Exhibit 4(f)
$_____________ principal amount _____________________
of Debentures the "Participant"
INVESTMENT OPTION AGREEMENT, made as of this 29th day of March, 1989,
among NATIONAL MEDICAL ENTERPRISES, INC. (the "Company'), NME PIP FUNDING 1,
INC., a wholly owned subsidiary of the Company ("PIP Funding I"), and the above-
named Participant.
WHEREAS, the Participant is employed by the Company or one of its
subsidiaries in a key capacity, and the Company desires to provide an incentive
to the Participant to continue the Participant's employment and to work in the
best interests of the Company's stockholders by offering the Participant the
opportunity to make an investment that will increase the Participant's
participation in the potential appreciation of the Company's Common Stock (the
"Common Stock");
WHEREAS, the Board of Directors of the Company has adopted the 1989
Performance Investment Plan (the "Plan") to be administered by a committee
designated by the Company's Board of Directors (the "Committee"), and the
Committee has designated the Participant as an eligible employee under the Plan;
WHEREAS, in connection with the Plan, the Company is issuing and
selling to PIP Funding I an issue of Convertible Subordinated Floating Rate
Debentures due April 3, 1996 (the "Debentures"), which will be convertible into
shares of the Company's Series B Convertible Preferred Stock (the "Convertible
Preferred Stock"), which in turn will be convertible into shares of Common
Stock; and
WHEREAS, PIP Funding I has agreed to sell to the Participant an
investment option to purchase from PIP Funding I a specified principal amount of
the Debentures and the Participant has agreed to purchase such option from PIP
Funding I.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the sufficiency and receipt of which are hereby
acknowledged, the parties hereto agree as follows:
1. Sale and Purchase of Option. PIP Funding I hereby sells, and the
---------------------------
Participant hereby purchases, an investment option (the "Option") evidenced by
this Investment Option Agreement entitling the Participant to purchase from PIP
Funding I the principal amount of Debentures indicated at the top of the
preceding page (the "Option Debentures"), at a purchase price equal to $100,000
per $105,264 principal amount of Option Debentures (the "Purchase Price"), plus
interest, if any, on such Option Debentures. The Option Debentures may only be
purchased in denominations of $105,264 or an integral multiple thereof.
2. Investment Option Amount for the Option. Simultaneously with the
---------------------------------------
Participant's execution and delivery of this Investment Option Agreement, the
Participant has delivered to PIP Funding I $5,264 per $105,264 principal amount
of the Option Debentures, representing the purchase price of the Option (the
"Investment Option Amount").
3. Restrictions on Exercise of the Option.
--------------------------------------
(a) Vesting. Except as otherwise provided herein, the Option may not
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be exercised, in whole or in part, at any time prior to the second anniversary
of the date of this Investment Option Agreement. Thereafter, the Option may be
exercised beginning on the second anniversary of the date hereof with respect to
25% of the principal amount of the Option Debentures, and beginning on each of
the third, fourth and fifth anniversaries of the date hereof with respect to an
additional 25% of the principal amount of the Option Debentures.
(b) Accelerated Vesting. Notwithstanding Section 3(a), but subject
-------------------
to Sections 3(c) and 3(d), the Option shall vest in full and may be exercised
immediately upon the occurrence of any Accelerated Vesting Event as defined in
Exhibit A hereto.
(c) Expiration. The Option may not be exercised after, and shall
----------
expire on, April 3, 1996 or such earlier date as is provided herein (the
"Expiration Date").
(d) Securities Laws. The Participant confirms that the Participant
---------------
will not make any distribution of Option Debentures purchased pursuant to any
exercise of the Option, the Convertible Preferred Stock into which such Option
Debentures are convertible or the Common Stock into
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which such Convertible Preferred Stock is convertible, in violation of
applicable securities laws. Prior to the second anniversary of the date of this
Investment Option Agreement (or as soon as practicable after any portion of the
Option becomes exercisable, if earlier), the Company will file and cause to be
declared effective a registration statement covering secondary offerings by the
Participant of all Common Stock acquired or which may be acquired upon the
conversion of Convertible Preferred Stock. In connection therewith, the Company
will also cause such Common Stock to be listed on the New York Stock Exchange,
if not already so listed. If the current market price of the Common Stock is
below the conversion price applicable to the Convertible Preferred Stock at the
time such filing of a registration statement is required, the Company may defer
any such filing of a registration statement and listing until such time as the
market price of the Common Stock is at least equal to such conversion price.
4. Repurchase of the Option.
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(a) Discretionary Repurchase. At any time after April 3, 1994, PIP
------------------------
Funding I may repurchase the Option (and all other options outstanding under
investment option agreements entered into pursuant to the Plan), in whole, 20
business days after notice to the Participant specifying PIP Funding I's
determination to repurchase the Option and the date of repurchase. The
repurchase shall be effected by paying the Participant an amount equal to the
Investment Option Amount applicable to the unexercised portion of the Option,
plus a premium (calculated as a percentage of such Investment Option Amount) of
41.9% if the repurchase date is during the 12-month period ending April 3, 1995
and 50.4% thereafter; provided, however, that the Participant shall have the
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right to exercise the unexercised portion of the Option within 18 business days
after the date of such notice. Upon repurchase, the then unexercised portion of
the Option shall expire.
(b) Mandatory Repurchase. (i) If there occurs a "Call Event" or an
--------------------
"Acceleration Event" as such terms are defined in Exhibit A hereto, PIP Funding
I shall repurchase the Option (and all other options outstanding under
investment option agreements entered into pursuant to the Plan), in whole. PIP
Funding I shall notify the Participant of such Call Event or Acceleration Event
within 5 business days thereof and specify in such notice the repurchase date,
which shall be 15 business days after the date of notice, and the repurchase
price which shall be computed in accordance I with clause (ii) below. If there
occurs a "Call Event" or an "Acceleration Event",
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the Option shall vest in full and the Participant shall have the right to
exercise the unexercised portion of the Option within 13 business days after the
date of PIP Funding I's notice thereof.
(ii) The amount to be paid to Participant in the case of a repurchase
of the Option in accordance with clause (i) above shall be equal to the
Investment Option Amount applicable to the unexercised portion of the Option
plus, in the case of a Call Event (but not an Acceleration Event), a Premium
(calculated as a percentage of such Investment Option Amount) of 6.0% if
repurchased on or before April 3, 1990 and thereafter the applicable premium
(calculated as a Percentage of such Investment Option Amount) set forth below:
Repurchase date during
the 12-month period ending April 3 Premium
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1991 12.4%
1992 19.1%
1993 26.2%
1994 33.8%
1995 41.9%
1996 50.4%
Upon repurchase, the then unexercised portion of the Option shall expire.
(c) Deferral of Repurchase. If the Participant is a person subject
----------------------
to Section 16 of the Securities Exchange Act of 1934, as amended, by reason of
being or having been an officer or director of the Company, the Participant may
by notice to PIP Funding I elect to defer any repurchase until 15 business days
after the end of such Participant's Section 16 holding period. To be effective,
any such notice of election must be received by PIP Funding I not later than
3:00 P.M., Los Angeles time, on the second business day prior to the repurchase
date specified by PIP Funding I. The repurchase price for any such deferred
repurchase shall be computed in accordance with Section 4(a) or Section
4(b)(ii), as applicable.
-4-
(d) Repurchase following Expiration. Unless repurchased pursuant to
-------------------------------
section 4 (a), 4(b) or 4(c), PIP Funding I shall repurchase the Option, in
whole, on the business day next following April 3, 1996 by paying the
Participant an amount equal to the Investment Option Amount applicable to the
unexercised portion of the Option.
5. Termination of Employment.
-------------------------
(a) Death. If the Participant dies while employed by the Company or
-----
any of its subsidiaries, the Option shall continue in effect in accordance with
its terms, and the beneficiary designated by the Participant, or, if no such
beneficiary is so designated, the Participant's estate or any person who
acquires the right to exercise the Option by reason of the Participant's death,
shall be entitled (until the Expiration Date and subject to Sections 3 and 4) to
exercise the Option to the extent not previously exercised.
(b) Permanent Disability. If the Participant's employment with the
--------------------
Company or any of its subsidiaries is terminated by reason of permanent
disability, as determined by the Committee, the Option shall continue in effect
in accordance with its terms, and the Participant shall be entitled (until the
Expiration Date and subject to Sections 3 and 4) to exercise the Option to the
extent not previously exercised.
(c) Voluntary or Involuntary Termination of Employment. If the
--------------------------------------------------
Participant's employment with the Company or any of its subsidiaries is
voluntarily or involuntarily terminated for any reason other than as referred to
in Sections 5(a), (b) or (d), the Participant shall be entitled, for a period of
90 days after such termination (but not after the Expiration Date), (i) to
exercise the portion of the Option vested prior to the date of such termination
to the extent not previously exercised or (ii) require that PIP Funding I
repurchase the Option for the Investment Option Amount applicable to the
unexercised portion thereof. Any such repurchase shall be effected within 7
business days after PIP Funding I receives a request therefor.
(d) Retirement. If the Participant retires at normal retirement age
----------
or, with the consent of the Committee, retires at an earlier age, the Option
shall continue in effect in accordance with its terms and the Participant shall
be entitled (until the Expiration Date and subject to Sections 3 and 4) to
exercise the Option to the extent not previously exercised.
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(e) Other. Following any termination of employment referred to in this
-----
Section 5, the Participant (or another person specified in Section 5(a) if that
Section is applicable) may not at any time transfer the unexercised portion of
the Option unless the Company, in its sole discretion, requests that the
unexercised portion of the Option be transferred to another eligible employee of
the Company or a subsidiary of the Company under arrangements mutually
satisfactory to the Participant (or such other person specified in Section
5(a)), the Company and the transferee.
6. Exercise.
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(a) General. The Option may be exercised by the Participant as a whole
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or from time to time in part by completion and delivery to PIP Funding I of an
exercise notice (together with any documents specified therein) in one of
several forms to be prescribed by PIP Funding I depending on whether the
Participant proposes to pay the Purchase Price for the Debentures being
purchased in cash or by delivery of a secured recourse note or by application of
the proceeds from a simultaneous conversion of Debentures into Convertible
Preferred Stock and then into Common Stock and the sale of all or a portion of
such Common Stock. Upon exercise of the Option the Participant will be required
to pay to PIP Funding I an amount equal to the Purchase Price (i.e., $100,000
for each $105,264 principal amount of Option Debentures being purchased) plus
interest, if any (which payment of interest may be in cash or by a short-term
secured recourse note). If requested several days in advance of exercise of the
Option, PIP Funding I will endeavor to ascertain and advise the Participant of
the approximate amount of any interest to be paid upon such exercise and the
next date on which the Option may be exercised without payment of interest. The
communications in the preceding sentence may be oral or in writing.
(b) Delivery of Notes. If payment of the Purchase Price and/or any
-----------------
interest is to be made by delivery of a secured recourse note or notes, the
Purchased Option Debentures will be retained by PIP Funding I as security for
the payment of the notes. The notes shall be in such forms as shall be
prescribed by PIP Funding I and shall require a pledge of such Debentures and
the delivery to PIP Funding I of such other documents as it may require in
connection therewith.
(c) Schedule. Upon each exercise of the Option, the Participant will
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be required to submit to PIP Funding I the Participant's copy of this
-6-
Investment Option Agreement for notation by PIP Funding I on the schedule
annexed hereto of the principal amount of Option Debentures purchased, the date
of exercise and the remaining principal amount of Option Debentures for which
the Option may be exercised. When the Option has been fully exercised, the
Participant's copy of this Investment Option Agreement will be marked cancelled.
Upon any repurchase of the Option, the Participant will be required to deliver
the Participant's copy of this Investment Option Agreement to PIP Funding I for
similar marking.
7. Conversion. Conversion of Debentures acquired by a Participant
----------
upon exercise of the Option shall be effected by completion and delivery to the
Company of a conversion notice (together with the documents specified therein)
in one of several forms to be prescribed by the Company depending on the manner
of payment of the Purchase Price and the disposition to be made of the
Convertible Preferred Stock issuable upon conversion of the Debentures and the
Common Stock issuable upon conversion of the Convertible Preferred Stock.
8. Subordinated Guarantee of the Company. The Company unconditionally
-------------------------------------
and irrevocably guarantees that if PIP Funding I does not repay the investment
Option Amount (including any premium with respect thereto) in connection with
any repurchase of the Option required herein, the Company shall pay such amount
as if the Company instead of PIP Funding I were the primary obligor for such
amount under this Investment Option Agreement; provided, however, that this
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obligation of the Company is subordinated to the extent and in the manner
provided in the Debentures as originally issued to PIP Funding I with regard to
the Company's obligations under such Debentures, to the prior payment in full of
all "Senior Debt" of the Company, as such term is defined in such Debentures.
9. Miscellaneous.
-------------
(a) No Right to Continued Employment. Neither
--------------------------------
this Investment Option Agreement nor the Plan shall be construed as giving the
Participant any right to be retained in the employ of the Company or any of its
subsidiaries.
(b) Non-Transferability. The Option is exercisable only by the
-------------------
Participant during his or her lifetime and neither this Investment Option
Agreement nor the Option may be sold, pledged, assigned, hypothecated or
-7-
transferred in any manner other than by will or the laws of descent and
distribution, except that they may be pledged as security for a loan to finance
the Investment Option Amount or the Purchase Price under arrangements
satisfactory to the Company or except as contemplated by Section 5(e). Upon
exercise of the Option by the Participant, the purchased Debentures may be
pledged, assigned, hypothecated or transferred, subject to compliance with
applicable securities laws and delivery to the Company of a legal opinion
satisfactory to the Company with respect to such compliance (except that the
purchased Debentures may be pledged as security for any secured recourse notes
delivered to PIP Funding I without the delivery of a legal opinion); provided,
--------
however, that, concurrently with such sale, pledge, assignment, hypothecation or
-------
transfer, the Participant repays the outstanding balance of any secured recourse
notes delivered by such Participant or the Company approves the assignment of
the Participant's secured recourse notes to the transferee. Thereafter the
Debentures shall be convertible only by the transferee.
(c) Tax Withholding. The Company and its subsidiaries shall have the
---------------
right to require the Participant to remit to the Company, prior to the delivery
of any certificate or certificates for Debentures, Convertible Preferred Stock
or Common Stock or the payment of any money or other property, an amount
sufficient to satisfy any Federal, state and/or local tax withholding
requirements.
(d) Amendment. This Investment Option Agreement may not be modified,
---------
amended or waived in any manner except by an instrument in writing signed by
each of the parties hereto. The waiver by any party of compliance with any
provision of this Investment Option Agreement by any other party shall not
operate or be construed as a waiver of any other provision of this investment
Option Agreement, or of any subsequent breach by such party of a provision of
this Investment Option Agreement.
(e) Maintenance of an Office or Agency. PIP Funding I will maintain an
----------------------------------
office or agency at the principal executive offices of the Company where this
Investment Option Agreement may be submitted for exercise of the Option and
where notices or demands to or upon PIP Funding I in respect hereof may be
served. PIP Funding I will advise the Participant of any change in the location
of such office or agency.
-8-
(f) Notices. Except as otherwise provided herein, every notice or
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other communication relating to this Investment Option Agreement shall be in
writing, and shall be mailed or delivered to the party for whom it is intended
at such address as may from time to time be designated by such party in a notice
mailed or delivered to the other party as herein provided; provided, however,
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that unless and until some other address shall be so designated, all notices or
communications by the Company to the Participant may be given to the Participant
personally or may be mailed to the address noted under the Participant's
signature below.
(g) Headings. The headings of paragraphs herein are included solely
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for convenience of reference and shall not affect the meaning or interpretation
of any of the provisions of this Investment Option Agreement.
(h) Governing Law. This Investment Option Agreement is to be governed
-------------
by and interpreted in accordance with the laws of the State of New York.
(i) Acknowledgment of Agency. The parties hereto acknowledge that PIP
------------------------
Funding I is acting as agent on behalf of the Company and is issuing and selling
the Option and the remarketed notes issued under the indenture referred to in
Exhibit A hereto, and is acquiring, holding and transferring the Debentures, in
its capacity as such pursuant to the terms of this Investment Option Agreement
and the Plan.
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IN WITNESS WHEREOF, the parties hereto have executed this Investment
Option Agreement as of the day and year first above written.
NATIONAL MEDICAL ENTERPRISES, INC.
By____________________________________________
Title: Senior Vice President
Address: 11620 Wilshire Boulevard
Los Angeles, CA 90025
Attention: Treasurer
With a copy to: General Counsel
NME PIP FUNDING I, INC.
By______________________________________________
Title: President
Address: 11620 Wilshire Boulevard
Los Angeles, CA 90025
Attention: Treasurer
________________________________________________
Participant
Address:
________________________________________________
Social Security or Tax I.D. Number
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Schedule
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Record of Option Exercises
--------------------------
Principal Amount Remaining
of Debentures Principal Amount
Purchased Pursuant of Debentures Notation
Date to Option Subject to Option Made By
---- -------------------- ------------------ ----------
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
Exhibit A
---------
For the purposes of Section 3(b) the term "Accelerated Vesting Event"
shall mean any of the following:
(i) Any "Designated Event" (as such term is defined below) not
approved in advance by the Board of Directors of the Company or any
"Call Event" or any "Acceleration Event", as such terms are defined
below;
(ii) During any period of two consecutive years (not including
any period prior to the execution of this Investment Option Agreement),
individuals who at the beginning of such period constituted the Board of
Directors of the Company and any new directors, whose election by the
Board of Directors of the Company or nomination for election by the
Company's stockholders was approved by a vote of at least a majority of
the directors then still in office who either were directors at the
beginning of the period, or whose election or nomination for election
was previously so approved, cease to constitute a majority thereof; and
(iii) Any determination by the Board of Directors of the
Company, in its sole and absolute discretion, that there has occurred a
change in control of the Company.
For the purposes of (i) above and the definition of "Acquiring Person"
below, any transaction not approved in advance by the Board of Directors of the
Company is a transaction which has not obtained the concurrence of a majority of
Continuing Directors, where "Continuing Director" shall mean any member of the
Board of Directors of the Company (while such person is a member of the Board of
Directors of the Company) who is not an Acquiring Person (as defined below) or
an Affiliate (as defined below) or Associate (as defined below) of an Acquiring
Person, or a representative of an Acquiring Person or of any such Affiliate or
Associate, and who either (i) was a member of the Board of Directors of the
Company prior to the time that any person became an Acquiring Person or (ii)
became a member of the Board of Directors of the Company subsequent to the time
that any person became an Acquiring Person, if such person's nomination for
election or election to the Board of Directors of the Company was recommended or
approved by a majority of the Continuing Directors then in office and "Acquiring
Person" shall mean any person who or which, together with all Affiliates and
Associates of such Person, shall Beneficially Own a number of shares of voting
stock having in the aggregate 20% or more of the general voting power of the
Company, but shall not include (i) the Company, (ii) any subsidiary of the
Company, (iii) any employee benefit plan or employee stock plan of
-2-
the Company or of any subsidiary of the Company or any person organized,
appointed, established or holding voting stock by, for or pursuant to, the terms
of any such plan, and (iv) any person who acquires a number of shares of voting
stock having in the aggregate 20% or more of the general voting power of the
Company in connection with a transaction or series of transactions approved
prior to such transaction or transactions by the Board of Directors of the
Company. "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as in effect as of the date of the
Indenture referred to below.
A person shall be deemed to "Beneficially Own" any securities of the
Company in accordance with Section 13 of the Securities Exchange Act of 1934 and
the Rules of the Securities and Exchange Commission thereunder (including Rule
13d-3, Rule 13d-5 or any successor provisions); provided, however, that a person
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shall be deemed to Beneficially Own all securities that any such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time and without regard to the 60-day limitation referred to in
Rule 13d-3.
For the purposes of (i) above, the terms "Designated Event", "Call
Event" and "Acceleration Event" shall have the following meanings:
I. "Designated Event" means any one or more of the following events
----------------
which shall occur subsequent to the date of the issuance by PIP Funding I of its
Remarketed Notes (the "Notes") pursuant to the Indenture dated as of March 15,
1989 among the Company, PIP Funding I and Bankers Trust Company, as Trustee (the
"Indenture"):
(A) (1) the Company shall consolidate with or merge into any other
corporation or convey, transfer or lease all or substantially all of its assets
to any person (other than a wholly owned direct or indirect subsidiary of the
Company), or (2) any corporation shall consolidate with or merge into the
Company, in either event pursuant to a transaction in which any common stock of
the Company outstanding immediately prior to the effectiveness thereof is
changed into or exchanged for cash, securities or other property.
(B) any person (other than the Company or any direct or indirect
subsidiary of the Company or any employee benefit plan or employee stock plan of
the Company or of any direct or indirect subsidiary of the Company or any person
organized, appointed, established or holding voting securities by, for or
pursuant to, the terms of any such plan) shall purchase or otherwise acquire,
directly or indirectly, Beneficial Ownership
-3-
of securities of the Company and, as a result of such purchase or acquisition,
such person (together with its "Associates" and "Affiliates') shall directly or
indirectly Beneficially Own in the aggregate (1) twenty percent (20%) or more of
the common stock of the Company, or (2) securities representing twenty percent
(20%) or more of the combined voting power of the Company's voting securities,
in each case under clause (1) or (2) outstanding on the date immediately prior
to the date of such purchase or acquisition (or, if there be more than one, the
last such purchase or acquisition); or
(C) on any day (a "Calculation Date") (1) the Company shall make any
distribution or distributions of cash, securities or other property (other than
regular periodic cash dividends at a rate which is substantially consistent with
past practice and other than common stock, or rights to acquire common stock or
preferred stock substantially equivalent to common stock) to holders of capital
stock, whether by means of dividend, reclassification, recapitalization or
otherwise, or (2) the Company or any direct or indirect subsidiary of the
Company shall purchase or otherwise acquire, directly or indirectly, Beneficial
Ownership of capital stock of the Company; and the sum of the Designated
Percentages of all such distributions, purchases and acquisitions which have
occurred an the Calculation Date and during the 365-day period immediately
preceding the Calculation Date shall equal or exceed thirty percent (30%).
"Designated Percentage" means (1) in the case of each distribution
---------------------
referred to in clause (C) of the definition of Designated Event, the percentage
determined as of the Calculation Date (as such term is defined in the definition
of Designated Event) of each such distribution by dividing the aggregate fair
market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be conclusive) of such distribution, by the
fair market value (based on the Current market Price) of all of the shares of
capital stock of the Company outstanding on the day immediately prior to such
Calculation Date, and (2) in the case of each purchase or acquisition referred
to in clause (C) of the definition of Designated Event, the percentage
determined as of the Calculation Date of each such purchase or acquisition by
dividing-all amounts expended by the Company and its direct or indirect
subsidiaries (the amount expended, if other than in cash, to be determined in
good faith by the Board of Directors of the Company, whose determination shall
be conclusive) in connection with the purchase or acquisition of any shares of
any class of capital stock of the Company by the fair market value (based on the
Current Market Price) of all of the shares of capital stock of the Company
outstanding on the day immediately prior to such Calculation Date.
"Current Market Price" means the average of the daily closing prices
--------------------
(or, if none, the average of the last daily bid and asked prices) of the
applicable class of capital stock as quoted by the Primary securities exchange
on which such stock is traded, or, if
-4-
none, the primary interdealer quotation system which reports quotations for such
stock, for the trading days during the period of 90 consecutive calendar days
ending on the day immediately prior to the Calculation Date.
II. A "Call Event" shall have occurred in the event that both (A) a
----------
Designated Event occurs on or before April 3, 1996 and (B) on any date which
occurs during the period commencing 120 days prior to the public disclosure of
the occurrence of such Designated Event and ending 120 days after such public
disclosure, the rating of the Notes is downgraded to lower than BBB- by Standard
& Poor's Corporation and its successors or lower than Baa3 by Moody's investors
Service, Inc. and its successors, and if such downgrading occurs prior to such
public disclosure, the rating assigned by S&P or Moody's on the date of such
public disclosure remains lower than BBB- or lower than Baa3, respectively.
III. An "Acceleration Event" shall have occurred if both (i) an
------------------
"Event of Default" with respect to the Notes has occurred and is continuing and
(ii) the Trustee under the Indenture or the holders of the requisite percentage
of the Notes shall have declared the principal of all the Notes to be due and
payable immediately .
"Event of Default" means any one of the following events (whatever the
----------------
reason for such Event of Default and whether it shall be voluntary or
involuntary or be 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):
(1) default in the payment of any interest upon any Note when
it becomes due and payable and the continuance of such default for a
period of five days; or
(2) default in the payment of the principal on any Note at its
maturity; or
(3) failure by PIP Funding I to redeem any Notes that are
subject to mandatory redemption pursuant to the Indenture; or
(4) default in the performance, or breach, of any covenant of
PIP Funding I or the Company contained in Article Eight or Section 10.8
of the indenture; or
(5) default in the performance or breach of any covenant of PIP
Funding I or the Company contained in the indenture or in the Notes
(other than
-5-
a default or breach which results specifically in an Event of Default
under a clause of this definition other than this clause (5)), and
continuance of such default or breach for a period of 30 days after
there has been given, by registered or certified mail, to PIP Funding I
by the Trustee under the Indenture or to PIP Funding I and such Trustee
by the holders of at least 25% in principal amount of the outstanding
Notes, a written notice specifying such default or breach and requiring
it to be remedied and stating that such notice is a "Notice of Default"
under the Indenture; or
(6) PIP Funding I or the Company pursuant to or within the
meaning of any bankruptcy law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against
it in an involuntary case,
(C) consents to the appointment of a custodian of it or
for all or substantially all of its property, or
(D) makes a general assignment for the benefit of its
creditors; or
(7) a court of competent jurisdiction enters an order or decree
under any bankruptcy law that:
(A) is for relief against PIP Funding I or the Company in
an involuntary case and such order or decree shall continue for
a period of 60 days undismissed, undischarged or unbonded,
(B) appoints a custodian of PIP Funding I or the Company
or for all or substantially all of its property and such order
or decree shall continue for a period of 60 days undismissed,
undischarged or unbonded, or
(C) orders the liquidation of PIP Funding I or the Company
and such order remains unstayed and in effect for a period of 60
days undismissed, undischarged or unbonded.