio for the Company and
its Restricted Subsidiaries is at least (a) 2.25 to 1.00; and
66
(2) no Default or Event of Default has occurred or is
continuing or would occur as a consequence of Incurring the
Indebtedness.
(b) Section 406(a)(ii) will not prohibit the incurrence of the
following Indebtedness:
(1) Indebtedness Incurred pursuant to the Senior Credit
Agreement in an aggregate principal amount up to $260.0 million at any
one time outstanding less the aggregate principal amount of all
principal repayments made as a result of the receipt of proceeds of
Asset Dispositions, which repayments (in the case of the revolving
credit facility thereunder) permanently reduce the commitments
thereunder;
(2) Indebtedness of the Company owing to and held by any
Restricted Subsidiary or Indebtedness of a Restricted Subsidiary owing
to and held by the Company or any Restricted Subsidiary; provided,
however,
(A) if the Company or any Subsidiary Guarantor
is the obligor on such Indebtedness, such Indebtedness is
expressly subordinated to the prior payment in full in cash of
all obligations with respect to the Notes or the Subsidiary
Guarantees, as the case may be; and
(B) (i) any subsequent issuance or transfer
of Capital Stock or any other event that results in any such
Indebtedness being beneficially held by a Person other than
the Company or a Restricted Subsidiary of the Company, and
(ii) any sale or other transfer of any
such Indebtedness to a Person other than the Company
or a Restricted Subsidiary of the Company shall be
deemed, in each case, to constitute an Incurrence of
such Indebtedness by the Company or such Subsidiary,
as the case may be;
(3) Indebtedness represented by (a) the Notes (including
any Exchange Notes issued in exchange for Initial Notes but excluding
any Additional Notes), (b) any Indebtedness (other than the
Indebtedness described in clauses (1), (2), (5), (6), (7), (8) and (9)
of this Section 406(b)) outstanding on the Issue Date and (c) any
Refinancing Indebtedness Incurred in respect of any Indebtedness
described in this clause (3) or clause (4) or Incurred pursuant to
Section 406(a)(ii);
(4) Indebtedness of a Restricted Subsidiary Incurred and
outstanding on the date on which such Restricted Subsidiary is acquired
by the Company after the Issue Date (other than Indebtedness Incurred
(a) to provide all or any portion
67
of the funds utilized to consummate the transaction or series of
related transactions pursuant to which such Restricted Subsidiary
became a Restricted Subsidiary or was otherwise acquired by the Company
or (b) otherwise in connection with, or in contemplation of, such
acquisition); provided, however, that at the time such Restricted
Subsidiary is acquired by the Company, the Company would have been able
to Incur $1.00 of additional Indebtedness pursuant to Section
406(a)(ii) after giving effect to the Incurrence of such Indebtedness
pursuant to this clause (4);
(5) Indebtedness of the Company or any Subsidiary
Guarantor under (x) Currency Agreements that are related to business
transactions of the Company or its Restricted Subsidiaries entered into
in the ordinary course of business, or (y) Currency Agreements or
Interest Rate Agreements that are entered into for bona fide hedging
purposes of the Company or its Restricted Subsidiaries and
substantially correspond in terms of notional amount, duration,
currencies and interest rates, as applicable, to Indebtedness of the
Company or its Restricted Subsidiaries Incurred without violation of
the Indenture;
(6) the Subsidiary Guarantees and other Guarantees by the
Subsidiary Guarantors of Indebtedness Incurred in accordance with the
provisions of this Indenture; provided that in the event such
Indebtedness that is being Guaranteed (a) ranks equally in right of
payment with the Notes or any Subsidiary Guarantee, then the related
Guarantee shall rank equally in right of payment to the Subsidiary
Guarantees or (b) is a Subordinated Obligation or a Guarantor
Subordinated Obligation, then the related Guarantee shall be
subordinated in right of payment to the Subsidiary Guarantees;
(7) Indebtedness incurred to insurance carriers in
respect of workers' compensation claims or self-insurance obligations,
or to issuers of performance, bid, surety and similar bonds or letters
of credit or guarantees supporting performance of contracts (other than
for borrowed money), in each case in the ordinary course of business;
(8) Indebtedness arising from agreements of the Company
or a Restricted Subsidiary providing for indemnification, adjustment of
purchase price or similar obligations, in each case, incurred or
assumed in connection with the disposition of any business, assets or
Capital Stock of a Restricted Subsidiary, or for contingent earn-out
payments based on performance of any business acquired by the Company
or any Restricted Subsidiary, provided that (in the case of any such
disposition) the maximum aggregate liability in respect of all such
Indebtedness shall at no time exceed the gross proceeds actually
received by the Company and its Restricted Subsidiaries in connection
with such disposition;
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(9) Indebtedness arising from the honoring by a bank or
other financial institution of a check, draft or similar instrument
(except in the case of daylight overdrafts) drawn against insufficient
funds in the ordinary course of business, provided, however, that such
Indebtedness is extinguished within five business days of Incurrence;
(10) Purchase Money Indebtedness and Capitalized Lease
Obligations Incurred to finance the acquisition by the Company or a
Restricted Subsidiary of any assets in the ordinary course of business
that, together with all Refinancing Indebtedness Incurred in respect of
Indebtedness previously Incurred pursuant to this clause (10), does not
exceed $20.0 million in the aggregate at any time outstanding;
(11) Indebtedness of the Company or any Subsidiary
Guarantor, to the extent the proceeds thereof are immediately used
after the Incurrence thereof to purchase Notes tendered in an offer to
purchase made as a result of a Change of Control;
(12) Indebtedness of any Foreign Subsidiary in Canada
under any working capital facility in an aggregate principal amount not
to exceed Cdn. $15.0 million outstanding at any time; and
(13) in addition to the items referred to in clauses (1)
through (12) above, Indebtedness of the Company and the Restricted
Subsidiaries in an aggregate outstanding principal amount which, when
taken together with the principal amount of all other Indebtedness
Incurred pursuant to this clause (13) and then outstanding, will not
exceed $35.0 million.
(c) Following the Select Medical Escrow Merger, the Company and
the Subsidiary Guarantors will not Incur any Indebtedness if the proceeds
thereof are used, directly or indirectly, to refinance any Subordinated
Obligations or any Guarantor Subordinated Obligations unless such refinancing
Indebtedness will be subordinated to the Notes and the Subsidiary Guarantees to
at least the same extent as such Subordinated Obligations or Guarantor
Subordinated Obligations. Following the Select Medical Escrow Merger, the
Company and the Subsidiary Guarantors will not Incur any Indebtedness if the
proceeds thereof are used, directly or indirectly, to refinance any Indebtedness
that ranks equally in right of payment with the Notes or any Subsidiary
Guarantee unless such refinancing Indebtedness is Senior Subordinated
Indebtedness or Subordinated Obligations (in the case of the Company) or
Guarantor Senior Subordinated Indebtedness or Guarantor Subordinated Obligations
(in the case of a Subsidiary Guarantor). Following the Select Medical Escrow
Merger, no Restricted Subsidiary other than a Subsidiary Guarantor may Incur any
Indebtedness if the proceeds are used,
69
directly or indirectly, to refinance Indebtedness of the Company or a Subsidiary
Guarantor.
(d) For purposes of determining compliance with, and the
outstanding principal amount of any particular Indebtedness Incurred pursuant to
and in compliance with, this Section 406:
(1) in the event that Indebtedness meets the criteria of
more than one of the types of Indebtedness described in Section
406(a)(ii) or (b), the Company, in its sole discretion, will classify
such item of Indebtedness on the date of Incurrence and only be
required to include the amount and type of such Indebtedness in one of
such clauses; provided that (a) any Indebtedness classified as Incurred
pursuant to clause (13) of Section 406(b) may subsequently be
reclassified as Incurred pursuant to Section 406(a)(ii) from and after
the first date on which the Company could Incur such Indebtedness under
such Section 406(a)(ii) if deemed Incurred on such date, and (b) all
Indebtedness incurred or outstanding under the Senior Credit Agreement
on the Issue Date shall, be deemed Incurred exclusively pursuant to
clause (1) of Section 406(b); and
(2) the amount of Indebtedness issued at a price that is
less than the principal amount thereof will be equal to the amount of
the liability in respect thereof determined in accordance with GAAP.
Accrual of interest, accrual of dividends, the accretion of accreted
value or fluctuations in exchange rates or commodity prices will not be deemed
to be an Incurrence of Indebtedness for purposes of this covenant. The amount of
any Indebtedness outstanding as of any date shall be (i) the accreted value of
the Indebtedness in the case of any Indebtedness issued with original issue
discount and (ii) the principal amount or liquidation preference thereof,
together with any interest thereon that is more than 30 days past due, in the
case of any other Indebtedness.
(e) Following the Select Medical Escrow Merger, the Company will
not permit any of its Unrestricted Subsidiaries to Incur any Indebtedness or
issue any shares of Disqualified Stock, other than Non-Recourse Debt. Following
the Select Medical Escrow Merger, if at any time an Unrestricted Subsidiary
becomes a Restricted Subsidiary, any Indebtedness of such Subsidiary shall be
deemed to be Incurred by a Restricted Subsidiary of the Company as of such date
(and, if such Indebtedness is not permitted to be Incurred as of such date under
Section 406, the Company shall be in default of Section 406).
Section 407. Limitation on Layering. Following the Select Medical
Escrow Merger, the Company will not Incur any Indebtedness that is subordinate
or junior in
70
ranking in any respect to any Senior Indebtedness unless such Indebtedness is
Senior Subordinated Indebtedness or is contractually subordinated in right of
payment to all Senior Subordinated Indebtedness, including the Notes. Following
the Select Medical Escrow Merger, no Subsidiary Guarantor will Incur any
Indebtedness that is subordinate or junior in ranking in any respect to any
Guarantor Senior Indebtedness of such Subsidiary Guarantor unless such
Indebtedness is Guarantor Senior Subordinated Indebtedness of such Subsidiary
Guarantor or is contractually subordinated in right of payment to all Guarantor
Senior Subordinated Indebtedness of such Subsidiary Guarantor, including its
Subsidiary Guarantee.
Section 408. Limitation on Restricted Payments.
(a) (i) Prior to the Select Medical Escrow Merger, Select Medical
Escrow will not make any Restricted Payment or any Investment, except in
connection with the consummation of the Xxxxxxx Acquisition, the Select Medical
Escrow Merger or the transactions contemplated thereby, including any Investment
deemed to exist by virtue of the Escrow Agreement.
(ii) Following the Select Medical Escrow Merger, the Company will
not, and will not permit any of its Restricted Subsidiaries, directly or
indirectly, to:
(1) declare or pay any dividend or make any distribution
on or in respect of any Capital Stock of the Company or any Restricted
Subsidiary (including any payment in connection with any merger or
consolidation involving the Company or any of its Restricted
Subsidiaries) except:
(A) dividends or distributions payable in
Capital Stock of the Company (other than Disqualified Stock)
or in options, warrants or other rights to purchase such
Capital Stock of the Company; and
(B) dividends or distributions payable to the
Company or a Restricted Subsidiary of the Company (and if such
Restricted Subsidiary is not a Wholly-Owned Subsidiary, to its
other holders of common Capital Stock on a pro rata basis);
(2) purchase, redeem, retire or otherwise acquire for
value any Capital Stock of the Company, or any Capital Stock of any
Restricted Subsidiary or any direct or indirect parent of the Company
held by Persons other than the Company or a Restricted Subsidiary of
the Company, other than in exchange for Capital Stock of the Company
(other than Disqualified Stock);
(3) purchase, repurchase, redeem, defease or otherwise
acquire or retire for value, prior to scheduled maturity, scheduled
repayment or scheduled sinking fund payment, any Subordinated
Obligations or Guarantor Subordinated
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Obligations (other than the purchase, repurchase or other acquisition
of Subordinated Obligations or Guarantor Subordinated Obligations
purchased in anticipation of satisfying a sinking fund obligation,
principal installment or final maturity, in each case due within one
year of the date of purchase, repurchase or acquisition and other than
the payment of Guarantor Subordinated Obligations held by the Company
or a Restricted Subsidiary); or
(4) make any Restricted Investment in any Person
(any such dividend, distribution, purchase, redemption, repurchase, defeasance,
other acquisition, retirement or Restricted Investment referred to in the
preceding clauses (1) through (4) of this Section 408(a)(ii) shall be referred
to herein as a "Restricted Payment"), if at the time the Company or such
Restricted Subsidiary makes such Restricted Payment:
(A) a Default or Event of Default shall have
occurred and be continuing (or would result from the
Restricted Payment); or
(B) the Company is not able to incur an
additional $1.00 of Indebtedness pursuant to Section
406(a)(ii) after giving effect to such Restricted Payment; or
(C) the aggregate amount of such Restricted
Payment and all other Restricted Payments declared or made
subsequent to the Existing Note Issue Date would exceed the
sum of:
(i) 50% of Consolidated Net Income for
the period (treated as one accounting period) from
the beginning of the first fiscal quarter commencing
after the Existing Note Issue Date to the end of the
most recent fiscal quarter ending prior to the date
of such Restricted Payment for which consolidated
financial statements of the Company have been
delivered to the Trustee in accordance with Section
404 (or, in case such Consolidated Net Income is a
deficit, minus 100% of such deficit);
(ii) the aggregate Net Cash Proceeds
received by the Company from the issue or sale of its
Capital Stock (other than Disqualified Stock) or
other capital contributions subsequent to the
Existing Note Issue Date (other than Net Cash
Proceeds received from an issuance or sale of such
Capital Stock to a Subsidiary of the Company or to an
employee stock ownership plan, option plan or similar
trust to the extent such sale to an employee stock
ownership plan, option plan or similar trust is
financed by loans from or guaranteed by the Company
or any Restricted Subsidiary
72
unless such loans have been repaid with cash on or
prior to the date of determination);
(iii) the amount by which Indebtedness of
the Company is reduced on the Company's balance sheet
upon the conversion or exchange (other than by a
Subsidiary of the Company) subsequent to the Existing
Note Issue Date of any Indebtedness of the Company
convertible or exchangeable for Capital Stock (other
than Disqualified Stock) of the Company (less the
amount of any cash, or other property, distributed by
the Company upon such conversion or exchange); and
(iv) the amount equal to the net
reduction in Restricted Investments made by the
Company or any of its Restricted Subsidiaries in any
Person resulting from:
(A) repurchases or redemptions
of such Restricted Investments by such
Person, proceeds realized upon the sale of
such Restricted Investment to an
unaffiliated purchaser, or repayments of
loans or advances or other transfers of
assets (including by way of dividend or
distribution) by such Person to the Company
or any Restricted Subsidiary of the Company;
or
(B) the redesignation of
Unrestricted Subsidiaries as Restricted
Subsidiaries (valued in each case as
provided in the definition of "Investment")
not to exceed, in the case of any
Unrestricted Subsidiary, the amount of
Investments previously made by the Company
or any Restricted Subsidiary in such
Unrestricted Subsidiary,
which amount in each case under this clause (iv) was
included in the calculation of the amount of
Restricted Payments; provided, however, that no
amount will be included under this clause (iv) to the
extent it is already included in Consolidated Net
Income.
(b) Section 408(a)(ii) will not prohibit:
(1) any purchase or redemption of Capital Stock or
Subordinated Obligations of the Company made by exchange for, or out of
the proceeds of the substantially concurrent sale of, Capital Stock of
the Company (other than Disqualified Stock and other than Capital Stock
issued or sold to a Subsidiary or an employee stock ownership plan or
similar trust to the extent such sale to an
73
employee stock ownership plan or similar trust is financed by loans
from or guaranteed by the Company or any Restricted Subsidiary unless
such loans have been repaid with cash on or prior to the date of
determination); provided, however, that (a) such purchase or redemption
will be excluded in the calculation of the amount of Restricted
Payments and (b) the Net Cash Proceeds from such sale will be excluded
from clause (4)(C)(ii) of Section 408(a)(ii);
(2) any purchase or redemption of Subordinated
Obligations of the Company made by exchange for, or out of the proceeds
of the substantially concurrent sale of, Subordinated Obligations of
the Company that qualifies as Refinancing Indebtedness; provided,
however, that such purchase or redemption will be excluded in the
calculation of the amount of Restricted Payments;
(3) so long as no Default or Event of Default has
occurred and is continuing, any purchase or redemption of Subordinated
Obligations from Net Available Cash to the extent permitted under
Section 410; provided, however, that such purchase or redemption will
be excluded in the calculation of the amount of Restricted Payments;
(4) dividends paid within 60 days after the date of
declaration if at such date of declaration such dividend would have
complied with this Section 408; provided, however, that such dividends
will be included in the calculation of the amount of Restricted
Payments;
(5) so long as no Default or Event of Default has
occurred and is continuing (or would result therefrom) loans or
advances to employees or directors of the Company or any Subsidiary of
the Company the proceeds of which are used to purchase Capital Stock of
the Company other than Disqualified Stock (or repurchases of such
Capital Stock in exchange for cancellation of such loans or advances),
in an aggregate amount not in excess of $2.0 million at any one time
outstanding; provided, however, that (a) the amount of such loans and
advances will be included in the calculation of the amount of
Restricted Payments and (b) the Net Cash Proceeds from any such sale of
Capital Stock of the Company will be excluded from clause (4)(C)(ii) of
Section 408(a)(ii);
(6) repurchases of Capital Stock deemed to occur upon the
exercise of stock options if such Capital Stock represents a portion of
the exercise price thereof, provided, however, that such repurchases
will be excluded from the calculation of the amount of Restricted
Payments;
(7) any purchase or redemption of (a) Disqualified Stock
of the Company made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Disqualified Stock of the Company
that qualifies as Refinancing Indebtedness or (b) Disqualified Stock of
a Restricted Subsidiary
74
made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Disqualified Stock of such Restricted Subsidiary or
the Company that qualifies as Refinancing Indebtedness; provided,
however, in each case under this clause (7) that (i) such Refinancing
Indebtedness is not issued or sold to a Subsidiary or an employee stock
ownership plan or similar trust to the extent such sale to an employee
stock ownership plan or similar trust is financed by loans from or
guaranteed by the Company or any Restricted Subsidiary unless such
loans have been repaid with cash on or prior to the date of
determination, (ii) at the time of such exchange, no Default or Event
of Default shall have occurred and be continuing or would result
therefrom and (iii) such purchase or redemption will be excluded in the
calculation of the amount of Restricted Payments;
(8) upon the occurrence of a Change of Control and within
60 days after the completion of the offer to repurchase the Notes
pursuant to Section 414 below (including the purchase of all Notes
tendered), any purchase or redemption of Subordinated Obligations
required pursuant to the terms thereof as a result of such Change of
Control at a purchase or redemption price not to exceed the outstanding
principal amount thereof, plus accrued and unpaid interest thereon, if
any; provided, however, that (a) at the time of such purchase or
redemption, no Default shall have occurred and be continuing (or would
result therefrom), (b) the Company would be able to Incur an additional
$1.00 of Indebtedness pursuant to Section 406(a)(ii) after giving pro
forma effect to such Restricted Payment, (c) such purchase or
redemption is not made, directly or indirectly, from the proceeds of
(or made in anticipation of) any Incurrence of Indebtedness by the
Company or any Subsidiary and (d) such purchase or redemption will be
included in the calculation of the amount of Restricted Payments;
(9) purchases of Capital Stock of Restricted Subsidiaries
from minority holders, provided that upon giving effect to any such
purchase of Capital Stock of any Restricted Subsidiary, such Subsidiary
shall be a Subsidiary Guarantor; provided, however, that such purchases
will be excluded in the calculation of the amount of Restricted
Payments;
(10) so long as no Default or Event of Default has
occurred and is continuing (or would result therefrom), an Investment
in a minority interest in a Person not engaged in any business other
than a Related Business, together with all other Investments pursuant
to this clause (10), in an aggregate amount at the time of such
Investment not to exceed $20.0 million outstanding at any one time (the
amount of such Investment outstanding at any time to be equal to its
original cost minus the net proceeds realized by the Company upon
repurchase, repayment or redemption thereof, or sale thereof to an
unaffiliated purchaser, but not less than zero) (any such Person, a
"Permitted Joint Venture"); provided, however, that such Investments
(a) will be included in the calculation of the amount of
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Restricted Payments and (b) will be excluded in calculating any net
reduction in Restricted Investments for purposes of clause (4)(C)(iv)
of Section 408(a)(ii); and
(11) Restricted Payments in an amount not to exceed $35.0
million in the aggregate.
The amount of all Restricted Payments, other than cash, shall be the
fair market value on the date of such Restricted Payment of the asset(s) or
securities proposed to be paid, transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment.
The fair market value of any cash Restricted Payment shall be its face amount
and any non-cash Restricted Payment shall be determined by the Board of
Directors acting in good faith whose resolution with respect thereto shall be
delivered in writing to the Trustee. Not later than the date of making any
Restricted Payment, the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this Section 408 were
computed, together with a copy of any fairness opinion or appraisal required by
this Indenture.
Section 409. Limitation on Restrictions on Distributions from
Restricted Subsidiaries.
(a) Following the Select Medical Escrow Merger, the Company will
not, and will not permit any Restricted Subsidiary to, create or otherwise cause
or permit to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary to:
(1) pay dividends or make any other distributions on its
Capital Stock or pay any Indebtedness or other obligations owed to the
Company or any Restricted Subsidiary;
(2) make any loans or advances to the Company or any
Restricted Subsidiary; or
(3) transfer any of its property or assets to the Company
or any Restricted Subsidiary.
(b) This Section 409 will not prohibit:
(i) any encumbrance or restriction pursuant to an
agreement as in effect at or entered into on the Issue Date, including,
without limitation, the Existing Indenture, the Indenture and the
Senior Credit Agreement and any governing agreements or instruments of
Existing Joint Venture Subsidiaries, in each case as in effect on such
date;
76
(ii) any encumbrance or restriction with respect to a
Restricted Subsidiary pursuant to an agreement relating to any
Indebtedness Incurred by a Restricted Subsidiary on or before the date
on which such Restricted Subsidiary was acquired by the Company (other
than Indebtedness Incurred as consideration in, or to provide all or
any portion of the funds utilized to consummate, the transaction or
series of related transactions pursuant to which such Restricted
Subsidiary became a Restricted Subsidiary or was acquired by the
Company, or in contemplation of the transaction) and outstanding on
such date;
(iii) any encumbrance or restriction with respect to a
Restricted Subsidiary pursuant to an agreement effecting a refinancing
of Indebtedness Incurred pursuant to an agreement referred to in
Section 409(b)(i) or (ii) or this Section 409(b)(iii) or contained in
any amendment to an agreement referred to in Section 409(b)(i) or (ii)
or this Section 409(b)(iii); provided, however, that the encumbrances
and restrictions with respect to such Restricted Subsidiary contained
in any such agreement or amendment are not less favorable to the
Holders of the Notes than the encumbrances and restrictions contained
in such agreements referred to in Section 409(b)(i) or (ii) on the
Issue Date or the date such Restricted Subsidiary became a Restricted
Subsidiary, as applicable;
(iv) in the case of clause (3) of this Section 409, any
encumbrance or restriction:
(a) that restricts in a customary manner the
subletting, assignment or transfer of any property or asset
that is subject to a lease, license or similar contract, or
the assignment or transfer of any such lease, license or other
contract;
(b) contained in mortgages, pledges or other
security agreements permitted under the Indenture securing
Indebtedness of the Company or a Restricted Subsidiary to the
extent such encumbrances or restrictions restrict the transfer
of the property subject to such mortgages, pledges or other
security agreements;
(c) pursuant to customary provisions restricting
dispositions of real property interests set forth in any
reciprocal easement agreements of the Company or any
Restricted Subsidiary; or
(d) imposed by purchase money obligations for
property acquired in the ordinary course of business, on the
property so acquired;
(v) any restriction with respect to a Restricted
Subsidiary (or any of its property or assets) imposed pursuant to an
agreement entered into for the direct or indirect sale or disposition
of all or substantially all the Capital Stock or assets of
77
such Restricted Subsidiary (or the property or assets that are subject
to such restriction) pending the closing of such sale or disposition;
(vi) any restriction with respect to a Restricted
Subsidiary contained in any agreement or instrument governing Capital
Stock (other than Disqualified Stock) of any Restricted Subsidiary that
is in effect on the date such Restricted Subsidiary is acquired by the
Company (and is not incurred in contemplation of such transaction);
(vii) encumbrances or restrictions arising or existing by
reason of applicable law or any applicable rule, regulation or order;
and
(viii) encumbrances or restrictions arising under provisions
in governing joint venture agreements or instruments of any New Joint
Venture Subsidiaries, provided that such encumbrances and restrictions
are not less favorable to the Holders of the Notes than the
encumbrances and restrictions contained in the governing joint venture
agreements or instruments of Existing Joint Venture Subsidiaries
referred to in Section 409(b)(i) as in effect on the Issue Date.
Section 410. Limitation on Sales of Assets and Subsidiary Stock.
(a) (i) Prior to the Select Medical Escrow Merger, Select Medical
Escrow will not consummate any Asset Disposition, except in connection with the
consummation of the Select Medical Escrow Merger or the transactions
contemplated by the Escrow Agreement or the Assumption Agreement, including the
related release of the Escrowed Funds.
(ii) Following the Select Medical Escrow Merger, the Company will
not, and will not permit any of its Restricted Subsidiaries to, make any Asset
Disposition unless:
(1) The Company or such Restricted Subsidiary receives
consideration at the time of such Asset Disposition at least equal to
the fair market value (including as to the value of all non-cash
consideration), as determined in good faith by the Board of Directors,
of the shares and assets subject to such Asset Disposition;
(2) at least 75% of the consideration from such Asset
Disposition received by the Company or such Restricted Subsidiary, as
the case may be, is in the form of cash or Cash Equivalents; and
(3) an amount equal to 100% of the Net Available Cash
from such Asset Disposition is applied by the Company or such
Restricted Subsidiary, as the case may be:
78
(A) first, to the extent the Company or any
Restricted Subsidiary, as the case may be, elects (or is
required by the terms of any Senior Indebtedness or Guarantor
Senior Indebtedness), to prepay, repay or purchase Senior
Indebtedness, Guarantor Senior Indebtedness or, if such
Restricted Subsidiary is a Foreign Subsidiary, Indebtedness
(other than any Preferred Stock or any Indebtedness that is
subordinate or junior in right of payment to any other
Indebtedness) of such Foreign Subsidiary (in each case other
than Indebtedness owed to the Company or an Affiliate of the
Company) within 360 days from the later of the date of such
Asset Disposition or the receipt of such Net Available Cash;
provided, however, that, in connection with any prepayment,
repayment or purchase of Indebtedness pursuant to this
clause (A), the Company or such Restricted Subsidiary will
retire such Indebtedness and will cause the related commitment
(if any) to be permanently reduced in an amount equal to the
principal amount so prepaid, repaid or purchased; and
(B) second, to the extent of the balance of such
Net Available Cash after application in accordance with clause
(A) above, to the extent the Company or such Restricted
Subsidiary elects, to invest in Additional Assets within 360
days from the later of the date of such Asset Disposition or
the receipt of such Net Available Cash.
(b) Any Net Available Cash from Asset Sales that are not applied
or invested as provided in Section 410(a)(ii) will be deemed to constitute
"Excess Proceeds." On the 361st day after an Asset Disposition, if the aggregate
amount of Excess Proceeds exceeds $15.0 million, the Company will be required to
make an offer ("Asset Sale Offer") to all Holders of Notes and, to the extent
required by the terms of other Senior Subordinated Indebtedness, to all holders
of other Senior Subordinated Indebtedness outstanding with similar provisions
requiring the Company to make an offer to purchase such Senior Subordinated
Indebtedness with the proceeds from any Asset Disposition ("Pari Passu Notes"),
to purchase the maximum principal amount of Notes and any such Pari Passu Notes
to which the Asset Sale Offer applies that may be purchased out of the Excess
Proceeds, in accordance with the procedures set forth in the Indenture or the
agreements governing the Pari Passu Notes, as applicable, in each case in
integral multiples of $1,000 at an offer price in cash in an amount equal to (x)
in the case of the Notes, 100% of the principal amount of the Notes, plus
accrued and unpaid interest to the date of purchase, and (y) in the case of the
Pari Passu Notes, 100% of the lesser of the then accreted value (if applicable)
and the principal amount of the Pari Passu Notes, plus accrued and unpaid
interest to the date of purchase. To the extent that the aggregate amount of
Notes and Pari Passu Notes so validly tendered and not properly withdrawn
pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company
may use any remaining Excess Proceeds for general corporate purposes, subject to
the other covenants contained in the Indenture. If the aggregate principal
amount of Notes surrendered by Holders of the
79
Notes and other Pari Passu Notes surrendered by holders or lenders,
collectively, exceeds the amount of Excess Proceeds the Company shall select the
Notes and Pari Passu Notes to be purchased on a pro rata basis on the basis of
the aggregate principal amount of tendered Notes and the lesser of the then
aggregate accreted value and the aggregate principal amount of the tendered Pari
Passu Notes. Upon completion of such Asset Sale Offer, the amount of Excess
Proceeds shall be reset at zero.
(c) The Asset Sale Offer will remain open for a period of 20
Business Days following its commencement, except to the extent that a longer
period is required by applicable law (the "Asset Sale Offer Period"). No later
than five Business Days after the termination of the Asset Sale Offer Period
(the "Asset Sale Purchase Date"), the Company will purchase the principal amount
of Notes and Pari Passu Notes required to be purchased pursuant to this covenant
(the "Asset Sale Offer Amount") or, if less than the Asset Sale Offer Amount has
been so validly tendered, all Notes and Pari Passu Notes validly tendered in
response to the Asset Sale Offer.
If the Asset Sale Purchase Date is on or after an interest record date
and on or before the related interest payment date, any accrued and unpaid
interest will be paid to the Person in whose name a Note is registered at the
close of business on such record date, and no additional interest will be
payable to Holders who tender Notes pursuant to the Asset Sale Offer.
On or before the Asset Sale Purchase Date, the Company will, to the
extent lawful, accept for payment, on a pro rata basis to the extent necessary,
the Asset Sale Offer Amount of Notes and Pari Passu Notes or portions of Notes
and Pari Passu Notes so validly tendered and not properly withdrawn pursuant to
the Asset Sale Offer, or if less than the Asset Sale Offer Amount has been
validly tendered and not properly withdrawn, all Notes and Pari Passu Notes so
validly tendered and not properly withdrawn, in each case in integral multiples
of $1,000. The Company will deliver to the Trustee an Officers' Certificate
stating that such Notes or portions thereof were accepted for payment by the
Company in accordance with the terms of this covenant and, in addition, the
Company will deliver all certificates and notes required, if any, by the
agreements governing the Pari Passu Notes. The Company will promptly (but in any
case not later than five Business Days after the termination of the Asset Sale
Offer Period) mail or deliver to each tendering Holder of Notes or holder or
lender of Pari Passu Notes, as the case may be, an amount equal to the purchase
price of the Notes or Pari Passu Notes so validly tendered and not properly
withdrawn by such Holder or lender, as the case may be, and accepted by the
Company for purchase, and the Company will promptly issue a new Note, and the
Trustee, upon delivery of an Officers' Certificate from the Company will
authenticate and mail or deliver such new Note to such Holder, in a principal
amount equal to any unpurchased portion of the Note surrendered; provided that
each such new Note will be in a principal amount of $1,000 or an integral
multiple of $1,000. In addition, the Company will take any and all other actions
required by the agreements
80
governing the Pari Passu Notes. Any Note not so accepted will be promptly 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 Purchase Date.
(d) For the purposes of this Section 410, securities, notes or
other obligations received by the Company or any Restricted Subsidiary of the
Company from the transferee in such Asset Disposition that are promptly
converted by the Company or such Restricted Subsidiary into cash, will be deemed
to be cash.
(e) The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Indenture. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 410, the Company will
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this Indenture by virtue of any
conflict.
Section 411. Limitation on Affiliate Transactions.
(a) (i) Prior to the Select Medical Escrow Merger, Select
Medical Escrow will not enter into or permit to exist any Affiliate Transaction
other than in connection with the consummation of the Select Medical Escrow
Merger or the transactions contemplated by the Escrow Agreement or the
Assumption Agreement.
(ii) Following the Select Medical Escrow Merger, the Company will
not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, enter into or conduct any transaction or series of related
transactions (including the purchase, sale, lease or exchange of any property or
the rendering of any service) with any Affiliate of the Company or any
Restricted Subsidiary (such transaction or transactions, an "Affiliate
Transaction") unless:
(1) the terms of such Affiliate Transaction are no less
favorable to the Company or such Restricted Subsidiary, as the case may
be, than those that could be obtained in a comparable transaction at
the time of such transaction in arm's-length dealings with a Person who
is not such an Affiliate;
(2) in the event such Affiliate Transaction involves an
aggregate amount in excess of $5.0 million, the terms of such Affiliate
Transaction have been approved by a majority of the members of the
Board of Directors of the Company and by a majority of members of such
Board having no direct or indirect financial or other interest in such
Affiliate Transaction (and each such
81
majority determines that such Affiliate Transaction satisfies the
criteria in clause (1) above; and
(3) in the event such Affiliate Transaction involves an
aggregate amount in excess of $15.0 million, the Company has received a
written opinion from an independent investment banking firm of
nationally recognized standing that the terms of such Affiliate
Transaction are not less favorable than those that might reasonably
have been obtained in a comparable transaction at such time on an
arm's-length basis from a Person that is not an Affiliate.
(b) Section 411(a)(ii) will not apply to:
(1) any Restricted Payment (other than a Restricted
Investment) permitted to be made pursuant to Section 408;
(2) any issuance of securities, or other payments, awards
or grants in cash, securities or otherwise pursuant to, or the funding
of, employment arrangements, stock options and stock ownership plans
and other fees, compensation, benefits and indemnities paid or entered
into by the Company or its Restricted Subsidiaries in the ordinary
course of business to or with officers, directors or employees of the
Company and its Restricted Subsidiaries;
(3) loans or advances to employees in the ordinary course
of business of the Company or any of its Restricted Subsidiaries;
(4) the payment of reasonable and customary fees paid to,
and indemnity provided on behalf of, officers, directors or employees
of the Company or any Restricted Subsidiary of the Company;
(5) any transaction between the Company and a Subsidiary
Guarantor or between Subsidiary Guarantors;
(6) any transaction with a Non-Guarantor Subsidiary or
Permitted Joint Venture in the ordinary course of business that
complies with the requirements of clause (1) of Section 411(a)(ii);
(7) the performance of obligations of the Company or any
of its Restricted Subsidiaries under the terms of any agreement to
which the Company or any of its Restricted Subsidiaries is a party on
the Issue Date and identified on a schedule to the Indenture on the
Issue Date, as these agreements may be amended, modified or
supplemented from time to time in compliance with Section 411(a)(ii);
and
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(8) the issuance or sale of any Capital Stock (other than
Disqualified Stock) of the Company.
Section 412. Limitation on Liens. Prior to the Select Medical Escrow
Merger, Select Medical Escrow will not create, incur, assume or suffer to exist
any Lien of any kind against or upon any of its property or assets, or any
proceeds, income or profit therefrom which secures any Indebtedness other than
as contemplated by the Escrow Agreement and the Securities Account Control
Agreement.
Following the Select Medical Escrow Merger, the Company will not, and
will not permit any of its Restricted Subsidiaries to, directly or indirectly,
create, incur or suffer to exist any Lien (other than Permitted Liens) upon any
property or assets of the Company or any of its Restricted Subsidiaries
(including Capital Stock), whether owned on the date of the Indenture or
acquired after that date, securing any Indebtedness that ranks equally with, or
is subordinate or junior to, the Notes or any Subsidiary Guarantee in right of
payment, unless contemporaneously with the incurrence of such Lien effective
provision is made to secure the Indebtedness due under this Indenture and the
Notes or, in the case of a Lien on any Restricted Subsidiary's property or
assets, any Subsidiary Guarantee of such Restricted Subsidiary, equally and
ratably with (or prior to, in the case of Liens with respect to Indebtedness
that is subordinate or junior in right of payment to the Notes or any Subsidiary
Guarantee, as the case may be) the Indebtedness secured by such Lien for so long
as such Indebtedness is so secured.
Section 413. Future Subsidiary Guarantors. After the Effective Date,
the Company will cause each Restricted Subsidiary that is not then a Subsidiary
Guarantor, other than any Foreign Subsidiary, any New Joint Venture Subsidiary
or any Existing Joint Venture Subsidiary, to execute and deliver to the Trustee
a supplemental indenture substantially in the form set forth on Exhibit B
providing a Subsidiary Guarantee pursuant to which such Subsidiary Guarantor
will unconditionally Guarantee, on a joint and several basis, the full and
prompt payment of the principal of, premium, if any, and interest on the Notes
on a senior subordinated basis. On the Effective Date, the Company will cause
Xxxxxxx and each of its Subsidiaries, other than any such Subsidiary which is a
Foreign Subsidiary or a New Joint Venture Subsidiary, to execute and deliver to
the Trustee a supplemental indenture substantially in the form set forth on
Exhibit A to the Escrow Agreement providing a Subsidiary Guarantee pursuant to
which such Subsidiary Guarantor will unconditionally Guarantee, on a joint and
several basis, the full and prompt payment of the principal of, premium, if any,
and interest on the Notes on a senior subordinated basis.
On the Effective Date and thereafter, the Company will cause each
Subsidiary that is or becomes a "Subsidiary Guarantor" under and as defined in
the Existing Indenture to become a Subsidiary Guarantor under this Indenture.
83
The Company will cause any Domestic Subsidiary that becomes "100%
owned" (as defined in Section 3-10(h)(1) of Regulation S-X (Title 17, Code of
Federal Regulations, Part 210)) by the Company after the Effective Date to
become a Subsidiary Guarantor pursuant to this Section 413.
Notwithstanding the exception to the first paragraph of this Section
413, after the Effective Date neither the Company nor any Restricted Subsidiary
shall create or acquire any Non-Guarantor Subsidiary or designate any Restricted
Subsidiary to be an Unrestricted Subsidiary unless after giving effect to such
creation, acquisition or designation, all Non-Guarantor Subsidiaries and
Unrestricted Subsidiaries taken as a whole on a combined basis (including such
Non-Guarantor Subsidiary or Unrestricted Subsidiary) shall not account for more
than 25% of EBITDA, and shall not have total assets in an amount exceeding 17%
of the total assets of the Company and its Subsidiaries on a combined basis
(including any unconsolidated Subsidiaries, and adjusted to eliminate any
intercompany balances) as at the end of and for, the most recently ended four
consecutive fiscal quarters of the Company for which consolidated financial
statements of the Company have been delivered to the Trustee, in accordance with
Section 404, giving effect to such creation, acquisition or designation on a pro
forma basis as if such transaction had occurred at the beginning of such
four-quarter period.
The Company will cause each Subsidiary Guarantor to comply with all of
the provisions of, and to fully perform all of its obligations under, this
Indenture applicable to such Subsidiary Guarantor.
Section 414. Purchase of Notes Upon a Change in Control. Upon the
occurrence of a Change of Control following the Issue Date, each Holder will
have the right to require the Company to repurchase all or any part (in integral
multiples of $1,000) of such Holder's Notes at a purchase price in cash equal to
101% of the principal amount of the Notes plus accrued and unpaid interest, if
any, to the date of purchase (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date).
Within 30 days following any Change of Control (or the Effective Date,
if such date follows a Change of Control), the Company will mail a notice (the
"Change of Control Offer") to each Holder, with a copy to the Trustee, stating:
(1) that a Change of Control has occurred and that such
Holder has the right to require the Company to purchase its Notes at a
purchase price in cash equal to 101% of the principal amount of the
Notes plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of Holders of record on a record date to receive
interest on the relevant interest payment date) (the "Change of Control
Payment");
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(2) the repurchase date, which shall be no earlier than
30 days nor later than 60 days from the date such notice is mailed (the
"Change of Control Payment Date"); and
(3) the procedures determined by the Company, consistent
with this Indenture, that a Holder must follow in order to have its
Notes repurchased.
On the Change of Control Payment Date, the Company will, to the extent
lawful:
(1) accept for payment all Notes or portions of Notes in
integral multiples of $1,000 properly tendered under the Change of
Control Offer;
(2) deposit with the paying agent an amount equal to the
Change of Control Payment in respect of all Notes or portions of Notes
so tendered; and
(3) deliver or cause to be delivered to the Trustee the
Notes so accepted, together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions of Notes being
purchased by the Company.
The Paying Agent will promptly mail to each Holder of Notes so tendered
the Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail, or cause to be transferred by book entry, to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided that each such new Note will be in a principal
amount of $1,000 or an integral multiple of $1,000.
If the Change of Control Payment Date is on or after a Regular Record
Date or any other interest record date and on or before the related Interest
Payment Date, any accrued and unpaid interest, if any, will be paid to the
Person in whose name a Note is registered at the close of business on such
record date, and no additional interest will be payable to Holders who tender
pursuant to the Change of Control Offer.
Prior to mailing a Change of Control Offer, and as a condition to such
mailing, (i) all Senior Indebtedness must be repaid in full, or the Company must
offer to repay all Senior Indebtedness and repay all Senior Indebtedness held by
holders who accept such offer or (ii) the requisite holders of each issue of
Senior Indebtedness shall have consented to such Change of Control Offer being
made to the extent such consent is required under the terms of such Senior
Indebtedness and shall have waived any event of default under such Senior
Indebtedness, caused by the Change of Control. The Company will effect such
repayment or obtain such consent and waiver within 30 days following any Change
of Control.
If required by applicable law, the Company shall publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.
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The Change of Control provisions described above are applicable in the
event of a Change of Control, whether or not any other provisions of this
Indenture are applicable to such Change of Control.
The Company will not be required to make a Change of Control Offer upon
a Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section 414. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Indenture, the Company will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations described in this Indenture by virtue of the
conflict.
Section 415. Limitation on Sale of Capital Stock of Restricted
Subsidiaries. Following the Select Medical Escrow Merger, the Company will not,
and will not permit any Restricted Subsidiary of the Company to, transfer,
convey, sell, lease or otherwise dispose of, (including, but not limited to, by
means of a merger, consolidation, or similar transaction) any Voting Stock of
any Restricted Subsidiary or to issue any of the Voting Stock of a Restricted
Subsidiary (other than, if required by applicable law, shares of its Voting
Stock constituting directors' qualifying shares) to, or merge or consolidate or
engage in any similar transaction with, any Person except:
(1) to or into the Company or a Wholly-Owned Subsidiary;
or
(2) for the sale of all of the Voting Stock of a
Restricted Subsidiary to a Person other than the Company or a
Subsidiary of the Company in compliance with Section 410.
Section 416. Limitation on Lines of Business. Prior to the Select
Medical Escrow Merger, Select Medical Escrow will not engage in any business
operations other than (i) activities as are specifically required pursuant to
the Indenture, the Notes, the Escrow Agreement or the Assumption Agreement or
any activities directly related thereto or (ii) the Select Medical Escrow
Merger.
Following the Select Medical Escrow Merger, the Company will not, and
will not permit any Restricted Subsidiary to, engage in any business other than
a Related Business.
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Section 417. Payments for Consent. Neither the Company nor any of its
Restricted Subsidiaries (nor, prior to the Select Medical Escrow Merger, Select
Medical Escrow) will, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fees or otherwise, to any Holder of
any Notes for or as an inducement to any consent, waiver or amendment of any of
the terms or provisions of the Indenture or the Notes unless such consideration
is offered to be paid or is paid to all Holders of the Notes that consent, waive
or agree to amend in the time frame set forth in the solicitation documents
relating to such consent, waiver or amendment.
Section 418. Corporate Existence. Subject to the other provisions of
this Article 4, Article 5 and Article 13, prior to the Select Medical Escrow
Merger, Select Medical Escrow, and following the Select Medical Escrow Merger,
the Company, will do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence and that of each
Restricted Subsidiary and the corporate rights (charter and statutory), licenses
and franchises, prior to the Select Medical Escrow Merger, of Select Medical
Escrow, and following the Select Medical Escrow Merger, of the Company, and each
Restricted Subsidiary; provided, however, that the Company shall not be required
to preserve any such existence (except that of the Company), right, license or
franchise if the Board of Directors of the Company shall reasonably determine in
good faith that the preservation thereof is no longer desirable in the conduct
of the business of the Company and each of its Restricted Subsidiaries, taken as
a whole, and that the loss thereof is not, and will not be, disadvantageous in
any material respect to the Holders, and provided, further, Select Medical
Escrow or the Company may merge in accordance with Section 501. Notwithstanding
the foregoing, (i) provided that the surviving entity in any such transaction is
or shall be a Restricted Subsidiary, subject to Section 413, any Non-Guarantor
Subsidiary may merge or consolidate (including any charter amendments required
solely to effect such merger or consolidation) with any other Non-Guarantor
Subsidiary; (ii) provided that the surviving entity in any such transaction is
or shall be a Subsidiary Guarantor, and provided further that such surviving
Subsidiary Guarantor expressly assumes all of the obligations under (a) the
Indenture and included Subsidiary Guarantee and (b) the Exchange and
Registration Rights Agreement, of any Subsidiary Guarantor that does not survive
the transaction, by executing and delivering to the Trustee a supplemental
indenture satisfactory to the Trustee, a Subsidiary Guarantor may merge or
consolidate (including any charter amendments required solely to effect such
merger or consolidation) with any other Subsidiary Guarantor; (iii) provided
that the surviving entity in any such transaction is or shall be a Subsidiary
Guarantor, any Non-Guarantor Subsidiary may merge or consolidate (including any
charter amendments required solely to effect such merger or consolidation) with
any Subsidiary Guarantor; and (iv) Non-Guarantor Subsidiaries may amend their
organizational documents in any way not inconsistent with this Indenture or
disadvantageous in any material respect to the Holders.
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Section 419. Payment of Taxes and Other Claims. Prior to the Select
Medical Escrow Merger, Select Medical Escrow, and following the Select Medical
Escrow Merger, the Company, will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (i) all material taxes,
assessments and governmental charges levied or imposed, prior to the Select
Medical Escrow Merger, upon Select Medical Escrow, and following the Select
Medical Escrow Merger, upon the Company or any Subsidiary or upon the income,
profits or property, prior to the Select Medical Escrow Merger, of Select
Medical Escrow, and following the Select Medical Escrow Merger, of the Company
or any Subsidiary and (ii) all lawful claims for labor, materials and supplies,
which, if unpaid, might by law become a material liability or lien upon the
property, prior to the Select Medical Escrow Merger, of Select Medical Escrow,
and following the Select Medical Escrow Merger, of the Company or any Restricted
Subsidiary; provided, however, that prior to the Select Medical Escrow Merger,
Select Medical Escrow, and following the Select Medical Escrow Merger, the
Company, shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings and for
which appropriate reserves, if necessary (in the good faith judgment of
management, prior to the Select Medical Escrow Merger, of Select Medical Escrow,
and following the Select Medical Escrow Merger, of the Company), are being
maintained in accordance with GAAP or where the failure to effect such payment
will not be disadvantageous to the Holders.
ARTICLE 5
SUCCESSOR COMPANY
Section 501. When the Company May Merge, etc. Prior to the Select
Medical Escrow Merger, except in connection with the Select Medical Escrow
Merger or in connection with the transactions contemplated by the Escrow
Agreement or the Assumption Agreement, Select Medical Escrow will not, in a
single transaction or a series of related transactions, consolidate with or
merge with or into, or sell, assign, transfer, lease, convey or otherwise
dispose of any of its assets to, another Person or Persons.
Upon the execution and delivery by the Company and the Subsidiary
Guarantors to the Trustee of the Assumption Agreement and a supplemental
indenture substantially in the form of Exhibit A to the Escrow Agreement and
compliance with the provisions of Section 903 hereof, pursuant to which the
Company expressly assumes, and the Subsidiary Guarantors expressly guarantee,
Select Medical Escrow's obligations under this Indenture and the Notes, Select
Medical Corporation shall be the successor obligor under this Indenture and the
Notes and will succeed to, and be substituted for, and may exercise every right
and power of, Select Medical Escrow hereunder and thereunder and Select Medical
Escrow shall be discharged from all obligations and covenants under this
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Indenture and the Notes by operation of law pursuant to the Select Medical
Escrow Merger.
Following the Select Medical Escrow Merger, the Company will not
consolidate with or merge with or into, or convey, transfer or lease all or
substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the
"Successor Company") will be a corporation organized and existing under
the laws of the United States of America, any State thereof or the
District of Columbia and the Successor Company (if not the Company)
will expressly assume all the obligations of the Company under the
Notes, this Indenture and the Exchange and Registration Rights
Agreement by executing and delivering to the Trustee a supplemental
indenture in form satisfactory to the Trustee;
(ii) immediately after giving effect to such transaction
(and treating any Indebtedness that becomes an obligation of the
Successor Company or any Subsidiary of the Successor Company as a
result of such transaction as having been Incurred by the Successor
Company or such Subsidiary at the time of such transaction), no Default
or Event of Default will have occurred and be continuing;
(iii) immediately after giving effect to such transaction,
the Successor Company could Incur at least $1.00 of additional
Indebtedness pursuant to paragraph (a)(ii) of Section 406;
(iv) each Subsidiary Guarantor (other than any party to
any such consolidation or merger, in which case clause (i) shall apply)
shall have delivered a supplemental indenture in form satisfactory to
the Trustee, confirming that its Subsidiary Guarantee shall apply to
the Successor Company's obligations in respect of the Indenture and the
Notes and its obligations under the Exchange and Registration Rights
Agreement shall continue to be in effect; and
(v) the Company will have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and each such supplemental indenture
complies with this Indenture.
For purposes of this Section 501, the sale, lease, conveyance,
assignment, transfer, or other disposition of all or substantially all of the
properties and assets of one or more Subsidiaries of the Company, which
properties and assets, if held by the Company instead of such Subsidiaries,
would constitute all or substantially all of the properties and assets of the
Company on a consolidated basis, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.
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Clause (iii) of the third paragraph of this Section 501 will not apply
to any transaction in which (1) any Restricted Subsidiary consolidates with,
merges into or transfers all or part of its properties and assets to the Company
or (2) the Company consolidates or merges with or into or transfers all or
substantially all its assets to an Affiliate incorporated or organized for the
purpose of reincorporating or reorganizing the Company in another jurisdiction
to realize tax or other benefits.
Section 502. Successor Company Substituted. Upon any transaction
involving the Company in accordance with Section 501, in which the Company is
not the Successor Company, the Successor Company will succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture, but, in the case of a lease of all or substantially all its
assets, the Company will not be released from the obligation to pay the
principal of and interest on the Notes.
ARTICLE 6
REMEDIES
Section 601. Events of Default. Each of the following is an Event of
Default:
(1) Prior to the Select Medical Escrow Merger, Select
Medical Escrow, and following the Select Medical Escrow Merger, the
Company, defaults in any payment of interest or additional interest (as
required by the Exchange and Registration Rights Agreement) on any Note
when due or payable, and such default continues for 30 days, whether or
not such payment is prohibited by Article 14;
(2) Prior to the Select Medical Escrow Merger, Select
Medical Escrow, and following the Select Medical Escrow Merger, the
Company, defaults in the payment of principal of or premium, if any, on
any Note when the same becomes due and payable at its Stated Maturity,
upon optional redemption, upon required repurchase, upon declaration of
acceleration or otherwise, whether or not such payment is prohibited by
Article 14;
(3) the Company, Select Medical Escrow or any Subsidiary
Guarantor fails to comply with any of their respective obligations
under Article 5 or Section 414 of this Indenture;
(4) the Company or Select Medical Escrow fails to comply
with any of their respective obligations under Article 4 (in each case,
other than a failure or breach that constitutes a Default or Event of
Default governed by clause (1), (2) or (3) above or by clause (10)
below) and such failure or breach continues for 30 days after the
Notice of Default specified below;
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(5) the Company or Select Medical Escrow fails to comply
with any of their respective other covenants or agreements in this
Indenture or under the Notes (in each case, other than a failure or
breach that constitutes a Default or an Event of Default governed by
clause (1), (2), (3) or (4) above or by clause 10 below) and such
failure or breach continues for 60 days after the Notice of Default
specified below;
(6) there is a default under any mortgage, indenture or
instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness of the Company or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Restricted Subsidiaries), other than Indebtedness
owed to the Company or a Restricted Subsidiary, whether such
Indebtedness or guarantee now exists, or is created after the date of
this Indenture, which default:
(a) is caused by a failure to pay principal of,
or interest or premium, if any, on such Indebtedness before
the expiration of the grace period provided in such
Indebtedness; or
(b) results in the acceleration of such
Indebtedness prior to its maturity;
and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under
which there has been such a default or the maturity of which has been
so accelerated, aggregates $5.0 million or more;
(7) Select Medical Escrow, the Company or any Restricted
Subsidiary, pursuant to or within the meaning of any Bankruptcy Law (as
defined below):
(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
(as defined below) of it or for any substantial part of its
property; or
(D) makes a general assignment for the benefit
of its creditors; or takes any comparable action under any
foreign laws relating to insolvency;
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
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(A) is for relief against Select Medical Escrow,
the Company or any Restricted Subsidiary in an involuntary
case;
(B) appoints a Custodian of Select Medical
Escrow, the Company or any Restricted Subsidiary or for any
substantial part of their property; or
(C) orders the winding up or liquidation of
Select Medical Escrow, the Company or any Restricted
Subsidiary;
or any similar relief is granted under any foreign laws and the order,
decree or relief remains unstayed and in effect for 60 days;
(9) failure by Select Medical Escrow, the Company or any
Restricted Subsidiary to pay final judgments aggregating in excess of
$5.0 million (net of any amounts that a reputable and creditworthy
insurance company has acknowledged liability for in writing), which
judgments are not paid, discharged or stayed for a period of 60 days;
(10) any failure by Select Medical Escrow, the Company or
any Restricted Subsidiary to perform or comply with (i) Section 1001(c)
of the Indenture; (ii) the other provisions of Article 10 to the extent
and in the case such provisions relate to a Special Redemption; (iii)
any of their respective obligations under the provisions of the Escrow
Agreement and the Assumption Agreement described in the Offering
Memorandum for the Notes dated July 29, 2003 under the heading
"Description of notes - Escrow of offering proceeds and other amounts;
special redemption"; or (iv) any of their respective obligations under
the Escrow Agreement, the Assumption Agreement or the Securities
Account Control Agreement (other than a failure or breach that
constitutes a Default or Event of Default governed by clause (10)(iii)
above) and such failure or breach continues for 30 days after the
Notice of Default specified below; or
(11) any Subsidiary Guarantee of any Subsidiary Guarantor
ceases to be in full force and effect (except as contemplated by the
terms of the Indenture) or is declared null and void in a judicial
proceeding or any Subsidiary Guarantor denies or disaffirms its
obligations under the Indenture or its Subsidiary Guarantee.
The foregoing will constitute Events of Default whatever the reason for
any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
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The term "Bankruptcy Law" means Xxxxx 00, Xxxxxx Xxxxxx Code, or any
similar Federal, state or foreign law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
Notwithstanding the foregoing, a Default under clause (4), (5) or
(10)(iv) of this Section 601 will not constitute an Event of Default until the
Trustee or the Holders of at least 25% in principal amount of the Outstanding
Notes notify the Company (or Select Medical Escrow prior to the Select Medical
Escrow Merger) (and the Trustee in the case of a notice by Holders) of the
Default and the Company (or Select Medical Escrow prior to the Select Medical
Escrow Merger) does not cure such Default within the time specified in such
clause (4), (5) or (10)(iv) after receipt of such notice. Such notice must
specify the Default, demand that it be remedied and state that such notice is a
"Notice of Default."
The Company (or Select Medical Escrow prior to the Select Medical
Escrow Merger) shall deliver to the Trustee, within 30 days after the occurrence
thereof, written notice in the form of an Officers' Certificate of any Default
or Event of Default under clause (3), (4), (5), (6), (7), (8), (9), (10) or (11)
of this Section 601, which notice shall contain the status thereof and a
description of the action the Company (or Select Medical Escrow prior to the
Select Medical Escrow Merger) is taking or proposes to take with respect
thereof.
Section 602. Acceleration of Maturity; Rescission and Annulment. If an
Event of Default (other than an Event of Default specified in clause (7) or (8)
of Section 601) occurs and is continuing, the Trustee by notice to the Company
(or Select Medical Escrow prior to the Select Medical Escrow Merger), or the
Holders of at least 25% in principal amount of the Outstanding Notes by notice
to the Company (or Select Medical Escrow prior to the Select Medical Escrow
Merger) and the Trustee, in either case specifying in such notice the respective
Event of Default and that such notice is a "notice of acceleration," may, and
the Trustee at the request of the Holders of at least 25% in principal amount of
the Outstanding Notes shall, declare the principal of, premium, if any and
accrued but unpaid interest, if any, on all the Notes to be due and payable.
Upon such a declaration, such principal and interest will be due and payable
immediately. If an Event of Default specified in clause (7) or (8) of Section
601 occurs and is continuing, the principal of, premium, if any, and any accrued
interest on all Notes will become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder. The Holders
of a majority in principal amount of the Outstanding Notes by notice to the
Company (or Select Medical Escrow prior to the Select Medical Escrow Merger) and
the Trustee may waive all past or existing Defaults (except with respect to
nonpayment of principal, premium or interest) and rescind any such acceleration
with respect to the Notes and its consequences if (1) rescission would not
conflict with any judgment or decree of a court of competent jurisdiction and
(2) all existing Events of Default, other than the nonpayment of the principal
of, premium, if
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any, and interest on the Notes that have become due solely by such declaration
of acceleration, have been cured or waived. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
Section 603. Other Remedies; Collection Suit by Trustee. If an Event of
Default occurs and is continuing, the Trustee may, but is not obligated under
this Section 603 to, pursue any available remedy to collect the payment of
principal of or interest on the Notes or to enforce the performance of any
provision of the Notes or this Indenture. If an Event of Default specified in
Section 601(1) or 601(2) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
(or Select Medical Escrow prior to the Select Medical Escrow Merger) for the
whole amount then due and owing (together with interest on any unpaid interest
to the extent lawful) and the amounts provided for in Section 707.
Section 604. Trustee May File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and the Holders allowed in any judicial
proceedings relative to the Company (or Select Medical Escrow prior to the
Select Medical Escrow Merger) or any other obligor upon the Notes, its creditors
or its property and, unless prohibited by law or applicable regulations, may
vote on behalf of the Holders in any election of a trustee in bankruptcy or
other Person performing similar functions, and any Custodian in any such
judicial proceeding is hereby authorized by each Holder to make 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 it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and its counsel, and any other amounts due the Trustee under
Section 707. The Trustee may take any other action with respect to such claims,
including participating as a member of any official committee of creditors
appointed in the matters as it deems necessary or advisable.
No provision of this Indenture 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 Notes or
the rights of any Holder thereof or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.
Section 605. Trustee May Enforce Claims Without Possession of Notes.
All rights of action and claims under this Indenture or the Notes may be
prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the
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ratable benefit of the Holders of the Notes in respect of which such judgment
has been recovered.
Section 606. Application of Money Collected. Any money collected by the
Trustee pursuant to this Article 6 shall be applied in the following order, at
the date or dates fixed by the Trustee and, in case of the distribution of such
money on account of principal (or premium, if any) or interest, upon
presentation of the Notes and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
First: to the payment of all amounts due the Trustee under
Section 707;
Second: following the Select Medical Escrow Merger, to holders
of Senior Indebtedness to the extent required by Article 14;
Third: to the payment of the amounts then due and unpaid upon
the Notes for principal (and premium, if any) and interest, in respect
of which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the
amounts due and payable on such Notes for principal (and premium, if
any) and interest, respectively; and
Fourth: prior to the Select Medical Escrow Merger, to Select
Medical Escrow, and following the Select Medical Escrow Merger, to the
Company.
Section 607. Limitation on Suits. Except to enforce the right to
receive payment of principal, premium, if any, or interest when due, no Holder
may pursue any remedy with respect to this Indenture or the Notes unless:
(1) such Holder has previously given the Trustee written
notice that an Event of Default is continuing;
(2) Holders of at least 25% in principal amount of the
Outstanding Notes have requested the Trustee in writing to pursue the
remedy;
(3) such Holder or Holders have offered to the Trustee
reasonable security or indemnity against any loss, liability or
expense;
(4) the Trustee has not complied with such request within
60 days after receipt of the request and the offer of security or
indemnity; and
(5) the Holders of a majority in principal amount of the
Outstanding Notes have not given the Trustee a direction that, in the
opinion of the Trustee, is inconsistent with the request during such
60-day period.
A Holder may not use this Indenture to affect, disturb or prejudice the
rights of another Holder, to obtain a preference or priority over another Holder
or to enforce any
95
right under this Indenture except in the manner herein provided and for the
equal and ratable benefit of all Holders.
Section 608. Unconditional Right of Holders to Receive Principal,
Premium and Interest. Notwithstanding any other provision in this Indenture, the
Holder of any Note shall have the absolute and unconditional right to receive
payment of the principal of and all (subject to Section 307) interest on such
Note on the respective Stated Maturity or Interest Payment Dates expressed in
such Note and to institute suit for the enforcement of any such payment on or
after such respective Stated Maturity or Interest Payment Dates, and such right
shall not be impaired without the consent of such Holder.
Section 609. Restoration of Rights and Remedies. If the Trustee or any
Holder has instituted any proceeding to enforce any right or remedy under this
Indenture or any Note and such proceeding has been discontinued or abandoned for
any reason, or has been determined adversely to the Trustee or to such Holder,
then and in every such case Select Medical Escrow, the Company, any Subsidiary
Guarantor, any other obligor upon the Notes, the Trustee and the Holders shall,
subject to any determination in such proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
Section 610. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section 611. Delay or Omission Not Waiver. No delay or omission of the
Trustee or of any Holder of any Note to exercise any right or remedy accruing
upon any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein. Every right and
remedy given by this Article 6 or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.
Section 612. Control by Holders. The Holders of not less than a
majority in aggregate principal amount of the Outstanding Notes shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or of exercising any trust or power conferred on
the Trustee, provided that
(1) such direction shall not be in conflict with any rule
of law or with this Indenture, and
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(2) the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction.
However, the Trustee may refuse to follow any direction that conflicts
with law or this Indenture or, subject to Section 701, that the Trustee
determines is unduly prejudicial to the rights of other Holders or would involve
the Trustee in personal liability; provided, however, that the Trustee may take
any other action deemed proper by the Trustee that is not inconsistent with such
direction. Prior to taking any action under this Indenture, the Trustee shall be
entitled to indemnification satisfactory to it in its sole discretion against
all losses and expenses caused by taking or not taking such action. This Section
612 shall be in lieu of Section 316(a)(1)(A) of the TIA, and such Section
316(a)(1)(A) of the TIA is hereby expressly excluded from this Indenture and the
Notes, as permitted by the TIA.
Section 613. Waiver of Past Defaults. The Holders of not less than a
majority in aggregate principal amount of the Outstanding Notes may on behalf of
the Holders of all the Notes waive any past or existing Default hereunder and
its consequences, except a Default
(1) in the payment of the principal of (or premium, if
any) or interest on any Note (which may only be waived with the consent
of each Holder of Notes affected), or
(2) in respect of a covenant or provision hereof that
pursuant to the second paragraph of Section 902 cannot be modified or
amended without the consent of the Holder of each Outstanding Note
affected.
Upon any such waiver, such Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereon. In
case of any such waiver, Select Medical Escrow, the Company, any Subsidiary
Guarantor, any other obligor upon the Notes, the Trustee and the Holders shall
be restored to their former positions and rights hereunder and under the Notes,
respectively. This paragraph of this Section 613 shall be in lieu of Section
316(a)(1)(B) of the TIA and such Section 316(a)(1)(B) of the TIA is hereby
expressly excluded from this Indenture and the Notes, as permitted by the TIA.
Section 614. Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture or the Notes, or
in any suit against the Trustee for any action taken, suffered or omitted by it
as Trustee, the filing by any party litigant in such suit of an undertaking to
pay the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or
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defenses made by such party litigant. This Section 614 shall not apply to any
suit instituted by the Trustee, to any suit instituted by any Holder, or group
of Holders, holding in the aggregate more than 10% in principal amount of the
Outstanding Notes, or to any suit instituted by any Holder for the enforcement
of the payment of the principal of (or premium, if any) or interest on any Note
on or after the respective Stated Maturity or Interest Payment Dates expressed
in such Note.
Section 615. Waiver of Stay, Extension or Usury Laws. Prior to the
Select Medical Escrow Merger, Select Medical Escrow, and following the Select
Medical Escrow Merger, the Company covenants (to the extent that it may lawfully
do so) that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
or any usury or other similar law wherever enacted, now or at any time hereafter
in force, that would prohibit or forgive Select Medical Escrow or the Company,
as the case may be, from paying all or any portion of the principal of (or
premium, if any) or interest on the Notes contemplated herein or in the Notes or
that may affect the covenants or the performance of this Indenture; and prior to
the Select Medical Escrow Merger, Select Medical Escrow, and following the
Select Medical Escrow Merger, the Company, to the extent that it may lawfully do
so, hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
ARTICLE 7
THE TRUSTEE
Section 701. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture, and
no implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such certificates or opinions
that by any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this
Indenture, but need not verify the contents thereof.
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(b) In case an Event of Default has occurred and is continuing,
the Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(c) No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that (i) this paragraph
does not limit the effect of paragraph (a) of this Section 701; (ii) 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 (iii) 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 612.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(e) Whether or not therein expressly so provided, every provision
of this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of
Sections 701 and 703 hereof.
Section 702. Notice of Defaults. Within 90 days after the occurrence of
any Default, the Trustee shall transmit by mail to all Holders, as their names
and addresses appear in the Note Register, notice of such Default hereunder
known to the Trustee unless such Default shall have been cured or waived;
provided, however, that, except in the case of a Default in the payment of the
principal of, premium, if any, or interest on any Note, the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of Responsible Officers of the
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders.
Section 703. Certain Rights of Trustee. Subject to the provisions of
Section 701:
(1) the Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
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(2) any request or direction of Select Medical Escrow or
the Company mentioned herein shall be sufficiently evidenced by a
Company Request or Company Order thereof, and any resolution of any
Person's board of directors shall be sufficiently evidenced if
certified by an Officer of such Person as having been duly adopted and
being in full force and effect on the date of such certificate;
(3) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate;
(4) 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;
(5) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the
request or direction of any of the Holders pursuant to this Indenture,
unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction;
(6) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, note, other evidence of indebtedness
or other paper or document but the Trustee, in its discretion, may make
such further inquiry or investigation into such facts or matters as it
may see fit, and, if the Trustee shall determine to make such further
inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company and Select Medical Escrow,
personally or by agent or attorney;
(7) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder;
(8) the Trustee shall not be deemed to have notice of any
Default or Event of Default unless a Responsible Officer of the Trustee
has actual knowledge thereof or unless written notice of any event
which is in fact such a
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Default is received by the Trustee at the Corporate Trust Office, and
such notice references the Notes or this Indenture; and
(9) any permissive right or authority granted to the
Trustee shall not be construed as a mandatory duty.
Section 704. Not Responsible for Recitals or Issuance of Notes. The
recitals contained herein and in the Notes, except the Trustee's certificates of
authentication, shall be taken as the statements of Select Medical Escrow, the
Company, any Subsidiary Guarantor and any other obligor upon the Notes, and
neither the Trustee nor any Authenticating Agent assumes any responsibility for
their correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Notes, except that the Trustee
represents that it is duly authorized to execute and deliver this Indenture,
authenticate the Notes and perform its obligations hereunder and that the
statements made by it in a Statement of Eligibility and Qualification on Form
T-1 supplied to Select Medical Escrow, the Company, any Subsidiary Guarantor and
any other obligor upon the Notes in connection with the registration of any
Notes and any Note Guarantees issued hereunder are and will be true and accurate
subject to the qualifications set forth therein. Neither the Trustee nor any
Authenticating Agent shall be accountable for the use or application by Select
Medical Escrow or the Company of Notes or the proceeds thereof.
Section 705. May Hold Notes. The Trustee, any Authenticating Agent, any
Paying Agent, any Note Registrar or any other agent of the Company (or prior to
the Select Medical Escrow Merger, Select Medical Escrow), in its individual or
any other capacity, may become the owner or pledgee of Notes and, subject to
Section 708 and Section 713, may otherwise deal with the Company (or prior to
the Select Medical Escrow Merger, Select Medical Escrow) or its Affiliates with
the same rights it would have if it were not Trustee, Authenticating Agent,
Paying Agent, Note Registrar or such other agent.
Section 706. Money Held in Trust. Money held by the Trustee in trust
hereunder need not be segregated from other funds except to the extent required
by law. The Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed with Select Medical Escrow
or the Company.
Section 707. Compensation and Reimbursement. Prior to the Select
Medical Escrow Merger, Select Medical Escrow, and following the Select Medical
Escrow Merger, the Company, agrees,
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by the Trustee hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
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(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses
incurred by the Trustee in accordance with any provision of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or
bad faith on the Trustee's part, arising out of or in connection with
the acceptance or administration of the trust or trusts hereunder,
including the costs and expenses of defending itself against any claim
or liability in connection with the exercise or performance of any of
its powers or duties hereunder. The Trustee shall notify the Company
promptly 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 not more than one firm acting as such
counsel. The Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(7) or (8) occurs, the expenses and the
compensation for such services are intended to constitute expenses of
administration under any Bankruptcy Law.
The indemnification and agreement to hold harmless granted to the
Trustee by the Company in this Section 707 shall survive termination of this
Indenture.
Section 708. Conflicting Interests. If the Trustee has or shall acquire
a conflicting interest within the meaning of the TIA, the Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided by,
and subject to the provisions of, the TIA and this Indenture. To the extent
permitted by such Act, the Trustee shall not be deemed to have a conflicting
interest by virtue of being a trustee under this Indenture with respect to
Original Notes and Additional Notes, or a trustee under any other indenture
between the Company and the Trustee.
Section 709. Corporate Trustee Required; Eligibility. There shall at
all times be one (and only one) Trustee hereunder. The Trustee shall be a Person
that is eligible pursuant to the TIA to act as such and has a combined capital
and surplus of at least $50,000,000. If any such Person publishes reports of
condition at least annually, pursuant to law or to the requirements of its
supervising or examining authority, then for the purposes of this Section 709
and to the extent permitted by the TIA, the combined capital and surplus of such
Person shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published. If at any time the Trustee
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shall cease to be eligible in accordance with the provisions of this Section
709, it shall resign immediately in the manner and with the effect hereinafter
specified in this Article.
Section 710. Resignation and Removal; Appointment of Successor. No
resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of Section 711.
The Trustee may resign at any time by giving written notice thereof to
the Company (or prior to the Select Medical Escrow Merger, Select Medical
Escrow). If the instrument of acceptance by a successor Trustee required by
Section 711 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Notes, delivered to the Trustee
and to the Company (or Select Medical Escrow prior to the Select Medical Escrow
Merger).
If at any time:
(1) the Trustee shall fail to comply with Section 708
after written request therefor by the Company (or Select Medical Escrow
prior to the Select Medical Escrow Merger) or by any Holder who has
been a bona fide Holder of a Note for at least six months, or
(2) the Trustee shall cease to be eligible under Section
709 and shall fail to resign after written request therefor by the
Company (or Select Medical Escrow prior to the Select Medical Escrow
Merger) or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall
be adjudged bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take charge
or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation,
then, in any such case, (A) the Company (or Select Medical Escrow prior to the
Select Medical Escrow Merger) by a board resolution may remove the Trustee, or
(B) subject to Section 614, any Holder who has been a bona fide Holder of a Note
for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.
If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, the Company
(or Select Medical Escrow prior to the Select Medical Escrow Merger) by a board
resolution shall
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promptly appoint a successor Trustee and shall comply with the applicable
requirements of Section 711. If, within one year after such resignation, removal
or incapability, or the occurrence of such vacancy, a successor Trustee shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Notes delivered to the Company (or Select Medical Escrow prior to
the Select Medical Escrow Merger) and the retiring Trustee, the successor
Trustee so appointed shall, forthwith upon its acceptance of such appointment in
accordance with the applicable requirements of Section 711, become the successor
Trustee and to that extent supersede the successor Trustee appointed by the
Company (or Select Medical Escrow prior to the Select Medical Escrow Merger). If
no successor Trustee shall have been so appointed by the Company (or Select
Medical Escrow prior to the Select Medical Escrow Merger) or the Holders and
accepted appointment in the manner required by Section 711, then, subject to
Section 614, any Holder who has been a bona fide Holder of a Note for at least
six months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor Trustee.
The Company (or Select Medical Escrow prior to the Select Medical
Escrow Merger) shall give notice of each resignation and each removal of the
Trustee and each appointment of a successor Trustee to all Holders in the manner
provided in Section 110. Each notice shall include the name of the successor
Trustee and the address of its Corporate Trust Office.
Section 711. Acceptance of Appointment by Successor. In case of the
appointment hereunder of a successor Trustee, every such successor Trustee so
appointed shall execute, acknowledge and deliver to the Company (or Select
Medical Escrow prior to the Select Medical Escrow Merger) and to the retiring
Trustee an instrument accepting such appointment, and thereupon the resignation
or removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee; but, on the
request of the Company (or Select Medical Escrow prior to the Select Medical
Escrow Merger) or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder. Notwithstanding the
replacement of the Trustee pursuant to this Section 711, the Company's
obligations under Section 707 shall continue for the benefit of the retiring
Trustee with regard to expenses and liabilities incurred by it and compensation
earned by it prior to such replacement or otherwise under the Indenture.
Upon request of any such successor Trustee, the Company (or Select
Medical Escrow prior to the Select Medical Escrow Merger) shall execute any and
all instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts referred to above.
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No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article 7.
Section 712. Merger, Conversion, Consolidation or Succession to
Business. Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article 7,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Notes shall have been authenticated, but
not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Notes so authenticated with the same effect as if
such successor Trustee had itself authenticated such Notes.
Section 713. Preferential Collection of Claims Against the Company. If
and when the Trustee shall be or become a creditor of the Company (or Select
Medical Escrow or any Subsidiary Guarantor or other obligor upon the Notes), the
Trustee shall be subject to the provisions of the TIA regarding the collection
of claims against the Company (or Select Medical Escrow or any Subsidiary
Guarantor or any such other obligor).
Section 714. Appointment of Authenticating Agent. The Trustee may
appoint an Authenticating Agent acceptable to the Company (or Select Medical
Escrow prior to the Select Medical Escrow Merger) to authenticate the Notes. Any
such appointment shall be evidenced by an instrument in writing signed by a
Trust Officer, a copy of which instrument shall be promptly furnished to the
Company (or Select Medical Escrow prior to the Select Medical Escrow Merger).
Unless limited by the terms of such appointment, an Authenticating Agent may
authenticate Notes whenever the Trustee may do so. Each reference in this
Indenture to authentication (or execution of a certificate of authentication) by
the Trustee includes authentication (or execution of a certificate of
authentication) by such Authenticating Agent. An Authenticating Agent has the
same rights as any Registrar, Paying Agent or agent for service of notices and
demands.
ARTICLE 8
HOLDERS' LISTS AND REPORTS
BY TRUSTEE AND THE COMPANY
Section 801. The Company to Furnish Trustee Names and Addresses of
Holders. The Company (or Select Medical Escrow prior to the Select Medical
Escrow Merger) will furnish or cause to be furnished to the Trustee
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(1) semi-annually, not more than 15 days after each
Regular Record Date, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders as of such Regular
Record Date, and
(2) at such other times as the Trustee may request in
writing, within 30 days after the receipt by the Company (or Select
Medical Escrow prior to the Select Medical Escrow Merger) of any such
request, a list of similar form and content as of a date not more than
15 days prior to the time such list is furnished;
provided, however, that if and so long as the Trustee shall be the Note
Registrar, no such list need be furnished pursuant to this Section 801.
Section 802. Preservation of Information; Communications to Holders.
The Trustee shall preserve, in as current a form as is reasonably practicable,
the names and addresses of Holders contained in the most recent list, if any,
furnished to the Trustee as provided in Section 801 and the names and addresses
of Holders received by the Trustee in its capacity as Note Registrar; provided,
however, that if and so long as the Trustee shall be the Note Registrar, the
Note Register shall satisfy the requirements relating to such list. None of
Select Medical Escrow, the Company, any Subsidiary Guarantor, any other obligor
upon the Notes or the Trustee or any other Person shall be under any
responsibility with regard to the accuracy of such list. The Trustee may destroy
any list furnished to it as provided in Section 801 upon receipt of a new list
so furnished.
The rights of Holders to communicate with other Holders with respect to
their rights under this Indenture or under the Notes, and the corresponding
rights and privileges of the Trustee, shall be as provided by the TIA.
Every Holder of Notes, by receiving and holding the same, agrees with
the Company (or Select Medical Escrow prior to the Select Medical Escrow Merger)
and the Trustee that neither the Company (or Select Medical Escrow prior to the
Select Medical Escrow Merger) nor the Trustee nor any agent of either of them
shall be held accountable by reason of any disclosure of information as to names
and addresses of Holders made pursuant to the TIA.
Section 803. Reports by Trustee. If such report is required by TIA
Section 313, within 60 days after each August 1 beginning with August 1, 2004
the Trustee shall mail to each Holder a brief report dated as of such August 1
that complies with Section 313(a). The Trustee shall transmit to Holders such
other reports concerning the Trustee and its actions under this Indenture as may
be required pursuant to the TIA at the times and in the manner provided pursuant
thereto. A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any Notes
are listed, with the SEC and with the Company. The Company (or Select Medical
Escrow prior to the Select Medical Escrow Merger) will notify the Trustee when
any Notes are listed on any stock exchange.
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ARTICLE 9
AMENDMENT, SUPPLEMENT OR WAIVER
Section 901. Without Consent of Holders. Without the consent of the
Holders of any Notes, the Company (or Select Medical Escrow prior to the Select
Medical Escrow Merger), the Trustee and (as applicable) any Subsidiary Guarantor
may enter into one or more indentures supplemental hereto in form and substance
satisfactory to the Trustee, for any of the following purposes:
(1) to cure any ambiguity, omission, defect or
inconsistency,
(2) to provide for the assumption by a successor of the
obligations of the Company under this Indenture,
(3) to provide for uncertificated Notes in addition to or
in place of certificated Notes, provided, however, that the
uncertificated Notes are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Notes are described in Section 163(f)(2)(B) of the Code,
(4) to add Guarantees with respect to the Notes or to
secure the Notes,
(5) to add to the covenants of the Company or Select
Medical Escrow for the benefit of the Noteholders or to surrender any
right or power conferred upon the Company or Select Medical Escrow,
(6) to make any change that does not adversely affect the
rights of any Holder under the Notes or this Indenture, or
(7) to comply with any requirement of the SEC in
connection with the qualification of this Indenture under the TIA or
otherwise.
Notwithstanding the foregoing provisions of this Section 901 and the
provisions of Section 902, on or after the date hereof (but after the execution
and delivery of this Indenture and the issuance of the Notes), Select Medical
Escrow, the Company, the Subsidiary Guarantors and the Trustee may execute and
deliver a supplemental indenture giving effect to the Assumption and to the
Guarantees by the Subsidiary Guarantors of the Notes, in each case without
notice to or consent of any Holder.
Section 902. With Consent of Holders. Subject to Section 608, the
Company (or Select Medical Escrow prior to the Select Medical Escrow Merger),
the Trustee and (if applicable) any Subsidiary Guarantor may amend or supplement
this Indenture or the Notes with the written consent of the Holders of not less
than a majority in aggregate principal amount of the Outstanding Notes
(including, without limitation, consents obtained in connection with a purchase
of or tender offer or exchange offer for Notes),
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and the Holders of not less than a majority in aggregate principal amount of the
Outstanding Notes by written notice to the Trustee (including, without
limitation, consents obtained in connection with a purchase of or tender offer
or exchange offer for Notes) may, subject to Section 613, waive any past or
existing Default or Event of Default or compliance by Select Medical Escrow, the
Company or any Subsidiary Guarantor with any provision of this Indenture, the
Notes or any Subsidiary Guarantee.
Notwithstanding the provisions of this Section 902, without the consent
of each Holder affected, an amendment or waiver, including a waiver pursuant to
Section 613, may not:
(i) reduce the principal amount of the Notes whose
Holders must consent to an amendment or waiver;
(ii) reduce the stated rate of or extend the stated time
for payment of interest on any Note;
(iii) reduce the principal of or extend the Stated Maturity
of any Note;
(iv) reduce the premium payable upon the redemption or
repurchase of any Note or change the time at which any Note may be
required to be redeemed or repurchased as described in Section 1001(a)
or (b) or any similar provision, whether through an amendment or waiver
of provisions in such Section 1001 (a) or (b) or similar provision or
any related definition or otherwise;
(v) make any Note payable in money other than that stated
in the Note;
(vi) impair the right of any Holder to receive payment of,
premium, if any, principal of and interest on such Holder's Notes on or
after the due dates therefor or to institute suit for the enforcement
of any payment on or with respect to such Holder's Notes;
(vii) make any change to the provisions of the Indenture,
the Notes, the Escrow Agreement or the Assumption Agreement relating to
the Select Medical Escrow Merger, the Company's assumption of the
obligations under the Indenture and the Notes or the Special Redemption
of the Notes described in Sections 1001(c), 1003 and 1005 which would
adversely affect the rights of any Holder; or
(viii) make any change in the amendment provisions described
in this Section 902 or the waiver provisions described in Section 613.
Notwithstanding Section 901 and the foregoing provisions of this
Section 902, no amendment to Article 14 or Article 15, respectively, or the
definitions relating thereto that adversely affects the rights of any Holder of
Senior Indebtedness or Guarantor Senior Indebtedness, respectively, at the time
outstanding may be made unless the holders of
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such Senior Indebtedness or Guarantor Senior Indebtedness (or any group or
representative thereof authorized to give a consent) consent in writing to such
amendment.
It shall not be necessary for the consent of the Holders under this
Section 902 to approve the particular form of any proposed amendment, supplement
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under Section 901 or this
Section 902 becomes effective, the Company (or Select Medical Escrow prior to
the Select Medical Escrow Merger) shall mail to the Holders of each Note
affected thereby, with a copy to the Trustee, a notice briefly describing the
amendment, supplement or waiver. Any failure of the Company (or Select Medical
Escrow prior to the Select Medical Escrow Merger) to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any supplemental indenture or effectiveness of any such amendment, supplement or
waiver.
Section 903. Execution of Amendments, Supplements or Waivers. The
Trustee shall sign any amendment, supplement or waiver authorized pursuant to
this Article 9 if the amendment, supplement or waiver 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, supplement or waiver, the Trustee shall be entitled to receive, and
shall be fully protected in relying upon, an Officers' Certificate and an
Opinion of Counsel to the effect that the execution of such amendment,
supplement or waiver is authorized or permitted by this Indenture and has been
duly authorized, executed and delivered by the Company (or Select Medical Escrow
prior to the Select Medical Escrow Merger) and that, subject to applicable
bankruptcy, insolvency, fraudulent transfer, fraudulent conveyance,
reorganization, moratorium and other laws now or hereinafter in effect affecting
creditors' rights or remedies generally and the general principles of equity
(including, without limitation, standards of materiality, good faith, fair
dealing and reasonableness), whether considered in a proceeding at law or at
equity, such amendment, supplement or waiver is a valid and binding agreement of
the Company (or Select Medical Escrow prior to the Select Medical Escrow
Merger), enforceable against it in accordance with its terms.
Section 904. Revocation and Effect of Consents. Until an amendment,
supplement or waiver becomes effective, a consent to it by a Holder is a
continuing consent by the Holder and every subsequent Holder of that Note or any
Note that evidences all or any part of the same debt as the consenting Holder's
Note, even if notation of the consent is not made on any Note. Subject to the
following paragraph of this Section 904, any such Holder or subsequent Holder
may revoke the consent as to such Holder's Note by notice to the Trustee or the
Company (or Select Medical Escrow prior to the Select Medical Escrow Merger)
received by the Trustee or the Company (or Select Medical Escrow prior to the
Select Medical Escrow Merger), as the case may be,
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before the date on which the Trustee receives an Officers' Certificate
certifying that the Holders of the requisite principal amount of Notes have
consented (and not theretofore revoked such consent) to the amendment,
supplement or waiver. The Company (or Select Medical Escrow prior to the Select
Medical Escrow Merger) may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver as set forth in Section 108.
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder of Notes, unless it makes a change described in any of clauses
(i) through (viii) of the second paragraph of Section 902. In that case, the
amendment, supplement or waiver shall bind each Holder of a Note who has
consented to it and every subsequent Holder of such Note or any Note that
evidences all or any part of the same debt as the consenting Holder's Note.
Section 905. Conformity with TIA. Every amendment or supplemental
indenture executed pursuant to this Article shall conform to the requirements of
the TIA as then in effect.
Section 906. Notation on or Exchange of Notes. If an amendment,
supplement or waiver changes the terms of a Note, the Trustee may require the
Holder of the Note to deliver it to the Trustee. The Trustee may place an
appropriate notation on the Note about the changed terms and return it to the
Holder. Alternatively, if the Company (or Select Medical Escrow prior to the
Select Medical Escrow Merger) or the Trustee so determines, the Company (or
Select Medical Escrow prior to the Select Medical Escrow Merger) in exchange for
the Note shall issue and the Trustee shall authenticate a new Note that reflects
the changed terms. Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment, supplement or
waiver.
ARTICLE 10
REDEMPTION OF NOTES
Section 1001. Redemption.
(a) Except as set forth in this Section 1001, the Notes will not
be redeemable at the option of the Company prior to August 1, 2008. The Notes
will not be redeemable by Select Medical Escrow except pursuant to Section
1001(c). The Notes will be redeemable, at the Company's option, in whole or in
part, and from time to time on and after August 1, 2008 and prior to maturity.
Such redemption may be made upon notice mailed by first-class mail to each
Holder's registered address in accordance with Section 1005. The Notes will be
so redeemable at the following Redemption Prices (expressed as a percentage of
principal amount), plus accrued and unpaid interest, if any,
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to the relevant Redemption Date (subject to Section 307 and to the right of
Holders of record on the relevant record date to receive interest due on the
relevant Interest Payment Date), if redeemed during the 12-month period
commencing on August 1 of the years set forth below:
REDEMPTION
PERIOD PRICE
------ ----------
2008............................................. 103.750%
2009............................................. 102.500%
2010............................................. 101.250%
2011 and thereafter.............................. 100.000%
(b) In addition, at any time and from time to time after the
Select Medical Escrow Merger and prior to August 1, 2006, the Company at its
option may redeem the Notes in an aggregate principal amount equal to up to 35%
of the original aggregate principal amount of the Notes (including the principal
amount of any Additional Notes), with the Net Cash Proceeds of one or more
Equity Offerings, at a Redemption Price of 107.500% of the principal amount of
the Notes, plus accrued and unpaid interest, if any, to the Redemption Date
(subject to Section 307 and to the right of Holders of record on the relevant
record date to receive interest due on the relevant Interest Payment Date);
provided, however, that an aggregate principal amount of the Notes equal to at
least 65% of the original aggregate principal amount of the Notes (including the
principal amount of any Additional Notes) must remain outstanding after each
such redemption and such redemption must occur within 90 days after the closing
of the Equity Offering. The Company may make such redemption upon notice mailed
by first-class mail to each Holder's registered address in accordance with
Section 1005.
(c) In addition, in the event that (i) the Xxxxxxx Acquisition is
not consummated on or prior to November 27, 2003 or (ii) the Stock Purchase
Agreement is terminated on or prior to November 27, 2003, for any reason, Select
Medical Escrow will mandatorily redeem all the Notes at the applicable Special
Redemption Price on the Special Redemption Date.
Section 1002. Applicability of Article. Redemption of Notes as
permitted by Section 1001 shall be made in accordance with this Article 10.
Section 1003. Election to Redeem; Notice to Trustee. In case of any
redemption at the election of the Company of less than all of the Notes, the
Company shall, at least 45 days prior to the Redemption Date initially fixed by
the Company (unless a shorter notice shall be satisfactory to the Trustee),
notify the Trustee of such Redemption Date and of the principal amount of Notes
to be redeemed. In case of a Special Redemption, Select Medical Escrow shall
notify the Trustee and the Escrow Agent of such Special
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Redemption and the Special Redemption Date at least 10 Business Days prior to
the Special Redemption Date; provided, however, that the Trustee shall not
notify any Holder of any Special Redemption unless Select Medical Escrow
confirms with the Trustee in writing at least 8 Business Days prior to a Special
Redemption that such Special Redemption shall occur. Without limiting the
foregoing, Select Medical Escrow shall notify the Trustee and the Escrow Agent
promptly following the occurrence of any event that will give rise to or result
in a Special Redemption.
Section 1004. Selection by Trustee of Notes to Be Redeemed. In the case
of any partial redemption, selection of the Notes for redemption will be made
not more than 60 days prior to the Redemption Date by the Trustee in compliance
with the requirements of the principal national securities exchange, if any, on
which the Notes are listed, or if the notes are not listed, then on a pro rata
basis, by lot or by such other method as the Trustee in its sole discretion
shall deem to be fair and appropriate, although no Note of $1,000 in original
principal amount or less will be redeemed in part.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. On and after the
Redemption Date, interest will cease to accrue on Notes or portions thereof
called for redemption.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Notes shall relate, in
the case of any Note redeemed or to be redeemed only in part, to the portion of
the principal of such Note that has been or is to be redeemed.
The Company shall certify to the Trustee, from time to time, if the
Notes are listed on a national securities exchange and absent receipt of any
such certification from the Company, the Trustee shall be entitled to assume in
good faith that the Notes are not listed on a national securities exchange.
Section 1005. Notice of Redemption. Notice of redemption or purchase as
provided in Sections 1001 (a) and (b) shall be given by first class mail,
postage prepaid, mailed not less than 30 nor more than 60 days prior to the
Redemption Date, to each Holder of Notes to be redeemed, at such Holder's
address appearing in the Note Register. In the case of a Special Redemption
pursuant to Section 1001(c), Select Medical Escrow shall mail a notice of
redemption by first class mail, postage prepaid, to each Holder of Notes at such
Holder's address appearing in the Note Register at least 8 Business Days prior
to the Special Redemption Date.
Any such notice shall state:
(1) the expected Redemption Date (including in each case
any Special Redemption Date, as applicable),
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(2) the Redemption Price (including in each case any
Special Redemption Price, as applicable),
(3) if less than all Outstanding Notes are to be
redeemed, the identification (and, in the case of partial redemption,
the respective principal amounts) of the Notes to be redeemed,
(4) that on the Redemption Date the Redemption Price will
become due and payable upon each such Note, and that, unless the
Company (or Select Medical Escrow in the case of a Special Redemption)
defaults in making such redemption payment or the Paying Agent is
prohibited from making such payment pursuant to the terms of this
Indenture, interest thereon shall cease to accrue from and after said
date,
(5) the place where such Notes are to be surrendered for
payment of the Redemption Price, and
(6) the CUSIP and other security identification numbers,
if any, subject to Section 311 hereof.
Notice of such redemption or purchase of Notes to be so redeemed or
purchased at the election of the Company (or Select Medical Escrow in the case
of a Special Redemption) shall be given by the Company (or Select Medical Escrow
in the case of a Special Redemption) or, at the Company's (or Select Medical
Escrow's in the case of a Special Redemption) request, by the Trustee in the
name and at the expense of the Company (or Select Medical Escrow in the case of
a Special Redemption).
The notice if mailed in the manner herein provided shall be
conclusively presumed to have been given, whether or not the Holder receives
such notice. In any case, failure to give such notice by mail or any defect in
the notice to the Holder of any Note designated for redemption as a whole or in
part shall not affect the validity of the proceedings for the redemption of any
other Note.
Section 1006. Deposit of Redemption Price. On or prior to any
Redemption Date, the Company (or Select Medical Escrow in the case of a Special
Redemption) shall deposit with the Trustee or with a Paying Agent (or, if the
Company (or Select Medical Escrow in the case of a Special Redemption) is acting
as its own Paying Agent, the Company (or Select Medical Escrow in the case of a
Special Redemption) shall segregate and hold in trust as provided in Section
403) an amount of money sufficient to pay the Redemption Price of, and any
accrued and unpaid interest on, all the Notes or portions thereof which are to
be redeemed on that date. In addition, in the case of a Special Redemption, any
such deposit shall be made in accordance with Section 2(b) of the Escrow
Agreement.
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Section 1007. Notes Payable on Redemption Date. Notice of redemption
having been given as provided in this Article 10, the Notes so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price
herein specified and from and after such date (unless the Company (or Select
Medical Escrow in the case of a Special Redemption) shall default in the payment
of the Redemption Price or the Paying Agent is prohibited from paying the
Redemption Price pursuant to the terms of this Indenture) such Notes shall cease
to bear interest. Upon surrender of such Notes for redemption in accordance with
such notice, such Notes shall be paid by the Company (or Select Medical Escrow
in the case of a Special Redemption) at the Redemption Price. Installments of
interest whose Interest Payment Date is on or prior to the Redemption Date shall
be payable to the Holders of such Notes registered as such on the relevant
Regular Record Dates according to their terms and the provisions of Section 307.
On and after any Redemption Date, if money sufficient to pay the
Redemption Price of and any accrued and unpaid interest on Notes called for
redemption or required to be redeemed shall have been made available in
accordance with Section 1006, the Notes (or the portions thereof) called for
redemption or required to be redeemed will cease to accrue interest and the only
right of the Holders of such Notes (or portions thereof) will be to receive
payment of the Redemption Price of and subject to the last sentence of the
preceding paragraph of this Section 1007, any accrued and unpaid interest on
such Notes (or portions thereof) to the Redemption Date. If any Note (or portion
thereof) called for redemption or required to be redeemed shall not be so paid
upon surrender thereof for redemption, the principal (and premium, if any)
shall, until paid, bear interest from the Redemption Date at the rate borne by
the Note (or portion thereof).
Section 1008. Notes Redeemed in Part. Any Note that is to be redeemed
only in part shall be surrendered at the Place of Payment (with, if the Company
or the Trustee so requires, due endorsement by, or a written instrument of
transfer in form satisfactory to the Company and the Trustee duly executed by,
the Holder thereof or his attorney duly authorized in writing) and the Company
shall execute and the Trustee shall authenticate and deliver to the Holder of
such Note without service charge, a new Note or Notes, of any authorized
denomination as requested by such Holder in aggregate principal amount equal to
and in exchange for the unredeemed portion of the principal of the Note so
surrendered.
ARTICLE 11
SATISFACTION AND DISCHARGE
Section 1101. Satisfaction and Discharge of Indenture. This Indenture
shall cease to be of further effect (except as to any surviving rights of
transfer or exchange of Notes herein expressly provided for), and the Trustee,
on demand of and at the expense of the Company (or Select Medical Escrow prior
to the Select Medical Escrow Merger),
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shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture, when
(1) either
(A) all Notes theretofore authenticated and
delivered (other than (i) Notes that have been destroyed, lost
or stolen and that have been replaced or paid as provided in
Section 306, and (ii) Notes for whose payment money has
theretofore been deposited in trust or segregated and held in
trust by the Company (or Select Medical Escrow prior to the
Select Medical Escrow Merger) and thereafter repaid to the
Company (or Select Medical Escrow prior to the Select Medical
Escrow Merger) or discharged from such trust, as provided in
Section 403) have been delivered to the Trustee cancelled or
for cancellation; or
(B) all such Notes not theretofore delivered to
the Trustee cancelled or for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one year
under arrangements reasonably satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the name,
and at the expense, of the Company (or Select Medical Escrow
prior to the Select Medical Escrow Merger),
(2) the Company (or Select Medical Escrow prior to the
Select Medical Escrow Merger) has deposited or caused to be deposited
with the Trustee an amount in United States dollars, U.S. Government
Obligations, or a combination thereof, sufficient to pay and discharge
the entire Indebtedness on such Notes not theretofore delivered to the
Trustee cancelled or for cancellation, for principal (and premium, if
any) and interest to the date of such deposit (in the case of Notes
that have become due and payable), or to the Stated Maturity or
Redemption Date, as the case may be;
(3) the Company (or Select Medical Escrow prior to the
Select Medical Escrow Merger) has paid or caused to be paid all other
sums then payable hereunder by the Company (or Select Medical Escrow
prior to the Select Medical Escrow Merger); and
(4) the Company (or Select Medical Escrow prior to the
Select Medical Escrow Merger) has delivered to the Trustee an Officers'
Certificate and
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an Opinion of Counsel each to the effect that all conditions precedent
provided for in this Section 1101 relating to the satisfaction and
discharge of this Indenture have been complied with, provided that any
such counsel may rely on any Officers' Certificate as to matters of
fact (including as to compliance with the foregoing clauses (1), (2)
and (3)).
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company (or Select Medical Escrow prior to the Select Medical
Escrow Merger) to the Trustee under Section 707 and, if money shall have been
deposited with the Trustee pursuant to clause (2) of this Section 1101, the
obligations of the Trustee under Section 1102, shall survive. Notwithstanding
anything herein to the contrary, Select Medical Escrow shall not satisfy and
discharge this Indenture pursuant to this Section 1101 prior to the Special
Redemption Date.
Section 1102. Application of Trust Money. Subject to the provisions of
the last paragraph of Section 403, all money deposited with the Trustee pursuant
to Section 1101 shall be held in trust and applied by it, in accordance with the
provisions of the Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company (or Select Medical Escrow prior
to the Select Medical Escrow Merger) acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal (and
premium, if any) and interest on the Notes; but such money need not be
segregated from other funds except to the extent required by law.
ARTICLE 12
DEFEASANCE OR COVENANT DEFEASANCE
Section 1201. The Company's Option to Elect Defeasance or Covenant
Defeasance. The Company may, at its option, at any time after the Select Medical
Escrow Merger, elect to have discharged the obligations of the Company with
respect to the Outstanding Notes and to have terminated the obligations of any
or all Subsidiary Guarantors with respect to the Subsidiary Guarantees, as the
case may be, in each case and to the extent as set forth in this Article 12, and
elect to have either Section 1202 or Section 1203 be applied to all of the
Outstanding Notes (the "Defeased Notes"), upon compliance with the conditions
set forth in Section 1204. Either Section 1202 or Section 1203 may be applied to
the Defeased Notes to any Redemption Date or the Stated Maturity of the Notes.
Section 1202. Defeasance and Discharge. Upon the Company's exercise
under Section 1201 of the option applicable to this Section 1202, the Company
shall be deemed to have been released and discharged from its obligations with
respect to the Defeased Notes on the date the relevant conditions set forth in
Section 1204 below are satisfied (hereinafter, "Defeasance"). For this purpose,
such Defeasance means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by the
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Defeased Notes, which shall thereafter be deemed to be "Outstanding" only for
the purposes of Section 1205 and the other Sections of this Indenture referred
to in clauses (a) and (b) below, and the Company and each of the Subsidiary
Guarantors shall be deemed to have satisfied all other obligations under such
Notes and this Indenture insofar as such Notes 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: (a) the rights of Holders of Defeased Notes
to receive, solely from the trust fund described in Section 1204 and as more
fully set forth in such Section, payments in respect of the principal of and
premium, if any, and interest on such Notes when such payments are due, (b) the
Company's obligations with respect to such Defeased Notes under Sections 304,
305, 306, 402 and 403, (c) the rights, powers, trusts, duties and immunities of
the Trustee hereunder, including the Trustee's rights under Section 707, and (d)
this Article 12. Subject to compliance with this Article 12, the Company may, at
its option and at any time, exercise its option under this Section 1202
notwithstanding the prior exercise of its option under Section 1203 with respect
to the Notes.
Section 1203. Covenant Defeasance. Upon the Company's exercise under
Section 1201 of the option applicable to this Section 1203, (a) the Company and
any Subsidiary Guarantors shall be released from their respective obligations
under any covenant or provision contained in Section 404 and Sections 406
through 417 and the provisions of clause (iii) of Section 501 shall not apply,
and (b) the occurrence of any event specified in clause (3) (with respect to
clause (iii) of Section 501), (4) and (5) (with respect to Section 404, Sections
406 through 417, inclusive, and any such covenants provided pursuant to Section
901(5)), inclusive, (6), (7) or (8) (with respect only to Restricted
Subsidiaries), (9) or (10) of Section 601 shall be deemed not to be or result in
an Event of Default, in each case with respect to the Defeased Notes on and
after the date the conditions set forth below are satisfied (hereinafter,
"Covenant Defeasance"), and the Notes shall thereafter be deemed not to be
"Outstanding" for the purposes of any direction, waiver, consent or declaration
or Act of Holders (and the consequences of any thereof) in connection with such
covenants or provisions, 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 Notes, the Company and any Subsidiary Guarantors
may omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant or provision, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or provision or by reason of any reference in any such covenant or
provision 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 601, but, except as specified above, the remainder of this Indenture and
such Outstanding Notes shall be unaffected thereby.
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Section 1204. Conditions to Defeasance or Covenant Defeasance. The
following shall be the conditions to application of either Section 1202 or
Section 1203 to the Outstanding Notes:
(1) The Company shall have irrevocably deposited with the
Trustee in trust (i) cash, in United States dollars in an amount, or
(ii) U.S. Government Obligations which through the scheduled payment of
principal and interest in respect thereof in accordance with their
terms will provide, not later than the one Business Day before the due
date of any payment, cash in amount or (iii) a combination of (i) and
(ii), as will be sufficient, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and discharge
the principal of, and premium, if any, and interest on the Defeased
Notes on (in the case of principal and premium) and to (in the case of
interest) the Stated Maturity or relevant Redemption Date in accordance
with the terms of this Indenture and the Notes;
(2) No Default or Event of Default shall have occurred
and be continuing on the date of such deposit or, insofar as Section
601(8) or 601(9) is concerned, at any time during the period ending on
the ninety-first day after the date of such deposit;
(3) Such deposit 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 or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound;
(4) In the case of an election under Section 1202, the
Company shall have delivered to the Trustee an Opinion of Counsel from
a firm of outside counsel reasonably satisfactory to the Trustee to the
effect that (x) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (y) since the
Issue Date, there has been a change in the applicable Federal income
tax law, in either case to the effect that, and based thereon such
opinion shall confirm to the effect that, the Holders of the
Outstanding Notes will not recognize income, gain or loss for Federal
income tax purposes as a result of such Defeasance and will be subject
to Federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such Defeasance had not
occurred;
(5) In the case of an election under Section 1203, the
Company shall have delivered to the Trustee an Opinion of Counsel from
a firm of outside counsel to the effect that the Holders of the
Outstanding Notes 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 amounts, in the
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same manner and at the same times as would have been the case if such
Covenant Defeasance had not occurred; and
(6) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel from a firm of outside
counsel, each to the effect that all conditions precedent provided for
in this Section 1204 relating to either the Defeasance under Section
1202 or the Covenant Defeasance under Section 1203, as the case may be,
have been complied with.
From and after the time of any deposit pursuant to clause (1) of the
first paragraph of this Section 1204, the money or U.S. Government Obligations
so deposited shall not be subject to the rights of the holders of Senior
Indebtedness or Guarantor Senior Indebtedness pursuant to the subordination
provisions of Article 14 or Article 15.
Section 1205. Deposited Money and U.S. Government Obligations to Be
Held in Trust; Other Miscellaneous Provisions. Subject to the provisions of the
last paragraph of Section 403, all money and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee (or such other
Person that would qualify to act as successor trustee under Article 7,
collectively and solely for purposes of this Section 1205, Section 1412 and
Section 1512, the "Trustee") pursuant to Section 1204 in respect of the Defeased
Notes shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as its own Paying Agent)
as the Trustee may determine, to the Holders of such Notes of all sums due and
to become due thereon in respect of principal, premium, if any, and interest,
but such money need not be segregated from other funds except to the extent
required by law.
The Company shall pay and indemnify the Trustee and its agents and hold
them harmless against any tax, fee or other charge imposed on or assessed
against the U.S. Government Obligations deposited pursuant to Section 1204 or
the principal, premium, if any, and interest received in respect thereof, other
than any such tax, fee or other charge that by law is for the account of the
Holders of the Defeased Notes.
Anything in this Article 12 to the contrary notwithstanding, the
Trustee shall deliver to the Company from time to time upon Company Request any
money or U.S. Government Obligations held by it as provided in Section 1204
hereof that, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof to the Trustee,
are in excess of the amount thereof that would then be required to be deposited
to effect an equivalent Defeasance or Covenant Defeasance. Subject to Article 7,
the Trustee shall not incur any liability to any Person by relying on such
opinion.
Section 1206. Reinstatement. If the Trustee or Paying Agent is unable
to apply any money or U.S. Government Obligations in accordance with Section
1202 or 1203, as
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the case may be, by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, then
the obligations of the Company, the Subsidiary Guarantors and any other obligor
upon the Notes under this Indenture, the Notes and any Subsidiary Guarantees
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 1202 or 1203, as the case may be, until such time as the Trustee or
Paying Agent is permitted to apply all such money and U.S. Government
Obligations in accordance with Section 1202 or 1203, as the case may be;
provided, however, that if the Company, any Subsidiary Guarantor or any other
obligor upon the Notes makes any payment of principal, premium, if any, or
interest on any Note following the reinstatement of its obligations, then the
Company, any Subsidiary Guarantor and any other obligor upon the Notes shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money and U.S. Government Obligations held by the Trustee or Paying
Agent.
Section 1207. Repayment to the Company. The Trustee shall pay to the
Company upon Company Request any money held by it for the payment of principal
or interest that remains unclaimed for two years. After payment to the Company,
Holders entitled to 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 or Paying Agent with respect to such money
shall thereupon cease.
ARTICLE 13
SUBSIDIARY GUARANTEES
Section 1301. Guarantees Generally.
(a) Subsidiary Guarantees. Any Subsidiary Guarantor from time to
time party hereto, as primary obligor and not merely as surety, hereby jointly
and severally, irrevocably and fully and unconditionally Guarantees, on a senior
subordinated basis, the punctual payment when due, whether at Stated Maturity,
by acceleration or otherwise, of all monetary obligations of the Company under
this Indenture and the Notes, whether for principal of or interest on the Notes,
expenses, indemnification or otherwise (all such obligations guaranteed by such
Subsidiary Guarantors being herein called the "Guaranteed Obligations"). For the
avoidance of doubt, prior to the Select Medical Escrow Merger, the provisions of
this Article 13 shall not apply.
Any term or provision of this Indenture notwithstanding, each
Subsidiary Guarantee shall not exceed the maximum amount that can be guaranteed
by the applicable Subsidiary Guarantor without rendering the Subsidiary
Guarantee, as it relates to such Subsidiary Guarantor, voidable under applicable
law relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.
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(b) Further Agreements of Subsidiary Guarantors.
(i) Each Subsidiary Guarantor hereby waives (to the
fullest extent permitted by law) the benefit of diligence, presentment,
demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands
whatsoever and covenants that (except as otherwise provided in Section
1303) its Subsidiary Guarantee will not be discharged except by
complete performance of the obligations contained in the Notes, this
Indenture, and its Subsidiary Guarantee. Such Subsidiary Guarantee is a
guarantee of payment and not of collection. Each Subsidiary Guarantor
further agrees (to the fullest extent permitted by law) that, as
between it, on the one hand, and the Holders of Notes and the Trustee,
on the other hand, subject to this Article 13 and Article 15, (1) the
maturity of the obligations guaranteed by its Subsidiary Guarantee may
be accelerated as and to the extent provided in Article 6 for the
purposes of such Subsidiary Guarantee notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect
of the obligations guaranteed by such Subsidiary Guarantee, and (2) in
the event of any acceleration of such obligations as provided in
Article 6, such obligations (whether or not due and payable) shall
forthwith become due and payable by such Subsidiary Guarantor in
accordance with the terms of this Section 1301 for the purpose of such
Subsidiary Guarantee. Neither the Trustee nor any other Person shall
have any obligation to enforce or exhaust any rights or remedies or to
take any other steps under any security for the Guaranteed Obligations
or against the Company or any other Person or any property of the
Company or any other Person before the Trustee is entitled to demand
payment and performance by any or all Subsidiary Guarantors of their
obligations under their respective Subsidiary Guarantees or under this
Indenture.
(ii) Until terminated in accordance with Section 1303,
each Subsidiary Guarantee shall remain in full force and effect and
continue to be effective should any petition be filed by or against the
Company for liquidation or reorganization, should the Company become
insolvent or make an assignment for the benefit of creditors or should
a receiver or trustee be appointed for all or any significant part of
the Company's assets, and shall, to the fullest extent permitted by
law, continue to be effective or be reinstated, as the case may be, if
at any time payment and performance of the Notes are, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee on such Notes, whether as a
"voidable preference," "fraudulent transfer" or otherwise, all as
though such payment or performance had not been made. In the event that
any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Notes shall, to the fullest extent permitted by law, be
reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.
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(c) Each Subsidiary Guarantor that makes a payment or distribution
under any Subsidiary Guarantee shall have the right to seek contribution from
the Company or any non-paying Subsidiary Guarantor that has also Guaranteed the
Guaranteed Obligations in respect of which such payment or distribution is made,
so long as the exercise of such right does not impair the rights of the Holders
under this Subsidiary Guarantee.
(d) Each Subsidiary Guarantor acknowledges that it will receive
direct and indirect benefits from the financing arrangements contemplated by
this Indenture and that its Subsidiary Guarantee and the waiver set forth in
Section 1305 is knowingly made in contemplation of such benefits.
(e) Each Subsidiary Guarantor also hereby agrees to pay any and
all out-of-pocket expenses (including counsel fees and expenses) incurred by the
Trustee or the Holders in enforcing any rights under its Subsidiary Guarantee.
Section 1302. Continuing Guarantees. Each Subsidiary Guarantee shall be
a continuing Guarantee and shall (i) remain in full force and effect until
payment in full of the principal amount of all outstanding Notes (whether by
payment at maturity, purchase, redemption, defeasance, retirement or other
acquisition) and all other Guaranteed Obligations then due and owing, unless
earlier terminated as provided in Section 1303, (ii) be binding upon such
Subsidiary Guarantor and (iii) inure to the benefit of and be enforceable by the
Trustee, the Holders and their permitted successors, transferees and assigns.
Section 1303. Release of Subsidiary Guarantees. Notwithstanding the
provisions of Section 1302 any Subsidiary Guarantee will be subject to
termination and discharge under the circumstances described in this Section
1303:
(a) Any Subsidiary Guarantor will automatically and
unconditionally be released from all obligations under its Subsidiary Guarantee,
and such Subsidiary Guarantee shall thereupon terminate and be discharged and of
no further force or effect, (i) concurrently with any sale or disposition
(whether by merger, consolidation, the sale of its Capital Stock or the sale of
all or substantially all of its assets, other than by lease) to a Person which
is not the Company or a Restricted Subsidiary of the Company and whether or not
the Subsidiary Guarantor is the surviving corporation in such transaction, if
(x) the sale or other disposition is in accordance with the terms of this
Indenture (including Sections 410 and 415) and (y) all of the obligations of
such Subsidiary Guarantor under the Senior Credit Agreement and related
documentation, and under any other agreements relating to any other Indebtedness
of the Company or any of its other Restricted Subsidiaries, terminate upon
consummation of such transaction, (ii) upon legal defeasance of the Company's
obligations, or satisfaction and discharge of this Indenture;
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as and to the extent provided in Article 11 or Article 12, (iii) subject to
clause (b)(ii) of Section 1301, upon payment in full of the aggregate principal
amount of all Notes then outstanding and all other Guaranteed Obligations then
due and owing, or (iv) upon its merger with or consolidation into another
Subsidiary Guarantor in compliance with the last sentence of Section 418.
A Subsidiary Guarantor will be deemed released and relieved of its
obligations under this Indenture, its Subsidiary Guarantee and the Exchange and
Registration Rights Agreement without any further action required on the part of
the Company or such Subsidiary Guarantor upon the designation by the Company of
such Subsidiary Guarantor as an Unrestricted Subsidiary in accordance with the
terms of this Indenture.
Upon any such occurrence specified in this Section 1303, the Trustee
shall execute any documents reasonably required in order to evidence such
release, discharge and termination in respect of such Subsidiary Guarantor's
Subsidiary Guarantee, as the case may be.
Section 1304. Agreement to Subordinate. Each Subsidiary Guarantee is,
to the extent and in the manner set forth in Article 15, subordinated and
subject in right of payment to the prior payment in full of all Guarantor Senior
Indebtedness and each Subsidiary Guarantee is made subject to such provisions of
this Indenture.
Section 1305. Waiver of Subrogation. Each Subsidiary Guarantor hereby
irrevocably waives any claim or other rights that it may now or hereafter
acquire against the Company that arise from the existence, payment, performance
or enforcement of the Company's obligations under the Notes and this Indenture
or such Subsidiary Guarantor's obligations under its Subsidiary Guarantee and
this Indenture, including, without limitation, any right of subrogation,
reimbursement, exoneration, indemnification, and any right to participate in any
claim or remedy of any Holder of Notes against the Company, whether or not such
claim, remedy or right arises in equity, or under contract, statute or common
law, until this Indenture is discharged and all of the Notes are discharged and
paid in full. If any amount shall be paid to a Subsidiary Guarantor in violation
of the preceding sentence and the Notes shall not have been paid in full, such
amount shall have been deemed to have been paid to such Subsidiary Guarantor for
the benefit of, and held in trust for the benefit of, the Holders of the Notes,
and shall forthwith be paid to the Trustee for the benefit of such Holders to be
credited and applied upon the Notes, whether matured or unmatured, in accordance
with the terms of this Indenture.
Section 1306. Notation Not Required. Neither the Company nor any
Subsidiary Guarantor shall be required to make a notation on the Notes to
reflect any Subsidiary Guarantee or any such release, termination or discharge
thereof.
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Section 1307. Successors and Assigns of the Subsidiary Guarantors. All
covenants and agreements in this Indenture by each Subsidiary Guarantor shall
bind its respective successors and assigns, whether so expressed or not.
Section 1308. Execution and Delivery of Subsidiary Guarantees. The
Company shall cause each Subsidiary that is required to become a Subsidiary
Guarantor pursuant to Section 413, to promptly execute and deliver to the
Trustee a supplemental indenture substantially in the form set forth in Exhibit
B to this Indenture, or otherwise in form and substance reasonably satisfactory
to the Trustee, evidencing its Subsidiary Guarantee on substantially the terms
set forth in this Article 13. Concurrently therewith, the Company shall deliver
to the Trustee an Opinion of Counsel from a firm of outside Counsel in form and
substance satisfactory to the Trustee to the effect that such supplemental
indenture has been duly authorized, executed and delivered by such Restricted
Subsidiary and that, subject to the applicable bankruptcy, insolvency,
fraudulent transfer, fraudulent conveyance, reorganization, moratorium and other
laws now or hereafter in effect affecting creditors' rights or remedies
generally and the general principles of equity, whether considered in a
proceeding at law or at equity such supplemental indenture is a valid and
binding agreement of such Restricted Subsidiary, enforceable against such
Restricted Subsidiary in accordance with its terms.
Section 1309. Notices. Notice to any Subsidiary Guarantor shall be
sufficient if addressed to such Subsidiary Guarantor in care of the Company at
the address, and place and in the manner provided in Section 109.
ARTICLE 14
SUBORDINATION
Section 1401. Agreement To Subordinate. The Company agrees, and each
Noteholder by accepting a Note agrees, that, following the Select Medical Escrow
Merger, the Indebtedness evidenced by the Notes is subordinated in right of
payment, to the extent and in the manner provided in this Article 14, to the
prior payment in full (when due) of all existing and future Senior Indebtedness
and that the subordination is for the benefit of and enforceable by the holders
of Senior Indebtedness of the Company. The Notes shall in all respects rank pari
passu with all other Senior Subordinated Indebtedness of the Company and only
Indebtedness of the Company that is Senior Indebtedness shall rank senior to the
Notes in accordance with the provisions set forth herein. All provisions of this
Article 14 shall be subject to Section 1411. For the avoidance of doubt, prior
to the Select Medical Escrow Merger, the provisions of this Article 14 shall not
apply
Section 1402. Liquidation, Dissolution, Bankruptcy. Upon any payment or
distribution of the assets of the Company to creditors upon a total or partial
liquidation or a total or partial dissolution of the Company or in a
reorganization, bankruptcy,
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insolvency, receivership or similar proceeding relating to the Company or its
properties or an assignment for the benefit of creditors or marshalling of the
Company's assets or liabilities:
(1) holders of Senior Indebtedness shall be entitled to
receive payment in full in cash or Cash Equivalents of all Senior
Indebtedness (including interest accruing after, or which would accrue
but for, the commencement of any proceeding at the rate specified in
the applicable Senior Indebtedness, whether or not a claim for such
interest would be allowed) before Noteholders shall be entitled to
receive any payment or distribution, if any, of the assets or
securities of the Company; and
(2) until the Senior Indebtedness is paid in full in cash
or Cash Equivalents, any payment or distribution to which Noteholders
would be entitled but for this Article 14 shall be made to holders of
Senior Indebtedness, as their respective interests may appear.
Section 1403. Default on Designated Senior Indebtedness. The Company
may not pay principal of, or premium (if any) or interest on, the Notes or make
any deposit pursuant to the provisions of Article 12 and may not otherwise
purchase, redeem or otherwise retire any Notes (collectively, "pay the Notes")
if (i) any Designated Senior Indebtedness is not paid when due in cash or Cash
Equivalents or (ii) any other default on Designated Senior Indebtedness occurs
and the maturity of such Designated Senior Indebtedness is accelerated in
accordance with its terms (either such event, a "Payment Default") unless, in
either case, (x) the Payment Default has been cured or waived and any such
acceleration has been rescinded in writing or (y) such Designated Senior
Indebtedness has been paid in full in cash or Cash Equivalents; provided that
the Company may pay the Notes without regard to the foregoing if the Company and
the Trustee receive written notice approving such payment from the
Representative for the Designated Senior Indebtedness with respect to which the
Payment Default has occurred and is continuing.
In addition, during the continuance of any default (other than a
Payment Default) with respect to any Designated Senior Indebtedness pursuant to
which the maturity thereof may be accelerated immediately without further notice
(except such notice as may be required to effect such acceleration) or the
expiration of any applicable grace period (a "Non-payment Default"), the Company
may not pay the Notes for the period specified as follows (a "Payment Blockage
Period"). The Payment Blockage Period shall commence upon the receipt by the
Trustee (with a copy to the Company) of written notice (a "Blockage Notice") of
such Non-payment Default from the Representative for such Designated Senior
Indebtedness specifying an election to effect a Payment Blockage Period and
shall end on the earliest to occur of the following events: (i) 179 days shall
have elapsed since such receipt of such Blockage Notice, (ii) the Non-payment
Default giving rise to such Blockage Notice is no longer continuing (and no
other Payment
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Default or Non-payment Default is then continuing), (iii) such Designated Senior
Indebtedness shall have been discharged or repaid in full in cash or Cash
Equivalents or (iv) such Payment Blockage Period shall have been terminated by
written notice to the Trustee and the Company from the Person or Persons who
gave such Blockage Notice. The Company shall promptly resume payments on the
Notes, including any missed payments, after such Payment Blockage Period ends,
unless the holders of such Designated Senior Indebtedness or the Representative
of such holders have accelerated the maturity of such Designated Senior
Indebtedness, or any Payment Default otherwise exists. Not more than one
Blockage Notice may be given in any 360 consecutive day period, irrespective of
the number of defaults with respect to Designated Senior Indebtedness during
such period.
Section 1404. Acceleration of Payment of Notes. If payment of the Notes
is accelerated because of an Event of Default, the Company shall promptly notify
the holders of the Designated Senior Indebtedness or the Representative of such
holders of the acceleration.
Section 1405. When a Distribution Must Be Paid Over. If a distribution
is made to Noteholders that because of provisions of this Article 14 should not
have been made to them, the Noteholders who received the distribution are
required to hold it in trust for the holders of Senior Indebtedness and pay it
over to them as their interests may appear.
Section 1406. Subrogation. After all Senior Indebtedness of the Company
is paid in full and until the Notes are paid in full, Holders shall be
subrogated to the rights of holders of Senior Indebtedness to receive
distributions applicable to such Senior Indebtedness. For purposes of such
subrogation, a distribution made under this Article 14 to holders of Senior
Indebtedness that otherwise would have been made to Holders is not, as between
the Company, its creditors other than the holders of such Senior Indebtedness
and Holders, a payment by the Company on such Senior Indebtedness, it being
understood that the provisions of this Article 14 are and are intended solely
for the purpose of defining the relative rights of the Holders, on the one hand,
and the holders of Senior Indebtedness of the Company, on the other hand.
Section 1407. Relative Rights. This Article 14 defines the relative
rights of Holders and holders of Senior Indebtedness. Nothing in this Indenture
shall:
(i) impair, as between the Company and Holders, the
obligation of the Company which is absolute and unconditional, to pay
principal of and interest on the Notes in accordance with their terms;
or
(ii) prevent the Trustee or any Holder from exercising its
available remedies upon a Default, subject to the rights of holders of
Senior Indebtedness to receive distributions otherwise payable to
Holders.
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Section 1408. Subordination May Not Be Impaired by the Company. No
right of any holder of Senior Indebtedness of the Company to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired by
any act or failure to act by the Company or by its failure to comply with this
Indenture.
Section 1409. Rights of Trustee and Paying Agent. The Company shall
give prompt written notice to the Trustee of any fact known to the Company that
would prohibit the making of any payment to or by the Trustee in respect of the
Notes. Failure to give such notice shall not affect the subordination of the
Notes to Senior Indebtedness of the Company. Notwithstanding Section 1403, the
Trustee or Paying Agent may continue to make payments on the Notes and shall not
be charged with knowledge of the existence of facts that would prohibit the
making of any such payments unless, not less than two Business Days prior to the
date of such payment, a Trust Officer of the Trustee receives notice
satisfactory to it that payments may not be made under this Article 14. The
Company, the Registrar or co-registrar, the Paying Agent, or a Representative or
holder of Senior Indebtedness may give the notice; provided, however, that, if
an issue of Senior Indebtedness has a Representative, only the Representative
may give the notice. The Trustee shall be entitled to rely on the delivery to it
of a written notice by a Person representing himself or itself to be a holder of
any Senior Indebtedness (or a Representative of such holder) to establish that
such notice has been given by a holder of such Senior Indebtedness or
Representative thereof.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. The
Registrar and co-registrar and the Paying Agent may do the same with like
rights. The Trustee shall be entitled to all the rights set forth in this
Article 14 with respect to any Senior Indebtedness that may at any time be held
by it, to the same extent as any other holder of Senior Indebtedness; and
nothing in Article 7 shall deprive the Trustee of any of its rights as such
holder. Nothing in this Article 14 shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 707.
Section 1410. Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness,
the distribution may be made and the notice given to their Representative (if
any).
Section 1411. Article 14 Not to Prevent Events of Default or Limit
Right to Accelerate. The failure to make a payment pursuant to the Notes by
reason of any provision in this Article 14 shall not be construed as preventing
the occurrence of a Default. Subject to Section 1404, nothing in this Article 14
shall have any effect on the right of the Holders or the Trustee to accelerate
the maturity of the Notes.
Section 1412. Trust Moneys and Permitted Junior Securities Not
Subordinated. Notwithstanding anything contained herein to the contrary,
payments (i) from money or the proceeds of U.S. Government Obligations held in
trust under Article 12 by the
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Trustee or (ii) in the form of Permitted Junior Securities, for the payment of
principal of and premium, if any, and interest on the Notes shall not be
subordinated to the prior payment of any Senior Indebtedness of the Company or
subject to the restrictions set forth in this Article 14, and none of the
Holders shall be obligated to pay over any such amount or such Permitted Junior
Securities, as the case may be, to the Company or any holder of Senior
Indebtedness of the Company or any other creditor of the Company.
Section 1413. Trustee Entitled to Rely. Upon any payment or
distribution pursuant to this Article 14, the Trustee and the Holders shall be
entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 1402
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Holders or (iii) upon the Representatives for the holders of Senior Indebtedness
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 14. In the event that the Trustee determines, in good faith,
that 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 14, 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 other facts pertinent to the rights of such
Person under this Article 14, 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. The provisions of Sections
701 and 703 shall be applicable to all actions or omissions of actions by the
Trustee pursuant to this Article 14.
Section 1414. Trustee to Effectuate Subordination. Each Holder by
accepting a Note authorizes and directs the Trustee on such Holder's behalf to
take such action as may be necessary or appropriate to acknowledge or effectuate
the subordination between the Holders and the holders of Senior Indebtedness of
the Company as provided in this Article 14 and appoints the Trustee as
attorney-in-fact for any and all such purposes.
Section 1415. 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 of the Company and shall not be liable to any such holders
if it shall mistakenly pay over or distribute to Holders or the Company or any
other Person, money or assets to which any holders of Senior Indebtedness shall
be entitled by virtue of this Article 14 or otherwise. With respect to the
holders of Senior Indebtedness of the Company, the Trustee undertakes to perform
or to observe only such of its covenants or obligations as are specifically set
forth in this Article 14 or Article 15 and no implied covenants or obligations
with respect to holders of Senior Indebtedness of the Company shall be read into
this Indenture against the Trustee.
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Section 1416. Reliance by Holders of Senior Indebtedness on
Subordination Provisions. Each Holder by accepting a Note acknowledges and
agrees that the foregoing subordination provisions are, and are intended to be,
an inducement and a consideration to each holder of any Senior Indebtedness of
the Company, whether such Senior Indebtedness was created or acquired before or
after the issuance of the Notes, to acquire and continue to hold, or to continue
to hold, such Senior Indebtedness and such holder of Senior Indebtedness shall
be deemed conclusively to have relied on such subordination provisions in
acquiring and continuing to hold, or in continuing to hold, such Senior
Indebtedness.
Section 1417. Trustee's Compensation Not Prejudiced. Nothing in this
Article 14 shall apply to amounts due to the Trustee pursuant to other Sections
of this Indenture.
ARTICLE 15
SUBORDINATION OF SUBSIDIARY GUARANTEES
Section 1501. Agreement to Subordinate. Each Subsidiary Guarantor
agrees, and each Noteholder by accepting a Note agrees, that, following the
Select Medical Escrow Merger, all payments pursuant to such Subsidiary
Guarantor's Subsidiary Guarantee made by or on behalf of such Subsidiary
Guarantor are subordinated in right of payment, to the extent and in the manner
provided in this Article 15, to the prior payment in full (when due) of all
existing and future Guarantor Senior Indebtedness of such Subsidiary Guarantor
and that the subordination is for the benefit of and enforceable by the holders
of Guarantor Senior Indebtedness of such Subsidiary Guarantor. Such Subsidiary
Guarantee shall in all respects rank pari passu with all other Guarantor Senior
Subordinated Indebtedness of such Subsidiary Guarantor and only Indebtedness of
such Subsidiary Guarantor that is Guarantor Senior Indebtedness shall rank
senior to such Subsidiary Guarantee in accordance with the provisions set forth
herein. All provisions of this Article 15 shall be subject to Section 1513. For
the avoidance of doubt, prior to the Select Medical Escrow Merger, the
provisions of this Article 15 shall not apply.
Section 1502. Liquidation, Dissolution, Bankruptcy. Upon any payment or
distribution of the assets of any Subsidiary Guarantor upon a total or partial
liquidation or dissolution of such Subsidiary Guarantor or in a reorganization,
bankruptcy, insolvency, receivership or similar proceeding relating to such
Subsidiary Guarantor or its properties or an assignment for the benefit of
creditors or marshalling of such Subsidiary Guarantor's assets of liabilities,
(i) holders of Guarantor Senior Indebtedness of such
Subsidiary Guarantor will be entitled to receive payment in full in
cash or Cash Equivalents of such Guarantor Senior Indebtedness
(including interest accruing after, or which would accrue but for, the
commencement of any proceeding at the rate specified
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in the applicable Senior Indebtedness, whether or not a claim for such
interest would be allowed) before the Noteholders are entitled to
receive any payment or distributions if any, of the assets or
securities of such Subsidiary Guarantor; and
(ii) until the Guarantor Senior Indebtedness of such
Subsidiary Guarantor is paid in full in cash or Cash Equivalents, any
payment or distribution from such Subsidiary Guarantor to which
Noteholders would be entitled but for this Article 15 will be made to
holders of such Guarantor Senior Indebtedness as their interests may
appear.
Section 1503. Default on Designated Guarantor Senior Indebtedness. No
Subsidiary Guarantor may make any payment pursuant to its Subsidiary Guarantee
and may not otherwise purchase, redeem or otherwise retire or defease any Notes
(collectively, "pay its Subsidiary Guarantee") if (i) any Designated Guarantor
Senior Indebtedness of such Subsidiary Guarantor is not paid when due in cash or
Cash Equivalents or (ii) any other default on Designated Guarantor Senior
Indebtedness of such Subsidiary Guarantor occurs and the maturity of such
Designated Guarantor Senior Indebtedness is accelerated in accordance with its
terms (either such event, a "Subsidiary Guarantor Payment Default") unless, in
either case, (x) the Subsidiary Guarantor Payment Default has been cured or
waived and any such acceleration has been rescinded in writing or (y) such
Designated Guarantor Senior Indebtedness has been paid in full in cash or Cash
Equivalents; provided, that, a Subsidiary Guarantor may pay its Subsidiary
Guarantee without regard to the foregoing if such Subsidiary Guarantor and the
Trustee receive written notice approving such payment from the Representative
for the Designated Guarantor Senior Indebtedness with respect to which the
Subsidiary Guarantor Payment Default has occurred and is continuing.
In addition, during the continuance of any default (other than a
Subsidiary Guarantor Payment Default) with respect to any Designated Guarantor
Senior Indebtedness of a Subsidiary Guarantor pursuant to which the maturity
thereof may be accelerated immediately without further notice (except such
notice as may be required to effect such acceleration) or the expiration of any
applicable grace period (a "Subsidiary Guarantor Non-payment Default"), a
Subsidiary Guarantor may not pay its Subsidiary Guarantee for the period
specified as follows (a "Subsidiary Guarantor Payment Blockage Period"). The
Subsidiary Guarantor Payment Blockage Period shall commence upon the receipt by
the Trustee (with a copy to such Subsidiary Guarantor) of written notice (a
"Subsidiary Guarantor Blockage Notice") of such Designated Guarantor Non-payment
Default from the Representative for Designated Guarantor Senior Indebtedness
specifying an election to effect a Subsidiary Guarantor Payment Blockage Period
and shall end on the earliest to occur of the following events: (i) 179 days
shall have elapsed since such receipt of such Subsidiary Guarantor Blockage
Notice, (ii) the Subsidiary Guarantor Non-payment Default giving rise to such
Blockage Notice is no longer continuing (and no other Subsidiary Guarantor
Payment Default or Subsidiary Guarantor Non-payment Default is then continuing),
(iii) such Designated Guarantor Senior
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Indebtedness shall have been discharged or repaid in full in cash or Cash
Equivalents or (iv) such Subsidiary Guarantor Payment Blockage Period shall have
been terminated by written notice to the Trustee and such Subsidiary Guarantor
from the Person or Persons who gave such Subsidiary Guarantor Blockage Notice. A
Subsidiary Guarantor shall promptly pay its Subsidiary Guarantee, after such
Subsidiary Guarantor Payment Blockage Period ends, unless the holders of such
Designated Guarantor Senior Indebtedness or the Representative of such holders
have accelerated the maturity of such Designated Guarantor Senior Indebtedness,
or any Subsidiary Guarantor Payment Default otherwise exists. Not more than one
Subsidiary Guarantor Blockage Notice to a Subsidiary Guarantor in the aggregate
may be given in any 360 consecutive day period, irrespective of the number of
defaults with respect to Designated Guarantor Senior Indebtedness of such
Subsidiary Guarantor during such period.
Section 1504. Acceleration of Payment of Notes. If payment of the Notes
is accelerated because of an Event of Default, each Subsidiary Guarantor shall
promptly notify the holders of the Designated Guarantor Senior Indebtedness of
such Subsidiary Guarantor (or the Representative of such holders) of the
acceleration. If a demand for payment is made on such Subsidiary Guarantor
pursuant to Article 13, each Subsidiary Guarantor shall promptly notify the
holders of the Designated Guarantor Senior Indebtedness of such Subsidiary
Guarantor (or their Representatives) of such demand.
Section 1505. When a Distribution Must Be Paid Over. If a distribution
from a Subsidiary Guarantor is made to Holders that because of the provisions of
this Article 15 should not have been made to them, the Holders who receive the
distribution shall hold it in trust for holders of Guarantor Senior Indebtedness
of such Subsidiary Guarantor and pay it over to them as their interests may
appear.
Section 1506. Subrogation. After all Guarantor Senior Indebtedness of a
Subsidiary Guarantor is paid in full and until the Notes are paid in full,
Holders shall be subrogated to the rights of holders of Guarantor Senior
Indebtedness of such Subsidiary Guarantor to receive distributions applicable to
such Guarantor Senior Indebtedness. For purposes of such subrogation, a
distribution made under this Article 15 to holders of Guarantor Senior
Indebtedness of a Subsidiary Guarantor that otherwise would have been made to
Holders is not, as between such Subsidiary Guarantor, its creditors other than
the holders of such Guarantor Senior Indebtedness, and Holders, a payment by
such Subsidiary Guarantor on such Guarantor Senior Indebtedness, it being
understood that the provisions of this Article 15 are and are intended solely
for the purpose of defining the relative rights of the Holders, on the one hand,
and the holders of Guarantor Senior Indebtedness of such Subsidiary Guarantors,
on the other hand.
Section 1507. Relative Rights. This Article 15 defines the relative
rights of Holders and holders of Guarantor Senior Indebtedness of each
Subsidiary Guarantor. Nothing in this Indenture shall:
131
(i) impair, as between a Subsidiary Guarantor and
Holders, the obligation of such Subsidiary Guarantor to pay the
Guaranteed Obligations in accordance with the terms of its respective
Subsidiary Guarantee; or
(ii) prevent the Trustee or any Holder from exercising its
available remedies upon a Default, subject to the rights of holders of
Guarantor Senior Indebtedness of a Subsidiary Guarantor to receive
distributions otherwise payable to Holders.
Section 1508. Subordination May Not Be Impaired by Subsidiary
Guarantors. No right of any holder of Guarantor Senior Indebtedness of a
Subsidiary Guarantor to enforce the subordination of the payments pursuant to
such Subsidiary Guarantor's Subsidiary Guarantee shall be impaired by any act or
failure to act by such Subsidiary Guarantor or by its failure to comply with
this Indenture.
Section 1509. Rights of Trustee and Paying Agent. A Subsidiary
Guarantor shall give prompt written notice to the Trustee of any fact known to
it that would prohibit the making of any payment to or by the Trustee in respect
of its Subsidiary Guarantee. Failure to give such notice shall not affect the
subordination of the payments pursuant to its Subsidiary Guarantee to Guarantor
Senior Indebtedness of such Subsidiary Guarantor. Notwithstanding Section 1503,
the Trustee or Paying Agent may continue to make payments pursuant to such
Subsidiary Guarantee and shall not be charged with knowledge of the existence of
facts that would prohibit the making of any such payments unless, not less than
two Business Days prior to the date of such payment, a Responsible Officer of
the Trustee receives notice satisfactory to it that payments may not be made
under this Article 15. The Company or any Subsidiary Guarantor, the Registrar or
co-registrar, the Paying Agent, or a Representative or holder of Guarantor
Senior Indebtedness or any Subsidiary Guarantor may give the notice; provided
that, if an issue of Guarantor Senior Indebtedness of a Subsidiary Guarantor has
a Representative, only the Representative may give the notice. The Trustee shall
be entitled to rely on the delivery to it of a written notice by a Person
representing himself or itself to be a holder of any Guarantor Senior
Indebtedness of a Subsidiary Guarantor (or a Representative of such holder) to
establish that such notice has been given by a holder of such Senior
Indebtedness or Representative thereof.
The Trustee in its individual or any other capacity may hold Guarantor
Senior Indebtedness of a Subsidiary Guarantor with the same rights it would have
if it were not Trustee. The Registrar and co-registrar and the Paying Agent may
do the same with like rights. The Trustee shall be entitled to all the rights
set forth in this Article 15 with respect to any Guarantor Senior Indebtedness
of a Subsidiary Guarantor which may at any time be held by it, to the same
extent as any other holder of Guarantor Senior Indebtedness of such Subsidiary
Guarantor; and nothing in Article 7 shall deprive the Trustee of any of its
rights as such holder. Nothing in this Article 15 shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 707.
132
Section 1510. Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Guarantor Senior
Indebtedness of a Note Subsidiary Guarantor, the distribution may be made and
the notice given to their Representative (if any).
Section 1511. Article 15 Not to Prevent Events of Default or Limit
Right to Accelerate. The failure to make a payment pursuant to the Parent
Guarantee or a Subsidiary Guarantee by reason of any provision in this Article
15 shall not be construed as preventing the occurrence of a Default. Nothing in
this Article 15 shall have any effect on the right of the Holders or the Trustee
to accelerate the maturity of the Notes or make a demand for payment on a
Subsidiary Guarantor pursuant to Article 13 or the relevant Subsidiary
Guarantee.
Section 1512. Trust Moneys Not Subordinated. Notwithstanding anything
contained herein to the contrary, payments (i) from money or the proceeds of
U.S. Government Obligations held in trust under Article 12 by the Trustee or
(ii) in the form of Permitted Junior Securities, for the payment of principal,
premium, if any, or interest on the Notes shall not be subordinated to the prior
payment of any Guarantor Senior Indebtedness of any Subsidiary Guarantor or
subject to the restrictions set forth in this Article 15, and none of the
Holders shall be obligated to pay over any such amount to any Subsidiary
Guarantor or any holder of Guarantor Senior Indebtedness of any Subsidiary
Guarantor or any other creditor of any Subsidiary Guarantor.
Section 1513. Trustee Entitled to Rely. Upon any payment or
distribution pursuant to this Article 15, the Trustee and the Holders shall be
entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 1502
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Holders or (iii) upon the Representatives for the holders of Guarantor Senior
Indebtedness or any Subsidiary Guarantor for the purpose of ascertaining the
Persons entitled to participate in such payment or distribution, the holders of
the Guarantor Senior Indebtedness and other Indebtedness of such Subsidiary
Guarantor, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 15.
In the event that the Trustee determines, in good faith, that evidence is
required with respect to the right of any Person as a holder of such Guarantor
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article 15, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of such Guarantor Senior
Indebtedness held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and other facts pertinent to the
rights of such Person under this Article 15, 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. The
provisions of Sections 701 and 703 shall be applicable to all actions or
omissions of actions by the Trustee pursuant to this Article 15.
133
Section 1514. Trustee to Effectuate Subordination. Each Holder by
accepting a Note authorizes and directs the Trustee on such Holder's behalf to
take such action as may be necessary or appropriate to acknowledge or effectuate
the subordination between the Holders and the holders of Guarantor Senior
Indebtedness of any Subsidiary Guarantor as provided in this Article 15 and
appoints the Trustee as attorney-in-fact for any and all such purposes.
Section 1515. Trustee Not Fiduciary for Holders of Guarantor Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Guarantor Senior Indebtedness of any Subsidiary Guarantor and shall
not be liable to any such holders if it shall mistakenly pay over or distribute
to Holders or the Company or any other Person, money or assets to which any
holders of Guarantor Senior Indebtedness shall be entitled by virtue of this
Article 15 or otherwise. With respect to the holders of Guarantor Senior
Indebtedness, the Trustee undertakes to perform or to observe only such of its
covenants or obligations as are specifically set forth in this Article 15 and no
implied covenants or obligations with respect to holders of Guarantor Senior
Indebtedness of any Subsidiary Guarantor shall be read into this Indenture
against the Trustee.
Section 1516. Reliance by Holders of Senior Indebtedness on
Subordination Provisions. Each Holder by accepting a Note acknowledges and
agrees that the foregoing subordination provisions are, and are intended to be,
an inducement and a consideration to each holder of any Guarantor Senior
Indebtedness of any Subsidiary Guarantor, whether such Guarantor Senior
Indebtedness was created or acquired before or after the issuance of the Notes,
to acquire and continue to hold, or to continue to hold, such Guarantor Senior
Indebtedness and such holder of such Guarantor Senior Indebtedness shall be
deemed conclusively to have relied on such subordination provisions in acquiring
and continuing to hold, or in continuing to hold, such Guarantor Senior
Indebtedness.
Section 1517. Trustee's Compensation Not Prejudiced. Nothing in this
Article 15 shall apply to amounts due to the Trustee pursuant to other Sections
of this Indenture.
134
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
SELECT MEDICAL ESCROW, INC
By /s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
U.S. BANK TRUST NATIONAL
ASSOCIATION, as Trustee
By:/s/ Xxxx Xxxxxx
------------------------------------
Name: Xxxx Xxxxxx
Title: Assistant Vice President
135
Exhibit A
FORM OF NOTE(1)
SELECT MEDICAL [ESCROW, INC.]*[CORPORATION]+,
7 1/2% Senior Subordinated Notes Due 2013
No. CUSIP No.(2),(3)
$_______
[Select Medical [Escrow, Inc.]*[Corporation]+, a Delaware corporation
(and its successors and assigns, ["Select Medical Escrow,"]*[the "Company,"]+
which term shall have the meaning ascribed thereto in the Indenture hereinafter
referred to) promises] to pay to , or registered assigns, the principal sum
of $ ([______] United States Dollars) on August 1, 2013 [(or such lesser or
greater amounts as shall be outstanding hereunder from time to time in
accordance with Sections 312 and 313 of the Indenture referred to on the reverse
hereof)](4). [Following the Assumption, the term "Select Medical Escrow" when
used in this Note shall be deemed to refer to the Company, and the Company shall
assume all of the obligations of Select Medical Escrow hereunder pursuant to the
Assumption.]*
Interest Payment Dates: August 1 and February 1.
Record Dates: July 15 and January 15.
Additional provisions of this Note are set forth on the other
side of this Note.
IN WITNESS WHEREOF, [Select Medical Escrow]*[the Company]+ has
caused this instrument to be duly executed.
SELECT MEDICAL [ESCROW, INC.]*[CORPORATION]+
By:___________________________________________
------------------
(1) Insert any applicable legends from Article 2.
* Include only for Notes issued prior to the Assumption.
+ Include only for Notes issued after the Assumption.
(2) Include appropriate CUSIP Number for Initial Note that is not registered
under the Securities Act.
(3) Include appropriate CUSIP Number for Exchange Note or Initial Note that is
registered under the Securities Act.
(4) Include only if the Note is issued in global form.
A-1
Name:
Title:
[SEAL]
Attest:
_______________________
A-2
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
This is one of the Notes described in the within-named Indenture.
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee
By:__________________________
Name:
Title:
Dated: ________________________
A-3
[FORM OF REVERSE SIDE OF NOTE]
7 1/2% Senior Subordinated Note Due 2013
1. Interest
[Select Medical Escrow]*[The Company]+ promises to pay interest
semi-annually on August 1 and February 1 in each year, commencing February 1,
2004 at the rate of 7 1/2% per annum [(subject to adjustment as provided
below)](5) [, except that interest accrued on this Note for periods prior to the
date on which the Initial Note was surrendered in exchange for this Note will
accrue at the rate or rates borne by such Initial Note from time to time during
such periods](6), until the Principal Amount is paid or made available for
payment. [Interest on this Note will accrue from the most recent date to which
interest on this Note or any of its Predecessor Notes has been paid or duly
provided for or, if no interest has been paid, from the Issue Date.](7)
[Interest on this Note will accrue from the most recent date to which interest
on this Note or any of its Predecessor Notes has been paid or duly provided for
or, if no such interest has been paid, from [August 12, 2003](8).](9) Interest
on the Notes shall be computed on the basis of a 360-day year of twelve 30-day
months. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Note (or one or more Predecessor Notes) is registered
at the close of business on the Regular Record Date for such interest, which
shall be the July 15 or January 15 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date. Any such interest not so
punctually paid or duly provided for will forthwith cease to be payable to the
Holder on such Regular Record Date and may either be paid to the Person in whose
name this Note (or one or more Predecessor Notes) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Notes not
more than 15 days nor less than 10 days prior to such Special Record Date, or be
paid at any time in any other lawful manner not
------------------
* Select Medical Escrow should be included only for Notes issued prior to
the Assumption.
+ The Company should be included only for Notes issued after the Assumption.
(5) Include only for Initial Note when additional interest provisions, set
forth in the next paragraph, are included.
(6) Include only for Exchange Note.
(7) Include only for Original Notes.
(8) Insert first date of issuance of Additional Note and its Predecessor
Notes.
(9) Include only for Additional Notes (and Exchange Notes issued in the
exchange therefor).
A-4
inconsistent with the requirements of any securities exchange on which the Notes
may be listed, and upon such notice as may be required by such exchange, all as
more fully provided in said Indenture.
[The Holder of this Note is entitled to the benefits of the Exchange
and Registration Rights Agreement (the "Exchange and Registration Rights
Agreement"), dated August 12, 2003, among Select Medical Escrow, Inc., Select
Medical Corporation, each of the Guarantors listed on Schedule I thereto, X.X.
Xxxxxx Securities Inc., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated,
Wachovia Capital Markets, LLC, XX Xxxxx Securities Corporation, CIBC World
Markets Corp., Fleet Securities, Inc. and Xxxxxxxxx & Company, Inc. Pursuant and
subject to the Exchange and Registration Rights Agreement, until (i) the date on
which this Note has been exchanged for a freely transferable Exchange Security
(as defined in the Exchange and Registration Rights Agreement) in the Registered
Exchange Offer (as defined in the Exchange and Registration Rights Agreement),
(ii) the date on which this Note has been effectively registered under the
Securities Act and disposed of in accordance with the Shelf Registration
Statement (as defined in the Exchange and Registration Rights Agreement), or
(iii) the date on which such Note is distributed to the public pursuant to Rule
144 of the Securities Act or is saleable pursuant to Rule 144(k) under the
Securities Act: From and including the date on which a Registration Default (as
defined below) shall occur to but excluding the date on which such Registration
Default has been cured (as determined pursuant to the Exchange and Registration
Rights Agreement), additional interest will accrue on the Note in an amount
equal to $0.192 per week per $1,000 principal amount of the Note held by such
Holder. Any such additional interest shall be paid in the same manner and on the
same dates as interest payments in respect of this Note. Following the cure of
all Registration Defaults, the accrual of such additional interest will cease.
For purposes of the foregoing, each of the following events, as more
particularly defined in the Exchange and Registration Rights Agreement, is a
"Registration Default": (i) the Exchange Offer Registration Statement is not
filed with the SEC on or prior to 45 days after the closing date of the Xxxxxxx
Acquisition (the "Acquisition Date") or the Shelf Registration Statement (as
defined in the Exchange and Registration Rights Agreement) is not filed with the
SEC on or prior to 30 days after required to be filed or requested to be filed
pursuant to the Exchange and Registration Rights Agreement, (ii) the Exchange
Offer Registration Statement or the Shelf Registration Statement (as defined in
the Exchange and Registration Rights Agreement), as the case may be, is not
declared effective within 105 days after the Acquisition Date (or in the case of
a Shelf Registration Statement required to be filed in response to a change or
development in law or the
A-5
applicable interpretation of the SEC's staff, if later, within 60 days after
publication or the Company is otherwise notified of the change or development in
law or interpretation), (iii) the Registered Exchange Offer is not consummated
on or prior to 135 days after the Acquisition Date, or (iv) the Shelf
Registration Statement is filed and declared effective within 105 days after the
Acquisition Date (or in the case of a Shelf Registration Statement required to
be filed in response to a change or development in law or the applicable
interpretation of the SEC's staff, if later, within 60 days after publication or
the Company is otherwise notified of the change or development in law or
interpretation) but shall thereafter cease to be effective or available for the
Holders of Transfer Restricted Securities (as defined in the Exchange and
Registration Rights Agreement) to offer and sell such Transfer Restricted
Securities (at any time that the Company and the Subsidiary Guarantors are
obligated to maintain the effectiveness thereof) without either being succeeded
by an additional Registration Statement (as defined in the Exchange and
Registration Rights Agreement) filed and declared effective or such Shelf
Registration Statement (as defined in the Exchange and Registration Rights
Agreement) otherwise becoming available again, in either case within 30 days (or
in any case if the aggregate number of days for which such Shelf Registration
Statement (as defined in the Exchange and Registration Rights Agreement) has not
been effective and available for the Holders of Transfer Restricted Securities
(as defined in the Exchange and Registration Rights Agreement) to offer and sell
such Transfer Restricted Securities within the preceding 360 days exceeds 45
days).](10) (11)
2. Method of Payment
Principal of, premium, if any, and interest on this Note will be
payable, and this Note may be exchanged or transferred, at the office or agency
of [Select Medical Escrow] [the Company] in the Borough of Manhattan, The City
of New York (which initially will be an office of an Affiliate of the Trustee in
New York, New York); at the option of [Select Medical Escrow] [the Company],
however, payment of interest may be made by check mailed to the address of the
Holder as such address appears in the Note Register; and in addition, if a
Holder of at least one million United States Dollars ($1,000,000) in aggregate
principal amount of Notes has given wire transfer instructions to us prior to
the record date for a payment, [Select Medical Escrow] [the Company] will make
such payment of principal of, premium, if any, and interest on, such Holder's
Note in accordance with those instructions. [Payment of principal of, premium,
if any, and interest on, this Note will be made by wire transfer of immediately
available Funds to the Depository or its nominee, as the case may be, as the
registered Holder of such global Note](12).
3. Paying Agent and Registrar
U.S. Bank Trust National Association, a national banking association,
the Trustee, will initially act as Paying Agent and Note Registrar. [Select
Medical Escrow] [The
------------------
(10) Include for Initial Note when required by the Exchange and Registration
Rights Agreement.
(11) For an Initial Additional Note, add similar provision, if any, as may be
agreed by the Company with respect to additional interest on such Initial
Additional Note.
(12) Include only if Note is issued in global form.
A-6
Company] may change the Paying Agent or Note Registrar without prior notice and
the Company and any of its Domestic Subsidiaries may act as Paying Agent or Note
Registrar.
4. Indenture
This Note is one of the duly authorized issue of 7 1/2% Senior
Subordinated Notes Due 2013 of [Select Medical Escrow]*[the Company]+ (herein
called the "Notes"), issued under an Indenture, dated as of August 12, 2003 (as
amended, supplemented or otherwise modified from time to time, the "Indenture,"
which term shall have the meanings assigned to it in such instrument), among
Select Medical Escrow, Inc. and U.S. Bank Trust National Association as Trustee
(herein called the "Trustee," which term includes any successor trustee under
the Indenture) and reference is hereby made to the Indenture for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of [Select Medical Escrow]* [the Company]+, any other guarantor upon this Note,
the Trustee and the Holders of the Notes and of the terms upon which the Notes
are, and are to be, authenticated and delivered. The terms of the Notes include
those stated in the Indenture and those made a part of the Indenture by
reference to the TIA. The Notes are subject to all such terms, and Holders are
referred to the Indenture and the TIA for a statement of such terms. Additional
Notes may be issued under the Indenture which may vote as a class with the Notes
and otherwise be treated as Notes for purposes of the Indenture.
All terms used in this Note that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
Following the Select Medical Escrow Merger, this Note is entitled to
the benefits of a certain senior subordinated Subsidiary Guarantee by the
Subsidiary Guarantors (and future Subsidiary Guarantors) made for the benefit of
the Holders. Reference is made to Article Thirteen of the Indenture and to the
Subsidiary Guarantees for terms relating to such Subsidiary Guarantees,
including the release, termination and discharge thereof. Neither the Company
nor any Subsidiary Guarantor shall be required to make any notation on this Note
to reflect any Subsidiary Guarantee or any such release, termination or
discharge.
5. Redemption
(a) The Notes will be redeemable, at the Company's option, in whole or
in part, and from time to time on and after August 1, 2008 and prior to
maturity. Such redemption may be made upon notice mailed by first-class mail to
each Holder's
----------------
* Include only for Notes issued prior to the Assumption.
+ Include only for Notes issued after the Assumption.
A-7
registered address in accordance with the Indenture. The Notes will be so
redeemable at the following Redemption Prices (expressed as a percentage of
principal amount), plus accrued interest, if any, to the relevant Redemption
Date (subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date) if redeemed during
the 12-month period commencing on August 1 of the years set forth below:
REDEMPTION
PERIOD PRICE
------ ----------
2008............................................. 103.750%
2009............................................. 102.500%
2010............................................. 101.250%
2011 and thereafter.............................. 100.000%
(b) In addition, after the Select Medical Escrow Merger and before
August 1, 2006, the Company at its option may on any one or more occasions
redeem the Notes in an aggregate principal amount equal to up to 35% of the
original aggregate principal amount of the Notes (including the principal amount
of any Additional Notes), with the Net Cash Proceeds of one or more Equity
Offerings, at a Redemption Price (expressed as a percentage of principal amount
thereof) of 107.50% plus accrued and unpaid interest, if any, to the Redemption
Date (subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date); provided, however,
that an aggregate principal amount of the Notes equal to at least 65% of the
original aggregate principal amount of the Notes (including the principal amount
of any Additional Notes) must remain outstanding after each such redemption and
each such redemption must occur within 90 days after the closing of such Equity
Offering.
[(c) In addition, in the event that (i) the Xxxxxxx Acquisition is not
consummated on or prior to November 27, 2003 or (ii) the Stock Purchase
Agreement is terminated on or prior to November 27, 2003, for any reason, Select
Medical Escrow will mandatorily redeem all the Notes at the applicable Special
Redemption Price on the Special Redemption Date.]*
6. No Sinking Fund
The Notes will not be entitled to the benefit of a sinking fund.
----------------
* Include only for Notes issued prior to the Assumption.
A-8
7. Subordination
Following the Select Medical Escrow Merger, the Notes shall be
subordinated to Senior Indebtedness, as defined in the Indenture. To the extent
provided in the Indenture, Senior Indebtedness must be paid before the Notes may
be paid. In addition, the Subsidiary Guarantees are or shall be, as the case may
be, subordinated to Subsidiary Guarantor Senior Indebtedness. To the extent
provided in the Indenture, Subsidiary Guarantor Senior Indebtedness must be paid
before any Subsidiary Guarantee may be paid. The Company and any Subsidiary
Guarantor agree, and each Holder by accepting a Note agrees, to the
subordination provisions contained in the Indenture and authorizes the Trustee
to give such provisions effect and appoints the Trustee as attorney-in-fact for
such purposes.
8. Put Provisions
The Indenture provides that, upon the occurrence of a Change of Control
following the Issue Date, each Holder will have the right to require the Company
to repurchase all or any part (in integral multiples of $1,000) of such Holder's
Notes at a purchase price in cash equal to 101% of the principal amount thereof
plus accrued and unpaid interest, if any, to the date of such purchase (subject
to the right of Holders of record on the relevant record date to receive
interest due on the relevant interest payment date). The Company will not be
required to make a Change of Control Offer upon a Change of Control if a third
party makes the Change of Control Offer in the manner, at the times and
otherwise in compliance with the requirements set forth in the Indenture
applicable to a Change of Control Offer made by the Company and purchases all
Notes validly tendered and not withdrawn under such Change of Control Offer.
9. Denominations; Transfer; Exchange
The Notes are in registered form without coupons in denominations of
$1,000 and whole multiples of $1,000. A Holder may transfer or exchange Notes in
accordance with the Indenture and subject to certain limitations set forth
therein. No service charge shall be made for any transfer or exchange of Notes,
but [Select Medical Escrow] [the Company] may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith. The Company shall not be required (i) to issue, transfer
or exchange any Note during a period beginning at the opening of business 15
days before the day of the mailing of a notice of redemption (or purchase) of
Notes selected for redemption (or purchase) under Section 1004 of the Indenture
and ending at the close of business on the day of such mailing, or (ii) to
transfer or exchange any Note so selected for redemption (or purchase) in whole
or in part.
A-9
10. Persons Deemed Owners
The registered Holder of this Note may be treated as the owner of it
for all purposes.
11. Unclaimed Money
The Trustee shall pay to [Select Medical Escrow] [the Company] upon a
Company Request any money held by it for the payment of principal (and premium,
if any) or interest that remains unclaimed for two years. After payment to
[Select Medical Escrow] [the Company], Holders entitled to money must look to
[Select Medical Escrow] [the Company] for payment as general creditors and all
liability of the Trustee or Paying Agent with respect to such money shall
thereupon cease.
12. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate
some or all of its obligations under the Notes and the Indenture if the Company
deposits with the Trustee money or U.S. Government Obligations for the payment
of principal of, premium (if any) and interest on the Notes to redemption or
maturity, as the case may be.
13. Amendment, Waiver
Subject to certain exceptions, (i) the Indenture may be amended with
the consent of the Holders of a majority in principal amount of the Notes then
outstanding and (ii) any past or existing default or compliance with any
provisions may be waived with the consent of the Holders of a majority in
principal amount of the Notes then outstanding (including in each case, consents
obtained in connection with a tender offer or exchange offer for Notes). In
certain instances provided in the Indenture, the Indenture may be amended
without the consent of any Holder.
14. Defaults and Remedies
If an Event of Default with respect to the Notes occurs and is
continuing, the Notes may be declared due and payable immediately in the manner
and with the effect provided in the Indenture.
15. No Recourse Against Others
No director, officer, employee, incorporator or stockholder, as such,
of the Company, Select Medical Escrow, any Subsidiary Guarantor or any
subsidiary thereof shall have any liability for any obligation of the Company,
Select Medical Escrow, or any Subsidiary Guarantor on the Notes under this
Indenture, the Notes or any Subsidiary Guarantee, or for any claim based on, in
respect of, or by reason of, any such obligation
A-10
or its creation. Each Noteholder, by accepting the Notes, waives and releases
all such liability. This waiver and release are part of the consideration for
issuance of the Notes.
16. Governing Law
THE INDENTURE, THIS NOTE AND THE SUBSIDIARY GUARANTEES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK. THE TRUSTEE, SELECT MEDICAL ESCROW, THE COMPANY, EACH SUBSIDIARY
GUARANTOR, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND (BY THEIR ACCEPTANCE OF
THE NOTES) THE HOLDERS, AGREE TO SUBMIT TO THE JURISDICTION OF ANY UNITED STATES
FEDERAL OR STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW
YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR
THE NOTES.
17. Authentication
This Note shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Note.
18. Abbreviations
Customary abbreviations may be used in the name of a Holder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
19. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, [Select Medical Escrow] [the Company] has
caused CUSIP numbers to be printed on the Notes and has directed the Trustee to
use CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be placed
only on the other identification numbers placed hereon.
A-11
[FORM OF TRANSFER NOTICE]
To assign this Note, fill in the form below:
I or we assign and transfer this Note to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint ________________________________________________________
agent to transfer this Note on the books of [Select Medical Escrow] [the
Company]. The agent may substitute another to act for him.
[[Check One]
[ ] (a) this Note is being transferred in compliance with the
exemption from registration under the Securities Act of 1933,
as amended, provided by Rule 144A thereunder.
or
[ ] (b) this Note is being transferred other than in accordance
with (a) above and documents are being furnished which comply
with the conditions of transfer set forth in this Note and the
Indenture.
If neither of the foregoing boxes is checked, the Trustee or other Note
Registrar shall not be obligated to register this Note in the name of any Person
other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 313 of the Indenture
shall have been satisfied.](13)
Date: ___________________________
________________________________________
NOTICE: The signature to this assignment
must correspond with the name as written
upon the face of the within-mentioned
instrument in every particular, without
alteration or any change whatsoever.
Signature Guarantee: _____________________________________
-------------------
(13) Include only for an Initial Note or an Initial Additional Note that bears
the Private Placement Legend, in accordance with the Indenture.
A-12
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar, which requirements include
membership or participation in the Security Transfer Agent Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the Note Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
[TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding
[Select Medical Escrow and] the Company as the undersigned has requested
pursuant to Rule 144A or has determined not to request such information and that
it is aware that the transferor is relying upon the undersigned's foregoing
representations in order to claim the exemption from registration provided by
Rule 144A.
Dated: ______________________ _________________________
NOTICE: To be executed by an executive
officer](14)
-----------------------------
(14) Include only for an Initial Note or an Initial Additional Note that bears
the Private Placement Legend, in accordance with the Indenture.
A-13
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 410 or 414 of the Indenture, check the box: [ ].
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 410 or 414 of the Indenture, state the amount (in
principal amount):
$
Date: __________________ Signed: ___________________________
(Sign exactly as your name appears on the other
side of the Note)
Signature Guarantee:_______________________________________
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar, which requirements include
membership or participation in the Security Transfer Agent Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the Note Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
A-14
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE
The following increases or decreases in this Global Note have
been made:
Principal Signature
Amount of Amount of amount of authorized
decreases in increases in of this Global officer or
Principal Principal Note following Trustees of
Date of Amount of this Amount of this such decreases Securities
Exchange Global Note Global Note or increases Custodian
A-15
Exhibit B
Form of Supplemental Indenture in Respect of Subsidiary Guarantee
SUPPLEMENTAL INDENTURE, dated as of [_________] (this "Supplemental
Indenture"), among [name of [New Subsidiary GUARANTOR[S](1)] (the "New
Subsidiary Guarantor[s]"), Select Medical Corporation, a Delaware corporation
(together with its successors and assigns, the "Company"), the then existing
Subsidiary Guarantors under the Indenture referred to below (the "Existing
Subsidiary Guarantors"), and U.S. Bank Trust National Association, as Trustee
(the "Trustee") under the Indenture referred to below.
W I T N E S S E T H:
WHEREAS, the Company, the Existing Subsidiary Guarantors and the
Trustee have heretofore become parties to an Indenture, dated as of August 12,
2003, as amended (as amended, supplemented, waived or otherwise modified, the
"Indenture"), providing for the issuance of 7 1/2% Senior Subordinated Notes Due
2013 of the Company (the "Notes");
WHEREAS, Section 413 of the Indenture provides that the Company is
required to or may cause the New Subsidiary Guarantors to execute and deliver to
the Trustee a supplemental indenture pursuant to which the New Subsidiary
Guarantors shall guarantee the Notes pursuant to a Subsidiary Guarantee on the
terms and conditions set forth herein and in Article Thirteen of the Indenture;
WHEREAS, [the][each] New Subsidiary Guarantor desires to enter into
this Supplemental Indenture for good and valuable consideration, including
substantial economic benefit in that the financial performance and condition of
such New Subsidiary Guarantor is dependent on the financial performance and
condition of the Company and on [the] [such] New Subsidiary Guarantor's access
to working capital through the Company's access to revolving credit borrowings
under the Senior Credit Agreement; and
WHEREAS, pursuant to Section 901 of the Indenture, the parties hereto
are authorized to execute and deliver this Supplemental Indenture to amend the
Indenture, without the consent of any Holder;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the New
Subsidiary Guarantor[s], the Company, the Existing Subsidiary Guarantors and the
Trustee mutually covenant and agree for the benefit of the Holders of the Notes
as follows:
------------------
(1) Insert as appropriate.
B-1
1. Defined Terms. As used in this Supplemental Indenture, terms defined
in the Indenture or in the preamble or recital hereto are used herein as therein
defined. The words "herein," "hereof" and "hereby" and other words of similar
import used in this Supplemental Indenture refer to this Supplemental Indenture
as a whole and not to any particular section hereof.
2. Agreement to Subsidiary Guarantee. [The] [Each] New Subsidiary
Guarantor hereby agrees, jointly and severally with [all] [any] other New
Subsidiary Guarantor[s] and all Existing Subsidiary Guarantors, fully and
unconditionally, to guarantee the Guaranteed Obligations under the Indenture and
the Notes on the terms and subject to the conditions set forth in Article
Thirteen of the Indenture and to be bound by (and shall be entitled to the
benefits of) all other applicable provisions of the Indenture as a Subsidiary
Guarantor. The Subsidiary Guarantee of each New Subsidiary Guarantor is subject
to the subordination provisions of the Indenture.
3. Termination, Release and Discharge. [The] [Each] New Subsidiary
Guarantor's Subsidiary Guarantee shall terminate and be of no further force or
effect, and [the] [each] New Subsidiary Guarantor shall be released and
discharged from all obligations in respect of such Subsidiary Guarantee, as and
when provided in Section 1303 of the Indenture.
4. Parties. Nothing in this Supplemental Indenture is intended or shall
be construed to give any Person, other than the Holders and the Trustee, any
legal or equitable right, remedy or claim under or in respect of [the] [each]
New Subsidiary Guarantor's Subsidiary Guarantee or any provision contained
herein or in Article Thirteen of the Indenture.
5. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. THE TRUSTEE,
THE COMPANY, EACH SUBSIDIARY GUARANTOR, ANY OTHER OBLIGOR IN RESPECT OF THE
NOTES AND (BY THEIR ACCEPTANCE OF THE NOTES) THE HOLDERS, AGREE TO SUBMIT TO THE
JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE BOROUGH
OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS INDENTURE OR THE NOTES.
6. Ratification of Indenture; Supplemental Indentures Part of
Indenture. Except as expressly amended hereby, the Indenture is in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. This Supplemental Indenture shall form a
part of the Indenture for all purposes, and every Holder of Notes heretofore or
hereafter authenticated and delivered shall be bound
B-2
hereby. The Trustee makes no representation or warranty as to the validity or
sufficiency of this Supplemental Indenture.
7. Counterparts. The parties hereto may sign one or more copies of this
Supplemental Indenture in counterparts, all of which together shall constitute
one and the same agreement.
8. Headings. The section headings herein are for convenience of
reference only and shall not be deemed to alter or affect the meaning or
interpretation of any provisions hereof.
B-3
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
[NAME OF NEW SUBSIDIARY
GUARANTOR],(2) as New Subsidiary Guarantor
By: ____________________________________
Name:
Title:
SELECT MEDICAL CORPORATION
By: ____________________________________
Name:
Title:
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee
By: ____________________________________
Name:
Title:
--------------------
(2) Add a signature block for each New Subsidiary Guarantor.
B-4
Schedule 1
Existing Joint Venture Subsidiaries
1263568 Ontario Limited
Canadian Back Institute Limited
Caritas Rehab Services, LLC
CBI Barrie Limited Partnership
CBI Burnaby Limited Partnership
CBI Cambridge Limited Partnership
CBI Edmonton Limited Partnership
CBI Gatineau Limited Partnership
CBI Kitchener Limited Partnership
CBI Lethbridge Limited Partnership
CBI London East Limited Partnership
CBI London Limited Partnership
CBI Mississauga Limited Partnership
CBI Montreal Limited Partnership
CBI Niagara Limited Partnership
CBI Ottawa Limited Partnership
CBI Ottawa West Limited Partnership
CBI Port Coquitlam Limited Partnership
CBI Physical Therapy Inc.
CBI Professional Services, Inc.
CBI Xxxxxx Limited Partnership
CBI Richmond Limited Partnership
CBI Sarnia Limited Partnership
CBI St. Xxxxx Xxxx Limited Partnership
CBI Sudbury Limited Partnership
CBI Surrey Limited Partnership
Dynamic Rehabilitation, Inc.
Eastern Rehabilitation, Inc.
Jeffersontown Physical Therapy, LLC
1-1
Kentucky Orthopedic Rehabilitation, L.L.C.
Medical Information Management Systems, L.L.C.
Metro Therapy, Inc.
Millennium Rehab Services, L.L.C.
Rehab Advantage Therapy Services, L.L.C.
S.T.A.R. Rehab, Inc.
Select Specialty Hospital - Central Pennsylvania, L.P.
Select Specialty Hospital - Houston, L.P.
Select Specialty Hospital - Mississippi Gulf Coast, Inc.
TJ Corporation I, L.L.C.
1-2
Schedule 2
Seller Notes
1. NovaCare Outpatient Rehabilitation East, Inc. 6% Subordinated Promissory
Note due August 31, 2003 principal amount $125,000 issued to Advance Rehab
Center, Inc.
2. RehabClinics, Inc. 2.5% Subordinated Promissory Note due December 15, 2002
principal amount $774,753 (adjusted) issued to Healthcare Innovations, Inc.
3. RehabClinics, Inc. 8% Subordinated Promissory Note due November 1, 2003
principal amount $413,829 issued to Xxxxx Xxxxxx Xxxxx.
4. Indianapolis Physical Therapy and Sports Medicine, Inc. 4% Subordinated
Promissory Note due March 30, 2006 principal amount $316,000 issued to
Excel Rehabilitation Services, LLP.
5. Pro Active Therapy of South Carolina, Inc 8% Subordinated Promissory Note
due October 1, 2007 principal amount $436,800 issued to Xxxx Mart.
6. Pro Active Therapy of North Carolina, Inc. 7% Subordinated Promissory Note
due October 1, 2004 principal amount $266,354 (adjusted) issued to
Touchstone Clinic LTD.
7. Select Medical of New York, Inc. 6% Subordinated Promissory Note due
October 30, 2004 principal amount $1,050,000 issued to Xxxxxxx Xxxxxxxxx.
8. Select Medical of New York, Inc. 6% Subordinated Promissory Note due
October 30, 2004 principal amount $1,050,000 issued to Xxxxxx Xxxxxxxxx.
9. Select Specialty Hospitals, Inc. 5% Subordinated Promissory Note due June
7, 2005 principal amount $1,380,000 issued to Health Motivation Center,
Inc.
2-1
