MANOR CARE, INC.
DEBT SECURITIES
STANDARD UNDERWRITING AGREEMENT PROVISIONS
Manor Care, Inc., a Delaware corporation (the "Company"), confirms its
agreement with each of you (individually, an "Agent" and collectively, the
"Agents") with respect to the issuance and sale by the Company of up to an
aggregate of $ 250,000,000* in gross proceeds of its Medium-Term Notes, Series A
(the "Notes"). The Notes are to be issued from time to time pursuant to an
indenture, dated as of ______ __, 1996 (as it may be supplemented or amended
from time to time, the "Indenture"), between the Company and [name of trustee],
as trustee (the "Trustee").
The Notes shall have the maturity ranges, applicable interest rates or
interest rate formulas, specified currency, issue price, redemption and
repayment provisions and other terms set forth in the Prospectus referred to in
Section 1(a) as it may be amended or supplemented from time to time, including
any supplement providing for the interest rate, maturity and other terms of any
Note (a "Pricing Supplement"). The Notes will be issued, and the terms thereof
established, from time to time, by the Company in accordance with the Indenture
and the Procedures referred to below. This Agreement shall only apply to sales
of the Notes and not to sales of any other securities or evidences of
indebtedness of the Company and only on the specific terms set forth herein.
Subject to the terms and conditions stated herein and to the
reservation by the Company of the right to sell its Notes directly on its own
behalf, and to designate and select additional agents in accordance with Section
2(a), the Company hereby (i) appoints each of the Agents as the agent of the
Company for the purpose of soliciting and receiving offers to purchase Notes
from the Company and (ii) agrees that whenever the Company determines to sell
Notes directly to an Agent as principal it will enter into a separate agreement
(each a "Purchase Agreement"). Each such Purchase Agreement, whether oral (and
confirmed in writing, which may be by facsimile transmission) or in writing,
shall be with respect to such information (as applicable) as specified in
Exhibit C hereto, relating to such sale in accordance with Section 2(e) hereof.
SECTION 1. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to, and agrees with, each Agent as of the date hereof, as of the
Closing Date (defined herein) and as of the times referred to in Sections 6(a)
and 6(b) hereof (the Closing Date and each such time being hereinafter sometimes
referred to as a "Representation Date"), as follows:
(a) A registration statement on Form S-3 (Registration No. 333- ) with
respect to the Notes (i) has been prepared by the Company in conformity with the
requirements of the U.S. Securities Act of 1933, as amended (the "Securities
Act"), and the rules and regulations (the "Rules and Regulations") of the U.S.
Securities and Exchange Commission (the "Commission") thereunder, (ii) has been
filed by the Company with the Commission under the Securities Act and (iii) has
become effective under the Securities Act. As provided in Section 3(b), a
prospectus supplement reflecting the terms of the Notes, the terms of the
offering thereof and the other matters set forth therein has been prepared and
will be filed pursuant
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to Rule 424 under the Securities Act. In addition, a preliminary prospectus
supplement reflecting the terms of the Notes, the terms of the offering thereof,
and the other matters set forth therein may also be prepared and filed pursuant
to Rule 424 under the Securities Act. Such prospectus supplement, in the form
filed pursuant to Rule 424, is herein referred to as the "Prospectus
Supplement", and any such preliminary prospectus supplement in the form filed
pursuant to Rule 424 is hereafter referred to as the "Preliminary Prospectus
Supplement". Any prospectus accompanied by a Preliminary Prospectus Supplement
is hereinafter referred to, collectively with such Preliminary Prospectus
Supplement, as a "Preliminary Prospectus." The registration statement referred
to in this Section 1(a), as amended at the time of the applicable Representation
Date, including the exhibits thereto and the documents incorporated by reference
therein, is herein called the "Registration Statement", and the basic prospectus
included therein relating to all offerings of securities under the Registration
Statement, as supplemented by the Prospectus Supplement and the Pricing
Supplement, is herein called the "Prospectus", except that, if such basic
prospectus is amended or supplemented on or prior to the date on which the
Prospectus Supplement is first filed pursuant to Rule 424, the term "Prospectus"
shall refer to the basic prospectus as so amended or supplemented and as
supplemented by the Prospectus Supplement, in either case including the
documents filed by the Company with the Commission pursuant to the U.S.
Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are
incorporated by reference therein. Any reference to any amendment to the
Registration Statement shall be deemed to refer to and include any annual or
interim report of the Company or other documents filed pursuant to Section 13(a)
or 15(d) of the Exchange Act after the effective date of the Registration
Statement that is incorporated by reference in the Registration Statement. The
Commission has not issued any order suspending the effectiveness of the
Registration Statement, and no stop-order has been initiated or threatened by
the Commission.
(b) On the effective date of the Registration Statement, such
Registration Statement conformed in all material respects to the requirements of
the Securities Act, the Exchange Act, the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), and the rules and regulations of the
Commission under such acts and did not include any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and on the
applicable Representation Date and at all times during each period during which,
in the opinion of counsel for the Agents, a prospectus relating to the Notes is
required to be delivered under the Act (each a "Marketing Period"), the
Registration Statement and the Prospectus will conform in all material respects
to the requirements of the Securities Act, the Exchange Act, the Trust Indenture
Act and the Rules and Regulations, and none of such documents will include any
untrue statement of a material fact or will omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, provided that the Company makes no representation or warranty as to
(i) that part of the Registration Statement that constitutes the Statement of
Eligibility and Qualification (the "Form T-1") under the Trust Indenture Act of
the Trustee under the Indenture or (ii) information contained in or omitted from
the Registration Statement or the Prospectus or any such amendment or supplement
thereto in reliance upon and in conformity with written information furnished to
the Company by or on behalf of any Agent specifically for inclusion therein.
(c) The Company has all necessary corporate power and authority to
execute and deliver this Agreement and the Purchase Agreement (if any) and
perform its obligations hereunder and thereunder; each of this Agreement and the
Purchase Agreement (if any) has been duly authorized, executed and delivered by
the Company, constitutes the valid and binding agreement of the Company and is
enforceable against the Company in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally and general equitable principles (whether considered in a proceeding
in equity or at law).
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(d) Neither the Company nor any of its "significant subsidiaries" (as
such term is defined in Regulation S-X of the Commission) is in violation of its
corporate charter or by-laws or in default under any agreement, indenture or
instrument, the effect of which violation or default would be material to the
Company or the Company and its significant subsidiaries, taken as a whole; the
execution, delivery and performance of this Agreement and each applicable
Purchase Agreement, if any, and compliance by the Company with the provisions of
the Indenture and the Notes will not conflict with, result in the creation or
imposition of any lien, charge or encumbrance upon any of the assets of the
Company or any of its significant subsidiaries pursuant to the terms of, or
constitute a material default under, any material agreement, indenture or
instrument, or result in a violation of the corporate charter or by-laws of the
Company or any of its significant subsidiaries or any order, rule, or regulation
of any court or governmental agency having jurisdiction over the Company, any of
its significant subsidiaries or their respective properties; and except as
required by the Securities Act, the Trust Indenture Act and applicable state
securities laws, no consent, authorization or order of, or filing or
registration with, any court or governmental agency in the United States
(including any state regulatory agency having jurisdiction over the Company or
any of its significant subsidiaries), which has not been made or obtained, is
required for the execution, delivery and performance of this Agreement or each
applicable Purchase Agreement, if any, or compliance with the provisions of the
Indenture and the Notes by the Company.
(e) Except as described in or contemplated by the Registration
Statement and the Prospectus, there has not been any material adverse change in,
or any adverse development which materially affects, the business, properties,
financial condition, results of operations of the Company and its significant
subsidiaries taken as a whole from the dates as of which information is given in
the Registration Statement and the Prospectus.
(f) The Indenture has been duly authorized, executed and delivered by
the Company and, assuming the due execution and delivery thereof by the Trustee,
constitutes a valid and binding agreement of the Company and is enforceable
against the Company in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally and
general equitable principles (whether considered in a proceeding in equity or at
law); the Notes have been duly authorized by the Company, and, when the terms of
the Notes and of their issue and sale have been duly established in accordance
with the Indenture and this Agreement, and the Notes have been duly executed,
authenticated, issued and delivered against payment therefor as provided herein
and the Indenture, the Notes will be duly executed, duly authenticated, duly
issued and delivered by the Company, and will constitute valid and binding
obligations of the Company entitled to the benefits of the Indenture and will be
enforceable against the Company in accordance with their terms and the terms of
the Indenture, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally or general equitable principles (whether
considered in a proceeding in equity or at law); and the Notes and the Indenture
will conform in all material respects to the descriptions thereof contained in
the Registration Statement and the Prospectus.
(g) The Company and each significant subsidiary of the Company (as
such term is defined in Regulation S-X or the Commission) has been duly
incorporated and is validly existing and in good standing under the laws of its
jurisdiction of incorporation, is duly qualified to do business and in good
standing as a foreign corporation in each jurisdiction in which its ownership of
property or the conduct of its business requires such qualification, except to
the extent that the failure to be so qualified or be in good standing would not
have a material adverse effect on the Company and its significant subsidiaries
taken as a whole, and has all power and authority necessary to own or hold its
properties and to conduct the business in which it is engaged.
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(h) Except as described in the Registration Statement and the
Prospectus, there is no material litigation or governmental proceeding pending
or, to the knowledge of the Company, threatened against the Company or any of
its significant subsidiaries which might result in any material adverse change
in the business, properties, financial condition or results of operations of the
Company or of the Company and its subsidiaries taken as a whole, or which could
reasonably be expected to adversely affect the consummation of the transactions
contemplated hereby.
(i) The Company is not an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.
SECTION 2. SOLICITATIONS AS AGENT; PURCHASES AS PRINCIPAL (a)
Appointment. Subject to the terms and conditions stated herein, the Company
hereby appoints each of the Agents as one of the exclusive agents of the Company
(subject to the provisions of the following paragraph) for the purpose of
soliciting or receiving offers to purchase the Notes from the Company by others.
On the basis of the representations and warranties contained herein, but subject
to the terms and conditions herein set forth, each Agent agrees, as one of the
exclusive agents of the Company (subject to the provisions of the following
paragraph), to use its reasonable efforts to solicit offers to purchase the
Notes upon the terms and conditions set forth in the Prospectus and the related
Prospectus Supplement. The Company may, from time to time, solicit or accept
offers to purchase Notes otherwise than through one of the Agents; provided,
however, that so long as this Agreement shall remain in effect, the Company
shall not, without the prior written consent of each Agent, solicit or accept
offers to purchase Notes through any additional agent other than an Agent,
unless such additional agent becomes a party to this Agreement, or an agreement
setting forth the same commissions and otherwise containing terms and conditions
that are substantially the same as those then in effect under this Agreement;
provided, further, that the Company expressly reserves the right to sell Notes
directly to investors, in which case the Agents shall not receive any commission
with respect to such sale. Each Agent also may purchase Notes from the Company
as principal for purposes of resale, as more fully described in paragraph (e) of
this Section.
(b) Suspension of Solicitation. The Company reserves the right, in its
sole discretion, to suspend solicitation of offers to purchase the Notes
commencing at any time for any period of time or indefinitely. Upon receipt of
at least one business day's prior written notice from the Company, the Agents
will forthwith suspend solicitation of offers to purchase Notes from the Company
until such time as the Company has advised the Agents that such solicitation may
be resumed. For the purpose of this agreement, "business day" shall mean any day
which is not a Saturday or Sunday and which is not a day on which (i) banking
institutions are generally authorized or obligated by law to close in The City
of New York and (ii) The New York Stock Exchange, Inc. is closed for trading.
Upon receipt of notice from the Company as contemplated by Section
3(d) or 3(k) hereof, each Agent shall suspend its solicitation of offers to
purchase Notes until such time as the Company shall have furnished it with an
amendment or supplement to the Registration Statement or the Prospectus, as the
case may be, contemplated by Section 3(d) or 3(k) and shall have advised such
Agent that such solicitation may be resumed.
(c) Agent's Commission. Promptly upon the closing of the sale of any
Notes sold by the Company as a result of a solicitation made by or offer to
purchase received by an Agent, the Company agrees to pay such Agent a
commission, in accordance with the schedule relating to the Notes set forth in
Exhibit A hereto.
(d) Solicitation of Offers. The Agents are authorized to solicit
offers to purchase the Notes only in denominations as are specified in the
Prospectus at a purchase price as shall be specified by the Company.
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Each Agent shall communicate to the Company, orally or in writing, each
reasonable offer to purchase Notes received by it as an Agent. The Company shall
have the sole right to accept offers to purchase the Notes and may reject any
such offer in whole or in part. Each Agent shall have the right, in its
discretion reasonably exercised without advising the Company, to reject any
offer to purchase the Notes received by it, in whole or in part, and any such
rejection shall not be deemed a breach of its agreement contained herein.
No Note which the Company has agreed to sell pursuant to this
Agreement shall be deemed to have been purchased and paid for, or sold by the
Company, until such Note shall have been delivered to the purchaser thereof
against payment by such purchaser.
In connection with the solicitation of offers to purchase Notes, the
Agents are not authorized to provide on behalf of the Company to any person any
written information relating to the Company other than the Prospectus and the
documents incorporated therein. No Note which the Company has agreed to sell
pursuant to this Agreement shall be deemed to have been purchased and paid for
or sold by the Company until such Note shall have been delivered to the
purchaser thereof against payment by such purchaser.
(e) Purchases as Principal. Each sale of Notes to any Agent as
principal, for resale to one or more investors or to another broker-dealer
(acting as principal for purposes of resale), shall be made in accordance with
the terms of this Agreement and a Purchase Agreement whether oral (and confirmed
in writing by such Agent to the Company, which may be by facsimile transmission)
or in writing, which will provide for the sale of such Notes to, and the
purchase thereof by, such Agent. A Purchase Agreement may also specify certain
provisions relating to the reoffering of such Notes by such Agent. The
commitment of any Agent to purchase Notes from the Company as principal shall be
deemed to have been made on the basis of the representations and warranties of
the Company herein contained and shall be subject to the terms and conditions
herein set forth. Each Purchase Agreement shall specify the principal amount and
terms of the Notes to be purchased by an Agent, the time and date (each such
time and date being referred to herein as a "Time of Delivery") and place of
delivery of and payment for such Notes and such other information (as
applicable) as is set forth in Exhibit C hereto. The Company agrees that if any
Agent purchases Notes as principal for resale such Agent shall receive such
compensation, in the form of a discount or otherwise, as shall be indicated in
the applicable Purchase Agreement or, if no compensation is indicated therein, a
commission in accordance with Exhibit A hereto. Any Agent may utilize a selling
or dealer group in connection with the resale of such Notes. In addition, the
Agents may offer the Notes they have purchased as principal to other dealers.
Any Agent may sell Notes to any dealer at a discount. Such Purchase Agreement
shall also specify any requirements for delivery of opinions of counsel,
accountant's letters and officers' certificates pursuant to Section 5 hereof.
(f) Administrative Procedures. Administrative procedures respecting
the sale of Notes (the "Procedures") are set forth in Exhibit B hereto and may
be amended in writing from time to time by the Agents and the Company. Each
Agent and the Company agree to perform the respective duties and obligations
specifically provided to be performed by each of them herein and in the
Procedures. The Procedures shall apply to all transactions contemplated
hereunder including sales of Notes to any Agent as principal pursuant to a
Purchase Agreement, unless otherwise set forth in such Purchase Agreement.
(g) Delivery of Documents. The documents required to be delivered by
Section 5 hereof shall be delivered at the offices of Simpson Thacher &
Bartlett, 425 Lexington Avenue, New York, New York 10017, not later than 10:00
A.M., New York City time, on the date of this Agreement or at such later time as
may be mutually agreed upon by the Company and the Agents, which in no event
shall be later than the time at which the Agents commence solicitation of offers
to purchase Notes hereunder (the "Closing Date").
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SECTION 3. COVENANTS OF THE COMPANY
The Company agrees to furnish promptly to Simpson Thacher & Bartlett,
counsel for the Agents, one signed copy of the Registration Statement, including
all exhibits, in the form it became effective and of all amendments thereto and,
in connection with each offering of Notes, the Company further agrees:
(a) Delivery of Signed Registration Statement and Other Documents. To
deliver promptly to each Agent and counsel to the Agents such number of
conformed copies of the Registration Statement as originally filed and each
amendment thereto (in each case excluding exhibits other than the computation of
the ratio of earnings to fixed charges, the Indenture and this Agreement) and of
each Preliminary Prospectus, the Prospectus and any documents incorporated by
reference in the Preliminary Prospectus or Prospectus (excluding exhibits
thereto) and any amended or supplemented Prospectus, as each Agent and counsel
to the Agents may reasonably request;
(b) Commission Filings. To prepare a Prospectus Supplement relating to
the Notes in a form approved by the Agents and to file the Prospectus, including
the Prospectus Supplement and any Pricing Supplement, with the Commission
pursuant to the applicable provisions of Rule 424(b) of the Rules and
Regulations within the time period and, during any Marketing Period, (i) to file
any amendment to the Registration Statement or any supplement to the Prospectus
that may, in the reasonable judgment of the Company or the Agents, be required
by the Securities Act or requested by the Commission, (ii) to file under the
Exchange Act any document incorporated by reference in the Prospectus that may,
in the reasonable judgment of the Company or the Agents, be required by the
Securities Act or requested by the Commission and (iii) to file promptly with
the Commission all reports and any definitive proxy or information statements
required to be filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the
Prospectus;
(c) Copies of Filings with Commission. Prior to filing with the
Commission during any Marketing Period any amendment to the Registration
Statement, supplement to the Prospectus, any document incorporated by reference
in the Prospectus, or to filing any Prospectus pursuant to Rule 424(b)(1),
(b)(3) or (b)(4) of the Rules and Regulations, to furnish a copy thereof to the
Agents and counsel for the Agents and obtain the consent of the Agents to the
filing;
(d) Notice to Agents of Certain Events. To advise the Agents and
counsel to the Agents promptly (i) when any post-effective amendment to the
Registration Statement becomes effective, (ii) of any request or proposed
request by the Commission for an amendment to the Registration Statement, a
supplement to the Prospectus or any additional information, (iii) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation or threat of any stop order proceeding,
(iv) of receipt by the Company of any notification with respect to the
suspension of the qualification of the Notes for sale in any jurisdiction or the
initiation or threat of any proceeding for that purpose, (v) of any downgrading
in the rating accorded the Notes or any other debt securities of the Company, or
any proposal to downgrade the rating of the Notes or any other debt securities
of the Company, by any "nationally recognized statistical rating organization",
as that term is defined by the Commission for purposes of Rule 436(g)(2) of the
Rules and Regulations, or of any public announcement that any such organization
has under surveillance or review, with possible negative implications, its
rating of the Notes or any of the Company's debt securities as soon as the
Company learns of such downgrading, proposal to downgrade or public announcement
and (vi) of the happening of any event which makes untrue any statement of a
material fact made in the Registration Statement or the Prospectus, or which
requires the making of a change in the Registration Statement or the Prospectus
in order to make any material statement therein not misleading;
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(e) Stop Orders. If, during any Marketing Period, the Commission shall
issue a stop order suspending the effectiveness of the Registration Statement,
suspending or preventing the use of any Preliminary Prospectus or Prospectuses,
or if the qualification of the Notes for sale in any jurisdiction shall be
suspended, to make every reasonable effort to obtain the lifting of that order
or suspension at the earliest possible time;
(f) Earnings Statements. As soon as practicable after the date of each
acceptance by the Company of an offer to purchase Notes hereunder, to make
generally available to its security holders and to the Agents an earning
statement of the Company and its subsidiaries, conforming with the requirements
of Section 11(a) of the Securities Act (including, at the option of the Company,
Rule 158), covering a period of at least 12 months beginning on the first day of
the first fiscal quarter of the Company commencing after the later of (i) the
effective date of the Registration Statement, (ii) the effective date of the
most recent post-effective amendment to the Registration Statement to become
effective prior to the date of such acceptance and (iii) the date of the
Company's most recent Annual Report on Form 10-K filed with the Commission prior
to the date of such acceptance;
(g) Copies of Reports, Releases and Financial Statements. For a period
expiring on the earlier of (i) three years after the applicable Representation
Date, or (ii) the last date upon which any Note sold pursuant to this Agreement
are outstanding, provided that with respect to (ii) only, all of the Notes which
may be sold pursuant to this Agreement have been sold, to furnish to the Agents
copies of all public reports and all reports and financial statements furnished
by the Company to the principal national securities exchange or quotation system
upon which its Common Stock may be listed pursuant to the requirements of or
agreements with such exchange or system or to the Commission pursuant to the
Exchange Act or any rule or regulation of the Commission thereunder;
(h) Blue Sky Qualifications. Promptly from time to time to take such
action as the Agents may reasonably request to qualify the Notes for offering
and sale under the securities laws of such jurisdictions as the Agents may
request and to comply with such laws so as to permit the continuance of sales
and dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Notes; provided that in connection therewith,
the Company shall not be required to qualify as a foreign corporation or to file
a general consent to service of process in any jurisdiction or to subject itself
to taxation in respect of doing business in any jurisdiction in which it is not
otherwise so subject.
(i) Holdback. Between the date of any Purchase Agreement and the date
of delivery of the Notes with respect thereto, the Company will not offer or
sell, or enter into any agreement to sell, without the prior written consent of
each Agent which is party to such Purchase Agreement, any senior debt securities
of the Company, other than borrowings under the Company's revolving credit
agreements and lines of credit, the private placement of securities and
issuances of its commercial paper;
(j) Use of Proceeds. To apply the net proceeds from the sale of the
Notes being sold by the Company as set forth in the Prospectus.
(k) Revisions to Prospectus - Material Changes. If, during any
Marketing Period, any event occurs as a result of which the Prospectus would
include an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made when the Prospectus was delivered, not misleading, or
if it is necessary at any time to amend any Prospectus to comply with the
Securities Act, to notify the Agents promptly, in writing, to suspend
solicitation of purchases of the Notes; and if the Company shall decide to amend
or supplement the Registration Statement or any Prospectus, to promptly advise
the Agents by telephone (with confirmation in writing) and to promptly, in
writing, prepare and file with the Commission an amendment or supplement which
will correct such statement or omission or an amendment which will effect such
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compliance; provided, however, that if during the period referred to above any
Agent shall own any Notes which it has purchased from the Company as principal
with the intention of reselling them, the Company shall promptly prepare and
timely file with the Commission any amendment or supplement to the Registration
Statement or any Prospectus that may, in the judgment of the Company or the
Agents, be required by the Securities Act or requested by the Commission.
(l) Pricing Supplement. To prepare, with respect to any Notes to be
sold through or to the Agents pursuant to this Agreement, a Pricing Supplement
with respect to such Notes in a form previously approved by the Agents and to
file such Pricing Supplement pursuant to Rule 424 under the Securities Act with
the Commission, in each case, within the applicable time period prescribed for
such filing by the Rules and Regulations.
SECTION 4. PAYMENT OF EXPENSES
The Company will pay:
(i) the costs incident to the authorization, issuance, sale and
delivery of the Notes and any taxes payable in that connection,
(ii) the costs incident to the preparation, printing and filing under
the Securities Act of the Registration Statement and any amendments and exhibits
thereto,
(iii) the costs incident to the preparation, printing and filing of
any document and any amendments and exhibits thereto required to be filed by the
Company under the Exchange Act,
(iv) the reasonable costs of distributing the Registration Statement,
as originally filed, and each amendment and post-effective amendment thereof
(including exhibits), the basic prospectus included in the Registration
Statement, each Prospectus, any supplement or amendment to any Prospectus and
any documents incorporated by reference in any of the foregoing documents,
(v) the fees and disbursements of the Trustee, any paying agent, any
calculation agent, any exchange rate agent and any other agents appointed by the
Company, and their respective counsel,
(vi) the costs and fees in connection with the listing of the Notes on
any securities exchange,
(vii) the cost and fees in connection with any filings with the
National Association of Securities Dealers, Inc.,
(viii) the fees and disbursements of counsel to the Company,
(ix) the reasonable fees and disbursements of Counsel to the Agents in
an amount previously approved by the Company,
(x) the fees paid to rating agencies in connection with the rating of
the Notes,
(xi) the fees and expenses of qualifying the Notes under the
securities laws of the several jurisdictions as provided in Section 3(h) hereof
and of preparing and printing a Blue Sky Memorandum (including fees and expenses
of counsel for the Company in connection therewith),
(xii) all advertising expenses in connection with the offering of the
Notes incurred with the consent of the Company, and
(xiii) all other costs and expenses arising out of the transactions
contemplated hereunder and incident to the performance of the Company's
obligations under this Agreement.
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SECTION 5. CONDITIONS OF OBLIGATIONS OF AGENT
The obligation of the Agents, as the agents of the Company, under this
Agreement to solicit offers to purchase the Notes, the obligation of any person
who has agreed to purchase Notes to make payment for and take delivery of Notes,
and the obligation of any Agent to purchase Notes pursuant to any Purchase
Agreement, is subject to the accuracy, on each Representation Date, of the
representations and warranties of the Company contained herein, to the accuracy
of the statements of the Company's officers made in any certificate furnished
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder, and to each of the following additional terms and
conditions:
(a) Registration Statement. The Prospectus as amended or supplemented
(including the Pricing Supplement) with respect to such Notes shall have been
filed with the Commission pursuant to Rule 424(b) under the Act within the
applicable time period prescribed for such filing by the Rules and Regulations
and in accordance with Section 3(l) hereof; no stop order suspending the
effectiveness of the Registration Statement or any part thereof nor any order
directed to any document incorporated by reference in any Prospectus shall have
been issued and no stop order proceeding shall have been initiated or threatened
by the Commission and no challenge shall have been made to the accuracy or
adequacy of any document incorporated by reference in any Prospectus; any
request of the Commission for inclusion of additional information in the
Registration Statement or any Prospectus or otherwise shall have been complied
with.
(b) No Suspension of Sale of the Notes. No order suspending the sale
of the Notes in any jurisdiction designated by the Agents pursuant to Section
3(h) hereof shall have been issued, and no proceeding for that purpose shall
have been initiated or threatened.
(c) No Material Omissions or Untrue Statements. No Agent shall have
discovered and disclosed to the Company that the Registration Statement or any
Prospectus contains an untrue statement of a fact which, in the opinion of
counsel for the Agents, is material or omits to state a fact which, in the
opinion of such counsel, is material and is required to be stated therein or is
necessary to make the statements therein not misleading.
(d) Legal Matters Satisfactory to Counsel. All corporate proceedings
and other legal matters incident to the authorization, form and validity of this
Agreement, the Notes, the Indenture, the form of the Registration Statement,
each Prospectus (other than financial statements and other financial data) and
all other legal matters relating to this Agreement and the transactions
contemplated hereby shall be satisfactory in all respects to counsel for the
Agents and the Company shall have furnished to such counsel all documents and
information that they may reasonably request to enable them to pass upon such
matters, and counsel to the Agents shall have furnished the Agents their
favorable opinion with respect to such matters and such additional matters as
the Agents may reasonably request.
(e) Opinions of Company Counsel. At the Closing Date, the Agents shall
have received (1) the opinion, addressed to the Agents and dated the Closing
Date, of Cahill Gordon & Reindel, outside counsel to the Company, in form and
substance satisfactory to the Agents and their counsel, substantially to the
effect that:
(i) The Company has been duly incorporated and is validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has the corporate power and authority to own its
properties and to conduct its business as described in the Prospectus;
(ii) The Company has all necessary corporate power to execute
and deliver this Agreement and the Purchase Agreement (if any) and to
perform its obligations hereunder and thereunder;
10
(iii) The Indenture has been duly authorized, executed and
delivered by the Company and duly qualified under the Trust Indenture Act
and, when executed by the Trustee, will constitute a valid and binding
agreement of the Company, enforceable in accordance with its terms, except
as enforceability thereof may be limited by the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally and
general equitable principles (whether considered in a proceeding in equity
or at law);
(iv) The Notes have been duly authorized, and assuming due
execution, authentication and delivery of the Notes in accordance with the
provisions of the Indenture and delivery of and payment for the Notes in
accordance with this Agreement and the Purchase Agreement (if any), will
constitute valid and binding obligations of the Company, entitled to the
benefits of the Indenture, enforceable in accordance with their terms,
except as enforceability thereof may be limited by the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights
generally and general equitable principles (whether considered in a
proceeding in equity or at law);
(v) The Notes and the Indenture conform in all material
respects to the statements concerning them in the Registration Statement
and the Prospectus;
(vi) The Registration Statement, has been declared effective
under the Securities Act; any required filing of the Prospectus pursuant
to Rule 424(b) of the Rules and Regulations has been made within the time
period required by Rule 424(b) of the Rules and Regulations; and no stop
order suspending the effectiveness of the Registration Statement has been
issued and no proceeding for that purpose is pending or, to the knowledge
of such counsel, threatened by the Commission;
(vii) The Registration Statement, as of its effective date, and
the Registration Statement and the Prospectus, as of the date hereof
(other than the financial statements and related schedules and statistical
information of a financial nature contained in or incorporated therein, as
to which such counsel have not been asked to, and do not express any
opinion) comply as to form in all material respects with the requirements
of the Securities Act and the Rules and Regulations thereunder, and any
further amendment or supplement to any such incorporated document made by
the Company prior to the Closing Date (other than the financial statements
and related schedules and statistical information of a financial nature
contained in or incorporated therein, as to which such counsel have not
been asked to, and do not express any opinion), when they became effective
complied as to form in all material respects with the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder; and
(viii) Each of this Agreement and the Purchase Agreement (if
any) has been duly authorized, executed and delivered by the Company. The
execution, delivery and performance by the Company of this Agreement and
the Purchase Agreement (if any), and the compliance by the Company with
the provisions of the Indenture and the Notes, will not conflict with or
result in a violation of the corporate charter or by-laws of the Company,
or any law, rule or regulation (other than laws and regulations relating
to hospitals and nursing centers or the regulation of businesses ancillary
thereto and state securities laws, as to which such counsel have not been
asked to, and do not express any opinion) or to such counsel's knowledge
without independent investigation, conflict with or result in the
violation of any order or determination of any arbitrator, court or
governmental agency having jurisdiction over the Company or any of the
Company's subsidiaries the effect of which would be material and adverse
to the Company and its subsidiaries taken as a whole. Except as required
by the Securities Act, the Exchange Act, the Trust Indenture Act or
applicable state or foreign securities laws and the National Association
of Securities Dealers, Inc. (as to which such counsel have not been asked
to, and do not express any opinion), no consent, approval, authorization
or order of, or filing
11
or registration with, any court or governmental agency in the United
States, which has not been made or obtained, is required for the
execution, delivery and performance of this Agreement and the Purchase
Agreement (if any), and compliance with the provisions of the Indenture
and the Notes by the Company, except to the extent that failure to make or
maintain such consents, approvals, authorizations, orders or filings, will
not, individually or in the aggregate, have a material adverse effect on
the Company and its subsidiaries, taken as a whole.
In rendering such opinion, such counsel may state that its opinion is
limited to matters governed by the Federal laws of the United States of America,
the laws of the State of New York and the General Corporation Law of the State
of Delaware. Such counsel shall also have furnished to the Agents a statement,
addressed to the Agents, dated the Closing Date to the effect that (i) such
counsel has participated in conferences, by person or by telephone, with
officers and other representatives of the Company, representatives of the
independent public accountants for the Company and representatives of the Agents
and the Agents' counsel, at which the contents of the Registration Statement and
Prospectus and related matters were discussed and acted as counsel to the
Company only in connection with the preparation of the Registration Statement;
such counsel did not participate in the preparation of the documents
incorporated by reference in the Registration Statement or the Prospectus
pursuant to Item 12 of Form S-3 which were filed under the Exchange Act and did
not review them prior to their filing. Without passing upon or assuming any
responsibility for the accuracy, completeness, or fairness of the statements
contained in the Registration Statement and Prospectus, such counsel shall state
that based on the foregoing, (relying as to materiality to a large extent upon
the opinions of officers and other representatives of the Company) no facts have
come to the attention of such counsel which lead them to believe that at the
time that the Registration Statement became effective and at the Closing Date
the Registration Statement (other than the financial statements, related
schedules and statistical information of a financial nature contained or
incorporated therein, as to which such counsel are not called upon to express a
belief), contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, or that the Prospectus, as of its date and at
the Closing Date, including any document incorporated by reference in the
Prospectus (other than the financial statements, related schedules and
statistical information of a financial nature contained or incorporated therein,
as to which such counsel are not called upon to express a belief), as amended
and supplemented, if applicable, contains any untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading; and
(2) The opinion, addressed to the Agents and dated the Closing Date, of James H.
Rempe, General Counsel of the Company, in form and substance satisfactory to the
Agents and their counsel, to the effect that:
(i) Each "significant subsidiary" of the Company (as such term
is defined in Regulation S-X) has been duly incorporated and is validly
existing and in good standing under the laws of its respective
jurisdiction of incorporation, is duly qualified to do business and is in
good standing as a foreign corporation in all jurisdictions in which its
ownership of property or the conduct of its business requires such
qualification (except where the failure so to qualify would not have a
material adverse effect upon the Company or the Company and its
subsidiaries taken as a whole), and has all power and authority necessary
to own its properties and to conduct the business in which it is
12
engaged as described in the Prospectus except to the extent that the
failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries taken as a
whole; and
(ii) The documents incorporated by reference in the Prospectus,
when they became effective or were filed (or, if an amendment with respect
to any such document was filed, when such amendment was filed) with the
Commission, complied as to form in all material respects to the
requirements of the Securities Act or the Exchange Act, as applicable, and
the rules and regulations thereunder (except as to the financial
statements and schedules and other financial and statistical data
contained or incorporated by reference therein, as to which such counsel
need express no opinion).
In rendering such opinion, such counsel may state that his opinion is
limited to matters governed by the Federal laws of the United States of America,
the laws of the State of Maryland and the General Corporation Law of Delaware.
(f) Officers' Certificate. The Company shall have furnished to the
Agents on the Closing Date a certificate, dated the Closing Date, signed on
behalf of the Company by its President or any Vice-President of the Company and
by a principal financial or accounting officer of the Company, stating that:
(i) The representations, warranties and agreements of the
Company in Section 1 hereof are true and correct as of the Closing Date;
the Company has complied with all its agreements contained herein; and the
conditions on its part to be fulfilled prior to the Closing Date set forth
herein have been fulfilled;
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose
have been instituted or threatened; and
(iii) There has been no material adverse change in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries taken as a whole except as
set forth or contemplated by the Prospectus.
(g) Accountant's Letter. The Company shall have furnished to the
Agents on the Closing Date a letter of Arthur Andersen LLP, addressed jointly to
the Company and the Agents and dated the Closing Date, of the type described in
the American Institute of Certified Public Accountants' Statement on Auditing
Standards No. 72, covering such specified financial statement items and
procedures as the Agents may reasonably request and in form and substance
reasonably satisfactory to the Agents.
(h) Additional Conditions. There shall not have occurred: (a) any
downgrading in the rating accorded the Company's debt securities by any
"nationally recognized statistical rating organization", as that term is defined
by the Commission for purposes of Rule 436(g)(2) of the Rules and Regulations,
(b) any public announcement that any such organization has under surveillance or
review, with possible negative implications, its rating of any of the Company's
debt securities, (c) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange, The American Stock
Exchange, the Chicago Board Options Exchange or the over-the-counter market or
the establishment of minimum prices on one or more of such exchanges or such
market by the Commission or such exchange or other regulatory body or
governmental authority having jurisdiction, (d) a banking moratorium declared by
United States federal or New York State authorities, (e) a declaration of a
national emergency or war by the United States, (f) any outbreak or escalation
in hostilities involving the United States or any material adverse change in
national or international political, financial or economic conditions, national
or international equity markets or currency exchange rates or controls as to
make it, in the judgment of the Agents, inadvisable or impracticable to proceed
with the solicitation of offers to purchase Notes or the purchase of Notes from
the Company as principal pursuant to the applicable Purchase Agreement, as the
13
case may be, or (g)(i) the Company or any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any material loss or interference
with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the Prospectus
or (ii) since such date there shall have been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries or any change, or any
development involving a prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of operations of
the Company and its subsidiaries, otherwise than as set forth or contemplated in
the Prospectus, the effect of which, in any such case described in clause (i) or
(ii), is, in the judgment of the Agents, so material and adverse as to make it
impracticable or inadvisable to proceed with the solicitation of offers to
purchase Notes or the purchase of Notes from the Company as principal pursuant
to the applicable Purchase Agreement, as the case may be.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are substantially in the form set forth above
and, if not, or if no particular form is set forth above, only if they are in
form and substance reasonably satisfactory to counsel for the Agents.
SECTION 6. ADDITIONAL COVENANTS OF THE COMPANY.
The Company covenants and agrees that:
(a) Acceptance of Offer Affirms Representations and Warranties. Each
acceptance by it of an offer for the purchase of Notes shall be deemed to be an
affirmation that the representations and warranties of the Company contained in
this Agreement and in any certificate theretofore given to the Agents pursuant
hereto are true and correct at the time of such acceptance, and an undertaking
that such representations and warranties will be true and correct at the time of
delivery to the purchaser or such purchaser's agent of the Notes relating to
such acceptance as though made at and as of each such time (and such
representations and warranties shall relate to the Registration Statement and
the Prospectus as amended or supplemented to each such time).
(b) Subsequent Delivery of Officers' Certificates. The Company agrees
that during each Marketing Period, each time that the Registration Statement or
any Prospectus shall be amended or supplemented (other than by a Pricing
Supplement providing solely for the interest rates or maturities of the Notes or
the principal amount of Notes remaining to be sold or similar changes), each
time the Company sells Notes to an Agent as principal and the applicable
Purchase Agreement specifies the delivery of an officers' certificate under this
Section 6(b) as a condition to the purchase of Notes pursuant to such Purchase
Agreement or the Company files with the Commission any document incorporated by
reference into any Prospectus, the Company shall submit to the Agents a
certificate, (i) as of the date of such amendment, supplement, Time of Delivery
relating to such sale or filing or (ii) if such amendment, supplement or filing
was not filed during a Marketing Period, as of the first day of the next
succeeding Marketing Period, representing that the statements contained in the
certificate referred to in Section 5(f) hereof which was last furnished to the
Agents are true and correct at the time of such amendment, supplement or filing,
as the case may be, as though made at and as of such time (except that such
statements shall be deemed to relate to the Registration Statement and each
Prospectus as amended and supplemented to such time).
(c) Subsequent Delivery of Legal Opinions. The Company agrees that
during each Marketing Period, each time that the Registration Statement or any
Prospectus shall be amended or supplemented (other than by a Pricing Supplement
providing solely for the interest rates or maturities of the Notes or the
principal amount of Notes remaining to be sold or similar changes), each time
the Company sells Notes to an Agent as principal and the applicable Purchase
Agreement specifies the delivery of a legal
14
opinion under this Section 6(c) as a condition to the purchase of Notes pursuant
to such Purchase Agreement or the Company files with the Commission any document
incorporated by reference into any Prospectus, the Company shall, (i)
concurrently with such amendment, supplement, Time of Delivery relating to such
sale or filing or (ii) if such amendment, supplement or filing was not filed
during a Marketing Period, on the first day of the next succeeding Marketing
Period, furnish the Agents and their counsel with the written opinion of General
Counsel to the Company, addressed to the Agents and dated the date of delivery
of such opinion, in form satisfactory to the Agents, to the same effect as the
opinions referred to in Section 5(e)(1) and 5(e)(2) hereof, but modified, as
necessary, to relate to the Registration Statement and each Prospectus as
amended or supplemented to the time of delivery of such opinion; provided,
however, that in lieu of such opinion, such counsel may furnish the Agents with
a letter to the effect that the Agents may rely on such prior opinion to the
same extent as if it were dated the date of such letter authorizing reliance
(except that statements in such prior opinion shall be deemed to relate to the
Registration Statement and each Prospectus as amended or supplemented to the
time of delivery of such letter authorizing reliance).
(d) Subsequent Delivery of Accountant's Letters. The Company agrees
that during each Marketing Period, each time that the Registration Statement or
any Prospectus shall be amended or supplemented to include additional financial
information, each time the Company sells Notes to an Agent as principal and the
applicable Purchase Agreement specifies the delivery of a letter under this
Section 6(d) as a condition to the purchase of Notes pursuant to such Purchase
Agreement or the Company files with the Commission any document incorporated by
reference into any Prospectus which contains additional financial information,
the Company shall cause Arthur Andersen LLP (or other independent accounts of
the Company acceptable to the Agents) to furnish the Agents, (i) concurrently
with such amendment, supplement, Time of Delivery relating to such sale or
filing or (ii) if such amendment, supplement, or filing was not filed during a
Marketing Period, on the first day of the next succeeding Marketing Period, a
letter, addressed jointly to the Company and the Agents and dated the date of
delivery of such letter, in form and substance reasonably satisfactory to the
Agents, to the same effect as the letter referred to in Section 5(g) hereof but
modified to relate to the Registration Statement and each Prospectus, as amended
and supplemented to the date of such letter, with such changes as may be
necessary to reflect changes in the financial statements and other information
derived from the accounting records of the Company; provided, however, that if
the Registration Statement or any Prospectus is amended or supplemented solely
to include financial information as of and for a fiscal quarter, such
accountants may limit the scope of such letter to the unaudited financial
statements included in such amendment or supplement unless there is contained
therein any other accounting, financial or statistical information that, in the
reasonable judgment of the Agents, should be covered by such letter, in which
event such letter shall also cover such other information.
(e) Opinion on Settlement Date. On any settlement date for the sale of
Notes, the Company shall, if requested by the Agent that solicited or received
the offer to purchase any Notes being delivered on such settlement date, furnish
such Agent with written opinions of counsel to the Company set forth in Section
5(e) hereof, each dated such settlement date, in form reasonably satisfactory to
such Agent, to the effect set forth in Section 5(e) hereof, but modified, as
necessary, to relate to the Prospectus relating to the Notes to be delivered on
such settlement date; provided, however, that in lieu of such opinion, such
counsel may furnish the Agents with a letter to the effect that the Agents may
rely on such prior opinion to the same extent as if it were dated such
settlement date (except that statements in such prior opinion shall be deemed to
relate to the Registration Statement and such Prospectus as amended or
supplemented to the time of delivery of such letter authorizing reliance).
15
SECTION 7. INDEMNIFICATION AND CONTRIBUTION
(a) The Company shall indemnify and hold harmless each Agent and each
person, if any, who controls any Agent within the meaning of the Securities Act,
from and against any loss, claim, damage or liability, joint or several, and any
action in respect thereof (including, but not limited to, any loss, claim,
damage, liability or action relating to purchases and sales of the Notes), to
which that Agent or controlling person may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement, the Prospectus, or the Registration Statement or
Prospectus as amended or supplemented, or (ii) the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and shall reimburse each Agent and
each such controlling person promptly upon demand for any legal and other
expenses reasonably incurred as incurred by that Agent or controlling person in
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, liability or action arises
out of, or is based upon, any untrue statement or alleged untrue statement or
omission or alleged omission made in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any amendment thereof or supplement
thereto, made in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of any Agent specifically for inclusion
therein; and provided further that as to any Preliminary Prospectus this
indemnity agreement shall not inure to the benefit of any Agent or any person
controlling an Agent on account of any loss, claim, damage, liability or action
arising from the sale of Notes to any person by that Agent if that Agent failed
to send or give a copy of the Prospectus (or the Prospectus as amended or
supplemented) to such person, if required by law so to have been delivered, at
or prior to the written confirmation of the sale of the Notes to such person,
and if the Prospectus (as so amended or supplemented) would have cured the
defect giving rise to such loss, claim, damage or liability, unless such failure
resulted from non-compliance by the Company with Section 3(a) hereof. For
purposes of the last proviso to the immediately preceding sentence, the term
"Prospectus" shall not be deemed to include the documents incorporated therein
by reference, and no Agent shall be obligated to send or give any supplement or
amendment to any document incorporated by reference in any Preliminary
Prospectus or the Prospectus to any person other than a person to whom such
Agent had delivered such incorporated document or documents in response to a
written request therefor. The foregoing indemnity agreement is in addition to
any liability which the Company may otherwise have to any Agent or any
controlling person of that Agent.
(b) Each Agent severally, and not jointly, shall indemnify and hold
harmless the Company, each of its directors (including any person who, with his
or her consent, is named in the Registration Statement as about to become a
director of the Company), each of its officers who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of the Securities Act, from and against any loss, claim, damage or liability,
joint or several, and any action in respect thereof (including, but not limited
to, any loss, claim, damage, liability or action relating to purchases and sales
of the Notes), to which the Company, or any such director or officer or
controlling person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement, the
Prospectus or the Registration Statement or Prospectus as amended or
supplemented, or arises out of, or is based upon, the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with information
16
furnished in writing to the Company by or on behalf of that Agent specifically
for inclusion therein, and shall reimburse the Company, or any such director or
officer or controlling person promptly upon demand for any legal and other
expenses reasonably incurred by the Company or any such director or officer or
controlling person in investigating or defending or preparing to defend against
or appearing as a third party witness in connection with any such loss, claim,
damage, liability or action. The foregoing indemnity agreement is in addition to
any liability which any Agent may otherwise have to the Company or any such
director, officer or controlling person.
(c) Promptly after receipt by an indemnified party under this Section
7 of notice of any claim or the commencement of any action (including any
governmental investigation), the indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under this Section 7,
notify each indemnifying party in writing of the claim or the commencement of
that action; provided, however, that the failure to notify the indemnifying
party shall not relieve it from its obligations hereunder, except to the extent
that the indemnifying party is materially prejudiced by such failure to notify,
or from any liability which it may have to an indemnified party otherwise than
under this Section 7. If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it wishes, jointly with any other similarly notified indemnifying party, to
assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the indemnified
party of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under this
Section 7 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than reasonable
investigation, provided, however, that the Agents shall have the right to employ
counsel to represent the Agents and their respective controlling persons who may
be subject to liability arising out of any claim in respect of which indemnity
may be sought by the Agents against the Company under this Section 7 if, in the
reasonable judgment of the Agents, it is advisable for the Agents and such
controlling persons to be represented by separate counsel, and in that event the
fees and expenses of such separate counsel shall be paid by the indemnifying
party. Except as provided above, it is understood that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
of attorneys (in addition to any local counsel) for all such indemnified
parties. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiffs, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 7 shall be for
any reason unavailable or insufficient to hold the indemnified party harmless,
then each indemnifying party, with respect to its obligations as provided in
Section 7(a) or 7(b), shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and the Agents on the other hand from
the offering of the Notes, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the Agents on the
other hand with respect to the statements or omissions which resulted in such
loss, claim, damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and any Agent on the other hand with respect to such
offering shall be deemed to be in the same proportion as the total net proceeds
from the sale of the Notes (before deducting expenses) received by the Company
bear to the total commissions received by such Agent with respect
17
to such offering. The relative fault shall be determined by reference to whether
the untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the Company
or any Agent, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Agents agree that it would not be just and equitable if
contributions pursuant to this Section 7(d) were to be determined by pro rata
allocation (even if the Agents were treated as one entity for such purpose) or
by any other method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section 7(d) shall be deemed to include, for
purposes of this Section 7(d) and subject to the limitations set forth above,
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7(d), no Agent shall be required
to contribute any amount in excess of the amount by which the total price at
which the Notes sold through such Agent and distributed to the public was
offered to the public exceeds the amount of any damages which such Agent has
otherwise paid or become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 7 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
SECTION 8. STATUS OF EACH AGENT
In soliciting offers to purchase Notes from the Company pursuant to
this Agreement (other than in respect of any Purchase Agreement), each Agent is
acting individually and not jointly and is acting solely as agent for the
Company and not as principal. Each Agent will make reasonable efforts to assist
the Company in obtaining performance by each purchaser whose offer to purchase
Notes from the Company has been solicited by such Agent and accepted by the
Company but such Agent shall have no liability to the Company in the event any
such purchase is not consummated for any reason. If the Company shall default in
its obligations to deliver Notes to a purchaser whose offer it has accepted, the
Company shall (i) hold the Agents harmless against any loss, claim or damage
arising from or as a result of such default by the Company and (ii), in
particular, pay to the Agents any commission to which they would be entitled in
connection with such sale.
SECTION 9. REPRESENTATIONS, WARRANTIES AND OBLIGATIONS TO SURVIVE
DELIVERY
The respective indemnities, agreements, representations, warranties
and other statements of the Company and the Agents contained in this Agreement,
or made by or on behalf of them, respectively, pursuant to this Agreement, shall
remain operative and in full force and effect, regardless of any investigation
made by or on behalf of any Agent or any person controlling such Agent or by or
on behalf of the Company, and shall survive each delivery of and payment for any
of the Notes.
SECTION 10. TERMINATION
This Agreement may be terminated for any reason with respect to any
party hereto, at any time, by any party hereto upon the giving of one business
day's written notice of such termination to the other parties hereto; provided,
however, if such terminating party is an Agent, such termination shall be
effective only with respect to such terminating party. If, at the time of a
termination, an offer to purchase any of the Notes has been accepted by the
Company but the time of delivery to the purchaser has not occurred, the
provisions of this Agreement shall remain in effect until such Notes are
delivered. The provisions of Sections 2(c), 3(b), 3(f), 3(g), 4, 7, 8 and 9
hereof shall survive any termination of this Agreement.
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SECTION 11. SALES OF NOTES DENOMINATED IN A FOREIGN CURRENCY AND
INDEXED NOTES
If at any time the Company and any of the Agents shall determine to
issue and sell Notes denominated in a currency or currency unit other than U.S.
Dollars, which other currency may include a composite currency, or with respect
to which an index is used to determine the amounts of payments of principal and
any premium or interest, the Company and any such Agent shall execute and
deliver an Amendment (a "Foreign Currency Amendment" or "Indexed Note
Amendment," as the case may be) in the form attached hereto as Exhibit D. Such
amendment shall establish, as appropriate additions and modifications that shall
apply to the sales, whether offered on an agency or principal basis, of the
Notes covered thereby. The Agents are authorized to solicit offers to purchase
Notes with respect to which an index is used to determine the amounts of
payments of principal and any premium and interest, and the Company shall agree
to any sales of such Notes (whether offered on an agency or principal basis),
only in a minimum aggregate amount of $2,500,000.
SECTION 12. NOTICES
Except as otherwise provided herein, all notices and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if mailed or transmitted by facsimile or any other standard form of
telecommunication. Notices to the Agents shall be directed to it as follows: [
], Attention: [ ]; Telephone No.: [ ]; Telecopy No.: [ ]; [co-agent
information]; notices to the Company shall be directed to it as follows: Manor
Care, Inc., 11555 Darnestown Road, Gaithersburg, Maryland 20878-3200; Attention:
Secretary; Telephone No.: 301-979-4000; Telecopy No. 301-979-4007.
SECTION 13. BINDING EFFECT; BENEFITS
This Agreement shall be binding upon each Agent, the Company, and
their respective successors. This Agreement and the terms and provisions hereof
are for the sole benefit of only those persons, except that (a) the
representations, warranties, indemnities and agreements of the Company contained
in this Agreement shall also be deemed to be for the benefit of the person or
persons, if any, who control any Agent within the meaning of Section 15 of the
Securities Act, and (b) the indemnity agreement of the Agents contained in
Section 7 hereof shall be deemed to be for the benefit of directors of the
Company (including any person who, with his or her consent is named in the
Registration Statement as about to become a director of the Company), officers
of the Company who have signed the Registration Statement and any person
controlling the Company. Nothing in this Agreement is intended or shall be
construed to give any person, other than the person referred to in this Section,
any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision contained herein.
SECTION 14. GOVERNING LAW; COUNTERPARTS
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York (without giving effect to the principles of
choice of law). This Agreement may be executed in counterparts and the executed
counterparts shall together constitute a single instrument.
SECTION 15. PARAGRAPH HEADINGS
The paragraph headings used in this Agreement are for convenience of
reference only, and are not to affect the construction hereof or be taken into
consideration in the interpretation hereof.
If the foregoing correctly sets forth our agreement, please indicate
your acceptance hereof in the space provided for that purpose below.
Very truly yours,
MANOR CARE, INC.
By:
-----------------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
[ ]
By:
------------------------------
Title:
[CO - AGENT]
By:
------------------------------
Title:
EXHIBIT A
MANOR CARE, INC.
MEDIUM-TERM NOTES, SERIES A
SCHEDULE OF PAYMENTS
The Company agrees to pay each Agent a commission equal to the
following percentage of the aggregate U.S. dollar equivalent of the principal
amount of Notes:
===========================================================================
TERM COMMISSION RATE
- ---------------------------------------------------------------------------
9 months to less than 12 months 0.125%
- ---------------------------------------------------------------------------
12 months to less than 18 months 0.150%
- ---------------------------------------------------------------------------
18 months to less than 2 years 0.200%
- ---------------------------------------------------------------------------
2 years to less than 3 years 0.250%
- ---------------------------------------------------------------------------
3 years to less than 4 years 0.350%
- ---------------------------------------------------------------------------
4 years to less than 5 years 0.450%
- ---------------------------------------------------------------------------
5 years to less than 6 years 0.500%
- ---------------------------------------------------------------------------
6 years to less than 7 years 0.550%
- ---------------------------------------------------------------------------
7 years to less than 10 years 0.600%
- ---------------------------------------------------------------------------
10 years to less than 15 years 0.625%
- ---------------------------------------------------------------------------
15 years to less than 20 years 0.650%
- ---------------------------------------------------------------------------
20 years to 30 years 0.750%
===========================================================================
EXHIBIT B
Manor Care, Inc.
Medium-Term Notes, Series A
Administrative Procedures
Medium-Term Notes, Series A, due from nine months to 30 years from
date of issue (the "Notes") may be offered on a continuing basis by Manor Care,
Inc. (the "Company"). Lehman Brothers Inc. and [name of co-agent], as agents
(each an "Agent" and collectively, the "Agents"), have each agreed to use their
reasonable best efforts to solicit offers to purchase the Notes. The Notes are
being sold pursuant to a Distribution Agreement between the Company and the
Agents dated ____ __, 1996 (as it may be supplemented or amended from time to
time, the "Distribution Agreement") to which these administrative procedures are
attached as an exhibit. The Notes will be issued pursuant to an Indenture, dated
as of ____ __, 1996 (as it may be amended or supplemented from time to time, the
"Indenture"), between the Company and [name of trustee], as trustee (the
"Trustee"). The Notes will rank equally with all other unsecured and
unsubordinated indebtedness of the Company and will have been registered with
the Securities and Exchange Commission (the "Commission"). Unless otherwise
noted, terms not defined herein shall have the same meanings as in the
Prospectus Supplement relating to the Notes (the "Prospectus") and in the
Distribution Agreement. Special administrative procedures for Multi-Currency
Notes and for Global Securities for Book-Entry Notes follow these administrative
procedures.
Administrative responsibilities, document control and record-keeping
functions to be performed by the Company will be performed by its Treasury
Department. Administrative procedures for the offering are explained below.
Registration
Notes will be issued only in fully registered form as either a
Book-Entry Note or a Certificated Note. Certificated Notes may be presented for
registration of transfer or exchange at the New York office of the Trustee's
designated agent.
Denominations
Unless otherwise indicated in the applicable Pricing Supplement, Notes
will be issued and payable in U.S. dollars in denominations of $1,000 and any
integral multiple thereof.
Interest Payments
Interest on Fixed Rate Notes and Floating Rate Notes (each as defined
in the Prospectus Supplement) shall accrue and be payable on terms specified in
the Prospectus Supplement and the applicable Pricing Supplement.
Acceptance and Rejection of Offers
The Company shall have the sole right to accept offers to purchase
Notes and may reject any such offer in whole or in part. Each Agent shall
promptly communicate to the Company, orally or in writing, each reasonable offer
to purchase Notes from the Company received by it other than those rejected by
such Agent. Each Agent shall have the right, in its discretion reasonably
exercised without advising the Company, to reject any offers in whole or in
part.
B-2
Settlement
The receipt of immediately available funds in U.S. Dollars by the
Company in The City of New York in payment for a Note (less the applicable
commission) and the authentication and issuance of such Note shall, with respect
to such Note, constitute "Settlement." All offers accepted by the Company will
be settled from one to three Business Days from the date of acceptance by the
Company pursuant to the timetable for Settlement set forth below unless the
Company and the purchaser agree to Settlement on a later date; provided,
however, that the Company will so notify the Trustee of any such later date on
or before the Business Day immediately prior to the Settlement date.
Settlement Procedures for Certificated Notes
In the event of a purchase of Notes by an Agent, as principal,
appropriate Settlement details will be set forth in the applicable Purchase
Agreement to be entered into between such Agent and the Company pursuant to the
Distribution Agreement. In the Event of the sale of a Multi-Currency Note or an
Indexed Note, additional or different Settlement details may be set forth in the
applicable Amendment to be entered into between the Agent and the Company
pursuant to the Distribution Agreement.
Settlement procedures with regard to each Certificated Note sold
through each Agent shall be as follows:
A. Such Agent will advise the Company by telex or facsimile of the
following Settlement information:
1. Exact name in which the Note is to be registered ("Registered
Owner").
2. Exact address of the Registered Owner and address for payment of
principal and interest, if any.
3. Taxpayer identification number of the Registered Owner (if
available).
4. Principal amount of the Note (and, if multiple Notes are to be
issued, denominations thereof).
5. Settlement date (Original Issue Date).
6. Stated Maturity.
7. Issue Price.
8. Trade Date.
9. Specified Currency and whether the option to elect payments in a
Specified Currency applies and if the Specified Currency is not
U.S. Dollars, the authorized denominations.
B-3
10. Interest rate:
(a) Fixed Rate Notes:
i) interest rate
ii) overdue rate, if any
(b) Floating Rate Notes:
i) Interest Rate Basis (e.g., Commercial Paper Rate)
ii) Initial Interest Rate
iii) Spread or Spread Multiplier, if any
iv) Interest Reset Dates, Interest Reset Period and
Interest Determination Dates
v) Index Maturity
vi) maximum and minimum interest rates, if any
vii) overdue rate, if any
(c) Indexed Notes
The applicable terms thereof
11. Interest Payment Date(s) and Regular Record Dates.
12. Optional Interest Reset Dates, if any, and Subsequent Interest
Periods, if any.
13. Extension Periods, if any, and Final Maturity Dates, if any.
14. The date on or after which the Notes are redeemable at the option
of the Company or repurchasable by the Company at the option of
the holder, and additional redemption or repurchase provisions,
if any.
15. Amortization schedule, if any.
16. Wire transfer information, if applicable.
17. Agent's commission (to be paid in the form of a discount from the
proceeds remitted to the Company upon Settlement).
18. Whether such Certificated Note is issued at an original issue
discount ("OID"), and, if so, the total amount of OID, the yield
to maturity and the initial accrual period of OID.
19. Other provisions, if appropriate.
B. The Company will confirm the above Settlement information to the
Trustee by telex or facsimile. If the Company rejects an offer, the Company will
promptly notify such Agent by telephone.
B-4
C. The Trustee will assign a Note number to the transaction and will
complete the first page of the preprinted 4-ply Note packet, the form of which
was previously approved by the Company, the Agents and the Trustee.
D. The Trustee will deliver the Note (with the attached white
confirmation) and the yellow and blue stubs to the Agent. Such Agent will
acknowledge receipt of the Note by completing the yellow stub and returning it
to the Trustee.
E. Such Agent will cause to be wire transferred to a bank account
designated by the Company immediately available funds in U.S. dollars in the
amount of the principal amount of the Note, less the applicable commission or
discount, if any.
F. Such Agent will deliver the Note (with the attached white
confirmation) to the purchaser against payment in immediately available funds in
the amount of the principal amount of the Note. Such Agent will deliver to the
purchaser a copy of the most recent Prospectus applicable to the Note with or
prior to any written offer of Notes, delivery of the Note and the confirmation
and payment by the purchaser for the Note.
G. Such Agent will obtain the acknowledgement of receipt for the Note
and Prospectus by the purchaser through the purchaser's completion of the blue
stub.
H. The Trustee will mail the pink stub to the Company's Treasurer.
Settlement Procedures Timetable for Certificated Notes
For offers accepted by the Company, Settlement procedures "A" through
"H" set forth above shall be completed on or before the respective times set
forth below:
Settlement
Procedure Time (New York)
- --------- ---------------
A 5:00 PM on date of order
B 3:00 PM on the Business Day prior to Settlement date
C-D 12 noon on Settlement date
E 2:15 PM on the Settlement date
F-G 3:00 PM on the Settlement date
H 5:00 PM on Business Day after the Settlement date
Failure
In the event that a purchaser of a Note shall either fail to accept
delivery of or make payment for such Note on the date fixed by the Company for
Settlement, such Agent will immediately notify the Trustee and the Company's
Treasurer by telephone, confirmed in writing, of such failure and return the
Note to the Trustee. Upon the Trustee's receipt of the Note from the Agent, the
Company will promptly return to the Agent an amount of immediately available
funds in U.S. dollars equal to any amount previously transferred to the Company
in respect of the Note pursuant to advances made by the Agent. Such returns will
be made on the Settlement date, if possible, and in any event not later than 12
noon (New York City time) on the Business Day following the Settlement date. The
Company will
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reimburse such Agent on an equitable basis for its loss of the use of the funds
during the period when the funds were credited to the account of the Company.
Upon receipt of the Note in respect of which the default occurred, the Trustee
will mark the Note "cancelled", make appropriate entries in its records and
deliver the Note to the Company with an appropriate debit advice. Such Agent
will not be entitled to any commission with respect to any Note which the
purchaser does not accept or make payment for.
Redemption
The Notes will be redeemable (if at all) prior to their Stated
Maturity on terms specified in the Prospectus Supplement and the applicable
Pricing Supplement.
Maturity
Notes will be paid at Maturity on terms specified in the Prospectus
Supplement and the applicable Pricing Supplement.
Procedures for Establishing the Terms of the Notes
The Company and the Agents will discuss from time to time the rates to
be borne by the Notes that may be sold as a result of the solicitation of offers
by the Agents. Once any Agent has recorded any indication of interest in Notes
upon certain terms and communicated with the Company, if the Company accepts an
offer to purchase Notes upon such terms, the Company will prepare a Pricing
Supplement, in the form previously approved by the Agents, reflecting the terms
of such Notes and, after approval from such Agent, will arrange to
electronically transmit for filing with the SEC under the EDGAR system a copy of
such Pricing Supplement (together with the Prospectus, if amended or
supplemented) and will supply an appropriate number of copies of the Prospectus,
as then amended or supplemented, together with such Pricing Supplement, to the
Agent who presented such offer. See "Delivery of Prospectus."
If the Company decides to post rates and a decision has been reached
to change interest rates, the Company will promptly notify each Agent. Each
Agent will forthwith suspend solicitation of purchases. At that time, the Agents
will recommend and the Company will establish rates to be so "posted". Following
establishment of posted rates and prior to the filing described in the following
sentence, the Agents may only record indications of interest in purchasing Notes
at the posted rates. Once any Agent has recorded any indication of interest in
Notes at the posted rates and communicated with the Company, if the Company
plans to accept an offer at the posted rate, the Company will prepare a Pricing
Supplement reflecting such posted rates and, after approval from the Agents,
will arrange to electronically transmit for filing with the SEC under the EDGAR
system a copy of such Pricing Supplement (together with the Prospectus if
amended or supplemented) and will supply an appropriate number of copies of the
Prospectus, as then amended or supplemented, to the Agent who presented such
offer. See "Delivery of Prospectus."
Suspension of Solicitation; Amendment or Supplement
In the event that at the time the Agents, at the direction of the
Company, suspend solicitation of offers to purchase from the Company there shall
be any orders outstanding which have not been settled, the Company will promptly
advise the Agents and the Trustee whether such orders may be settled and whether
copies of the Prospectus as theretofore amended and/or supplemented as in effect
at the time of the suspension may be delivered in connection with the settlement
of such orders. The
B-6
Company will have the sole responsibility for such decision and for any
arrangements which may be made in the event that the Company determines that
such orders may not be settled or that copies of such Prospectus may not be so
delivered.
Delivery of Prospectus
A copy of the Prospectus as most recently amended or supplemented on
the date of delivery thereof, together with the applicable Pricing Supplement,
must be delivered to a purchaser prior to or simultaneously with the earlier of
the delivery of (i) the written confirmation of a sale sent to a purchaser or
his agent and (ii) any Note purchased by such purchaser. The Company shall
ensure that the applicable Agent receives copies of the Prospectus and each
amendment or supplement thereto (including the applicable Pricing Supplement) in
such quantities and within such time limits as will enable such Agent to deliver
such confirmation or Note to a purchaser as contemplated by these procedures and
in compliance with the preceding sentence. Copies of Pricing Supplements should
be delivered to:
If to Lehman Brothers Inc.:
By facsimile delivery to:
Lehman Brothers Inc.
c/o ADP
Prospectus Services
536 Broad Hollow Road
Melville, New York 11747
Attention: Mike Ward
Telephone: (516) 254-7106
Facsimile: (516) 249-7492]
with a copy by hand to:
Lehman Brothers Inc.
3 World Financial Center, 9th Floor
New York, New York 10285-0900
Attention: Brunnie Vazquez
Telephone: (212) 526-8400
If to [co-agent]:
B-7
If, since the date of acceptance of a purchaser's offer, the Prospectus shall
have been supplemented solely to reflect any sale of Notes on terms different
from those agreed to between the Company and such purchaser or a change in
posted rates not applicable to such purchaser, such purchaser shall not receive
the Prospectus as supplemented by such new supplement, but shall receive the
Prospectus as supplemented to reflect the terms of the Notes being purchased by
such purchaser and otherwise as most recently amended or supplemented on the
date of delivery of the Prospectus. The Trustee will make all such deliveries
with respect to all Notes sold directly by the Company.
Authenticity of Signatures
The Company will cause the Trustee to furnish the Agents from time to
time with the specimen signatures of each of the Trustee's officers, employees
and agents who have been authorized by the Trustee to authenticate Notes, but
the Agents will have no obligation or liability to the Company or the Trustee in
respect of the authenticity of the signature of any officer, employee or agent
of the Company or the Trustee on any Note.
Advertising Costs
The Company will determine with the Agents the amount and nature of
advertising, if any, that may be appropriate in offering the Notes. Advertising
expenses incurred with the consent of the Company will be paid by the Company.
B-8
SPECIAL ADMINISTRATIVE PROCEDURES
FOR MULTI-CURRENCY NOTES
Unless otherwise set forth in an applicable Foreign Currency
Amendment, the following procedures and terms shall apply to Multi-Currency
Notes in addition to, and to the extent inconsistent therewith in replacement
of, the procedures and terms set forth above.
Denominations
The authorized denominations of any Multi-Currency Note will be the
amount of the Specified Currency for such Multi-Currency Note equivalent, at the
noon buying rate in the City of New York for cable transfers for such Specified
Currency (the "Market Exchange Rate") on the first Business Day in the City of
New York and the country issuing such currency (or in the case of ECUs,
Brussels) next preceding the date on which the Company accepts the offer to
purchase such Multi-Currency Note, to U.S.$100,000 (rounded down to an integral
multiple of 10,000 units of such Specified Currency) and any greater amount that
is an integral multiple of 10,000 units of such Specified Currency.
Currencies
Unless otherwise specified in the applicable Pricing Supplement,
payments of principal of (and premium, if any) and interest on all
Multi-Currency Notes will be made in the applicable Specified Currency,
provided, however, that payments of principal of (and premium, if any) and
interest on Multi- Currency Notes denominated in other than U.S dollars will
nevertheless be made in U.S. dollars (i) at the option of the Holders thereof
under the procedures described below and (ii) at the option of the Company in
the case of imposition of exchange controls or other circumstances beyond the
control of the Company as described below.
Payment of Principal and Interest
If so specified in the applicable Pricing Supplement, except as
provided in the next paragraph, payments of interest and principal (and premium,
if any) with respect to any Multi-Currency Note will be made in U.S. dollars if
the Holder of such Note on the relevant Regular Record Date or at Maturity, as
the case may be, has transmitted a written request for such payment in U.S.
dollars to the Trustee at its Corporate Trust Office in The City of New York on
or prior to such Regular Record Date or the date 15 days prior to Maturity, as
the case may be. Such request may be in writing (mailed or hand delivered) or by
cable, telex or other form or facsimile transmission. Any such request made with
respect to any Multi-Currency Note by a Holder will remain in effect with
respect to any further payments of interest and principal (and premium, if any)
with respect to such Multi-Currency Note payable to such Holder, unless such
request is revoked on or prior to the relevant Regular Record Date or the date
15 days prior to Maturity, as the case may be. Holders of Multi-Currency Notes
denominated in other than U.S. dollars whose Notes are registered in the name of
a broker or nominee should contact such broker or nominee to determine whether
and how an election to receive payments in U.S. dollars may be made.
The U.S. dollar amount to be received by a Holder of a Multi-Currency
Note who elects to receive payments in U.S. dollars will be based on the highest
bid quotation in The City of New York received by the Currency Determination
Agent (as defined below) as of noon New York City time on the third Business Day
next preceding the applicable payment date from three recognized foreign
exchange dealers (one of which may be the Currency Determination Agent) for the
purchase by the quoting dealer of the Specified Currency for U.S. dollars for
settlement on such payment date in the aggregate amount
B-9
of the Specified Currency payable to all Holders of Multi-Currency Notes
electing to receive U.S. dollar payments and at which the applicable dealer
commits to execute a contract. If three such bid quotations are not available on
the third Business Day preceding the date of payment of principal (and premium,
if any) or interest with respect to any such Multi-Currency Note, such payment
will be made in the Specified Currency. All currency exchange costs associated
with any payment in U.S. dollars on any such Multi- Currency Note will be borne
by the Holder thereof by deductions from such payment. Unless otherwise provided
in the applicable Pricing Supplement, the Trustee will be the Currency
Determination Agent (the "Currency Determination Agent") with respect to the
Multi-Currency Notes.
Payment Currency
If the principal of (and premium, if any) or interest on any
Multi-Currency Note is payable in any currency other than U.S. dollars and such
Specified Currency is not available due to the imposition of exchange controls
or other circumstances beyond the control of the Company, the Company will be
entitled to satisfy its obligations to Holders of the Multi-Currency Notes by
making such payment in U.S. dollars on the basis of the Market Exchange Rate on
the last date such Specified Currency was available (the "Conversion Date"). Any
payment made under such circumstances in U.S. dollars where the required payment
is in other than U.S. dollars will not constitute an Event of Default under the
Indenture.
If payment in respect of a Note is required to be made in any currency
unit (e.g., ECU) and such currency unit is unavailable due to the imposition of
exchange controls or other circumstances beyond the Company's control, then all
payments in respect of such Multi-Currency Note shall be made in U.S. dollars
until such currency unit is again available. The amount of each payment in U.S.
dollars shall be computed on the basis of the equivalent of the currency unit in
U.S. dollars, which shall be determined by the Company or its agent on the
following basis. The component currencies of the currency unit for this purpose
(the "Component Currencies") shall be the currency amounts that were components
of the currency unit as of the Conversion Date for such currency unit. The
equivalent of the currency unit in U.S. dollars shall be calculated by
aggregating the U.S. dollar equivalents of the Component Currencies. The U.S.
dollar equivalent of each of the Component Currencies shall be determined by the
Company or such agent on the basis of the Market Exchange Rate for each such
Component Currency that is available as of the third Business Day prior to the
date on which the relevant payment is due and for each such Component Currency
that is unavailable, if any, as of the Conversion Date for such Component
Currency.
If the official unit of any Component Currency is altered by way of
combination or subdivision, the number of units of that currency as a Component
Currency shall be divided or multiplied in the same proportion, if two or more
Component Currencies are consolidated into a single currency, the amounts of
those currencies as Component Currencies shall be replaced by an amount in such
single currency equal to the sum of the amounts of the consolidated Component
Currencies expressed in such single currency. If any Component Currency is
divided into two or more currencies, the amount of the original Component
Currency shall be replaced by the amounts of such two or more currencies, the
sum of which shall be equal to the amount of the original Component Currency.
Outstanding Multi-Currency Notes
For purposes of calculating the principal amount of any Multi-Currency
Note for any purpose under the Indenture, the principal amount of such
Multi-Currency Note at any time outstanding shall be deemed to be the U.S.
dollar equivalent at the Market Exchange Rate, determined as of the date
B-10
of the original issuance of such Multi-Currency Note, of the principal amount of
such Multi-Currency Note.
Details for Settlement of Multi-Currency Notes
In addition to the Settlement information specified in "Settlement
Procedures" above, the Agents shall communicate to the Company in the manner set
forth in "Settlement Procedures" the following information:
1. Specified Currency.
2. Denominations.
3. Wire transfer and overseas bank account information (if holder
has elected payment in a Specified Currency).
Additional Obligations of the Company and the Agents
(a) The Company or its designated agent shall submit such reports
or information as may be required from time to time by applicable law,
regulations and guidelines promulgated by Japanese governmental and
regulatory authorities in respect of the issue and purchase of Notes
denominated in Japanese Yen.
(b) The Company acknowledges that the terms of Notes denominated
in Japanese Yen that will be issued will be limited to those which
have been recognized by Japanese authorities.
(c) Each Agent represents to and agrees with the Company that it
will not offer or sell any Note directly or indirectly in Japan or to
residents of Japan or for the benefit of any Japanese person (which
term as used herein means any person resident in Japan, including any
corporation or other entity organized under the laws of Japan) or to
others for reoffering or resale directly or indirectly in Japan or to
any Japanese person during the period of 90 days from the issue date
of such Note (which Note is denominated in Japanese Yen) or 180 days
from the issue date of the Note (which Note is a Dual Currency Note,
Reverse Dual Currency Note or Optional Dual Currency Note) and that
thereafter it will not do so, except under circumstances which will
result in compliance with any applicable laws, regulations and
ministerial guidelines of Japan taken as a whole. Furthermore, in
connection with the issuance of Notes denominated in Japanese Yen, the
Company and you each agree to comply with all applicable laws,
regulations and guidelines as amended from time to time of the
Japanese governmental and regulatory authorities.
B-11
SPECIAL ADMINISTRATIVE PROCEDURES FOR BOOK-ENTRY NOTES
Each Note will be represented by either a Global Security (as defined
hereinafter) delivered to the Trustee, as agent for the Depository Trust Company
("DTC"), and recorded in the book-- entry system maintained by DTC (a
"Book-Entry Note") or a certificate delivered to the Holder thereof or a Person
designated by such Holder (a "Certificated Note"). An owner of a Book-Entry Note
will not be entitled to receive a certificate representing such Note. In
connection with the qualification of the Book-Entry Notes for eligibility in the
book-entry system maintained by DTC, the Trustee will perform the custodial,
document control and administrative functions described below, in accordance
with its respective obligations under a Letter of Representations from the
Company and the Trustee to DTC dated the date hereof and a Medium-Term Note
Certificate Agreement between the Trustee and DTC, dated as of _______ __, 19__,
and its obligations as a participant in DTC, including DTC's Same-Day Funds
Settlement System ("SDFS"). Except as otherwise set forth in this Exhibit B,
Book-Entry Notes will be issued in accordance with the administrative procedures
set forth below.
Issuance: On any date of settlement (as defined under
"Settlement" below) for one or more Fixed Rate
Book-Entry Notes, the Company will issue a single
Global Security in fully registered form without
coupons (a "Global Security") representing all of such
Notes that have the same Original Issue Date, interest
rate and Stated Maturity. Similarly, on any settlement
date for one or more Floating Rate Book-Entry Notes,
the Company will issue a single Global Security
representing all of such Notes that have the same
Original Issue Date, Interest Rate Basis, Initial
Interest Rate, Interest Payment Period, Interest
Payment Dates, Index Maturity, Spread or Spread
Multiplier, if any, minimum interest rate (if any),
maximum interest rate (if any), redemption provisions,
if any, and Stated Maturity. No Global Security will
represent (i) both Fixed Rate and Floating Rate
Book-Entry Notes or (ii) any Certificated Note or (iii)
any Multi-Currency or Indexed Note.
Identification The Company will arrange, on or prior to
Numbers: commencement of a program for the offering of
Book-Entry Notes, with the CUSIP Service Bureau of
Standard & Poor's Ratings Group (the "CUSIP Service
Bureau") for the reservation of a series of CUSIP
numbers (including tranche numbers), consisting of
approximately 900 CUSIP numbers and relating to Global
Securities representing the Book-Entry Notes. The
Trustee has or will obtain from the CUSIP Service
Bureau a written list of such series of reserved CUSIP
numbers and will deliver to the Company and DTC such
written list of 900 CUSIP numbers of such series. The
Trustee will assign CUSIP numbers to Global Securities
as described below under Settlement Procedure "B". DTC
will notify the CUSIP Service Bureau periodically of
the CUSIP numbers that the Trustee has assigned to
Global Securities. The Trustee will notify the Company
at any time when fewer than 100 of the reserved CUSIP
numbers remain
B-12
unassigned to Global Securities, and if it deems
necessary, the Company will reserve additional CUSIP
numbers for assignment to Global Securities repre-
senting Book-Entry Notes. Upon obtaining such addition-
al CUSIP numbers the Trustee shall deliver such
additional CUSIP numbers to the Company and DTC.
Registration: Each Global Security will be registered in the name of
Cede & Co., as nominee for DTC, on the Security
Register maintained under the Indenture. The beneficial
owner of a Book-Entry Note (or one or more indirect
participants in DTC designated by such owner) will
designate one or more participants in DTC (with respect
to such Note, the "Participants") to act as agent or
agents for such owner in connection with the book-entry
system maintained by DTC, and DTC will record in
book-entry form, in accordance with instructions
provided by such Participants, a credit balance with
respect to such Note in the account of such
Participants. The ownership interest of such beneficial
owner in such Note will be recorded through the records
of such Participants or through the separate records of
such Participants and one or more indirect participants
in DTC.
Transfers: Transfers of a Book-Entry Note will be accomplished by
book entries made by DTC and, in turn, by Participants
(and in certain cases, one or more indirect
participants in DTC) acting on behalf of beneficial
transferors and transferees of such Note.
Consolidation and
Exchange:
Consolidation and
Exchange: The Trustee may deliver to DTC and the CUSIP Service
Bureau at any time a written notice of consolidation
specifying (i) the CUSIP numbers of two or more
Outstanding Global Securities that represent (A) Fixed
Rate Book-Entry Notes having the same Original Issue
Date, interest rate and Stated Maturity and with
respect to which interest has been paid to the same
date or (B) Floating Rate Book-Entry Notes having the
same Interest Rate Basis, Original Issue Date, Initial
Interest Rate, Interest Payment Dates, Index Maturity,
Spread or Spread Multiplier, if any, minimum interest
rate (if any), maximum interest rate (if any),
redemption provisions, if any, and Stated Maturity and
with respect to which interest has been paid to the
same date, (ii) a date, occurring at least thirty days
after such written notice is delivered and at least
thirty days before the next Interest Payment Date for
such Book-Entry Notes, on which such Global Securities
shall be exchanged for a single replacement Global
Security and (iii) a new CUSIP number, obtained from
the Company, to be assigned to such replacement Global
Security. Upon receipt of such a notice, DTC will send
to its participants (including the Trustee) a written
reorganization notice to the effect that such exchange
will occur on such date. Prior to the specified
B-13
exchange date, the Trustee will deliver to the CUSIP
Service Bureau a written notice setting forth such
exchange date and the new CUSIP number and stating
that, as of such exchange date, the CUSIP numbers of
the Global Securities to be exchanged will no longer be
valid. On the specified exchange date, the Trustee will
exchange such Global Securities for a single Global
Security bearing the new CUSIP number, and the CUSIP
numbers of the exchanged Global Securities will, in
accordance with CUSIP Service Bureau procedures, be
cancelled and not immediately reassigned.
Notwithstanding the foregoing, if the Global Securities
to be exchanged exceed the maximum principal amount
specified by DTC, one Global Security will be
authenticated and issued to represent such maximum
principal amount of the exchanged Global Securities and
an additional Global Security will be authenticated and
issued to represent any remaining principal amount of
such Global Securities (see "Denominations" below).
Denominations: Unless otherwise specified in the Prospectus Supplement
or the applicable Pricing Supplement, Book-Entry Notes
will be issued in principal amounts of $1,000 or any
integral multiple thereof.
Interest: Interest on each Book-Entry Note will accrue and be
payable on terms specified in the Prospectus Supplement
and the applicable Pricing Supplement. Standard &
Poor's Ratings Group will use the information received
in the pending deposit message described under
Settlement Procedure "C", below in order to include the
amount of any interest payable and certain other
information regarding the related Global Security in
the appropriate weekly bond report published by
Standard & Poor's Ratings Group.
Promptly after each Interest Determination Date for
Floating Rate Notes, the Company will notify the
Trustee, and the Trustee in turn will notify Standard &
Poor's Ratings Group, of the interest rates determined
on such Interest Determination Date.
Payments of Principal
and Interest: Payments of Interest Only. Promptly after each Regular
Record Date, the Trustee will deliver to the Company
and DTC a written notice specifying by CUSIP number the
amount of interest to be paid on each Global Security
on the following Interest Payment Date (other than an
Interest Payment Date coinciding with Maturity) and the
total of such amounts. DTC will confirm the amount
payable on each Global Security on such Interest
Payment Date by reference to the daily bond reports
published by Standard & Poor's Ratings Group. The
Company will pay to the Trustee, as paying agent, the
total amount of interest due on such
B-14
Interest Payment Date (other than at Maturity), and the
Trustee will pay such amount to DTC at the times and in
the manner set forth below under "Manner of Payment".
Payments at Maturity. On or about the first Business
Day of each month, the Trustee will deliver to the
Company and DTC a written list of principal and
interest to be paid on each Global Security maturing in
the following month. The Company, the Trustee and DTC
will confirm the amounts of such principal and interest
payments with respect to each such Global Security on
or about the fifth Business Day preceding the Maturity
of such Global Security. The Company will pay to the
Trustee, as the paying agent, the principal amount of
such Global Security, together with interest due at
such Maturity. The Trustee will pay such amount to DTC
at the times and in the manner set forth below under
"Manner of Payment".
Manner of Payment. The total amount of any principal
and interest due on Global Securities on any Interest
Payment Date or at Maturity shall be paid by the
Company to the Trustee in funds available for use by
the Trustee as of 9:30 A.M. (New York City time) on
such date. The Company will make such payment on such
Global Securities by instructing the Trustee to
withdraw funds from an account maintained by the
Company at the Trustee. The Company will confirm such
instructions in writing to the Trustee. For maturity,
redemption or any other principal payments: prior to 10
A.M. (New York City time) on such date or as soon as
possible thereafter, the Trustee will make such
payments to DTC in same day funds in accordance with
DTC's Same Day Funds Settlement Paying Agent Operating
Procedures. For interest payments: the Trustee will
make such payments to DTC in accordance with existing
arrangements between DTC and the Trustee. DTC will
allocate such payments to its participants in
accordance with its existing operating procedures.
Neither the Company (either as issuer or as Paying
Agent) nor the Trustee shall have any direct
responsibility or liability for the payment by DTC to
such Participants of the principal of and interest on
the Book-Entry Notes.
Withholding Taxes. The amount of any taxes required
under applicable law to be withheld from any interest
payment on a Book-Entry Note will be determined and
withheld by the Participant, indirect participant in
DTC or other Person responsible for forwarding payments
and materials directly to the beneficial owner of such
Note.
B-15
Settlement Procedures: Settlement Procedures with regard to each
Book-Entry Note which will be registered in the name of
the nominee of DTC (unless otherwise indicated in the
applicable Pricing Supplement, "Cede & Co.") sold by
the Company through an Agent, as agent, shall be as
follows:
A. Such Agent will advise the Company by telex or
facsimile of the following settlement information:
1. Principal amount of the Note (and, if
multiple Notes are to be issued,
denominations thereof).
2. Settlement date (Original Issue Date).
3. Stated Maturity.
4. Issue Price.
5. Trade Date.
6. Specified Currency and whether the option to
elect payments in a Specified Currency
applies and if the Specified Currency is not
U.S. Dollars, the authorized denominations.
7. Interest rate:
(a) Fixed Rate Notes:
i) interest rate
ii) overdue rate, if any
(b) Floating Rate Notes:
i) Interest Rate Basis (e.g., Commercial
Paper Rate)
ii) Initial Interest Rate
iii) Spread or Spread Multiplier, if any
iv) Interest Reset Dates, Interest Reset
Period and Interest Determination
Dates
v) Index Maturity vi) maximum and
minimum interest rates, if any
vii) overdue rate, if any
(c) Currency Indexed Notes
The applicable terms thereof
B-16
8. Interest Payment Date(s) and Regular Record
Dates.
9. Optional Interest Reset Dates, if any, and
Subsequent Interest Periods, if any.
10. Extension Periods, if any, and Final Maturity
Dates, if any.
11. The date on or after which the Notes are
redeemable at the option of the Company or
repurchasable by the Company at the option of
the holder, and additional redemption or
repurchase provisions, if any.
12. Amortization schedule, if any.
13. Wire transfer information, if applicable.
14. Agents Commission (to be paid in the form of
a discount from the proceeds remitted to the
Company upon Settlement).
15. Whether such Book-Entry Note is issued at an
original issue discount ("OID"), and, if so,
the total amount of OID, the yield to
maturity and the initial accrual period of
OID.
B. The Company will advise the Trustee by electronic
transmission of the information set forth in
Settlement Procedure "All above and the name of
such Agent. Each such communication by the Company
shall constitute a representation and warranty by
the Company to the Trustee and each Agent that (i)
such Note is then, and at the time of issuance and
sale thereof will be, duly authorized for issuance
and sale by the Company, (ii) such Note, and the
Global Security representing such Note, will
conform with the terms of the Indenture and (iii)
upon authentication and delivery of such Global
Security, the aggregate initial offering price of
all Notes issued under the Indenture will not
exceed the maximum aggregate amount then
authorized (except for Book-Entry Notes
represented by Global Securities authenticated and
delivered in exchange for or in lieu of Global
Securities pursuant to the Indenture and except
for Certificated Notes authenticated and delivered
upon registration of transfer of, in exchange for,
or in lieu of Certificated Notes pursuant to any
such Section).
B-17
C. The Trustee will assign a CUSIP number to the
Global Security representing such Note and enter a
pending deposit message through DTC's Participant
Terminal System, providing the following
settlement information to DTC, such Agent and
Standard & Poor's Ratings Group:
1. The applicable information set forth in
Settlement Procedure "A".
2. Identification as a Fixed Rate Book-Entry
Note or a Floating Rate Book-Entry Note.
3. Initial Interest Payment Date for such Note,
number of days by which such date succeeds
the related "DTC Regular Record Date" (which
term means the Regular Record Date except in
the case of floating rate notes which reset
daily or weekly in which case it means the
date 5 calendar days immediately preceding
the Interest Payment Date) and amount of
interest payable on such Interest Payment
Date per $1,000 of principal amount of such
Note.
4. Frequency of interest payments (monthly,
semiannually, quarterly, etc.).
5. CUSIP number of the Global Security
representing such Note.
6. Whether such Global Security will represent
any other Book-Entry Note (to the extent
known at such time).
D. Such Agent will deliver to the purchaser a copy of
the most recent Prospectus applicable to the Note
with or prior to any written offer of Notes and
the confirmation and payment by the purchaser of
the Note.
Such Agent will confirm the purchase of such Note
to the purchaser either by transmitting to the
Participants with respect to such Note a
confirmation order or orders through DTC's
institutional delivery system or by mailing a
written confirmation to such purchaser.
E. The Trustee, as Trustee, will complete and
authenticate the note certificate evidencing the
Global Security representing such Book-Entry Note.
F. DTC will credit such Note to the Trustee's
participant account at DTC.
B-18
G. The Trustee will enter an SDFS deliver order
through DTC's Participant Terminal System
instructing DTC to (i) debit such Note to the
Trustee's participant account and credit such Note
to such Agent's participant account and (ii) debit
such Agent's settlement account and credit the
Trustee's settlement account for an amount equal
to the price of such Note less such Agent's
commission. The entry of such a deliver order
shall constitute a representation and warranty by
the Trustee to DTC that (i) the Global Security
representing such Book-Entry Note has been issued
and authenticated and (ii) the Trustee is holding
such Global Security pursuant to the Medium-Term
Note Certificate Agreement between the Trustee and
DTC (the "Certificate Agreement").
H. Such Agent will enter an SDFS deliver order
through DTC's Participant Terminal System
instructing DTC (i) to debit such Note to such
Agent's participant account and credit such Note
to the participant accounts of the Participants
with respect to such Note and (ii) to debit the
settlement accounts of such Participants and
credit the settlement account of such Agent for an
amount equal to the price of such Note.
I. Transfers of funds in accordance with SDFS deliver
orders described in Settlement Procedures "G" and
"H" will be settled in accordance with SDFS
operating procedures in effect on the Settlement
date.
J. The Trustee will credit to an account of the
Company maintained at the Trustee funds available
for immediate use in the amount transferred to the
Trustee in accordance with Settlement Procedure
"G".
Settlement Procedures
Timetable: For orders of Book-Entry Notes solicited by an Agent,
as agent, and accepted by the Company for settlement,
Settlement Procedures "A" through "J" set forth above
shall be completed as soon as possible but not later
than the respective times (New York City time) set
forth below:
B-19
Settlement.
Procedure Time
A 11:00 A.M. on the sale date
B 12 Noon on the sale date
C 2:00 P.M. on the sale date
D Day after sale date
E 3:00 P.M. on day before Settlement date
F 10:00 A.M. on Settlement date
G-H 2:00 P.M. on Settlement date
I 4:45 P.M. on Settlement date
J 5:00 P.M. on Settlement date
If a sale is to be settled more than one Business Day
after the sale date, Settlement Procedures "A", "B" and
"C" shall be completed as soon as practicable but no
later than 11:00 A.M., 12 Noon and 2:00 P.M., as the
case may be, on the first Business Day after the sale
date. If the initial interest rate for a Floating Rate
Book-Entry Note has not been determined at the time
that Settlement Procedure "A" is completed, Settlement
Procedures "B" and "C" shall be completed as soon as
such rate has been determined but no later than 12:00
Noon and 2:00 P.M., respectively, on the second
Business Day before the Settlement date. Settlement
Procedure "J" is subject to extension in accordance
with any extension of Fedwire closing deadlines and in
the other events specified in the SDFS operating
procedures in effect on the Settlement date.
If Settlement of a Book-Entry Note is rescheduled or
canceled, the Trustee will deliver to DTC, through
DTC's Participant Terminal System, a cancellation
message to such effect by no later than 2:00 P.M. on
the Business Day immediately preceding the scheduled
Settlement date.
Failure to Settle: If the Trustee has not entered an SDFS
deliver order with respect to a Book-Entry Note
pursuant to Settlement Procedure "G", then, upon
written request (which may be effected by facsimile
transmission) of the Company, the Trustee shall deliver
to DTC, through DTC's Participant Terminal System, as
soon as practicable but no later than 2:00 P.M. on any
Business Day, a withdrawal message instructing DTC to
debit such Note to the Trustee's participant account.
DTC will process the withdrawal message, provided that
the Trustee's participant account contains a principal
amount of the Global Security representing such Note
that is at least equal to the principal amount to be
debited. If a withdrawal message is processed with
respect to all the Book-- Entry Notes represented by a
Global Security, the Trustee will mark such Global
Security "canceled", make appropriate entries
B-20
in the Trustee's records and send such canceled Global
Security to the Company. The CUSIP number assigned to
such Global Security shall, in accordance with CUSIP
Service Bureau procedures, be canceled and not
immediately reassigned. If a withdrawal message is
processed with respect to one or more, but not all, of
the Book-Entry Notes represented by a Global Security,
the Trustee will exchange such Global Security for two
Global Securities, one of which shall represent such
Book-Entry Note or Notes and shall be canceled
immediately after issuance and the other of which shall
represent the other Book-Entry Notes previously
represented by the surrendered Global Security and
shall bear the CUSIP number of the surrendered Global
Security.
If the purchase price for any Book-Entry Note is not
timely paid to the Participants with respect to such
Note by the beneficial purchaser thereof (or a Person,
including an indirect participant in DTC, acting on
behalf of such purchaser), such Participants and, in
turn, the Agent for such Note may enter SDFS deliver
orders through DTC's Participant Terminal System
debiting such Book-Entry Note free to such Agent's
participant account and crediting such Book-Entry Note
free to the participant account of the Trustee and
shall notify the Trustee and the Company thereof.
Thereafter, the Trustee (i) will immediately notify the
Company, once the Trustee has confirmed that such
Book-Entry Note has been credited to its participant
account, and the Company shall immediately transfer by
Fed wire (immediately available funds) to such Agent an
amount equal to the amount with respect to such
Book-Entry Note which was previously sent by wire
transfer to the account of the Company in accordance
with Settlement Procedure "J", and (ii) the Trustee
will deliver the withdrawal message and take the
related actions described in the preceding paragraph.
Such debits and credits will be made on the Settlement
date, if possible, and in any event not later than 5:00
P.M. on the following Business Day. If such failure
shall have occurred for any reason other than a default
by the Agent in the performance of its obligations
hereunder and under the Distribution Agreement, then
the Company will reimburse the Agent on an equitable
basis for the loss of the use of the funds during the
period when they were credited to the account of the
Company.
Notwithstanding the foregoing, upon any failure to
settle with respect to a Book-Entry Note, DTC may take
any actions in accordance with its SDFS operating
procedures then in effect. In the event of a failure to
settle with respect to one or more, but not all, of the
Book-Entry Notes to have been represented by a Global
Security, the Trustee will provide, in accordance with
Settlement Procedure "E", for the authentication and
issuance of
B-21
a Global Security representing the other Book-Entry
Notes to have been represented by such Global Security
and will make appropriate entries in its records.
Trustee Not to
Risk Funds: Nothing herein shall be deemed to require the Trustee
to risk or expend its own funds in connection with any
payment to the Company, DTC, the Agents, or the
purchaser, it being understood by all parties that
payments made by the Trustee to the Company, DTC, the
Agents, or the purchaser shall be made only to such
extent that funds are provided to the Trustee for such
purpose. Similarly, nothing herein shall alter any
duty, or limit or diminish any right or immunity, of
the Trustee under the Indenture.
EXHIBIT C
PURCHASE AGREEMENT
Manor Care, Inc. _______________, 19__
10570 Columbia Pike
Silver Spring, Maryland 20901
Attention: Treasurer
The undersigned agrees to purchase the following principal amount of
the Notes described in the Distribution Agreement dated ____ __, 1996 (as it may
be supplemented or amended from time to time, the "Distribution Agreement"):
Principal Amount [$] ______________________________
Specified Currency: ______________________________
Indexed Currency: ______________________________
Interest Rate: ________%
Discount: ________% of Principal Amount
Aggregate Price to be
paid to Company
(in immediately
available funds): [$] ______________________________
Settlement Date: ______________________________
Other Terms: ______________________________
In the case of Notes issued in a foreign currency or currency unit,
unless otherwise specified below, settlement and payments of principal and
interest will be in U.S. dollars based on the highest bid quotation in The City
of New York received by the Exchange Rate Agent at approximately 11:00 A.M., New
York City time, on the second Business Day preceding the applicable payment date
from three recognized foreign exchange dealers selected by the Exchange Rate
Agent and approved by the Company (one of which may be the Exchange Rate Agent)
for the purchase by the quoting dealer of the Specified Currency for U.S.
dollars for settlement on such payment date in the aggregate amount of the
Specified Currency payable to all holders of Notes denominated in such Specified
Currency electing to receive U.S. dollar payments and at which the applicable
dealer commits to execute a contract. If such bid quotations are not available,
payments will be made in the Specified Currency.
Our obligation to purchase Notes hereunder is subject to the continued
accuracy of your representations and warranties contained in the Distribution
Agreement and to your performance and observance of all applicable covenants and
agreements contained therein, including, without limitation, your obligations
pursuant to Section 6 and Section 7 thereof. Our obligation hereunder is subject
to the conditions set forth in Section 5 of the Distribution Agreement and to
the further condition that we shall receive (a) the opinions required to be
delivered pursuant to Section 5(e) of the Distribution Agreement, (b) the
certificate required to be delivered pursuant to Section 5(f) of the
Distribution Agreement, (c) the letter referred to in Section 5(g), in each case
dated as of the above Settlement Date and (d) and such further information,
certificates and documents as the Agents or counsel to the Agents may reasonably
request.
C-2
In further consideration of our agreement hereunder, you agree that
between the date hereof and the above Settlement date, you will not offer or
sell, or enter into any agreement to sell, any debt securities of the Company,
other than borrowings under your revolving credit agreements and lines of
credit, the private placement of securities and issuances of your commercial
paper or other issuances of Notes.
We may terminate this Agreement, in our absolute discretion, by notice
given to and received by the Company prior to delivery of and payment for the
Securities, if prior to that time (a) a downgrading shall have occurred in the
rating accorded the Company's debt securities by any "nationally recognized
statistical rating organization", as that term is defined by the Commission for
purposes of Rule 436(g)(2) of the Rules and Regulations, (b) any such
organization shall have publicly announced that is has under surveillance or
review, with possible negative implications, its rating of any of the Company's
debt securities, (c) trading in securities generally on the New York Stock
Exchange, The American Stock Exchange, the Chicago Board Options Exchange or the
over-the-counter market shall have been suspended or materially limited or
minimum prices shall have been established on one or more of such exchanges or
such market by the Commission or such exchange or other regulatory body or
governmental authority having jurisdiction, (d) a banking moratorium shall have
been declared by United States federal or New York State authorities, (e) the
United States shall have become engaged in major hostilities or there shall have
been an escalation in major hostilities involving the United States or a
declaration of a national emergency or war shall have been made by the United
States, (f) there shall have been such a material adverse change in national or
international political, financial or economic conditions, national or
international equity markets or currency exchange rates or controls as to make
it, in the judgment of the Agents, inadvisable or impracticable to proceed with
the payment for and delivery of the Notes, or (g)(i) the Company or any of its
subsidiaries shall have sustained since the date of the latest audited financial
statements included or incorporated by reference in the Prospectus any loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus or (ii) since such date there shall have been any
change in the capital stock or long-term debt of the Company or any of its
subsidiaries or any change, or any development involving a prospective change,
in or affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the Prospectus, the
effect of which, in any such case described in clause (i) or (ii), is, in the
judgment of the Agents, so material and adverse as to make it impracticable or
inadvisable to proceed with the offering or the delivery of the Notes on the
terms and in the manner contemplated in the Prospectus.
C-3
This Agreement shall be governed by and construed in accordance with
the laws of New York.
[Insert name of Agent(s]]
By _________________________
[Title]
Accepted: 19__
Manor Care, Inc.
By _________________________
[Title]
EXHIBIT D
[FOREIGN CURRENCY] [INDEXED NOTE]
AMENDMENT NO. ____________ TO DISTRIBUTION AGREEMENT,
DATED , 1996, AS AMENDED
[Insert Title of Foreign Currency and, in the case of
Indexed Notes, the Indexed Basis]
The undersigned hereby agree that for the purposes of the issue and
sale of Notes denominated in [title of currency or currency unit] (the
"Specified Currency") (and indexed to [title of index basis] (the "Index
Basis")] pursuant to the Distribution Agreement, dated ____ __, 1996 as it may
be amended (the "Distribution Agreement"), the following additions and
modifications shall be made to the Distribution Agreement. The additions and
modifications adopted hereby shall be of the same effect for the sale under the
Distribution Agreement of all Notes denominated in the Specified Currency [and
indexed to the Index Basis], whether offered on an agency or principal basis,
but shall be of no effect with respect to Notes denominated in any currency or
currency unit other than the Specified Currency.
Except as otherwise expressly provided herein, all terms used herein
which are defined in the Distribution Agreement shall have the same meanings as
in the Distribution Agreement. The term[s] Agent [or Agents], as used in the
Distribution Agreement, shall be deemed to refer [only] to the undersigned
Agent[s] for purposes of this Amendment.
[Insert appropriate additions and modifications to the Distribution
Agreement, for example, to opinions of counsel, conditions to obligations and
settlement procedures, etc.]
_______________, 19__
Manor Care, Inc.
By_________________________
Name:
Title:
[Name(s) of Agent(s) participating in the offering of
Notes in the Specified Currency]
By_________________________
Name:
Title: