-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WA46NYJxq5cBFfB8FTTGKUGgK6zSqy2gklwz04Z933EM2IfsqsMzwPLZmB8fgz9i vSV4jzZ2YASwTTrrbjKYbQ== 0000950152-97-006562.txt : 19970918 0000950152-97-006562.hdr.sgml : 19970918 ACCESSION NUMBER: 0000950152-97-006562 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 19970912 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NCS HEALTHCARE INC CENTRAL INDEX KEY: 0001004990 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DRUG STORES AND PROPRIETARY STORES [5912] IRS NUMBER: 341816187 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-35551 FILM NUMBER: 97679888 BUSINESS ADDRESS: STREET 1: 3201 ENTERPRISE PARKWAY STREET 2: SUITE 2200 CITY: BEACHWOOD STATE: OH ZIP: 44122 MAIL ADDRESS: STREET 1: 1400 MCDONALD INVESTMENT CENTER STREET 2: 800 SUPERIOR AVE CITY: CLEVELAND STATE: OH ZIP: 44114 S-3 1 NCS HEALTHCARE, INC. FORM S-3 1 As filed with the Securities and Exchange Commission on September 12, 1997 Registration No. 333- ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 NCS HEALTHCARE, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 34-1816187 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.) INCORPORATION OR ORGANIZATION) SEE "TABLE OF ADDITIONAL REGISTRANTS" ON THE FOLLOWING PAGE FOR INFORMATION RELATING TO THE GUARANTORS OF THE DEBENTURES REGISTERED HEREBY 3201 Enterprise Parkway, Suite 220 Beachwood, Ohio 44122 (216) 514-3350 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES) ------------------ Copy to: Jon H. Outcalt Thomas F. McKee, Esq. Chairman of the Board Calfee, Halter & Griswold LLP NCS HealthCare, Inc. 1400 McDonald Investment Center 3201 Enterprise Parkway, Suite 220 800 Superior Avenue Beachwood, Ohio 44122 Cleveland, Ohio 44114 (216) 514-3350 (216) 622-8200 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICES)
----------------- Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. ------------------- If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [x] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]_____________ If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]___ If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] CALCULATION OF REGISTRATION FEE
============================================================================================================================ AMOUNT OF TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM REGISTRATION SECURITIES AMOUNT TO BE REGISTERED OFFERING PRICE PER UNIT AGGREGATE OFFERING FEE TO BE REGISTERED PRICE - ---------------------------------------------------------------------------------------------------------------------------- 5 3/4% Convertible Subordinated Debentures due 2004............ $100,000,000 100% $100,000,000 $30,304 - ---------------------------------------------------------------------------------------------------------------------------- Class A Common Stock, $.01 par value..................... 3,058,103(1) Not applicable Not applicable $ 0(2) - ---------------------------------------------------------------------------------------------------------------------------- Guarantees (3)................. -- -- -- $ 0(4) - ---------------------------------------------------------------------------------------------------------------------------- Total registration fee......... -- -- -- $30,304 ============================================================================================================================ (1) Plus such additional indeterminate number of shares as may become issuable upon conversion of the Debentures being registered hereunder by means of adjustment in the conversion price. (2) Pursuant to Rule 457(i), there is no filing fee with respect to the shares of Class A Common Stock issuable upon conversion of the Debentures because no additional consideration will be received in connection with the exercise of the conversion privilege. (3) No separate consideration was received for the Guarantees from the Initial Purchasers of the Debentures. (4) Guarantees by certain wholly-owned subsidiaries of NCS HealthCare, Inc. of the obligations under the Debentures are also being registered hereby. Pursuant to Rule 457(n) under the Securities Act of 1933, as amended, no registration fee is required with respect to the Guarantees.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. 2 ------------------ Table of Additional Registrants To Form S-3 Registration Statement Under The Securities Act of 1933
State of Name of Additional Registrant FEIN No. Incorporation - ----------------------------- -------- ------------- Advanced Rx Services, Inc. 22-3395391 New Jersey Cheshire Long Term Care Pharmacy, Inc. 06-1330453 Connecticut HLF Adult Home Pharmacy Corp. 16-1342819 New York Kinetic Services, Inc. 95-4346189 California Look Drug Stores, Inc. 39-0923148 Wisconsin Management & Network Services, Inc. 34-1819691 Ohio Medi Centre, Inc. 38-3214240 Michigan NCS Daven Drug, Inc. 31-1508219 Ohio NCS HealthCare of Arkansas, Inc. 31-1490517 Ohio NCS HealthCare of California, Inc. 31-1499819 Ohio NCS HealthCare of Florida, Inc. 34-1843258 Ohio NCS HealthCare of Illinois, Inc. 37-1354510 Illinois NCS HealthCare of Indiana, Inc. 35-1954599 Indiana NCS HealthCare of Iowa, Inc. 31-1509013 Ohio NCS HealthCare of Kansas, Inc. 34-1839172 Ohio NCS HealthCare of Kentucky, Inc. 31-1521217 Ohio NCS HealthCare of Maryland, Inc. 31-1496240 Ohio NCS HealthCare of Michigan, Inc. 34-1777940 Ohio NCS HealthCare of Modesto, Inc. 31-1510328 Ohio NCS HealthCare of Ohio, Inc. 31-1257307 Ohio NCS HealthCare of Oklahoma, Inc. 73-1499934 Oklahoma NCS HealthCare of Oregon, Inc. 34-1836971 Ohio NCS HealthCare of Pennsylvania, Inc. 23-2679334 Pennsylvania Loomis Enterprises, Inc. 05-04229829 Rhode Island NCS HealthCare of South Carolina, Inc. 31-1508225 Ohio NCS HealthCare of Vermont, Inc. 31-1526078 Ohio NCS HealthCare of Washington, Inc. 34-1844193 Ohio NCS Quality Care Pharmacy, Inc. 31-1504761 Ohio NCS Services, Inc. 34-1837567 Ohio Rescot Systems Group, Inc. 23-2589308 Pennsylvania Thrifty Medical Supply, Inc. 73-1291927 Oklahoma Uni-Care Health Services, Inc. 02-0468190 New Hampshire Uni-Care Health Services of Maine, Inc. 02-0468192 New Hampshire
3 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED SEPTEMBER 12, 1997 PROSPECTUS NCS HEALTHCARE, INC. [NCS HEALTHCARE, INC. LOGO] $100,000,000 Principal Amount of 5 3/4% Convertible Subordinated Debentures due 2004 Interest Payable February 15 and August 15 3,058,103 Shares of Class A Common Stock, par value $.01 per share ------------------ This Prospectus relates to (i) the resale of $100,000,000 aggregate principal amount of 5 3/4% Convertible Subordinated Debentures due 2004 (the "Debentures") of NCS HealthCare, Inc., a Delaware corporation (the "Company"), issued to the initial purchasers of the Debentures (the "Initial Purchasers") in a private placement consummated on August 13, 1997 (the "Debt Offering") and (ii) the resale of up to 3,058,103 shares of the Class A Common Stock, par value $.01 per share ("Class A Common Stock"), of the Company (and such indeterminate number of additional shares as may be issued to anti-dilution adjustments) which are initially issuable upon conversion of the Debentures by any holders of Debentures that did not purchase the Debentures under the Registration Statement (of which this Prospectus is a part). The Debentures and such shares of Class A Common Stock issued upon conversion of the Debentures may be offered from time to time for the accounts of holders of Debentures named herein or in supplements to this Prospectus (the "Selling Securityholders"). See "Plan of Distribution." Information concerning the Selling Securityholders may change from time to time and will be set forth in supplements to this Prospectus. The Debentures are convertible into Class A Common Stock of the Company at any time at or before maturity, unless previously redeemed, at a conversion price of $32.70 per share, subject to adjustment in certain events. The Class A Common Stock of the Company is traded on the Nasdaq Stock Market's National Market System under the symbol "NCSS." On September 10, 1997, the closing price of the Class A Common Stock as reported by Nasdaq was $24.4375 per share. The Debentures do not provide for a sinking fund. The Debentures are not redeemable by the Company prior to August 18, 2000. Thereafter, the Debentures are redeemable at the option of the Company, in whole or in part, at the redemption prices set forth in this Prospectus, together with accrued interest. Upon a Repurchase Event (as defined herein), each holder of Debentures shall have the right, at the holder's option, to require the Company to repurchase such holder's Debentures at a purchase price equal to 100% of the principal amount thereof, plus accrued interest. See "Description of Debentures - Certain Rights to Require Repurchase of Debentures." The Debentures are unsecured obligations of the Company and are subordinate to all present and future Senior Indebtedness (as defined herein) of the Company. As of August 31, 1997, Senior Indebtedness of the Company was approximately $1.1 million. The Indenture will not restrict the incurrence of any other indebtedness or liabilities by the Company or its subsidiaries. Each of the Company's wholly-owned subsidiaries has guaranteed, jointly and severally, the Company's obligations under the Debentures. See "Description of Debentures - Subordination." The Debentures have been designated for trading in the Private Offerings, Resales and Trading through Automated Linkages ("PORTAL") Market. For a description of certain income tax consequences to holders of the Debentures, see "Certain United States Federal Income Tax Consequences." All of the Debentures were issued initially pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), provided by Section 4(2) thereof and to the Company's knowledge, were transferred to the Selling Securityholders pursuant to Rule 144A or Regulation S under the Securities Act. Debentures resold pursuant to the Registration Statement (of which this Prospectus is a part) will no longer be eligible for trading in the PORTAL Market. The Selling Securityholders, acting as principals for their own account, directly, through agents designated from time to time, or through brokers, dealers, agents or underwriters also to be designated, may sell all or a portion of the Debentures or shares of Class A Common Stock which may be offered hereby by them from time to time on terms to be determined at the time of sale. The aggregate proceeds to the Selling Securityholders from the sale of Debentures and Class A Common Stock will be the purchase price of such Debentures or Class A Common Stock less commissions, if any. For information concerning indemnification agreements between the Company and the Selling Securityholders, see "Plan of Distribution." The Company will not receive any of the proceeds from the sales of the Debentures or the shares of Class A Common Stock by the Selling Securityholders. The Selling Securityholders may be deemed to be "underwriters" under the Securities Act. If any broker-dealers are used by the Selling Securityholders, any commissions paid to broker-dealers and, if broker-dealers purchase any Debentures or shares of Class A Common Stock as principals, any profits received by such broker-dealers on the resale of the Debentures or shares of Class A Common Stock may be deemed to be underwriting discounts or commissions under the Securities Act. In addition, any profits realized by the Selling Securityholders may be deemed to be underwriting commissions. SEE "RISK FACTORS" BEGINNING AT PAGE 3 HEREIN FOR CERTAIN INFORMATION THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS. ------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE DATE OF THIS PROSPECTUS IS ___________, 1997 4 AVAILABLE INFORMATION NCS HealthCare, Inc. ("NCS" or the "Company") is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith, files reports and other information with the Securities and Exchange Commission (the "Commission") which may be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, 450 Fifth Street, NW, Washington, D.C. 20549. Such reports, proxy statements and other information filed by the Company also are available for inspection and copying at the Commission's Regional Offices located at: Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and at Seven World Trade Center, 13th Floor, New York, New York 10048-1102. Such material may also be accessed electronically by means of the Commission's home page on the Internet at http://www.sec.gov. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The Company hereby incorporates the following documents in this Prospectus by reference: (a) the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1997; (b) the description of the Class A Common Stock contained in the Form 8-A Registration Statement. All documents subsequently filed pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination of this offering shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. The Company will provide, without charge, to each person to whom this Prospectus is delivered, upon the written or oral request of such person, a copy of any and all of the information that has been incorporated by reference in this Prospectus (not including exhibits to the information that is incorporated by reference unless such exhibits are specifically incorporated by reference into the information that the Prospectus incorporates). Such request should be directed to Kristen H. Schulz, NCS HealthCare, Inc., 3201 Enterprise Parkway, Suite 220, Beachwood, Ohio 44122, telephone (216) 514-3350. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for all purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. THE COMPANY NCS is a leading independent provider of pharmacy services to long-term care institutions including skilled nursing facilities, assisted living facilities and other institutional health care settings. The Company purchases and dispenses prescription and non-prescription pharmaceuticals and provides client facilities with related management services, automated medical record keeping, drug therapy evaluation and regulatory assistance. The Company also provides a broad array of ancillary health care services to complement its core pharmacy services, including infusion therapy, physical, speech and occupational therapies, nutrition management and other services. As of June 30, 1997, NCS provided pharmacy services to approximately 152,000 residents in 23 states. Based on data from industry sources, the U.S. market for pharmacy services in long-term care facilities exceeded $3.5 billion in 1994. The Company believes that several factors are driving market growth, including the aging of the U.S. population, the increasing number of patients receiving care in non-hospital settings such as long-term care institutions and the increasing acuity levels of and additional pharmaceutical therapies available for patients receiving care in long-term care institutions. The institutional pharmacy services market is highly fragmented and consolidating. Prior to the 1970s, retail pharmacies fulfilled the pharmacy needs of most long-term care institutions. Today, long-term care institutions are typically served by one of three types of providers: retail pharmacies, long-term care facility operators with captive pharmacy companies and independent pharmacy companies like NCS. The Company believes that retail pharmacies and, to a lesser extent, small independent pharmacy companies, generally lack the sophistication, information technology, scale economies, breadth of services and capital necessary to compete in an increasingly competitive and regulated business environment. As a result, the Company believes that the industry will continue to consolidate at the expense of these providers. 2 5 NCS's strategy is to capitalize on industry trends and Company expertise to strengthen its position as a leading provider of high quality, integrated pharmacy and related services to institutional clients. The Company intends to implement this strategy by identifying and standardizing "best practices," cross marketing its services across its customer base to generate internal growth, utilizing its proprietary technology to deliver information, providing a broad array of ancillary health care services to complement its core pharmacy services and continuing its aggressive acquisition and development program. From 1986 to June 30, 1997, NCS completed 37 acquisitions (other than fold-in acquisitions), including 22 acquisitions since the beginning of fiscal 1997. As a result of its fiscal 1997 acquisitions, the Company expanded its geographic presence into 16 new states. In addition, the Company completed 27 fold-in acquisitions in fiscal 1997. The Company intends to continue to expand through acquisitions. Prospective investors are cautioned that the statements included and incorporated by reference in this Prospectus that are not descriptions of historical facts may be forward-looking statements. Such statements reflect management's current views, are based on many assumptions and are subject to risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors, including those described under the caption "Risk Factors." RISK FACTORS In addition to the other information contained and incorporated by reference in this Prospectus, prospective investors should carefully consider the following factors in evaluating an investment in the Debentures or shares of Class A Common Stock offered hereby. This Prospectus includes, in addition to historical information, forward-looking statements that involve risks and uncertainties. The Company's actual results could differ materially. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below as well as those described elsewhere in this Prospectus (including the documents incorporated by reference herein). IMPACT OF ACQUISITIONS In accordance with its strategy for growth, NCS presently is engaged in an expansion program which incorporates an active acquisition program in the long-term care pharmacy industry. For the years ended June 30, 1995 and 1996, more than half, and for the year ended June 30, 1997, more than 66% of the growth in the Company's revenues resulted from acquisitions. The success of the Company's acquisition program and of its underlying growth strategy will depend, among other things, on the continued availability of suitable acquisition candidates. The Company is in various stages of discussion with potential acquisition candidates, although no material acquisition has become the subject of any definitive agreement, letter of intent or agreement in principle. One or more of these potential acquisitions could be material to the Company if completed. There can be no assurance that the Company will be able to complete any acquisitions on favorable terms, or at all, in the future. As a consequence of recent acquisitions, the Company has significantly grown in size and broadened the geographic area in which it operates. Any acquisition involves inherent uncertainties, such as the effect on the acquired businesses of integration into a larger organization and the availability of management resources to oversee the operations of the acquired business. The Company's ability to integrate the operations of acquired companies is essential to its future success. Even though an acquired business may have enjoyed excellent profitability and growth as an independent company prior to the acquisition, there can be no assurance that such profitability and growth would continue thereafter. There can be no assurance that the Company will be able to integrate new businesses successfully, that it will succeed in managing the significantly larger operations resulting therefrom or that any acquisition will not have a material adverse effect on the Company. In addition, the Company incurred significant amounts of goodwill in connection with recent acquisitions. At June 30, 1997, goodwill represented approximately 56.3% of total assets. In the event that the Company determines that the carrying value of goodwill is impaired, it would write-down such carrying value, which would result in a charge to earnings. Any such charge could have a material adverse effect on the Company's financial results. DECREASE IN NUMBER OF LONG-TERM CARE COMPANIES There is an ongoing trend in the long-term care market to consolidate facilities. Additionally, certain operators of long-term care facilities have acquired their own companies to provide pharmacy products and services rather than obtaining such products and services from independent providers like the Company. Both of these factors may adversely affect NCS by decreasing the number of customers for whom the Company can effectively compete. 3 6 COMPETITION Competition among providers of pharmacy services to the long-term care industry is intense, both regionally and nationally. The Company competes with numerous local retail pharmacies, local, regional and national institutional pharmacies and pharmacies owned by long-term care facilities. In its program of acquiring institutional pharmacy providers, the Company competes with several other companies which have similar acquisition strategies. Competition for certain acquisition targets is intense. Some of the Company's competitors have significantly greater financial and other resources than the Company and are often willing to pay higher prices for acquisitions. There can be no assurance as to the Company's ability to compete or pay for acquisitions or that competitive pressures will not have a material adverse effect on the Company. CAPITAL REQUIREMENTS RELATING TO GROWTH STRATEGY To take advantage of the consolidation trend in the institutional pharmacy industry and to expand the geographic area in which it operates, the Company's strategy includes growth through acquisitions. This strategy may require significant capital resources. Capital is needed not only for acquisitions, but also for the effective integration, operation and expansion of such businesses. There can be no assurance that acceptable financing for future acquisitions or for the integration, expansion and operation of existing businesses can be obtained. REGULATION AND REIMBURSEMENT The Company's business is subject to federal, state and local regulations, and its pharmacies are required to be licensed in the states in which they are located. The failure to obtain or renew any required regulatory approvals or licenses could adversely affect the continued operation of the Company's business. In addition, the long-term care facilities that contract for the services of NCS are also subject to federal, state and local regulations and are required to be licensed in the states in which they are located. The failure by these institutions to comply with such regulations or to obtain or renew any required licenses could result in the loss of the Company's ability to provide pharmacy services to their residents. The Company is also subject to federal and state laws that prohibit certain direct and indirect payments between health care providers that are intended, among other things, to induce or encourage the referral of residents to, or the recommendation of, a particular provider of items or services. In the ordinary course of its business, the Company is subject to inspections, audits, inquiries and similar actions by governmental authorities responsible for enforcing these laws and regulations. Violation of these laws and regulations can result in loss of licensure, civil and criminal penalties and exclusion from the Medicare and Medicaid programs. See "Business - Government Regulation." For the year ended June 30, 1997, approximately 40% of the Company's pharmacy services billings were paid by Medicare and Medicaid and 11% were paid by long-term care facilities which were, in turn, reimbursed by Medicare. Medicare and Medicaid are highly regulated. The failure of NCS and/or its client institutions to comply with applicable reimbursement regulations could adversely affect the Company's business. Additionally, changes in such reimbursement programs or in regulations related thereto, such as reductions in the allowable reimbursement levels, modifications in the timing or processing of payments and other changes intended to limit or decrease the growth of Medicare and Medicaid expenditures, could adversely affect the Company's business. See "Business - Reimbursement and Billing." UNCERTAINTY DUE TO PROPOSED CHANGES IN NATIONAL AND STATE HEALTH CARE POLICIES The Clinton administration and members of Congress have proposed reforms to the system of health care delivery in the United States. None of these proposals have been adopted. The process by which the administration or Congress will pursue additional or modified proposals for national health care reform and the precise nature of any such proposals are unclear at this time. In addition, several states are considering or have implemented various health care reforms, including reforms through Medicaid managed care demonstration projects. Several states in which the Company operates have applied for, or received, approval from the U.S. Department of Health and Human Services ("HHS") for waivers from certain Medicaid requirements, which are generally required for such managed care projects. Although these demonstration projects generally exempt institutional care, including long-term care facilities and institutional pharmacy services, no assurance can be given that these waiver projects ultimately will not change the reimbursement system for long-term care, including pharmacy services, from fee-for-service to managed care negotiated or capitated rates. It is not possible to predict what reforms of the health care system will be adopted and the effect, if any, such reforms may have on the Company's business. See "Business - Reimbursement and Billing" and "Government Regulation." 4 7 DEPENDENCE ON KEY EMPLOYEES The Company's operations are substantially dependent on the abilities of its executive officers to manage the Company's business and to identify acquisition candidates. The Company has an employment agreement with only one of these individuals. In addition, in connection with the Company's acquisition of certain significant subsidiaries, the Company has entered into employment agreements with certain other key personnel. The Company's ability to operate these subsidiaries is substantially dependent on the contribution of these personnel to the day-to-day operation of those businesses. The loss of any of its executive officers or other key personnel could have a material adverse effect on the Company's results of operations. RISK OF PROFESSIONAL LIABILITY; AVAILABILITY OF INSURANCE The Company's business exposes it to risks that are inherent in the packaging and distribution of pharmaceuticals and the provision of ancillary services. The Company currently maintains professional liability and errors and omissions insurance. There can be no assurance that the coverage limits of such insurance will be adequate to protect the Company against future claims. In addition, there can be no assurance that the Company will be able to maintain professional liability insurance in the future on acceptable terms or with adequate coverage against potential liabilities. CONTROL BY PRINCIPAL STOCKHOLDERS As of June 30, 1997, the Directors and executive officers of the Company and their affiliates collectively owned approximately 67.3% of the outstanding voting power of the Company. As a result, these stockholders are able to exercise significant influence over matters requiring stockholder approval, including the election of Directors and the approval of significant corporate transactions. Such concentration of ownership may have the effect of delaying or preventing a change in control of the Company. See "Description of Capital Stock." POTENTIAL EFFECT OF ANTI-TAKEOVER PROVISIONS AND CERTAIN PROVISIONS OF DELAWARE LAW Certain provisions of Delaware law and the Company's Certificate of Incorporation and By-Laws could have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from attempting to acquire, control of the Company. The Company's By-Laws provide for the Board of Directors to be divided into three classes of directors serving staggered three-year terms. Such classification of the Board of Directors lengthens the time required to change the composition of a majority of directors and could discourage a proxy contest or other takeover bid for the Company. The Company's Certificate of Incorporation allows the Company to issue Preferred Stock with rights senior to those of the Common Stock without any further vote or action by the stockholders. The issuance of Preferred Stock could decrease the amount of earnings and assets available for distribution to the holders of Common Stock or could adversely affect the rights and powers, including voting rights, of the holders of the Common Stock. In addition, the Company's Certificate of Incorporation provides for Class B Common Stock, which has ten votes per share. At June 30, 1997, the outstanding shares of Class B Common Stock represented 37.3% of the shares of Common Stock outstanding, which shares entitle the holders thereof to 85.6% of the total voting power of the Common Stock. The existence of the Class B Common Stock and the issuance of Preferred Stock could have the effect of making an unsolicited acquisition of the Company more difficult and, consequently, cause a decrease in the market price of the Class A Common Stock. In addition, the Company is subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law, which prohibits the Company from engaging in a "business combination" with an "interested stockholder" for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. The application of Section 203 also could have the effect of delaying or preventing a change in control of the Company. See "Description of Capital Stock - Preferred Stock" and "- The Delaware Business Combination Act." SUBORDINATION OF DEBENTURES The Debentures are subordinate in right of payment to all current and future Senior Indebtedness of the Company. Senior Indebtedness includes all secured indebtedness of the Company, whether existing on or created or incurred after the date of the issuance of the Debentures, that is not made subordinate to or pari passu with the Debentures by the instrument creating the indebtedness. At August 31, 1997, the aggregate amount of the Company's Senior Indebtedness was approximately $1.1 million. The Indenture does not limit the amount of additional indebtedness, 5 8 including Senior Indebtedness, which the Company can create, incur, assume or guarantee. Additionally, pursuant to a credit agreement entered into on August 1, 1997, among the Company and certain lending institutions, KeyBank National Association as administrative agent, the Company is entitled to borrow up to $135 million of Senior Indebtedness under a credit facility. By reason of such subordination of the Debentures, in the event of insolvency, bankruptcy, liquidation, reorganization, dissolution or winding up of the business of the Company or upon default in payment with respect to any Senior Indebtedness of the Company or an event of default with respect to such indebtedness resulting in the acceleration thereof, the assets of the Company will be available to pay the amounts due on the Debentures only after all Senior Indebtedness of the Company has been paid in full. RISKS RELATING TO ENFORCEABILITY OF SUBSIDIARY GUARANTEES The Company's payment obligations under the Debentures are jointly and severally guaranteed by all of its wholly-owned subsidiaries. To the extent that a court were to find that (i) a guarantee was incurred by a subsidiary guarantor with the intent to hinder, delay or defraud any present or future creditor, (ii) the subsidiary guarantor contemplated insolvency with a design to prefer one or more creditors to the exclusion in whole or in part of others or (iii) such subsidiary guarantor did not receive fair consideration or reasonably equivalent value for issuing its guarantee and such subsidiary guarantor (w) was insolvent, (x) was rendered insolvent by reason of the issuance of such guarantee, (y) was engaged or about to engage in a business or transaction for which the remaining assets of such subsidiary guarantor constituted unreasonably small capital to carry on its business or (z) intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they matured, the court, subject to applicable statutes of limitations, could avoid or subordinate such guarantee in favor of a subsidiary guarantor's creditors or take other action detrimental to the holders of the Debentures. Among other things, a legal challenge of a guarantee on fraudulent conveyance grounds may focus on the benefits, if any, realized by a subsidiary guarantor as a result of the issuance by the Company of the Debentures. To the extent any guarantees were avoided as a fraudulent conveyance or held unenforceable for any other reason, holders of the Debentures would cease to have any claim in respect of such subsidiary guarantor and would be creditors solely of the Company and any subsidiary guarantor whose guarantee was not avoided or held unenforceable. In such event, the claims of holders of the Debentures against the issuer of an invalid guarantee would be subject to the prior payment of all liabilities of such subsidiary guarantor. There can be no assurance that, after providing for all prior claims, there would be sufficient assets remaining to satisfy the claims of the holders of the Debentures relating to any avoided portions of any of the guarantees. In addition, if a court were to avoid the guarantees under fraudulent conveyance laws or other legal principles or, by the terms of such guarantees, the obligations thereunder were reduced as necessary to prevent such avoidance, or the guarantees were released, the claims of other creditors of the subsidiary guarantors, including trade creditors, would to such extent have priority as to the assets of such subsidiary guarantors over the claims of holders of the Debentures. The guarantees of the Debentures by any subsidiary guarantor will be released at such time as the subsidiary guarantor is no longer a member of an affiliated group (within the meaning of Section 279(g) of the Internal Revenue Code of 1986, as amended) which includes the Company, including, without limitation, upon the sale or disposition (whether by merger, stock purchase, asset sale or otherwise) of such subsidiary guarantor. The Indenture does not impose any limitations on the Company's ability to sell or dispose of any subsidiary guarantor. See "Description of Debentures - Subsidiary Guarantees." LIMITATIONS ON REPURCHASE UPON A REPURCHASE EVENT In the event of a Repurchase Event, which includes a Change in Control and a Termination of Trading (each as defined herein), each holder of Debentures will have the right, at the holder's option, to require the Company to repurchase all or a portion of such holder's Debentures at a purchase price equal to 100% of the principal amount thereof plus accrued interest thereon to the repurchase date. The Company's ability to repurchase the Debentures upon a Repurchase Event may be limited by the terms of the Company's Senior Indebtedness and the subordination provisions of the Indenture. Further, the ability of the Company to repurchase Debentures upon a Repurchase Event will be dependent on the availability of sufficient funds and compliance with applicable securities laws. Accordingly, there can be no assurance that the Company will be able to repurchase the Debentures upon a Repurchase Event. The term "Repurchase Event" is limited to certain specified transactions and may not include other events that might adversely affect the financial condition of the Company or result in a downgrade of the credit rating (if any) of the Debentures nor would the requirement that the Company offer to repurchase the Debentures upon a Repurchase Event necessarily afford holders of the Debentures protection in the event of a highly leveraged reorganization, merger or similar transaction involving the Company. See "Description of Debentures." 6 9 ABSENCE OF PUBLIC MARKET; TRANSFER RESTRICTIONS There is no existing public market for the Debentures and there can be no assurance as to the liquidity of any market that may develop for the Debentures, the ability of the holders to sell their Debentures or the price at which holders of the Debentures may be able to sell their Debentures. Future trading prices of the Debentures will depend on many factors, including, among other things, prevailing interest rates, the Company's operating results, the price of the Class A Common Stock and the market for similar securities. The Initial Purchasers have informed the Company that the Initial Purchasers intend to make a market in the Debentures offered hereby; however, the Initial Purchasers are not obligated to do so, and any such market making activity may be terminated at any time without notice to the holders of the Debentures. See "Description of Debentures - Registration Rights; Liquidated Damages." The Debentures have been designated for trading in the PORTAL Market; however, the Company does not intend to apply for listing of the Debentures on any securities exchange. Debentures resold pursuant to the Registration Statement (of which this Prospectus is a part) will no longer be eligible for trading in the PORTAL Market. POSSIBLE VOLATILITY OF STOCK PRICE The stock market has from time to time experienced extreme price and volume fluctuations which in some circumstances have been unrelated to the operating performance of particular companies. The market price for shares of the Class A Common Stock may be highly volatile depending on various factors, including, but not limited to, the state of the national economy, stock market conditions, industry research reports, actions by governmental agencies, litigation involving the Company, earnings and other announcements by the Company or its competitors and general conditions in the institutional pharmacy business. USE OF PROCEEDS The Company will not receive any proceeds from the sale of the Debentures or the shares of Class A Common Stock offered hereby. RATIO OF EARNINGS TO FIXED CHARGES The Company's ratio of earnings to fixed charges for each of the periods indicated is as follows:
YEAR ENDED JUNE 30, ----------------------------------------------------------------------------------------- 1993 1994 1995 1996 1997 --------------- --------------- --------------- --------------- --------------- 3.4x 5.2x 3.6x 2.6x 11.1x
For purposes of computing the ratio of earnings to fixed charges, earnings represent income before income taxes plus fixed charges. Fixed charges include interest (expensed and capitalized), amortization of debt issuance costs and the estimated interest component of rental expense. 7 10 DESCRIPTION OF DEBENTURES The Debentures were issued under an indenture dated as of August 13, 1997 (the "Indenture") between the Company and National City Bank, as trustee (the "Trustee"). The following summaries of certain provisions of the Indenture do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all of the provisions of the Indenture, including the definition therein of certain terms. Wherever particular sections or defined terms of the Indenture are referred to, such sections or defined terms are incorporated herein by reference. For purposes of the following discussion, "Common Stock" includes any stock of any class of the Company which has no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company and which is not subject to redemption by the Company, including, without limitation, the Company's Class B Common Stock. Copies of the Indenture are available from the Company or the Initial Purchasers upon request. GENERAL The Debentures are unsecured obligations of the Company, limited to $100 million in aggregate principal amount and mature on August 15, 2004. The Debentures bear interest at a rate of 5 3/4% per annum from the date of original issuance of Debentures pursuant to the Indenture, or from the most recent Interest Payment Date to which interest has been paid or provided for, payable semi-annually on February 15 and August 15 of each year, commencing February 15, 1998, to the Person in whose name the Debenture (or any predecessor Debenture) is registered at the close of business on the preceding February 1 or August 1, as the case may be. Interest on the Debentures will be paid on the basis of a 360-day year of twelve 30-day months. Principal of, and premium, if any, and interest on the Debentures is payable (i) in respect of Debentures held of record by the Depository Trust Company ("DTC") or its nominee in same day funds on or prior to the payment dates with respect to such amounts and (ii) in respect of Debentures held of record by Holders other than DTC or its nominee at the corporate trust office of the Trustee, and the Debentures may be surrendered for transfer, exchange or conversion at the corporate trust office of the Trustee. In addition, with respect to Debentures held of record by Holders other than DTC or its nominee, payment of interest may be made at the option of the Company by check mailed to the address of the persons entitled thereto as it appears in the Register for the Debentures on the Regular Record Date for such interest. The Debentures have been issued only in registered form, without coupons and in denominations of $1,000 or any integral multiple thereof. No service charge will be made for any transfer or exchange of the Debentures, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge and any other expenses (including the fees and expenses of the Trustee) payable in connection therewith. The Company is not required (i) to issue, register the transfer of or exchange any Debentures during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption and ending at the close of business on the day of such mailing or (ii) to register the transfer of or exchange any Debenture selected for redemption in whole or in part, except the unredeemed portion of Debentures being redeemed in part. All monies paid by the Company to the Trustee or any Paying Agent for the payment of principal of and premium and interest on any Debenture which remain unclaimed for two years after such principal, premium or interest become due and payable may be repaid to the Company. Thereafter, the Holder of such Debenture may, as an unsecured general creditor, look only to the Company for payment thereof. The Indenture does not contain any provisions that would provide protection to Holders of the Debentures against a sudden and dramatic decline in credit quality of the Company resulting from any takeover, recapitalization or similar restructuring, except as described below under "Certain Rights to Require Repurchase of Debentures." CONVERSION RIGHTS The Debentures are convertible into Class A Common Stock at any time prior to redemption or final maturity, initially at the conversion price of $32.70 per share. The right to convert Debentures which have been called for redemption will terminate at the close of business on the second business day preceding the Redemption Date. See "Optional Redemption" below. The conversion price is subject to adjustment upon the occurrence of any of the following events: (i) the subdivision, combination or reclassification of outstanding shares of Common Stock; (ii) the payment in shares of 8 11 Common Stock of a dividend or distribution on any class of capital stock of the Company; (iii) the issuance of rights or warrants to all holders of Class A Common Stock or Class B Common Stock or both entitling them to acquire shares of Common Stock at a price per share less than the Current Market Price; (iv) the distribution to holders of Class A Common Stock or Class B Common Stock or both of shares of capital stock other than Common Stock, evidences of indebtedness, cash or assets (including securities, but excluding dividends or distributions paid exclusively in cash and dividends, distributions, rights and warrants referred to above); (v) a distribution consisting exclusively of cash (excluding any cash distributions referred to in (iv) above) to all holders of Class A Common Stock or Class B Common Stock or both in an aggregate amount that, together with (A) all other cash distributions (excluding any cash distributions referred to in (iv) above) made within the 12 months preceding such distribution and (B) any cash and the fair market value of other consideration payable in respect of any tender offer by the Company or a subsidiary of the Company for Common Stock consummated within the 12 months preceding such distribution, exceeds 12.5% of the Company's market capitalization (determined as provided in the Indenture) on the date fixed for determining the stockholders entitled to such distribution; and (vi) the consummation of a tender offer made by the Company or any subsidiary of the Company for Common Stock which involves an aggregate consideration that, together with (X) any cash and other consideration payable in respect of any tender offer by the Company or a subsidiary of the Company for Common Stock consummated within the 12 months preceding the consummation of such tender offer and (Y) the aggregate amount of all cash distributions (excluding any cash distributions referred to in (iv) above) to all holders of the Class A Common Stock or Class B Common Stock or both within the 12 months preceding the consummation of such tender offer, exceeds 12.5% of the Company's market capitalization at the date of consummation of such tender offer. No adjustment of the conversion price will be required to be made until cumulative adjustments amount to at least one percent of the conversion price, as last adjusted. Any adjustment that would otherwise be required to be made shall be carried forward and taken into account in any subsequent adjustment. In addition to the foregoing adjustments, the Company from time to time may, to the extent permitted by law, reduce the conversion price of the Debentures by any amount for any period of at least 20 days, in which case the Company shall give at least 15 days' notice of such decrease. The Company also is permitted to reduce the conversion price as it considers to be advisable in order that any event treated for federal income tax purposes as a dividend of stock or stock rights will not be taxable to the holders of the Class A Common Stock or, if that is not possible, to diminish any income taxes that are otherwise payable because of such event. In the case of any consolidation or merger of the Company with any other corporation (other than one in which no change is made in the Common Stock), or any sale or transfer of all or substantially all of the assets of the Company, the Holder of any Debenture then outstanding will, with certain exceptions, have the right thereafter to convert such Debenture only into the kind and amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer by a holder of the number of shares of Class A Common Stock into which such Debenture might have been converted immediately prior to such consolidation, merger, sale or transfer; and adjustments will be provided for events subsequent thereto that are as nearly equivalent as practical to the conversion price adjustments described above. Fractional shares of Class A Common Stock will not be issued upon conversion, but, in lieu thereof, the Company will pay a cash adjustment based upon the then Closing Price at the close of business on the day of conversion. If any Debentures are surrendered for conversion during the period from the close of business on any Regular Record Date through and including the next succeeding Interest Payment Date (except any such Debentures called for redemption), such Debentures when surrendered for conversion must be accompanied by payment in next day funds of an amount equal to the interest thereon which the registered Holder on such Regular Record Date is to receive. Except as described in the preceding sentence, no interest will be payable by the Company on converted Debentures with respect to any Interest Payment Date subsequent to the date of conversion. No other payment or adjustment for interest or dividends is to be made upon conversion. SUBORDINATION The payment of the principal of and premium, if any, and interest on the Debentures, to the extent set forth in the Indenture, is subordinated in right of payment to the prior payment in full of all Senior Indebtedness. If there is a payment or distribution of assets to creditors upon any liquidation, dissolution, winding up, reorganization, assignment for the benefit of creditors, marshalling of assets or any bankruptcy, insolvency or similar proceedings of the Company, the holders of all Senior Indebtedness will be entitled to receive payment in full of all amounts due or to become due thereon or provision for such payment in money or money's worth before the Holders of the Debentures will be entitled to receive any payment in respect of the principal of or premium, if any, or interest on the Debentures. In the event of the acceleration of the maturity of the Debentures, the holders of all Senior Indebtedness will first be entitled to receive 9 12 payment in full in cash of all amounts due thereon or provision for such payment in money or money's worth before the holders of the Debentures will be entitled to receive any payment for the principal of or premium, if any, or interest on the Debentures. No payments on account of principal of or premium, if any, or interest on the Debentures or on account of the purchase or acquisition of Debentures may be made if there has occurred and is continuing a default in any payment with respect to Senior Indebtedness, any acceleration of the maturity of any Senior Indebtedness or if any judicial proceeding is pending with respect to any such default. Senior Indebtedness with respect to the Company is defined in the Indenture as (a) all secured indebtedness of the Company for money borrowed under the Company's primary revolving credit facility and any predecessor or successor credit facilities thereto, whether outstanding on the date of execution of the Indenture (such as the Company's $135 million credit facility currently in existence, any increase in the maximum principal amount thereof and any predecessor or successor facilities thereto) or thereafter created, incurred or assumed, (b) all other secured indebtedness of the Company for money borrowed, whether outstanding on the date of the execution of the Indenture or thereafter created, incurred or assumed, except any indebtedness that by the terms of the instrument or instruments by which such indebtedness was created or incurred expressly provides that it (i) is junior in right of payment to the Debentures or (ii) ranks pari passu in right of payment with the Debentures, and (c) any amendments, renewals, extensions, modifications, refinancings and refundings of any of the foregoing. The term "indebtedness for money borrowed" when used with respect to the Company is defined to mean (i) any obligation of, or any obligation guaranteed by, the Company for the repayment of borrowed money (including without limitation interest, fees, penalties and other obligations in respect thereof), whether or not evidenced by bonds, debentures, notes or other written instruments, (ii) any deferred payment obligation of, or any such obligation guaranteed by, the Company for the payment of the purchase price of property or assets evidenced by a note or similar instrument, (iii) any obligation of, or any such obligation guaranteed by, the Company for the payment of rent or other amounts under a lease of property or assets which obligation is required to be classified and accounted for as a capitalized lease on the balance sheet of the Company under generally accepted accounting principles, (iv) any obligation of, or any such obligation which is guaranteed by, the Company for the reimbursement of any obligor of any letter of credit, banker's acceptance or similar credit transaction, (v) any obligation of, or any such obligation which is guaranteed by, the Company under interest rate swaps, caps, collars, options and similar arrangements and (vi) any obligation of the Company under any foreign exchange contract, currency swap agreement, futures contract, currency option contract or other foreign currency hedge. Senior Indebtedness with respect to the Company's subsidiaries for purposes of the subsidiary guarantees of the Debentures shall have a corresponding meaning. The Debentures are obligations of the Company. The operations of the Company are currently conducted principally through subsidiaries, which are separate and distinct legal entities. Each of the Company's wholly-owned subsidiaries has guaranteed the Company's payment obligations under the Debentures, so long as such subsidiary is a member of an affiliated group (within the meaning of Section 279(g) of the Internal Revenue Code of 1986, as amended) which includes the Company. The satisfaction by the Company's subsidiaries of their contractual guarantees, as well as the payment of dividends and certain loans and advances to the Company by such subsidiaries, which may be subject to certain statutory or contractual restrictions, are contingent upon the earnings of such subsidiaries and are subject to various business considerations. Any right of the Company to receive assets of any subsidiary of the Company upon the liquidation or reorganization of any such subsidiary will be effectively subordinated to the claims of that subsidiary's creditors, except to the extent that the Company is itself recognized as a creditor of such subsidiary, in which case the claims of the Company would still be subordinate to any security in the assets of such subsidiary and any indebtedness of such subsidiary senior to that held by the Company. The Indenture does not limit or prohibit the incurrence of Senior Indebtedness. At August 31, 1997, the aggregate amount of Senior Indebtedness of the Company outstanding was approximately $1.1 million. The Company expects to incur additional indebtedness, including Senior Indebtedness from time to time in the future. See "Capitalization." SUBSIDIARY GUARANTEES Each of the Company's wholly-owned subsidiaries unconditionally guarantee, jointly and severally, the Company's obligations under the Debentures. The indebtedness represented by the guarantees is subordinated to all Senior Indebtedness of such subsidiaries. At such time as a subsidiary guarantor is no longer a member of an affiliated group (within the meaning of Section 279(g) of the Internal Revenue Code of 1986, as amended) which includes the Company, including, without 10 13 limitation, upon the sale or disposition (whether by merger, stock purchase, asset sale or otherwise) of such subsidiary guarantor, such subsidiary guarantor shall be deemed to be released from all its obligations under the subsidiary guarantee. The obligations of each subsidiary guarantor under its guarantee are limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities of such subsidiary guarantor (other than liabilities of such subsidiary guarantor under indebtedness which is subordinated to the guarantee) and after giving effect to any collections from or payments made by or on behalf of any other subsidiary guarantor in respect of the obligations of such other subsidiary guarantor under its guarantee, or pursuant to its contribution obligations under the Indenture, result in the obligations of such subsidiary guarantor under such guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal or state law. See "Risk Factors - Risks Relating to Enforceability of Subsidiary Guarantees." OPTIONAL REDEMPTION The Debentures are redeemable, at the Company's option, in whole or from time to time in part, at any time on or after August 18, 2000, upon not less than 30 nor more than 60 days' notice mailed to each Holder of Debentures to be redeemed at its address appearing in the Security Register and prior to Maturity at the Redemption Prices below (expressed as percentages of the principal amount) plus accrued interest to the Redemption Date (subject to the right of Holders of record on the relevant Regular Record Date to receive interest due on an Interest Payment Date that is on or prior to the Redemption Date). If redeemed during the 12-month period beginning August 15, in the year indicated (August 18, in the case of 2000), the redemption price shall be:
REDEMPTION YEAR PRICE ---- ----- 2000...................................................... 103.29% 2001...................................................... 102.46 2002...................................................... 101.64 2003...................................................... 100.82
No sinking fund is provided for the Debentures. CONSOLIDATION, MERGER AND SALE OF ASSETS The Indenture provides that the Company will not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, or permit any Person to consolidate with or merge into the Company or convey, transfer or lease its properties substantially as an entirety to the Company, unless (a) if applicable, the Person formed by such consolidation or into which the Company is merged or the Person or corporation which acquires the properties and assets of the Company substantially as an entirety is a corporation, limited liability company, partnership or trust organized and validly existing under the laws of the United States or any state thereof or the District of Columbia and expressly assumes payment of the principal of and premium, if any, and interest on the Debentures and performance and observance of each obligation of the Company under the Indenture, (b) after consummating such consolidation, merger, transfer or lease, no Default or Event of Default will occur and be continuing, (c) such consolidation, merger or acquisition does not adversely affect the validity or enforceability of the Debentures and (d) the Company has delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease complies with the provisions of the Indenture. CERTAIN RIGHTS TO REQUIRE REPURCHASE OF DEBENTURES In the event of any Repurchase Event (as defined below) occurring after the date of issuance of the Debentures and on or prior to Maturity, each Holder of Debentures will have the right, at the Holder's option, to require the Company to repurchase all or any part of the Holder's Debentures on the date (the "Repurchase Date") that is 30 days after the date the Company gives notice of the Repurchase Event as described below at a price (the "Repurchase Price") equal to 100% of the principal amount thereof, together with accrued and unpaid interest to the Repurchase Date. On or prior to the Repurchase Date, the Company shall deposit with the Trustee or a Paying Agent an amount of money sufficient to pay the Repurchase Price of the Debentures which are to be repaid on the Repurchase Date. 11 14 Failure by the Company to provide timely notice of a Repurchase Event, as provided for below, or to repurchase the Debentures when required under the preceding paragraph will result in an Event of Default under the Indenture whether or not such repurchase is permitted by the subordination provisions of the Indenture. On or before the 15th day after the occurrence of a Repurchase Event, the Company is obligated to mail to all Holders of Debentures a notice of the occurrence of such Repurchase Event identifying the Repurchase Date, the date by which the repurchase right must be exercised, the Repurchase Price for Debentures and the procedures which the Holder must follow to exercise this right. To exercise the repurchase right, the Holder of a Debenture must deliver, on or before the close of business on the Repurchase Date, written notice to the Company (or an agent designated by the Company for such purpose) and to the Trustee of the Holder's exercise of such right, together with the certificates evidencing the Debentures with respect to which the right is being exercised, duly endorsed for transfer. A "Repurchase Event" shall have occurred upon the occurrence of a Change in Control or a Termination of Trading (each as defined below). A "Change in Control" shall occur when: (i) all or substantially all of the Company's assets are sold as an entirety to any person or related group of persons; (ii) there shall be consummated any consolidation or merger of the Company (A) in which the Company is not the continuing or surviving corporation (other than a consolidation or merger with a wholly owned subsidiary of the Company in which all shares of Class A Common Stock outstanding immediately prior to the effectiveness thereof are changed into or exchanged for the same consideration) or (B) pursuant to which the Class A Common Stock and Class B Common Stock would be converted into cash, securities or other property, in each case other than a consolidation or merger of the Company in which the holders of the Class A Common Stock and Class B Common Stock immediately prior to the consolidation or merger have, directly or indirectly, at least a majority of the total voting power of all classes of capital stock entitled to vote generally in the election of directors of the continuing or surviving corporation immediately after such consolidation or merger in substantially the same proportion as their ownership of Class A Common Stock and Class B Common Stock immediately before such transaction; (iii) any person, or any persons acting together which would constitute a "group" for purposes of Section 13(d) of the Exchange Act (in each case other than members of the Current Control Group, as defined below), together with any affiliates thereof, shall beneficially own (as defined in Rule 13d-3 under the Exchange Act) at least 50% of the total voting power of all classes of capital stock of the Company entitled to vote generally in the election of directors of the Company; (iv) at any time during any consecutive two-year period, individuals who at the beginning of such period constituted the Board of Directors of the Company (together with any new directors whose election by such Board of Directors or whose nomination for election by the stockholders of the Company was approved by a vote of 66-2/3% of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Company then in office; or (v) the Company is liquidated or dissolved or adopts a plan of liquidation or dissolution. "Current Control Group" means the members of the Board of Directors and the executive officers of the Company as of August 7, 1997, their spouses, children, parents and siblings, the trustee of any trust created for the benefit of any such member of the Board of Directors, officer or family member, the executor or administrator (in his or her capacity as such) of the estate of any such member of the Board of Directors, officer or family member, and any Person who receives Class B Common Stock under the last will and testament of, or under the laws of descent and distribution from, any such member of the Board of Directors, officer or family member. A "Termination of Trading" shall occur if the Class A Common Stock (or other common stock into which the Debentures are then convertible) is neither listed for trading on a U.S. national securities exchange nor approved for trading on an established automated over-the-counter trading market in the United States. The right to require the Company to repurchase Debentures as a result of the occurrence of a Repurchase Event could create an event of default under Senior Indebtedness of the Company, as a result of which any repurchase could, absent a waiver, be blocked by the subordination provisions of the Debentures. See "Subordination." Failure by the Company to repurchase the Debentures when required will result in an Event of Default with respect to the Debentures whether or not such repurchase is permitted by the subordination provisions. The Company's ability to pay cash to the Holders of Debentures upon a repurchase may be limited by certain financial covenants contained in the Company's Senior Indebtedness. 12 15 In the event a Repurchase Event occurs and the Holders exercise their rights to require the Company to repurchase Debentures, the Company intends to comply with applicable tender offer rules under the Exchange Act, including Rules 13e-4 and 14e-1, as then in effect, with respect to any such purchase. The foregoing provisions would not necessarily afford Holders of the Debentures protection in the event of highly leveraged or other transactions involving the Company that may adversely affect Holders. In addition, the foregoing provisions may discourage open market purchases of the Class A Common Stock or a non-negotiated tender or exchange offer for such stock and, accordingly, may limit a stockholder's ability to realize a premium over the market price of the Class A Common Stock in connection with any such transaction. EVENTS OF DEFAULT The following are Events of Default under the Indenture with respect to the Debentures: (a) default in the payment of principal of or any premium on any Debenture when due (even if such payment is prohibited by the subordination provisions of the Indenture), whether at maturity, upon redemption, upon acceleration or otherwise; (b) default in the payment of any interest on any Debenture when due, which default continues for 30 days (even if such payment is prohibited by the subordination provisions of the Indenture); (c) failure to provide timely notice of a Repurchase Event as required by the Indenture; (d) default in the payment of the Repurchase Price in respect of any Debenture on the Repurchase Date therefor (even if such payment is prohibited by the subordination provisions of the Indenture); (e) default in the performance of any other covenant of the Company in the Indenture which continues for 60 days after written notice as provided in the Indenture; (f) default under one or more bonds, debentures, notes or other evidences of indebtedness for money borrowed by the Company or any subsidiary of the Company or under one or more mortgages, indentures or instruments under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company or any subsidiary of the Company, whether such indebtedness now exists or shall hereafter be created, which default individually or in the aggregate shall constitute a failure to pay the principal of indebtedness in excess of $10,000,000 when due and payable after the expiration of any applicable grace period with respect thereto or shall have resulted in indebtedness in excess of $10,000,000 becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, without such indebtedness having been discharged, or such acceleration having been rescinded or annulled, within a period of 30 days after there shall have been given to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the Outstanding Debentures a written notice specifying such default and requiring the Company to cause such indebtedness to be discharged or cause such acceleration to be rescinded or annulled; and (g) certain events in bankruptcy, insolvency or reorganization of the Company or any subsidiary of the Company. If an Event of Default with respect to the Debentures shall occur and be continuing, the Trustee or the Holders of not less than 25% in aggregate principal amount of the Outstanding Debentures may declare the principal of and premium, if any, on all such Debentures to be due and payable immediately, but if the Company cures all Events of Default (except the nonpayment of interest on, premium, if any, and principal of any Debentures) and certain other conditions are met, such declaration may be canceled and past defaults may be waived by the holders of a majority in principal amount of Outstanding Debentures. If an Event of Default shall occur as a result of an event of bankruptcy, insolvency or reorganization of the Company or any subsidiary of the Company, the aggregate principal amount of the Debentures shall automatically become due and payable. The Company is required to furnish to the Trustee annually a statement as to the performance by the Company of certain of its obligations under the Indenture and as to any default in such performance. The Indenture provides that the Trustee may withhold notice to the Holders of the Debentures of any continuing default (except in the payment of the principal of or premium, if any, or interest on any Debentures) if the Trustee considers it in the interest of Holders of the Debentures to do so. MODIFICATION, AMENDMENTS AND WAIVERS The Indenture contains provisions permitting the Company and the Trustee, with the consent of the holders of not less than a majority of the aggregate principal amount of the Outstanding Debentures, to execute a supplemental indenture to add provisions to, or change in any manner or eliminate any provisions of, the Indenture or modify in any manner the rights of Holders of the Debentures, provided that without the consent of each Holder of Outstanding Debentures, no supplemental indenture may (i) change the stated maturity of the principal of, or any installment of interest on, any Debenture, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof, or change the place of payment where, or the coin or currency in which, any Debenture or any premium or interest thereon is payable, or impair the right to institute suit for enforcement of any such payment on or after 13 16 the stated maturity thereof (or, in the case of redemption, on or after the redemption date), (ii) adversely affect the right to convert the Debentures as provided in the Indenture, (iii) modify the provisions of the Indenture with respect to the subordination of the Debentures in a manner adverse to the Holders of Debentures, (iv) impair the right of Holders of Debentures to require the Company to repurchase Debentures upon the occurrence of a Repurchase Event or (v) reduce the percentage in principal amount of Outstanding Debentures, the consent of whose Holders is required for any waiver of compliance with certain provisions of the Indenture or certain defaults thereunder. Modifications and amendments of the Indenture may be made by the Company and the Trustee without the consent of the Holders to: (a) cause the Indenture to be qualified under the Trust Indenture Act; (b) evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company herein and in the Debentures; (c) add to the covenants of the Company for the benefit of the Holders or an additional Event of Default, or surrender any right or power conferred upon the Company; (d) secure the Debentures; (e) make provision with respect to the conversion rights of Holders in the event of a consolidation, merger or sale of assets involving the Company, as required by the Indenture; (f) evidence and provide for the acceptance of appointment by a successor Trustee with respect to the Debentures; or (g) cure any ambiguity, correct or supplement any provision which may be defective or inconsistent with any other provision, or make any other provisions with respect to matters or questions arising under the Indenture which shall not be inconsistent with the provisions of the Indenture, provided, however, that no such modifications or amendment may adversely affect the interest of Holders in any material respect. SATISFACTION AND DISCHARGE The Company may discharge its obligations under the Indenture while Debentures remain Outstanding if (a) all Outstanding Debentures will become due and payable at their scheduled maturity within one year or (b) all Outstanding Debentures are scheduled for redemption within one year, and in either case the Company has deposited with the Trustee an amount sufficient to pay and discharge all Outstanding Debentures on the date of their scheduled maturity or the scheduled date of redemption. FORM, DENOMINATION AND REGISTRATION The Debentures have been issued in fully registered form, without coupons, in denominations of $1,000 in principal amount and integral multiples thereof. Global Debenture; Book-Entry Form. Debentures will be evidenced by a global Debenture (hereinafter referred to as the "Registered Global Debenture"), except as set forth below under "Certificated Debentures." The Registered Global Debentures will be deposited with, or on behalf of, DTC and registered in the name of Cede & Co. ("Cede") as DTC's nominee. Beneficial interests in the Registered Global Debenture are exchangeable for definitive certificated Debentures only in accordance with the terms of the Indenture. Except as set forth below, the Registered Global Debentures may be transferred, in whole or in part, only to another nominee of DTC or to a successor of DTC or its nominee. The Holders of Debentures may hold their interests in the Registered Global Debentures directly through DTC if such Holder is a participant in DTC, or indirectly through organizations which are participants in DTC (the "Participants"). Transfers between Participants will be effected in the ordinary way in accordance with DTC rules and will be settled in same day funds. The laws of some states require that certain persons take physical delivery of securities in definitive form. Consequently, the ability to transfer beneficial interests in the Registered Global Debentures to such persons may be limited. The Holders of Debentures who are not Participants may beneficially own interests in the Registered Global Debentures held by DTC only through Participants or certain banks, brokers, dealers, trust companies and other parties that clear through or maintain a custodial relationship with a Participant, either directly or indirectly ("Indirect Participants"). So long as Cede, as the nominee of DTC, is the registered owner of the Registered Global Debentures, Cede for all purposes will be considered the sole holder of the Registered Global Debentures. Payment of interest on and the redemption price or repurchase price (upon redemption at the option of the Company or repurchase at the option of the Holder upon a Repurchase Event) of the Registered Global Debentures will be made to Cede, the nominee for DTC, as the registered owner of the Registered Global Debentures, by wire transfer of immediately available funds on each interest payment date or the redemption date, as the case may be. Neither the 14 17 Company, the Trustee nor any paying agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the Registered Global Debentures or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. With respect to any payment of interest on and the redemption price or repurchase price (upon redemption at the option of the Company or repurchase at the option of the Holder upon a Repurchase Event) of the Registered Global Debentures, DTC's practice is to credit Participants' accounts on the payment date therefor with payments in amounts proportionate to their respective beneficial interests in the Debentures represented by the Registered Global Debentures as shown on the records of DTC, unless DTC has reason to believe that it will not receive payment on such payment date. Payments by Participants to owners of beneficial interests in Debentures represented by the Registered Global Debentures held through such Participants will be the responsibility of such Participants, as is now the case with securities held for the accounts of customers registered in "street name." Because DTC can only act on behalf of Participants, who in turn act on behalf of Indirect Participants and certain banks, the ability of a person having a beneficial interest in Debentures represented by the Registered Global Debentures to pledge such interest to persons or entities that do not participate in the DTC system, or otherwise take actions in respect of such interest, may be affected by the lack of a physical certificate evidencing such interest. Neither the Company nor the Trustee (or any registrar, paying agent or conversion agent under the Indenture) will have any responsibility for the performance by DTC or its Participants or Indirect Participants of their respective obligations under the rules and procedures governing their operations. If DTC is at any time unwilling or unable to continue as depositary and a successor depositary is not appointed by the Company within 90 days, the Company will cause Debentures to be issued in definitive form in exchange for the Registered Global Debentures. Certificated Debentures. Debentures sold (other than pursuant to the Registration Statement of which this Prospectus is a part) to investors that are neither Qualified Institutional Buyers nor persons acquiring such Debentures in compliance with Regulation S under the Securities Act will be issued in definitive registered form and may not be evidenced by a Global Debenture. Qualified Institutional Buyers may request that their Debentures be issued in definitive registered form. In addition, certificated Debentures may be issued in exchange for Debentures represented by the Registered Global Debentures if no successor depositary is appointed by the Company as set forth above under the paragraph entitled "Global Debentures; Book-Entry Form." PAYMENTS OF PRINCIPAL AND INTEREST The Indenture requires that payments in respect of the Debentures (including principal, premium, if any, and interest) held of record by DTC (including Debentures evidenced by the Registered Global Debentures) be made in same day funds. Payments in respect of the Debentures held of record by holders other than DTC may, at the option of the Company, be made by check and mailed to such holders of record as shown on the Register for the Debentures. REGISTRATION RIGHTS; LIQUIDATED DAMAGES The Company and the Initial Purchasers entered into a Registration Rights Agreement (the "RRA") on August 13, 1997 (the "Closing Date"). In the RRA, the Company agreed to file with the SEC within 30 days after the Closing Date a registration statement (the "Shelf") (of which this Prospectus forms a part) on Form S-1 or Form S-3 to cover resales of Transfer Restricted Securities (as defined below) by the holders thereof who satisfy the conditions referred to below. The Company will be permitted to prohibit offers and sales of Transfer Restricted Securities pursuant to the Shelf under certain circumstances and subject to certain conditions (any period during which offers and sales are prohibited being a "Suspension Period"). "Transfer Restricted Securities" means each Debenture and any underlying share of Class A Common Stock until such Debenture or share, as the case may be, (i) has been transferred pursuant to the Shelf or another registration statement covering it which has been filed with the SEC pursuant to the Securities Act, in either case after such registration statement has become effective under the Securities Act, (ii) has been transferred pursuant to Rule 144 under the Securities Act or (iii) may be sold or transferred pursuant to Rule 144(k) under the Securities Act (or any similar provisions then in force). "Transfer Restricted Securities" is also deemed to include the guarantees of the Company's obligations under the Indenture and the Debentures by certain subsidiaries of the Company. See "Description of Debentures - Subsidiary Guarantees" above. 15 18 If the Shelf has not been declared effective by the SEC within 90 days after the Closing Date or is filed and declared effective but shall thereafter cease to be effective (without being succeeded immediately by a replacement shelf registration statement filed and declared effective) or usable for the offer and sale of Transfer Restricted Securities for a period of time (including any Suspension Period) which shall exceed 60 days in the aggregate in any 12-month period during the period beginning on the Closing Date and ending on or prior to the second anniversary of the Closing Date (each such event a "Registration Default"), the Company will pay liquidated damages to each Holder of Transfer Restricted Securities which has complied with its obligations under the RRA. The amount of liquidated damages payable during any period in which a Registration Default shall have occurred and be continuing is that amount which is equal to one-quarter of one percent (25 basis points) per annum per $1,000 principal amount of $2.50 per annum per 30.581 shares of Common Stock (subject to adjustment in the event of a stock split, stock recombination, stock dividend and the like) constituting Transfer Restricted Securities for the first 90 days during which a Registration Default has occurred and is continuing and 50 basis points per annum per $1,000 principal amount of Debentures or $5.00 per annum per 30.581 shares of Common Stock (subject to adjustment as set forth above) constituting Transfer Restricted Securities for any additional days during which a Registration Default has occurred and is continuing. The Company has agreed to pay all accrued liquidated damages by wire transfer of immediately available funds or by federal funds check on each Damages Payment Date (as defined in the RRA). Following the cure of a Registration Default, liquidated damages will cease to accrue with respect to such Registration Default. The Company has agreed to maintain the Shelf until the first to occur of (i) the second anniversary of the Closing Date or (ii) the date on which no security covered by the Shelf remains a Transfer Restricted Security. The foregoing summary of certain provisions of the RRA does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the provisions of the RRA. Copies of the RRA are available from the Company or the Initial Purchasers on request. GOVERNING LAW The Indenture and Debentures are governed by and construed in accordance with the laws of the State of New York, without giving effect to such state's conflicts of laws principles. INFORMATION CONCERNING THE TRUSTEE The Company and its subsidiaries maintain deposit accounts and conduct other banking transactions with the Trustee in the ordinary course of business. The Trustee serves as transfer agent with respect to the Class A Common Stock. The Trustee also serves as a lender under the Company's existing credit facility. ABSENCE OF PUBLIC MARKET; TRANSFER RESTRICTIONS The Debentures will be subject to significant restrictions on resale. See "Notice to Investors." There is no existing public market for the Debentures and there can be no assurance as to the liquidity of any markets that may develop for the Debentures, the ability of the Holders to sell their Debentures or at what price Holders of the Debentures will be able to sell their Debentures. Future trading prices of the Debentures will depend upon many factors including, among other things, prevailing interest rates, the Company's operating results, the price of the Class A Common Stock and the market for similar securities. The Initial Purchasers have informed the Company that they intend to make a market in the Debentures offered hereby; however, the Initial Purchasers are not obligated to do so and any such market making activity may be terminated at any time without notice to the holders of the Debentures. See "- Registration Rights; Liquidated Damages." The Debentures have been designated for trading in the PORTAL Market; however, the Company does not intend to apply for listing of the Debentures on any securities exchange. DESCRIPTION OF CAPITAL STOCK The Company's Certificate of Incorporation (the "Certificate") authorizes capital stock consisting of 50 million shares of Class A Common Stock, par value $.01 per share, 20 million shares of Class B Common Stock, par value $.01 per share (the "Class B Common Stock"), and one million shares of Preferred Stock, par value $.01 per share (the "Preferred Stock"). The Company is incorporated under the General Corporation Law of the State of Delaware (the "Delaware GCL"). 16 19 COMMON STOCK At September 2, 1997, there were 11,464,820 shares of Class A Common Stock and 6,742,742 shares of Class B Common Stock issued and outstanding, and options to purchase 402,274 shares of Class A Common Stock and options to purchase 164,557 shares of Class B Common Stock were outstanding. In addition, at such date, there were an aggregate of 314,710 shares of Class A Common Stock reserved for issuance under the Company's 1996 Long Term Incentive Plan. The Class A Common Stock and Class B Common Stock are identical in all material respects except that (i) shares of the Class B Common Stock entitle the holders thereof to ten votes per share on all matters and shares of the Class A Common Stock entitle the holders thereof to one vote per share on all matters, and (ii) the shares of Class B Common Stock are subject to certain restrictions on transfer. The shares of Class B Common Stock are not transferable except in certain very limited instances to family members, trusts, other holders of Class B Common Stock, charitable organizations and entities controlled by such persons (collectively, "Permitted Transferees"). These restrictions on transfer may be removed by the Board of Directors if the Board determines that the restrictions may have a material adverse effect on the liquidity, marketability or market value of the outstanding shares of Class A Common Stock. The Class B Common Stock is fully convertible at any time into shares of Class A Common Stock on a share-for-share basis and will automatically be converted into shares of Class A Common Stock upon any purported transfer to non-Permitted Transferees. Once a share of Class B Common Stock has been converted into a share of Class A Common Stock, such share of Class A Common Stock cannot thereafter be reconverted into a share of Class B Common Stock. Because the Class B Common Stock will at all times be convertible into Class A Common Stock on a share-for-share basis, holders of Class B Common Stock will be able to sell the equity interest represented by their Class B Common Stock to persons who are not Permitted Transferees by converting such shares into Class A Common Stock. As is the case with Preferred Stock and additional Class A Common Stock, additional Class B Common Stock can be issued at the discretion of the Board of Directors. Except as set forth below (and as provided by law and in the Company's Certificate now in effect), all matters submitted to a vote of the Company's stockholders will be voted on by holders of Class A Common Stock and Class B Common Stock voting together as a single class. Holders of outstanding shares of Class A Common Stock and Class B Common Stock, respectively, vote separately as a class with respect to amendments to the Certificate of Incorporation that would increase the authorized number of shares of Class B Common Stock, or that would make other amendments to the Certificate (other than increases in the number of authorized shares of Class A Common Stock) that alter or change the designations or powers or the preferences, qualifications, limitations, restrictions or the relative or special rights of either the Class B Common Stock or the Class A Common Stock so as to affect them adversely. No cash dividend may be declared or paid on the Class B Common Stock unless an equal or greater dividend is simultaneously declared or paid on the Class A Common Stock. Otherwise, subject to the rights of holders of Preferred Stock, if any, the Class A Common Stock and the Class B Common Stock rank equally and have equal rights per share with respect to all dividends and distributions, including distributions upon liquidation of the Company and consideration to be received upon a merger or consolidation of the Company or a sale of all or substantially all of the Company's assets. In the case of stock dividends or stock splits, however, only shares of Class A Common Stock can be distributed in respect of outstanding Class A Common Stock and only shares of Class B Common Stock can be distributed in respect of outstanding Class B Common Stock. Neither shares of Class A Common Stock nor shares of Class B Common Stock can be split, divided or combined unless all outstanding shares of the other class are correspondingly split, divided or combined. Because of the restrictions on transfer of the Class B Common Stock, over time shares of Class B Common Stock having ten votes will (unless the Directors determine to remove such restrictions) be converted into shares of Class A Common Stock having one vote, as holders convert their Class B Common Stock into Class A Common Stock in order to sell their shares. Accordingly, the holders of Class B Common Stock who continue to hold their Class B Common Stock will realize over time an increase in their relative voting power in the Company. The Directors and executive officers of the Company and their affiliates collectively own approximately 67.3% of the total voting power of the Company, prior to the conversion of any Debentures. A substantial portion of this group's share ownership consists of Class B Common Stock. If those individuals continue to hold their Class B Common Stock for the foreseeable future, the degree of control of the Company by these Directors and executive officers and their affiliates, and their percentage of the total voting power of the Company, will increase over time. 17 20 Holders of Class A Common Stock and Class B Common Stock do not have any preemptive rights or rights to subscribe for additional securities of the Company and are not subject to any further calls or assessments by the Company. There are no redemption or sinking fund provisions applicable to the Class A Common Stock or the Class B Common Stock. The shares of Class A Common Stock are not convertible into any other series or class of the Company's securities. Subject to the preferences applicable to the Preferred Stock, if any, outstanding at the time, holders of shares of Class A Common Stock and Class B Common Stock are entitled to dividends, if, when and as declared by the Board of Directors from funds legally available therefor and are entitled, in the event of liquidation, to share ratably in all assets remaining after payment of liabilities and Preferred Stock preferences, if any. See "Preferred Stock." PREFERRED STOCK The Company's Board of Directors is authorized, without further action by the stockholders, to issue, from time to time, not in excess of one million shares of Preferred Stock in one or more classes or series, and to fix or alter the designations, powers and preferences, and relative, participating, optional or other rights, if any, and qualifications, limitations or restrictions thereof, including, without limitation, dividend rights (and whether dividends are cumulative), conversion rights, if any, voting rights (including the number of votes, if any, per share), rights and terms of redemption (including sinking fund provisions, if any), redemption price and liquidation preferences of any unissued shares or wholly unissued series of Preferred Stock, and the number of shares constituting any such class or series and the designation thereof, and to increase or decrease the number of shares of any such class or series subsequent to the issuance of shares of such class or series, but not below the amount then outstanding. Currently, there are no shares of Preferred Stock outstanding, and the Company has no present intention to issue any Preferred Stock. TWO-TIER BUSINESS COMBINATION PROVISIONS The Certificate contains a provision designed to help assure that stockholders of the Company receive equitable treatment, beyond that presently provided by the applicable state law, in the event of certain Business Combinations (as defined) between the Company and another corporation or entity. Delaware law generally requires the affirmative vote of the holders of at least a majority of the outstanding shares entitled to vote to approve a merger, consolidation or disposition of all or substantially all of the Company's assets. The Certificate raises the affirmative vote required to approve such a business combination to at least 66-2/3% of the total voting power of the Company's outstanding shares of Class A Common Stock and Class B Common Stock, unless a Fair Price (as described herein) is paid to each of the stockholders of the Company, The Board of Directors is concerned about the partial or "two-step" tender offer technique of accomplishing corporate takeovers. The first step in this technique is a tender offer made by another corporation or entity seeking control at a price that often substantially exceeds the market value of the target corporation's stock. After acquiring a controlling number of shares, the entity will then effectuate the second step: a business combination with the target corporation designed to eliminate the then remaining stockholders' interest in the corporation. The terms of the second step business combination may not reflect arms-length bargaining and therefore may not assure proper treatment of the stockholders remaining after the tender offer. The Board of Directors intends to prevent persons who might acquire a controlling interest in the Company from imposing a business combination on minority stockholders unless such controlling persons are able and willing to deal fairly with minority stockholders by paying them a fair price for their interest in the Company. The Board recognizes that this fair price requirement might have the effect of discouraging unilateral tender offers and other takeover proposals to acquire control of the Company, as well as unsolicited acquisitions of the Company's outstanding shares. The Certificate requires, in addition to any required vote by the then outstanding Preferred Stock, the vote of not less than 66-2/3% of the then outstanding shares of the Company's Class A Common Stock and Class B Common Stock to approve any Business Combination of the Company with any Related Person (as defined) unless certain conditions have been met. In addition, the 66-2/3% vote must include the affirmative vote of 51% of the outstanding shares of Class A Common Stock and Class B Common Stock held by stockholders other than the Related Person. Accordingly, the actual vote required to approve the Business Combination may be greater than 66-2/3%, depending upon the number of shares controlled by the Related Person. A Related Person is defined to include any person or entity which is, directly or indirectly, the beneficial owner of shares of Common Stock representing 5% or more of the total voting power of the Company, including any affiliate or associate of such person or entity. The term Business Combination is defined to 18 21 include virtually any transaction between the Company and a Related Person, including a merger, consolidation or sale of assets. The 66-2/3% requirement and the 51% requirement are not applicable, however (and, therefore, the proposed Business Combination could be approved by a simple majority of the stockholders unless otherwise required by Delaware law), if the Related Person pays a Fair Price to the Company's stockholders in the transaction or if a majority of the Board of Directors approves the transaction. Under the terms of the Certificate, the Fair Price must be at least equal to the greatest of (i) the highest price paid or agreed to be paid by the Related Person to purchase any shares of the Company's common equity securities, (ii) the highest market price of the common equity securities during the 24-month period prior to the taking of such vote, or (iii) the per share book value of the Class A Common Stock at the end of the calendar quarter immediately preceding the taking of such vote. In addition, the Fair Price consideration to be received by the Company's stockholders must be of the same form and kind as the most favorable form and kind of consideration paid by the Related Person in acquiring any of its shares of common equity securities of the Company. The Certificate provides that the above provisions regarding two-tier business combinations may not be amended, altered, changed or repealed except by the affirmative vote of at least 66-2/3% of the shares of the common equity securities entitled to vote at a meeting of the stockholders called for the consideration of such amendment, alteration, change or repeal, and at least 51% of the outstanding shares entitled to vote thereon held by stockholders who are not Related Persons, unless such proposal shall have been proposed by a majority of the Board of Directors. THE DELAWARE BUSINESS COMBINATION ACT Section 203 of the Delaware GCL (the "Delaware Business Combination Act") imposes a three-year moratorium on business combinations between a Delaware corporation whose stock generally is publicly traded or held of record by more than 2,000 stockholders and an "interested stockholder" (in general, a stockholder owning 15% or more of a corporation's outstanding voting stock) or an affiliate or associate thereof unless (a) prior to an interested stockholder becoming such, the board of directors of the corporation approved either the business combination or the transaction resulting in the interested stockholder becoming such, (b) upon consummation of the transaction resulting in the interested stockholder becoming such, the interested stockholder owns 85% of the voting stock outstanding at the time the transaction commenced (excluding, from the calculation of outstanding shares, shares beneficially owned by directors who are also officers and certain employee stock plans) or (c) on or after an interested stockholder becomes such, the business combination is approved by (i) the board of directors and (ii) holders of at least 66-2/3% of the outstanding shares (other than those shares beneficially owned by the interested stockholder) at a meeting of stockholders. The term "business combination" is defined generally to include mergers or consolidations between a Delaware corporation and an "interested stockholder" involving the assets or stock of the corporation or its majority-owned subsidiaries and transactions which increase an "interested stockholder's" percentage ownership of stock. The Delaware Business Combination Act applies to certain corporations incorporated in the State of Delaware unless the corporation expressly elects not to be governed by such legislation and sets forth such election in (a) the corporation's original certificate of incorporation, (b) an amendment to the corporation's by-laws as adopted by the corporation's board of directors within 90 days of the effective date of such legislation or (c) an amendment to the corporation's certificate of incorporation or by-laws is approved by (in addition to any other vote required by law) a majority of the shares entitled to vote (however, such amendment would not be effective until 12 months after the date of its adoption and would not apply to any business combination between the corporation and any person who became an interested stockholder on or prior to such adoption of such amendment). The Company has not made such an election and, upon completion of the offering, will be subject to the Delaware Business Combination Act. DIRECTOR LIABILITY PROVISIONS As permitted by the Delaware GCL, the Certificate contains a provision which eliminates, under certain circumstances, the personal liability of Directors (only in their capacities as Directors of the Company) to the Company or its stockholders for monetary damages for a breach of fiduciary duty as Directors. The provision in the Certificate does not change a Director's duty of care, but it does authorize the Company to eliminate monetary liability for certain violations of the duty, including violations based on grossly negligent business decisions which may include decisions relating to attempts to change control of the Company. The provision does not affect the availability of equitable remedies for a breach of duty of care, such as an action to enjoin or rescind a transaction involving a breach of fiduciary duty; however, in certain circumstances equitable remedies may not be available as a practical matter. The provision 19 22 in the Certificate in no way affects a Director's liability under the federal securities laws. In addition, the Company's By-Laws and indemnity agreements entered into with the Company's Directors and officers indemnify its past and current Directors and officers for and provides advancements in respect of all expense, liability and loss reasonably incurred in connection with any threatened, pending or completed action, suit or proceeding, either civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a Director or officer of the Company, including, in certain circumstances under the indemnity agreements for settlements in derivative actions. CLASSIFIED BOARD The Certificate divides the Board of Directors into three classes. The Directors serve staggered terms of three years, with the members of one class being elected in any year, as follows: (i) James B. Naylor, Phyllis K. Wilson and A. Malachi Mixon III have been designated as Class I Directors and will serve until the 1999 annual meeting; (ii) Boake A. Sells and Kevin B. Shaw have been designated as Class II Directors and will serve until the 1997 annual meeting; and (iii) Richard L. Osborne and Jon H. Outcalt have been designated as Class III Directors and will serve until the 1998 annual meeting; and in each case until their respective successors are elected and qualified. A classified Board of Directors may have the effect of making it more difficult to remove incumbent Directors, providing such Directors with enhanced ability to retain their positions. A classified Board of Directors may also make the acquisition of control of the Company by a third party by means of a proxy contest more difficult. In addition, the classification may make it more difficult to change the majority of Directors for business reasons unrelated to a change of control. The Certificate provides that the above provisions regarding classification of the Board of Directors may not be amended, altered, changed or repealed except by the affirmative vote of at least 66-2/3% of the shares of Common Stock entitled to vote at a meeting of the stockholders called for the consideration of such amendment, alteration, change or repeal, unless such proposal shall have been proposed by a majority of the Board of Directors. GENERAL It is possible that the existence of the ten vote per share Class B Common Stock, the Company's ability to issue Preferred Stock, the increased voting requirements with respect to a Business Combination provided for in the Certificate, the provisions of the Delaware Business Combination Act and the division of the Board of Directors of the Company into classes as provided in the Certificate, may discourage other persons from making a tender offer for or acquisitions of substantial amounts of the Company's Class A Common Stock. This could have the incidental effect of inhibiting changes in management and may also prevent temporary fluctuations in the market price of the Company's Class A Common Stock which often result from actual or rumored takeover attempts. In addition, the limited liability provisions in the Certificate with respect to Directors and officers may discourage stockholders from bringing a lawsuit against Directors for breach of their fiduciary duty and may also have the effect of reducing the likelihood of derivative litigation against Directors and officers, even though such an action, if successful, might otherwise have benefited the Company and its stockholders. Furthermore, a stockholder's investment in the Company may be adversely affected to the extent that cost of settlement and damage awards against the Company's Directors and executive officers are paid by the Company pursuant to the indemnification provisions contained in the Company's By-Laws and indemnity agreements described above. REGISTRATION RIGHTS The Company has granted from time to time, in connection with acquisitions and otherwise, rights relating to the registration of Class A Common Stock. Pursuant to such rights, the Company has filed and intends to cause to be declared effective a registration statement relating to the resale of approximately 1,070,000 shares of Class A Common Stock. Additional registration rights may be granted, and additional shares may be registered, in the future. TRANSFER AGENT AND REGISTRAR The Company's Transfer Agent and Registrar for the Common Stock is National City Bank, Cleveland, Ohio. 20 23 SELLING SECURITYHOLDERS The following table sets forth information concerning the aggregate principal amount of Debentures beneficially owned by each Selling Securityholder or record holders of Debentures, as of September 2, 1997, and the number of shares of Class A Common Stock issuable upon conversion of the Debentures, which may be offered from time to time pursuant to this prospectus. Other than their ownership of the Company's Class A Common Stock, none of the Selling Securityholders has had any material relationship with the Company within the past three years. The table has been prepared on the basis of information furnished to the Company by DTC, Smith Barney Inc. and or by or on behalf of the Selling Securityholders. Any or all of the Debentures or shares of Class A Common Stock listed below may be offered for sale by the Selling Securityholders from time to time.
UNDERLYING SHARES OF PRINCIPAL AMOUNT OF CLASS A COMMON STOCK PERCENTAGE OF DEBENTURES PERCENTAGE OF OR ADDITIONAL SHARES CLASS A COMMON BENEFICIALLY OWNED DEBENTURES OF CLASS A COMMON STOCK OUTSTANDING NAME (1) THAT MAY BE SOLD OUTSTANDING STOCK THAT MAY BE SOLD(2) AFTER THE OFFERING(3) ----------------- ---------------- ----------- ------------------------- --------------------- Bank of New York 10,380,000 10.4% 317,431 2.7% Bankers Trust 6,490,000 6.5 198,470 1.7 Bear, Stearns Securities Corp. 2,500,000 2.5 76,452 * Bank of America Personal Trust 390,000 * 11,926 * Boston Safe Deposit & Trust Co. 22,895,000 22.9 700,152 5.8 Chase/Chemical Bank 125,000 * 3,822 * Chase Manhattan Bank, N.A. 150,000 * 4,587 * Citibank, N.A. 800,000 * 24,464 * Corestates Bank, N.A. 2,050,000 2.1 62,691 * CS First Boston Corporation 400,000 * 12,232 * Custodial Trust Company 10,815,000 10.8 330,733 2.8 Deutsche Morgan Grenfell Inc. 1,500,000 1.5 45,871 * Fifth Third Bank 2,000,000 2 61,162 * First National Bank of Maryland 160,000 * 4,892 * Mercantile Safe Deposit & Trust 2,360,000 2.4 72,171 * Merrill Lynch Professional Clearing Corp. 3,800,000 3.8 116,207 1 Merrill Lynch - Debt Securities 2,000,000 2 61,162 * Norwest Bank, Denver N.A. 100,000 * 3,058 * Northern Trust Co. - Trust 525,000 * 16,055 * PNC Bank, N.A. 400,000 * 12,232 *
21 24
UNDERLYING SHARES OF PRINCIPAL AMOUNT OF CLASS A COMMON STOCK PERCENTAGE OF DEBENTURES PERCENTAGE OF OR ADDITIONAL SHARES CLASS A COMMON BENEFICIALLY OWNED DEBENTURES OF CLASS A COMMON STOCK OUTSTANDING NAME (1) THAT MAY BE SOLD OUTSTANDING STOCK THAT MAY BE SOLD(2) AFTER THE OFFERING(3) ----------------- ---------------- ----------- ------------------------- --------------------- Republic New York Securities Corp. 150,000 * 4,587 * Sanwa Bank California 415,000 * 12,691 * SBC Dillon 500,000 * 15,290 * Societe General Securities Corporation 2,000,000 2 61,162 * Spear, Leeds & Kellogg 125,000 * 3,822 * SSB-- Custodian 26,870,000 26.9 821,712 6.7 Union Bank 100,000 * 3,058 * - --------------------------------- * Less than 1% (1) The Selling Securityholders and the amount of Debentures held by them are set forth herein is as of September 9, 1996 and will be updated as required. (2) Assumes conversion of the full amount of Debentures held by such holder at the initial rate of $32.70 in principal amount of Debentures per share of Class A Common Stock. Under the terms of the Indenture, fractional shares will not be issued upon conversion of the Debentures; cash will be paid in lieu of fractional shares, if any. (3) Based upon 11,464,820 shares of Class A Common Stock outstanding as of September 2, 1997, treating as outstanding the total number of shares of Class A Common Stock shown as being issuable upon the assumed conversion by the named Selling Securityholder of the full amount of such Selling Securityholder's Debentures but not assuming the conversion of the Debentures of any other Selling Securityholder.
PLAN OF DISTRIBUTION The Debentures, the underlying shares of Class A Common Stock and the subsidiary guarantees are being registered to permit public secondary trading of such securities by the holders thereof from time to time after the date of this Prospectus. The Company and the Selling Securityholders have agreed to indemnify each other against certain liabilities arising under the Securities Act. The Company has agreed, among other things, to bear all expenses (other than underwriting discounts, selling commissions and fees and expenses of counsel and other advisors to holders of the Debentures and the shares of Class A Common Stock) in connection with the registration and sale of the securities covered by this Prospectus. The Company will not receive any of the proceeds from the offering of the Debentures and the shares of Class A Common Stock by the Selling Securityholders. The Company has been advised by the Selling Securityholders that the Selling Securityholders may sell all or a portion of the Debentures and shares beneficially owned by them and offered hereby from time to time on any exchange on which the securities are listed, as applicable, on terms to be determined at the times of such sales. The Selling Securityholders may also make private sales directly or through a broker or brokers. Alternatively, any of the Selling Securityholders may from time to time offer the Debentures or shares of Class A Common Stock which may be offered hereby and beneficially owned by them through underwriters, dealers or agents, who may receive compensation in the form of underwriting discounts, commissions or concessions from the Selling 22 25 Securityholders and the purchasers of the Debentures or shares of Class A Common Stock for whom they may act as agent. Such underwriters, dealers or agents may include the Initial Purchasers of the Debentures, which may perform investment banking or other services for or engage in other transactions with the Company from time to time in the future. The securities offered hereby may be sold from time to time in one or more transactions at fixed offering prices, which may be changed, or at varying prices determined at the time of sale or at negotiated prices. Such prices will be determined by the Selling Securityholders or by agreement between such Selling Securityholders and underwriters or dealers who receive fees or commissions in connection therewith. The Company's outstanding Class A Common Stock is listed for trading on the Nasdaq Stock Market's National Market ("Nasdaq"), and application has been made to list the shares of Class A Common Stock issuable upon conversion of the Debentures on Nasdaq. There is no assurance as to the development or liquidity of any trading market that may develop for the Debentures. In order to comply with the securities laws of certain states, if applicable, the securities offered hereby will be sold in such jurisdictions only through registered or licensed brokers or dealers. In addition, in certain states the Debentures and shares of Class A Common Stock offered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and compliance with such requirement is effected. The Selling Securityholders and any broker-dealers, agents or underwriters that participate with the Selling Securityholders in the distribution of the Debentures or shares of Class A Common Stock offered hereby may be deemed to be "underwriters" within the meaning of the Securities Act, in which case any commissions or discounts received by such broker-dealers, agents or underwriters any profit on the resale of the Debentures or shares of Class A Common Stock offered hereby and purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.... CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES The following is a general discussion of certain United States federal income tax considerations to Holders of the Debentures. This discussion is based upon the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations, Internal Revenue Service ("IRS") rulings, and judicial decisions now in effect, all of which are subject to change (possibly with retroactive effect) or different interpretations. This discussion does not deal with all aspects of United States federal income taxation that may be important to Holders of the Debentures or the shares of Class A Common Stock and does not deal with tax consequences arising under the laws of any foreign, state or local jurisdiction. This discussion is for general information only and does not purport to address all tax consequences that may be important to particular purchasers in light of their personal circumstances, or to certain types of purchasers (such as certain financial institutions, insurance companies, tax-exempt entities, dealers in securities or persons who hold the Debentures or shares of Class A Common Stock in connection with a straddle) that may be subject to special rules. This discussion assumes that each Holder holds the Debentures and any shares of Class A Common Stock received upon conversion thereof as capital assets. For the purpose of this discussion, a "Non-U.S. Holder" refers to any Holder who is not a United States person. The term "United States person" means a citizen or resident of the United States, a corporation or partnership created or organized in the United States or any state thereof, or an estate or trust, the income of which is includible in income for United States federal income tax purposes regardless of its source. PROSPECTIVE PURCHASERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THEIR PARTICIPATION IN THIS OFFERING, OWNERSHIP AND DISPOSITION OF THE DEBENTURES, INCLUDING CONVERSION OF THE DEBENTURES, AND THE EFFECT THAT THEIR PARTICULAR CIRCUMSTANCES MAY HAVE ON SUCH TAX CONSEQUENCES. 23 26 OWNERSHIP OF THE DEBENTURES Interest on Debentures. Interest paid on the Debentures will be taxable to a Holder as ordinary interest income in accordance with the Holder's methods of tax accounting at the time that such interest is accrued or (actually or constructively) received. The Company expects that the Debentures will not be issued with original issue discount ("OID") within the meaning of the Code. Constructive Dividend. Certain corporate transactions, such as distributions of assets to holders of Class A Common Stock, may cause a deemed distribution to the Holders of the Debentures if the conversion price or conversion ratio of the Debentures is adjusted to reflect such corporate transaction. Such deemed distributions will be taxable as a dividend, return of capital, or capital gain in accordance with the earnings and profits rules discussed under "Dividends on Shares of Class A Common Stock." Sale or Exchange of Debentures or Shares of Class A Common Stock. In general, a Holder of Debentures will recognize gain or loss upon the sale, redemption, retirement or other disposition of the Debentures measured by the difference between the amount of cash and the fair market value of any property received (except to the extent attributable to the payment of accrued interest) and the Holder's adjusted tax basis in the Debentures. A Holder's tax basis in the Debentures generally will equal the cost of the Debentures to the Holder increased by the amount of market discount, if any, previously taken into income by the Holder or decreased by any bond premium theretofore amortized by the Holder with respect to the Debentures. In general, each holder of Class A Common Stock into which the Debentures have been converted will recognize gain or loss upon the sale, exchange, redemption, or other disposition of the Class A Common Stock under rules similar to those applicable to the Debentures. Special rules may apply to redemptions, or other disposition of the Class A Common Stock under rules similar to those applicable to the Debentures. Special rules may apply to redemptions of the Class A Common Stock which may result in the amount paid being treated as a dividend. Subject to the market discount rules discussed below, the gain or loss on the disposition of the Debentures or shares of Class A Common Stock will be capital gain or loss and will be long-term gain or loss if the Debentures or shares of Class A Common Stock have been held for more than one year at the time of such disposition. (For the basis and holding period of shares of Class A Common Stock, see "Conversion of Debentures.") Conversion of Debentures. A Holder of Debentures will not recognize gain or loss on the conversion of the Debentures into shares of Class A Common Stock. The Holder's tax basis in the shares of Class A Common Stock received upon conversion of the Debentures will be equal to the Holder's aggregate basis in the Debentures exchanged therefor (less any portion thereof allocable to cash received in lieu of a fractional share). The holding period of the shares of Class A Common Stock received by the Holder upon conversion of Debentures will generally include the period during which the Holder held the Debentures prior to the conversion. Cash received in lieu of a fractional share of Class A Common Stock should be treated as a payment in exchange for such fractional share rather than as a dividend. Gain or loss recognized on the receipt of cash paid in lieu of such fractional shares generally will equal the difference between the amount of cash received and the amount of tax basis allocable to the fractional shares. Market Discount. The resale of Debentures may be affected by the "market discount" provisions of the Code. For this purpose, the market discount on a Debenture will generally be equal to the amount, if any, by which the stated redemption price at maturity of the Debenture immediately after its acquisition exceeds the Holder's tax basis in the Debenture. Subject to a de minimis exception, these provisions generally require a Holder of a Debenture acquired at a market discount to treat as ordinary income any gain recognized on the disposition of such Debenture to the extent of the "accrued market discount" on such Debenture at the time of disposition. In general, market discount on a Debenture will be treated as accruing on a straight-line basis over the term of such Debenture, or, at the election of the Holder, under a constant yield method. A Holder of a Debenture acquired at a market discount may be required to defer the deduction of a portion of the interest on any indebtedness incurred or maintained to purchase or carry the Debenture until the Debenture is disposed of in a taxable transaction, unless the Holder elects to include accrued market discount in income currently. If a Holder acquires a Debenture at a market discount and receives shares of Class A Common Stock upon conversion of the Debenture, the amount of accrued market discount with respect to the converted Debenture through the date of conversion will be treated as ordinary income upon the disposition of the Class A Common Stock. Dividends on Shares of Class A Common Stock. Distributions on shares of Class A Common Stock will constitute dividends for United States federal income tax purposes to the extent of current or accumulated earnings and 24 27 profits of the Company as determined under United States federal income tax principles. Dividends paid to holders that are United States corporations may qualify for the dividends-received deduction. To the extent, if any, that a holder receives distributions on shares of Class A Common Stock that would otherwise constitute dividends for United States federal income tax purposes but that exceed current and accumulated earnings and profits of the Company, such distributions will be treated first as a non-taxable return of capital reducing the holder's basis in the shares of Class A Common Stock. Any such distributions in excess of the holder's basis in the shares of Class A Common Stock will be treated as capital gain. CERTAIN FEDERAL INCOME TAX CONSIDERATIONS APPLICABLE TO NON-U.S. HOLDERS Interest on Debentures. Generally, interest paid on the Debentures to a Non-U.S. Holder will not be subject to United States federal income tax if: (i) such interest is not effectively connected with the conduct of a trade or business within the United States by such Non-U.S. Holder; (ii) the Non-U.S. Holder does not actually or constructively own 10% or more of the total voting power of all classes of stock of the Company entitled to vote and is not a controlled foreign corporation with respect to which the Company is a "related person" within the meaning of the Code; and (iii) the beneficial owner, under penalty of perjury, certifies that the owner is not a United States person and provides the owner's name and address. If certain requirements are satisfied, the certification described in clause (iii) above may be provided by a securities clearing organization, a bank, or other financial institution that holds customers' securities in the ordinary course of its trade or business. For this purpose, the Holder of Debentures would be deemed to own constructively the shares of Class A Common Stock into which it could be converted. A Holder that is not exempt from tax under these rules will be subject to United States federal income tax withholding at a rate of 30% unless the interest is effectively connected with the conduct of a United States trade or business, in which case the interest will be subject to the United States federal income tax on net income that applies to United States persons generally. Non-U.S. Holders should consult applicable income tax treaties, which may provide different rules. Sales or Exchange of Debentures or Shares of Class A Common Stock. A Non-U.S. Holder generally will not be subject to United States federal income tax on gain recognized upon the sale or other disposition of the Debentures or shares of Class A Common Stock unless: (i) the gain is effectively connected with the conduct of a trade or business within the United States by the Non-U.S. Holder or (ii) in the case of a Non-U.S. Holder who is a nonresident alien individual and holds the Class A Common Stock as a capital asset, such holder is present in the United States for 183 or more days in the taxable year and certain other circumstances are present. If the Company is a "United States real property holding corporation," a Non-U.S. Holder may be subject to federal income tax with respect to gain realized on the disposition of such Debentures or shares of Class A Common Stock as if it were effectively connected with a United States trade or business and the amount realized will be subject to withholding at the rate of 10%. The amount withheld pursuant to these rules will be creditable against such Non-U.S. Holder's United States federal income tax liability and may entitle such Non-U.S. Holder to a refund upon furnishing the required information to the Internal Revenue Service. Non-U.S. Holders should consult applicable income tax treaties, which may provide different rules. Conversion of Debentures. A Non-U.S. Holder generally will not be subject to United States federal income tax on the conversion of a Debenture into shares of Class A Common Stock. To the extent a Non-U.S. Holder receives cash in lieu of a fractional share on conversion, such cash may give rise to gain that would be subject to the rules described above with respect to the sale or exchange of a Debenture or Class A Common Stock. Dividends on Shares of Class A Common Stock. Generally, any distribution on shares of Class A Common Stock to a Non-U.S. Holder will be subject to United States federal income tax withholding at a rate of 30% unless the dividend is effectively connected with the conduct of trade or business within the United States by the Non-U.S. Holders, in which case the dividend will be subject to the United States federal income tax on net income that applies to United States persons generally (and, with respect to corporate holders and under certain circumstances, the branch profits tax). Non-U.S. Holders should consult any applicable income tax treaties, which may provide for a lower rate of withholding or other rules different from those described above. A Non-U.S. Holder may be required to satisfy certain certification requirements in order to claim a reduction of or exemption from withholding under the foregoing rules. INFORMATION REPORTING AND BACKUP WITHHOLDING U.S. Holders. Information reporting and backup withholding may apply to payments of interest or dividends on or the proceeds of the sale or other disposition of the Debentures or shares of Class A Common Stock made by the 25 28 Company with respect to certain non corporate U.S. holders. Such U.S. holders generally will be subject to backup withholding at a rate of 31% unless the recipient of such payment supplies a taxpayer identification number, certified under penalties of perjury, as well as certain other information, or otherwise establishes, in the manner prescribed by law, an exemption from backup withholding. Any amount withheld under backup withholding is allowable as a credit against the U.S. holder's federal income tax, upon furnishing the required information. Non-U.S. Holders. Generally, information reporting and backup withholding of United States federal income tax at a rate of 31% may apply to payments of principal, interest and premium (if any) to Non-U.S. Holders if the payee fails to certify that the holder is a Non-U.S. person or if the Company or its paying agent has actual knowledge that the payee is a United States person. The 31% backup withholding tax generally will not apply to dividends paid to foreign holders outside the United States that are subject to 30% withholding as discussed above or that are subject to a tax treaty that reduces such withholding. The payment of the proceeds on the disposition of Debenture or shares of Class A Common Stock to or through the United States office of a United States or foreign broker will be subject to information reporting and backup withholding unless the owner provides the certification described above or otherwise establishes an exemption. The proceeds of the disposition by a Non-U.S. Holder of Debentures or shares of Class A Common Stock to or through a foreign office of a broker will not be subject to backup withholding. However, if such broker is a U.S. person, a controlled foreign corporation for United States tax purposes, or a foreign person 50% or more of whose gross income from all sources for certain periods is from activities that are effectively connected with a United States trade or business, information reporting will apply unless such broker has documentary evidence in its files of the owner's foreign status and has no actual knowledge to the contrary or unless the owner otherwise establishes an exemption. Both backup withholding and information reporting will apply to the proceeds from such dispositions if the broker has actual knowledge that the payee is a U.S. Holder. LEGAL MATTERS The validity of the Debentures and the underlying shares of Class A Common Stock offered hereby will be passed upon for the Company by Calfee, Halter & Griswold LLP, Cleveland, Ohio. EXPERTS The consolidated financial statements of NCS HealthCare, Inc. appearing in NCS HealthCare, Inc.'s Annual Report (Form 10-K) for the year ended June 30, 1997, have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon included therein and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. 26 29 ===================================================== No dealer, salesperson or any other person has been authorized to give any information or to make any representations not contained in this Prospectus and, if given or made, such information or representations must not be relied upon as having been authorized by the Company. This Prospectus does not constitute an offer to sell or the solicitation of an offer to buy any of the Securities offered hereby in any jurisdiction to any person to whom it is unlawful to make such offer in such jurisdiction. Neither the delivery of this Prospectus nor any sale made hereunder shall, under any circumstances, create any implication that information contained herein is correct as of any time subsequent to the date hereof or that there has been no change in the affairs of the Company since that date. TABLE OF CONTENTS
PAGE ---- Available Information ........................ 2 Incorporation Of Certain Documents By Reference ................................ 2 The Company .................................. 2 Risk Factors ................................. 3 Use Of Proceeds .............................. 7 Ratio Of Earnings to Fixed Charges ........... 7 Description Of Debentures .................... 8 Description Of Capital Stock ................. 16 Selling Securityholders ...................... 21 Plan of Distribution ......................... 22 Certain United States Federal Income Tax Consequences ............................. 23 Legal Matters ................................ 26 Independent Auditors ......................... 26
===================================================== ===================================================== $100,000,000 AGGREGATE PRINCIPAL AMOUNT OF 5 3/4% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2004 3,058,103 SHARES OF CLASS A COMMON STOCK [NCS HEALTHCARE, INC. LOGO] NCS HEALTHCARE, INC. ------------------ PROSPECTUS __________, 1997 ------------------ ===================================================== 30 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets forth the estimated expenses payable by the Registrant in connection with the sale and distribution of the Debentures and the shares of Class A Common Stock registered hereby: SEC Registration Fee.............................................. $30,304 Accounting Fees .................................................. 2,500 Fees and Expenses of Counsel...................................... 15,000 Miscellaneous..................................................... 2,196 ------- Total.................................................... $50,000 =======
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 145 of the Delaware General Corporation Law sets forth the conditions and limitations governing the indemnification of officers, directors and other persons. Section 145 provides that a corporation shall have the power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or contemplated action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or was serving at the request of the corporation in a similar capacity with another corporation or other entity, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement incurred in connection therewith if he acted in good faith and in a manner that he reasonably believed to be in the best interests of the corporation. With respect to a suit by or in the right of the corporation, indemnity may be provided to the foregoing persons under Section 145 on a basis similar to that set forth above, except that no indemnity may be provided in respect of any claim, issue or matter as to which such person has been adjudged to be liable to the corporation unless and to the extent that the Delaware Court of Chancery or the court in which such action, suit or proceeding was brought determines that, despite the adjudication of liability but in view of all the circumstances of the case, such person is entitled to indemnity for such expenses as the court deems proper. Moreover, Section 145 provides for mandatory indemnification of a director, officer, employee or agent of the corporation to the extent that such person has been successful in defense of any such action, suit or proceeding and provides that a corporation may pay the expenses of an officer or director in defending an action, suit or proceeding upon receipt of an undertaking to repay such amounts if it is ultimately determined that such person is not entitled to be indemnified. Section 145 establishes provisions for determining that a given person is entitled to indemnification, and also provides that the indemnification provided by or granted under Section 145 is not exclusive of any rights to indemnity or advancement of expenses to which such person may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise. The Registrant's By-laws provides that the Registrant shall indemnify, to the fullest extent permitted by Delaware law, any Director or officer who was or is a party or is threatened to be made a party to any action, suit or proceeding by reason of the fact that he or she, or a person of he or she is the legal representative, is or was a Director or officer of the Registrant, or is or was serving at the request of the Registrant as a director, officer, partner, trustee, employee or agent of another entity, against all expenses, liabilities and losses (including attorneys' fees, judgments, fines, excise taxes or penalties or amounts paid in settlement) reasonably incurred by such person in connection therewith. In addition, provisions of The Registrant's By-laws provide for the advancement of expenses, including attorneys' fees, incurred by a Director or officer of the Registrant in defending any proceeding for which indemnification is provided under the By-laws upon receipt of an undertaking to repay such amounts if it is ultimately determined that he or she is not entitled to be indemnified by the Registrant as authorized in the By-laws. In addition, the By-laws permit the Registrant to maintain insurance, at its expense, to protect itself and any of its Directors or officers or individuals serving at the request of the Registrant as a director, officer, partner, trustee, employee or agent of another entity, against any expense, II-1 31 liability or loss, whether or not the Registrant would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law. Section 102 (b) of the Delaware General Corporation Law permits corporations to eliminate or limit the personal liability of a Director to the corporation or its stockholders for monetary damages for breach of the Director's duty of care. Accordingly, the Registrant's Amended Certificate of Incorporation provides that a Director of the Registrant shall not be personally liable to the Registrant or its stockholders for monetary damages for breach of fiduciary duty as a Director, except for liability (i) for any breach of the Director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law or (iv) for any transaction from which the Director derived an improper personal benefit. The Registrant's Amended Certificate of Incorporation further provides that any repeal, amendment or other modification of the foregoing provisions will not affect the liability or alleged liability of any Director of the corporation then existing with respect to any state of facts then or theretofore existing or any action, suit or proceeding theretofore or thereafter brought or threatened based in whole or in part upon any such state of facts. In addition to the foregoing, the Registrant has entered into indemnity agreements with its executive officers and Directors. The indemnity agreements provide that such persons will be indemnified to the fullest extent permitted by law against all expenses (including attorneys' fees), judgments, fines, amounts paid or incurred by them for settlement in any action or proceeding on account of their service as a Director or officer of the Registrant or of any subsidiary of the Registrant or of any other entity in which they are serving at the request of the Registrant. The agreements bind the Registrant to provide indemnification to Directors and officers whether or not the Registrant maintains Directors and officers liability insurance coverage and regardless of any future changes in the By-laws. The protection to be afforded Directors and officers by the agreements is broader than that provided under the indemnification provisions contained in the By-laws, in that the agreements expressly provide for the advancement of expenses and for indemnification with respect to amounts paid in settlements of derivative actions. ITEM 16. EXHIBITS. See the Exhibit Index at page E-1 of this Registration Statement. ITEM 17. UNDERTAKINGS. (1) The undersigned Registrant hereby undertakes: (a) To file, during the period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or event arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement; PROVIDED, HOWEVER, that paragraphs (a)(i) and (a)(ii) do not apply if the registration statement is on Form S-3 or Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (b) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. II-2 32 (2) The undersigned Registrant hereby undertakes that for the purpose of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted for Directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a Director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such Director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-3 33 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. NCS HEALTHCARE, INC. By: /s/ Jon H. Outcalt ------------------------------------- Jon H. Outcalt Chairman of the Board POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of NCS HealthCare, Inc., a Delaware corporation, hereby constitute and appoint Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12th, 1997.
SIGNATURE TITLE --------- ----- /s/ Jon H. Outcalt Chairman of the Board of Directors - ----------------------------------------------- Jon H. Outcalt /s/ Kevin B. Shaw President, Chief Executive Officer and Director - ----------------------------------------------- (Principal Executive Officer) Kevin B. Shaw /s/ Jeffrey R. Steinhilber Chief Financial Officer - ----------------------------------------------- (Principal Accounting and Financial Officer) Jeffrey R. Steinhilber /s/ Malachi Mixon III Director - ----------------------------------------------- A. Malachi Mixon III /s/ Boake A. Sells Director - ----------------------------------------------- Boake A. Sells /s/ James B. Naylor Director - ----------------------------------------------- James B. Naylor /s/ Richard L. Osborne Director - ----------------------------------------------- Richard L. Osborne /s/ Phyllis K. Wilson Director - ----------------------------------------------- Phyllis K. Wilson
II-4 34 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. ADVANCED Rx SERVICES, INC. By: /s/ Kevin B. Shaw ------------------------------------ Kevin B. Shaw, President POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of Advanced Rx Services, Inc., a New Jersey corporation, hereby constitute and appoint Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw President and Director - --------------------------------------- (Principal Executive Officer) Kevin B. Shaw /s/ Jeffrey R. Steinhilber Treasurer - --------------------------------------- (Principal Accounting and Financial Officer) Jeffrey R. Steinhilber
II-5 35 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. HLF ADULT HOME PHARMACY CORP. By: /s/ Kevin B. Shaw ------------------------------------ Kevin B. Shaw POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of HLF Adult Home Pharmacy Corp., a New York corporation, hereby constitute and appoint Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw Director - ---------------------------------------- (Principal Executive Officer) Kevin B. Shaw /s/ Jeffrey R. Steinhilber Secretary and Treasurer - ---------------------------------------- (Principal Accounting and Financial Officer) Jeffrey R. Steinhilber
II-6 36 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. KINETIC SERVICES, INC. By: /s/ Kevin B. Shaw ----------------------------------- Kevin B. Shaw, President POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of Kinetic Services, Inc., a California corporation, hereby constitute and appoint Jon H. Outcalt, Kevin B. Shaw, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw President and Director - ---------------------------------------- (Principal Executive Officer) Kevin B. Shaw /s/ Jon H. Outcalt Treasurer and Secretary - ---------------------------------------- (Principal Accounting and Financial Officer) Jon H. Outcalt
II-7 37 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. LOOK DRUG STORES, INC. By: /s/ Kevin B. Shaw ---------------------------------- Kevin B. Shaw, President POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of Look Drug Stores, Inc., a Wisconsin corporation, hereby constitute and appoint Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw President and Director - ------------------------------------------ (Principal Executive Officer) Kevin B. Shaw /s/ Jeffrey R. Steinhilber Treasurer and Secretary - ------------------------------------------ (Principal Accounting and Financial Officer) Jeffrey R. Steinhilber
II-8 38 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. LOOMIS ENTERPRISES, INC. By: /s/ Kevin B. Shaw -------------------------------------- Kevin B. Shaw, President and Secretary POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of Loomis Enterprises, Inc., a Rhode Island corporation, hereby constitute and appoint Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw President, Secretary and Director - -------------------------------------------- (Principal Executive Officer) Kevin B. Shaw /s/ Jeffrey R. Steinhilber Treasurer - -------------------------------------------- (Principal Accounting and Financial Officer) Jeffrey R. Steinhilber
II-9 39 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. MANAGEMENT & NETWORK SERVICES, INC. By: /s/ Kevin B. Shaw -------------------------------------- Kevin B. Shaw, President and Secretary POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of Management & Network Services, Inc., an Ohio corporation, hereby constitute and appoint Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw President, Secretary and Director - ------------------------------------------ (Principal Executive Officer) Kevin B. Shaw /s/ Jeffrey R. Steinhilber Treasurer - ------------------------------------------ (Principal Accounting and Financial Officer) Jeffrey R. Steinhilber
II-10 40 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. MEDI CENTRE, INC. By: /s/ Kevin B. Shaw --------------------------------- Kevin B. Shaw, President POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of Medi Centre, Inc., a Michigan corporation, hereby constitute and appoint Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw President and Director - -------------------------------------------- (Principal Executive Officer) Kevin B. Shaw /s/ Jeffrey R. Steinhilber Treasurer and Secretary - -------------------------------------------- (Principal Accounting and Financial Officer) Jeffrey Steinhilber
II-11 41 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. NCS DAVEN DRUG, INC. By: /s/ Kevin B. Shaw ---------------------------------- Kevin B. Shaw, President POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of NCS Daven Drug, Inc., an Ohio corporation, hereby constitute and appoint Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw President and Director - -------------------------------------- (Principal Executive Officer) Kevin B. Shaw /s/ Jon H. Outcalt Treasurer and Secretary - -------------------------------------- (Principal Accounting and Financial Officer) Jon H. Outcalt
II-12 42 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. NCS HEALTHCARE OF ARKANSAS, INC. By: /s/ Kevin B. Shaw -------------------------------------- Kevin B. Shaw, President and Secretary POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of NCS HealthCare of Arkansas, Inc., an Ohio corporation, hereby constitute and appoint Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw President, Secretary and Director - --------------------------------------------- (Principal Executive Officer) Kevin B. Shaw /s/ Jeffrey R. Steinhilber Treasurer - --------------------------------------------- (Principal Accounting and Financial Officer) Jeffrey R. Steinhilber
II-13 43 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. NCS HEALTHCARE OF CALIFORNIA, INC. By: /s/ Kevin B. Shaw ------------------------------------ Kevin B. Shaw, President POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of NCS HealthCare of California, Inc., an Ohio corporation, hereby constitute and appoint Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw President and Director - --------------------------------------------- (Principal Executive Officer) Kevin B. Shaw /s/ Jeffrey R. Steinhilber Treasurer and Secretary - --------------------------------------------- (Principal Accounting and Financial Officer) Jon H. Outcalt
II-14 44 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. NCS HEALTHCARE OF FLORIDA, INC. By: /s/ Kevin B. Shaw -------------------------------------- Kevin B. Shaw, President and Secretary POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of NCS HealthCare of Florida, Inc., an Ohio corporation, hereby constitute and appoint Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw President, Secretary and Director - ------------------------------------------ (Principal Executive Officer) Kevin B. Shaw /s/ Jeffrey R. Steinhilber Treasurer - ------------------------------------------ (Principal Accounting and Financial Officer) Jeffrey R. Steinhilber
II-15 45 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. NCS HEALTHCARE OF ILLINOIS, INC. By: /s/ Kevin B. Shaw ------------------------------------------- Kevin B. Shaw, Vice President and Secretary POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of NCS HealthCare of Illinois, Inc., an Illinois corporation, hereby constitute and appoint Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw Vice President, Secretary and Director - --------------------------------------- (Principal Executive Officer) Kevin B. Shaw /s/ Jeffrey R. Steinhilber Treasurer - --------------------------------------- (Principal Accounting and Financial Officer) Jeffrey R. Steinhilber
II-16 46 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. NCS HEALTHCARE OF IOWA, INC. By: /s/ Kevin B. Shaw -------------------------------------- Kevin B. Shaw, President and Secretary POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of NCS HealthCare of Iowa, Inc., an Ohio corporation, hereby constitute and appoint Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw President, Secretary and Director - -------------------------------------------- (Principal Executive Officer) Kevin B. Shaw /s/ Jeffrey R. Steinhilber Vice President - -------------------------------------------- (Principal Accounting and Financial Officer) Jeffrey R. Steinhilber
II-17 47 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. NCS HEALTHCARE OF KANSAS, INC. By: /s/ Kevin B. Shaw -------------------------------------- Kevin B. Shaw, President and Secretary POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of NCS HealthCare of Kansas, Inc., an Ohio corporation, hereby constitute and appoint Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw President, Secretary and Director - -------------------------------------- (Principal Executive Officer) Kevin B. Shaw /s/ Jeffrey R. Steinhilber Treasurer - -------------------------------------- (Principal Accounting and Financial Officer) Jeffrey R. Steinhilber
II-18 48 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. NCS HEALTHCARE OF KENTUCKY, INC. By: /s/ Kevin B. Shaw -------------------------------------- Kevin B. Shaw, President and Secretary POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of NCS HealthCare of Kentucky, Inc., an Ohio corporation, hereby constitute and appoint Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw President, Secretary and Director - ------------------------------------------ (Principal Executive Officer) Kevin B. Shaw /s/ Jeffrey R. Steinhilber Treasurer - ------------------------------------------ (Principal Accounting and Financial Officer) Jeffrey R. Steinhilber /s/ Judith A. Bradac Assistant Secretary - ------------------------------------------ Judith A. Bradac /s/ J. Patrick Morris Vice President - ------------------------------------------ J. Patrick Morris /s/ Herbert L. DeBarba Assistant Secretary - ------------------------------------------ Herbert L. DeBarba
II-19 49 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. NCS HEALTHCARE OF MARYLAND, INC. By: /s/ Kevin B. Shaw -------------------------------------- Kevin B. Shaw, President and Secretary POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of NCS HealthCare of Maryland, Inc., an Ohio corporation, hereby constitute and appoint Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw President, Secretary and Director - ------------------------------------ (Principal Executive Officer) Kevin B. Shaw /s/ Jeffrey R. Steinhilber Treasurer - ------------------------------------ (Principal Accounting and Financial Officer) Jeffrey R. Steinhilber /s/ Judith A. Bradac Assistant Secretary - ------------------------------------ Judith A. Bradac /s/ Michael Mascali Vice President - ------------------------------------ Michael Mascali
II-20 50 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. NCS HEALTHCARE OF MICHIGAN, INC. By: /s/ Kevin B. Shaw ------------------------------------ Kevin B. Shaw, Chairman of the Board and Secretary POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of NCS HealthCare of Michigan, Inc., an Ohio corporation, hereby constitute and appoint Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw Chairman of the Board and Secretary - ----------------------------------------- (Principal Executive Officer) Kevin B. Shaw /s/ Phyllis K. Wilson President and Director - ----------------------------------------- Phyllis K. Wilson /s/ Jeffrey R. Steinhilber Vice President and Treasurer - ----------------------------------------- (Principal Accounting and Financial Officer) Jeffrey R. Steinhilber
II-21 51 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. NCS HEALTHCARE OF MODESTO, INC. By: /s/ Kevin B. Shaw ------------------------------------ Kevin B. Shaw, President POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of NCS HealthCare of Modesto, Inc., an Ohio corporation, hereby constitute and appoint Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw President and Director - ------------------------------------------ (Principal Executive Officer) Kevin B. Shaw /s/ Jon H. Outcalt Treasurer and Secretary - ------------------------------------------ (Principal Accounting and Financial Officer) Jon H. Outcalt
II-22 52 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. NCS HEALTHCARE OF OHIO, INC. By: /s/ Kevin B. Shaw ------------------------------------- Kevin B. Shaw, Chairman and Secretary POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of NCS HealthCare of Ohio, Inc., an Ohio corporation, hereby constitute and appoint Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw Chairman of the Board and Secretary - ----------------------------------------- (Principal Executive Officer) Kevin B. Shaw /s/ Phyllis K. Wilson President and Director - ----------------------------------------- Phyllis K. Wilson /s/ Jeffrey R. Steinhilber Treasurer - ----------------------------------------- (Principal Accounting and Financial Officer) Jeffrey R. Steinhilber /s/ Norman D. Leibow Director - ----------------------------------------- Norman D. Leibow
II-23 53 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. NCS HEALTHCARE OF OKLAHOMA, INC. By: /s/ Kevin B. Shaw -------------------------------------- Kevin B. Shaw, President and Secretary POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of NCS HealthCare of Oklahoma, Inc., an Oklahoma corporation, hereby constitute and appoint Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw President, Secretary and Director - -------------------------------------- (Principal Executive Officer) Kevin B. Shaw /s/ Jeffrey R. Steinhilber Treasurer - -------------------------------------- (Principal Accounting and Financial Officer) Jeffrey R. Steinhilber
II-24 54 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. NCS HEALTHCARE OF OREGON, INC. By: /s/ Kevin B. Shaw ----------------------------------- Kevin B. Shaw, President POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of NCS HealthCare of Oregon, Inc., an Ohio corporation, hereby constitute and appoint Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw President and Director - ------------------------------------------- (Principal Executive Officer) Kevin B. Shaw /s/ Jeffrey R. Steinhilber Treasurer - ------------------------------------------- (Principal Accounting and Financial Officer) Jeffrey R. Steinhilber
II-25 55 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. NCS HEALTHCARE OF PENNSYLVANIA, INC. By: /s/ Kevin B. Shaw --------------------------------- Kevin B. Shaw, Secretary POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of NCS HealthCare of Pennsylvania, Inc., a Pennsylvania corporation, hereby constitute and appoint Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw Secretary and Director - -------------------------------------- (Principal Executive Officer) Kevin B. Shaw /s/ Jeffrey R. Steinhilber Treasurer - -------------------------------------- (Principal Accounting and Financial Officer) Jeffrey R. Steinhilber
II-26 56 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. NCS HEALTHCARE OF SOUTH CAROLINA, INC. By: /s/ Kevin B. Shaw -------------------------------------- Kevin B. Shaw, President and Secretary POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of NCS HealthCare of South Carolina, Inc., an Ohio corporation, hereby constitute and appoint Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw President, Secretary and Director - ----------------------------------------- (Principal Executive Officer) Kevin B. Shaw /s/ Jeffrey R. Steinhilber Treasurer - ----------------------------------------- (Principal Accounting and Financial Officer) Jeffrey R. Steinhilber
II-27 57 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. NCS HEALTHCARE OF VERMONT, INC. By: /s/ Kevin B. Shaw -------------------------------------- Kevin B. Shaw, President and Secretary POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of NCS HealthCare of Vermont, Inc., an Ohio corporation, hereby constitute and appoint Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw President, Secretary and Director - ---------------------------------------- (Principal Executive Officer) Kevin B. Shaw /s/ Jeffrey R. Steinhilber Treasurer - ---------------------------------------- (Principal Accounting and Financial Officer) Jeffrey R. Steinhilber
II-28 58 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. NCS HEALTHCARE OF WASHINGTON, INC. By: /s/ Kevin B. Shaw -------------------------------------- Kevin B. Shaw, President and Secretary POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of NCS HealthCare of Washington, Inc., an Ohio corporation, hereby constitute and appoint Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw President, Secretary and Director - ---------------------------------------- (Principal Executive Officer) Kevin B. Shaw /s/ Jeffrey R. Steinhilber Treasurer and Assistant Secretary - ---------------------------------------- (Principal Accounting and Financial Officer) Jeffrey R. Steinhilber
II-29 59 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. NCS QUALITY CARE PHARMACY, INC. By: /s/ Kevin B. Shaw ---------------------------------- Kevin B. Shaw, President POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of NCS Quality Care Pharmacy, Inc., an Ohio corporation, hereby constitute and appoint Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw President and Director - ------------------------------------- (Principal Executive Officer) Kevin B. Shaw /s/ Jon H. Outcalt Secretary and Treasurer - ------------------------------------- (Principal Accounting and Financial Officer) Jon H. Outcalt
II-30 60 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. NCS SERVICES, INC. By: /s/ Kevin B. Shaw --------------------------------- Kevin B. Shaw, President POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of NCS Services, Inc., an Ohio corporation, hereby constitute and appoint Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw President and Director - ---------------------------------------- (Principal Executive Officer) Kevin B. Shaw /s/ Jeffrey R. Steinhilber Treasurer - ---------------------------------------- Jeffrey R. Steinhilber
II-31 61 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. THRIFTY MEDICAL SUPPLY, INC. By: /s/ Kevin B. Shaw -------------------------------------- Kevin B. Shaw, President and Secretary POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of Thrifty Medical Supply, Inc., an Oklahoma corporation, hereby constitute and appoint Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw President, Secretary and Director - ------------------------------------------- (Principal Executive Officer) Kevin B. Shaw /s/ Jeffrey R. Steinhilber Treasurer - ------------------------------------------- (Principal Accounting and Financial Officer) Jeffrey R. Steinhilber
II-32 62 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. UNI-CARE HEALTH SERVICES, INC. By: /s/ Kevin B. Shaw -------------------------------------- Kevin B. Shaw, President and Secretary POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of Uni-Care Health Services, Inc., a New Hampshire corporation, hereby constitute and appoint Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw President, Secretary and Director - ------------------------------------- (Principal Executive Officer) Kevin B. Shaw /s/ Jeffrey R. Steinhilber Treasurer - ------------------------------------- (Principal Executive Officer) Jeffrey R. Steinhilber
II-33 63 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. UNI-CARE HEALTH SERVICES OF MAINE, INC. By: /s/ Kevin B. Shaw -------------------------------------- Kevin B. Shaw, President and Secretary POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of Uni-Care Health Services of Maine, Inc., a New Hampshire corporation, hereby constitute and appoint Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw President, Secretary and Director - ------------------------------------ (Principal Executive Officer) Kevin B. Shaw /s/ Jeffrey R. Steinhilber Treasurer - ------------------------------------ (Principal Accounting and Financial Officer) Jeffrey R. Steinhilber
II-34 64 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. RESCOT SYSTEMS GROUP, INC. By: /s/ Kevin B. Shaw -------------------------------------- Kevin B. Shaw, President and Secretary POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of Uni-Care Health Services of Maine, Inc., a New Hampshire corporation, hereby constitute and appoint Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw President, Secretary and Director - ------------------------------------ (Principal Executive Officer) Kevin B. Shaw /s/ Jeffrey R. Steinhilber Treasurer and Director - ------------------------------------ (Principal Accounting and Financial Officer) Jeffrey R. Steinhilber
II-35 65 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. NCS HEALTHCARE OF INDIANA, INC. By: /s/ Kevin B. Shaw -------------------------------------- Kevin B. Shaw, Secretary POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of Uni-Care Health Services of Maine, Inc., a New Hampshire corporation, hereby constitute and appoint Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Marvin R. Richardson President and Director - ------------------------------------ (Principal Executive Officer) Marvin R. Richardson /s/ Jeffrey R. Steinhilber Treasurer and Secretary - ------------------------------------ (Principal Accounting and Financial Officer) Jeffrey R. Steinhilber /s/ Kevin B. Shaw Vice President and Director - ------------------------------------ Kevin B. Shaw
II-36 66 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cleveland and State of Ohio, as of the 12th day of September, 1997. CHESHIRE LONG TERM CARE PHARMACY, INC. By: /s/ Kevin B. Shaw -------------------------------------- Kevin B. Shaw, President and Secretary POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being Directors and/or officers of Uni-Care Health Services of Maine, Inc., a New Hampshire corporation, hereby constitute and appoint Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite, necessary or advisable to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 12, 1997.
SIGNATURE TITLE --------- ----- /s/ Kevin B. Shaw President, Secretary and Director - ------------------------------------ (Principal Executive Officer) Kevin B. Shaw /s/ Jeffrey R. Steinhilber Treasurer - ------------------------------------ (Principal Accounting and Financial Officer) Jeffrey R. Steinhilber
II-37 67 NCS HEALTHCARE, INC. EXHIBIT INDEX
EXHIBIT DESCRIPTION NO. ----------- --- 1.1 Purchase Agreement, dated August 7, 1997, between the Company and Smith Barney Inc., William Blair & Company, L.L.C., Montgomery Securities and McDonald & Company Securities, Inc. 2.1 Stock Purchase Agreement, dated December 1994, by and among Aberdeen Group, Inc. and Calvin Hunsicker. (A) 2.2 Asset Purchase Agreement, dated May 10, 1995, by and among Quality Health Care NCS, Inc., Low Cost Health Care of Indiana, Inc., Marvin R. Richardson, Melanie A. Richardson and Richard A. Freese. (A) 2.3 Stock Purchase Agreement, dated September 1, 1995, by and among Aberdeen Group, Inc. and each of the owners of shares of, capital stock of Corinthian HealthCare Systems, Inc. (A) 2.4 Stock Purchase Agreement, dated as of October 1, 1995, by and between James F.J. Kane and Aberdeen Group, Inc. (A) 2.5 Certificate of Ownership and Merger of Aberdeen Group, Inc. with and into the Company. (A) 2.6 Stock Purchase Agreement, dated May 15, 1996, by and among the Company and the owners of capital stock of Uni-Care Health Services, Inc., a New Hampshire corporation and Uni-Care Health Services of Maine, Inc., a New Hampshire corporation. (B) 2.7 Asset Purchase Agreement, dated as of July 31, 1996, by and among the Registrant, NCS HealthCare of Oregon, Inc., an Ohio corporation, IPAC Pharmacy, Inc., an Oregon corporation, and Prestige Care, Inc., a Washington corporation. (C) 2.8 Asset Purchase Agreement, dated August 13, 1996, by and among NCS HealthCare of Oklahoma, Inc., an Oklahoma corporation, Med-Equip Homecare Equipment Service, Inc., an Oklahoma corporation, Gail Benjamin, Willis V. Smith and John Tarr. (D) 2.9 Asset Purchase Agreement, dated August 13, 1996, by and among Thrifty Medical of Tulsa, L.L.C., an Oklahoma limited liability company, Willis V. Smith, Charles Oliver and NCS HealthCare of Oklahoma, Inc., an Oklahoma corporation. (D) 2.10 Agreement of Merger, dated August 13, 1996, by and among Northside Pharmacy, Inc., an Oklahoma corporation, Willis V. Smith, Charles Oliver, the Willis Vernon Smith Unitrust Dated August 8, 1996, NCS HealthCare of Oklahoma, Inc., an Oklahoma corporation, and the Company. (D) 2.11 Stock Purchase Agreement, dated August 13, 1996, by and among the Willis Vernon Smith Unitrust Dated August 8, 1996, Charles Oliver, Willis V. Smith and the Company. (D) 4.1 Specimen certificate of the Company's Class A Common Stock. (A) 4.2 Specimen certificate of the Company's Class B Common Stock. (A) 4.3 Credit Agreement, dated as of April 5, 1995, by and among Aberdeen Group, Inc., National City Bank, Society National Bank, and National City Bank, as Agent. (A) 4.4 First Amendment to Credit Agreement, dated as of August 31, 1995, by and among Aberdeen Group, Inc., National City Bank, Society National Bank, and National City Bank, as Agent. (A)
E-1 68
EXHIBIT DESCRIPTION NO. ----------- --- 4.5 Second Amendment to Credit Agreement by and among Aberdeen Group, Inc., National City Bank, Society National Bank, and National City Bank, as Agent. (A) 4.6 Amended and Restated Promissory Note, dated August 31, 1995. (A) 4.7 Commercial Demand Note, dated November 1, 1995. (A) 4.8 Form of Convertible Subordinated Debenture due September 30, 1996. (A) 4.9 Waiver Letter, dated as of January 25, 1996, by and among Aberdeen Group, Inc., National City Bank and Society National Bank. (A) 4.10 Indenture, dated August 13, 1997, between the Company and National City Bank, as Trustee. 4.11 Form of 5 3/4% Convertible Subordinated Debentures due 2004 (included in Exhibit 4.10). 4.12 Registration Rights Agreement, dated August 13, 1997, by and among the Company and Smith Barney Inc., William Blair & Company, L.L.C., Montgomery Securities and McDonald & Company Securities, Inc. 5.1 Opinion of Calfee, Halter & Griswold LLP as to the validity of the Debentures and the shares of Class A Common Stock.* 10.1 Form of Guarantee Agreement, dated August 13, 1997, by and among National City Bank and the subsidiary guarantors. 10.2 Credit Agreement, dated August 1, 1997, by and among the Company, the lending institutions named therein and KeyBank National Association, as Administrative Agent. 11.1 Statement re Computation of Per Share Earnings. (E) 12.1 Statements re Computation of Ratios. 23.1 Consent of Calfee, Halter & Griswold LLP (included in Exhibit 5.1 of this Registration Statement). 23.2 Consent of Ernst & Young LLP. 24.1 Powers of Attorney and related certified resolutions. - ----------------- * To be filed by amendment. (A) Incorporated herein by reference to the appropriate exhibit to the Company's Registration Statement on Form S-1 (Reg. No. 33-80455). (B) Incorporated herein by reference to the appropriate exhibit to the Company's Current Report on Form 8-K, dated May 15, 1996, as amended (File No. 0-027602). (C) Incorporated herein by reference to the appropriate exhibit to the Company's Current Report on Form 8-K, dated August 1, 1996, as amended (File No. 0-027602). (D) Incorporated herein by reference to the appropriate exhibit to the Company's Current Report on Form 8-K, dated August 13, 1996 (File No. 0-027602). (E) Incorporated herein by reference to the appropriate exhibit to the Company's Annual Report on Form 10-K, dated August 8, 1997. (File No. 0-027602).
E-2 EX-1.1 2 EXHIBIT 1.1 1 Exhibit 1.1 $100,000,000 NCS HEALTHCARE, INC. 5-3/4% Convertible Subordinated Debentures due 2004 PURCHASE AGREEMENT ------------------ August 7, 1997 SMITH BARNEY INC. WILLIAM BLAIR & COMPANY L.L.C. MONTGOMERY SECURITIES MCDONALD & COMPANY SECURITIES, INC. As Initial Purchasers C/O SMITH BARNEY INC. 388 Greenwich Street New York, New York 10013 Dear Sirs: NCS HealthCare, Inc., a Delaware corporation (the "Company"), proposes, upon the terms and conditions set forth herein, to issue and sell to you, as the initial purchasers (the "Initial Purchasers"), $100,000,000 aggregate principal amount of its 5-3/4% Convertible Subordinated Debentures due 2004 (the "Firm Debentures"). The Company also proposes, upon the terms and conditions set forth herein, to issue and sell to the Initial Purchasers up to an additional $15,000,000 aggregate principal amount of its 5-3/4% Convertible Subordinated Debentures due 2004 (the "Additional Debentures"). The Firm Debentures and the Additional Debentures are hereinafter collectively referred to as the "Debentures." The Debentures will be issued pursuant to the provisions of an Indenture, to be dated as of August 13, 1997 (the "Indenture"), between the Company and National City Bank, as Trustee (the "Trustee"). The obligations of the Company under the Indenture and the Debentures will be guaranteed by the wholly-owned subsidiaries (the "Guarantees") of the Company (collectively, the "Guarantors") pursuant to a Guarantee Agreement, to be dated as of August 13, 1997 and substantially in the form of Exhibit A hereto, between the Guarantors and the Trustee (the "Guarantee Agreement"). The Company's Class A common stock, $.01 par value, is hereinafter referred to as the "Common Stock". The Company wishes to confirm as follows its agreement with the Initial Purchasers in connection with the purchase and resale of the Debentures. 1. Preliminary Offering Memorandum and Offering Memorandum. The Debentures will be offered and sold to the Initial Purchasers without registration under the Securities Act of 1933, as amended (the "Act"), in reliance on an exemption pursuant to Section 4(2) under the Act. The Company has prepared a preliminary offering memorandum, dated July 17, 1997 (the "Preliminary Offering Memorandum"), and an offering memorandum, dated August 7, 1997 (the "Offering Memorandum"), setting forth information regarding the Company and the Debentures. Any references herein to the Preliminary Offering Memorandum and the Offering Memorandum shall be deemed to include all amendments and supplements thereto and any documents filed under the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Securities and Exchange Commission (the "Commission") thereunder (collectively, the "Exchange Act") which are incorporated by reference therein. As used herein, the term "Incorporated Documents" means the documents which at the time are incorporated by reference in 2 the Preliminary Offering Memorandum, the Offering Memorandum or any amendment or supplement thereto. The Company hereby confirms that it has authorized the use of the Preliminary Offering Memorandum and the Offering Memorandum in connection with the offering and resale of the Debentures by the Initial Purchasers. The Company understands that the Initial Purchasers propose to make offers and sales (the "Exempt Resales") of the Debentures purchased by the Initial Purchasers hereunder only on the terms and in the manner set forth in the Offering Memorandum and Section 2 hereof, as soon as the Initial Purchasers deem advisable after this Agreement has been executed and delivered, (i) to persons whom the Initial Purchasers reasonably believe to be qualified institutional buyers ("Qualified Institutional Buyers") as defined in Rule 144A under the Act, as such rule may be amended from time to time ("Rule 144A"), in transactions under Rule 144A and (ii) outside the United States to non-U.S. persons in offshore transactions in reliance upon Regulation S (as those terms are defined in Regulation S under the Act) ("Regulation S") under the Act (such persons specified in clauses (i) and (ii) being referred to herein as the "Eligible Purchasers"). As used herein the terms "offshore transactions," "United States" and "U.S. persons" have the meaning given them in Regulation S. It is understood and acknowledged that upon original issuance thereof, and until such time as the Debentures (and all securities issued in exchange therefor, in substitution thereof or upon conversion thereof (including the Common Stock)) have been (i) effectively registered under the Act and disposed of in accordance with an effective registration statement under the Act, (ii) distributed to the public pursuant to Rule 144 or (ii) sold or transferred pursuant to Rule 144(k) under the Act (or any similar provisions then in force) or otherwise, any certificate representing such securities shall bear the following legend: THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO REGISTRATION UNDER SUCH LAWS. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATED PERSON OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) UNLESS SUCH OFFER, SALE OR OTHER TRANSFER IS (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON THE HOLDER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT SUBJECT TO THE COMPANY'S AND NATIONAL CITY BANK'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (C), (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES PROVIDED THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO NATIONAL CITY BANK AND SUBJECT TO ANY APPLICABLE SECURITIES LAWS. THIS LEGEND WILL BE REMOVED UPON THE REQUEST 2 3 OF THE THEN HOLDER OF THIS SECURITY AFTER THE RESALE RESTRICTION TERMINATION DATE. It is also understood and acknowledged that holders (including subsequent transferees) of the Debentures and, if such Debentures are subsequently converted into Common Stock, the Common Stock, will have the registration rights set forth in the registration rights agreement (the "Registration Rights Agreement"), to be dated the date hereof, in substantially the form of Exhibit B hereto, for so long as such Debentures and Common Stock constitute "Transfer Restricted Securities" (as defined in the Registration Rights Agreement). Pursuant to the Registration Rights Agreement, the Company will agree (i) to file with the Commission under the circumstances set forth therein, a registration statement on the appropriate form under the Act relating to the resale of the Debentures and the Common Stock by certain holders thereof from time to time in accordance with the methods of distribution set forth in such registration statement and Rule 415 under the Act (the "Shelf Registration Statement") and (ii) to use its best efforts to cause such Shelf Registration Statement to be declared effective. This Agreement, the Indenture, the Registration Rights Agreement and the Guarantee Agreement are hereinafter referred to collectively as the "Operative Documents." Capitalized terms used herein without definition have the respective meanings specified therefor in the Indenture or the Offering Memorandum. 2. Agreements to Sell, Purchase and Resell. (a) The Company hereby agrees, subject to all the terms and conditions set forth herein, to issue and sell to each Initial Purchaser and, upon the basis of the representations, warranties and agreements of the Company herein contained and subject to all the terms and conditions set forth herein, each Initial Purchaser agrees to purchase from the Company, at a purchase price of 97.25% of the principal amount thereof, the principal amount of Firm Debentures set forth opposite the name of such Initial Purchaser in Schedule I hereto. (b) The Company also agrees, subject to all the terms and conditions set forth herein, to sell to the Initial Purchasers, and, upon the basis of the representations, warranties and agreements of the Company herein contained and subject to all the terms and conditions set forth herein, the Initial Purchasers shall have the right to purchase from the Company pursuant to an option (the "over-allotment option") which may be exercised at any time and from time to time prior to 9:00 P.M., New York City time, on the 30th day after the date of the Offering Memorandum (or, if such 30th day shall be a Saturday or Sunday or a holiday, on the next business day thereafter when the New York Stock Exchange is open for trading), up to $15,000,000 principal amount of Additional Debentures at the same purchase price as the Firm Debentures, plus accrued interest, if any, from the date of issuance of the Firm Debentures to the date of delivery and payment. Upon any exercise of the over-allotment option, each Initial Purchaser, severally and not jointly, agrees to purchase that principal amount of Additional Debentures which bears the same proportion to the aggregate principal amount of Additional Debentures to be purchased by the Initial Purchasers as the principal amount of Firm Debentures set forth opposite the name of such Initial Purchaser bears to the aggregate principal amount of Firm Debentures. (c) The Initial Purchasers have advised the Company that they propose to offer the Debentures for sale upon the terms and conditions set forth in this Agreement and in the Offering Memorandum. Each Initial Purchaser hereby represents and warrants to the Company that such Initial Purchaser (i) is a Qualified Institutional Buyer within the meaning of Rule 144A and is purchasing the Debentures pursuant to a private sale exempt from registration under the Act and is not purchasing the Debentures with a view to or for offer or sale in connection with any distribution that would be in violation of foreign or U.S. federal or state securities laws, (ii) will not solicit offers for, or offer or sell, the Debentures by means of any form of general solicitation or general advertising or in any mariner involving a public offering within the meaning of Section 4(2) of the Act, and (iii) has solicited and will solicit offers for the Debentures only from, and has offered and will offer, sell or deliver the Debentures as part of its initial offering, only to (A) persons whom the Initial Purchasers reasonably believe to be Qualified Institutional Buyers, or if any such person is buying for one or more institutional accounts for which such person is acting as fiduciary or agent, only when such person has represented to the Initial Purchaser that each such 3 4 account is a Qualified Institutional Buyer, to whom notice has been given that such sale or delivery is being made in reliance on Rule 144A, in each case, in transactions under Rule 144A and (B) outside the United States to certain persons in offshore transactions in reliance on Regulation S. The Initial Purchasers have advised the Company that they will offer the Debentures to Eligible Purchasers at a price initially equal to 100% of the principal amount thereof, plus accrued interest, if any, from the date of issuance of the Firm Debentures. Such price may be changed by the Initial Purchasers at any time thereafter without notice. (d) The Initial Purchasers represent and warrant that they (i) have not offered or sold and prior to the date that is six months after the closing date with respect to the Offering will not offer or sell any Debentures to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which will not involve an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995 (the "Regulations"); (ii) have complied with and will comply with all applicable provisions of the Financial Services Act of 1986 and the Regulations with respect to anything done by it in relation to the Debentures in, from, or otherwise involving the United Kingdom; and (iii) have only issued or passed on and will only issue or pass on to any person in the United Kingdom any document received by it in connection with the offer of the Debentures if that person is of a kind described in Article 11(3) of the Financial Services Act of 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a person to whom such document may otherwise lawfully be issued or passed on. (e) The Initial Purchasers represent and warrant that they have offered and sold the Debentures and agree that they will offer and sell the Debentures (i) as part of their distribution at any time, and (ii) otherwise until 40 days after the later of the commencement of the offering of the Debentures and the Closing Date, only in accordance with Rule 903 of Regulation S or as otherwise permitted pursuant to paragraph (c) above. Accordingly, the Initial Purchasers represent and agree that none of such Initial Purchasers, their affiliates nor any persons acting on their behalf have engaged or will engage in any directed selling efforts (as defined in Regulation S under the Act) with respect to the Debentures, and they have complied and will comply with the offering restrictions requirement of Regulation S. Such Initial Purchasers agree that, at or prior to confirmation of the sale of Debentures to non-U.S. persons (as defined in Regulation S under the Act) other than a sale pursuant to Rule 144A, they will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases Debentures from such Initial Purchasers during the restricted period a confirmation or notice to substantially the following effect: "The Securities covered hereby have not been registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered and sold within the United States or to, or for the account or benefit of, U.S. persons (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the offering and the closing date, except in either case in accordance with Regulation S (or Rule 144A) under the Securities Act. Terms used above have the meaning given to them by Regulation S." The Initial Purchasers understand that the Company and, for purposes of the opinions to be delivered to the Initial Purchasers pursuant to Sections 7(c) and 7(d) hereof, counsel to the Company and counsel to the Initial Purchasers, will rely upon the accuracy and truth of the foregoing representations and agreements and the Initial Purchasers hereby consent to such reliance. 3. Delivery of the Debentures and Payment Therefor. Delivery to the Initial Purchasers of and payment for the Firm Debentures shall be made at the office of Smith Barney Inc., 388 Greenwich Street, New York, NY 10013, at 10:00 A.M., New York City time, on August 13, 1997 (the "Closing Date"). The place of closing for the Firm Debentures and the Closing Date may be varied by agreement between the Initial Purchasers and the Company. 4 5 Delivery to the Initial Purchasers of and payment for any Additional Debentures to be purchased by the Initial Purchasers shall be made at the aforementioned office of Smith Barney Inc. at such time on such date (the "Option Closing Date"), which may be the same as the Closing Date but shall in no event be earlier than the Closing Date nor earlier than two nor later than ten business days after the giving of the notice hereinafter referred to, as shall be specified in a written notice from the Initial Purchasers to the Company of the Initial Purchasers' determination to purchase the principal amount of Additional Debentures specified in such notice. The place of closing for any Additional Debentures and the Option Closing Date for such Additional Debentures may be varied by agreement between the Initial Purchasers and the Company. The Firm Debentures and any Additional Debentures which the Initial Purchasers may elect to purchase will be delivered to the Initial Purchasers against payment of the purchase price therefor in immediately available funds. Debentures being sold by the Initial Purchasers in Exempt Resales to Qualified Institutional Buyers in reliance on Rule 144A will be initially evidenced by one or more global securities, and will be registered in the name of Cede & Co. ("Cede") as nominee of The Depository Trust Company ("DTC"). Debentures being sold by the Initial Purchasers in Exempt Resales to certain persons in offshore transactions in reliance on Regulation S will be initially evidenced by one or more global securities which will be deposited with, or on behalf of DTC, and registered in the name of Cede as DTC's nominee, for the account of Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear System and Cedel, S.A. The Debentures to be delivered to the Initial Purchasers shall be made available to the Initial Purchasers in New York City for inspection and packaging not later than 9:30 a.m., New York City time, on the business day next preceding the Closing Date or the Option Closing Date, as the case may be. 4. Agreements of the Company. The Company agrees with the Initial Purchasers as follows: (a) The Company will advise the Initial Purchasers promptly and, if requested by them, will confirm such advice in writing, within the period of time referred to in paragraph (e) below, of any material change in the Company's condition (financial or other), business, prospects, properties, net worth or results of operations, or of the happening of any event which makes any statement of a material fact made in the Offering Memorandum (as then amended or supplemented) untrue or which requires the making of any additions to or changes in the Offering Memorandum (as then amended or supplemented) in order to make the statements therein not misleading, or of the necessity to amend or supplement the Offering Memorandum (as then amended or supplemented) to comply with any law. (b) The Company will furnish to the Initial Purchasers, without charge, as of the date of the Offering Memorandum, such number of copies of the Offering Memorandum (as then amended or supplemented) as they may reasonably request. (c) The Company will not make any amendment or supplement to the Preliminary Offering Memorandum or to the Offering Memorandum of which the Initial Purchasers shall not previously have been advised or to which they shall reasonably object after being so advised or file any document which upon filing becomes an Incorporated Document, without delivering a copy of such document to the Initial Purchasers, prior to or concurrently with such filing. (d) Prior to the execution and delivery of this Agreement, the Company has delivered or will deliver to the Initial Purchasers, without charge, in such quantities as the Initial Purchasers shall have requested or may hereafter request, copies of the Preliminary Offering Memorandum. The Company consents to the use, in accordance with the securities or Blue Sky laws of the jurisdictions in which the Debentures are offered by the Initial Purchasers and by dealers, prior to the date of the Offering Memorandum, of each Preliminary Offering Memorandum so furnished by the Company. The Company consents to the use of the Offering Memorandum (and of any amendment or supplement thereto) in accordance with the securities or Blue Sky laws of the jurisdictions in which the_ Debentures are offered by the Initial Purchasers and by all dealers to whom Debentures may be sold, in connection with the offering 5 6 and sale of the Debentures. (e) If, at any time prior to completion of the distribution of the Debentures by the Initial Purchasers to Eligible Purchasers, any event shall occur that in the judgment of the Company or in the opinion of counsel for the Initial Purchasers is required to be set forth in the Offering Memorandum (as then amended or supplemented) or should be set forth in the Offering Memorandum (as then amended or supplemented) in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary to supplement or amend the Offering Memorandum, or to file under the Exchange Act any document which upon filing becomes an Incorporated Document, to comply with any law, the Company will forthwith prepare an appropriate supplement or amendment thereto or such document, and will expeditiously furnish to the Initial Purchasers and dealers a reasonable number of copies thereof. In the event that the Company and the Initial Purchasers agree that the Offering Memorandum should be amended or supplemented, or that a document should be filed under the Exchange Act which upon filing becomes an Incorporated Document, the Company, if requested by the Initial Purchasers, will promptly issue a press release announcing or disclosing the matters to be covered by the proposed amendment or supplement or such document. (f) The Company will cooperate with the Initial Purchasers and with their counsel in connection with the registration or qualification of the Debentures and the Common Stock issuable upon conversion of the Debentures for offering and sale by the Initial Purchasers and by dealers under the securities or Blue Sky laws of such jurisdictions as the Initial Purchasers may designate and will file such consents to service of process or other documents necessary or appropriate in order to effect such qualification; provided that in no event shall the Company be obligated to qualify to do business in any jurisdiction where it is not now so qualified or to take any action which would subject it to service of process in suits, other than those arising out of the offering or sale of the Debentures, in any jurisdiction where it is not now so subject. (g) So long as any of the Debentures are outstanding, the Company will furnish to the Initial Purchasers (i) as soon as reasonably practicable, a copy of each report of the Company mailed to stockholders or filed with the Commission and (ii) from time to time, such other information concerning the Company as the Initial Purchasers may reasonably request. (h) If this Agreement shall terminate or shall be terminated after execution and delivery pursuant to any provisions hereof (otherwise than pursuant to Section 10 hereof or by notice given by the Initial Purchasers terminating this Agreement pursuant to Section 9 or Section 11 hereof) or if this Agreement shall be terminated by the Initial Purchasers because of any failure or refusal on the part of the Company to comply with the terms or fulfill any of the conditions of this Agreement, the Company agrees to reimburse the Initial Purchasers for all out-of-pocket expenses (including reasonable fees and expenses of its counsel) incurred by it in connection herewith. (i) The Company will apply the net proceeds from the sale of the Debentures to be sold by it hereunder substantially in accordance with the description set forth in the Offering Memorandum. (j) Except as provided in this Agreement, the Company will not sell, offer to sell, contract to sell or otherwise transfer or dispose of any Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, or grant any options or warrants to purchase Common Stock, for a period of 90 days after the date of the Offering Memorandum, without the prior written consent of Smith Barney Inc. other than (i) the issuance by the Company in the manner and to the extent disclosed in the Offering Memorandum of shares of Common Stock and Class B Common Stock issuable upon the exercise of outstanding options under the 1995 Amended and Restated Employee Stock Purchase and Option Plan and the 1996 Long Term Incentive Plan, (ii) the grant to employees in the ordinary course of business of options to purchase Common Stock pursuant to the Company's existing option plans, provided that such options are not exercisable during the 90-day period after the date of the Offering Memorandum, and (iii) the issuance by the Company of Common Stock or Class B Common Stock as consideration for acquired businesses under circumstances that would prohibit resale of such securities during the 90-day period 6 7 provided for in the "lock-up" letters furnished pursuant to paragraph (k) below. (k) The Company has furnished or will furnish to the Initial Purchasers "lock-up" letters, in form and substance satisfactory to the Initial Purchasers, signed by each of its current directors and officers. (l) Except as stated in this Agreement, the Preliminary Offering Memorandum and the Offering Memorandum, the Company has not taken, nor will it take, directly or indirectly, any action designed to or that might reasonably he expected to cause or result in stabilization or manipulation of the price of the Debentures to facilitate the sale or resale of the Debentures. (m) The Company will use its best efforts to cause the Debentures to be eligible for trading on The PORTAL Market. (n) From and after the Closing Date, so long as any of the Debentures are outstanding during any period in which the Company is not subject to Section 13 or 15(d) of the Exchange Act, the Company will furnish to holders of the Debentures and prospective purchasers of Debentures designated by such holders, upon request of such holders or such prospective purchasers, the information required to be delivered pursuant to Rule 144A(d)(4) under the Act to permit compliance with Rule 144A in connection with resale of the Debentures. (o) The Company agrees not to sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the Act) that would be integrated with the sale of the Debentures in a mariner that would require the registration under the Act of the sale to the Initial Purchasers or the Eligible Purchasers of the Debentures. (p) The Company agrees to comply with all of the terms and conditions of the Registration Rights Agreement, and all agreements set forth in the representation letters of the Company to DTC relating to the approval of the Debentures by DTC for "book entry" transfer. (q) The Company agrees that prior to any registration of the Debentures pursuant to the Registration Rights Agreement, or at such earlier time as may be so required, the Indenture and, if required, the Guarantee Agreement shall be qualified under the Trust Indenture Act of 1939, as amended (the "1939 Act"), and will cause to be entered into any necessary supplemental indentures or such other agreements as may be necessary in connection therewith. (r) The Company agrees that it will cause each of its wholly-owned subsidiaries to enter into the Guarantee Agreement on or prior to the Closing Date. 5. Representations and Warranties of the Company. The Company represents and warrants to the Initial Purchasers that: (a) The Preliminary Offering Memorandum and Offering Memorandum with respect to the Debentures have been prepared by the Company for use by the Initial Purchasers in connection with the Exempt Resales. No order or decree preventing the use of the Preliminary Offering Memorandum or the Offering Memorandum or any amendment or supplement thereto, or any order asserting that the transactions contemplated by this Agreement are subject to the registration requirements of the Act has been issued and no proceeding for that purpose has commenced or is pending or, to the knowledge of the Company, is contemplated. (b) The Preliminary Offering Memorandum and the Offering Memorandum as of their respective dates and the Offering Memorandum as of the Closing Date, did not or will not at any such times contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein in light of the circumstances under which they are made not misleading, except that this representation and warranty does not apply to statements in or omissions 7 8 from the Preliminary Offering Memorandum and Offering Memorandum made in reliance upon and in conformity with information relating to the Initial Purchasers furnished to the Company in writing by or on behalf of the Initial Purchasers expressly for use therein. (c) The Incorporated Documents heretofore filed were filed in a timely mariner and, when they were filed (or, if any amendment with respect to any such document was filed, when such document was filed), conformed in all material respects to the requirements of the Exchange Act and did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and any further Incorporated Documents will, when so filed, be filed in a timely mariner and conform in all material respects to the requirements of the Exchange Act and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. (d) The Indenture has been duly and validly authorized by the Company and, upon its execution, delivery and performance by the Company and assuming due authorization, execution, delivery and performance by the Trustee, will be a valid and binding agreement of the Company, enforceable in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and by general equitable principles, and the Indenture conforms in all material respects to the description thereof in the Offering Memorandum; and no qualification of the Indenture under the 1939 Act is required in connection with the offer and sale of the Debentures contemplated hereby or in connection with the Exempt Resales. (e) The Debentures have been duly authorized by the Company and, when executed by the Company and authenticated by the Trustee in accordance with the Indenture and delivered to the Initial Purchasers against payment therefor in accordance with the terms hereof, will have been validly issued and delivered, and will constitute valid and binding obligations of the Company entitled to the benefits of the Indenture and enforceable in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and by general equitable principles, and the Debentures will conform in all material respects to the description thereof in the Offering Memorandum. (f) All the outstanding shares of capital stock of the Company have been duly authorized and validly issued, are fully paid and nonassessable, are free of any preemptive or similar rights and were issued and sold in compliance with all applicable federal and state securities laws; the shares of Common Stock issuable upon conversion of the Debentures have been duly authorized and reserved for issuance and, when delivered upon conversion of the Debentures, will be validly issued, fully paid and nonassessable and free of any preemptive or similar rights; and the authorized capital stock of the Company conforms to the description thereof in the Offering Memorandum and the authorized and outstanding capital stock of the company is as set forth under the caption "Capitalization" in the Offering Memorandum." (g) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware with full corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Offering Memorandum, and is duly registered and qualified to conduct its business and is in good standing in each jurisdiction or place where the nature of its properties or the conduct of its business requires such registration or qualification, except where the failure so to register or qualify does not have a material adverse effect on the condition (financial or other), business, prospects, properties, net worth or results of operations of the Company and the Subsidiaries (as hereinafter defined), taken as a whole (a "Material Adverse Effect"). (h) The subsidiaries listed on Schedule II hereto constitute all of the Company's subsidiaries (as defined in Regulation S-X under the Act). Such subsidiaries are referred to herein individually as a "Subsidiary" and collectively as the "Subsidiaries." Each Subsidiary is a corporation duly organized, validly existing and in good standing in the jurisdiction of its incorporation with full corporate power and authority to own, lease and operate its properties and to conduct its business as described in the 8 9 Offering Memorandum and is duly registered and qualified to conduct its business and is in good standing in each jurisdiction or place where the nature of its properties or the conduct of its business requires such registration or qualification, except where the failure so to register or qualify would not have a Material Adverse Effect. All the outstanding shares of capital stock of each of the Subsidiaries have been duly authorized and validly issued, are fully paid and nonassessable, and are owned by the Company directly, or indirectly through one of the other Subsidiaries, free and clear of any lien, adverse claim, security interest, equity, or other encumbrance, except as disclosed in the Offering Memorandum. (i) There are no legal or governmental proceedings pending or, to the knowledge of the Company, threatened, against the Company or any of the Subsidiaries, or to which the Company or any of the Subsidiaries, or to which any of their respective properties, is subject, that are not disclosed in the Offering Memorandum which, if adversely decided, could have a Material Adverse Effect, or materially affect the issuance of the Debentures or the consummation of the transactions contemplated by the Operative Documents. There are no agreements, contracts, indentures, leases or other instruments that would be required to be described in the Offering Memorandum if it were a prospectus included in a registration statement on Form S-3 under the Act but are not described as would be required, or that are required to be filed as an exhibit to any Incorporated Document that are not so filed as required. Neither the Company nor any of the Subsidiaries is involved in any strike, job action or labor dispute, and to the Company's knowledge no such action or dispute is threatened. (j) Except as to violations or defaults which would not singularly or in the aggregate have a Material Adverse Effect, neither the Company nor any of the Subsidiaries is (i) in violation of its certificate or articles of incorporation or by-laws or other organizational documents, or of any law, ordinance, administrative or governmental rule or regulation applicable to the Company or any of the Subsidiaries or of any decree of any court or governmental agency or body having jurisdiction over the Company or any of the Subsidiaries, or (ii) in default in the performance of any obligation, agreement or condition contained in any bond, debenture, note or any other evidence of indebtedness or in any material agreement, indenture, lease or other instrument to which the Company or any of the Subsidiaries is a party or by which any of them or any of their respective properties may be bound. (k) Neither the issuance, offer, sale or delivery of the Debentures, the issuance of Common Stock upon conversion of the Debentures, the execution, delivery or performance of this Agreement, the Indenture or the Registration Rights Agreement by the Company, the execution, delivery or performance of the Guarantee Agreement by the Guarantors, nor the consummation by the Company and the Guarantors of the transactions contemplated hereby or thereby (i) requires any consent, approval, authorization or other order of, or registration or filing with, any court, regulatory body, administrative agency or other governmental body, agency or official (except such as may be required in connection with the registration under the Act of the Debentures, the Common Stock and the Guarantees in accordance with the Registration Rights Agreement, the qualification of the Indenture and, if necessary, the Guarantee Agreement under the 1939 Act and except for compliance with the securities or Blue Sky laws of various jurisdictions) or conflicts or will conflict with or constitutes or will constitute a breach of, or a default under, the certificate or articles of incorporation or bylaws, or other organizational documents, of the Company or any of the Subsidiaries or (ii) conflicts or will conflict with or constitutes or will constitute a breach of, or a default under, any agreement, indenture, lease or other instrument to which the Company or any of the Subsidiaries is a party or by which any of them or any of their respective properties may be bound which is material to the Company and its Subsidiaries taken as a whole, except for any such conflict, breach or default that has been waived, or violates or will violate any statute, law, regulation or filing or judgment, injunction, order or decree applicable to the Company or any of the Subsidiaries or any of their respective properties, or will result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of the Subsidiaries pursuant to the terms of any agreement or instrument to which any of them is a party or by which any of them may be bound or to which any of the property or assets of any of them is subject. (l) The accountants, Ernst & Young LLP and Arthur Andersen, who each have certified or shall certify the financial statements included as part of the Offering Memorandum (or any 9 10 amendment or supplement thereto), are independent public accountants under Rule 101 of the AICPA's Code of Professional Conduct, and its interpretation and rulings. (m) The historical financial statements, together with related schedules and notes forming part of the Offering Memorandum, present fairly the consolidated financial position, results of operations and changes in stockholders' equity and cash flows of the Company and the Subsidiaries on the basis stated in the Offering Memorandum at the respective dates or for the respective periods to which they apply; such statements and related schedules and notes have been prepared in accordance with generally accepted accounting principles consistently applied throughout the periods involved, except as disclosed therein; and the other financial and statistical information and data set forth in the Offering Memorandum, are accurately presented in all material respects and prepared on a basis consistent with such financial statements and the books and records of the Company. The pro forma financial statements (including the notes thereto) and other pro forma financial information included or incorporated by reference in the Offering Memorandum present fairly the information shown therein and have been properly computed on the basis described therein, and the pro forma financial statements incorporated by reference in the Offering Memorandum have been prepared in accordance with the Commission's rules and guidelines with respect to pro forma financial statements (including Article 11 of Regulation S-X). The assumptions used in preparation of the pro forma financial statements and other pro forma financial information included or incorporated by reference in the Offering Memorandum are reasonable, and the adjustments used therein are reasonably appropriate to give effect to the transactions or circumstances referred to therein. (n) The Company has all requisite power and authority to execute, deliver and perform its obligations under this Agreement and the Registration Rights Agreement; the execution and delivery of, and the performance by the Company of its obligations under, this Agreement and the Registration Rights Agreement have been duly and validly authorized by the Company, and this Agreement has been, and the Registration Rights Agreement when executed will have been, duly executed and delivered by the Company and constitute the valid and legally binding agreements of the Company, enforceable against the Company in accordance with their terms, except as the enforcement hereof and thereof may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and subject to the applicability of general equitable principles, and except as rights to indemnity and contribution hereunder and thereunder may be limited by Federal or state securities laws. (o) The Guarantors have all requisite power and authority to execute, deliver and perform their respective obligations under the Guarantee Agreement, the execution and delivery of, and the performance by each Guarantor of its respective obligations under the Guarantee Agreement have been duly and validly authorized by such Guarantor and the Guarantee Agreement, when executed, will have been duly executed and delivered by each of the Guarantors and constitute the valid and legally binding agreement of each such Guarantor, enforceable against each such Guarantor in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and subject to the applicability of general equitable principles; and the Guarantees conform in all material respects to the description thereof in the Offering Memorandum; and no qualification of the Guarantees under the 1939 Act is required in connection with the offer and sale of the Debentures contemplated hereby or in connection with Exempt Resales. (p) Except as disclosed in or contemplated by the Offering Memorandum (or any amendment or supplement thereto), subsequent to the date as of which such information is given in the Offering Memorandum (or any amendment or supplement thereto), neither the Company nor any of the Subsidiaries has incurred any liability or obligation, direct or contingent, or entered into any transaction, that is or would be material to the Company and the Subsidiaries, taken as a whole, and there has not been any material change in the capital stock, or material increase in the short-term or long-term debt, of the Company or any of the Subsidiaries, or any material adverse change, or any development involving or which could reasonably be expected to involve a prospective material adverse change, in the condition (financial or other), business, prospects, properties, net worth or results of operations of the Company and 10 11 the Subsidiaries, taken as a whole. (q) Each of the Company and the Subsidiaries has good and marketable title to all property (real and personal) described in the Offering Memorandum as being owned by it, free and clear of all liens, claims, security interests or other encumbrances except such as are described in the Offering Memorandum or in a document filed as an exhibit to an Incorporated Document, subject to such exceptions as are not material to its respective business or do not or could not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries taken as whole, and all the property described in the Offering Memorandum as being held under lease by the Company or any of the Subsidiaries is held by it under valid, subsisting and enforceable leases. (r) The Company has not distributed and, prior to the later to occur of (i) the Closing Date or the Option Closing Date, if any, and (ii) completion of the distribution of the Debentures, will not distribute any offering material in connection with the offering and sale of the Debentures other than the Preliminary Offering Memorandum and Offering Memorandum. (s) Each of the Company and the Subsidiaries has such permits, licenses, franchises, authorizations and clearances ("Permits") of governmental or regulatory authorities as are necessary to own, lease and operate its properties and to conduct its business in the mariner described in the Offering Memorandum or in an Incorporated Document, subject to such qualifications as may be set forth in the Offering Memorandum and except where the failure to have such Permits would not materially interfere with the ownership, lease or operation of such properties or the conduct of such business; subject to such qualifications as may be set forth in the Offering Memorandum, each of the Company and the Subsidiaries has fulfilled and performed all its material obligations with respect to the Permits, and no event has occurred which allows, or after notice or lapse of time would allow, revocation or termination thereof or results in any other material impairment of the rights of the holder of any Permit, subject in each case to such qualification as may be set forth in the Offering Memorandum. Except as described in the Offering Memorandum, none of the Permits contains any restriction that is materially burdensome to the Company or the Subsidiaries. Each of the Company and the Subsidiaries has the requisite provider number or other authorization to bill the Medicare program and the respective Medicaid program in the state or states in which such entity operates. There is no action pending or, to the Company's knowledge, threatened which could result in a revocation of any such provider number or authorization or result in the Company's or any Subsidiary's exclusion from the Medicare or any state Medicaid programs. The Company's and each Subsidiary's business practices do not violate any applicable provisions of federal or state laws governing Medicare or any state Medicaid programs, including, without limitation, Sections 1320a-7a and 1320a-7b of Title 42 of the United States Code. No individual with an ownership or control interest, as defined in 42 U.S.C. Section 1320a-3(a)(3), in the Company or any Subsidiary, or who is an officer, director or managing employee as defined in 42 U.S.C. Section 1320a-5(h), of the Company or any Subsidiary is a person described in 42 U.S.C. Section 1320a-7(b)(8)(B). The Company's and each Subsidiary's business practices do not violate any federal or state laws regarding physician ownership of (or financial relationship with) and referral to entities providing healthcare related goods or services, or laws requiring disclosure of financial interests held by physicians in entities to which they may refer patients for the provisions of health care related goods or services. (t) The Company and the Subsidiaries maintain insurance of the types and in amounts generally deemed adequate for its business and consistent with insurance coverage maintained by similar companies and businesses, all of which insurance is in full force and effect. (u) The Company maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. 11 12 (v) Neither the Company nor any of its Subsidiaries nor, to the Company's best knowledge, any employee or agent of the Company or any Subsidiary has made any payment of funds of the Company or any Subsidiary or received or retained any funds in violation of any law, rule or regulation, which payment, receipt or retention of funds is of a character that would be required to be disclosed in the Offering Memorandum if it were a prospectus included in a registration statement. (w) There are no material Medicare or Medicaid recoupment or recoupments of any third party payor being sought, requested or claimed, or to the Company's knowledge, threatened against the Company or any of the Subsidiaries. (x) The property, assets and operations of the Company and the Subsidiaries comply in all material respects with all applicable Federal, state and local laws, rules, orders, decrees, judgments, injunctions, licenses, permits and regulations relating to environmental matters (the "Environmental Laws"), except to the extent that the lack of compliance with such Environmental Laws would not, singularly or in the aggregate, have a Material Adverse Effect. To the Company's best knowledge, none of the Company's or any Subsidiary's property, assets or operations is the subject of any federal, state or local investigation evaluating whether any remedial action is needed to respond to a release of any substance into the environment regulated by or forming the basis of liability under any Environmental Laws (a "Hazardous Material"). Neither the Company nor any Subsidiary has received any notice or claim, nor are there any pending or, to the Company's best knowledge, threatened or reasonably anticipated lawsuits against it with respect to violations of an Environmental Law or in connection with the release of any Hazardous Material into the environment. Neither the Company nor any Subsidiary has any material contingent liability in connection with any release of Hazardous Material into the environment. (y) No holder of any security of the Company (other than holders of the Debentures and holders of shares of Common Stock received upon conversion thereof) has any right to have any Common Stock or other securities of the Company included in the Shelf Registration Statement or to request or demand registration of shares of Common Stock or any other security of the Company because of the consummation of the transactions contemplated by this Agreement or the Registration Rights Agreement. Except as described in the Offering Memorandum, no person has the right, contractual or otherwise, to cause the Company to sell or otherwise issue to them, or to permit them to underwrite the sale of, any of the Debentures. Except as described in or contemplated by the Offering Memorandum, there are no outstanding options, warrants or other rights calling for the issuance of, and, there are no commitments, plans or arrangements to issue, any shares of capital stock of the Company or any security convertible into or exchangeable or exercisable for capital stock of the Company. (z) The Company and the Subsidiaries own or possess all patents, trademarks, trademark registrations, service marks, service mark registrations, trade names, copyrights, licenses, inventions, trade secrets and rights described in the Offering Memorandum as being owned by any of them or necessary for the conduct of their respective businesses, and the Company is not aware of any claim to the contrary or any challenge by any other person to the rights of the Company and the Subsidiaries with respect to the foregoing. (aa) The Company is not now, and after sale of the Debentures to be sold by it hereunder and application of the net proceeds from such sale as described in the Offering Memorandum under the caption "Use of Proceeds" will not be, an "investment company" within the meaning of the Investment Company Act of 1940, as amended. (bb) Based upon the assumptions and subject to the qualifications set forth therein, the statements made in the Offering Memorandum under the caption "Certain United States Federal Income Tax Consequences" accurately summarize the material United States federal income tax consequences of the ownership, conversion and disposition of the Debentures for United States holders who acquire Debentures on original issue and who hold Debentures as "capital assets" within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended. 12 13 (cc) The Company and the Subsidiaries have filed all federal, state, local and foreign tax returns and tax forms required to be filed; such returns and forms are complete and correct in all material respects; and all taxes shown by such returns or otherwise assessed that are due or payable have been paid, except such taxes as are being contested in good faith and as to which adequate reserves have been provided. (dd) When the Debentures are issued and delivered pursuant to this Agreement, such Debentures will not be of the same class (within the meaning of Rule 144A(d)(3) under the Act) as any security of the Company that is listed on a national securities exchange registered under Section 6 of the Exchange Act or that is quoted in a United States automated interdealer quotation system. (ee) After giving effect to the intended use of proceeds from the offering of the Debentures as described in the Offering Memorandum under the caption "Use of Proceeds" the Debentures do not constitute "corporate acquisition indebtedness" within the meaning of Section 279 of the Internal Revenue Code. (ff) Neither the Company nor any affiliate (as defined in Rule 501(b) of Regulation D ("Regulation D") under the Act) of the Company has directly, or through any agent (provided that no representation is made as to the Initial Purchasers or any person acting on their behalf), (i) sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any security (as defined in the Act) which is or will be integrated with the offering and sale of the Debentures in a mariner that would require the registration of the Debentures under the Act or (ii) engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offering of the Debentures. (gg) The Company is not required to deliver the information specified in Rule 144A(d)(4) in connection with the offering and resale of the Debentures by the Initial Purchasers. (hh) Assuming (i) that the representations and warranties in Section 2 hereof are true, (ii) the Initial Purchasers comply with the covenants set forth in Section 2 hereof and (iii) that each person to whom the Initial Purchasers offer, sell or deliver the Debentures is a Qualified Institutional Buyer or a person other than a U.S. person outside the United States in reliance on Regulation S under the Act, the purchase and sale of the Debentures pursuant hereto (including the Initial Purchasers' proposed offering of the Debentures on the terms and in the manner set forth in the Offering Memorandum and Section 2 hereof) is exempt from the registration requirements of the Act. None of the Company, its Subsidiaries or affiliates or any person acting on its or their behalf (provided that no representation is made as to the Initial Purchasers or any person acting on their behalf) has engaged in any directed selling efforts (as that term is defined in Regulation S) with respect to the Debentures and the Company, its Subsidiaries and each person acting on their behalf (provided that no representation is made as to the Initial Purchasers or any person acting on their behalf) have complied with the offering restrictions requirement of Regulation S. (ii) The execution and delivery of this Agreement, the other Operative Documents and the sale of the Debentures to the Initial Purchasers or by the Initial Purchasers to Eligible Purchasers will not involve any prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Code. The representation made by the Company in the preceding sentence is made in reliance upon and subject to the accuracy of, and compliance with, the representations and covenants made or deemed made by the Eligible Purchasers as set forth in the Offering Memorandum under the section entitled "Notice to Investors." (jj) The Company is not required to obtain stockholder consent or approval pursuant to the rules of the NASDAQ or any securities exchange or trading facility in connection with the offering and sale of the Debentures. (kk) No class of securities of the Company is rated by any "nationally recognized statistical rating organization," as defined for purposes of Rule 436(g) under the Act. 13 14 6. Indemnification and Contribution. (a) The Company agrees to indemnify and hold harmless each Initial Purchaser and each person, if any, who controls any Initial Purchaser within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages, liabilities and expenses (including reasonable costs of investigation) arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Offering Memorandum or Offering Memorandum or in any amendment or supplement thereto, or arising out of or based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, liabilities or expenses arise out of or are based upon any untrue statement or omission or alleged untrue statement or omission which has been made therein or omitted therefrom in reliance upon and in conformity with the information relating to such Initial Purchaser furnished in writing to the Company by or on behalf of any Initial Purchaser expressly for use in connection therewith; provided, however, that the indemnification contained in this paragraph (a) with respect to the Preliminary Offering Memorandum shall not inure to the benefit of any Initial Purchaser (or to the benefit of any person controlling any Initial Purchaser) on account of any such loss, claim, damage, liability or expense arising from the sale of the Debentures by such Initial Purchaser to any person if the untrue statement or alleged untrue statement or omission or alleged omission of a material fact contained in the Preliminary Offering Memorandum was corrected in the Offering Memorandum and such Initial Purchaser sold Debentures to that person without sending or giving at or prior to the written confirmation of such sale, a copy of the Offering Memorandum (as then amended or supplemented) if the Company has previously furnished sufficient copies thereof to the several Initial Purchasers. The foregoing indemnity agreement shall be in addition to any liability which the Company may otherwise have. (b) If any action, suit or proceeding shall be brought against any Initial Purchaser or any person controlling any Initial Purchaser in respect of which indemnity may be sought against the Company, such Initial Purchaser or such controlling person shall promptly notify the Company and the Company shall assume the defense thereof, including the employment of counsel and payment of all fees and expenses; provided, however, that the omission so to notify the Company shall not relieve the Company from any liability that it may have to any Initial Purchaser (except to the extent that the Company is materially prejudiced or otherwise forfeits substantive rights or defenses by reason of such failure). Such Initial Purchaser or any such controlling person shall have the right to employ separate counsel in any such action, suit or proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Initial Purchaser or such controlling person unless (i) the Company has agreed in writing to pay such fees and expenses, (ii) the Company has failed to assume the defense and employ counsel, or (iii) the named parties to any such action, suit or proceeding (including any impleaded parties) include both such Initial Purchaser or such controlling person and the Company and representation of the Company by the same counsel would be inappropriate under applicable standards of professional conduct (whether or not such representation by the same counsel has been proposed) due to actual or potential differing interests between them (in which case the Company shall not have the right to assume the defense of such action, suit or proceeding on behalf of such Initial Purchaser or such controlling person). It is understood, however, that the Company shall, in connection with any one such action, suit or proceeding or separate but substantially similar or related actions, suits or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of only one separate firm of attorneys (in addition to any local counsel) at any time for all such Initial Purchasers and controlling persons not having actual or potential differing interests with the Initial Purchasers or among themselves, which firm shall be designated in writing by Smith Barney Inc., and that all such reasonable fees and expenses shall be reimbursed as they are incurred. The Company shall not be liable for any settlement of any such action, suit or proceeding effected without its written consent, but if settled with such written consent, or if there be a final judgment for the plaintiff in any such action, suit or proceeding, the Company agrees to indemnify and hold harmless any Initial Purchaser, to the extent provided in paragraph (a), and any such controlling person from and against any loss, claim, damage, liability or expense by reason of such settlement or judgment. (c) - Each Initial Purchaser agrees to indemnify and hold harmless the Company, and 14 15 its directors and officers, and any person who controls the Company within the meaning of Section 15 of the Act or Section 20 of the Exchange Act to the same extent as the indemnity from the Company to each Initial Purchaser set forth in paragraph (a) hereof, but only with respect to information relating to such Initial Purchaser furnished in writing by or on behalf of such Initial Purchaser expressly for use in the Preliminary Offering Memorandum or Offering Memorandum or any amendment or supplement thereto. If any action, suit or proceeding shall be brought against the Company, any of its directors or officers, or any such controlling person based on the Preliminary Offering Memorandum or Offering Memorandum, or any amendment or supplement thereto, and in respect of which indemnity may be sought against any Initial Purchaser pursuant to this paragraph (c), such Initial Purchaser shall have the rights and duties given to the Company by paragraph (b) above (except that if the Company shall have assumed the defense thereof such Initial Purchaser shall not be required to do so, but may employ separate counsel therein and participate in the defense thereof, but the fees and expenses of such counsel shall be at such Initial Purchaser's expense), and the Company, its directors and officers, and any such controlling person shall have the rights and duties given to the Initial Purchasers by paragraph (b) above. The foregoing indemnity agreement shall be in addition to any liability which the Initial Purchasers may otherwise have. (d) If the indemnification provided for in this Section 6 is unavailable to an indemnified party under paragraphs (a) or (c) hereof in respect of any losses, claims, damages, liabilities or expenses referred to therein, then an indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Initial Purchasers on the other hand from the offering of the Debentures, or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Initial Purchasers on the other in connection with the statements or omissions that resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Initial Purchasers on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company bear to the total discounts and commissions received by the Initial Purchasers, in each case as set forth in the table on the cover page of the Offering Memorandum; provided that, in the event that the Initial Purchasers shall have purchased any Additional Debentures hereunder, any determination of the relative benefits received by the Company or the Initial Purchasers from the offering of the Debentures shall include the net proceeds (before deducting expenses) received by the Company, and the discounts and commissions received by the Initial Purchasers, from the sale of such Additional Debentures, in each case computed on the basis of the respective amounts set forth in the notes to the table on the cover page of the Offering Memorandum. The relative fault of the Company on the one hand and the Initial Purchasers on the other hand shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or by the Initial Purchasers on the other hand and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. (e) The Company and the Initial Purchasers agree that it would not be just and equitable if contribution pursuant to this Section 6 were determined by a pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in paragraph (d) above. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities and expenses referred to in paragraph (d) above shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating any claim or defending any such action, suit or proceeding. Notwithstanding the provisions of this Section 6, no Initial Purchaser shall be required to contribute any amount in excess of the amount by which the total price of the Debentures sold by it to Eligible Purchasers exceeds the amount of any damages which such Initial Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Initial Purchasers' obligations to contribute pursuant to 15 16 this Section 6 are several in proportion to the respective numbers of Firm Debentures set forth opposite their names in Schedule I hereto and not joint. (f) No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action, suit or proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such action, suit or proceeding. (g) Any losses, claims, damages, liabilities or expenses for which an indemnified party is entitled to indemnification or contribution under this Section 6 shall be paid by the indemnifying party to the indemnified party as such losses, claims, damages, liabilities or expenses are incurred. The indemnity and contribution agreements contained in this Section 6 and the representations and warranties of the Company set forth in this Agreement shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of any Initial Purchaser or any person controlling any Initial Purchaser, the Company, its directors or officers or any person controlling the Company, (ii) acceptance of any Debentures and payment therefor hereunder, and (iii) any termination of this Agreement. A successor to any Initial Purchaser or any person controlling any Initial Purchaser, or to the Company, its directors or officers or any person controlling the Company, shall be entitled to the benefits of the indemnity, contribution and reimbursement agreements contained in this Section 6. 7. Conditions of the Initial Purchasers' Obligations. The several obligations of the Initial Purchasers to purchase the Firm Debentures hereunder are subject to the following conditions: (a) At the time of execution of this Agreement and on the Closing Date, no order or decree preventing the use of the Offering Memorandum or any amendment or supplement thereto, or any order asserting that the transactions contemplated by this Agreement are subject to the registration requirements of the Act shall have been issued and no proceedings for that purpose shall have been commenced or shall be pending or, to the knowledge of the Company, be contemplated. No stop order suspending the sale of the Debentures in any jurisdiction designated by the Initial Purchasers shall have been issued and no proceedings for that purpose shall have been commenced or shall be pending or, to the knowledge of the Company, shall be contemplated. (b) Subsequent to the effective date of this Agreement, there shall not have occurred (i) any change, or any development involving a prospective change, in or affecting the condition (financial or other), business, prospects, properties, net worth or results of operations of the Company or the Subsidiaries not contemplated by the Offering Memorandum, which in the opinion of the Initial Purchasers, would materially adversely affect the market for the Debentures, or (ii) any event or development relating to or involving the Company or any officer or director of the Company which makes any statement made in the Offering Memorandum untrue or which, in the opinion of the Company and its counsel or the Initial Purchasers and their counsel, requires the making of any addition to or change in the Offering Memorandum in order to state a material fact required by any law to be stated therein or necessary in order to make the statements therein not misleading, if amending or supplementing the Offering Memorandum to reflect such event or development would, in the opinion of the Initial Purchasers, materially adversely affect the market for the Debentures. (c) The Initial Purchasers shall have received on the Closing Date an opinion of Calfee, Halter & Griswold LLP, counsel for the Company, dated the Closing Date and addressed to the Initial Purchasers, to the effect that: (i) The Incorporated Documents (except for the financial statements and the notes thereto and the schedules and other financial and statistical data included therein, as to which such counsel need not express any opinion), at the time they were filed, complied as to form in all material respects with the requirements of the Exchange Act; 16 17 (ii) The Company is a corporation duly incorporated and validly existing in good standing under the laws of the State of Delaware with full corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Offering Memorandum (and any amendment or supplement thereto), and is duly registered and qualified to conduct its business and is in good standing in each jurisdiction or place where the nature of its properties or the conduct of its business requires such registration or qualification, except where the failure to so register or qualify does not have a Material Adverse Effect; (iii) Each Material Subsidiary (as hereinafter defined) is a corporation duly incorporated and validly existing and in good standing under the laws of the jurisdiction of its organization, with full corporate power and authority to own, lease, and operate its properties and to conduct its business as described in the Offering Memorandum (and any amendment or supplement thereto); each Material Subsidiary is duly registered and qualified to conduct its business and is in good standing as a foreign corporation in each jurisdiction or place where the nature of its properties or the conduct of its business requires such registration or qualification, except where the failure so to register or qualify or to be in good standing would not have a Material Adverse Effect; and all the outstanding shares of capital stock of each of the Material Subsidiaries have been duly authorized and validly issued, are fully paid and nonassessable, and are owned of record by the Company directly, or indirectly through one of the other Material Subsidiaries, free and clear of any perfected security interest or, to such counsel's knowledge, any other lien, adverse claim, equity or other encumbrance, except as disclosed in, or contemplated by, the Offering Memorandum (or any amendment or supplement thereto); (iv) The Company has all necessary corporate power and authority to execute and deliver this Agreement and the Registration Rights Agreement and to issue, sell and deliver the Debentures to be sold by it to the Initial Purchasers as provided herein, and this Agreement and the Registration Rights Agreement have each been duly authorized, executed and delivered by the Company and each constitutes a valid and binding agreement of the Company, enforceable in accordance with its terms, except as enforcement of rights to indemnity and contribution under each agreement may be limited by Federal or state securities laws or principles of public policy and except to the extent that enforceability of each agreement is subject to (i) applicable bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect affecting creditors' rights generally and (ii) general principles of equity; (v) The Indenture has been duly and validly authorized, executed and delivered by the Company and, assuming due authorization, execution and delivery by the Trustee, is a valid and binding agreement of the Company, enforceable in accordance with its terms, except to the extent that enforceability thereof is subject to (i) applicable bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect affecting creditors' rights generally and (ii) general principles of equity; (vi) The Debentures have been duly and validly authorized by the Company and when executed by the Company in accordance with the Indenture and, assuming due authentication of the Debentures by the Trustee, upon delivery to the Initial Purchasers against payment therefor in accordance with the terms hereof, will have been validly issued and delivered, and will constitute valid and binding obligations of the Company entitled to the benefits of the Indenture, except to the extent that enforceability thereof is subject to (i) applicable bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect affecting creditors' rights generally and (ii) general principles of equity; (vii) The shares of Common Stock issuable upon conversion of the Debentures have been duly authorized and reserved for issuance and, when issued and delivered upon conversion of the Debentures, in accordance with the terms thereof, will be validly issued, fully paid and nonassessable and will be free of any (A) preemptive rights under the Amended and Restated Certificate of Incorporation of the Company or the Delaware General Corporation Law or (B) to the best knowledge of such counsel after reasonable inquiry, similar rights; 17 18 (viii) The authorized capital stock of the Company is as set forth under the caption "Capitalization" in the Offering Memorandum; and the authorized capital stock of the Company conforms in all material respects as to legal matters to the description thereof contained in the Offering Memorandum under the caption "Description of Capital Stock"; (ix) All the shares of capital stock of the Company outstanding prior to the issuance of the Debentures to be issued and sold by the Company hereunder have been duly authorized and validly issued, are fully paid and nonassessable and were issued and sold in compliance with all applicable Federal and state securities laws; (x) No consent, approval, authorization or other order of, or registration or filing with, any court, regulatory body, administrative agency or other governmental body, agency, or official is required on the part of the Company or any Subsidiary (except such as may be required under state securities or Blue Sky laws governing the purchase and distribution of the Debentures, or such as may be required to qualify the Indenture and, if necessary, the Guarantees under the 1939 Act, and such as may be required in connection with the performance by the Company of its obligations under the Registration Rights Agreement, as to which counsel need not express any opinion) for the valid issuance and sale of the Debentures to the Initial Purchasers as contemplated by this Agreement; (xi) Neither the offer, sale or delivery of the Debentures, nor the issuance of Common Stock upon conversion of the Debentures in accordance with the terms of the Debentures, nor the execution, delivery or performance by the Company of this Agreement, the Registration Rights Agreement or the Indenture, the execution, delivery or performance of the Guarantee Agreement by the Guarantors, nor compliance by the Company and the Guarantors with the provisions hereof or thereof, nor consummation by the Company and the Guarantors of the transactions contemplated hereby or thereby, conflicts or will conflict with or constitutes or will constitute a breach of, or a default under the certificate or articles of incorporation or bylaws or other organizational documents of the Company or any of the Subsidiaries or any agreement, indenture, lease or other instrument to which the Company or any of the Subsidiaries is a party or by which any of them or any of their respective properties is bound which is material to the Company and its Subsidiaries taken as a whole and that is an exhibit to any Incorporated Document, or to the knowledge of such counsel will result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of the Subsidiaries, nor will any such action result in any violation of any existing law, or any regulation, ruling (assuming compliance with all applicable state securities and Blue Sky laws and, in the case of the Registration Rights Agreement, the Act, the Exchange Act and the 1939 Act), judgment, injunction, order or decree known to such counsel, and applicable to the Company, the Subsidiaries or any of their respective properties; (xii) To the knowledge of such counsel, (A) there are no legal or governmental proceedings pending or threatened against the Company or any of the Subsidiaries, or to which the Company or any of the Subsidiaries, or any of their property, are subject, which are of the type that would be required to be described in the Offering Memorandum if it were a prospectus included in a registration statement on Form S-3 under the Act or in any of the Incorporated Documents but are not so described as required and (B) there are no agreements, contracts, indentures, leases or other instruments, that are of the type that would be required to be described in the Offering Memorandum if it were a prospectus included in a registration statement on Form S-3 under the Act or in any of the Incorporated Documents but are not so described as required, or that are required to be filed as an exhibit to any of the Incorporated Documents that are not so filed as required; (xiii) No registration of the Debentures under the Act nor qualification of the Indenture or the Guarantees under the 1939 Act is required for the sale of the Debentures to the Initial Purchasers as contemplated in this Agreement or for the Exempt Resales (assuming (A) that all representations and warranties made by the Initial Purchasers and the Company in this Agreement and in the Offering Memorandum are true, correct and accurate (including but not limited to the representations by the Initial Purchasers and the Company regarding the absence of general solicitation in connection with the 18 19 Exempt Resales and regarding offers and sales outside the United States in reliance on Regulation S), (B) the Initial Purchasers comply with all of the covenants set forth in this Agreement (including but not limited to the covenants set forth in Section 2 hereof), (C) none of the Company, its Subsidiaries and each person acting on its or their behalf have complied with the offering restrictions requirements of Regulation S, (D) that each person to whom the Initial Purchasers offer, sell or deliver the Debentures in the Exempt Resales is (x) a Qualified Institutional Buyer or (y) a person other than a U.S. person outside the United States in reliance on Regulation S under the Act, and (E) that the representations made by each person to whom Debentures are sold in reliance on Rule 144A or Regulation S are true. correct and accurate); (xiv) To the knowledge of such counsel, neither the Company nor any of the Subsidiaries is in violation of any law, ordinance, administrative or governmental rule or regulation applicable to the Company or any of the Subsidiaries, the violation of which would have a Material Adverse Effect or of any decree of any court or governmental agency or body having jurisdiction over the Company or any of the Subsidiaries; (xv) The statements m: (A) the Offering Memorandum under the captions "Risk Factors -- Regulation and Reimbursement," "Risk Factors -- Uncertainty Due to Proposed Changes in National and State Health Care Policies," "Risk Factors -- Potential Effect of Anti-Takeover Provisions and Certain Provisions of Delaware Laws," "Risk Factors -- Subordination of Debentures," "Risk Factors -- Risks Relating to Enforceability of Subsidiary Guarantees," "Risk Factors -- Limitations Upon a Repurchase Event," "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity and Capital Resources," "Business -- Reimbursement and Billing," "Business -- Government Regulation," "Description of Debentures," "Description of Capital Stock," "Plan of Distribution" (other than the ninth paragraph thereunder, as to which no opinion need be expressed by such counsel) and "Notice to Investors"; (B) the Company's 10-K for the year ended June 30, 1996 under the captions "Business -- Reimbursement and Billing" and "Business -- Government Regulation"; (C) the Company's 8-K dated August 1, 1996 under the caption "Acquisition or Disposition of Assets"; (D) the Company's 8-K dated August 13, 1996 under the caption "Acquisition or Disposition of Assets"; (E) the Company's 8-K dated November 1, 1996 under the caption "Other Events"; and (F) the Company's Proxy Statement dated October 18, 1996 under the captions "Executive Compensation" and "Certain Transactions," insofar as such statements are descriptions of contracts, agreements or other legal documents, or refer to statements of law or legal conclusions, are accurate and present fairly the information shown; (xvi) Except as disclosed in the Offering Memorandum, such counsel does not know of any outstanding option, warrant or other right calling for the issuance of, and such counsel does not know of any commitment, plan or arrangement to issue, any share of capital stock of the Company or any security convertible into or exchangeable or exercisable for capital stock of the Company; and such counsel does not know of any holder of any security of the Company (except for holders of the Debentures and the Common Stock issuable upon conversion thereof) or any other person who has the right, contractual or otherwise, to cause the Company to sell or otherwise issue to them, or to permit them to underwrite the sale of, any of the Debentures or the right to have any Common Stock or other securities of the Company included in the Shelf Registration Statement or the right, as a result of the consummation of the transactions contemplated by the Operative Documents, to require registration under the Act of any shares of Common Stock or other securities of the Company; (xvii) To the knowledge of such counsel, neither the Company nor any of the Subsidiaries is in violation of its respective certificate or articles of incorporation or bylaws, or other organizational documents, or is in default in the performance of any material obligation, agreement or condition contained in any bond, debenture, note or other evidence of indebtedness made an exhibit to any Incorporated Document; (xviii) Each of the Company and the Subsidiaries has full corporate power and authority and all necessary Permits (except where the failure to so have any such Permits, individually or in the aggregate, would not have a Material Adverse Effect) to own its properties and to conduct its business as now being conducted as described in the Offering Memorandum; 19 20 (xix) When the Debentures are issued and delivered pursuant to this Agreement, such Debentures will not be of the same class (within the meaning of Rule 144A(d)(3) under the Act) as any security of the Company that is listed on a national securities exchange registered under Section 6 of the Exchange Act or that is quoted in a United States automated interdealer quotation system; (xx) The Company is not required to deliver the information specified in Rule 144A(d)(4) in connection with the offering and resale of the Debentures by the Initial Purchasers; (xxi) Based upon the assumptions and subject to the qualifications set forth therein, the statements made in the Offering Memorandum under the caption "Certain United States Federal Income Tax Consequences" accurately summarize the material United States federal income tax consequences of the ownership, conversion and disposition of the Debentures for United States holders who acquire Debentures on original issue and who hold Debentures as "capital assets" within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended; (xxii) The Company is not required to obtain stockholder consent or approval pursuant to the rules of Nasdaq in connection with the issuance, offering and resale of the Debentures; (xxiii) Neither the Company nor any of the Subsidiaries is an "investment company or a person "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended; and (xxiv) Each Guarantor has all necessary corporate power and authority to execute and deliver the Guarantee Agreement, and the Guarantee Agreement has been duly authorized, executed and delivered by each Guarantor. In addition, such counsel shall state that, although such counsel has not undertaken, except as otherwise indicated in their opinion, to determine independently, and does not assume any responsibility for, the accuracy, completeness or fairness of the statements in the Offering Memorandum, such counsel has participated in the preparation of the Offering Memorandum, including review and discussion of the content thereof, and nothing has come to the attention of such counsel that has caused it to believe that the Offering Memorandum, as of its date, and as of the Closing Date or the Option Closing Date, as the case may be, contained an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading or that any amendment or supplement to the Offering Memorandum, as of its date, and as of the Closing Date or the Option Closing Date, as the case may be, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading (it being understood that such counsel need express no opinion with respect to the financial statements and the notes thereto and the schedules and other financial and statistical data included or incorporated by reference in the Offering Memorandum). In rendering their opinion as aforesaid, counsel may rely upon an opinion or opinions, each dated the Closing Date, of other counsel retained by them or the Company as to laws of any jurisdiction other than the federal laws of the United States or the State of Ohio or the corporation law of the State of Delaware, provided that (l) each such local counsel is acceptable to the Initial Purchasers, (2) such reliance is expressly authorized by each opinion so relied upon and a copy of each such opinion is delivered to the Initial Purchasers and is, in form and substance, satisfactory to them and counsel for the Initial Purchasers and (3) counsel shall state in their opinion that they believe that they and the Initial Purchasers are justified in relying thereon. For purposes of the opinion of such counsel rendered pursuant to clause (iii) of this paragraph (c), "Material Subsidiary" shall mean each Subsidiary other than those Subsidiaries which would not, when considered in the aggregate, constitute a "significant subsidiary" as defined in Regulation S-X under the Act. The Material Subsidiaries shall be identified in an exhibit to such counsel's opinion. 20 21 (d) The Initial Purchasers shall have received on the Closing Date an opinion of Dewey Ballantine, counsel for the Initial Purchasers, dated the Closing Date, and addressed to the Initial Purchasers, with respect to the matters referred to in clauses (iv), (v), (vi), (vii) (other than subclause (B) thereof) and (xiii) of the foregoing paragraph (c), and the penultimate paragraph of the foregoing paragraph (c) and such other related matters as the Initial Purchasers may request. (e) The Initial Purchasers shall have received letters addressed to the Initial Purchasers, and dated the date hereof and the Closing Date, from Ernst & Young LLP, independent certified public accountants, substantially in the forms heretofore approved by the Initial Purchasers. (f)(i) There shall not have been any material change in the capital stock of the Company nor any material increase in the short-term or long-term debt of the Company from that set forth or contemplated in the Offering Memorandum (or any amendment or supplement thereto); (ii) there shall not have been, since the respective dates as of which information is given in the Offering Memorandum (or any amendment or supplement thereto), except as may otherwise be stated in the Offering Memorandum (or any amendment or supplement thereto), any material adverse change in the condition (financial or other), business, prospects, properties, net worth or results of operations of the Company and the Subsidiaries, taken as a whole; (iii) the Company and the Subsidiaries shall not have any liabilities or obligations, direct or contingent (whether or not in the ordinary course of business), that are material to the Company and the Subsidiaries, taken as a whole, other than those reflected in the Offering Memorandum (or any amendment or supplement thereto); and (iv) all the representations and warranties of the Company contained in this Agreement shall be true and correct in all material respects on and as of the date hereof and on and as of the Closing Date as if made on and as of the Closing Date, and the Initial Purchasers shall have received a certificate, dated the Closing Date and signed by the chief executive officer and the chief financial officer of the Company (or such other officers as are acceptable to the Initial Purchasers), to the effect set forth in this Section 7(f) and in Section 7(g) hereof. (g) The Company shall not have failed at or prior to the Closing Date to have performed or complied with any of its agreements herein contained and required to be performed or complied with by it hereunder at or prior to the Closing Date. (h) You shall have received a certificate dated the Closing Date signed by the chief accounting officer of the Company substantially in the form heretofore approved by you, respecting the Company's compliance with the financial covenants contained in credit agreements to which the Company is a party. (i) The Debentures shall have been designated for trading on PORTAL. (j) The Company and the Initial Purchasers shall have executed and delivered the Registration Rights Agreement. (k) The Company and the Trustee shall have executed and delivered the Indenture. (l) Each wholly-owned subsidiary of the Company and the Trustee shall have executed and delivered the Guarantee Agreement. (m) The Company shall have furnished or caused to be furnished to the Initial Purchasers such further certificates and documents as the Initial Purchasers shall have reasonably requested. All such opinions, certificates, letters and other documents will be in compliance with the provisions hereof only if they are reasonably satisfactory in form and substance to the Initial Purchasers and counsel for the Initial Purchasers. Any certificate or document signed by any officer of the Company and delivered to the initial Purchasers, or to counsel for the Initial Purchasers, shall be deemed a representation and warranty by 21 22 the Company to the Initial Purchasers as to the statements made therein. The obligations of the Initial Purchasers to purchase any Additional Debentures hereunder are subject to the satisfaction on and as of any Option Closing Date of the conditions set forth in this Section 7, except that, if any Option Closing Date is other than the Closing Date, the certificates, opinions and letters referred to in paragraphs (c) through (f) and paragraphs (a) and (m) shall be dated the Option Closing Date in question and the opinion called for by paragraphs (c) and (d) shall be revised to reflect the sale of Additional Debentures. 8. Expenses. The Company agrees to pay the following costs and expenses and all other costs and expenses incident to the performance by it of its obligations hereunder: (i) the preparation, printing or reproduction of the Offering Memorandum (including financial statements thereto), and each amendment or supplement thereto; (ii) the printing (or reproduction) and delivery (including postage, air freight charges and charges for counting and packaging) of such copies of the Offering Memorandum, the Preliminary Offering Memorandum, the Incorporated Documents, and all amendments or supplements to any of them as may be reasonably requested for use in connection with the offering and sale of the Debentures; (iii) the preparation, printing, authentication, issuance and delivery of certificates for the Debentures, including any stamp taxes in connection with the original issuance and sale of the Debentures; (iv) the printing (or reproduction) and delivery of this Agreement, Blue Sky Memoranda and all other agreements or documents printed (or reproduced) and delivered in connection with the offering of the Debentures; (v) the application for designation of the Debentures on PORTAL; (vi) the registration of the Common Stock and the listing of the shares of Common Stock issuable upon conversion of the Debentures on the NASDAQ; (vii) the qualification of the Debentures and the shares of Common Stock issuable upon conversion of the Debentures for offer and sale under the securities or Blue Sky laws of the several states as provided in Section 4(f) hereof (including the reasonable fees and expenses and disbursements of counsel for the Initial Purchasers relating to the preparation, printing or reproduction, and delivery of Blue Sky Memoranda and such qualification); (viii) the transportation and other expenses incurred by or on behalf of Company representatives in connection with presentations to prospective purchasers of the Debentures; (ix) the performance by the Company of its obligations under the Registration Rights Agreement; (x) the fees and expenses of the Trustee and (xi) the fees and expenses of the Company's accountants and the fees and expenses of counsel (including local and special counsel) for the Company. 9. Effective Date of Agreement. This Agreement shall become effective upon the execution and delivery hereof by all the parties hereto. Until such time as this Agreement shall have become effective, it may be terminated by the Company, by notifying the Initial Purchasers, or by the Initial Purchasers, by notifying the Company. Any notice under this Section 9 may be given by telegram, telecopy or telephone but shall be subsequently confirmed by letter. 10. Default by an Initial Purchaser. If any one or more of the Initial Purchasers shall fail or refuse to purchase the Debentures which it is obligated to purchase on the Closing Date, and arrangements satisfactory to the non-defaulting Initial Purchasers or by another party or parties satisfactory to the non-defaulting Initial Purchasers and the Company for the purchase of such Debentures by the non-defaulting Initial Purchasers and the Company are not made within thirty-six (36) hours after such default, this Agreement shall terminate without liability on the part of the non-defaulting Initial Purchasers or the Company. In any such case which does not result in termination of this Agreement, either the non-defaulting Initial Purchasers or the Company shall have the right to postpone the Closing Date, but in no event for longer than seven (7) days, in order that the required changes, if any, in the Offering Memorandum or any other documents or arrangements may be effected. Any action taken under this paragraph shall not relieve the defaulting Initial Purchasers from liability in respect of such default under this Agreement. The term "Initial Purchaser" as used in this Agreement includes, for all purposes of this Agreement, any party not identified in this Agreement who purchases Debentures which a defaulting Initial Purchaser is obligated, but fails or refuses to purchase. 22 23 11. Termination of Agreement. This Agreement shall be subject to termination in the absolute discretion of the Initial Purchasers, without liability on the part of the Initial Purchasers to the Company, by notice to the Company, if prior to the Closing Date or any Option Closing Date (if different from the Closing Date and then only as to the Additional Debentures), as the case may be, (i) trading in securities generally on the New York Stock Exchange, American Stock Exchange or The Nasdaq Stock Market's National Market shall have been suspended or materially limited, (ii) a general moratorium on commercial banking activities in New York shall have been declared by either federal or state authorities, or (iii) there shall have occurred any outbreak or escalation of hostilities or other international or domestic calamity, crisis or change in political, financial or economic conditions, the effect of which on the financial markets of the United States is such as to make it, in the judgment of the Initial Purchasers, impracticable or inadvisable to commence or continue the offering of the Debentures on the terms set forth on the cover page of the Offering Memorandum or to enforce contracts for the resale of the Debentures by the Initial Purchasers. Notice of such termination may be given to the Company by telegram, telecopy or telephone and shall be subsequently confirmed by letter. 12. Information Furnished by the Initial Purchasers. The statements set forth in the last paragraph on the cover page, the stabilization legend on page 2 and in the first, third, fourth, sixth and ninth paragraphs under the caption "Plan of Distribution" in the Preliminary Offering Memorandum and Offering Memorandum, constitute the only information furnished by or on behalf of the Initial Purchasers, as such information is referred to in Sections 5(b) and 6 hereof. 13. Miscellaneous. Except as otherwise provided in Sections 4, 9 and 11 hereof, notice given pursuant to any provision of this Agreement shall be in writing and shall be delivered (i) if to the Company, at the office of the Company at 3201 Enterprise Parkway, Suite 220, Beachwood, Ohio 44122, Attention: J.H. Outcalt, Chairman of the Board, with a copy to Calfee, Halter & Griswold LLP, 1400 McDonald Investment Center, 800 Superior Avenue, Cleveland, Ohio 44114, Attention: Thomas F. McKee, Esq. or (ii) if to the Initial Purchasers, to Smith Barney Inc., 388 Greenwich Street, New York, NY 10013, Attention: Manager, Investment Banking Division, with a copy to Dewey Ballantine, 1301 Avenue of the Americas, New York, New York 10019, Attention: Frederick W. Kanner, Esq. This Agreement has been and is made solely for the benefit of the Initial Purchasers, the Company, its directors, its officers and the controlling persons referred to in Section 6 hereof and their respective successors and assigns, to the extent provided herein, and no other person shall acquire or have any right under or by virtue of this Agreement. Neither the term "successor" nor the term "successors and assigns" as used in this Agreement shall include a purchaser from the Initial Purchasers of any of the Debentures in his status as such purchaser. 14. Applicable Law; Counterparts. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed within the State of New York without giving effect to the choice of laws or conflict of laws principles thereof. This Agreement may be signed in various counterparts which together constitute one and the same instrument. If signed in counterparts, this Agreement shall not become effective unless at least one counterpart hereof shall have been executed and delivered on behalf of each party hereto. 23 24 Please confirm that the foregoing correctly sets forth the agreement between the Company and the Initial Purchasers. Very truly yours, NCS HEALTHCARE, INC. By: /s/ Jon H. Outcalt -------------------------- Confirmed as of the date first above mentioned. SMITH BARNEY INC. WILLIAM BLAIR & COMPANY, L.L.C. MONTGOMERY SECURITIES MCDONALD & COMPANY SECURITIES, INC. By: SMITH BARNEY INC. By: /s/ Ben Lorello ----------------------------------- 24 25 SCHEDULE I NCS HEALTHCARE, INC.
Principal Amount Initial Purchaser of Firm Debentures - ----------------- ------------------ Smith Barney Inc ..................... $60,000,000 William Blair & Company, L.L.C. ...... 20,000,000 Montgomery Securities ................ 15,000.000 McDonald & Company Securities, Inc ... 5,000,000 --------- Total ........................ $100,000,000 ============
EX-4.10 3 EXHIBIT 4.10 1 Exhibit 4.10 - -------------------------------------------------------------------------------- NCS HEALTHCARE, INC. and NATIONAL CITY BANK, as Trustee ---------- INDENTURE Dated as of August 13, 1997 ---------- $115,000,000 5-3/4% Convertible Subordinated Debentures due 2004 - -------------------------------------------------------------------------------- 2 Certain Sections of this Indenture relating to Sections 310 through 318 of the Trust Indenture Act of 1939: Section 310 (a)(1) ................................. 609 (a)(2) ........................................ 609 (a)(3) ........................................ Not Applicable (a)(4) ........................................ Not Applicable (a)(5) ........................................ 609 (b) ........................................ 608 Section 311 (a)..................................... 613 (b) ........................................ 613 Section 312 (a)..................................... 701 ........................................ 702(a) (b) ........................................ 702(b) (c) ........................................ 702(c) Section 313 (a)..................................... 703(a) (b) ........................................ 703(a) (c) ........................................ 703(a) (d) ........................................ 703(b) Section 314 (a)..................................... 704 (a)(4) ........................................ 1005 (b) ........................................ Not Applicable (c)(1) ........................................ 102 (c)(2) ........................................ 102 (c)(3) ........................................ Not Applicable (d) ........................................ Not Applicable (e) ........................................ 102 Section 315 (a)..................................... 601 (b) ........................................ 602 (c) ........................................ 601 (d) ........................................ 601 (e) ........................................ 514 Section 316 (a)(1).................................. 502 (a)(1)(A) ........................................ 512 (a)(1)(B) ........................................ 513 (a)(2) ........................................ Not Applicable (b) ........................................ 508 (c) ........................................ 104(c) Section 317 (a)(1)........................................ 503 (a)(2) ........................................ 504 (b) ........................................ 1004 Section 318 (a)..................................... 107 - ------------------------ Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture. i 3 TABLE OF CONTENTS* Page ---- Parties................................................................... 1 Recitals of the Company................................................... 1 ARTICLE ONE Definitions and Other Provisions of General Application..................... 1 SECTION 101. DEFINITIONS............................. 1 "Act"................................................... 2 "Affiliate"............................................. 2 "Authenticating Agent".................................. 2 "Beneficial Owner"...................................... 2 "Board of Directors".................................... 2 "Board Resolution"...................................... 2 "Business Day".......................................... 2 "Cedel"................................................. 2 "Change in Control"..................................... 2 "Class A Common Stock".................................. 3 "Class B Common Stock".................................. 3 "Commission"............................................ 3 "Common Stock".......................................... 3 "Company"............................................... 3 "Company Request" or "Company Order".................... 3 "Corporate Trust Office"................................ 3 "Corporation"........................................... 4 "Current Market Price".................................. 4 "DTC"................................................... 4 "Defaulted Interest".................................... 4 "Definitive Security"................................... 4 "Depositary"............................................ 4 "Euroclear"............................................. 4 "Event of Default"...................................... 4 "Exchange Act".......................................... 4 "Global Security"....................................... 4 "Guarantee"............................................. 4 "Guarantee Agreement"................................... 4 - -------- *Note: This table of contents shall not, for any purposes, be deemed to be a part of the Indenture. ii 4 "Guarantor"............................................. 4 "Holder"................................................ 4 "Indenture"............................................. 4 "Initial Purchasers".................................... 5 "Interest Payment Date"................................. 5 "Maturity".............................................. 5 "Officers' Certificate"................................. 5 "144A Global Security".................................. 5 "Opinion of Counsel".................................... 5 "Outstanding"........................................... 5 "Paying Agent".......................................... 6 "Person"................................................ 6 "Predecessor Security".................................. 6 "Purchase Agreement".................................... 6 "Record Date"........................................... 6 "Redemption Date"....................................... 6 "Redemption Price"...................................... 6 "Registration Rights Agreement"......................... 7 "Regular Record Date"................................... 7 "Regulation S".......................................... 7 "Regulation S Global Security".......................... 7 "Repurchase Date"....................................... 7 "Repurchase Event"...................................... 7 "Repurchase Price"...................................... 7 "Resale Restriction Termination Date"................... 7 "Responsible Officer"................................... 7 "Securities Custodian".................................. 7 "Security Register" and "Security Registrar"............ 7 "Senior Indebtedness"................................... 7 "Shelf Registration Statement".......................... 8 "Special Record Date"................................... 8 "Stated Maturity"....................................... 8 "Subsidiary"............................................ 8 "Termination of Trading"................................ 9 "Transfer Restricted Securities"........................ 9 "Trust Indenture Act"................................... 9 "Trustee"............................................... 9 "Vice President"........................................ 9 "Wholly-owned Subsidiary"............................... 9 SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS............ 9 SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.......... 10 SECTION 104. ACTS OF HOLDERS; RECORD DATES................... 10 SECTION 105. NOTICES, ETC., TO TRUSTEE AND COMPANY........... 11 SECTION 106. NOTICE TO HOLDERS; WAIVER....................... 12 SECTION 107. CONFLICT WITH TRUST INDENTURE ACT............... 13 SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS........ 13 iii 5 SECTION 109. SUCCESSORS AND ASSIGNS............................... 13 SECTION 110. SEPARABILITY CLAUSE.................................. 13 SECTION 111. BENEFITS OF INDENTURE................................ 13 SECTION 112. GOVERNING LAW........................................ 13 SECTION 113. LEGAL HOLIDAYS....................................... 13 SECTION 114. NO SECURITY INTEREST CREATED......................... 14 SECTION 115. LIMITATION ON INDIVIDUAL LIABILITY................... 14 ARTICLE TWO Security Forms........................... 14 SECTION 201. FORMS GENERALLY...................................... 15 SECTION 202. FORM OF FACE OF SECURITY............................. 16 SECTION 203. FORM OF REVERSE OF GLOBAL SECURITIES AND DEFINITIVE SECURITY............................................. 20 SECTION 204. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION...... 28 ARTICLE THREE The Securities........................... 29 SECTION 301. TITLE AND TERMS...................................... 29 SECTION 302. DENOMINATIONS........................................ 30 SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING....... 30 SECTION 304. TEMPORARY SECURITIES................................. 30 SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE............................................. 31 SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES..... 40 SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED....... 41 SECTION 308. PERSONS DEEMED OWNERS................................ 43 SECTION 309. CANCELLATION......................................... 43 SECTION 310. COMPUTATION OF INTEREST.............................. 43 ARTICLE FOUR Satisfaction and Discharge..................... 43 SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.............. 43 SECTION 402. APPLICATION OF TRUST MONEY........................... 45 SECTION 403. REINSTATEMENT........................................ 45 ARTICLE FIVE Remedies.............................. 45
iv 6 SECTION 501. EVENTS OF DEFAULT.................................... 45 SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT............................................ 48 SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE........................................... 49 SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM..................... 50 SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES........................................... 50 SECTION 506. APPLICATION OF MONEY COLLECTED....................... 51 SECTION 507. LIMITATION ON SUITS.................................. 51 SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND INTEREST AND TO CONVERT.................. 52 SECTION 509. RESTORATION OF RIGHTS AND REMEDIES................... 52 SECTION 510. RIGHTS AND REMEDIES CUMULATIVE....................... 52 SECTION 511. DELAY OR OMISSION NOT WAIVER......................... 53 SECTION 512. CONTROL BY HOLDERS................................... 53 SECTION 513. WAIVER OF PAST DEFAULTS.............................. 53 SECTION 514. UNDERTAKING FOR COSTS................................ 54 ARTICLE SIX The Trustee............................ 54 SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES.................. 54 SECTION 602. NOTICE OF DEFAULTS................................... 55 SECTION 603. CERTAIN RIGHTS OF TRUSTEE............................ 55 SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES........................................... 57 SECTION 605. MAY HOLD SECURITIES.................................. 57 SECTION 606. MONEY HELD IN TRUST.................................. 57 SECTION 607. COMPENSATION AND REIMBURSEMENT....................... 57 SECTION 608. DISQUALIFICATION; CONFLICTING INTERESTS.............. 58 SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.............. 59 SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR............................................ 59 SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR............... 60 SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS............................................. 61 SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.... 61 SECTION 614. APPOINTMENT OF AUTHENTICATING AGENT.................. 61 ARTICLE SEVEN Holders' Lists and Reports by Trustee and Company.... 64
v 7 SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS........................................... 64 SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATION TO HOLDERS.............................................. 64 SECTION 703. REPORTS BY TRUSTEE................................... 64 SECTION 704. REPORTS BY COMPANY................................... 65 SECTION 705. RULE 144A INFORMATION REQUIREMENT.................... 65 ARTICLE EIGHT Consolidation, Merger, Conveyance, Transfer or Lease. 65 SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS................................................ 65 SECTION 802. SUCCESSOR SUBSTITUTED................................ 66 ARTICLE NINE Supplemental Indentures...................... 67 SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.............................................. 67 SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS...... 67 SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES................. 68 SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.................... 69 SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.................. 69 SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES... 69 SECTION 907. NOTICE OF SUPPLEMENTAL INDENTURE..................... 69 ARTICLE TEN Covenants............................. 69 SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST........... 69 SECTION 1002. GUARANTEES OF SUBSIDIARIES........................... 70 SECTION 1003. MAINTENANCE OF OFFICE OR AGENCY...................... 70 SECTION 1004. MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST...... 70 SECTION 1005. STATEMENT BY OFFICERS AS TO DEFAULT.................. 71 SECTION 1006. EXISTENCE............................................ 72 SECTION 1007. WAIVER OF CERTAIN COVENANTS.......................... 72 ARTICLE ELEVEN Redemption of Securities...................... 72 SECTION 1101. RIGHT OF REDEMPTION.................................. 72
vi 8 SECTION 1102. APPLICABILITY OF ARTICLE............................. 72 SECTION 1103. ELECTION TO REDEEM; NOTICE TO TRUSTEE................ 72 SECTION 1104. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED.... 73 SECTION 1105. NOTICE OF REDEMPTION................................. 73 SECTION 1106. DEPOSIT OF REDEMPTION PRICE.......................... 74 SECTION 1107. SECURITIES PAYABLE ON REDEMPTION DATE................ 74 SECTION 1108. SECURITIES REDEEMED IN PART.......................... 75 ARTICLE TWELVE Subordination of Securities.................... 75 SECTION 1201. SECURITIES SUBORDINATED TO SENIOR INDEBTEDNESS....... 75 SECTION 1202. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC....... 75 SECTION 1203. PRIOR PAYMENT TO SENIOR INDEBTEDNESS UPON ACCELERATION OF SECURITIES........................... 77 SECTION 1204. NO PAYMENT WHEN SENIOR INDEBTEDNESS IN DEFAULT....... 77 SECTION 1205. PAYMENT PERMITTED IF NO DEFAULT...................... 78 SECTION 1206. SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS......................................... 78 SECTION 1207. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS.......... 78 SECTION 1208. TRUSTEE TO EFFECTUATE SUBORDINATION.................. 79 SECTION 1209. NO WAIVER OF SUBORDINATION PROVISIONS................ 79 SECTION 1210. NOTICE TO TRUSTEE.................................... 79 SECTION 1211. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT.................................... 80 SECTION 1212. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS......................................... 81 SECTION 1213. RIGHTS OF TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS; PRESERVATION OF TRUSTEE'S RIGHTS....... 81 SECTION 1214. ARTICLE APPLICABLE TO PAYING AGENTS.................. 81 SECTION 1215. CERTAIN CONVERSIONS DEEMED PAYMENT................... 81 SECTION 1216. NO SUSPENSION OF REMEDIES............................ 82 ARTICLE THIRTEEN Conversion of Securities...................... 82 SECTION 1301. CONVERSION PRIVILEGE AND CONVERSION PRICE............ 82 SECTION 1302. EXERCISE OF CONVERSION PRIVILEGE..................... 82 SECTION 1303. FRACTIONS OF SHARES.................................. 83 SECTION 1304. ADJUSTMENT OF CONVERSION PRICE....................... 84 SECTION 1305. NOTICE OF ADJUSTMENTS OF CONVERSION PRICE............ 90 SECTION 1306. NOTICE OF CERTAIN CORPORATE ACTION................... 90 SECTION 1307. COMPANY TO RESERVE CLASS A COMMON STOCK.............. 91 SECTION 1308. TAXES ON CONVERSIONS................................. 92
vii 9 SECTION 1309. COVENANT AS TO CLASS A COMMON STOCK.................. 92 SECTION 1310. CANCELLATION OF CONVERTED SECURITIES................. 92 SECTION 1311. PROVISIONS OF CONSOLIDATION, MERGER OR SALE OF ASSETS............................................... 92 SECTION 1312. TRUSTEE'S DISCLAIMER................................. 93 ARTICLE FOURTEEN Right to Require Repurchase.................... 93 SECTION 1401. RIGHT TO REQUIRE REPURCHASE.......................... 93 SECTION 1402. NOTICE; METHOD OF EXERCISING REPURCHASE RIGHT........ 93 SECTION 1403. DEPOSIT OF REPURCHASE PRICE.......................... 95 SECTION 1404. SECURITIES NOT REPURCHASED ON REPURCHASE DATE........ 95 SECTION 1405. SECURITIES REPURCHASED IN PART....................... 95 SECTION 1406. CERTAIN DEFINITIONS.................................. 95 ARTICLE FIFTEEN Guarantees............................. 97 SECTION 1501. UNCONDITIONAL GUARANTEES............................. 97 SECTION 1502. ADDITION OF GUARANTORS............................... 97 SECTION 1503. SUBORDINATION OF GUARANTEES.......................... 97
viii 10 INDENTURE, dated as of August 13, 1997 between NCS HEALTHCARE, INC., a corporation duly organized and existing under the laws of the State of Delaware (herein called the "Company"), having its principal executive offices at 3201 Enterprise Parkway, Suite 220, Beachwood, Ohio 44122, and National City Bank, a national banking association, as Trustee (herein called the "Trustee"). RECITALS OF THE COMPANY The Company has duly authorized the creation of an issue of its 5-3/4% Convertible Subordinated Debentures due 2004 (herein called the "Securities") of substantially the tenor and amount hereinafter set forth, and to provide therefor the Company has duly authorized the execution and delivery of this Indenture. All things necessary to make the Securities, when executed by the Company and authenticated and delivered hereunder and duly issued by the Company, the valid obligations of the Company, and to make this Indenture a valid agreement of the Company, in accordance with their and its terms, have been done. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows: ARTICLE ONE Definitions and Other Provisions of General Application SECTION 101. Definitions. ----------- For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles, and, except as otherwise herein expressly provided, the term 11 "generally accepted accounting principles" with respect to any computation required and permitted hereunder shall mean such accounting principles as are generally accepted and accepted and adopted by the Company at the date of this Indenture; and (4) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. Certain terms used in Articles Twelve, Thirteen and Fourteen are defined in such Articles. "Act," when used with respect to any Holder, has the meaning specified in Section 104. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the possession, directly or indirectly, of the power to direct the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Authenticating Agent" means any Person authorized by the Trustee pursuant to Section 614 to act on behalf of the Trustee to authenticate Securities. The term "Beneficial Owner" is determined in accordance with Rule 13d- 3, promulgated by the Commission under the Exchange Act. "Board of Directors" means either the Board of Directors of the Company or any duly authorized committee of that Board. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors or a duly authorized committee thereof and to be in full force and effect on the date of such certification and delivered to the Trustee. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in Cleveland, Ohio or New York, New York are authorized or obligated to close by law or executive order. "Cedel" means Cedel Bank societe anonyme. "Change in Control" has the meaning specified in Section 1406. 2 12 "Class A Common Stock" means that class of capital stock of the Company designated as Class A Common Stock, par value $.01 per share. "Class B Common Stock" means that class of capital stock of the Company designated as Class B Common Stock, par value $.01 per share. "Closing Date" means August 13, 1997. "Commission" means the Securities and Exchange Commission as from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Common Stock" includes any stock of any class of the Company which has no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company and which is not subject to redemption by the Company, including, without limitation, the Class A Common Stock and Class B Common Stock of the Company. However, subject to the provisions of Section 1311, shares issuable on conversion of Securities shall include only shares of the class designated as Class A Common Stock of the Company at the date of this Indenture or shares of any class or classes resulting from any reclassification or reclassifications thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company and which are not subject to redemption by the Company; PROVIDED, that if at any time there shall be more than one such resulting class, the shares of each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications. "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person. "Company Request" or "Company Order" means a written request or order signed in the name of the Company by its Chairman of the Board, its President or a Vice President, and by its Chief Financial Officer, Controller, Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee. "Corporate Trust Office" means the office of the Trustee in Cleveland, Ohio, which initially shall be 629 Euclid Avenue, Suite 635, Cleveland, Ohio 44114-3484, at which at any particular time its corporate trust business shall principally be administered. 3 13 "Corporation" means a corporation, association, company, joint-stock company or business trust. "Current Market Price" has the meaning specified in Section 1304. "DTC" has the meaning specified in Section 305. "Defaulted Interest" has the meaning specified in Section 307. "Definitive Security" means a Security or Securities that are in the form of the Security set forth in Sections 202 and 203 hereof, containing the legend specified for a Definitive Security and not including the additional language referred to in footnote 1 or the additional schedule referred to in footnote 2. "Depositary" has the meaning specified in Section 305. "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear System. "Event of Default" has the meaning specified in Section 501. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Global Security" means a Security or Securities in the form of the Security set forth in Sections 202, 203 and 204 hereof containing the legend specified for a Global Security, the additional language referred to in footnote 1 and the additional schedule referred to in footnote 2. "Guarantee" means each of the guarantees of the Securities by the Guarantors made pursuant to the Guarantee Agreement. "Guarantee Agreement" means that certain Guarantee Agreement dated as of August 13, 1997 between the Trustee and the Guarantors. "Guarantor" means each of the entities set forth on Schedule I hereto and each other Person that hereafter becomes a Wholly Owned Subsidiary (and in each case any successor thereto) until it is no longer a member of an affiliated group (within the meaning of Section 279(g) of the Internal Revenue Code of 1986, as amended) which includes the Company, including, without limitation, upon the sale or disposition (whether by merger, stock purchase, asset sale or otherwise) of such Guarantor. "Holder" means a Person in whose name a Security is registered in the Security Register. "Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto 4 14 entered into pursuant to the applicable provisions hereof, including, for all purposes of this instrument and any such supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be a part of and govern this instrument and any such supplemental indenture, respectively. "Initial Purchasers" means Smith Barney Inc., William Blair & Company, L.L.C., Montgomery Securities and McDonald & Company Securities, Inc.. "Interest Payment Date" means the Stated Maturity of an instalment of interest on the Securities. "Maturity," when used with respect to any Security, means the date on which the principal of such Security becomes due and payable as therein or herein provided, whether at the Stated Maturity thereof or by declaration of acceleration, redemption or otherwise. "Officers' Certificate" means a certificate, in form reasonably satisfactory to the Trustee, signed by the Chairman of the Board, the Chief Executive Officer, the President or a Vice President, and by the Chief Financial Officer, Controller, Treasurer, the Secretary or an Assistant Secretary, of the Company, and delivered to the Trustee. One of the officers signing an Officers' Certificate given pursuant to Section 1005 shall be the principal executive, financial or accounting officer of the Company. "144A Global Security" has the meaning specified in Section 201. "Opinion of Counsel" means a written opinion, in form reasonably satisfactory to the Trustee, of counsel, who may be counsel for or an employee of the Company, and who shall be reasonably acceptable to the Trustee. "Outstanding," when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except: (i) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation; (ii) Securities, or portions thereof, for the payment or redemption of which moneys in the necessary amount have been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; provided, that if such Securities, or portions thereof, are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and 5 15 (iii) Securities which have been paid pursuant to Section 306 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company; PROVIDED, HOWEVER, that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which the Trustee knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor. "Paying Agent" means any Person authorized by the Company to pay the principal of and premium, if any, or interest on any Securities on behalf of the Company. "Person" means any individual, corporation, limited liability company, partnership, joint venture, trust, unincorporated organization or government or any agency or political subdivision thereof. "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security. "Purchase Agreement" means that certain Purchase Agreement dated August 7, 1997 between the Company and the Initial Purchasers. "Record Date" means either a Regular Record Date or a Special Record Date, as applicable. "Redemption Date," when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price," when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture on the applicable Redemption Date. 6 16 "Registration Rights Agreement" means that certain Registration Rights Agreement dated as of August 13, 1997 between the Company and the Initial Purchasers. "Regular Record Date," for the interest payable on any Interest Payment Date means the February 1 or August 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. "Regulation S" means Regulation S under the Securities Act of 1933, as amended. "Regulation S Global Security" has the meaning specified in Section 201. "Repurchase Date" has the meaning specified in Section 1401. "Repurchase Event" has the meaning specified in Section 1406. "Repurchase Price" has the meaning specified in Section 1401. "Resale Restriction Termination Date" means, with respect to any Security, the date which is two years after the later of (i) the original issue date of such Security and (ii) the last date on which the Company or any Affiliate of the Company was the owner of such Security (or any Predecessor Security). "Responsible Officer" means, when used with respect to the Trustee, the chairman of the Board of Directors, any vice chairman of the Board of Directors, the chairman of the trust committee, the chairman of the executive committee, any vice chairman of the executive committee, the president, any vice president (whether or not designated by numbers or words added before or after the title "vice president"), the cashier, the secretary, the treasurer, any trust officer, any assistant trust officer, any assistant cashier, any assistant secretary, any assistant treasurer, or any other officer or assistant officer of the Trustee customarily performing functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his or her knowledge of and familiarity with the particular subject. "Securities Custodian" means the Trustee, as custodian with respect to the Securities in global form, or any successor entity thereto. "Security Register" and "Security Registrar" have the respective meanings specified in Section 305. "Senior Indebtedness" means (a) all secured indebtedness of the Company for money borrowed under the Company's primary revolving credit facility and any predecessor or successor credit facilities thereto, whether outstanding on the date of execution of the Indenture (including, without limitation, the Company's proposed $150 million credit facility currently being negotiated, any increase in the maximum principal 7 17 amount thereof and any predecessor or successor facilities thereto) or thereafter created, incurred or assumed, (b) all other secured indebtedness of the Company for money borrowed, whether outstanding on the date of the execution of the Indenture or thereafter created, incurred or assumed, except any indebtedness that by the terms of the instrument or instruments by which such indebtedness was created or incurred expressly provides that it (i) is junior in right of payment to the Debentures or (ii) ranks pari passu in right of payment with the Debentures, and (c) any amendments, renewals, extensions, modifications, refinancings and refundings of the foregoing. For the purposes of this definition, "indebtedness for money borrowed" when used with respect to the Company means (i) any obligation of, or any obligation guaranteed by, the Company for the repayment of borrowed money (including, without limitation, interest, fees, penalties or other obligations in respect thereof), whether or not evidenced by bonds, debentures, notes or other written instruments, (ii) any deferred payment obligation of, or any such obligation guaranteed by, the Company for the payment of the purchase price of property or assets evidenced by a note or similar instrument, (iii) any obligation of, or any such obligation guaranteed by, the Company for the payment of rent or other amounts under a lease of property or assets which obligation is required to be classified and accounted for as a capitalized lease on the balance sheet of the Company under generally accepted accounting principles, (iv) any obligation of, or any such obligation which is guaranteed by, the Company for the reimbursement of any obligor of any letter of credit, banker's acceptance or similar credit transaction, (v) any obligation of, or any such obligation which is guaranteed by, the Company under interest rate swaps, caps, collars, options and similar arrangements and (vi) any obligation of the Company under any foreign exchange contract, currency swap agreement, futures contract, currency option contract or other foreign currency hedge. For purposes of this definition, "secured indebtedness" includes, without limitation, indebtedness of the Company for money borrowed that is secured by a lien on the outstanding capital stock or other equity interests in all or a substantial portion of the Company's Wholly-owned Subsidiaries. For purposes of the Guarantees of the Securities under the Guarantee Agreement, Senior Indebtedness shall have the meaning given to such term in the Guarantee Agreement. "Shelf Registration Statement" means the Registration Statement with respect to the Debentures and the Common Stock the Issuer is required to file pursuant to the Registration Rights Agreement. "Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 307. "Stated Maturity," when used with respect to any Security or any instalment of interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security or such instalment of interest is due and payable. "Subsidiary" means a corporation more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries or by the Company and one or more other Subsidiaries. For the purposes of this definition, "voting stock" means stock which ordinarily has voting power for the 8 18 election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency. "Termination of Trading" has the meaning specified in Section 1406. "Transfer Restricted Securities" means Securities that bear or are required to bear the legend set forth in Section 305 hereof. "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed; provided, however, that in the event the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended. "Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean such successor Trustee. "Vice President," when used with respect to the Company means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president". "Wholly-owned Subsidiary" means a Subsidiary all the capital stock of which (other than director's qualifying shares) is owned directly by the Company. SECTION 102. Compliance Certificates and Opinions. ------------------------------------ Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee such certificates and opinions as may be required under the Trust Indenture Act. Each such certificate or opinion shall be given in the form of an Officers' Certificate, if to be given by an officer of the Company, or an Opinion of Counsel, if to be given by counsel, and shall comply with the requirements of the Trust Indenture Act and any other requirement set forth in this Indenture. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that each individual or firm signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; 9 19 (3) a statement that, in the opinion of each such individual or such firm, he has or they have made such examination or investigation as is necessary to enable him or them to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual or such firm, such condition or covenant has been complied with. SECTION 103. Form of Documents Delivered to Trustee. -------------------------------------- In any case where several matters are required to be certified by or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any Person may certify to give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certification or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate of public officials or upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. SECTION 104. Acts of Holders; Record Dates. ----------------------------- (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agents duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose 10 20 of this Indenture and (subject to Section 601) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. (c) The Company may, in the circumstances permitted by the Trust Indenture Act, fix any day as the record date for the purpose of determining the Holders entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action, or to vote on any action, authorized or permitted to be given or taken by Holders. If not set by the Company prior to the first solicitation of a Holder made by any Person in respect of any such action, or, in the case of any such vote, prior to such vote, the record date for any such action or vote shall be the 30th day (or, if later, the date of the most recent list of Holders required to be provided pursuant to Section 701) prior to such first solicitation or vote, as the case may be. With regard to any record date, only the Holders on such date (or their duly designated proxies) shall be entitled to give or take, or vote on, the relevant action. Notwithstanding the foregoing, the Company shall not set a record date for, and the provisions of this paragraph shall not apply with respect to, any Act by the Holders pursuant to Section 501, 502 or 512. (d) The ownership of Securities shall be proved by the Security Register. (e) Any Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer therefor or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security. (f) Without limiting the foregoing, a Holder entitled hereunder to give or take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any different part of such principal amount. SECTION 105. Notices, Etc., to Trustee and Company. ------------------------------------- Any Act of Holders or other documents provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, 11 21 (1) the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, Attention: Corporate Trust Department, or at any other address previously furnished in writing to the Holders and the Company by the Trustee; or (2) the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, registered or certified with postage prepaid, to the Company, addressed to it at the address of its principal executive offices specified in the first paragraph of this instrument or at any other address previously furnished in writing to the Trustee by the Company. All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, registered or certified with postage prepaid, if mailed; when answered back if telexed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by nationally recognized overnight air courier guaranteeing next day delivery. SECTION 106. Notice to Holders; Waiver. ------------------------- Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if made, given, furnished or filed in writing to each Holder affected by such event, at his address as it appears in the Security Register, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, registered or certified with postage prepaid, if mailed; when answered back if telexed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by nationally recognized overnight air courier guaranteeing next day delivery. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder. 12 22 SECTION 107. Conflict with Trust Indenture Act. --------------------------------- If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act or another provision that would be required or deemed under such Act to be a part of and govern this Indenture if this Indenture were subject thereto, the latter provision shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or to be excluded, as the case may be. SECTION 108. Effect of Headings and Table of Contents. ---------------------------------------- The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 109. Successors and Assigns. ---------------------- All covenants and agreements in this Indenture by the Company and the Trustee shall bind each of their respective successors and assigns, whether so expressed or not. SECTION 110. Separability Clause. ------------------- In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 111. Benefits of Indenture. --------------------- Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, the Holders of Securities and, with respect to Article Twelve, the holders of Senior Indebtedness, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 112. Governing Law. ------------- This Indenture and the Securities shall be governed by and construed in accordance with the laws of the State of New York, but without regard to the principles of conflicts of laws thereof. SECTION 113. Legal Holidays. -------------- In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security or the last date on which a Holder has the right to convert his Securities shall not be a Business Day, then (notwithstanding any other provision of this 13 23 Indenture or of the Securities) payment of interest or principal and premium if any, or conversion of the Securities need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at the Stated Maturity, or on such last day for conversion; PROVIDED, that no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be, to the next succeeding Business Day. SECTION 114. No Security Interest Created. ---------------------------- Nothing in this Indenture or in the Securities, express or implied, shall be construed as having granted to the Trustee or any Holder any security interest in any property or assets of the Company or any of its Subsidiaries under the Uniform Commercial Code or similar legislation, as now or hereafter enacted and in effect in any jurisdiction where property of the Company or its Subsidiaries is or may be located. SECTION 115. Limitation on Individual Liability. ---------------------------------- No recourse under or upon any obligation, covenant or agreement contained in this Indenture or in any Security, or for any claim based thereon or otherwise in respect thereof, shall be had against any incorporator, shareholder, officer or director, as such, past, present or future, of the Company or of any successor Person, either directly or through the Company, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that this Indenture and the obligations issued hereunder are solely corporate obligations, and that no such personal liability whatever shall attach to, or is or shall be incurred by, the incorporators, shareholders, officers or directors, as such, of the Company or of any successor Person, or any of them, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any Security or implied therefrom; and that any and all such personal liability of every name and nature, either at common law or in equity or by constitution or statute, of, and any and all such rights and claims against, every such incorporator, shareholder, officer or director, as such, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any Security or implied therefrom, are hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issuance of such Security. 14 24 ARTICLE TWO Security Forms SECTION 201. Forms Generally. --------------- The Securities and the Trustee's certificate of authentication shall be in substantially the forms set forth in this Article, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with any organizational document, any applicable law or with the rules of any securities exchange on which the Securities are listed or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution of the Securities. The Securities issued in definitive form shall be substantially in the form set forth in Section 202 hereof. Unless issued in definitive form, Securities issued and sold in reliance on Rule 144A shall be issued in the form of one or more global securities (the "144A Global Security"), the face of which shall be substantially in the form set forth in Section 202 hereof and the reverse of which shall be substantially in the form set forth in Section 203 hereof, which 144A Global Security shall be deposited on behalf of the holders of the Securities represented thereby with the Trustee, as custodian for the Depositary, and registered in the name of the nominee of the Depositary, duly executed by the Company and authenticated as provided for herein. Securities offered and sold outside the United States in reliance on Regulation S shall be issued in the form of one or more global securities (the "Regulation S Global Security"), the face of which shall be substantially in the form set forth in Section 202 hereof and the reverse of which shall be substantially in the form set forth in Section 203 hereof, which Regulation S Global Security shall be deposited on behalf of the holders of the Securities represented thereby with the Trustee, as custodian for the Depositary, and registered in the name of a nominee of the Depositary, duly executed by the Company and authenticated as provided herein, for credit to the accounts of the respective depositaries for Euroclear and Cedel (or such other accounts as they may direct). Prior to or on the 40th day after the later of the commencement of the offering of the Securities and the Closing Date (the "Restricted Period"), beneficial interests in the Regulation S Global Security may only be held through Chase Manhattan Bank or Citibank, N.A., as operators of Euroclear or Cedel, respectively, or an agent acting for and on behalf of them, unless delivery is made though the 144A Global Security in accordance with the certification requirements hereof. During the Restricted Period, interests in the Regulation S Global Security may be exchanged for interests in the Rule 144A Global Security or for Definitive Securities only in accordance with the certification requirements described in Section 305 below. 15 25 Each Global Security shall represent such of the Outstanding Securities as shall be specified therein and each shall provide that it shall represent the aggregate amount of Outstanding Securities from time to time endorsed thereon and that the aggregate amount of Outstanding Securities represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Security to reflect the amount of any increase or decrease in the amount of Outstanding Securities represented thereby shall be made by the Trustee or the Securities Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof. The Definitive Securities shall be printed, lithographed or engraved or produced by any combination of these methods or may be produced in any other manner permitted by the rules of any securities exchange on which the Securities may be listed or by the Depositary, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities. SECTION 202. Form of Face of Security. ------------------------ LEGENDS FOR GLOBAL SECURITY: UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS 16 26 SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION UNDER SUCH LAWS. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATED PERSON OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) UNLESS SUCH OFFER, SALE OR OTHER TRANSFER IS (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON THE HOLDER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT SUBJECT TO THE COMPANY'S AND NATIONAL CITY BANK'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (C), (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES PROVIDED THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO NATIONAL CITY BANK AND SUBJECT TO ANY APPLICABLE SECURITIES LAWS. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE THEN HOLDER OF THIS SECURITY AFTER THE RESALE RESTRICTION TERMINATION DATE. LEGENDS FOR DEFINITIVE SECURITY: THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION UNDER SUCH LAWS. 17 27 THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATED PERSON OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) UNLESS SUCH OFFER, SALE OR OTHER TRANSFER IS (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON THE HOLDER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT SUBJECT TO THE COMPANY'S AND NATIONAL CITY BANK'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (C), (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES PROVIDED THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO NATIONAL CITY BANK AND SUBJECT TO ANY APPLICABLE SECURITIES LAWS. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE THEN HOLDER OF THIS SECURITY AFTER THE RESALE RESTRICTION TERMINATION DATE. NCS HEALTHCARE, INC. 5-3/4% Convertible Subordinated Debentures due 2004 No. ________ $___________ NCS HealthCare, Inc., a corporation duly organized and existing under the laws of the State of Delaware (herein called the "Company," which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to __________________________, or registered assigns, the principal sum of ________________ Dollars [or such greater or lesser amount as indicated on the 18 28 Schedule of Exchanges of Securities on the reverse hereof]1 on August 15, 2004, and to pay interest thereon from the date of original issuance of Securities pursuant to the Indenture or from and including the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on February 15 and August 15 in each year, commencing February 15, 1998 at the rate of 5-3/4% per annum, until the principal hereof is paid or made available for payment and promises to pay any liquidated damages which may be payable pursuant to Section 4 of the Registration Rights Agreement on the Interest Payment Dates. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the February 1 or August 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. Notice of a Special Record Date shall be given to Holders of Securities not less than 10 days prior to such Special Record Date. Payment of the principal of and premium, if any, and interest on this Security will be made (i) in respect of Securities held of record by the Depositary or its nominee in same day funds on or prior to the respective payment dates and (ii) in respect of Securities held of record by Holders other than the Depositary or its nominee at the office or agency of the Company maintained for that purpose pursuant to Section 1003 of the Indenture, in each case in such coin or currency of the United States of America as of the time of payment is legal tender for payment of public and private debts; PROVIDED, HOWEVER, that at the option of the Company payment of interest in respect of Securities held of record by Holders other than the Depositary or its nominee may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register. Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. - -------- (1) This phrase should be included only if the Security is issued in global form. 19 29 Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. Dated: _________________ NCS HEALTHCARE, INC. By _______________________ Attest: - ------------------------ SECTION 203. Form of Reverse of Global Securities and Definitive Security. ------------------------------------------------------------ This Security is one of a duly authorized issue of Securities of the Company designated as its 5-3/4% Convertible Subordinated Debentures due 2004 (herein called the "Securities"), limited in aggregate principal amount to $115,000,000 (including Securities issuable pursuant to the Initial Purchasers' over-allotment option, as provided for in the Purchase Agreement dated August 7, 1997 between the Company and the Initial Purchasers), issued and to be issued under an Indenture, dated as of August 13, 1997 (herein called the "Indenture"), between the Company and National City Bank, as Trustee (herein called the "Trustee," which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee, the holders of Senior Indebtedness and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. Subject to and upon compliance with the provisions of the Indenture, the Holder of this Security is entitled, at his option, at any time pursuant to the Indenture and on or before the close of business on August 15, 2004 or in case this Security or a portion hereof is called for redemption, then in respect of this Security or such portion hereof until and including, but (unless the Company defaults in making the payment due upon redemption) not after, the close of business on the second business day preceding the Redemption Date, to convert this Security (or any portion of the principal amount hereof which is $1,000 or an integral multiple thereof), at the principal amount hereof, or of such portion, into fully paid and non-assessable shares (calculated as to each conversion to the nearest 1/100th of a share) of Class A Common Stock at a conversion price equal to $32.70 principal amount for each share of Class A Common Stock (or at 20 30 the current adjusted conversion price if an adjustment has been made as provided in the Indenture) by surrender of this Security, duly endorsed or assigned to the Company or in blank, to the Company at its office or agency maintained for that purpose pursuant to Section 1003 of the Indenture, accompanied by written notice to the Company and the Trustee in the form provided in this Security (or such other notice as is acceptable to the Company) that the Holder hereof elects to convert this Security, or if less than the entire principal amount hereof is to be converted, the portion hereof to be converted, and, in case such surrender shall be made during the period from the opening of business on any Regular Record Date next preceding any Interest Payment Date to the close of business on such Interest Payment Date (unless this Security or the portion thereof being converted has been called for redemption), also accompanied by payment in New York Clearing House funds, or other funds acceptable to the Company of an amount equal to the interest payable on such Interest Payment Date on the principal amount of this Security then being converted. Subject to the aforesaid requirement for payment and, in the case of a conversion after the Regular Record Date next preceding any Interest Payment Date and on or before such Interest Payment Date, to the right of the Holder of this Security (or any Predecessor Security) of record at such Regular Record Date to receive an instalment of interest (with certain exceptions provided in the Indenture), no payment or adjustment is to be made upon conversion on account of any interest accrued hereon or on account of any dividends on the Class A Common Stock issued upon conversion. No fractional shares or scrip representing fractions of shares will be issued on conversion, but instead of any fractional share the Company shall pay a cash adjustment as provided in the Indenture. The conversion price is subject to adjustment as provided in the Indenture. In addition, the Indenture provides that in case of certain consolidations or mergers to which the Company is a party or the sale or transfer of all or substantially all of the assets of the Company, the Indenture shall be amended, without the consent of any Holders of Securities, so that this Security, if then outstanding, will be convertible thereafter, during the period this Security shall be convertible as specified above, only into the kind and amount of securities, cash and other property receivable upon the consolidation, merger, sale or transfer by a holder of the number of shares of Class A Common Stock into which this Security might have been converted immediately prior to such consolidation, merger, sale or transfer (assuming such holder of Class A Common Stock failed to exercise any rights of election and received per share the kind and amount received per share by a plurality of non-electing shares). The Securities are subject to redemption upon not less than 30 and not more than 60 days' notice by mail, at any time on or after August 18, 2000, as a whole or in part, at the election of the Company, at the Redemption Prices set forth below (expressed as percentages of the principal amount), plus accrued and unpaid interest to the Redemption Date (subject to the right of Holders of record on the relevant Regular Record Date to receive interest due on an Interest Payment Date that is on or prior to the Redemption Date). If redeemed during the 12-month period beginning August 15, in the year indicated (August 18, in the case of 2000), the redemption price shall be: 21 31 Redemption Year Price ---- ----- 2000............... 103.29% 2001............... 102.46% 2002............... 101.64% 2003............... 100.82% In certain circumstances involving the occurrence of a Repurchase Event (as defined in the Indenture), the Holder hereof shall have the right to require the Company to repurchase this Security at 100% of the principal amount hereof, together with accrued interest to the Repurchase Date, but interest installments whose Stated Maturity is on or prior to such Repurchase Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture. In the event of redemption or conversion of this Security in part only, a new Security or Securities for the unredeemed or unconverted portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. The indebtedness evidenced by this Security is, in all respects, subordinate and subject in right of payment to the prior payment in full of all Senior Indebtedness, and this Security is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Security, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination so provided, and (c) appoints the Trustee his attorney-in-fact for any and all such purposes. If an Event of Default shall occur and be continuing, the principal of all the Securities may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in aggregate principal amount of the Securities at the time Outstanding, and, under certain limited circumstances, by the Company and the Trustee without the consent of the Holders. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Securities at the time Outstanding, on behalf of the Holders of all the Securities, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or 22 32 in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and premium, if any, and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed or to convert this Security as provided in the Indenture. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and any premium and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Securities are issuable only in fully registered form without coupons in denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities are exchangeable for a like aggregate principal amount of Securities of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange except as provided in the Indenture, and the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, except as provided in this Security, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. Each of the Company's Wholly-owned Subsidiaries have unconditionally guaranteed, jointly and severally, the Company's obligations under the Debentures pursuant to the Guarantee Agreement. The indebtedness represented by such guarantees is subordinate and subject in right of payment to the prior payment in full of all Senior Indebtedness (as defined in the Guarantee Agreement) of such Subsidiaries. All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement. 23 33 [FORM OF CONVERSION NOTICE] TO NCS HEALTHCARE, INC. The undersigned registered owner of this Security hereby irrevocably exercises the option to convert this Security, or the portion hereof (which is $1,000 or a multiple thereof) designated below, into shares of Class A Common Stock in accordance with the terms of the Indenture referred to in this Security, and directs that the shares issuable and deliverable upon the conversion, together with any check in payment for a fractional share and any Security representing any unconverted principal amount hereof, be issued and delivered to the registered owner hereof unless a different name has been provided below. If this Notice is being delivered on a date after the close of business on a Regular Record Date and prior to the close of business on the related Interest Payment Date, this Notice is accompanied by payment in New York Clearing House funds, or other funds acceptable to the Company, of an amount equal to the interest payable on such Interest Payment Date on the principal of this Security to be converted (unless this Security has been called for redemption). If shares or any portion of this Security not converted are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Any amount required to be paid by the undersigned on account of interest accompanies this Security. Dated: ------------------------- ------------------------- Signature(s) Signature(s) must be guaranteed by an "eligible guarantor institution" that is a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Trustee or agent responsible for conversion, which requirements include the membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such "signature guarantee program" as may be determined by the Trustee in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended, if shares of Class A Common Stock are to be delivered, or Securities are to be issued, other than to and in the name of the registered owner. - ------------------------------ Signature Guarantee 24 34 Fill in for registration of shares of Class A Common Stock if they are to be delivered, or Securities if they are to be issued, other than to and in the name of the registered owner: - ------------------------------ (Name) - ------------------------------ (Street Address) - ------------------------------ (City, State and zip code) (Please print name and address) Register: _____ Class A Common Stock _____ Securities (Check appropriate line(s)). Principal amount to be converted (if less than all): $__________,000 --------------------------- Social Security or other Taxpayer Identification Number of owner 25 35 [ASSIGNMENT FORM] If you the holder want to assign this Security, fill in the form below and have your signature guaranteed: I or we assign and transfer this Security to ________________________________________________________________________________ (Insert assignee's social security or tax ID number) ___________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint ________________________________________________________________________________ agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. ________________________________________________________________________________ Date:__________________ Your signature: ________________________________________ (Sign exactly as your name appears on the face of this Security) Signature Guarantee: ----------------------------------------------------------- Signature must be guaranteed by an "eligible guarantor institution" that is a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Trustee, which requirements include the membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such "signature guarantee program" as may be determined by the Trustee in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. 26 36 [OPTION OF HOLDER TO ELECT PURCHASE] If you wish to have this Security purchased by the Company pursuant to Section 1401 of the Indenture, check the Box: [ ] If you wish to have a portion of this Security (which is $1,000 or an integral multiple thereof) purchased by the Company pursuant to Section 1401 of the Indenture, state the amount you wish to have purchased: $__________________ Date: ___________________ Your Signature(s): -------------------- Tax Identification No.: -------------------- (Sign exactly as your name appears on the face of this Security) Signature Guarantee: ----------------------------------------------------------- Signature must be guaranteed by an "eligible guarantor institution" that is a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Trustee, which requirements include the membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such "signature guarantee program" as may be determined by the Trustee in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. 27 37 [FORM OF SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES(2)] The following exchanges of a part of this Global Security for Definitive Securities have been made:
Amount of Amount of Principal Signature of decrease in increase in Amount of this authorized Principal Principal Global Security signatory of Amount of this Amount of this following such Trustee or Date of Global Global decrease (or Securities Exchange Security Security increase) Custodian -------- -------- -------- --------- --------- 1. 2. 3. 4. 5.
SECTION 204. Form of Trustee's Certificate of Authentication. ----------------------------------------------- The Trustee's certificate of authentication shall be in substantially the following form: This is one of the Securities referred to in the within-mentioned Indenture. NATIONAL CITY BANK, as Trustee By ---------------------------- Authorized Signatory - -------- (2) This Schedule should be included only if the Security is issued in global form. 28 38 ARTICLE THREE The Securities SECTION 301. Title and Terms. --------------- The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is limited to $115,000,000 (including $15,000,000 aggregate principal amount of Securities that may be sold to the Initial Purchasers by the Company upon exercise of the over-allotment option granted pursuant to the Purchase Agreement), except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities pursuant to Section 304, 305, 306, 906, 1108, 1302 or 1405. The Securities shall be known and designated as the "5-3/4% Convertible Subordinated Debentures due 2004" of the Company. Their Stated Maturity shall be August 15, 2004 and they shall bear interest at the rate of 5-3/4% per annum, from the date of original issuance of Securities pursuant to this Indenture or from the most recent Interest Payment Date to which interest has been paid or duly provided for, as the case may be, payable semi-annually on February 15 and August 15, commencing February 15, 1998, until the principal thereof is paid or made available for payment. The principal of and premium, if any, and interest on the Securities shall be payable (i) in respect of Securities held of record by the Depositary or its nominee in same day funds on or prior to the respective payment dates and (ii) in respect of Securities held of record by Holders other than the Depositary or its nominee at the office or agency of the Company maintained for such purpose pursuant to Section 1003; PROVIDED, HOWEVER, that, at the option of the Company, payment of interest to Holders of record other than the Depositary may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register. The Securities shall be subject to the transfer restrictions set forth in Section 305. The Securities shall be redeemable as provided in Article Eleven. The Securities shall be subordinated in right of payment to Senior Indebtedness as provided in Article Twelve. The Securities shall be convertible as provided in Article Thirteen. The Securities shall be subject to repurchase at the option of the Holder as provided in Article Fourteen. The Securities shall be guaranteed by the Company's Wholly-owned Subsidiaries as provided in Article Fifteen. 29 39 SECTION 302. Denominations. ------------- The Securities shall be issuable only in fully registered form without coupons and only in denominations of $1,000 and any integral multiple thereof. SECTION 303. Execution, Authentication, Delivery and Dating. ---------------------------------------------- The Securities shall be executed on behalf of the Company by its Chairman of the Board, its Chief Executive Officer, its President, its Chief Financial Officer or one of its Vice Presidents, under its corporate seal or a facsimile thereof reproduced thereon attested by its Secretary or one of its Assistant Secretaries. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities; and the Trustee in accordance with such Company Order shall either at one time or from time to time pursuant to such instructions as may be described therein authenticate and deliver such Securities as in this Indenture provided and not otherwise. Such Company Order shall specify the amount of Securities to be authenticated and the date on which the original issue of Securities is to be authenticated, and shall certify that all conditions precedent to the issuance of such Securities contained in this Indenture have been complied with. The aggregate principal amount of Securities Outstanding at any time may not exceed the amount set forth above except as provided in Section 306. Each Security shall be dated the date of its authentication. No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein duly executed by the Trustee by manual signature, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder and is entitled to the benefits of the Indenture. The Trustee may appoint an Authenticating Agent pursuant to the terms of Section 614. SECTION 304. Temporary Securities. --------------------- Pending the preparation of Definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise 30 40 produced, in any authorized denomination, substantially of the tenor of the Definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities. Every such temporary Security shall be executed by the Company and shall be authenticated and delivered by the Trustee upon the same conditions and in substantially the same manner, and with the same effect, as the Definitive Security or Securities in lieu of which it is issued. If temporary Securities are issued, the Company will cause Definitive Securities to be prepared without unreasonable delay. After the preparation of Definitive Securities, the temporary Securities shall be exchangeable for Definitive Securities upon surrender of the temporary Securities at any office or agency of the Company designated pursuant to Section 1003, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor one or more Definitive Securities of a like principal amount of authorized denominations. Until so exchanged the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as Definitive Securities. SECTION 305. Registration, Registration of Transfer and Exchange. --------------------------------------------------- (a) The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency designated pursuant to Section 1003 being herein sometimes collectively referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. The Trustee is hereby appointed "Security Registrar" for the purpose of registering Securities and transfers of Securities as herein provided. At all reasonable times the Security Register shall be open for inspection by the Company. The Company initially appoints The Depository Trust Company ("DTC") to act as depositary (the "Depositary") with respect to the Global Security(ies). The Company initially appoints the Trustee to act as Securities Custodian with respect to the Global Security(ies). (b) With respect to the transfer and exchange of Definitive Securities, when Definitive Securities are presented to the Security Registrar with the request (x) to register the transfer of the Definitive Securities or (y) to exchange such Definitive Securities for an equal principal amount of Definitive Securities of other authorized denominations, the Security Registrar shall register the transfer or make the exchange as requested if its requirements for such transactions are met; PROVIDED, HOWEVER, that the Definitive Securities presented or surrendered for register of transfer or exchange: (i) shall be duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Security Registrar duly 31 41 executed by the Holder thereof or by its attorney, duly authorized in writing; and (ii) shall, in the case of Transfer Restricted Securities that are Definitive Securities, be accompanied by the following additional information and documents, as applicable: (A) if such Transfer Restricted Security is being delivered to the Security Registrar by a Holder for registration in the name of such Holder, without transfer, a certification from such Holder to that effect (in substantially the form of Exhibit A hereto); or (B) if such Transfer Restricted Security is being transferred to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act) in reliance on Rule 144A under the Securities Act or pursuant to an exemption from registration in accordance with Rule 144 or Regulation S under the Securities Act or pursuant to an effective registration statement under the Securities Act, a certification to that effect (in substantially the form of Exhibit A hereto) and, in the case of a transfer in accordance with Rule 144A, Rule 144 or Regulation S under the Securities Act, an Opinion of Counsel reasonably acceptable to the Company and to the Security Registrar to the effect that such transfer is in compliance with the Securities Act; or (C) if such Transfer Restricted Security is being transferred in reliance on another exemption from the registration requirements of the Securities Act, a certification to that effect (in substantially the form of Exhibit A hereto) and an Opinion of Counsel reasonably acceptable to the Company and to the Security Registrar to the effect that such transfer is in compliance with the Securities Act. (c) The following restrictions apply to any transfer of a Definitive Security for a beneficial interest in a 144A Global Security. A Definitive Security may not be exchanged for a beneficial interest in a 144A Global Security except until and upon satisfaction of the requirements set forth below. Upon receipt by the Trustee of a Definitive Security, duly endorsed or accompanied by appropriate instruments of transfer, in form satisfactory to the Trustee, together with: (i) if such Definitive Security is a Transfer Restricted Security, certification, substantially in the form of Exhibit A hereto, that such Definitive Security is being transferred to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act) in accordance with Rule 144A and an Opinion of Counsel reasonably acceptable to the 32 42 Company and to the Security Registrar to the effect that such transfer is in compliance with the Securities Act; and (ii) whether or not such Definitive Security is a Transfer Restricted Security, written instructions directing the Trustee to make, or to direct the Securities Custodian to make, an endorsement on the 144A Global Security to reflect an increase in the aggregate principal amount of the Securities represented by the 144A Global Security, then the Trustee shall cancel such Definitive Security and cause, or direct the Securities Custodian to cause, in accordance with the standing instructions and procedures existing between the Depositary and the Securities Custodian, the aggregate principal amount of Securities represented by the 144A Global Security to be increased accordingly. If no 144A Global Securities are then outstanding, the Company shall execute and, upon receipt of an authentication order in the form of a Company Order in accordance with Section 303, the Trustee shall authenticate a new 144A Global Security in the appropriate principal amount. (d) The following restrictions apply to any transfer of a Definitive Security for a beneficial interest in a Regulation S Global Security. A Definitive Security may not be exchanged for a beneficial interest in a Regulation S Global Security except until and upon satisfaction of the requirements set forth below. Upon receipt by the Trustee of a Definitive Security, duly endorsed or accompanied by appropriate instruments of transfer, in form satisfactory to the Trustee, together with: (i) if such Definitive Security is a Transfer Restricted Security, certification, substantially in the form of Exhibit A hereto, that such Definitive Security is being transferred in accordance with Regulation S and an Opinion of Counsel reasonably acceptable to the Company and to the Security Registrar to the effect that such transfer is in compliance with the Securities Act; and (ii) whether or not such Definitive Security is a Transfer Restricted Security, written instructions directing the Trustee to make, or to direct the Securities Custodian to make, an endorsement on the Regulation S Global Security to reflect an increase in the aggregate principal amount of the Securities represented by the Regulation S Global Security, then the Trustee shall cancel such Definitive Security and cause, or direct the Securities Custodian to cause, in accordance with the standing instructions and procedures existing between the Depositary and the Securities Custodian, the aggregate principal amount of Securities represented by the Regulation S Global Security to be increased accordingly. If no Regulation S Global Securities are then outstanding, the Company shall execute and, upon receipt of an authentication order in the form of a Company Order in 33 43 accordance with Section 303, the Trustee shall authenticate a new Regulation S Global Security in the appropriate principal amount. (e) The transfer and exchange of Global Securities or beneficial interests therein shall be effected through the Depositary, in accordance with this Indenture (including the restrictions on transfer set forth herein) and the procedures of the Depositary therefor. (f) With respect to the transfer of a beneficial interest in a 144A Global Security or a Regulation S Global Security for a Definitive Security: (i) Any person having a beneficial interest in a 144A Global Security or a Regulation S Global Security may upon request exchange such beneficial interest for a Definitive Security. Upon receipt by the Trustee of written instructions or such other form of instructions as is customary for the Depositary or its nominee on behalf of any person having a beneficial interest in a 144A Global Security or a Regulation S Global Security constituting a Transfer Restricted Security only, and receipt by the Trustee of the following additional information and documents (all of which may be submitted by facsimile): (A) if such beneficial interest is being transferred to the person designated by the Depositary as being the beneficial owner, a certification from such person to that effect (in substantially the form of Exhibit A hereto); or (B) if such beneficial interest is being transferred to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act) in accordance with Rule 144A under the Securities Act or pursuant to an exemption from registration in accordance with Rule 144 or Regulation S under the Securities Act or pursuant to an effective registration statement under the Securities Act, a certification to that effect from the transferor (in substantially the form of Exhibit A hereto) and, in the case of a transfer in accordance with Rule 144A, Rule 144 or Regulation S under the Securities Act, an Opinion of Counsel reasonably acceptable to the Company and to the Security Registrar to the effect that such transfer is in compliance with the Securities Act; or (C) if such beneficial interest is being transferred in reliance on another exemption from the registration requirements of the Securities Act, a certification to that effect from the transferee or transferor (in substantially the form of Exhibit A hereto) and an Opinion of Counsel from the transferee or transferor reasonably acceptable to the Company and to the 34 44 Security Registrar to the effect that such transfer is in compliance with the Securities Act, then the Trustee or the Securities Custodian, at the direction of the Trustee, will cause, in accordance with the standing instructions and procedures existing between the Depositary and the Securities Custodian, the aggregate principal amount of the Global Security to be reduced and, following such reduction, the Company will execute and, upon receipt of an authentication order in the form of a Company Order in accordance with Section 303, the Trustee will authenticate and deliver to the transferee a Definitive Security. (ii) Definitive Securities issued in exchange for a beneficial interest in a 144A Global Security or a Regulation S Global Security pursuant to this Section 305 shall be registered in such names and in such authorized denominations as the Depositary, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such Definitive Securities to the persons in whose names such Securities are so registered. (g) With respect to the transfer of a beneficial interest in a Regulation S Global Security for a beneficial interest in a 144A Global Security, any person having a beneficial interest in a Regulation S Global Security may upon request exchange such beneficial interest for an interest in a 144A Global Security. Upon receipt by the Trustee of written instructions or such other form of instructions as is customary for the Depositary or its nominee on behalf of any person having a beneficial interest in a Regulation S Global Security constituting a Transfer Restricted Security only, and receipt by the Trustee of the following additional information and documents (all of which may be submitted by facsimile): (i) instructions given in accordance with the procedures of Euroclear or Cedel, the Depositary and the Securities Custodian, as the case may be, from or on behalf of a beneficial owner of an interest in the Regulations S Global Security directing the Trustee, as transfer agent, to credit or cause to be credited a beneficial interest in the 144A Global Security in an amount equal to the beneficial interest in the Regulation S Global Security to be exchanged or transferred, (ii) a written order given in accordance with the procedures of Euroclear or Cedel, the Depositary and the Securities Custodian, as the case may be, containing information regarding the account with the Depositary to be credited with such increase and the name of such account, and (iii) a certification from the transferor (in substantially the form of Exhibit A hereto) to the effect that such beneficial interest is being transferred to a "qualified institutional buyer" (as defined in Rule 144A 35 45 under the Securities Act) in accordance with Rule 144A under the Securities Act and an Opinion of Counsel reasonably acceptable to the Company and to the Security Registrar to the effect that such transfer is in compliance with the Securities Act, then the Trustee, as transfer agent, shall promptly deliver appropriate instructions to the Depositary, its nominee, or the custodian for the Depositary, as the case may be, to reduce or reflect on its records a reduction of the Regulation S Global Security by the aggregate principal amount of the beneficial interest in such Regulation S Global Security to be exchanged or transferred, and the Trustee, as transfer agent, shall promptly deliver appropriate instructions to the Depositary, its nominee, or the custodian for the Depositary, as the case may be, concurrently with such reduction, increase or reflect on its records an increase of the principal amount of the 144A Global Security by the aggregate principal amount of the beneficial interest in the Regulation S Global Security to be so exchanged or transferred, and to credit or cause to be credited to the account of the person specified in such instructions a beneficial interest in the 144A Global Security equal to the reduction in the principal amount of the Regulation S Global Security. (h) With respect to the transfer of a beneficial interest in a 144A Global Security for a beneficial interest in a Regulation S Global Security, any person having a beneficial interest in a 144A Global Security may upon request exchange such beneficial interest for an interest in a Regulation S Global Security. Upon receipt by the Trustee of written instructions or such other form of instructions as is customary for the Depositary or its nominee on behalf of any person having a beneficial interest in a 144A Global Security constituting a Transfer Restricted Security only, and receipt by the Trustee of the following additional information and documents (all of which may be submitted by facsimile): (i) instructions given in accordance with the procedures of the Depositary and the Securities Custodian, as the case may be, from or on behalf of a holder of a beneficial interest in the 144A Global Security, directing the Trustee, as transfer agent, to credit or cause to be credited a beneficial interest in the Regulation S Global Security in an amount equal to the beneficial interest in the 144A Global Security to be exchanged or transferred, (ii) a written order given in accordance with the procedures of the Depositary and the Securities Custodian, as the case may be, containing information regarding the Euroclear or Cedel account to be credited with such increase and the name of such account, and (iii) a certification from the transferor (in substantially the form of Exhibit A hereto) to the effect that such beneficial interest is being transferred in accordance with Regulation S and an Opinion of Counsel reasonably acceptable to the Company and to the Security Registrar to the effect that such transfer is in compliance with the Securities Act, 36 46 then the Trustee, as transfer agent, shall promptly deliver appropriate instructions to the Depositary, its nominee, or the custodian for the Depositary, as the case may be, to reduce or reflect on its records a reduction of the 144A Global Security by the aggregate principal amount of the beneficial interest in such 144A Global Security to be so exchanged or transferred from the relevant participant, and the Trustee, as transfer agent, shall promptly deliver appropriate instructions to the Depositary, its nominee, or the custodian for the Depositary, as the case may be, concurrently with such reduction, to increase or reflect on its records an increase of the principal amount of such Regulation S Global Security by the aggregate principal amount of the beneficial interest in such 144A Global Security to be so exchanged or transferred, and to credit or cause to be credited to the account of the person specified in such instructions (who shall be Euroclear or Cedel or an agent acting for and on behalf of them) a beneficial interest in such Regulation S Global Security equal to the reduction in the principal amount of such 144A Global Security. (i) Notwithstanding any other provisions of this Indenture (other than the provisions set forth in subsection (j) of this Section 305), a Global Security may not be transferred as a whole except by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. (j) The following relates to the authentication of Definitive Securities in absence of the Depositary. If at any time: (i) the Depositary for the Securities notifies the Company that the Depositary is unwilling or unable to continue as Depositary for the Global Securities and a successor Depositary for the Global Securities is not appointed by the Company within 90 days after delivery of such notice; or (ii) the Company, at its sole discretion, notifies the Trustee in writing that it elects to cause the issuance of Definitive Securities under this Indenture, then the Company will execute, and the Trustee, upon receipt of a Company Order in accordance with Section 303 requesting the authentication and delivery of Definitive Securities, will authenticate and deliver Definitive Securities, in an aggregate principal amount equal to the principal amount of the Global Securities, in exchange for such Global Securities. (k) (i) Except as permitted by the following paragraph (ii), each Security certificate evidencing the Global Securities and the Definitive Securities (and all Securities issued in exchange therefor or substitution thereof) shall bear a legend in substantially the following form: THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH 37 47 REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION UNDER SUCH LAWS. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATED PERSON OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) UNLESS SUCH OFFER, SALE OR OTHER TRANSFER IS (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON THE HOLDER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT SUBJECT TO THE COMPANY'S AND NATIONAL CITY BANK'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (C), (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES PROVIDED THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO NATIONAL CITY BANK AND SUBJECT TO ANY APPLICABLE SECURITIES LAWS. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE THEN HOLDER OF THIS SECURITY AFTER THE RESALE RESTRICTION TERMINATION DATE. (ii) Upon any sale or transfer of a Transfer Restricted Security (including any Transfer Restricted Security represented by a Global Security) pursuant to Rule 144 under the Securities Act or an effective registration statement under the Securities Act (including the Shelf Registration Statement): (A) in the case of any Transfer Restricted Security that is a Definitive Security, the Security Registrar shall permit the 38 48 Holder thereof to exchange such Transfer Restricted Security for a Definitive Security that does not bear the legend set forth above and rescind any restriction on the transfer of such Transfer Restricted Security; provided, however, that with respect to a transfer made in reliance upon Rule 144 or an effective registration statement, the Holders thereof shall certify in writing to the Security Registrar that such request is being made pursuant to Rule 144 or an effective registration statement (such Certification to be substantially in the form of Exhibit A hereto) and, in the case of a transfer made in reliance upon Rule 144, shall be accompanied by an Opinion of Counsel reasonably acceptable to the Company and to the Security Registrar to the effect that such transfer is in compliance with the Securities Act; and (B) any such Transfer Restricted Security represented by a Global Security shall not be subject to the provisions set forth in (i) above (such sales or transfers being subject only to the provisions of Section 305(e) hereof); PROVIDED, HOWEVER, that with respect to any request for an exchange of a Transfer Restricted Security that is represented by a Global Security for a Definitive Security that does not bear a legend, which request is made in reliance upon Rule 144 or an effective registration statement, the Holder thereof shall certify in writing to the Security Registrar that such request is being made pursuant to Rule 144 or an effective registration statement (such certification to be substantially in the form of Exhibit A hereto) and, in the case of a transfer made in reliance upon Rule 144, shall be accompanied by an Opinion of Counsel reasonably acceptable to the Company and to the Security Registrar to the effect that such transfer is in compliance with the Securities Act. (l) At such time as all beneficial interests in a Global Security have either been exchanged for Definitive Securities, redeemed, repurchased or cancelled, such Global Security shall be returned to or retained and cancelled by the Trustee. At any time prior to such cancellation, if any beneficial interest in a Global Security is exchanged for Definitive Securities, redeemed, repurchased or cancelled, the principal amount of Securities represented by such Global Security shall be reduced and an endorsement shall be made on such Global Security, by the Trustee or the Securities Custodian, at the direction of the Trustee, to reflect such reduction. (m) All Definitive Securities and Global Securities issued upon any registration of transfer or exchange of Definitive Securities or Global Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Definitive Securities or Global Securities surrendered upon such registration of transfer or exchange. 39 49 To permit registrations of transfer and exchanges, the Company shall execute and the Trustee shall authenticate Definitive Securities and Global Securities at the Security Registrar's request. No service charge to a Holder shall be made for any registration of transfer or exchange of Securities except as provided in Section 306. The Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 304, 906, 1108 or 1302 not involving any transfer. The Company or the Security Registrar shall not be required (i) to issue, register the transfer of or exchange any Security during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Securities selected for redemption under Section 1104 and ending at the close of business on the day of such mailing, (ii) to register the transfer of or exchange any Definitive Security or beneficial interest in any Global Security so selected for redemption in whole or in part, except the unredeemed portion of any Definitive Security being redeemed in part or (iii) to register the transfer or exchange of any Definitive Security or beneficial interest in any Global Security surrendered for conversion pursuant to Article Thirteen or repurchase pursuant to Article Fourteen. SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities. ------------------------------------------------ If any mutilated Security is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of like tenor and principal amount and bearing a number not contemporaneously outstanding. If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and principal amount and bearing a number not contemporaneously outstanding. The Trustee may charge the Company for the Trustee's expenses in replacing such Security. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security. Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental 40 50 charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Security issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. SECTION 307. Payment of Interest; Interest Rights Preserved. ---------------------------------------------- Interest on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest. Payment of interest will be made (i) in respect of Securities held by the Depositary or its nominee, in same day funds on or prior to the respective Interest Payment Dates and (ii) in respect of Securities held of record by Holders other than the Depositary or its nominee, at the Corporate Trust Office of the Trustee or at such other office or agency of the Company as it shall maintain for that purpose pursuant to Section 1003; PROVIDED, HOWEVER, that, at the option of the Company, interest on any Security held of record by Holders other than the Depositary or its nominee may be paid by mailing checks to the addresses of the Holders thereof as such addresses appear in the Securities Register. Any interest on any Security which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled 41 51 to such Defaulted Interest as in this Clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder at his address as it appears in the Security Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following Clause (2). (2) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such manner of payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. In the case of any Security which is converted after any Regular Record Date and on or prior to the next succeeding Interest Payment Date (other than any Security whose Maturity is prior to such Interest Payment Date), interest whose Stated Maturity is on such Interest Payment Date shall be payable on such Interest Payment Date notwithstanding such conversion, and such interest (whether or not punctually paid or duly provided for) shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on such Regular Record Date; PROVIDED, HOWEVER, that Securities so surrendered for conversion shall (except in the case of Securities or portions thereof called for redemption) be accompanied by payment in New York Clearing House funds or other funds acceptable to the Company of an amount equal to the interest payable on such Interest Payment Date on the principal amount being surrendered for conversion. Except as otherwise expressly provided in the immediately preceding sentence, in the case of any Security which is converted, interest whose Stated Maturity is after the date of conversion of such Security shall not be payable. 42 52 SECTION 308. Persons Deemed Owners. --------------------- Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of and premium, if any, and (subject to Section 307) interest on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. SECTION 309. Cancellation. ------------ All Securities surrendered for payment, redemption, registration of transfer, exchange or conversion shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly canceled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section, except as expressly permitted by this Indenture. All canceled Securities held by the Trustee shall be disposed of as directed by a Company Order. SECTION 310. Computation of Interest. ----------------------- Interest on the Securities shall be computed on the basis of a 360-day year of twelve 30-day months. ARTICLE FOUR Satisfaction and Discharge SECTION 401. Satisfaction and Discharge of Indenture. --------------------------------------- This Indenture shall upon Company Request cease to be of further effect (except as expressly provided for in this Article Four), and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (1) either (A) all Securities theretofore authenticated and delivered (other than (i) Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306 and (ii) Securities for whose payment money has theretofore been deposited in trust or 43 53 segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 1004) have been delivered to the Trustee for cancellation; or (B) all such Securities not theretofore delivered to the Trustee for cancellation (i) have become due and payable, or (ii) will become due and payable at their Stated Maturity within one year, or (iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, or (iv) are delivered to the Trustee for Conversion in accordance with Article Thirteen, and the Company, in the case of (i), (ii), (iii) or (iv) above, has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose an amount in cash sufficient (without consideration of any investment of such cash) to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation for principal and premium, if any, and interest to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be; PROVIDED that the Trustee shall have been irrevocably instructed to apply such amount to said payments with respect to the Securities; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, the following rights or obligations under the Securities and this Indenture shall survive until otherwise terminated or discharged hereunder: (a) Article Thirteen, Article Fourteen and the Company's obligations under Sections 304, 305, 306, 1002, 1003 and 1004, in each case with respect to any Securities described in subclause (B) of Clause (1) of this Section, (b) this Article Four, (c) the rights, powers, trusts, duties and immunities of the Trustee hereunder, including the obligations of the Company to the Trustee under 44 54 Section 607, and the obligations of the Trustee to any Authenticating Agent under Section 614 and (d) if money shall have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of this Section, the rights of Holders of any Securities described in subclause (B) of Clause (1) of this Section to receive, solely from the trust fund described in such subclause (B), payments in respect of the principal of, and premium (if any) and interest on, such Securities when such payment are due. SECTION 402. Application of Trust Money. -------------------------- Subject to the provisions of Section 506 and the last paragraph of Section 1004, all money deposited with the Trustee pursuant to Section 401 shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal and premium, if any, and interest for whose payment such money has been deposited with the Trustee. All moneys deposited with the Trustee pursuant to Section 401 (and held by it or any Paying Agent) for the payment of Securities subsequently converted shall be returned to the Company upon Company Request. SECTION 403. Reinstatement. ------------- If the Trustee or the Paying Agent is unable to apply any money in accordance with this Article Four by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to this Article Four until such time as the Trustee or Paying Agent is permitted to apply all money held in trust with respect to the Securities; PROVIDED, HOWEVER, that if the Company makes any payment of principal of or any premium or interest on any Security following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of the Securities to receive such payment from the money so held in trust. ARTICLE FIVE Remedies SECTION 501. Events of Default. ----------------- "Event of Default," wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be occasioned by the provisions of Article Twelve or be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body); 45 55 (1) default in the payment of the principal of or premium, if any, on any Security at its Maturity, whether or not such payment is prohibited by the provisions of Article Twelve; or (2) default in the payment of any interest upon any Security when it becomes due and payable, whether or not such payment is prohibited by the provisions of Article Twelve, and continuance of such default for a period of 30 days; or (3) default in the payment of the Redemption Price in respect of any Security on the Redemption Date therefor in accordance with the provisions of Article Eleven, whether or not such payment is prohibited by the provisions of Article Twelve; or (4) failure to provide timely notice of a Repurchase Event as required in accordance with the provisions of Article Fourteen; or (5) default in the payment of the Repurchase Price in respect of any Security on the Repurchase Date therefor in accordance with the provisions of Article Fourteen, whether or not such payment is prohibited by the provisions of Article Twelve; or (6) default in the performance, or breach, of any covenant or warranty of the Company in this Indenture (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (7) default under one or more bonds, debentures, notes or other evidences of indebtedness for money borrowed by the Company or any Subsidiary or under one or more mortgages, indentures or instruments under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company or any Subsidiary, whether such indebtedness now exists or shall hereafter be created, which default individually or in the aggregate shall constitute a failure to pay the principal of indebtedness in excess of $10,000,000 when due and payable after the expiration of any applicable grace period with respect thereto or shall have resulted in indebtedness in excess of $10,000,000 becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, without such indebtedness having been discharged, or such acceleration having been rescinded or annulled, within a period of 30 days after there shall have been given, by registered or certified mail, to the Company by the Trustee or to the Company 46 56 and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities a written notice specifying such default and requiring the Company to cause such indebtedness to be discharged or cause such acceleration to be rescinded or annulled and stating that such notice is a "Notice of Default" hereunder; or (8) the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Company or any Subsidiary in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or (B) a decree or order adjudging the Company or any Subsidiary a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or any Subsidiary under any applicable Federal or State law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Subsidiary or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 90 consecutive days; or (9) the commencement by the Company or any Subsidiary of a voluntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of the Company or any Subsidiary in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable Federal or State law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Subsidiary or of any substantial part of its property, or the making by it of a general assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company or any Subsidiary in furtherance of any such action. Upon receipt by the Trustee of any Notice of Default pursuant to this Section 501, a record date shall automatically and without any other action by any Person be set for the purpose of determining the Holders of Outstanding Securities entitled to join in such Notice of Default, which record date shall be the close of business on the Business Day the Trustee receives such Notice of Default. The Holders of Outstanding Securities on such record date (or their duly appointed agents), and only such Persons, shall be entitled to join in such Notice of Default, whether or not such Holders remain Holders after such record date; PROVIDED, that unless such Notice of Default shall have become effective by virtue of the Holders of the requisite principal amount of 47 57 Outstanding Securities on such record date (or their duly appointed agents) having joined therein on or prior to the 90th day after such record date, such Notice of Default shall automatically and without any action by any Person be canceled and of no further force or effect. SECTION 502. Acceleration of Maturity; Rescission and Annulment. --------------------------------------------------- If an Event of Default (other than as specified in subparagraph (8) or (9) of Section 501) occurs and is continuing, then and in every such case the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities may declare the principal of all the Securities to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal plus any interest accrued on the securities to the date of declaration shall become immediately due and payable. If an Event of Default specified in subparagraph (8) or (9) of Section 501 occurs and is continuing, then the principal of, premium, if any, and accrued and unpaid interest, if any, on all of the Securities shall IPSO FACTO become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder of Securities. At any time after such a declaration of acceleration has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the Outstanding Securities, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if (1) the Company has paid or deposited with the Trustee a sum sufficient to pay (A) all overdue interest on all Securities, (B) the principal of and premium, if any, on any Securities which have become due otherwise than by such declaration of acceleration and interest thereon at the rate borne by the Securities, (C) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate borne by the Securities, and (D) all sums paid or advanced by the Trustee and each predecessor Trustee, their respective agents and counsel hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee and each predecessor Trustee, their respective agents and counsel; and (2) all Events of Default, other than the nonpayment of the principal of, premium, if any, and interest on the Securities that has become due solely by 48 58 such declaration of acceleration, have been cured or waived as provided in Section 513. No such rescission and waiver shall affect any subsequent default or impair any right consequent thereon. Upon receipt by the Trustee of any declaration of acceleration, or any rescission and annulment of any such declaration, pursuant to this Section 502, a record date shall automatically and without any other action by any Person be set for the purpose of determining the Holders of Outstanding Securities entitled to join in such declaration, or rescission and annulment, as the case may be, which record date shall be the close of business on the Business Day the Trustee receives such declaration, or rescission and annulment, as the case may be. The Holders of Outstanding Securities on such record date (or their duly appointed agents), and only such Persons, shall be entitled to join in such declaration, or rescission and annulment, as the case may be, whether or not such Holders remain Holders after such record date; PROVIDED, that unless such declaration, or rescission and annulment, as the case may be, shall have become effective by virtue of Holders of the requisite principal amount of Outstanding Securities on such record date (or their duly appointed agents) having joined therein on or prior to the 90th day after such record date, such declaration, or rescission and annulment, as the case may be, shall automatically and without any action by any Person be canceled and of no further force or effect. SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee. --------------------------------------------------------------- The Company covenants that if (1) default is made in the payment of any interest on any Security when such interest becomes due and payable and such default continues for a period of 30 days, or (2) default is made in the payment of the principal of or premium, if any, on any Security at the Maturity thereof, the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and premium, if any, and interest, and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal and premium, if any, and on any overdue interest, at the rate borne by the Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee and each predecessor Trustee, their respective agents and counsel, and any other amounts due the Trustee or any predecessor Trustee under Section 607. If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial 49 59 proceeding for the collection of the sums so due and unpaid and may prosecute any such proceeding to judgment or final decree, and may enforce the same against the Company (or any other obligor upon the Securities) and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company (or any other obligor upon the Securities), wherever situated. If an Event of Default occurs and is continuing, the Trustee may, in its discretion, proceed to protect and enforce its rights and the rights of the Holders by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. SECTION 504. Trustee May File Proofs of Claim. -------------------------------- In case of any judicial proceeding relative to the Company (or any other obligor upon the Securities), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Trust Indenture Act in order to have the claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it and each predecessor Trustee for the reasonable compensation, expenses, disbursements and advances of the Trustee and each predecessor Trustee and their respective agents and counsel, and any other amounts due the Trustee under Section 607. No provision of this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding; PROVIDED, HOWEVER, that the Trustee may, on behalf of the Holders, vote for the election of a trustee in bankruptcy or similar official and may be a member of the Creditors' Committee. SECTION 505. Trustee May Enforce Claims Without Possession of Securities. ----------------------------------------------------------- All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee and each predecessor 50 60 Trustee and their respective agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered. SECTION 506. Application of Money Collected. ------------------------------ Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal or premium, if any, or interest, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: Subject to Article Twelve, to the holders of Senior Indebtedness; SECOND: To payment of all amounts due the Trustee under Section 607; THIRD: To the payment of the amounts then due and unpaid for principal of and premium, if any, and interest on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal and premium, if any, and interest, respectively; and FOURTH: The balance, if any, to the Company for the benefit of the Company or any other Person or Persons determined to be entitled thereto. SECTION 507. Limitation on Suits. ------------------- No Holder of any Security shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default; (2) the Holders of not less than 25% in principal amount of the Outstanding Securities shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (3) such Holder or Holders have offered to the Trustee reasonable indemnity satisfactory to it against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and 51 61 (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities; it being understood and intended that no one or more holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Holders. SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and Interest and to Convert. ------------------------------------------------------------ Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and premium, if any, and (subject to Section 307) interest on such Security on the respective Stated Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date or, in the case of a repurchase pursuant to Article Fourteen, on the Repurchase Date) and to convert such Security in accordance with Article Thirteen and to institute suit for the enforcement of any such payment and right to convert, and such rights shall not be impaired without the consent of such Holder. SECTION 509. Restoration of Rights and Remedies. ---------------------------------- If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. SECTION 510. Rights and Remedies Cumulative. ------------------------------ Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in Section 306, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. 52 62 SECTION 511. Delay or Omission Not Waiver. ---------------------------- No delay or omission of the Trustee or of any Holder of any Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. SECTION 512. Control by Holders. ------------------ The Holders of a majority in principal amount of the Outstanding Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee; PROVIDED, that (1) such direction shall not be in conflict with any rule of law or with this Indenture; and (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction; and (3) subject to the provisions of Section 601, the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith shall determine that the action so directed would involve the Trustee in personal liability or would be unduly prejudicial to Holders not joining in such direction. Upon receipt by the Trustee of any such direction, a record date shall automatically and without any other action by any Person be set for the purpose of determining the Holders of Outstanding Securities entitled to join in such direction, which record date shall be the close of business on the day the Trustee receives such direction. The Holders of Outstanding Securities on such record date (or their duly appointed agents), and only such Persons, shall be entitled to join in such direction, whether or not such Holders remain Holders after such record date; PROVIDED, that unless such direction shall have become effective by virtue of Holders of the requisite principal amount of Outstanding Securities on such record date (or their duly appointed agents) having joined therein on or prior to the 90th day after such record date, such direction shall automatically and without any action by any Person be canceled and of no further force or effect. SECTION 513. Waiver of Past Defaults. ----------------------- The Holders of not less than a majority in principal amount of the Outstanding Securities may on behalf of the Holders of all the Securities waive any past default hereunder and its consequences, except a default 53 63 (1) in the payment of the principal of or premium, if any, or interest on any Security, or (2) in respect of a covenant or provision hereof which under Article Nine cannot be modified or amended without the consent of the Holder of each Outstanding Security affected. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. SECTION 514. Undertaking for Costs. --------------------- In any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act; PROVIDED, that neither this Section nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Company, in any suit instituted by the Trustee, a suit by a Holder pursuant to Section 508, or a suit by a Holder or Holders of more than 10% in principal amount of the outstanding Securities. ARTICLE SIX The Trustee SECTION 601. Certain Duties and Responsibilities. ---------------------------------- The duties and responsibilities of the Trustee shall be as provided by this Indenture and the Trust Indenture Act for securities issued pursuant to indentures qualified thereunder. Except as otherwise provided herein, notwithstanding the foregoing, no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability or risk in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity satisfactory to it against such risk or liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. The Trustee shall not be liable (x) for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts or (y) with respect to any action taken or omitted to be taken by it in good 54 64 faith in accordance with the direction of the holders of not less than a majority in aggregate principal amount of the Securities at the time Outstanding relating to the time, method and place of conducting any proceeding or any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture. Prior to the occurrence of an Event of Default and after the curing or waiving of all Events of Default which may have occurred: (i) the duties and obligations of the Trustee shall be determined solely by the express provisions of this Indenture and in the Trust Indenture Act, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture and in the Trust Indenture Act, and no implied covenants or obligations shall be read in to this Indenture against the Trustee; and (ii) in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions therein, upon any statements, certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture and believed by the Trustee to be genuine and to have been signed or presented by the proper party or parties; but in the case of any such statements, certificates or opinions which by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform on their face to the requirements of this Indenture. If a default or an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise thereof as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. SECTION 602. Notice of Defaults. ------------------ The Trustee shall give the Holders notice of any default hereunder known to it as and to the extent provided by the Trust Indenture Act; PROVIDED, HOWEVER, that in the case of any default of the character specified in Section 501(6), no such notice to Holders shall be given until at least 30 days after the occurrence thereof; and PROVIDED, FURTHER, that, except in the case of a default in payment of principal of, premium, if any, or interest on any Securities, the Trustee may withhold notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders of Securities. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default. SECTION 603. Certain Rights of Trustee. ------------------------- Subject to the provisions of Section 601: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; 55 65 (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (d) the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity satisfactory to it against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) before the Trustee acts or refrains from acting with respect to any matter contemplated by this Indenture, it may require an Officers' Certificate or an Opinion of Counsel, which shall conform to the provisions of Section 102, and the Trustee shall be protected and shall not be liable for any action it takes or omits to take in good faith and without gross negligence in reliance on such certificate or opinion; (g) the Trustee shall not be required to give any bond or surety in respect of the performance of its power and duties hereunder; (h) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; and (i) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. 56 66 SECTION 604. Not Responsible for Recitals or Issuance of Securities. ------------------------------------------------------ The statements and recitals contained herein and in the Securities and in any other document in connection with the sale of the Securities, except the Trustee's certificate of authentication, shall be taken as the statements of the Company, and the Trustee and any Authenticating Agent assume no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. The Trustee and any Authenticating Agent shall not be accountable for the use or application by the Company of Securities or the proceeds thereof. SECTION 605. May Hold Securities. ------------------- The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 608 and 613, may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such other agent. SECTION 606. Money Held in Trust. ------------------- Money held by the Trustee or any Paying Agent in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee or any Paying Agent shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the Company. SECTION 607. Compensation and Reimbursement. ------------------------------ The Company agrees: (1) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (including its services as Security Registrar or Paying Agent, if so appointed by the Company) as may be mutually agreed upon in writing by the Company and the Trustee (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, to reimburse the Trustee and each predecessor Trustee promptly upon its request for all reasonable expenses, disbursements and advances incurred or made by or on behalf of it in connection with the performance of its duties under any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel and all other persons not regularly in its employ) except to the extent any such expense, disbursement or advance may be attributable to its negligence or bad faith; and 57 67 (3) to indemnify the Trustee and each predecessor Trustee (each an "indemnitee") for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this Indenture or the trusts hereunder and its duties hereunder (including its services as Security Registrar or Paying Agent, if so appointed by the Company), including enforcement of this Indenture (including Section 607) and including the costs and expenses of defending itself against or investigating any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The Company shall defend any claim or threatened claim asserted against an indemnitee for which it may seek indemnity, and the indemnitee shall cooperate in the defense unless, in the reasonable opinion of the indemnitee's counsel, the indemnitee has an interest adverse to the Issuer or a potential conflict of interest exists between the indemnitee and the Company, in which case the indemnitee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel; PROVIDED that the Company shall only be responsible for the reasonable fees and expenses of one law firm (in addition to local counsel) in any one action or separate substantially similar actions in the same jurisdiction arising out of the same general allegations or circumstances, such law firm to be designated by the indemnitee. As security for the performance of the obligations of the Company under this Section 607, the Trustee shall have a lien prior to the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the Holders of particular Securities, and the Securities are hereby subordinated to such prior lien. The obligations of the Company under this Section to compensate and indemnify the Trustee and any predecessor Trustee and to pay or reimburse the Trustee and any predecessor Trustee for expenses, disbursements and advances, and any other amounts due the Trustee or any predecessor Trustee under Section 607, shall constitute an additional obligation hereunder and shall survive the satisfaction and discharge of this Indenture. When the Trustee or any predecessor Trustee incurs expenses or renders services in connection with the performance of its obligations hereunder (including its services as Security Registrar or Paying Agent, if so appointed by the Company) after an Event of Default specified in Section 501(8) or (9) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under ny applicable bankruptcy, insolvency or other similar federal or state law to the extent provided in Section 503(b)(5) of Title 11 of the United States Code, as now or hereafter in effect. SECTION 608. Disqualification; Conflicting Interests. --------------------------------------- If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to 58 68 the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture. SECTION 609. Corporate Trustee Required; Eligibility. --------------------------------------- There shall at all times be a Trustee hereunder which shall be a Person that (i) is eligible pursuant to the Trust Indenture Act to act as such and (ii) has (or, in the case of a corporation included in a bank holding company system, whose related bank holding company has) a combined capital and surplus of at least $50,000,000. If such Person publishes reports of conditions at least annually, pursuant to law or to the requirements of a Federal or state supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. SECTION 610. Resignation and Removal; Appointment of Successor. ------------------------------------------------- (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 611. (b) The Trustee may resign at any time by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee required by Section 611 shall not have been delivered to the resigning Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (c) The Trustee may be removed at any time by an Act of the Holders of a majority in principal amount of the Outstanding Securities delivered to the Trustee and to the Company. (d) If at any time: (1) the Trustee shall fail to comply with Section 608 after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for the last six months, or (2) the Trustee shall cease to be eligible under Section 609 and shall fail to resign after written request therefor by the Company or by any such Holder, or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its 59 69 property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (i) the Company by a Board Resolution may remove the Trustee, or (ii) subject to Section 514, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Trustee and such successor Trustee shall comply with the applicable requirements of Section 611. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 611 become the successor Trustee and supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment in the manner required by Section 611, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (f) The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee to all Holders in the manner provided in Section 106. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. SECTION 611. Acceptance of Appointment by Successor. -------------------------------------- Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts. 60 70 No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. SECTION 612. Merger, Conversion, Consolidation or Succession to Business. ----------------------------------------------------------- Any corporation into which the Trustee may be merged or converted or with it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities. SECTION 613. Preferential Collection of Claims Against Company. ------------------------------------------------- If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company (or any such other obligor). SECTION 614. Appointment of Authenticating Agent. ----------------------------------- The Trustee may appoint an Authenticating Agent or Agents acceptable to and at the expense of the Company which shall be authorized to act on behalf of the Trustee to authenticate Securities issued upon original issue and upon exchange, registration of transfer, partial conversion or partial redemption or pursuant to Section 306, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a Person organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or State authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at 61 71 any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section. Any Person into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any Person succeeding to the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such Person shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent. An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall mail notice of such appointment by first-class mail, postage prepaid, to all Holders as their names and addresses appear in the Security Register. Any successor Authenticating Agent upon acceptance of its appointment under this Section shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible to act as such under the provisions of this Section. Any Authenticating Agent by the acceptance of its appointment shall be deemed to have represented to the Trustee that it is eligible for appointment as Authenticating Agent under this Section and to have agreed with the Trustee that: it will perform and carry out the duties of an Authenticating Agent as herein set forth, including among other things the duties to authenticate Securities when presented to it in connection with the original issuance and with exchanges, registrations of transfer or redemptions or conversions thereof or pursuant to Section 306; it will keep and maintain, and furnish to the Trustee from time to time as requested by the Trustee, appropriate records of all transactions carried out by it as Authenticating Agent and will furnish the Trustee such other information and reports as the Trustee may reasonably require; and it will notify the Trustee promptly if it shall cease to be eligible to act as Authenticating Agent in accordance with the provisions of this Section. Any Authenticating Agent by the acceptance of its appointment shall be deemed to have agreed with the Trustee to indemnify the Trustee against any loss, liability or expense incurred by the Trustee and to defend any claim asserted against the Trustee by reason of any acts or failures to act of such Authenticating Agent, but such Authenticating Agent shall have no liability for any action taken by it in accordance with the specific written direction of the Trustee. 62 72 The Trustee shall not be liable for any act or any failure of the Authenticating Agent to perform any duty either required herein or authorized herein to be performed by such person in accordance with this Indenture. The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section. If an appointment is made pursuant to this Section, the Securities may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternative certificate of authentication in the following form: This is one of the Securities described in the within-mentioned Indenture. NATIONAL CITY BANK -------------------------------------, As Trustee By ________________________________ As Authenticating Agent By _____________________________ Authorized Officer 63 73 ARTICLE SEVEN Holders' Lists and Reports by Trustee and Company SECTION 701. Company to Furnish Trustee Names and Addresses of Holders. ---------------------------------------------------------- The Company will furnish or cause to be furnished to the Trustee (a) semi-annually, not more than 15 days after each Regular Record Date, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of such Regular Record Date, and (b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished. Notwithstanding the foregoing, so long as the Trustee is the Security Registrar, no such list shall be required to be furnished. SECTION 702. Preservation of Information; Communication to Holders. ------------------------------------------------------ (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 701 and the names and addresses of Holders received by the Trustee in its capacity as Security Registrar. The Trustee may destroy any list furnished to it as provided in Section 701 upon receipt of a new list so furnished. (b) The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and duties of the Trustee, shall be as provided by the Trust Indenture Act. (c) Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of any disclosure of information as to names and addresses of Holders made pursuant to the Trust Indenture Act or otherwise in accordance with this Indenture. 64 74 SECTION 703. Reports by Trustee. ------------------ (a) Not later than 60 days following each May 15, the Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant thereto. (b) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which the Securities are listed, with the Commission and with the Company. The Company will notify the Trustee when the Securities are listed on any stock exchange. SECTION 704. Reports by Company. ------------------ The Company shall file with the Trustee and the Commission, and transmit to Holders, such information, documents and other reports, and such summaries thereof, as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant to such Act; PROVIDED, that any such information, documents or reports required to be filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within 15 days after the same is so required to be filed with the Commission. SECTION 705. Rule 144A Information Requirement. --------------------------------- If at any time prior to the Resale Restriction Termination Date the Company is no longer subject to Section 13 or 15(d) of the Exchange Act, the Company will furnish to the Holders or beneficial holders of the Securities and prospective purchasers of the Securities designated by the Holders of the Securities, upon their request, information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act until the earlier of (i) the date on which the Securities and the underlying Common Stock are registered under the Securities Act or (ii) the Resale Restriction Termination Date. ARTICLE EIGHT Consolidation, Merger, Conveyance, Transfer or Lease SECTION 801. Company May Consolidate, Etc., Only on Certain Terms. ----------------------------------------------------- The Company shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and the Company shall not permit any Person to consolidate with or merge into the Company, unless: 65 75 (1) in case the Company shall consolidate with or merge into another Person or convey, transfer or lease all or substantially all of its properties and assets to any Person, the Person formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or which leases, all or substantially all of the properties and assets of the Company shall be a corporation, limited liability company, partnership or trust, shall be organized and validly existing under the laws of the United States of America, any State thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of and premium, if any, and interest on all the Securities and the performance or observance of every covenant of this Indenture on the part of the Company to be performed or observed and shall have provided for conversion rights in accordance with Section 1311; (2) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; (3) such consolidation, merger, conveyance, transfer or lease does not adversely affect the validity or enforceability of the Securities; and (4) the Company or the successor Person has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with. SECTION 802. Successor Substituted. --------------------- Upon any consolidation of the Company with, or merger of the Company into, any other Person or any conveyance, transfer or lease of all or substantially all of the properties and assets of the Company in accordance with Section 801, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a transfer by lease, the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Securities. 66 76 ARTICLE NINE Supplemental Indentures SECTION 901. Supplemental Indentures Without Consent of Holders. -------------------------------------------------- Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (1) to cause this Indenture to be qualified under the Trust Indenture Act; or (2) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company herein and in the Securities; or (3) to add to the covenants of the Company for the benefit of the Holders or an additional Event of Default, or to surrender any right or power conferred herein or in the Securities upon the Company; or (4) to secure the Securities; or (5) to make provision with respect to the conversion rights of Holders pursuant to the requirements of Section 1311; or (6) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities; or (7) to reflect the release of any Guarantor from its Guarantee, or the addition of any Wholly-owned Subsidiary of the Company as a Guarantor, in the manner provided by this Indenture and the Guarantee Agreement; (8) to cure any ambiguity, to correct or supplement any provision herein or in the Securities which may be defective or inconsistent with any other provision herein or in the Securities, or to make any other provisions with respect to matters or questions arising under this Indenture which shall not be inconsistent with the provisions of this Indenture; PROVIDED, that such action pursuant to this Clause (8) shall not adversely affect the interests of the Holders in any material respect and the Trustee may rely upon an Opinion of Counsel to that effect. SECTION 902. Supplemental Indentures With Consent of Holders. ----------------------------------------------- With the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities, by Act of said Holders delivered to the Company 67 77 and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders under this Indenture; PROVIDED, HOWEVER, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby, (1) change the Stated Maturity of the principal of, or any installment of interest on, any Security, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof, or change the place of payment where, or the coin or currency in which, any Security or any premium or interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date), or adversely affect the right to convert any Security as provided in Article Thirteen (except as permitted by Section 901(5)), or modify the provisions of Article Fourteen, or the provisions of this Indenture with respect to the subordination of the Securities, in a manner adverse to the Holders, or (2) reduce the percentage in principal amount of the Outstanding Securities, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences provided for in this Indenture, or (3) modify any of the provisions of this Section, Section 513 or Section 1007, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby; PROVIDED, HOWEVER, that this Clause shall not be deemed to require the consent of any Holder with respect to changes in the references to "the Trustee" and concomitant changes in this Section and Section 1007, or the deletion of this proviso, in accordance with the requirements of Section 901(6). It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. SECTION 903. Execution of Supplemental Indentures. ------------------------------------ In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated 68 78 to, enter into any such supplemental indenture which adversely affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. SECTION 904. Effect of Supplemental Indentures. --------------------------------- Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. SECTION 905. Conformity with Trust Indenture Act. ----------------------------------- Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act. SECTION 906. Reference In Securities To Supplemental Indentures. -------------------------------------------------- Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and (at the specific direction of the Company) authenticated and delivered by the Trustee in exchange for Outstanding Securities. SECTION 907. Notice of Supplemental Indenture. -------------------------------- Promptly after the execution by the Company and the Trustee of any supplemental indenture pursuant to Section 902, the Company shall transmit to the Holders a notice setting forth the substance of such supplemental indenture. ARTICLE TEN Covenants SECTION 1001. Payment of Principal, Premium and Interest. ------------------------------------------ The Company will duly and punctually pay the principal of and premium, if any, and interest on the Securities in accordance with the terms of the Securities and this Indenture. 69 79 SECTION 1002. Guarantees of Subsidiaries. --------------------------- The Company will cause each Wholly-owned Subsidiary to enter into the Guarantee Agreement, in accordance with Article Fifteen of this Indenture. SECTION 1003. Maintenance of Office or Agency. -------------------------------- The Company will maintain an office or agency where Securities may be presented or surrendered for payment, where Securities may be surrendered for registration of transfer, where Securities may be surrendered for exchange or conversion and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served, which office shall initially be the office of the Trustee located at 629 Euclid Avenue, Suite 635, Cleveland, Ohio 44114-3484. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of any such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. The Company may also from time to time designate one or more other offices or agencies where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind such designations. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. SECTION 1004. Money for Security Payments to be Held in Trust. ----------------------------------------------- If the Company shall at any time act as its own Paying Agent, it will, on or before each due date of the principal of and premium, if any, or interest on any of the Securities, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal and premium, if any, or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act. Whenever the Company shall have one or more Paying Agents, it will, on or prior to 11:00 a.m. (New York City time) on each due date of the principal of and premium, if any, or interest on any Securities, deposit with a Paying Agent a sum in same day funds sufficient to pay the principal and any premium and interest so becoming due, such sum to be held as provided by the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act. The Company will cause each Paying Agent other than the Trustee or the Company to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying 70 80 Agent will (i) comply with the provisions of the Trust Indenture Act and this Indenture applicable to it as a Paying Agent and hold all sums held by it for the payment of principal of or any premium or interest on the Securities in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (ii) give the Trustee notice of any default by the Company (or any other obligor upon the Securities) in the making of any payment in respect of the Securities; and (iii) at any time during the continuance of any default by the Company (or any other obligor upon the Securities) in the making of any payment in respect of the Securities, upon the written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying Agent for payment in respect of the Securities, and account for any funds disbursed. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of and premium, if any, or interest on any Security and remaining unclaimed for two years after such principal and premium, if any, or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in New York, New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company. SECTION 1005. Statement by Officers as to Default. ----------------------------------- The Company will deliver to the Trustee, within 120 days after the end of each fiscal year of the Company ending after the date hereof, an Officers' Certificate stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance and observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder) and, if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge. 71 81 SECTION 1006. Existence. --------- Subject to Article Eight, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights (charter and statutory) and franchises and the existence, rights (charter and statutory) and franchises of each Subsidiary; PROVIDED, HOWEVER, that the Company shall not be required to preserve any such right or franchise if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is not disadvantageous in any material respect to the Holders. SECTION 1007. Waiver of Certain Covenants. --------------------------- The Company may omit in any particular instance to comply with any covenant or condition set forth in Section 1006, if before the time for such compliance the Holders of at least a majority in principal amount of the Outstanding Securities shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such covenant or condition shall remain in full force and effect. ARTICLE ELEVEN Redemption of Securities SECTION 1101. Right of Redemption. ------------------- The Securities may be redeemed at the election of the Company, in whole or from time to time in part, at any time on or after August 18, 2000, at the Redemption Prices specified in the form of Security hereinbefore set forth, together with accrued interest, to the Redemption Date. SECTION 1102. Applicability of Article. ------------------------ Redemption of Securities at the election of the Company as permitted by any provision of this Indenture shall be made in accordance with such provision and this Article. SECTION 1103. Election to Redeem; Notice to Trustee. ------------------------------------- The election of the Company to redeem any Securities pursuant to Section 1101 shall be evidenced by a Board Resolution. In case of any redemption at the election of the Company of less than all the Securities, the Company shall, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter period shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the 72 82 principal amount of Securities to be redeemed. In case of any redemption at the election of the Company of all of the Securities, the Company shall, at least 45 days prior to the Redemption Date fixed by the Company (unless a shorter period shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date. SECTION 1104. Selection by Trustee of Securities to be Redeemed. ------------------------------------------------- If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities not previously called for redemption, by lot or pro rata or by such other method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to $1,000 or any integral multiple thereof) of the principal amount of Securities of a denomination larger than $1,000. If any Security selected for partial redemption is converted in part before termination of the conversion right with respect to the portion of the Security so selected, the converted portion of such Security shall be deemed (so far as may be) to be the portion selected for redemption. Securities which have been converted during a selection of Securities to be redeemed shall be treated by the Trustee as Outstanding for the purpose of such selection. In any case where more than one Security is registered in the same name, the Trustee in its discretion may treat the aggregate principal amount so registered as if it were represented by one Security. The Trustee shall promptly notify the Company and each Security Registrar in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed. SECTION 1105. Notice of Redemption. -------------------- Notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to the Trustee and to each Holder of Securities to be redeemed, at his address appearing in the Security Register. All notices of redemption shall state: (a) the Redemption Date, (b) the Redemption Price, 73 83 (c) if less than all the Outstanding Securities are to be redeemed, the identification (and, in the case of partial redemption of any Securities, the principal amounts) of the particular Securities to be redeemed, (d) that on the Redemption Date the Redemption Price will become due and payable upon each such Security to be redeemed and that (unless the Company shall default in payment of the Redemption Price) interest thereon will cease to accrue on and after said date, (e) the conversion price, the date on which the right to convert the Securities to be redeemed will terminate and the place or places where such Securities may be surrendered for conversion, and (f) the place or places where such Securities are to be surrendered for payment of the Redemption Price. Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request received by the Trustee at least 40 days prior to the Redemption Date, by the Trustee in the name and at the expense of the Company. SECTION 1106. Deposit of Redemption Price. --------------------------- At or prior to 9:00 a.m. (New York City time) on any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1004) an amount of money in same day funds sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on, all the Securities or portions thereof which are to be redeemed on that date other than any Securities called for redemption on that date which have been converted prior to the date of such deposit. If any Security called for redemption is converted, any money deposited with the Trustee or with any Paying Agent or so segregated and held in trust for the redemption of such Security shall (subject to any right of the Holder of such Security or any Predecessor Security to receive interest as provided in the last paragraph of Section 307) be paid to the Company upon Company Request or, if then held by the Company, shall be discharged from such trust. SECTION 1107. Securities Payable on Redemption Date. ------------------------------------- Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Securities shall cease to bear interest. Upon surrender of any such Security for redemption in accordance with 74 84 said notice, such Security shall be paid by the Company at the Redemption Price, together with accrued interest to the Redemption Date; PROVIDED, HOWEVER, that installments of interest whose Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 307. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal and premium, if any, shall, until paid, bear interest from the Redemption Date at the rate borne by the Security. SECTION 1108. Securities Redeemed in Part. --------------------------- Any Security which is to be redeemed only in part shall be surrendered at an office or agency of the Company maintained for that purpose pursuant to Section 1003 (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered. ARTICLE TWELVE Subordination of Securities SECTION 1201. Securities Subordinated to Senior Indebtedness. ---------------------------------------------- The Company covenants and agrees, and each Holder of a Security, by his acceptance thereof, likewise covenants and agrees, that, at all times and in all respects, the indebtedness represented by the Securities and the payment of the principal of and premium, if any, and interest on each and all of the Securities are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Indebtedness. SECTION 1202. Payment Over of Proceeds Upon Dissolution, Etc. ---------------------------------------------- In the event of (a) any insolvency or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding, relative to the Company or to its creditors, as such, or to a substantial part of its assets, or (b) any proceeding for the liquidation, dissolution or other winding up of the Company, whether voluntary or involuntary and whether or not involving insolvency or bankruptcy, or (c) any general assignment for the benefits of creditors or any other marshalling of assets and liabilities of the Company, then and in any such event the holders of Senior 75 85 Indebtedness shall be entitled to receive payment in full of all amounts due or to become due on or in respect of all Senior Indebtedness; or provision shall be made for such payment in money or money's worth, before the Holders of the Securities are entitled to receive any payment or distribution of any kind or character, whether in cash, property or securities, on account of principal of or premium, if any, or interest on the Securities, and to that end the holders of Senior Indebtedness shall be entitled to receive, for application to the payment thereof, any payment or distribution of any kind or character, whether in cash, property or securities, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other indebtedness of the Company being subordinated to the payment of the Securities, which may be payable or deliverable in respect of the Securities in any such case, proceeding, dissolution, liquidation or other winding up or event. In the event that, notwithstanding the foregoing provisions of this Section, the Trustee or the Holder of any Security shall have received any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other indebtedness of the Company being subordinated to the payment of the Securities, before all Senior Indebtedness is paid in full or payment thereof provided for, and if such fact shall, at or prior to the time of such payment or distribution, have been made known to the Trustee or such Holder, as the case may be, then and in such event such payment or distribution shall be paid over or delivered forthwith to the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other Person making payment or distribution of assets of the Company for application to the payment of all Senior Indebtedness remaining unpaid, to the extent necessary to pay all Senior Indebtedness in full, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness. For purposes of this Article only, the words "cash, property or securities" shall not be deemed to include securities of the Company as reorganized or readjusted, or securities of the Company or any other corporation provided for by a plan of reorganization or readjustment, which are subordinated in right of payment to all Senior Indebtedness which may at the time be outstanding to substantially the same extent as, or to a greater extent than, the Securities are so subordinated as provided in this Article. The consolidation of the Company with, or the merger of the Company into, another Person or the liquidation or dissolution of the Company following the conveyance or transfer of its properties and assets substantially as an entirety to another Person upon the terms and conditions set forth in Article Eight shall not be deemed a dissolution, winding up, liquidation, reorganization, general assignment for the benefit of creditors or marshalling of assets and liabilities of the Company for the purposes of this Section if the Person formed by such consolidation or into which the Company is merged or which acquires by conveyance or transfer such properties and assets substantially as an entirety, as the case may be, shall, as a part of such consolidation, merger, conveyance or transfer, comply with the conditions set forth in Article Eight. 76 86 SECTION 1203. Prior Payment to Senior Indebtedness upon Acceleration of --------------------------------------------------------- Securities. ---------- In the event that any Securities are declared due and payable before their Stated Maturity, then and in such event the holders of Senior Indebtedness outstanding at the time such Securities so become due and payable shall be entitled to receive payment in full of all amounts due on or in respect of such Senior Indebtedness, or provision shall be made for such payment in money or money's worth, before the Holders of the Securities are entitled to receive any payment (including any payment which may be payable by reason of the payment of any other indebtedness of the Company being subordinated to the payment of the Securities) by the Company on account of the principal of or premium, if any, or interest on the Securities or on account of the purchase or other acquisition of Securities. In the event that, notwithstanding the foregoing, the Company shall make any payment to the Trustee or the Holder of any Security prohibited by the foregoing provisions of this Section, and if such fact shall, at or prior to the time of such payment, have been made known to the Trustee or such Holder, as the case may be, then and in such event such payment shall be paid over the delivered forthwith to the Company. The provisions of this Section shall not apply to any payment with respect to which Section 1202 would be applicable. SECTION 1204. No Payment When Senior Indebtedness in Default. ---------------------------------------------- (a) In the event and during the continuation of any default in the payment of principal of or premium, if any, or interest on any Senior Indebtedness beyond any applicable grace period with respect thereto, or in the event that any event of default with respect to any Senior Indebtedness shall have occurred and be continuing and shall have resulted in such Senior Indebtedness becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, unless and until such event of default shall have been cured or waived or shall have ceased to exist and such acceleration shall have been rescinded or annulled, or (b) in the event any judicial proceeding shall be pending with respect to any such default in payment or event of default, then no payment (including any payment which may be payable by reason of the payment of any other indebtedness of the Company being subordinated to the payment of the Securities) shall be made by the Company on account of the principal of or premium, if any, or interest on the Securities or on account of the purchase or other acquisition of Securities. In the event that, notwithstanding the foregoing, the Company shall make any payment to the Trustee or the Holder of any Security prohibited by the foregoing provisions of this Section, and if such fact shall, at or prior to the time of such payment, have been made known to the Trustee or such Holder, as the case may be, then and in such event such payment shall be paid over and delivered forthwith to the Company. 77 87 The provisions of this Section shall not apply to any payment with respect to which Section 1202 would be applicable. SECTION 1205. Payment Permitted If No Default. ------------------------------- Nothing contained in this Article or elsewhere in this Indenture or in any of the Securities shall prevent (a) the Company, at any time except during the pendency of any case, proceeding, dissolution, liquidation or other winding up, general assignment for the benefit of creditors or other marshalling of assets and liabilities of the Company referred to in Section 1202 or under the conditions described in Section 1203 or 1204, from making payments at any time of principal of and premium, if any, or interest on the Securities, or (b) the application by the Trustee of any money deposited with it hereunder to the payment of or on account of the principal of and premium, if any, or interest on the Securities or the retention of such payment by the Holders, if, at the time of such application by the Trustee, it did not have knowledge that such payment would have been prohibited by the provisions of this Article. SECTION 1206. Subrogation to Rights of Holders of Senior Indebtedness. ------------------------------------------------------- Subject to the payment in full of all amounts due on or in respect of Senior Indebtedness, the Holders of the Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Indebtedness pursuant to the provisions of this Article (equally and ratably with the holders of all indebtedness of the Company which by its express terms is subordinated to other indebtedness of the Company to substantially the same extent as the Securities are subordinated and is entitled to like rights of subrogation) to the rights of the holders of such Senior Indebtedness to receive payments and distributions of cash, property and securities applicable to the Senior Indebtedness until the principal of and premium, if any, and Interest on the Securities shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of the Senior Indebtedness of any cash, property or securities to which the Holders of the Securities or the Trustee would otherwise be entitled except for the provisions of this Article, and no payments over pursuant to the provisions of this Article to the holders of Senior Indebtedness by Holders of the Securities or the Trustee, shall, as among the Company, its creditors other than holders of Senior Indebtedness and the Holders of the Securities, be deemed to be a payment or distribution by the Company to or on account of the Senior Indebtedness. SECTION 1207. Provisions Solely to Define Relative Rights. ------------------------------------------- The provisions of this Article are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities on the one hand and the holders of Senior Indebtedness on the other hand. Nothing contained in this Article or elsewhere in this Indenture or in the Securities is intended to or shall (a) impair, as among the Company, its creditors other than holders of Senior Indebtedness and the Holders of the Securities, the obligation of the Company, which is absolute and unconditional, to pay to the Holders of the Securities the principal of and premium, if 78 88 any, and interest on the Securities as and when the same shall become due and payable in accordance with their terms; or (b) affect the relative rights against the Company or the Holders of the Securities and creditors of the Company other than the holders of Senior Indebtedness; or (c) prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article of the holders of Senior Indebtedness to receive cash, property and securities otherwise payable or deliverable to the Trustee or such Holder. SECTION 1208. Trustee to Effectuate Subordination. ----------------------------------- Each holder of a Security by his acceptance thereof authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article and appoints the Trustee his attorney-in-fact for any and all such purposes. SECTION 1209. No Waiver of Subordination Provisions. ------------------------------------- No right of any present or future holder of any Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof any such holder may have or be otherwise charged with. Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Indebtedness may, at any time and from time to time, without the consent of or notice to the Trustee or the Holders of the Securities, without incurring responsibility to the Holders of the Securities and without impairing or releasing the subordination provided in this Article or the obligations hereunder of the Holders of the Securities to the holders of Senior Indebtedness, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Indebtedness, or otherwise amend or supplement in any manner Senior Indebtedness or any instrument evidencing the same or any agreement under which Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Indebtedness; (iii) release any Person liable in any manner for the collection of Senior Indebtedness; and (iv) exercise or refrain from exercising any rights against the Company and any other Person. SECTION 1210. Notice to Trustee. ----------------- The Company shall give prompt written notice to the Trustee of any fact known to the Company which would prohibit the making of any payment to or by the Trustee in respect of the Securities. Notwithstanding the provisions of this Article or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the 79 89 existence of any facts which would prohibit the making of any payment to or by the Trustee in respect of the Securities, unless and until the Trustee shall have received written notice thereof from the Company or a holder of Senior Indebtedness or from any trustee therefor; and, prior to the receipt of any such written notice, the Trustee, subject to the provisions of Section 601, shall be entitled in all respects to assume that no such facts exist; PROVIDED, HOWEVER, that if the Trustee shall not have received the notice provided for in this Section at least four Business Days prior to the date upon which by the terms hereof any money may become payable for any purpose (including, without limitation, the payment of the principal of and premium, if any, or interest on any Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such money and to apply the same to the purpose for which such money was received and shall not be affected by any notice to the contrary which may be received by it within four Business Days prior to such date. Subject to the provisions of Section 601, the Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself to be a holder of Senior Indebtedness (or a trustee therefor) to establish that such notice has been given by a holder of Senior Indebtedness (or a trustee therefor). In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. SECTION 1211. Reliance on Judicial Order or Certificate of Liquidating Agent. -------------------------------------------------------------- Upon any payment or distribution of assets of the Company referred to in this Article, the Trustee, subject to the provisions of Section 601, and the Holders of the Securities shall be entitled to rely upon any order or decree entered by any court of competent jurisdiction in which such insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution, winding up or similar case or proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other person making such payment or distribution, delivered to the Trustee or to the Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article. 80 90 SECTION 1212. Trustee Not Fiduciary For Holders Of Senior Indebtedness. -------------------------------------------------------- The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of Securities or to the Company or to any other Person cash, property or securities to which holders of Senior Indebtedness shall be entitled by virtue of this Article or otherwise. With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article, and no implied covenants or obligations with respect to the holders of Senior Indebtedness shall be read into this Article against the Trustee. SECTION 1213. Rights of Trustee as Holder of Senior Indebtedness; Preservation ---------------------------------------------------------------- of Trustee's Rights. -------------------- The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article with respect to any Senior Indebtedness which may at any time be held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. Nothing in this Article shall apply to claims of, or payments to, the Trustee under or pursuant to Section 607. SECTION 1214. Article Applicable to Paying Agents. ----------------------------------- In case at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term "Trustee" as used in this Article shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article in addition to or in place of the Trustee; PROVIDED, HOWEVER, that Section 1213 shall not apply to the Company or any Affiliate of the Company if it or such Affiliate acts as Paying Agent. SECTION 1215. Certain Conversions Deemed Payment. ---------------------------------- For the purposes of this Article only, (1) the issuance and delivery of junior securities upon conversion of Securities in accordance with Article Thirteen shall not be deemed to constitute a payment or distribution on account of the principal of or premium or interest on Securities or on account of the purchase or other acquisition of Securities, and (2) the payment, issuance or delivery of cash, property or securities (other than junior securities) upon conversion of a Security shall be deemed to constitute payment on account of the principal of such Security. For the purposes of this Section, the term "junior securities" means (a) shares of any class of capital stock of the Company and (b) securities of the Company which are subordinated in right of payment to all Senior Indebtedness which may be outstanding at the time of issuance or delivery of such securities to substantially the same extent as, or to a greater extent than, the Securities 81 91 are so subordinated as provided in this Article. Nothing contained in this Article or elsewhere in this Indenture or in the Securities is intended to or shall impair, as among the Company, its creditors other than holders of Senior Indebtedness and the Holders of the Securities, the right, which is absolute and unconditional, of the Holder of any Security to convert such Security in accordance with Article Thirteen. SECTION 1216. No Suspension of Remedies. ------------------------- Nothing contained in this Article shall limit the right of the Trustee or the Holders of the Securities to take any action to accelerate the maturity of the Securities pursuant to the provisions described under Article Five and as set forth in this Indenture or to pursue any rights or remedies hereunder or under applicable law, subject to the rights, if any, under this Article of the holders, from time to time, of Senior Indebtedness to receive the cash, property or securities receivable upon the exercise of such rights or remedies. ARTICLE THIRTEEN Conversion of Securities SECTION 1301. Conversion Privilege and Conversion Price. ----------------------------------------- Subject to and upon compliance with the provisions of this Article, at the option of the Holder thereof, any Security or any portion of the principal amount thereof which equals $1,000 or any integral multiple thereof may be converted at any time at the principal amount thereof, or of such portion thereof, into fully paid and nonassessable shares (calculated as to each conversion to the nearest 1/100 of a share) of Class A Common Stock, at the conversion price, determined as hereinafter provided, in effect at the time of conversion. Such conversion right shall expire at the close of business on August 15, 2004. In case a Security or portion thereof is called for redemption, such conversion right in respect of the Security or portion so called shall expire at the close of business on the second business day preceding the applicable Redemption Date, unless the Company defaults in making the payment due upon redemption. The price at which shares of Class A Common Stock shall be delivered upon conversion (herein called the "conversion price") shall be initially $32.70 per share of Class A Common Stock. The conversion price shall be adjusted in certain instances as provided in paragraphs (a), (b), (c), (d), (e), (f) and (i) of Section 1304. SECTION 1302. Exercise of Conversion Privilege. -------------------------------- In order to exercise the conversion privilege, the Holder of any Security shall surrender such Security, duly endorsed or assigned to the Company or in blank, at any office or agency of the Company maintained pursuant to Section 1003, accompanied by written notice to the Company in the form provided in the Security (or such other 82 92 notice as is acceptable to the Company) at such office or agency that the Holder elects to convert such Security or, if less than the entire principal amount thereof is to be converted, the portion thereof to be converted. Securities surrendered for conversion during the period from the close of business on any Regular Record Date next preceding any Interest Payment Date to the close of business on such Interest Payment Date shall (except in the case of Securities or portions thereof which have been called for redemption) be accompanied by payment in New York Clearing House funds or other funds acceptable to the Company of an amount equal to the interest payable on such Interest Payment Date on the principal amount being surrendered for conversion. Except as provided in the immediately preceding sentence and subject to the fourth paragraph of Section 307, no payment or adjustment shall be made upon any conversion on account of any interest accrued on the Securities surrendered for conversion or on account of any dividends on the Class A Common Stock issued upon conversion. Securities shall be deemed to have been converted immediately prior to the close of business on the day of surrender of such Securities for conversion in accordance with the foregoing provisions, and at such time the rights of the Holders of such Securities as Holders shall cease, and the Person or Persons entitled to receive the Class A Common Stock issuable upon conversion shall be treated for all purposes of the record holder or holders of such Common Stock as and after such time. As promptly as practicable on or after the conversion date, the Company shall issue and shall deliver at such office or agency a certificate or certificates for the number of full shares of Class A Common Stock issuable upon conversion, together with payment in lieu of any fraction of a share, as provided in Section 1303. In the case of any Security which is converted in part only, upon such conversion the Company shall execute and the Trustee shall authenticate and deliver to the Holder thereof, at the expense of the Company, a new Security or Securities of authorized denominations in aggregate principal amount equal to the unconverted portion of the principal amount of such Security. SECTION 1303. Fractions of Shares. ------------------- No fractional share of Class A Common Stock shall be issued upon conversion of Securities. If more than one Security shall be surrendered for conversion at one time by the same Holder, the number of full shares which shall be issuable upon conversion thereof shall be computed on the basis of the aggregate principal amount of the Securities (or specified portions thereof) so surrendered. Instead of any fractional share of such Common Stock which would otherwise be issuable upon conversion of any Security or Securities (or specified portions thereof), the Company shall pay a cash adjustment in respect of such fraction in an amount equal to the same fraction of the Closing Price (as hereinafter defined) at the close of business on the day of conversion (or, if such day is not a Trading Day (as hereafter defined), on the Trading Day immediately preceding such day). 83 93 SECTION 1304. Adjustment of Conversion Price. ------------------------------ (a) In case the Company shall pay or make a dividend or other distribution on Common Stock exclusively in Common Stock or shall pay or make a dividend or other distribution on any other class of capital stock of the Company which dividend or distribution includes Common Stock, the conversion price in effect at the opening of business on the day following the date fixed for the determination of shareholders entitled to receive such dividend or other distribution shall be reduced by multiplying such conversion price by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination and the denominator shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution, such reduction to become effective immediately after the opening of business on the day following the date fixed for such determination. For the purpose of this paragraph (a), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company. The Company shall not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Company. (b) Subject to paragraph (g) of this Section, in case the Company shall pay or make a dividend or other distribution on Common Stock consisting exclusively of, or shall otherwise issue to all holders of any class of Common Stock, rights or warrants entitling the holders thereof to subscribe for or purchase shares of Common Stock at a price per share less than the Current Market Price (determined as provided in paragraph (h) of this Section) on the date fixed for the determination of shareholders entitled to receive such rights or warrants, the conversion price in effect at the opening of business on the day following the date fixed for such determination shall be reduced by multiplying such conversion price by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock which the aggregate of the offering price of the total number of shares of Common Stock so offered for subscription or purchase would purchase at such Current Market Price and the denominator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock so offered for subscription or purchase, such reduction to become effective immediately after the opening of business on the day following the date fixed for such determination. For the purposes of this paragraph (b), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company. The Company shall not issue any rights or warrants in respect of shares of Common Stock held in the treasury of the Company. (c) In case outstanding shares of Common Stock shall be subdivided into a greater number of shares of Common Stock, the conversion price in effect at the opening of business on the day following the day upon which such subdivision becomes effective shall be proportionately reduced, and, conversely, in case outstanding shares of Common Stock shall be combined into a smaller number of shares of Common Stock, the conversion price in effect at the opening of business on the day following the day 84 94 upon which such combination becomes effective shall be proportionately increased, such reduction or increase, as the case may be, to become effective immediately after the opening of business on the day following the day upon which subdivision or combination becomes effective. (d) Subject to the last sentence of this paragraph (d) and to paragraph (g) of this Section, in case the Company shall, by dividend or otherwise, distribute to all holders of any class of Common Stock evidences of its indebtedness, shares of any class of its capital stock, cash or other assets (including securities, but excluding any rights or warrants referred to in paragraph (b) of this Section, excluding any dividend or distribution paid exclusively in cash and excluding any dividend or distribution referred to in paragraph (a) of this Section), the conversion price shall be reduced by multiplying the conversion price in effect immediately prior to the close of business on the date fixed for the determination of shareholders entitled to such distribution by a fraction of which the numerator shall be the Current Market Price (determined as provided in paragraph (h) of this Section) on such date less the fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) on such date of the portion of the evidences of indebtedness, shares of capital stock, cash and other assets to be distributed applicable to one share of Common Stock and the denominator shall be such Current Market Price, such reduction to become effective immediately prior to the opening of business on the day following such date. If the Board of Directors determines the fair market value of any distribution for purposes of this paragraph (d) by reference to the actual or when-issued trading market for any securities comprising part or all of such distribution, it must in doing so consider the prices in such market over the same period used in computing the Current Market Price pursuant to paragraph (h) of this Section, to the extent possible. For purposes of this paragraph (d), any dividend or distribution that includes shares of Common Stock, rights or warrants to subscribe for or purchase shares of Common Stock or securities convertible into or exchangeable for shares of Common Stock shall be deemed to be (x) a dividend or distribution of the evidences of indebtedness, cash, assets or shares of capital stock other than such shares of Common Stock, such rights or warrants or such convertible or exchangeable securities (making any conversion price reduction required by this paragraph (d)) immediately followed by (y) in the case of such shares of Common Stock or such rights or warrants, a dividend or distribution thereof (making any further conversion price reduction required by paragraph (a) and (b) of this Section, except any shares of Common Stock included in such dividend or distribution shall not be deemed "outstanding at the close of business on the date fixed for such determination" within the meaning of paragraph (a) of this Section), or (z) in the case of such convertible or exchangeable securities, a dividend or distribution of the number of shares of Common Stock as would then be issuable upon the conversion or exchange thereof, whether or not the conversion or exchange of such securities is subject to any conditions (making any further conversion price reduction required by paragraph (a) of this Section, except the shares deemed to constitute such dividend or distribution shall not be deemed "outstanding at the close of business on the date fixed for such determination" within the meaning of paragraph (a) of this Section). 85 95 (e) In case the Company shall, by dividend or otherwise, at any time distribute to all holders of any class of Common Stock cash (excluding any cash that is distributed as part of a distribution referred to in paragraph (d) of this Section or in connection with a transaction to which Section 1311 applies) in an aggregate amount that, together with (A) the aggregate amount of any other distributions to all holders of any class of Common Stock made exclusively in cash within the 12 months preceding the date fixed for the determination of shareholders entitled to such distribution and in respect of which no conversion price adjustment pursuant to this paragraph (e) has been made previously and (B) the aggregate of any cash plus the fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) as of such date of determination of consideration payable in respect of any tender offer by the Company or a Subsidiary for all or any portion of Common Stock consummated within the 12 months preceding such date of determination and in respect of which no conversion price adjustment pursuant to paragraph (f) of this Section has been made previously, exceeds the greater of (I) 12.5% of the product of the Current Market Price (determined as provided in paragraph (h) of this Section) on such date of determination times the number of shares of Common Stock outstanding on such date or (II) the Company's retained earnings on the date fixed for determining the stockholders entitled to such distribution, the conversion price shall be reduced by multiplying the conversion price in effect immediately prior to the close of business on such date of determination by a fraction of which the numerator shall be the Current Market Price (determined as provided in paragraph (h) of this Section) on such date less the amount of cash to be distributed at such time applicable to one share of Common Stock and the denominator shall be such Current Market Price, such reduction to become effective immediately prior to the opening of business on the day after such date. (f) In case a tender offer made by the Company or any Subsidiary for all or any portion of Common Stock shall be consummated and such tender offer shall involve an aggregate consideration having a fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) as of the last time (the "Expiration Time") that tenders may be made pursuant to such tender offer (as it shall have been amended) that, together with (A) the aggregate of the cash plus the fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) as of the Expiration Time of the other consideration paid in respect of any other tender offer by the Company or a Subsidiary for all or any portion of Common Stock consummated within the 12 months preceding the Expiration Time and in respect of which no conversion price adjustment pursuant to this paragraph (f) has been made previously and (B) the aggregate amount of any distributions to all holders of any class of Common Stock made exclusively in cash within the 12 months preceding the Expiration Time and in respect of which no conversion price adjustment pursuant to paragraph (e) of this Section has been made previously, exceeds the greater of (I) 12.5% of the product of the Current Market Price (determined as provided in paragraph (h) of this Section) immediately prior to the Expiration Time times the number of shares of Common Stock outstanding (including any tendered shares) at the Expiration Time or (II) the Company's retained earnings as of the Expiration Time, the conversion price shall 86 96 be reduced by multiplying the conversion price in effect immediately prior to the Expiration Time by a fraction of which the numerator shall be (x) the product of the Current Market Price (determined as provided in paragraph (h) of this Section) immediately prior to the Expiration Time times the number of shares of Common Stock outstanding (including any tendered shares at the Expiration Time minus (y) the fair market value (determined as aforesaid) of the aggregate consideration payable to shareholders upon consummation of such tender offer and the denominator shall be the product of (A) such Current Market Price times (B) such number of outstanding shares at the Expiration Time minus the number of shares accepted for payment in such tender offer (the "Purchased Shares"), such reduction to become effective immediately prior to the opening of business on the day following the Expiration Time; PROVIDED, that if the number of Purchased Shares or the aggregate consideration payable therefor have not been finally determined by such opening of business, the adjustment required by this paragraph (f) shall, pending such final determination, be made based upon the preliminarily announced results of such tender offer, and, after such final determination shall have been made, the adjustment required by this paragraph (f) shall be made based upon the number of Purchased Shares and the aggregate consideration payable therefor as so finally determined. (g) The reclassification of any class of Common Stock into securities which include securities other than Common Stock (other than any reclassification upon a consolidation or merger to which Section 1311 applies) shall be deemed to involve (i) a distribution of such securities other than Common Stock to all holders of such class of Common Stock (and the effective date of such reclassification shall be deemed to be "the date fixed for the determination of shareholders entitled to such distribution" within the meaning of paragraph (d) of this Section), and (ii) a subdivision or combination, as the case may be, of the number of shares of Common Stock outstanding immediately prior to such reclassification into the number of shares of Common Stock outstanding immediately thereafter (and the effective date of such reclassification shall be deemed to be "the day upon which such subdivision becomes effective" or "the day upon which such combination becomes effective," as the case may be, and "the day upon which such subdivision or combination becomes effective" within the meaning of paragraph (c) of this Section). Rights or warrants issued by the Company to all holders of any class of Common Stock entitling the holders thereof to subscribe for or purchase shares of Common Stock (either initially or under certain circumstances), which rights or warrants (i) are deemed to be transferred with such shares of Common Stock, (ii) are not exercisable and (iii) are also issued in respect of future issuances of Common Stock, in each case in clauses (i) through (iii) until the occurrence of a specified event or events ("Trigger Event"), shall for purposes of this Section 1304 not be deemed issued until the occurrence of the earliest Trigger Event. If any such rights or warrants, including any such existing rights or warrants distributed prior to the date of this Indenture are subject to subsequent events, upon the occurrence of each of which such rights or warrants shall become exercisable to purchase different securities, evidences of indebtedness or other assets, then the occurrence of each such event shall be deemed to be such date of 87 97 issuance and record date with respect to new rights or warrants (and a termination or expiration of the existing rights or warrants without exercise by the holder thereof). In addition, in the event of any distribution (or deemed distribution) of rights or warrants, or any Trigger Event with respect thereto, that was counted for purposes of calculating a distribution amount for which an adjustment to the Conversion Price under this Section 1304 was made, (1) in the case of any such rights or warrant which shall all have been redeemed or repurchased without exercise by any holders thereof, the Conversion Price shall be readjusted upon such final redemption or repurchase to give effect to such distribution or Trigger Event, as the case may be, as though it were a cash distribution, equal to the per share redemption or repurchase price received by a holder or holders of Common Stock with respect to such rights or warrants (assuming such holder had retained such rights or warrants), made to all holders of Common Stock as of the date of such redemption or repurchase, and (2) in the case of such rights or warrants which shall have expired or been terminated without exercise by any holders thereof, the Conversion Price shall be readjusted as if such rights and warrants had not been issued. (h) For the purpose of any computation under this paragraph and paragraphs (b), (d) and (e) of this Section, the current market price per share of Common Stock (the "Current Market Price") on any date shall be deemed to be the average of the daily Closing Prices for the 5 consecutive Trading Days selected by the Company commencing not more than 20 Trading Days before, and ending not later than, the date in question; PROVIDED, HOWEVER, that (i) if the "ex" date for any event (other than the issuance or distribution requiring such computation) that requires an adjustment to the conversion price pursuant to paragraph (a), (b), (c), (d), (e) or (f) above occurs on or after the 20th Trading Day prior to the date in question and prior to the "ex" date for the issuance or distribution requiring such computation, the Closing Price for each Trading Day prior to the "ex" date for such other event shall be adjusted by multiplying such Closing Price by the same fraction by which the conversion price is so required to be adjusted as a result of such other event, (ii) if the "ex" date for any event (other than the issuance or distribution requiring such computation) that requires an adjustment to the conversion price pursuant to paragraph (a), (b), (c), (d), (e) or (f) above occurs on or after the "ex" date for the issuance or distribution requiring such computation and on or prior to the date in question, the Closing Price for each Trading Day on and after the "ex" date for such other event shall be adjusted by multiplying such Closing Price by the reciprocal of the fraction by which the conversion price is so required to be adjusted as a result of such other event, and (iii) if the "ex" date for the issuance or distribution requiring such computation is on or prior to the date in question, after taking into account any adjustment required pursuant to clause (ii) of this proviso, the Closing Price for each Trading Day on or after such "ex" date shall be adjusted by adding thereto the amount of any cash and the fair market value on the date in question (as determined by the Board of Directors in a manner consistent with any determination of such value for purposes of paragraph (d) or (e) of this Section, whose determination shall be conclusive and described in a Board Resolution) of the evidences of indebtedness, shares of capital stock or assets being distributed applicable to one share of Common Stock as of the close of business on the day before such "ex" date. For the purpose of any computation under paragraph (f) of this Section, the Current Market Price on any date shall be deemed to 88 98 be the average of the daily Closing Prices for the 5 consecutive Trading Days selected by the Company commencing on or after the latest (the "Commencement Date") of (i) the date 20 Trading Days before the date in question, (ii) the date of commencement of the tender offer requiring such computation and (iii) the date of the last amendment, if any, of such tender offer involving a change in the maximum number of shares for which tenders are sought or a change in the consideration offered, and ending not later than the Expiration Time of such tender offer; PROVIDED, HOWEVER, that if the "ex" date for any event (other than the tender offer requiring such computation) that requires an adjustment to the conversion price pursuant to paragraph (a), (b), (c), (d), (e) or (f) above occurs on or after the Commencement Date and prior to the Expiration Time for the tender offer requiring such computation, the Closing Price for each Trading Day prior to the "ex" date for such other event shall be adjusted by multiplying such Closing Price by the same fraction by which the conversion price is so required to be adjusted as a result of such other event. The closing price for any Trading Day (the "Closing Price") shall be the last reported sales price regular way or, in case no such reported sale takes place on such day, the average of the reported closing bid and asked prices regular way, in either case on the New York Stock Exchange or, if the Common Stock is not listed or admitted to trading on such exchange, on the principal national securities exchange on which the Common Stock is listed or admitted to trading or, if not listed or admitted to trading on any national securities exchange, on the Nasdaq Stock Market's National Market or, if the Common Stock is not listed or admitted to trading on any national securities exchange or quoted on such National Market, the average of the closing bid and asked prices in the over-the-counter market as furnished by any New York Stock Exchange member firm selected from time to time by the Company for that purpose. For purposes of this paragraph, the term "Trading Day" means each Monday, Tuesday, Wednesday, Thursday and Friday, other than any day on which securities are generally not traded on the applicable securities exchange or in the applicable securities market and the term "'ex' date," (i) when used with respect to any issuance or distribution, means the first date on which the Common Stock trades regular way on the relevant exchange or in the relevant market from which the Closing Prices were obtained without the right to receive such issuance or distribution, (ii) when used with respect to any subdivision or combination of shares of Common Stock, means the first date on which the Common Stock trades regular way on such exchange or in such market after the time at which such subdivision or combination becomes effective, and (iii) when used with respect to any tender offer means the first date on which the Common Stock trades regular way on such exchange or in such market after the last time that tenders may be made pursuant to such tender offer (as it shall have been amended). (i) The Company may make such reductions in the conversion price, in addition to those required by paragraphs (a), (b), (c), (d), (e) and (f) of this Section, (i) to the extent permitted by law, by any amount for any period of at least 20 days or (ii) as it considers to be advisable (as evidenced by a Board Resolution) in order that any event treated for federal income tax purposes as a dividend of stock or stock rights shall not be taxable to the recipients or, if that is not possible, to diminish any income taxes that are otherwise payable because of such event. 89 99 (j) No adjustment in the conversion price shall be required unless such adjustment (plus any other adjustments not previously made by reason of this paragraph (j)) would require an increase or decrease of at least 1% in the conversion price; PROVIDED, HOWEVER, that any adjustments which by reason of this paragraph (j) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. (k) Notwithstanding any other provision of this Section 1304, no adjustment to the conversion price shall reduce the conversion price below the then par value per share of the Class A Common Stock, and any such purported adjustment shall instead reduce the conversion price to such par value. The Company hereby covenants not to take any action to increase the par value per share of the Class A Common Stock. SECTION 1305. Notice of Adjustments of Conversion Price. ----------------------------------------- Whenever the conversion price is adjusted as herein provided: (a) the Company shall compute the adjusted conversion price in accordance with Section 1304 and shall prepare an Officers' Certificate signed by the Treasurer of the Company setting forth the adjusted conversion price and showing in reasonable detail the facts upon which such adjustment is based, and such certificate shall forthwith be filed (with a copy to the Trustee) at each office or agency maintained for the purpose of conversion of Securities pursuant to Section 1003; and (b) a notice stating that the conversion price has been adjusted and setting forth the adjusted conversion price shall forthwith be prepared, and as soon as practicable after it is prepared, such notice shall be mailed by the Company to all Holders at their last addresses as they shall appear in the Security Register. In the case of any adjustment pursuant to Section 1304(i)(i), such notice shall be mailed at least 15 days before the date the reduced conversion price shall take effect and shall state the reduced conversion price and the period it will be in effect. SECTION 1306. Notice of Certain Corporate Action. ---------------------------------- In case: (a) the Company shall declare a dividend (or any other distribution) on Common Stock payable (i) otherwise than exclusively in cash or (ii) exclusively in cash in an amount that would require a conversion price adjustment pursuant to paragraph (e) of Section 1304; or (b) the Company shall authorize the granting to the holders of any class of Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any other rights (excluding shares of capital 90 100 stock or option for capital stock issued pursuant to a benefit plan for employees, officers or directors of the Company); or (c) of any reclassification of Common Stock (other than a subdivision or combination of the outstanding shares of Common Stock), or of any consolidation, merger or share exchange to which the Company is a party and for which approval of any stockholders of the Company is required, or of the sale or transfer of all or substantially all of the assets of the Company; or (d) of the voluntary or involuntary dissolution, liquidation or winding up of the Company; or (e) the Company or any Subsidiary shall commence a tender offer for all or a portion of outstanding shares of Common Stock (or shall amend any such tender offer to change the maximum number of shares being sought or the amount or type of consideration being offered therefor); then the Company shall cause to be filed at each office or agency maintained pursuant to Section 1003, and shall cause to be mailed to all Holders at their last addresses as they shall appear in the Security Register, at least 21 days (or 11 days in any case specified in clause (a), (b) or (e) above) prior to the applicable record, effective or expiration date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution or granting of rights or warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of record who will be entitled to such dividend, distribution, rights or warrants are to be determined, (y) the date on which such reclassification, consolidation, merger, share exchange, sale, transfer, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, share exchange, sale, transfer, dissolution, liquidation or winding up, or (z) the date on which such tender offer commenced, the date on which such tender offer is scheduled to expire unless extended, the consideration offered and the other material terms thereof (or the material terms of any amendment thereto). Neither the failure to give any such notice nor any defect therein shall affect the legality or validity of any action described in clauses (a) through (e) of this Section 1306. SECTION 1307. Company to Reserve Class A Common Stock. --------------------------------------- The Company shall at all times reserve and keep available, free from preemptive rights, out of the authorized but unissued Class A Common Stock or out of the Class A Common Stock held in treasury, for the purpose of effecting the conversion of Securities, the full number of shares of Class A Common Stock then issuable upon the conversion of all outstanding Securities. Shares of Class A Common Stock issuable upon conversion of outstanding Securities shall be issued out of the Class A Common Stock held in Treasury to the extent available. 91 101 SECTION 1308. Taxes on Conversions. -------------------- The Company will pay any and all taxes that may be payable in respect of the issue or delivery of shares of Class A Common Stock on conversion of Securities pursuant hereto. The Company shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares of Class A Common Stock in a name other than that of the Holder of the Security or Securities to be converted, and no such issue or delivery shall be made unless and until the Person requesting such issue has paid to the Company the amount of any such tax, or has established to the satisfaction of the Company that such tax has been paid. SECTION 1309. Covenant as to Class A Common Stock. ----------------------------------- The Company covenants that all shares of Class A Common Stock which may be issued upon conversion of Securities will upon issue be fully paid and nonassessable and, except as provided in Section 1308, the Company will pay all taxes, liens and charges with respect to the issue thereof. SECTION 1310. Cancellation of Converted Securities. ------------------------------------ All Securities delivered for conversion shall be delivered to the Trustee to be canceled by or at the direction of the Trustee, which shall dispose of the same as provided in Section 309. SECTION 1311. Provisions of Consolidation, Merger or Sale of Assets. ----------------------------------------------------- In case of any consolidation of the Company with, or merger of the Company into, any other Person, any merger of another Person into the Company (other than a merger which does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of Common Stock) or any sale or transfer of all or substantially all of the assets of the Company, the Person formed by such consolidation or resulting from such merger or which acquires such assets, as the case may be, shall execute and deliver to the Trustee a supplemental indenture providing that the Holder of each Security then Outstanding shall have the right thereafter, during the period such Security shall be convertible as specified in Section 1301, to convert such Security only into the kind and amount of securities, cash and other property, if any, receivable upon such consolidation, merger, sale or transfer by a holder of the number of shares of Class A Common Stock into which such Security might have been converted immediately prior to such consolidation, merger, sale or transfer, assuming such holder of Class A Common Stock (i) is not a Person with which the Company consolidated or into which the Company merged or which merged into the Company or to which such sale or transfer was made, as the case may be (a "Constituent Person"), or an Affiliate of a Constituent Person and (ii) failed to exercise his rights of election, if any, as to the kind or amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer (provided that if the kind or amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer is not the same for 92 102 each share of Class A Common Stock held immediately prior to such consolidation, merger, sale or transfer by other than a Constituent Person or an Affiliate thereof and in respect of which such rights of election shall not have been exercised ("nonelecting share"), then for the purpose of this Section the kind and amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer by each nonelecting share shall be deemed to be the kind and amount so receivable per share by a plurality of the nonelecting shares). Such supplemental indenture shall provide for adjustments which, for events subsequent to the effective date of such supplemental indenture, shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article. The above provisions of this Section shall similarly apply to successive consolidations, mergers, sales or transfers. SECTION 1312. Trustee's Disclaimer. -------------------- The Trustee has no duty to determine when an adjustment under this Article Thirteen should be made, how it should be made or what such adjustment should be, but may accept as conclusive evidence of the correctness of any such adjustment, and shall be protected in relying upon, the Officers' Certificate with respect thereto which the Company is obligated to file with the Trustee pursuant to Section 1305. The Trustee makes no representation as to the validity or value of any securities or assets issued upon conversion of Securities, and the Trustee shall not be responsible for the Company's failure to comply with any provisions of this Article Thirteen. The Trustee shall not be under any responsibility to determine the correctness of any provisions contained in any supplemental indenture executed pursuant to Section 1311, but may accept as conclusive evidence of the correctness thereof, and shall be protected in relying upon, the Officers' Certificate with respect thereto which the Company is obligated to file with the Trustee pursuant to Section 1311. ARTICLE FOURTEEN Right to Require Repurchase SECTION 1401. Right to Require Repurchase. --------------------------- In the event that there shall occur a Repurchase Event (as defined in Section 1406), then each Holder shall have the right, at such Holder's option, to require the Company to purchase, and upon the exercise of such right, the Company shall, subject to the provisions of Section 1203, purchase, all or any part of such Holder's Securities on the date (the "Repurchase Date") that is 30 days after the date the Company gives notice of the Repurchase Event as contemplated in Section 1402(a) at a price (the "Repurchase Price") equal to 100% of the principal amount thereof, together with accrued and unpaid interest to the Repurchase Date. SECTION 1402. Notice; Method of Exercising Repurchase Right. --------------------------------------------- 93 103 (a) On or before the 15th day after the occurrence of a Repurchase Event, the Company, or at the request of the Company received by the Trustee at least 40 days prior to the Repurchase Date, the Trustee (in the name and at the expense of the Company), shall give notice of the occurrence of the Repurchase Event and of the repurchase right set forth herein arising as a result thereof by first-class mail, postage prepaid, to the Trustee and to each Holder of the Securities at such Holder's address appearing in the Security Register. The Company shall also deliver a copy of such notice of a repurchase right to the Trustee. Each notice of a repurchase right shall state: (1) the event constituting the Repurchase Event and the date thereof, (2) the Repurchase Date, (3) the date by which the repurchase right must be exercised, (4) the Repurchase Price, and (5) the instructions a Holder must follow to exercise a repurchase right. No failure of the Company to give the foregoing notice shall limit any Holder's right to exercise a repurchase right. The Trustee shall have no affirmative obligation to determine if there shall have occurred a Repurchase Event. (b) To exercise a repurchase right, a Holder shall deliver to the Company (or an agent designated by the Company for such purpose in the notice referred to in (a) above) and to the Trustee on or before the close of business on the Repurchase Date (i) written notice of the Holder's exercise of such right, which notice shall set forth the name of the Holder, the principal amount of the Security or Securities (or portion of a Security) to be repurchased, and a statement that an election to exercise the repurchased right is being made thereby, and (ii) the Security or Securities with respect to which the repurchase right is being exercised, duly endorsed for transfer to the Company. Such written notice shall be irrevocable. If the Repurchase Date falls between any Regular Record Date and the next succeeding Interest Payment Date, Securities to be repurchased must be accompanied by payment from the Holder of an amount equal to the interest thereon which the registered Holder thereof is to receive on such Interest Payment Date. In the event a repurchase right shall be exercised in accordance with the terms hereof, the Company shall on the Repurchase Date pay or cause to be paid in cash to the Holder thereof the Repurchase Price of the Security or Securities as to which the repurchase right had been exercised. In the event that a repurchase right is exercised with respect to less than the entire principal amount of a surrendered Security, the Company shall execute and deliver to the Trustee and the Trustee shall 94 104 authenticate for issuance in the name of the Holder a new Security or Securities in the aggregate principal amount of the unrepurchased portion of such surrendered security. SECTION 1403. Deposit of Repurchase Price. --------------------------- On or prior to the Repurchase Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1004) an amount of money in same day funds sufficient to pay the Repurchase Price of the Securities which are to be repaid on the Repurchase Date. SECTION 1404. Securities not Repurchased on Repurchase Date. --------------------------------------------- If any Security surrendered for repurchase shall not be so paid on the Repurchase Date, the principal shall, until paid, bear interest to the extent permitted by applicable law from the Repurchase Date at the rate per annum borne by such Security. SECTION 1405. Securities Repurchased in Part. ------------------------------ Any Security which is to be repurchased only in part shall be surrendered at any office or agency of the Company designated for that purpose pursuant to Section 1003 (with, if the Company or the Trustee so requires, due endorsement by, or written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unrepurchased portion of the principal of the Security so surrendered. SECTION 1406. Certain Definitions. -------------------- For purposes of this Article: (a) A "Repurchase Event" shall have occurred upon the occurrence of a Change in Control or Termination of Trading after the date of this Indenture and on or prior to August 15, 2004. (b) A "Change in Control" shall occur when: (i) all or substantially all of the Company's assets are sold as an entirety to any person or related group of persons; (ii) there shall be consummated any consolidation or merger of the Company (A) in which the Company is not the continuing or surviving corporation (other than a consolidation or merger with a Wholly-owned Subsidiary of the Company in which all shares of Class A Common Stock 95 105 outstanding immediately prior to the effectiveness thereof are changed into or exchanged for the same consideration) or (B) pursuant to which Common Stock would be converted into cash, securities or other property, in each case, other than a consolidation or merger of the Company in which the holders of Common Stock immediately prior to the consolidation or merger have, directly or indirectly, at least a majority of the total voting power of all classes of capital stock entitled to vote generally in the election of directors of the continuing or surviving corporation immediately after such consolidation or merger in substantially the same proportion as their ownership of Common Stock immediately before such transaction; (iii) any person, or any persons acting together which would constitute a "group" for purposes of Section 13(d) of the Exchange Act (a "Group") (in each case other than members of the Current Control Group), together with any Affiliates thereof, shall beneficially own (as defined in Rule 13d-3 under the Exchange Act) at least 50% of the total voting power of all classes of capital stock of the Company entitled to vote generally in the election of directors of the Company; (iv) at any time during any consecutive two-year period, individuals who at the beginning of such period constituted the Board of Directors of the Company (together with any new directors whose election by such Board of Directors or whose nomination for election by the stockholders of the Company was approved by a vote of 66 2/3% of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Company then in office; or (v) the Company is liquidated or dissolved or adopts a plan of liquidation or dissolution. (c) "Current Control Group" means the members of the Board of Directors and the executive officers of the Company as of the date of the Purchase Agreement, their spouses, children, parents and siblings, the trustee of any trust created for the benefit of any such member of the Board of Directors, officer or family member, the executor or administrator (in his or her capacity as such) of the estate of any such member of the Board of Directors, officer or family member, and any Permitted Transferee, as defined in the Company's Amended and Restated Certificate of Incorporation as in effect as of the date of the Purchase Agreement, who receives Class B Common Stock under the last will and testament of, or under the laws of descent and distribution from, any such member of the Board of Directors, officer or family member. (d) A "Termination of Trading" shall occur if the Class A Common Stock (or other common stock into which the Securities are then convertible) is neither listed for trading on a U.S. national securities exchange nor approved for trading on an established automated over-the-counter trading market in the United States. 96 106 ARTICLE FIFTEEN Guarantees ---------- SECTION 1501. UNCONDITIONAL GUARANTEES. The Company shall cause each Wholly-owned Subsidiary to enter the Guarantee Agreement (which Guarantee Agreement shall be substantially in the form attached hereto as Exhibit B). SECTION 1502. ADDITION OF GUARANTORS. (a) For as long as any Guarantees are required to remain in effect pursuant to the terms of this Indenture, promptly but in no event later than 30 days following the acquisition or creation of any Wholly-owned Subsidiary after the date of this Indenture, the Company shall cause such Subsidiary to execute and deliver a Guarantee evidencing its provision of a guarantee in accordance with clause (b) below. (b) Any Person that was not a Guarantor on the date of the execution of the Indenture may become a Guarantor by executing and delivering to the Trustee a Guarantee (such Guarantee to be effected by means of an amendment to the Guarantee Agreement). SECTION 1503. SUBORDINATION OF GUARANTEES. Each Holder of a Security, by his acceptance thereof, covenants and agrees, that, to the extent and in the manner set forth in the Guarantee Agreement, the payment of the principal of (and premium, if any) and interest on the Securities as guaranteed by each Guarantor pursuant to its Guarantee is hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Indebtedness (as defined in the Guarantee Agreement) of such Guarantor. ----------------------------- This instrument may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. 97 107 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. NCS HEALTHCARE, INC. By /s/ Jeffrey R. Steinhilber _____________________________ Name: Jeffrey R. Steinhilber Title: Senior Vice President and Chief Financial Officer Attest: /s/ Judith B. Wasser ______________________ NATIONAL CITY BANK, as Trustee By /s/ Marla Clark ________________________________ Name: Marla Clark Title: Assistant Vice President Attest: /s/ Holly Retina ___________________ 108 ) ) ss. ) On the day of , 1997, before me personally came , to me known, who, being by me duly sworn, did depose and say that he is of NCS HealthCare, Inc., one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority. -------------------------------- ) ) ss. ) On the day of , 1997, before me personally came , to me known, who, being by me duly sworn, did depose and say that he is of National City Bank, a_______________ ________, described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority. -------------------------------- 109 EXHIBIT A --------- [FORM OF CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF SECURITIES] CERTIFICATE FOR EXCHANGE OR TRANSFER Re: 5-3/4% Convertible Subordinated Debentures due 2004 This Certificate relates to $_________ principal amount of Securities held in *____________ book-entry or *____________ definitive form by _________ (the "Transferor"). The Transferor*: - has requested the Trustee by written order to deliver in exchange for its beneficial interest in a Global Security held by the Depositary a Security or Securities in definitive, registered form of authorized denominations and an aggregate principal amount equal to its beneficial interest in such Global Security (or the portion thereof indicated above); or - has requested the Trustee by written order to deliver in exchange for its Security or Securities a beneficial interest in a Global Security held by the Depositary in a principal amount equal to the aggregate principal amount of such Security or Securities; or - has requested the Trustee by written order to exchange or register the transfer of a Security or Securities. In connection with such request and in respect of each such security, the Transferor does hereby certify to the Company and the Trustee that Transferor is familiar with the Indenture relating to the above captioned Debentures and, as provided in Section 305 of such Indenture, the transfer of this Security does not require registration under the Securities Act (as defined below) because*: - Such Security is being acquired for the Transferor's own account, without transfer (in satisfaction of Section 305(b)(ii)(A) or Section 305(f)(i)(A) of the Indenture). - Such Security is being transferred to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act of 1933, as amended (the "Securities Act")) in reliance on Rule 144A or pursuant to an exemption from registration in accordance with Regulation S under the Securities Act (in satisfaction of Section 305(b)(ii)(B), Section 305(c)(i), Section 305(d)(i), Section 305(f)(i)(B), Section 305(g)(iii) or Section 305(h)(iii) of the Indenture). An opinion of counsel to the effect that such transfer does not require registration under the Securities Act accompanies this Certificate (in satisfaction of Section 305(b)(ii)(B), Section 305(c)(i), Section 305(d)(i), Section 305(f)(i)(B), Section 305(g)(iii) or Section 305(h)(iii) of the Indenture). - -------------------------- * Check applicable box. 110 - Such Security is being transferred in accordance with Rule 144 under the Securities Act, or pursuant to an effective registration statement under the Securities Act (in satisfaction of Section 305(b)(ii)(B), Section 305(f)(i)(B) or Section 305(k)(ii) of the Indenture). If such Security is being transferred in accordance with Rule 144 under the Securities Act, an opinion of counsel to the effect that such transfer does not require registration under the Securities Act accompanies this Certificate (in satisfaction of Section 305(b)(ii)(B), Section 305(f)(i)(B) or Section 305(k)(ii) of the Indenture). - Such Security is being transferred in reliance on and in compliance with an exemption from the registration requirements of the Securities Act, other than Rule 144A, 144 or Regulation S under the Securities Act. An opinion of counsel to the effect that such transfer does not require registration under the Securities Act accompanies this Certificate (in satisfaction of Section 305(b)(ii)(C) or Section 305(f)(i)(C) of the Indenture). You are entitled to rely upon this certificate and you are irrevocably authorized to produce this certificate or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby. _________________________________ [INSERT NAME OF TRANSFEROR] By: _____________________________ Date: ________________ EX-4.12 4 EXHIBIT 4.12 1 Exhibit 4.12 ================================================================================ REGISTRATION RIGHTS AGREEMENT Dated as of August 13, 1997 relating to up to $115,000,000 in Aggregate Principal Amount of 5-3/4% Convertible Senior Subordinated Debentures due 2004 by and between NCS HealthCare, Inc. and Smith Barney Inc., William Blair & Company L.L.C., Montgomery Securities and McDonald & Company Securities, Inc. as Initial Purchasers ================================================================================ 2 This Registration Rights Agreement (the "Agreement") is made and entered into as of August 13, 1997, by and between NCS HealthCare, Inc., a Delaware corporation (the "Company") and Smith Barney Inc., William Blair & Company L.L.C., Montgomery Securities and McDonald & Company Securities, Inc. (the "Initial Purchasers"), who will purchase up to $115,000,000 in aggregate principal amount of 5-3/4% Convertible Subordinated Debentures due 2004 (the "Debentures") of the Company (including up to an additional $15,000,000 aggregate principal that may be purchased by the Initial Purchasers pursuant to their over-allotment option) pursuant to the Purchase Agreement dated August 7, 1997 (the "Purchase Agreement"), between the Company and the Initial Purchasers. In order to induce the Initial Purchasers to enter into the Purchase Agreement, the Company has agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the obligations of the Initial Purchasers set forth in the Purchase Agreement. All defined terms used but not defined herein shall have the meanings ascribed to them in the Indenture (as defined herein). The parties hereby agree as follows: SECTION 1. DEFINITIONS As used in this Agreement, the following capitalized terms shall have the following meanings: Act: The Securities Act of 1933, as amended. Closing Date: The date on which all the Debentures are first sold by the Company to the Initial Purchasers pursuant to the Purchase Agreement. Commission: The Securities and Exchange Commission. Common Stock: The Class A Common Stock, par value $.O1 per share, of the Company. Damages Payment Date: With respect to the Debentures or the Common Stock, as applicable, each Interest Payment Date as defined in the Indenture. Effectiveness Target Dale: As defined in Section 4. Exchange Act: The Securities Exchange Act of 1934, as amended. Holders: As defined in Section 2(b) hereof. Indenture: The Indenture, to be dated as of August 13, 1997, among the Company and National City Bank, as trustee (the "Trustee"), pursuant to which the Debentures are to be issued, as such Indenture is amended or supplemented from time to time in accordance with the terms thereof. Interest Payment Date: As defined in the Indenture. NASD: National Association of Securities Dealers, Inc. Person: An individual, partnership, corporation, trust or unincorporated organization, or a government or agency or political subdivision thereof. Preliminary Prospectus: As defined in Section 3(g). Prospectus: The prospectus included in the Shelf Registration Statement, as amended or supplemented by any Prospectus Supplement with respect to the terms of the offering of any portion of the Transfer Restricted Securities (as defined herein) covered by the Shelf Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments, and all material which may be incorporated by reference into such prospectus. 1 3 Prospectus Supplement: As defined in Section 5(b). Record Holder: (i) With respect to any Damages Payment Date relating to the Debentures, each Person who is registered on the books of the Registrar as the holder of Debentures on the record date with respect to the Interest Payment Date on which such Damages Payment Date shall occur and (ii) with respect to any Damages Payment Date relating to the Common Stock, each Person who is a holder of record of such Common Stock fifteen days prior to the Damages Payment Date. Registration Expenses: As defined in Section 6(a). Shelf Registration Statement: As defined in Section 3(a) hereof. TIA: The Trust Indenture Act of 1939, as amended (15 U.S.C. Section 77aaa-77bbbb) as in effect on the date of the Indenture. Transfer Restricted Securities: Each Debenture and share of Common Stock of the Company issuable upon conversion of a Debenture, until each such Debenture or share (i) has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement covering it, (ii) is distributed to the public pursuant to Rule 144 or (iii) may be sold or transferred pursuant to Rule 144(k) (or any similar provisions then in force) under the Securities Act or otherwise. "Transfer Restricted Securities" shall be deemed to include the guarantees of the Company's obligations under the Indenture and the Debentures by certain subsidiaries of the Company pursuant to that certain Guarantee Agreement dated as of August 13, 1997. Underwriter: Any underwriter, placement agent, selling broker. dealer manager, qualified independent underwriter or similar securities industry professional. Underwritten Registration or Underwritten Offering: An offering in which securities of the Company are sold to an Underwriter or with the assistance of such Underwriter for reoffering to the public on a firm commitment or best efforts basis. SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT (a) Transfer Restricted Securities. The securities entitled to the benefits of this Agreement are the Transfer Restricted Securities. (b) Holders of Transfer Restricted Securities. A Person is deemed to be a holder of Transfer Restricted Securities (each, a "Holder") whenever such Person owns Transfer Restricted Securities. SECTION 3. SHELF REGISTRATION (a) Subject to the provisions of Section 5 hereof, the Company shall cause to be filed with the Commission on or prior to 30 days after the Closing Date, a shelf registration statement pursuant to Rule 415 under the Act (as may then be amended) (the "Shelf Registration Statement") on Form S-i or Form S-3, if the use of such form is then available and as determined by the Company, to cover resales of Transfer Restricted Securities by the Holders thereof who satisfy certain conditions relating to the provision of information in connection with the Shelf Registration Statement. In order for their Transfer Restricted Securities to be included in the Shelf Registration Statement, the Holders of such Transfer Restricted Securities shall have provided the representations required pursuant to Section 3(g) hereof. The Company shall use its reasonable best efforts to cause such Shelf Registration Statement to be declared effective by the Commission on or prior to 90 days after the Closing Date. The Company shall use its reasonable best efforts to keep such Shelf Registration Statement continuously effective for a period ending two years from the Closing Date or such shorter period that will terminate when each of the Transfer Restricted Securities covered by the Shelf Registration Statement shall cease to be a Transfer Restricted 2 4 Security. The Company further agrees to use its reasonable best efforts to prevent the happening of any event that would cause the Shelf Registration Statement to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or to be not effective and usable for resale of the Transfer Restricted Securities during the period that such Shelf Registration Statement is required to be effective and usable. Upon the occurrence of any event that would cause the Shelf Registration Statement (i) to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) to be not effective and usable for resale of Transfer Restricted Securities during the period that such Shelf Registration Statement is required to be effective and usable, the Company shall as promptly as practicable file an amendment to the Shelf Registration Statement, in the case of clause (i), correcting any such misstatement or omission, and in the case of either clause (i) or (ii), use its best efforts to cause such amendment to be declared effective and such Shelf Registration Statement to become usable as soon as practicable thereafter. Notwithstanding anything to the contrary in this Section 3, subject to compliance with Sections 4 and 5(0), if applicable, the Company may prohibit offers and sales of Transfer Restricted Securities pursuant to the Shelf Registration Statement at any time if (A) (i) it is in possession of material non-public information, (ii) the Board of Directors of the Company determines (based on advice of counsel) that such prohibition is necessary in order to avoid a requirement to disclose such material non-public information and (iii) the Board of Directors of the Company determines in good faith that disclosure of such material non-public information would not be in the best interests of the Company and its shareholders or (B) the Company has made a public announcement relating to an acquisition or business combination transaction including the Company and/or one or more of its subsidiaries (i) that is material to the Company and its subsidiaries taken as a whole and (ii) the Board of Directors of the Company determines in good faith that offers and sales of Transfer Restricted Securities pursuant to the Shelf Registration Statement prior to the consummation of such transaction (or such earlier date as the Board of Directors shall determine) is not in the best interests of the Company and its shareholders (the period during which any such prohibition of offers and sales of Transfer Restricted Securities pursuant to the Shelf Registration Statement is in effect pursuant to clause (A) or (B) of this subparagraph (a) is referred to herein as a "Suspension Period"). A Suspension Period shall commence on and include the date on which the Company provides written notice to Holders of Transfer Restricted Securities covered by the Shelf Registration Statement that offers and sales of Transfer Restricted Securities cannot be made thereunder in accordance with this Section 3 and shall end on the date on which each Holder of Transfer Restricted Securities covered by the Shelf Registration Statement either receives copies of a Prospectus Supplement contemplated by Section 5(0) or is advised in writing by the Company that offers and sales of Transfer Restricted Securities pursuant to the Shelf Registration Statement and use of the Prospectus may be resumed. (b) None of the Company nor any of its security holders (other than the Holders of Transfer Restricted Securities in such capacity) shall have the right to include any of the Company's securities in the Shelf Registration Statement. None of the holders of Transfer Restricted Securities shall have the right to include any Transfer Restricted Securities in any other Registration Statement filed by the Company in connection with any sale of securities by the Company for its own account or on behalf of any other holders of the Company's securities. (c) If the Holders of a majority of the outstanding Transfer Restricted Securities so elect (with holders of Common Stock constituting Transfer Restricted Securities being deemed to be Holders of the aggregate principal amount of Debentures converted into such Common Stock for purposes of such calculation), an offering of Transfer Restricted Securities pursuant to the Shelf Registration Statement may be effected in the form of an Underwritten Offering. The Holders of the Transfer Restricted Securities to be registered shall pay all underwriting discounts and commissions of such Underwriters. (d) If any of the Transfer Restricted Securities covered by the Shelf Registration Statement are to be sold in an Underwritten Offering, the Underwriter(s) that will administer the offering will be selected by the Holders of a majority of the outstanding Transfer Restricted Securities (with holders of Common Stock constituting Transfer Restricted Securities being deemed to be Holders of the aggregate 3 5 principal amount of Debentures converted into such Common Stock for purposes of such calculation); provided, however, that such Underwriter(s) shall be reasonably satisfactory to the Company. (e) Each Holder whose Transfer Restricted Securities are covered by a Shelf Registration Statement filed pursuant to this Section 3 agrees, upon the request of the Underwriter(s) in any Underwritten Offering, not to effect any sale or distribution of securities of the Company of the same class as the securities included in such Shelf Registration Statement, for a period of up to 90 days beginning on the date any such Underwritten Offering made pursuant to such Shelf Registration Statement commences, to the extent timely notified in writing by such Underwriter(s). (f) The Company agrees not to effect any public or private offer, sale or distribution of Securities of the same quality and nature as the Transfer Restricted Securities to be registered in an Underwritten Offering during the 90-day period beginning on the date any such Underwritten Offering made pursuant to the Shelf Registration Statement commences, to the extent timely notified in writing by the Underwriter(s) (except as part of such registration, if permitted, or pursuant to registrations on Forms SA or S-8 or any successor form to such Forms), unless the Underwriter(s) shall consent in writing to a shorter period of time. (g) No Holder of Transfer Restricted Securities may include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless such Holder furnishes to the Company in writing, within 10 business days after receipt of a request therefor, such information as the Company may reasonably request for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus (a "Preliminary Prospectus") included therein. SECTION 4. LIQUIDATED DAMAGES (a) If (i) the Shelf Registration Statement is not filed with the Commission on or prior to 30 days after the Closing Date, (ii) the Shelf Registration Statement has not been declared effective by the Commission within 90 days after the Closing Date (the "Effectiveness Target Date"), or (iii) the Shelf Registration Statement is filed and declared effective but shall thereafter cease to be effective (without being succeeded immediately by an additional registration statement filed and declared effective) or useable for resale for a period of time (including any Suspension Period) which shall exceed 60 days in the aggregate in any 12-month period during the period beginning on the Closing Date and ending on or prior to the second anniversary of the Closing Date (each such event referred to in clauses (i) through (iii), a "Registration Default"), the Company will pay liquidated damages to each Holder of Transfer Restricted Securities who has complied with such Holder's obligations under this Agreement. The amount of liquidated damages payable during any period during which a Registration Default shall have occurred and be continuing is that amount which is equal to one-quarter of one percent (25 basis points) per annum per $1,000 principal amount of Debentures or $2.50 per annum per 30.581 shares of Common Stock (subject to adjustment in the event of stock splits, stock recombinations, stock dividends and the like) constituting Transfer Restricted Securities for the first 90-days during which a Registration Default has occurred and is continuing and 50 basis points per annum per $1,000 principal amount of Debentures or $5.00 per annum per 30.581 shares (subject to adjustment as set forth above) of Common Stock constituting Transfer Restricted Securities for all additional days during which a Registration Default has occurred and is continuing. The Company shall notify the Trustee and the Initial Purchasers within three business days after each and every date on which a Registration Default occurs. All accrued liquidated damages shall be paid to Record Holders by wire transfer of immediately available funds or by federal funds check by the Company on each Damages Payment Date. Following the cure of all Registration Defaults, liquidated damages will cease to accrue with respect to such Registration Default. All of the Company's obligations in respect of the payment of liquidated damages set forth in the preceding paragraph which are outstanding with respect to any Transfer Restricted Security at the time such security ceases to be a Transfer Restricted Security shall survive until such time as all such liquidated damages with respect to such security shall have been paid in full. 4 6 The parties hereto agree that the liquidated damages provided in this Section 4 constitute a reasonable estimate of the damages that will be incurred by Holders of Transfer Restricted Securities by reason of the failure of the Shelf Registration Statement to be filed, declared effective or to remain effective, as the case may be. SECTION 5. REGISTRATION PROCEDURES In connection with the Shelf Registration Statement, the Company will use its best efforts to effect such registration to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution or disposition thereof, and pursuant thereto the Company will as expeditiously as possible after the Closing Date: (a) on or prior to the date 30 days after the Closing Date, prepare and file with the Commission a Shelf Registration Statement relating to the registration on Form S-I or Form S-3, if the use of such form is then available and as determined by the Company, for the sale of the Transfer Restricted Securities in accordance with the intended method or methods of distribution thereof and shall include all financial statements required to be included or incorporated by reference therein; cooperate and assist in any filings required to be made with the NASD and use its reasonable best efforts to cause such Shelf Registration Statement to become effective and approved by such governmental agencies or authorities as may be necessary to enable the selling Holders to consummate the disposition of such Transfer Restricted Securities; provided, however, that before filing a Shelf Registration Statement or any Prospectus, or any amendments or supplements thereto, the Company will furnish to the Initial Purchasers, the Holders and the Underwriter(s), if any, copies of all such documents proposed to be filed (except that the Company shall not be required to furnish any exhibits to such documents, including those incorporated by reference, unless so requested by an Initial Purchaser, Holder or Underwriter in writing), and the Company will not file any Shelf Registration Statement or amendment thereto or any Prospectus or any supplement thereto to which (i) the Initial Purchasers or the Underwriter(s), if any, shall reasonably object or (ii) if there are no Underwriters, the Initial Purchasers or the Holders of a majority of the outstanding Transfer Restricted Securities shall reasonably object (with holders of Common Stock constituting Transfer Restricted Securities being deemed to be Holders of the aggregate principal amount of Debentures converted into such Common Stock for purposes of such calculation), in each such case within five business days after the receipt thereof. An Initial Purchaser, Holder or Underwriter, if any, shall be deemed to have reasonably objected to such filing if the Shelf Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading which misstatement or omission is specifically identified to the Company in writing within such five business days; (b) prepare and file with the Commission such amendments and post-effective amendments to the Shelf Registration Statement as may be necessary to keep the Shelf Registration Statement effective for the applicable period set forth in Section 3(a) hereof; cause the Prospectus to be supplemented by any required supplement thereto (a "Prospectus Supplement"), and as so supplemented to be filed pursuant to Rule 424 under the Act, and to comply fully with the applicable provisions of Rules 424 and 430A under the Act in a timely manner; and comply with the provisions of the Act with respect to the disposition of all securities covered by such Shelf Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Shelf Registration Statement, Prospectus or Prospectus Supplement; (c) if requested by the Holders of Transfer Restricted Securities, or if the Transfer Restricted Securities are being sold in an Underwritten Offering, the Underwriter(s) of such Underwritten Offering, promptly incorporate m the Prospectus, any Prospectus Supplement or post-effective amendment to the Shelf Registration Statement such information as the Underwriters and/or the Holders of Transfer Restricted Securities being sold agree should be included therein relating to the plan of distribution of the Transfer Restricted Securities, including, without limitation, information with respect to the principal amount of Debentures and/or the number of shares of Common Stock being sold to such Underwriter(s), the purchase price being paid therefor and any other terms with respect to the offering of the Transfer Restricted Securities to be sold in such offering; and make all required filings of such Prospectus, Prospectus 5 7 Supplement or post-effective amendment as soon as practicable after die Company is notified of the matters to be incorporated in such Prospectus, Prospectus Supplement or post-effective amendment; (d) advise the Initial Purchasers, the Underwriter(s), if any, and selling Holders promptly and, if requested by such Persons, to confirm such advice in writing, (i) when the Prospectus or any Prospectus Supplement or post-effective amendment to the Shelf Registration Statement has been filed, and, with respect to the Shelf Registration Statement or any post-effective amendment thereto, when the same has become effective, (ii) of any request by the Commission for amendments to the Shelf Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Shelf Registration Statement under the Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, (iv) if at any time the representations and warranties of the Company contemplated by paragraph (l)(i) below cease to be true and correct, and (v) of the existence of any fact and the happening of any event that makes any statement of a material fact made in the Shelf Registration Statement, the Prospectus, any amendment or supplement thereto, or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in the Shelf Registration Statement or the Prospectus in order to make the statements therein not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Shelf Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or Blue Sky laws, the Company shall use their reasonable best efforts to obtain the withdrawal or lifting of such order at the earliest possible time; (e) furnish to each Initial Purchaser, each Holder and each of the Underwriter(s), if any, without charge, at least one copy of the Shelf Registration Statement, as first filed with the Commission, and of each amendment thereto (excluding documents incorporated by reference therein and exhibits thereto unless requested by such Initial Purchaser, Holder or Underwriter); (f) deliver to each Initial Purchaser, each selling Holder and each of the Underwriter(s), if any, without charge, as many copies of any Preliminary Prospectus and the Prospectus and any amendments or supplements thereto as such Persons may reasonably request; the Company consents to the use of any Preliminary Prospectus and the Prospectus and any amendments or supplements thereto by each of the selling Holders and each of the Underwriter(s), if any, in connection with the public offering and the sale of the Transfer Restricted Securities covered by any Preliminary Prospectus and the Prospectus or any amendments or supplements thereto; (g) prior to any public offering of Transfer Restricted Securities, cooperate with the selling Holders, the Underwriter(s), if any, and their respective counsel in connection with the registration and qualification of the Transfer Restricted Securities under the securities or Blue Sky laws of such jurisdictions as the selling Holders or Underwriter(s) may request and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdiction of the Transfer Restricted Securities covered by the Shelf Registration Statement; provided, however, that the Company shall not be required (i) to register or qualify as a foreign corporation where it is not now so qualified or (ii) to take any action that would subject it to the service of process in suits, other than as to matters and transactions relating to the Shelf Registration Statement, in any jurisdiction where it is not now so subject; (h) cooperate with the selling Holders and the Underwriter(s), if any, to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and enable such Transfer Restricted Securities to be in such denominations and registered in such names as the Holders or the Underwriter(s), if any, may request at least two business days prior to any sale of Transfer Restricted Securities; (i) use its best efforts to cause the Transfer Restricted Securities covered by the Shelf Registration Statement to be registered with or approved by such other United States federal or state governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the 6 8 Underwriter(s), if any, to consummate the disposition of such Transfer Restricted Securities, subject to the proviso contained in clause (g) above; (j) if any fact or event contemplated by clause (d)(v) above shall exist or have occurred, prepare a post-effective amendment or supplement to the Shelf Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading; (k) provide a CUSIP number for all Transfer Restricted Securities not later than the effective date of the Shelf Registration Statement and provide the Trustee under the Indenture and/or the transfer agent for the Common Stock with certificates for the Transfer Restricted Securities which are in a form eligible for deposit with the Depository Trust Company; (l) enter into such agreements (including an underwriting agreement) and take all such other actions in connection therewith as may reasonably be required in order to expedite or facilitate the disposition of the Transfer Restricted Securities pursuant to the Shelf Registration Agreement, m connection with an Underwritten Registration, and (i) make such representations and warranties to the Holders and the Underwriter(s), in form, substance and scope as they may reasonably request and as are customarily made by issuers to Underwriters in primary Underwritten Offerings and covering matters including, but not limited to, those set forth in the Purchase Agreement; (ii) obtain opinions of counsel for the Company and updates thereof in customary form and covering matters reasonably requested by the Underwriter(s) of the type customarily covered in legal opinions to Underwriters in connection with primary Underwritten Offerings addressed to each selling Holder and the Underwriter requesting the same and covering the matters as may be reasonably requested by such Holders and Underwriters; (iii) obtain "cold comfort" letters and updates thereof from the Company's independent certified public accountants addressed to the selling Holders of Transfer Restricted Securities and the Underwriters requesting the same, such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters to Underwriters in connection with primary Underwritten Offerings; (iv) set forth in full or incorporate by reference in the underwriting agreement the indemnification provisions and procedures of Section 7 hereof with respect to all parties to be indemnified pursuant to said Section; and (v) deliver such documents and certificates as may be reasonably requested by the Holders of the Transfer Restricted Securities being sold or the Underwriter(s) of such Underwritten Offering to evidence compliance with clause (i) above and with any customary conditions contained in the underwriting agreement entered into by the Company pursuant to this clause (1). The above shall be done at or prior to each closing under such underwriting agreement, as and to the extent required thereunder; (m) make available at reasonable times and in a reasonable manner for inspection by a representative of the Holders of the Transfer Restricted Securities, any Underwriter participating in any disposition pursuant to such Shelf Registration Statement, and any attorney or accountant retained by such selling Holders or any of the Underwriters, all financial and other records, pertinent corporate documents and properties of the Company and cause the Company's officers, directors and employees to supply all information reasonably requested by any such Holder, Underwriter, attorney or accountant in connection with such Shelf Registration Statement prior to its effectiveness, provided, however, that such representatives, attorneys or accountants shall agree to keep confidential (which agreement shall be confirmed in writing in advance to the Company if the Company shall so request) all information, records or documents made available to such persons which are not otherwise available to the general public unless disclosure of such records. information or documents is required by court or administrative order (of which the Company shall have been given prior notice and an opportunity to defend) after the exhaustion of all appeals therefrom, and to use such information obtained pursuant to this provision only in connection with the transaction for which such information was obtained, and not for any other purpose; (n) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its security holders, as soon as practicable, a consolidated earnings statement, which consolidated earnings statement shall satisfy the provisions of Section 7 9 11(a) of the Act, for the twelve-month period (i) commencing at the end of any fiscal quarter in which Transfer Restricted Securities are sold to Underwriters in a firm commitment or best efforts Underwritten Offering or (ii) if not sold to Underwriters in such an offering, beginning with the first month of the Company's first fiscal quarter commencing after the effective date of the Shelf Registration Statement; (o) cause the Indenture and, if necessary, the Guarantee Agreement, to be qualified under the TIA, and, in connection therewith, cooperate with the Trustee and the Holders to effect such changes to the Indenture and, if necessary, the Guarantee Agreement, as may be required for such Indenture and, if necessary, the Guarantee Agreement to be so qualified in accordance with the terms of the TIA; and execute and use its best efforts to cause the Trustee to execute, all documents as may be required to effect such changes and all other forms and documents required to be filed with the Commission to enable such Indenture and, if necessary, the Guarantee Agreement, to be so qualified in a timely manner; (p) make every reasonable effort to obtain the withdrawal of any order suspending the effectiveness of the Shelf Registration Statement at the earliest possible moment; (q) cause all Transfer Restricted Securities covered by the Shelf Registration Statement to be listed on each securities exchange or quotation system on which similar securities issued by the Company are then listed if requested by the Holders of a majority of the outstanding Transfer Restricted Securities (with holders of Common Stock constituting Transfer Restricted Securities being deemed to be Holders of the aggregate principal amount of Debentures converted into such Common Stock for purposes of such calculation) or the Underwriters, if any; and cause the Debentures covered by the Shelf Registration Statement to be rated with the appropriate rating agencies, if so requested by the Holders of a majority in aggregate principal amount of such Debentures or the Underwriters; and (r) cooperate and assist in any filings required to be made with the NASD and in the performance of any due diligence investigation by any Underwriter (including any "qualified independent Underwriter" that is required to be retained in accordance with the rules and regulations of the NASD). Each Holder as to which any Shelf Registration Statement is being effected agrees to furnish promptly to the Company all information required to be disclosed in order to make the information previously furnished to the Company by such Holder not materially misleading or necessary to cause such Shelf Registration Statement not to omit a material fact with respect to such Holder necessary in order to make the statements therein not misleading. Each Holder agrees that the information furnished by such Holder specifically for inclusion in any Shelf Registration Statement will not contain any misstatement of material fact or omit to state a material fact necessary in order to make such information not misleading. Each Holder agrees by acquisition of such Transfer Restricted Securities that, upon receipt of any notice from the Company of the existence of any fact of the kind described in Section 5(d)(v) hereof, such Holder will forthwith discontinue disposition of Transfer Restricted Securities until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 5(j) hereof, or until it is advised in writing (the "Advice") by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings with respect to the Prospectus. If so directed by the Company, each Holder will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Transfer Restricted Securities current at the time of receipt of such notice. In the event Company shall give any such notice, the time period regarding the effectiveness of the Shelf Registration Statement set forth in Section 3(a) hereof shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 5(d)(v) hereof to and including the date when each selling Holder covered by such Shelf Registration Statement shall have received the copies of the supplemented or amended Prospectus contemplated by Section 5(j) hereof or shall have received the Advice. 8 10 SECTION 6. REGISTRATION EXPENSES (a) All expenses incident to the Company's performance of or compliance with this Agreement (the "Registration Expenses") will be borne by the Company, regardless of whether a Shelf Registration Statement becomes effective, including without limitation: (i) all registration and filing fees and expenses (including any filings made with the NASD); (ii) fees and expenses of compliance with federal securities or state blue sky laws; (iii) expenses of printing (including, without limitation, expenses of printing or engraving certificates for the Transfer Restricted Securities in a form eligible for deposit with Depository Trust Company and of printing the Prospectus and any Preliminary Prospectus), messenger and delivery services and telephone; (iv) reasonable fees and disbursements of counsel for the Company and for the Holders of the Transfer Restricted Securities (subject to the provisions of Section 6(0) hereof); (v) fees and disbursements of all independent certified public accountants of the Company (including the expenses of any special audit and "cold comfort" letters required by or incidental to the preparation and filing of a Shelf Registration Statement and Prospectus and the disposition of Transfer Restricted Securities); (vi) fees and expenses associated with any NASD filing required to be made in connection with the Shelf Registration Statement, including, if applicable, the fees and expenses of any "qualified independent Underwriter" (and its counsel) that is required to be retained in accordance with the rules and regulations of the NASD; and (vii) fees and expenses of listing the Transfer Restricted Securities on any securities exchange or quotation system in accordance with Section 5(q) hereof. The Company will, in any event, bear its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit, rating agency fees and the fees and expenses of any Person, including special experts, retained by the Company. The Holders of Transfer Restricted Securities shall bear the expense of any broker's commission or Underwriter's discount or commission. (b) In connection with the Shelf Registration Statement, the Company will reimburse the Holders of Transfer Restricted Securities being registered pursuant to such Shelf Registration Statement for the reasonable fees and disbursements of not more than one counsel chosen by the Holders of a majority of the outstanding Transfer Restricted Securities (with holders of Common Stock constituting Transfer Restricted Securities being deemed to be Holders of the aggregate principal amount of Debentures converted into such Common Stock for purposes of such calculation). Notwithstanding the provisions of this Section 6(0), each Holder of Transfer Restricted Securities shall pay all Registration Expenses to the extent required by applicable law. SECTION 7. INDEMNIFICATION (a) The Company agrees to indemnify and hold harmless (i) each of the Initial Purchasers, (ii) each Holder, (iii) each person, if any, who controls (within the meaning of Section 15 of the Act or Section 20 of the Exchange Act) any of the Initial Purchasers or any Holder (any of the persons referred to in this clause (iii) being hereinafter referred to as a "controlling person") and (iv) the respective officers, directors, partners, employees, representatives and agents of any of the Initial Purchasers or any Holder or any controlling person (any person referred to in clause (i), (ii), (iii) or (iv) may hereinafter be 9 11 referred to as a "Non-Company Indemnitee"), to the fullest extent lawful, from and against any and all losses, claims, damages, liabilities and judgments caused by any untrue statement or alleged untrue statement of a material fact contained in the Shelf Registration Statement, Prospectus or Preliminary Prospectus (or any amendments or supplements thereto), including any document incorporated by reference therein, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except, with respect to any Non- Company Indemnitee, insofar as such losses, claims, damages, liabilities or judgments (I) are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information furnished in writing to the Company by such Non-Company Indemnitee expressly for use therein or (2) with respect to any Preliminary Prospectus, result from the fact that such Non-Company Indemnity sold Transfer Restricted Securities to a person to whom there was not sent or given, at or prior to the written confirmation of such sale, a copy of the final Prospectus, as amended or supplemented, if the Company shall have previously furnished copies thereof to such Non-Company Indemnitee in accordance with this Agreement and the final Prospectus, as amended or supplemented, would have corrected such untrue statement or omission. (b) In case any action shall be brought against any Non-Company Indemnitee, based upon the Shelf Registration Statement, Prospectus, or Preliminary Prospectus (or any amendments or supplements thereto), and with respect to which indemnity may be sought against the Company, such Non-Company Indemnitee shall promptly notify the Company in writing and the Company shall assume the defense thereof, including the employment of counsel and payment of all fees and expenses; provided, however, that the omission so to notify the Company shall not relieve the Company from any liability that it may have to any Non-Company Indemnitee (except to the extent that the Company is materially prejudiced or otherwise forfeits substantive rights or defenses by reason of such failure). Such Non-Company Indemnitee shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of counsel shall be paid by such Non-Company Indemnitee, unless (i) the employment of such counsel shall have been specifically authorized in writing by the Company, (ii) the Company shall have failed to assume the defense and employ counsel or (iii) the named parties to any such action (including any impleaded parties) include both such Non-Company Indemnitee and the Company and it would be inappropriate for the same counsel to represent such Non-Company Indemnitee and the Company (in which case the Company shall not have the right to assume the defense of such action on behalf of such Non-Company Indemnitee, it being understood, however, that the Company shall not, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for the Non-Company Indemnitees, which firm shall be designated in writing by the Non-Company Indemnitees and whose fees and expenses reasonably incurred shall be reimbursed as they are incurred). The Company shall not be liable for any settlement of any such action effected without the written consent of the Company, but if settled with the written consent of the Company, the Company agrees to indemnify and hold harmless any Non-Company Indemnitee from and against any amounts payable pursuant to such written consent m connection with such settlement. Notwithstanding the immediately preceding sentence, if in any case where the fees and expenses of counsel are at the expense of the Company and a Non-Company Indemnitee shall have requested the Company to reimburse such Non-Company Indemnitee for such fees and expenses of counsel as incurred, the Company agrees that it shall be liable for any settlement of any action effected without its written consent if (i) each settlement is entered into more than 30 business days after the receipt by the Company of the aforesaid request and (ii) the Company shall have failed to reimburse such Non-Company Indemnitee in accordance with such request for reimbursement prior to the date of such settlement. The Company shall not, without the prior written consent of such Non-Company Indemnitee, effect any settlement of any pending or threatened proceeding in respect of which such Non-Company Indemnitee is or could have been a party and indemnity could have been sought hereunder by such Non-Company Indemnitee, unless such settlement includes an unconditional release of such Non-Company Indemnitee from all liability on claims that are the subject matter of such proceeding. (c) Each Holder of Transfer Restricted Securities agrees to indemnify and hold harmless (i) the Company, (ii) each of the Initial Purchasers, (iii) each other Holder, (iv) any person controlling (within the meaning of Section 15 of the Act or Section 20 of the Exchange Act) the Company, any of the Initial Purchasers and each other Holder and (v) the respective officers, directors, partners, 10 12 employees, representatives and agents of each of the parties referred to in clauses (i), (ii), (iii) and (iv), to the same extent as the foregoing indemnity from the Company to each of the Non-Company Indemnitees, but only with respect to information relating to such Holder that was furnished in writing by such Holder expressly for use in the Shelf Registration Statement (or any amendment or supplement thereto). In no event shall the liability of any selling Holder hereunder be greater in amount than the dollar amount of the proceeds received by such Holder upon the sales of the Transfer Restricted Securities giving rise to such indemnification obligation. (d) If the indemnification provided for in this Section 7 is unavailable to an indemnified party in respect of any losses, claims, damages, liabilities or judgments referred to herein, then each indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities and judgments in such proportion as is appropriate to reflect the relative fault of the indemnifying party, on the one hand, and the indemnified party, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or judgments, as well as any other relevant equitable considerations. The relative fault of the indemnifying party, on the one hand, and the indemnified party, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party, on the one hand, or the indemnified party, on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, each of the Initial Purchasers and each Holder of Transfer Restricted Securities agree that it would not be just and equitable if contribution pursuant to this Section 7(d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The losses, claims, damages, liabilities or judgments of an indemnified party referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim prior to the indemnifying party's assumption of the defense thereof or subsequent thereto to the extent permitted by the second sentence of Section 7(b) hereof. Notwithstanding the provisions of this Section 7, none of the Holders shall be required to contribute, in the aggregate, any amount m excess of the amount by which the total amount received by such Holder with respect to the sale of Transfer Restricted Securities exceeds the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(1) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Holders' obligations to contribute pursuant to this Section 7(d) are several in proportion to the respective principal amount of Notes held by each of the Holders hereunder and not joint. SECTION 8. RULE 144A The Company hereby agrees with each Holder, for so long as any of the Debentures or shares of Common Stock that are Transfer Restricted Securities remain outstanding and during any such period in which the Company is not subject to Section 13 or 15(d) of the Exchange Act, to make available to any Initial Purchaser or any beneficial owner of the Debentures or shares of such Common Stock in connection with any sale thereof and any prospective purchaser of such Debentures or Common Stock from such Initial Purchaser or beneficial owner, the information required by Rule 144A(d)(4) under the Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A. 11 13 SECTION 9. PARTICIPATION IN Underwritten REGISTRATIONS No Holder may participate in any Underwritten Offering hereunder unless such Holder (a) agrees to sell such Holder's Transfer Restricted Securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements, (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements and (c) furnishes the Company in writing information in accordance with Section 3(g) and agrees to indemnify and hold harmless the Company, its directors, its officers who sign the Registration Statement and any person controlling the Company within the meaning of Section 15 of the Act or Section 20 of the Exchange Act to the extent contemplated by Section 7(c). SECTION 10. SELECTION OF UNDERWRITERS The Holders of Transfer Restricted Securities covered by the Shelf Registration Statement who desire to do so may sell such Transfer Restricted Securities in an Underwritten Offering. In any such Underwritten Offering, the Underwriter(s) that will administer the offering will be selected by the Holders of the Transfer Restricted Securities included in such offering in the manner specified in Section 3(c); provided, however, that such Underwriters must be reasonably satisfactory to the Company. SECTION 11. MISCELLANEOUS (a) REMEDIES. Each Holder of Transfer Restricted Securities, in addition to being entitled to exercise all rights provided herein, and as provided in the Purchase Agreement and granted by law, including recovery of damages, will be entitled to specific performance of such Holder's rights under this Agreement. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. (b) NO INCONSISTENT AGREEMENTS. The Company will not on or after the date of this Agreement enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders of Transfer Restricted Securities in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders of Transfer Restricted Securities hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's securities under any other agreements. (c) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given unless the Company has obtained the written consent of Holders of a majority of the outstanding Transfer Restricted Securities affected by such amendment, modification, supplement, waiver or departure (with holders of Common Stock constituting Transfer Restricted Securities being deemed to be Holders of the aggregate principal amount of Debentures converted into such Common Stock for purposes of such calculation). Notwithstanding the foregoing, a waiver or consent to departure from the provisions hereof that relates exclusively to the rights of Holders of Transfer Restricted Securities whose securities are being sold pursuant to such Shelf Registration Statement and that does not directly or indirectly affect the rights of other Holders of Transfer Restricted Securities shall be valid only with the written consent of Holders of at least 66-2/3% of the Transfer Restricted Securities being sold, in each case calculated in accordance with the provisions of Section 3(c). (d) NOTICES. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), telex, telecopier, or air courier guaranteeing overnight delivery: (i) if to a Holder of Transfer Restricted Securities, at the address set forth on the records of the Registrar under the Indenture, with a copy to the Registrar; and 12 14 (ii) if to the Company or an Initial Purchaser, initially at its address set forth in the Purchase Agreement and thereafter at such other address, notice of which is given in accordance with the provisions of this Section. All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five business days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and on the next business day, if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee under the Indenture at the address specified in the Indenture. (e) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders of Transfer Restricted Securities; provided, however, that this Agreement shall not inure to the benefit of or be binding upon a successor or assign of a Holder of Transfer Restricted Securities unless and to the extent such successor or assign acquired Transfer Restricted Securities from such Holder; and provided further that nothing herein shall be deemed to permit any assignment, transfer or any disposition of Transfer Restricted Securities in violation of the terms of the Purchase Agreement. If any transferee of any Holder shall acquire Transfer Restricted Securities, in any manner, whether by operation of law or otherwise, such Transfer Restricted Securities shall be held subject to all of the terms of this Agreement and by taking and holding such Transfer Restricted Securities such person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement and such Person shall be entitled to receive the benefits hereof. (f) COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (g) HEADINGS. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAW RULES THEREOF. (i) SEVERABILITY. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (j) ENTIRE AGREEMENT. This Agreement together with the other Operative Documents (as defined in the Purchase Agreement) is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted by the Company with respect to the securities sold pursuant to the Purchase Agreement. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. 13 15 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. NCS HEALTHCARE, INC. By: /s/ Jeffrey R. Steinhilber ____________________________ Name: Jeffrey R. Steinhilber Title: Senior Vice President and Chief Financial Officer SMITH BARNEY INC. WILLIAM BLAIR & COMPANY L.L.C. MONTGOMERY SECURITIES MCDONALD & COMPANY SECURITIES, INC. BY: SMITH BARNEY INC. By: /s/ Ben Lorello ___________________ Name: Ben Lorello Title: Managing Director 14 EX-10.1 5 EXHIBIT 10.1 1 Exhibit 10.1 GUARANTEE AGREEMENT GUARANTEE AGREEMENT, dated as of August 13, 1997, among the entities listed on Annex A attached hereto (collectively, the "Guarantors") and National City Bank (the "Trustee"). WHEREAS NCS HealthCare, Inc. (the "Company") and the Trustee, have entered into an Indenture dated as of August 13, 1997 regarding up to $115,000,000 in aggregate principal amount of 5-3/4% Convertible Subordinated Debentures due 2004 of the Company (the "Securities"); NOW, THEREFORE, in accordance with Article 10 of the Indenture and for value received, each of the undersigned Guarantors jointly and severally guarantee to the Trustee and to the holders of the Securities (the "Holders") the punctual payment of the obligations of the Company under the Indenture, as the direct and primary obligation of the undersigned, waiving all demands and suretyship defenses. Any term used herein and not otherwise defined herein shall have the meaning assigned to such term in the Indenture. ARTICLE I The Guarantees -------------- SECTION 101. UNCONDITIONAL GUARANTEES. (a) For value received, the Guarantors, jointly and severally, hereby fully, unconditionally and absolutely guarantee (the "Guarantees") to the Holders and to the Trustee the complete and punctual payment and performance by the Company of the obligations of the Company under the Indenture (the "Obligations"), and further agree to pay any and all reasonable expenses (including, without limitation, all fees and disbursements of counsel) which may be paid or incurred by the Trustee or the Holders in enforcing their rights under the Guarantees. (b) Failing payment or performance by the Company when due of any Obligation guaranteed pursuant to the Guarantees, for whatever reason, the Guarantors, jointly and severally, will be obligated to pay or perform the same immediately. Each of the Guarantors hereby agrees that its obligations hereunder shall be full, unconditional and absolute, irrespective of the validity or enforceability of the Securities, the Guarantees or the Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder with respect to any provisions hereof or thereof, any release of any other Guarantor, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a Guarantor. Each of the Guarantors hereby agrees that in the event of a default in payment of the principal of, or premium, if any, or interest on the 2 Securities, whether at the stated maturity or by declaration of acceleration, call for redemption or otherwise, legal proceedings may be instituted by the Trustee on behalf of the Holders or, subject to Section 508 of the Indenture, by the Holders, on the terms and conditions set forth in the Indenture, directly against each of the Guarantors to enforce the Guarantees without first proceeding against the Company. (c) The obligations of each Guarantor herein shall be as aforesaid full, unconditional and absolute and shall not be impaired, modified, released or limited by any occurrence or condition whatsoever, including, without limitation, (i) any compromise, settlement, release, waiver, renewal, extension, indulgence or modification of, or any change in, any of the obligations and liabilities of the Company or any Guarantor contained in the Securities or the Indenture, (ii) any impairment, modification, release or limitation of the liability of the Company, any Guarantor or any of their estates in bankruptcy, or any remedy for the enforcement thereof, resulting from the operation of any present or future provision of title 11, U.S. Code or any similar Federal or state law for the relief of debtors, as amended, or other statute or from the decision of any court, (iii) the assertion or exercise by the Company, any Guarantor or the Trustee of any rights or remedies, (iv) the assignment or the purported assignment of any property as security for the Securities, including all or any part of the rights of the Company or any Guarantor under the Indenture, (v) the extension of the time for payment by the Company or any Guarantor of any payments or other sums or any part thereof owing or payable under any of the terms and provisions of the Securities or the Indenture or of the time for performance by the Company or any Guarantor of any other obligations under or arising out of any such terms and provisions or the extension of the renewal of any thereof, (vi) the modification or amendment (whether material or otherwise) of any duty, agreement or obligation of the Company or any Guarantor set forth herein or in the Indenture or (vii) the voluntary or involuntary liquidation, dissolution, sale or other disposition of all or substantially all of the assets, marshalling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization of, or other similar proceeding affecting, the Company or any of the Guarantors or any of their respective assets. (d) The Guarantors each hereby (i) waives diligence, presentment, demand of payment, filing of claims with a court in the event of the merger, insolvency or bankruptcy of the Company or a Guarantor, and all demands whatsoever, (ii) acknowledges that any agreement, instrument or document evidencing the Guarantees may be transferred and that the benefit of its obligations hereunder shall extend to each holder of any agreement, instrument or document evidencing the Guarantees without notice to them and (iii) covenants that its Guarantee will not be discharged except by complete performance of the Guarantees or upon payment, performance and satisfaction in full by the Company of its obligations under the Indenture. Each Guarantor further agrees that if at any time all or any part of any payment theretofore applied by any person to any Guarantee is, or must be, rescinded or returned for any reasons whatsoever, including without limitation, the insolvency, bankruptcy or reorganization of the Company or any Guarantor, such Guarantee, as the case may be, shall, to the extent that such payment is or must be rescinded or returned, be deemed to have continued in existence notwithstanding such application, and the Guarantees shall continue to be effective or be reinstated as though such application had not been made. 2 3 (e) Each Guarantor shall be subrogated to all rights of the Holders and the Trustee against the Company in respect of any amounts paid by such Guarantor pursuant to the provisions of the Indenture, PROVIDED, HOWEVER, that no Guarantor shall be entitled to enforce or to receive any payments arising out of, or based upon, such right of subrogation until all of the Securities and the Guarantees shall have been paid in full or discharged. SECTION 102. LIMITATION OF GUARANTOR'S LIABILITY. Each Guarantor and by its acceptance hereof each Holder confirms that it is the intention of all such parties that the guarantee by such Guarantor pursuant to its Guarantee not constitute a fraudulent transfer or conveyance for purposes of any federal, state or foreign law. To effectuate the foregoing intention, the Holders and each Guarantor hereby irrevocably agree that the obligations of each Guarantor under its Guarantee shall be limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities of such Guarantor and after giving effect to any collections from payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Guarantee or pursuant to Section 103, result in the obligations of such Guarantor under its Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal, state or foreign law. SECTION 103. CONTRIBUTION. In order to provide for just and equitable contribution among the Guarantors, the Guarantors agree, INTER SE that, in the event any payment or distribution is made by any Guarantor (a "Funding Guarantor") under its Guarantee, such Funding Guarantor shall be entitled to a contribution from each other Guarantor in a pro rata amount based on the Adjusted Net Assets (defined below) of each Guarantor (including the Funding Guarantor) for all payments, damages and expenses incurred by the Funding Guarantor in discharging the Company's obligations with respect to the Securities or any other Guarantor's obligations with respect to its Guarantee. For purposes of this Section, Adjusted Net Assets of a Guarantor at any date shall mean the lesser of: (x) the amount by which the fair value of the property of such Guarantor at such date exceeds the total amount of liabilities, including, without limitation, the probable amount of contingent liabilities (after giving effect to all other fixed and contingent liabilities incurred or assumed on such date) of such Guarantor at such date, but excluding liabilities under the Guarantee of such Guarantor, and (y) the amount by which the present fair saleable value of the assets of such Guarantor at such date exceeds the amount that will be required to pay the probable liability of such Guarantor on its debts (after giving effect to all fixed and contingent liabilities incurred or assumed on such date), excluding debt in respect of the Guarantee of such Guarantor, as they become absolute and matured. SECTION 104. ADDITION OF GUARANTORS. For as long as any Guarantees are required to remain in effect pursuant to the terms of the Indenture, promptly but in no event later than 30 days following the acquisition or creation of any Wholly Owned Subsidiary after the date of the Indenture, this Guaranty Agreement shall be amended to add such Subsidiary as a Guarantor. SECTION 105. RELEASE OF GUARANTEE. Notwithstanding anything to 3 4 the contrary contained in this Article 1, in the event that any of the undersigned entities (i) shall no longer be a member of an affiliated group (within the meaning of Section 279(g) of the Internal Revenue Code of 1986, as amended) which includes the Company, or (ii) shall no longer be obligated to guarantee any Obligations under the Indenture for any other reason, such entity shall be released from all liability hereunder and the Guarantee of such entity shall be of no further force or effect. ARTICLE II Subordination of Guarantees --------------------------- SECTION 201. GUARANTEES SUBORDINATE TO SENIOR INDEBTEDNESS. Each Guarantor covenants and agrees, and pursuant to the Indenture each Holder, by his acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereafter set forth in this Article, the payment of the principal of (and premium, if any) and interest on the Securities as guaranteed by each Guarantor pursuant to its Guarantee are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Indebtedness (as hereinafter defined) of such Guarantor. For purposes of this Article, "Senior Indebtedness" with respect to any Guarantor means (a) all secured Indebtedness for Money Borrowed (as hereinafter defined) of such Guarantor under such Guarantor's primary credit facility and any predecessor or successor credit facilities thereto, whether outstanding on the date of execution of this Guarantee Agreement or thereafter created, incurred or assumed, (b) all other secured Indebtedness for Money Borrowed of such Guarantor, whether outstanding on the date of execution of this Guarantee Agreement or thereafter created, incurred or assumed, except any indebtedness that by the terms of the instrument or instruments by which such indebtedness was created or incurred expressly provides that it (i) is junior in right of payment to the Guarantee or (ii) ranks pari passu in right of payment with the Guarantee, and (c) any amendments, renewals, extensions, modifications, refinancings and refundings of any of the foregoing. The term "Indebtedness for Money Borrowed" when used with respect to any Guarantor, for purposes of this Article means (i) any obligation of, or any obligation guaranteed by, such Guarantor for the payment of the purchase price of property or assets evidenced by a note or similar instrument, (ii) any deferred payment obligation of, or any such obligation guaranteed by, such Guarantor for the payment of the purchase price of property or assets evidenced by a note or similar instrument, (iii) any obligation of or any such obligation guaranteed by, such Guarantor for the payment of rent or other amounts under a lease of property or assets which obligation is required to be classified or accounted for as a capitalized lease on the balance sheet of such Guarantor under generally accepted accounting principles, (iv) any obligation of, or any such obligation guaranteed by, such Guarantor for the reimbursement of any obligor of any letter of credit, banker's acceptance or similar credit transaction, (v) any obligation of, or any such obligation which is guaranteed by, such Guarantor under interest rate swaps, caps, collars, options and similar arrangements and (vi) and obligation of such Guarantor under any foreign exchange contract, currency swap agreement, futures contract, currency option contract or other foreign currency hedge. 4 5 ARTICLE III Trust Indenture Act ------------------- SECTION 301. TRUST INDENTURE ACT; APPLICATION. This Guarantee Agreement is subject to the provisions of the Trust Indenture Act that are required to be part of this Guarantee Agreement and shall, to the extent applicable, be governed by such provisions; and if and to the extent that any provision of this Guarantee Agreement limits, qualifies or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control. SECTION 302. LIST OF HOLDERS OF SECURITIES. (a) The Guarantors shall provide or shall cause to be provided to the Trustee (unless the Trustee is otherwise the registrar of the Securities) a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders of the Securities ("List of Holders"), (i) semi-annually, not more than 15 days after each Regular Record Date, as of such Regular Record Date, and (ii) at any other time within 30 days of receipt by the Guarantors of a written request for a List of Holders as of a date no more than 15 days before such List of Holders is given to the Trustee; provided, that the Guarantors shall not be obligated to provide such List of Holders at any time the List of Holders does not differ from the most recent List of Holders given to the Trustee by the Guarantors or the Company. (b) The Trustee shall comply with its obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust Indenture Act. SECTION 303. REPORTS BY THE TRUSTEE. Within 60 days after May 15 of each year, the Trustee shall provide to the Holders of the Securities such reports as are required by Section 313 of the Trust Indenture Act, if any, in the form and in the manner provided by Section 313 of the Trust Indenture Act. The Trustee shall also comply with the requirements of Section 313(d) of the Trust Indenture Act. SECTION 304. PERIODIC REPORTS TO TRUSTEE. The Guarantors shall provide or shall cause to be provided to the Trustee such documents, reports and information as required by Section 314 (if any) and the compliance certificate required by Section 314 of the Trust Indenture Act in the form, in the manner and at the times required by Section 314 of the Trust Indenture Act. Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Guarantors' compliance with any of their covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers' Certificates). SECTION 305. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. The Guarantors shall provide to the Trustee such evidence of compliance with any conditions precedent, if any, provided for in this Guarantee Agreement that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(l) may be given in 5 6 the form of an Officers' Certificate. SECTION 306. EVENTS OF DEFAULT; WAIVER. The Holders of not less than a majority in principal amount of Outstanding Securities may, on behalf of the Holders of all of the Securities, waive any past default hereunder and its consequences. Upon such waiver, any such default shall cease to exist, and any default arising therefrom shall be deemed to have been cured, for every purpose of the Guarantee Agreement, but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. SECTION 307. EVENT OF DEFAULT; NOTICE. The Trustee shall give the Holders notice of any default hereunder known to it as and to the extent provided by the Trust Indenture Act; provided, that, except in the case of default in any payment pursuant to the Guarantees, the Trustee shall be protected in withholding such notice if and so long as a committee of Responsible Officers in good faith determines that the withholding of such notice is in the interests of the holders of the Securities. SECTION 308. CONFLICTING INTERESTS. If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and the Indenture. ARTICLE IV Miscellaneous ------------- SECTION 401. CONDITIONS OF EFFECTIVENESS. This Guarantee Agreement shall become effective as of the date of this Guarantee Agreement when and if this Guarantee Agreement has been duly executed by each of the Guarantors and the Trustee. SECTION 402. REFERENCE TO AND EFFECT ON THE INDENTURE. The execution, delivery and effectiveness of this Guarantee Agreement shall not operate as a waiver of any right, power or remedy of the Trustee under the Indenture, nor constitute a waiver of any provision of the Indenture, and the Indenture shall remain in full force and effect and are hereby ratified and confirmed. SECTION 403. GOVERNING LAW. This Guarantee Agreement shall be governed by and construed in accordance with the laws of the State of New York, but without regard to the principles of conflicts of laws thereof. SECTION 404. HEADINGS. Section headings in this Guarantee Agreement are included herein for convenience of reference only and shall not constitute a part of this Guarantee Agreement for any other purpose. SECTION 405. COUNTERPARTS. This Guarantee Agreement may be executed in any number of counterparts, all of which taken together shall constitute one 6 7 and the same instrument, and any party hereto may execute this Guarantee Agreement by signing any such counterpart. SECTION 406. NOTICES. Any notice or communication shall be in writing and delivered in person or mailed by first class mail addressed as follows: if to any Guarantor or all Guarantors: c/o NCS HealthCare, Inc. 3201 Enterprise Parkway, Suite 220 Beachwood, Ohio 44122 Attention: Chief Financial Officer if to the Trustee: National City Bank Corporate Trust Administration 629 Euclid Avenue, Room 635 Cleveland, Ohio 44114 Attention: Janet A. Schwartz SECTION 407. RIGHTS OF HOLDERS. The Guarantors expressly acknowledge that any Holder may institute a legal proceeding directly against the Guarantor to enforce its rights under this Guarantee Agreement, without first instituting a legal proceeding against the Company or any other Person. SECTION 408. AMENDMENTS AND WAIVERS. The provisions of this Guarantee Agreement may be amended, modified or supplemented by the Trustee and the Guarantors, provided that, without the consent of each Holder, no amendment, modification or supplement to this Guarantee Agreement shall be made which adversely affects the rights of the Holders hereunder in any material respect. The foregoing notwithstanding, no consent of any Holders shall be required to (i) reflect the release of any Guarantor from its Guarantee, or the addition of any Wholly-owned Subsidiary of the Company as a Guarantor, in the manner provided by the Indenture and this Guarantee Agreement or (ii) cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Guarantee Agreement which shall not be inconsistent with the provisions of this Guarantee Agreement, provided that such action pursuant to this clause (ii) shall not adversely affect the rights of Holders hereunder in any material respect. SECTION 409. SEVERABILITY. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. 7 8 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written. ADVANCED RX SERVICES, INC. By: /s/Jeffrey R. Steinhilber ----------------------------------- Jeffrey R. Steinhilber, Treasurer Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 9 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written. HLF ADULT HOME PHARMACY CORP. By: /s/Jeffrey R. Steinhilber ----------------------------------- Jeffrey R. Steinhilber, Secretary and Treasurer Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 10 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written. KINETIC SERVICES, INC. By: /s/Jon H. Outcalt ----------------------------------- Jon H. Outcalt, Secretary and Treasurer Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 11 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written. LOOK DRUG STORES, INC. By: /s/Jeffrey R. Steinhilber ----------------------------------- Jeffrey R. Steinhilber, Secretary and Treasurer Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 12 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written. LOOMIS ENTERPRISES, INC. By: /s/Jeffrey R. Steinhilber ----------------------------------- Jeffrey R. Steinhilber, Treasurer Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 13 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written. MANAGEMENT & NETWORK SERVICES, INC. By: /s/Jeffrey R. Steinhilber ----------------------------------- Jeffrey R. Steinhilber, Treasurer Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 14 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written. MEDI CENTRE, INC. By: /s/Jeffrey R. Steinhilber ----------------------------------- Jeffrey R. Steinhilber, Secretary and Treasurer Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 15 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written. NCS DAVEN DRUG, INC. By: /s/Jon H. Outcalt ----------------------------------- Jon H. Outcalt, Secretary and Treasurer Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 16 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written. NCS HEALTHCARE OF ARKANSAS, INC. By: /s/Jeffrey R. Steinhilber ----------------------------------- Jeffrey R. Steinhilber, Treasurer Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 17 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written. NCS HEALTHCARE OF CALIFORNIA, INC. By: /s/Jon H. Outcalt ----------------------------------- Jon H. Outcalt, Secretary and Treasurer Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 18 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written. NCS HEALTHCARE OF FLORIDA, INC. By: /s/Jeffrey R. Steinhilber ----------------------------------- Jeffrey R. Steinhilber, Treasurer Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 19 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written. NCS HEALTHCARE OF ILLINOIS, INC. By: /s/Jeffrey R. Steinhilber ----------------------------------- Jeffrey R. Steinhilber, Treasurer Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 20 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written. NCS HEALTHCARE OF INDIANA, INC. By: /s/Jeffrey R. Steinhilber ----------------------------------- Jeffrey R. Steinhilber, Secretary and Treasurer Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 21 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written. NCS HEALTHCARE OF IOWA, INC. By: /s/Jeffrey R. Steinhilber ----------------------------------- Jeffrey R. Steinhilber, Vice President Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 22 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written: NCS HEALTHCARE OF KANSAS, INC. By: /s/Jeffrey R. Steinhilber ----------------------------------- Jeffrey R. Steinhilber, Treasurer Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 23 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written: NCS HEALTHCARE OF KENTUCKY, INC. By: /s/Jeffrey R. Steinhilber ----------------------------------- Jeffrey R. Steinhilber, Treasurer Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 24 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written: RESCOT SYSTEMS GROUP, INC. By: /s/Jeffrey R. Steinhilber ----------------------------------- Jeffrey R. Steinhilber, Treasurer Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 25 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written: NCS HEALTHCARE OF MARYLAND, INC. By: /s/Jeffrey R. Steinhilber ----------------------------------- Jeffrey R. Steinhilber, Treasurer Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 26 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written. NCS HEALTHCARE OF MICHIGAN, INC. By: /s/Jeffrey R. Steinhilber ----------------------------------- Jeffrey R. Steinhilber, Vice President and Treasurer Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 27 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written. NCS HEALTHCARE OF MODESTO, INC. By: /s/Jon H. Outcalt ----------------------------------- Jon H. Outcalt, Secretary and Treasurer Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 28 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written. NCS HEALTHCARE OF OHIO, INC. By: /s/Jeffrey R. Steinhilber ----------------------------------- Jeffrey R. Steinhilber, Treasurer Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 29 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written. NCS HEALTHCARE OF OKLAHOMA, INC. By: /s/Jeffrey R. Steinhilber ----------------------------------- Jeffrey R. Steinhilber, Treasurer Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 30 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written. NCS HEALTHCARE OF OREGON, INC. By: /s/Jeffrey R. Steinhilber ----------------------------------- Jeffrey R. Steinhilber, Treasurer Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 31 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written. NCS HEALTHCARE OF PENNSYLVANIA, INC. By: /s/Jeffrey R. Steinhilber ----------------------------------- Jeffrey R. Steinhilber, Treasurer Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 32 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written. NCS HEALTHCARE OF SOUTH CAROLINA, INC. By: /s/Jeffrey R. Steinhilber ----------------------------------- Jeffrey R. Steinhilber, Treasurer Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 33 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written. NCS HEALTHCARE OF VERMONT, INC By: /s/Jeffrey R. Steinhilber ----------------------------------- Jeffrey R. Steinhilber, Treasurer Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 34 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written. NCS HEALTHCARE OF WASHINGTON, INC. By: /s/Jeffrey R. Steinhilber ----------------------------------- Jeffrey R. Steinhilber, Treasurer and Assistant Secretary Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 35 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written. NCS QUALITY CARE PHARMACY, INC. By: /s/Jon H. Outcalt ----------------------------------- Jon H. Outcalt, Secretary and Treasurer Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 36 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written. NCS SERVICES, INC. By: /s/Jeffrey R. Steinhilber ----------------------------------- Jeffrey R. Steinhilber, Treasurer Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 37 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written. THRIFTY MEDICAL SUPPLY, INC. By: /s/Jeffrey R. Steinhilber ----------------------------------- Jeffrey R. Steinhilber, Treasurer Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 38 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written. UNI-CARE HEALTH SERVICES, INC. By: /s/Jeffrey R. Steinhilber ----------------------------------- Jeffrey R. Steinhilber, Treasurer Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 39 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written. UNI-CARE HEALTH SERVICES OF MAINE, INC. By: /s/Jeffrey R. Steinhilber ----------------------------------- Jeffrey R. Steinhilber, Treasurer Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 40 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee Agreement to be duly executed as of the day and year first above written. CHESHIRE LONG TERM CARE PHARMACY, INC. By: /s/Jeffrey R. Steinhilber ----------------------------------- Jeffrey R. Steinhilber, Treasurer Attest: /s/ Judith B. Wasen - ---------------------- NATIONAL CITY BANK, as Trustee By: /s/ Marla Clark ----------------------------------- Attest: /s/ Holly Retina - ---------------------- 41 SCHEDULE I EX-10.2 6 EXHIBIT 10.2 1 Exhibit 10.2 ================================================================================ CREDIT AGREEMENT DATED AS OF AUGUST 1, 1997 AMONG NCS HEALTHCARE, INC. AS BORROWER THE LENDING INSTITUTIONS NAMED THEREIN AS LENDERS KEYBANK NATIONAL ASSOCIATION AS ADMINISTRATIVE AGENT NBD BANK AS CO-AGENT =============================================================================== 2
TABLE OF CONTENTS Page SECTION 1. DEFINITIONS AND TERMS......................................................................... 1 1.1. Certain Defined Terms......................................................................... 1 1.2. Computation of Time Periods................................................................... 17 1.3. Accounting Terms.............................................................................. 17 1.4. Terms Generally............................................................................... 17 SECTION 2. AMOUNT AND TERMS OF LOANS..................................................................... 18 2.1. Commitments for Loans......................................................................... 18 2.2. Minimum Borrowing Amounts, etc.; Pro Rata Borrowings.......................................... 18 2.3. Notice of Borrowing........................................................................... 19 2.4. Disbursement of Funds......................................................................... 20 2.5. Refunding of, or Participation in, Swing Line Revolving Loans................................. 20 2.6. Notes......................................................................................... 21 2.7. Conversions of General Revolving Loans........................................................ 22 2.8. Interest...................................................................................... 22 2.9. Interest Periods.............................................................................. 25 2.10. Increased Costs, Illegality, etc.............................................................. 26 2.11. Compensation.................................................................................. 27 2.12. Change of Lending Office; Replacement of Lenders.............................................. 28 SECTION 3. LETTERS OF CREDIT............................................................................. 28 3.1. Letters of Credit............................................................................. 28 3.2. Letter of Credit Requests: Notices of Issuance................................................ 29 3.3. Agreement to Repay Letter of Credit Drawings.................................................. 30 3.4. Letter of Credit Participations............................................................... 30 3.5. Increased Costs............................................................................... 32 3.6. Guaranty of Subsidiary Letter of Credit Obligations........................................... 32 SECTION 4. FEES; COMMITMENTS............................................................................. 34 4.1. Fees.......................................................................................... 34 4.2. Voluntary Reduction of Commitments............................................................ 35 4.3. Mandatory Adjustments of Commitments, etc..................................................... 35 4.4. Extension of Maturity Date.................................................................... 35 SECTION 5. PAYMENTS...................................................................................... 35 5.1. Voluntary Prepayments......................................................................... 35 5.2. Mandatory Prepayments......................................................................... 36 5.3. Method and Place of Payment................................................................... 37 5.4. Net Payments.................................................................................. 38 SECTION 6. CONDITIONS PRECEDENT.......................................................................... 39 6.1. Conditions Precedent at Closing Date.......................................................... 39 6.2. Conditions Precedent to All Credit Events..................................................... 40 SECTION 7. REPRESENTATIONS AND WARRANTIES................................................................ 40 7.1. Corporate Status, etc......................................................................... 40 7.2. Subsidiaries.................................................................................. 40 7.3. Corporate Power and Authority, etc............................................................ 40 7.4. No Violation.................................................................................. 41
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Page 7.5. Governmental Approvals........................................................................ 41 7.6. Litigation.................................................................................... 41 7.7. Use of Proceeds; Margin Regulations........................................................... 41 7.8. Financial Statements, etc..................................................................... 41 7.9. No Material Adverse Change.................................................................... 42 7.10. Tax Returns and Payments...................................................................... 42 7.11. Title to Properties, etc...................................................................... 42 7.12. Lawful Operations, etc........................................................................ 43 7.13. Environmental Matters......................................................................... 43 7.14. Compliance with ERISA......................................................................... 43 7.15. Intellectual Property, etc.................................................................... 44 7.16. Investment Company............................................................................ 44 7.17. Burdensome Contracts; Labor Relations......................................................... 44 7.18. Existing Indebtedness......................................................................... 44 7.19. True and Complete Disclosure.................................................................. 44 SECTION 8. AFFIRMATIVE COVENANTS......................................................................... 45 8.1. Reporting Requirements........................................................................ 45 8.2. Books, Records and Inspections................................................................ 48 8.3. Insurance..................................................................................... 48 8.4. Payment of Taxes and Claims................................................................... 48 8.5. Corporate Franchises.......................................................................... 48 8.6. Good Repair................................................................................... 48 8.7. Compliance with Statutes, etc................................................................. 49 8.8. Compliance with Environmental Laws............................................................ 49 8.9. Fiscal Years, Fiscal Quarters................................................................. 49 8.10. Certain Subsidiaries to Join in Subsidiary Guaranty........................................... 50 8.11. Pledge of Additional Stock; Release of Collateral............................................. 50 8.12. Most Favored Covenant Status.................................................................. 51 8.13. Senior Debt................................................................................... 51 SECTION 9. NEGATIVE COVENANTS............................................................................ 51 9.1. Changes in Business........................................................................... 51 9.2. Consolidation, Merger or Sale of Assets, etc.................................................. 51 9.3. Liens......................................................................................... 53 9.4. Indebtedness.................................................................................. 54 9.5. Advances, Investments, Loans and Guaranty Obligations......................................... 55 9.6. Total Net Indebtedness/Consolidated EBITDA Ratio.............................................. 57 9.7. Total Senior Indebtedness/Consolidated EBITDA Ratio........................................... 57 9.8. Interest Coverage Ratio....................................................................... 57 9.9. Minimum Consolidated Net Worth................................................................ 57 9.10. Prepayments and Refinancings of Subordinated Debt, etc........................................ 57 9.11. Transactions with Affiliates.................................................................. 57 9.12. Limitation on Certain Restrictive Agreements.................................................. 58 9.13. Limitation on Sale and Lease-Back Transactions................................................ 58 9.14. Plan Terminations, Minimum Funding, etc....................................................... 58 SECTION 10. EVENTS OF DEFAULT............................................................................. 59 10.1. Events of Default............................................................................. 59 10.2. Acceleration, etc............................................................................. 60 10.3. Application of Liquidation Proceeds........................................................... 61
ii 4 Page SECTION 11. THE ADMINISTRATIVE AGENT...................................................................... 61 11.1. Appointment................................................................................... 61 11.2. Delegation of Duties.......................................................................... 62 11.3. Exculpatory Provisions........................................................................ 62 11.4. Reliance by Administrative Agent.............................................................. 62 11.5. Notice of Default............................................................................. 62 11.6. Non-Reliance.................................................................................. 63 11.7. Indemnification............................................................................... 63 11.8. The Administrative Agent in Individual Capacity............................................... 63 11.9. Successor Administrative Agent................................................................ 63 11.10. Other Agents.................................................................................. 64 SECTION 12. MISCELLANEOUS................................................................................. 64 12.1. Payment of Expenses etc....................................................................... 64 12.2. Right of Setoff............................................................................... 65 12.3. Notices....................................................................................... 65 12.4. Benefit of Agreement.......................................................................... 65 12.5. No Waiver: Remedies Cumulative................................................................ 67 12.6. Payments Pro Rata............................................................................. 67 12.7. Calculations: Computations.................................................................... 67 12.8. Governing Law; Submission to Jurisdiction; Venue; Waiver of Jury Trial........................ 68 12.9. Counterparts.................................................................................. 68 12.10. Effectiveness................................................................................. 68 12.11. Headings Descriptive.......................................................................... 68 12.12. Amendment or Waiver........................................................................... 68 12.13. Survival...................................................................................... 69 12.14. Domicile of Loans............................................................................. 69 12.15. Confidentiality............................................................................... 69 12.16. Lender Register............................................................................... 69 12.17. Limitations on Liability of the Letter of Credit Issuers...................................... 70 12.18. General Limitation of Liability............................................................... 70 12.19. No Duty....................................................................................... 70 12.20. Lenders and Agent Not Fiduciary to Borrower, etc.............................................. 71 12.21. Margin Stock.................................................................................. 71 12.22. Survival of Representations and Warranties.................................................... 71
iii 5 ANNEX I - INFORMATION AS TO LENDERS ANNEX II - INFORMATION AS TO SUBSIDIARIES ANNEX III - DESCRIPTION OF EXISTING INDEBTEDNESS ANNEX IV - DESCRIPTION OF EXISTING LIENS ANNEX V - DESCRIPTION OF EXISTING ADVANCES, LOANS, INVESTMENTS AND GUARANTEES ANNEX VI - DESCRIPTION OF LETTERS OF CREDIT DEEMED ISSUED UNDER THE CREDIT AGREEMENT EXHIBIT A-1 - FORM OF GENERAL REVOLVING NOTE EXHIBIT A-2 - FORM OF SWING LINE REVOLVING NOTE EXHIBIT B-1 - FORM OF NOTICE OF BORROWING EXHIBIT B-2 - FORM OF NOTICE OF CONVERSION EXHIBIT B-3 - FORM OF LETTER OF CREDIT REQUEST EXHIBIT C-1 - FORM OF SUBSIDIARY GUARANTY EXHIBIT C-2 - FORM OF PLEDGE AGREEMENT EXHIBIT D - FORM OF OPINION OF SPECIAL COUNSEL TO THE BORROWER EXHIBIT E - FORM OF ASSIGNMENT AGREEMENT EXHIBIT F - FORM OF SECTION 5.4(b)(ii) CERTIFICATE iv 6 CREDIT AGREEMENT, dated as of August 1, 1997, among the following: (i) NCS HEALTHCARE, INC., a Delaware corporation (herein, together with its successors and assigns, the "BORROWER"); (ii) the lending institutions listed in Annex I hereto (each a "LENDER" and collectively, the "LENDERS"); (iii) KEYBANK NATIONAL ASSOCIATION, a national banking association, as administrative agent (the "ADMINISTRATIVE AGENT"); and (iv) NBD BANK, a Michigan bank, as Co-Agent: PRELIMINARY STATEMENTS: (1) Unless otherwise defined herein, all capitalized terms used herein and defined in section 1 are used herein as so defined. (2) The Borrower has applied to the Lenders for credit facilities in order to refinance certain indebtedness of the Borrower and in order to provide working capital and funds for other lawful purposes. (3) The Borrower has requested that the credit facilities be secured by the Pledge Agreement, covering only the stock presently owned by the Borrower in its directly owned Wholly-Owned Subsidiaries, subject to the right of the Borrower, as provided herein, to obtain the release of all Collateral covered by the Pledge Agreement. (4) Subject to and upon the terms and conditions set forth herein, the Lenders are willing to make available to the Borrower the credit facilities provided for herein. NOW, THEREFORE, it is agreed: SECTION 1. DEFINITIONS AND TERMS. 1.1. CERTAIN DEFINED TERMS. As used herein, the following terms shall have the meanings herein specified unless the context otherwise requires: "ADMINISTRATIVE AGENT" shall have the meaning provided in the first paragraph of this Agreement and shall include any successor to the Administrative Agent appointed pursuant to section 11.9. "AFFILIATE" shall mean, with respect to any person, any other person directly or indirectly controlling, controlled by, or under direct or indirect common control with such person. A person shall be deemed to control a second person if such first person possesses, directly or indirectly, the power (i) to vote 10% or more of the securities having ordinary voting power for the election of directors or managers of such second person or (ii) to direct or cause the direction of the management and policies of such second person, whether through the ownership of voting securities, by contract or otherwise. Notwithstanding the foregoing, a director, officer or employee of a person shall not, solely by reason of such status, be considered an Affiliate of such person. 7 "AGREEMENT" shall mean this Credit Agreement, as the same may be from time to time further modified, amended and/or supplemented. "APPLICABLE EURODOLLAR MARGIN" shall have the meaning provided in section 2.8(g). "APPLICABLE FACILITY FEE RATE" shall have the meaning provided in section 4.1(a). "APPLICABLE LENDING OFFICE" shall mean, with respect to each Lender, (i) such Lender's Domestic Lending Office in the case of Borrowings consisting of Prime Rate Loans (or, in the case of any Borrowings of Swing Line Revolving Loans consisting of Money Market Rate Loans), and (ii) such Lender's Eurodollar Lending Office in the case of Borrowings consisting of Eurodollar Loans. "ASSET SALE" shall mean the sale, transfer or other disposition (including by means of mergers, consolidations, and liquidations of a corporation, partnership or limited liability company of the interests therein of the Borrower or any Subsidiary) by the Borrower or any Subsidiary to any person other than the Borrower or any Subsidiary of any of their respective assets (other than sales, transfers or other dispositions of obsolete or excess furniture, fixtures, equipment or other property, tangible or intangible, in the ordinary course of business). "ASSIGNMENT AGREEMENT" shall mean an Assignment Agreement substantially in the form of Exhibit E hereto. "AUTHORIZED OFFICER" shall mean any officer or employee of the Borrower designated as such in writing to the Administrative Agent by the Chief Financial Officer, the Secretary or an Assistant Secretary of the Borrower. "AVAILABLE COMMITMENT AMOUNT" shall mean at any time an amount which is the lesser of (i) the Total General Revolving Commitment at such time, and (ii) an amount equal to (A) three times the sum of (1) the Borrower's Consolidated EBITDA for its two consecutive fiscal quarters most recently ended for which financial statements have been delivered pursuant to section 8.1(b), annualized to a full period of four fiscal quarters, and (2) to the extent not included pursuant to the preceding clause (1), the aggregate earnings before interest, income taxes, depreciation and amortization of all Permitted Acquisitions which have been or are being contemporaneously completed for their respective most recently completed fiscal year for which annual audited financial statements (or unaudited financial statements, if such unaudited financial statements are also included in other consolidated or combined audited financial statements) are available and have been delivered to the Administrative Agent; REDUCED BY (B) the aggregate principal amount of Total Senior Indebtedness (other than the Notes) at such time. "BANKRUPTCY CODE" shall have the meaning provided in section 10.1(h). "BORROWER" shall have the meaning provided in the first paragraph of this Agreement. "BORROWING" shall mean the incurrence of Loans consisting of one Type of Loan, by the Borrower from all of the Lenders having Commitments in respect thereof on a PRO RATA basis on a given date (or resulting from conversions on a given date), having in the case of Eurodollar Loans the same Interest Period. "BUSINESS DAY" shall mean (i) for all purposes other than as covered by clause (ii) below, any day excluding Saturday, Sunday and any day which shall be in the city in which the Payment Office is located a legal holiday or a day on which banking institutions are authorized by law or other governmental actions to close and (ii) with respect to all notices and determinations in connection with, and payments of principal and interest on, 2 8 Eurodollar Loans, any day which is a Business Day described in clause (i) and which is also a day for trading by and between banks in U.S. dollar deposits in the interbank Eurodollar market. "CAPITAL LEASE" as applied to any person shall mean any lease of any property (whether real, personal or mixed) by that person as lessee which, in conformity with GAAP, is accounted for as a capital lease on the balance sheet of that person. "CAPITALIZED LEASE OBLIGATIONS" shall mean all obligations under Capital Leases of the Borrower or any of its Subsidiaries in each case taken at the amount thereof accounted for as liabilities identified as "capital lease obligations" (or any similar words) on a consolidated balance sheet of the Borrower and its Subsidiaries prepared in accordance with GAAP. "CASH EQUIVALENTS" shall mean (i) securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (PROVIDED that the full faith and credit of the United States of America is pledged in support thereof) having maturities of not more than one year from the date of acquisition, (ii) U.S. dollar denominated time deposits, certificates of deposit, money market deposits and bankers' acceptances of (x) any Lender or (y) any bank whose short-term commercial paper rating from S&P is at least A-2 or the equivalent thereof or from Moody's is at least P-2 or the equivalent thereof (any such bank, an "APPROVED LENDER"), in each case with maturities of not more than two years from the date of acquisition, (iii) repurchase obligations with a term not more than 30 days for underlying securities of the types described in clause (i) entered into with any Lender or Approved Lender, (iv) commercial paper issued by any Lender or Approved Lender or by the parent company of any Lender or Approved Lender and commercial paper issued by, or guaranteed by, any industrial or financial company with a short-term commercial paper rating of at least A-2 or the equivalent thereof by S&P or at least P-2 or the equivalent thereof by Moody's, or guaranteed by any industrial company with a long term unsecured and unsupported debt rating of at least A or A2, or the equivalent of each thereof, from S&P or Moody's, as the case may be, and in each case maturing within 270 days after the date of acquisition, PROVIDED that the aggregate principal amount of commercial paper so acquired which is issued by any single issuer shall not exceed $25,000,000, (v) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States of America, or by any polictical subdivision or taxing authority thereof, and rated at least A by S&P or A by Moody's, (vi) investments in money market funds substantially all the assets of which are comprised of securities of the types described in clauses (i) through (v) above, and (vii) investments in money market funds utilized by a Lender or an Approved Lender in conjunction with "sweep" accounts maintained for commercial customers. "CASH PROCEEDS" shall mean, with respect to any Asset Sale, the aggregate cash payments (including any cash received by way of deferred payment pursuant to a note receivable issued in connection with such Asset Sale, other than the portion of such deferred payment constituting interest, but only as and when so received) received by the Borrower and/or any Subsidiary from such Asset Sale. "CERCLA" shall mean the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as the same may be amended from time to time, 42 U.S.C. ss. 9601 ET SEQ. "CHANGE OF CONTROL" shall mean and include any of the following: (i) during any period of two consecutive calendar years, individuals who at the beginning of such period constituted the Borrower's Board of Directors (together with any new directors whose election by the Borrower's Board of Directors or whose nomination for election by the Borrower's shareholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the directors then in office, (ii) any person or group (as such term is defined in section 13(d)(3) of the 1934 Act), other than the Current Control Group, shall acquire, directly or indirectly, beneficial ownership (within the 3 9 meaning of Rule 13d-3 and 13d-5 of the 1934 Act) of more than 30%, on a fully diluted basis, of the voting interest in the Borrower's capital stock, (iii) the Current Control Group shall, for any reason, cease to have, directly or indirectly, beneficial ownership (within the meaning of Rule 13d-3 and 13d-5 of the 1934 Act) of at least 30%, on a fully diluted basis, of the voting interest in the Borrower's capital stock, (iv) the full time active employment of Kevin B. Shaw as chief executive officer of the Borrower shall be voluntarily terminated by the Borrower or Mr. Shaw (other than by reason of death or disability), unless a successor acceptable to the Required Lenders shall have been appointed or elected and actually taken office within six months following any such termination, in which case the name of such successor shall be substituted for the name of the person he or she replaces for purposes of this clause (iv), (v) the shareholders of the Borrower approve (A) a merger or consolidation of the Borrower with any other person, other than a merger or consolidation which would result in the voting securities of the Borrower outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted or exchanged for voting securities of the surviving or resulting entity) more than 75% of the combined voting power of the voting securities of the Borrower or such surviving or resulting entity outstanding after such merger or consolidation, or (B) a merger or consolidation effected to implement a recapitalization of the Borrower (or similar transaction), other than any such transaction in which no person or group (as hereinabove defined) not excepted from the provisions of clause (ii) above acquires more than 30% of the combined voting power, on a fully diluted basis, of the Borrower's then outstanding voting securities, (vi) the shareholders of the Borrower approve a plan of complete liquidation of the Borrower or an agreement or agreements for the sale or disposition by the Borrower of all or substantially all of the Borrower's assets, and/or (vii) any "Change of Control" or similar term as defined in any other agreement or instrument evidencing or governing Indebtedness of the Borrower or any Subsidiary. As used herein, the term "CURRENT CONTROL GROUP" shall mean the members of the Board of Directors and the executive officers of the Borrower as of the Effective Date, their spouses, children, parents and siblings, the trustee of any trust created for the benefit of any such member of the Board of Directors, officer or family member, the executor or administrator (in his or her capacity as such) of the estate of any such member of the Board of Directors, officer or family member, and any person who receives Class B Common Stock of the Borrower under the last will and testament of, or under the laws of descent and distribution from, any such member of the Board of Directors, officer or family member. "CLOSING DATE" shall mean the date, on or after the Effective Date, upon which the conditions specified in section 6.1 are satisfied. "CODE" shall mean the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and the rulings issued thereunder. Section references to the Code are to the Code, as in effect at the Effective Date and any subsequent provisions of the Code, amendatory thereof, supplemental thereto or substituted therefor. "COLLATERAL" shall mean any collateral covered by any Security Document. "COLLATERAL AGENT" shall mean the Administrative Agent acting as Collateral Agent for the Lenders pursuant to the Security Documents. 4 10 "COMMITMENT" shall mean with respect to each Lender its General Revolving Commitment or its Swing Line Revolving Commitment, as the case may be. "CONSOLIDATED CAPITAL EXPENDITURES" shall mean, for any period, the aggregate of all expenditures (whether paid in cash or accrued as liabilities and including in all events amounts expended or capitalized under Capital Leases but excluding any amount representing capitalized interest) by the Borrower and its Subsidiaries during that period that, in conformity with GAAP, are or are required to be included in the property, plant or equipment reflected in the consolidated balance sheet of the Borrower and its Subsidiaries. "CONSOLIDATED EBIT" shall mean, for any period, (A) Consolidated Net Income for such period; PLUS (B) the sum of the amounts for such period included in determining such Consolidated Net Income of (i) Total Interest Expense, (ii) Total Income Tax Expense, (iii) amortization or write-off of deferred financing costs, and (iv) extraordinary (and other one-time) non-cash losses and charges; LESS (C) gains on sales of assets (excluding sales in the ordinary course of business) and other extraordinary gains and other one-time non-cash gains; all as determined for the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP; PROVIDED that Consolidated EBIT for any period shall include the appropriate financial items for any person or business which has been acquired by the Borrower for any portion of such period prior to the date of acquisition which are covered by audited financial statements of such person or business unit (or unaudited financial statements, if such unaudited financial statements are included in other audited consolidated or combined financial statements) which have been delivered to the Administrative Agent, except that if any portion of such period is not so covered by such audited (or unaudited, as aforesaid) financial statements, the most recent corresponding period which is so covered by audited (or unaudited, as aforesaid) financial statements so delivered shall be used. "CONSOLIDATED EBITDA" shall mean, for any period, the sum of the amounts for such period of (i) Consolidated EBIT, (ii) Total Depreciation Expense, and (iii) Total Amortization Expense, all as determined for the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP; PROVIDED that Consolidated EBITDA for any period shall include the appropriate financial items for any person or business which has been acquired by the Borrower for any portion of such period prior to the date of acquisition which are covered by audited financial statements of such person or business unit (or unaudited financial statements, if such unaudited financial statements are included in other audited consolidated or combined financial statements) which have been delivered to the Administrative Agent, except that if any portion of such period is not so covered by such audited (or unaudited, as aforesaid) financial statements, the most recent corresponding period which is so covered by audited (or unaudited, as aforesaid) financial statements so delivered shall be used. "CONSOLIDATED NET INCOME" shall mean for any period, the net income (or loss), without deduction for minority interests, of the Borrower and its Subsidiaries on a consolidated basis for such period taken as a single accounting period determined in conformity with GAAP, PROVIDED that there shall be excluded therefrom (i) the income, (or loss) of any entity (other than Subsidiaries of the Borrower) in which the Borrower or any of its Subsidiaries has a joint interest, except to the extent of the amount of dividends or other distributions actually paid to the Borrower or any of its Subsidiaries during such period, (ii) the income (or loss) of any entity accrued prior to the date it becomes a Subsidiary of the Borrower or is merged into or consolidated with the Borrower or any of its Subsidiaries or on which its assets are acquired by the Borrower or any of its Subsidiaries, and (iii) the income of any Subsidiary of the Borrower to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that income is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary. 5 11 "CONSOLIDATED NET WORTH" shall mean at any time for the determination thereof all amounts which, in conformity with GAAP, would be included under the caption "total stockholders' equity" (or any like caption) on a consolidated balance sheet of the Borrower as at such date. "CONVERTIBLE SUBORDINATED DEBENTURES DUE 2004" shall mean the Convertible Subordinated Debentures due 2004 issued by the Borrower as contemplated by the Preliminary Offering Memorandum dated July 17, 1997, in the same or a lesser (but not less than $100 million) or a greater aggregate principal amount (and any convertible debt securities having the same or substantially the same terms which may be issued in exchange therefor or in replacement thereof). "CREDIT DOCUMENTS" shall mean this Agreement, the Notes, the Subsidiary Guaranty and any Letter of Credit Document. "CREDIT EVENT" shall mean the making of any Loans and/or the issuance of any Letter of Credit. "CREDIT PARTY" shall mean the Borrower and each of its Subsidiaries which is a party to any Credit Document. "DEFAULT" shall mean any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default. "DEFAULTING LENDER" shall mean any Lender with, respect to which a Lender Default is in effect. "DESIGNATED HEDGE AGREEMENT" shall mean any Hedge Agreement to which the Borrower or any of its Subsidiaries is a party which, pursuant to a written instrument signed by the Required Lenders, has been designated as a Designated Hedge Agreement so that the Borrower's or Subsidiaries's counterparty's credit exposure thereunder will be entitled to share in the benefits of the Subsidiary Guaranty and the Security Documents to the extent such Subsidiary Guaranty or Security Documents provide guarantees or collateral for creditors of the Borrower or any Subsidiary under Designated Hedge Agreements. The Required Lenders may impose as a condition to any designation of a Designated Hedge Agreement a requirement that the counterparty enter into an intercreditor or similar agreement with the Administrative Agent under which recoveries from the Borrower and its Subsidiaries with respect to such Designated Hedge Agreement will be shared in a manner consistent with the provisions of section 10.3 hereof. "DOLLARS", "U.S. DOLLARS", "DOLLARS" and the sign "$" each means lawful money of the United States. "DOMESTIC LENDING OFFICE" shall mean, with respect to any Lender, the office of such Lender specified as its Domestic Lending Office in Annex I or in the Assignment Agreement pursuant to which it became a Lender, or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Administrative Agent. "EFFECTIVE DATE" shall have the meaning provided in section 12.10. "ELIGIBLE TRANSFEREE" shall mean and include a commercial bank, financial institution or other "accredited investor" (as defined in SEC Regulation D), in each case which (i) is not disapproved in writing by the Borrower in a notice given to a requesting Lender and the Administrative Agent, specifying the reasons for such disapproval, within five Business Days following the giving of notice to the Borrower of the identity of any proposed transferee (any such disapproval by the Borrower must be reasonable, it being understood that increased costs under section 2.10 hereof shall be deemed a reasonable basis for disapproval), PROVIDED that the Borrower shall not be entitled to exercise the foregoing right of disapproval if and so long as any Event of Default shall have occurred and be continuing; and (ii) is not a direct competitor of the Borrower or engaged in the same or similar business as the Borrower, or any of its respective Subsidiaries or is not an Affiliate of any such competitors of the Borrower or any of its respective Subsidiaries. 6 12 "ENVIRONMENTAL CLAIMS" shall mean any and all administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of non-compliance or violation, investigations or proceedings relating in any way to any Environmental Law or any permit issued under any such law (hereafter "CLAIMS"), including, without limitation, (a) any and all Claims by governmental or regulatory authorities for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law, and (b) any and all Claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from the storage, treatment or Release (as defined in CERCLA) of any Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment. "ENVIRONMENTAL LAW" shall mean any applicable Federal, state, foreign or local statute, law, rule, regulation, ordinance, code, binding and enforceable guideline, binding and enforceable written policy and rule of common law now or hereafter in effect and in each case as amended, and any binding and enforceable judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment issued to or rendered against the Borrower or any of its Subsidiaries relating to the environment, employee health and safety or Hazardous Materials, including, without limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, 33 U.S.C. section 2601 ET SEQ.; the Clean Air Act, 42 U.S.C. section 7401 ET SEQ.; the Safe Drinking Water Act, 42 U.S.C. section 3803 ET SEQ.; the Oil Pollution Act of 1990, 33 U.S.C. section 2701 ET SEQ.; the Emergency Planning and the Community Right-to-Know Act of 1986, 42 U.S.C. section 11001 ET SEQ., the Hazardous Material Transportation Act, 49 U.S.C. section 1801 ET SEQ. and the Occupational Safety and Health Act, 29 U.S.C. section 651 ET SEQ. (to the extent it regulates occupational exposure to Hazardous Materials); and any state and local or foreign counterparts or equivalents, in each case as amended from time to time. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder. Section references to ERISA are to ERISA, as in effect at the Effective Date and any subsequent provisions of ERISA, amendatory thereof, supplemental thereto or substituted therefor. "ERISA AFFILIATE" shall mean each person (as defined in section 3(9) of ERISA) which together with the Borrower or a Subsidiary of the Borrower would be deemed to be a "single employer" (i) within the meaning of section 414(b),(c), (m) or (o) of the Code or (ii) as a result of the Borrower or a Subsidiary of the Borrower being or having been a general partner of such person. "EURODOLLAR LENDING OFFICE" shall mean, with respect to any Lender, the office of such Lender specified as its Eurodollar Lending Office in Annex I or in the Assignment Agreement pursuant to which it became a Lender, or such other office or offices for Eurodollar Loans of such Lender as such Lender may from time to time specify to the Borrower and the Administrative Agent. "EURODOLLAR LOANS" shall mean each Loan bearing interest at the rates provided in section 2.8(a)(ii). "EURODOLLAR RATE" shall mean with respect to each Interest Period for a Eurodollar Loan, (A) either (i) the rate per annum for deposits in Dollars of amounts in same day funds comparable to the outstanding principal amount of the Eurodollar Loan for which an interest rate is then being determined for a maturity most nearly comparable to such Interest Period which appears on page 3750 of the Dow Jones Telerate Screen as of 11:00 A.M. (local time at the Notice Office) on the date which is two Business Days prior to the commencement of such Interest Period, or (ii) if such a rate does not appear on such page, an interest rate per annum equal to the average (rounded upward to the nearest whole multiple of 1/16 of 1% per annum, if such average is not such a multiple) of the rate per annum at which deposits in Dollars are offered to each of the Reference Banks by prime banks in the London interbank Eurodollar market for deposits of amounts in Dollars in same day funds comparable to the outstanding principal amount of the Eurodollar Loan for which an interest rate is then being determined with maturities comparable to the Interest Period to be applicable to such Eurodollar Loan, determined as of 11:00 A.M. (London time) on the date which is two Business Days prior to the commencement of such Interest Period, in each case divided (and rounded upward to the nearest whole multiple of 1/16th of 1%) by (B) a percentage equal to 100% minus the then stated maximum rate of all reserve requirements (including, without limitation, any marginal, emergency, supplemental, special or other reserves and without 7 13 benefit of credits for proration, exceptions or offsets which may be available from time to time) applicable to any member bank of the Federal Reserve System in respect of Eurocurrency liabilities as defined in Regulation D (or any successor category of liabilities under Regulation D). "EVENT OF DEFAULT" shall have the meaning provided in section 10.1. "EXISTING INDEBTEDNESS" shall have the meaning provided in section 7.18. "EXISTING INDEBTEDNESS AGREEMENTS" shall have the meaning provided in section 7.18. "EXISTING LETTER OF CREDIT" shall have the meaning provided in section 3.1(d). "FACILITY" shall mean the General Revolving Facility or the Swing Line Revolving Facility, as applicable. "FACILITY FEE" shall have the meaning provided in section 4.1(a). "FACING FEE" shall have the meaning provided in section 4.1(c). "FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any period, a fluctuating interest rate equal for each day during such period to the weighted average of the rates on overnight Federal Funds transactions with members of the Federal Reserve System arranged by Federal Funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three Federal Funds brokers of recognized standing selected by the Administrative Agent. "FEES" shall mean all amounts payable pursuant to, or referred to in, section 4.1. "FOREIGN SUBSIDIARY" shall mean any Subsidiary (i) which is not incorporated in the United States and substantially all of whose assets and properties are located, or substantially all of whose business is carried on, outside the United States, or (ii) substantially all of whose assets consist of Subsidiaries that are Foreign Subsidiaries as defined in clause (i) of this definition. "GAAP" shall mean generally accepted accounting principles in the United States of America as in effect from time to time; it being understood and agreed that determinations in accordance with GAAP for purposes of section 9, including defined terms as used therein, are subject (to the extent provided therein) to section 12.7(a). "GENERAL REVOLVING COMMITMENT" shall mean, with respect to each Lender, the amount, if any, set forth opposite such Lender's name in Annex I as its "General Revolving Commitment" as the same may be reduced from time to time pursuant to section 4.2, 4.3 and/or 10 or adjusted from time to time as a result of assignments to or from such Lender pursuant to section 12.4. "GENERAL REVOLVING FACILITY" shall mean the facility evidenced by the Total General Revolving Commitment. "GENERAL REVOLVING FACILITY PERCENTAGE" shall mean at any time for any Lender with a General Revolving Commitment, the percentage obtained by dividing such Lender's General Revolving Commitment by the Total General Revolving Commitment, PROVIDED, that if the Total General Revolving Commitment has been terminated, the General Revolving Facility Percentage for each Lender with a General Revolving Commitment shall be determined by dividing such Lender's General Revolving Commitment immediately prior to such termination by the Total General Revolving Commitment immediately prior to such termination. 8 14 "GENERAL REVOLVING LOAN" shall have the meaning provided in section 2.1(a). "GENERAL REVOLVING NOTE" shall have the meaning provided in section 2.6(a)(i). "GUARANTY OBLIGATIONS" shall mean as to any person (without duplication) any obligation of such person guaranteeing any Indebtedness ("PRIMARY INDEBTEDNESS") of any other person (the "PRIMARY OBLIGOR") in any manner, whether directly or indirectly, including, without limitation, any obligation of such person, whether or not contingent, (a) to purchase any such primary Indebtedness or any property constituting direct or indirect security therefor, (b) to advance or supply funds (i) for the purchase or payment of any such primary Indebtedness or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary Indebtedness of the ability of the primary obligor to make payment of such primary Indebtedness, or (d) otherwise to assure or hold harmless the owner of such primary Indebtedness against loss in respect thereof, PROVIDED, HOWEVER, that the term Guaranty Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guaranty Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary Indebtedness in respect of which such Guaranty Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such person is required to perform thereunder) as determined by such person in good faith. "HEDGE AGREEMENT" shall mean (i) any interest rate swap agreement, any interest rate cap agreement, any interest rate collar agreement or other similar agreement or arrangement designed to protect against fluctuations in interest rates, and (ii) any currency swap agreement, forward currency purchase agreement or similar agreement or arrangement designed to protect against fluctuations in currency exchange rates. "HAZARDOUS MATERIALS" shall mean (i) any petrochemical or petroleum products, radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde foam insulation, transformers or other equipment that contain dielectric fluid containing levels of polychlorinated biphenyls, and radon gas; and (ii) any chemicals, materials or substances defined as or included in the definition of "hazardous substances", "hazardous wastes", "hazardous materials", "restricted hazardous materials", "extremely hazardous wastes", "restrictive hazardous wastes", "toxic substances", "toxic pollutants", "contaminants" or "pollutants", or words of similar meaning and regulatory effect, under any applicable Environmental Law. "INDEBTEDNESS" of any person shall mean without duplication: (i) all indebtedness of such person for borrowed money, (ii) all bonds, notes, debentures and similar debt securities of such person, (iii) the deferred purchase price of capital assets or services which in accordance with GAAP would be shown on the liability side of the balance sheet of such person, (iv) the face amount of all letters of credit issued for the account of such person and, without duplication, all drafts drawn thereunder, (v) all Indebtedness of a second person secured by any Lien on any property owned by such first person, whether or not such Indebtedness has been assumed, up to the greater of (A) the portion of such Indebtedness equivalent to the fair value of such property, and (B) if such Indebtedness has been assumed by such first person, the amount thereof so assumed, (vi) all Capitalized Lease Obligations of such person, 9 15 (vii) the present value, determined on the basis of the implicit interest rate, of all basic rental obligations under all "synthetic" leases (i.e. leases accounted for by the lessee as operating leases under which the lessee is the "owner" of the leased property for Federal income tax purposes, (viii) all obligations of such person to pay a specified purchase price for goods or services whether or not delivered or accepted, I.E., take-or-pay and similar obligations, (ix) all net obligations of such person under Hedge Agreements and (x) the full outstanding balance of trade receivables, notes or other instruments sold with full or limited recourse, other than solely for purposes of collection of delinquent accounts, and (xi) all Guaranty Obligations of such person, PROVIDED that neither trade payables and accrued expenses, in each case arising in the ordinary course of business, nor obligations in respect of insurance policies or performance or surety bonds which themselves are not guarantees of Indebtedness (nor drafts, acceptances or similar instruments evidencing the same nor obligations in respect of letters of credit supporting the payment of the same), shall constitute Indebtedness. "INTEREST COVERAGE RATIO" shall mean, for any Testing Period, the ratio of (i) Consolidated EBIT to (ii) Total Interest Expense, in each case on a consolidated basis for the Borrower and its Subsidiaries for such Testing Period. "INTEREST PERIOD" with respect to any Eurodollar Loan shall mean the interest period applicable thereto, as determined pursuant to section 2.9. "KEYBANK" shall mean KeyBank National Association, a national banking association, together with its successors and assigns. "LEASEHOLDS" of any person means all the right, title and interest of such person as lessee or licensee in, to and under leases or licenses of land, improvements and/or fixtures. "LENDER" shall have the meaning provided in the first paragraph of this Agreement. "LENDER DEFAULT" shall mean (i) the refusal (which has not been retracted) of a Lender in violation of the requirements of this Agreement to make available its portion of any incurrence of Loans or to fund its portion of any unreimbursed payment under section 3.4(c) or (ii) a Lender having notified the Administrative Agent and/or the Borrower that it does not intend to comply with the obligations under section 2.1 and/or section 3.4(c), in the case of either (i) or (ii) as a result of the appointment of a receiver or conservator with respect to such Lender at the direction or request of any regulatory agency or authority. "LENDER REGISTER" shall have the meaning provided in section 12.16. "LETTER OF CREDIT" shall have the meaning provided in section 3.1(a). "LETTER OF CREDIT DOCUMENTS" shall have the meaning specified in section 3.2(a). "LETTER OF CREDIT FEE" shall have the meaning provided in section 4.1(b). "LETTER OF CREDIT ISSUER" shall mean (i) in respect of each Existing Letter of Credit, the Lender that has issued same as of the Effective Date; and (ii) in respect of any other Letter of Credit, (1) KeyBank, and/or (2) such other Lender that is requested, and agrees, to so act by the Borrower, and is approved by the Administrative Agent. Unless otherwise agreed between the Borrower and KeyBank, KeyBank will be the only Letter of Credit Issuer. 10 16 "LETTER OF CREDIT OUTSTANDINGS" shall mean, at any time, the sum, without duplication, of (i) the aggregate Stated Amount of all outstanding Letters of Credit and (ii) the aggregate amount of all Unpaid Drawings. "LETTER OF CREDIT REQUEST" shall have the meaning provided in section 3.2(a). "LIEN" shall mean any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement or any lease in the nature thereof). "LOAN" shall have the meaning provided in section 2.1. "MARGIN STOCK" shall have the meaning provided in Regulation U. "MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the business, operations, property, assets, liabilities, condition (financial or otherwise) or prospects of, when used with reference to the Borrower or any of its Subsidiaries, the Borrower and its Subsidiaries, taken as a whole, or when used with reference to any other person, such person and its Subsidiaries, taken as a whole, as the case may be. "MATERIAL SUBSIDIARY" shall mean, at any time, with reference to any person, any Subsidiary of such person that (x) has assets at such time comprising 5% or more of the consolidated assets of such person and its Subsidiaries or (y) had net income in the most recently ended fiscal year of such person comprising 5% or more of the consolidated net income of such person and its Subsidiaries for such fiscal year. "MATURITY DATE" shall mean July 31, 2000, unless earlier terminated, or extended in accordance with section 4.4. "MINIMUM BORROWING AMOUNT" shall mean (i) for General Revolving Loans which are (A) Prime Rate Loans, $3,000,000, with minimum increments thereafter of $1,000,000 and (B) Eurodollar Loans, $3,000,000, with minimum increments thereafter of $1,000,000; and (ii) for Swing Line Revolving Loans, $250,000, with minimum increments thereafter of $100,000. "MONEY MARKET RATE LOAN" shall mean each Swing Line Revolving Loan bearing interest at a rate provided in section 2.8(b)(ii). "MOODY'S" shall mean Moody's Investors Service, Inc. and its successors. "MULTIEMPLOYER PLAN" shall mean a multiemployer plan, as defined in section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making or accruing an obligation to make contributions or has within any of the preceding three plan years made or accrued an obligation to make contributions. "MULTIPLE EMPLOYER PLAN" shall mean an employee benefit plan, other than a Multiemployer Plan, to which the Borrower or any ERISA Affiliate, and one or more employers other than the Borrower or an ERISA Affiliate, is making or accruing an obligation to make contributions or, in the event that any such plan has been terminated, to which the Borrower or an ERISA Affiliate made or accrued an obligation to make contributions during any of the five plan years preceding the date of termination of such plan. "NET CASH PROCEEDS" shall mean, with respect to any Asset Sale, the Cash Proceeds resulting therefrom net of (i) reasonable and customary expenses of sale incurred in connection with such Asset Sale, and other reasonable and customary fees and expenses incurred, and all state, and local taxes paid or reasonably estimated to be payable by such person, as a consequence of such Asset Sale and the payment of principal, premium and interest of Indebtedness secured by the asset which is the subject of the Asset Sale and required to be, and which is, repaid under the terms thereof as a result of such Asset Sale, (ii) amounts of any distributions payable to 11 17 holders of minority interests in the relevant person or in the relevant property or assets and (iii) incremental income taxes paid or payable as a result thereof. "1934 ACT" shall mean the Securities Exchange Act of 1934, as amended. "NON-DEFAULTING LENDER" shall mean each Lender other than a Defaulting Lender. "NOTE" shall mean a General Revolving Note or a Swing Line Revolving Note, as the case may be. "NOTICE OF BORROWING" shall have the meaning provided in section 2.3(a). "NOTICE OF CONVERSION" shall have the meaning provided in section 2.7. "NOTICE OFFICE" shall mean the principal office of the Administrative Agent. Such office is presently at Key Center, 127 Public Square, Cleveland, Ohio 44114, Attention: Large Corporate Group (facsimile: (216) 689- 4981). If the Administrative Agent changes its principal office, or a successor Administrative Agent is appointed as provided herein, the Notice Office will be such other principal office, located in a city in the United States Eastern Time Zone, as the Administrative Agent may designate to the Borrower. "OBLIGATIONS" shall mean all amounts, direct or indirect, contingent or absolute, of every type or description, and at any time existing, owing by the Borrower or any other Credit Party to the Administrative Agent or any Lender pursuant to the terms of this Agreement or any other Credit Document. "PARTICIPANT" shall have the meaning provided in section 3.4(a). "PAYMENT OFFICE" shall mean the principal office of the Administrative Agent. Such office is presently at Key Center, 127 Public Square, Cleveland, Ohio 44114, Attention: Large Corporate Group (telephone: (216) 689- 4448; facsimile: (216) 689-4981). If the Administrative Agent changes its principal office, or a successor Administrative Agent is appointed as provided herein, the Payment Office will be such other principal office, located in a city in the United States Eastern Time Zone, as the Administrative Agent may designate to the Borrower. "PBGC" shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto. "PERCENTAGE" shall mean the General Revolving Facility Percentage or the Swing Line Revolving Facility Percentage, as applicable. "PERMITTED ACQUISITION" shall mean and include (i) any acquisition on a going concern basis (whether by purchase, lease or otherwise) of facilities and businesses operated by persons who are not Subsidiaries of the Borrower, and (ii) acquisitions of equity or other similar interests in such persons (whether by merger, stock purchase or otherwise); PROVIDED, that no such transaction shall be considered a Permitted Acquisition if (A) such transaction is actively opposed by the Board of Directors (or similar governing body) of the selling person or the person whose equity interests are to be acquired, UNLESS all of the Lenders consent to such transaction; (B) both (1) at the time thereof and after giving effect thereto, the ratio of the Borrower's Total Net Indebtedness to Consolidated EBITDA for any Testing Period would exceed 3.00 to 1.00, and (2) the aggregate consideration for such transaction (including the principal amount of any assumed Indebtedness and (without duplication) any Indebtedness of any acquired person or persons), would exceed an amount equal to 10% of the Borrower's Total Assets as of the end of its most recently completed fiscal period for which financial statements have been delivered hereunder, UNLESS the 12 18 Required Lenders, in the exercise of reasonable and prudent business judgment, giving due consideration for the Borrower's continued compliance with section 9.6, consent to such transaction (which consent shall be presumed in the case of any Lender if within five Business Days after such Lender received written notification from the Borrower or the Administrative Agent describing in reasonable detail such transaction, such Lender fails to notify the Administrative Agent and the Borrower in writing that such Lender does not intend to consent to such transaction); or (C) as a result thereof the Borrower or any Subsidiary acquires any equity interest in any person and such person does not by virtue of such transaction become a Subsidiary of the Borrower. Notwithstanding the foregoing, the term Permitted Acquisition specifically excludes expenditures (including the purchase of adjacent land) to expand then existing facilities owned by the Borrower or any Subsidiary on the Effective Date or acquired pursuant to a Permitted Acquisition, and any loans, advances or investments otherwise permitted pursuant to section 9.5. "PERMITTED LIENS" shall mean Liens described in section 9.3. "PERSON" shall mean any individual, partnership, joint venture, firm, corporation, limited liability company, association, trust or other enterprise or any government or political subdivision or any agency, department or instrumentality thereof. "PLAN" shall mean any multiemployer or single-employer plan as defined in section 4001 of ERISA, which is maintained or contributed to by (or to which there is an obligation to contribute by) the Borrower or a Subsidiary of the Borrower or an ERISA Affiliate, and each such plan for the five year period immediately following the latest date on which the Borrower, or a Subsidiary of the Borrower or an ERISA Affiliate maintained, contributed to or had an obligation to contribute to such plan. "PLEDGE AGREEMENT" shall have the meaning provided in section 6.1(c). "PRIME RATE" shall mean, for any period, a fluctuating interest rate per annum as shall be in effect from time to time which rate per annum shall at all times be equal to the greater of (i) the rate of interest established by KeyBank in Cleveland, Ohio, from time to time, as its prime rate, whether or not publicly announced, which interest rate may or may not be the lowest rate charged by it for commercial loans or other extensions of credit; and (ii) the Federal Funds Effective Rate in effect from time to time PLUS 1/2 of 1% per annum. "PRIME RATE LOAN" shall mean each Loan bearing interest at the rate provided in section 2.8(a)(i) or 2.8(b)(i). "PROHIBITED TRANSACTION" shall mean a transaction with respect to a Plan that is prohibited under section 4975 of the Code or section 406 of ERISA and not exempt under section 4975 of the Code or section 408 of ERISA. "QUOTED RATE" shall have the meaning provided in section 2.3(b). "RCRA" shall mean the Resource Conservation and Recovery Act, as the same may be amended from time to time, 42 U.S.C. ss. 6901 ET SEQ. "REAL PROPERTY" of any person shall mean all of the right, title and interest of such person in and to land, improvements and fixtures, including Leaseholds. "REFERENCE BANKS" shall mean (i) KeyBank and NBD Bank, and (ii) any other Lender or Lenders selected as a Reference Bank by the Administrative Agent and the Required Lenders, PROVIDED, that if any of such Reference Banks is no longer a Lender, such other Lender or Lenders as may be selected by the Administrative Agent acting on instructions from the Required Lenders. 13 19 "REGULATION D" shall mean Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof establishing reserve requirements. "REGULATION U" shall mean Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof establishing margin requirements. "REPORTABLE EVENT" shall mean an event described in section 4043(c) of ERISA with respect to a Plan other than those events as to which the 30-day notice period is waived under subsection .13, .14, .16, .18, .19 or .20 of PBGC Regulation section 2615. "REQUIRED LENDERS" shall mean Non-Defaulting Lenders whose outstanding General Revolving Loans and Unutilized General Revolving Commitments constitute at least 66+2/3% of the sum of the total outstanding General Revolving Loans and Unutilized General Revolving Commitments of Non-Defaulting Lenders (PROVIDED that, for purposes hereof, neither the Borrower, nor any of its Affiliates, shall be included in (i) the Lenders holding such amount of the General Revolving Loans or having such amount of the Unutilized General Revolving Commitments, or (ii) determining the aggregate unpaid principal amount of the General Revolving Loans or Unutilized General Revolving Commitments). "SALE AND LEASE-BACK TRANSACTION" shall mean any arrangement with any person providing for the leasing by the Borrower or any Subsidiary of the Borrower of any property (except for temporary leases for a term, including any renewal thereof, of not more than one year and except for leases between the Borrower and a Subsidiary or between Subsidiaries), which property has been or is to be sold or transferred by the Borrower or such Subsidiary to such person. "S&P" shall mean Standard & Poor's Ratings Group, a division of McGraw Hill, Inc., and its successors. "SEC" shall mean the United States Securities and Exchange Commission. "SEC REGULATION D" shall mean Regulation D as promulgated under the Securities Act of 1933, as amended, as the same may be in effect from time to time. "SECTION 5.4(b)(ii) CERTIFICATE" shall have the meaning provided in section 5.4(b)(ii). "SECURITY DOCUMENTS" shall mean the Pledge Agreement and each other document pursuant to which any Lien or security interest is granted by any Credit Party to the Collateral Agent as security for any of the Obligations. "STATED AMOUNT" of each Letter of Credit shall mean the maximum available to be drawn thereunder (regardless of whether any conditions or other requirements for drawing could then be met, but taking into account any drawings which have already been made thereunder). "SUBSIDIARY" of any person shall mean and include (i) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such person directly or indirectly through Subsidiaries and (ii) any partnership, association, joint venture or other entity in which such person directly or indirectly through Subsidiaries, has more than a 50% equity interest at the time. Unless otherwise expressly provided, all references herein to "Subsidiary" shall mean a Subsidiary of the Borrower. "SUBSIDIARY GUARANTOR" shall mean any Subsidiary which is a party to the Subsidiary Guaranty. "SUBSIDIARY GUARANTY" shall have the meaning provided in section 6.1(c). 14 20 "SUBORDINATED INDEBTEDNESS" shall mean (i) the Convertible Subordinated Debentures due 2004, and (ii) any other Indebtedness which has been subordinated to the Obligations in such manner and to such extent as the Administrative Agent (acting on instructions from the Required Lenders) may require. "SWING LINE REVOLVING COMMITMENT" shall mean, with respect to each Lender, the amount, if any, set forth opposite such Lender's name in Annex I as its "Swing Line Revolving Commitment" as the same may be reduced from time to time pursuant to section 4.2, 4.3 and/or 10 or adjusted from time to time as a result of assignments to or from such Lender pursuant to section 12.4. "SWING LINE REVOLVING FACILITY" shall mean the facility evidenced by the Total Swing Line Revolving Commitment. "SWING LINE REVOLVING FACILITY PERCENTAGE" shall mean at any time for any Lender with a Swing Line Revolving Commitment, the percentage obtained by dividing such Lender's Swing Line Revolving Commitment by the Total Swing Line Revolving Commitment, PROVIDED, that if the Total Swing Line Revolving Commitment has been terminated, the Swing Line Revolving Facility Percentage for each Lender with a Swing Line Revolving Commitment shall be determined by dividing such Lender's Swing Line Revolving Commitment immediately prior to such termination by the Total Swing Line Revolving Commitment immediately prior to such termination. "SWING LINE REVOLVING LOAN" shall have the meaning provided in section 2.1(b). "SWING LINE REVOLVING NOTE" shall have the meaning provided in section 2.6(a)(ii). "TESTING PERIOD" shall mean for any determination a single period consisting of the four consecutive fiscal quarters of the Borrower then last ended (whether or not such quarters are all within the same fiscal year). "TOTAL AMORTIZATION EXPENSE" shall mean, for any period, all amortization expenses of the Borrower and its Subsidiaries, all as determined for the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP. "TOTAL ASSETS" shall mean at any time the total assets, net of depreciation, reserves and other adjustments, which would appear on a consolidated balance sheet, prepared in accordance with GAAP, of the Borrower and its Subsidiaries at such time. "TOTAL COMMITMENT" shall mean the sum of the Commitments of the Lenders. "TOTAL DEPRECIATION EXPENSE" shall mean, for any period, all depreciation expenses of the Borrower and its Subsidiaries, all as determined for the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP. "TOTAL GENERAL REVOLVING COMMITMENT" shall mean the sum of the General Revolving Commitments of the Lenders. "TOTAL INCOME TAX EXPENSE" shall mean, for any period, all provisions for taxes based on the net income of the Borrower or any of its Subsidiaries (including, without limitation, any additions to such taxes, and any penalties and interest with respect thereto), and all franchise taxes of the Borrower and its Subsidiaries, all as determined for the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP. "TOTAL INDEBTEDNESS" shall mean the sum (without duplication) of the following, for the Borrower and/or any of its Subsidiaries, all as determined on a consolidated basis of: (i) all indebtedness for borrowed money, 15 21 (ii) all bonds, notes, debentures and similar debt securities, (iii) the deferred purchase price of capital assets or services which in accordance with GAAP would be shown on the liability side of a consolidated balance sheet of the Borrower and its Subsidiaries, (iv) all Indebtedness of a second person secured by any Lien on any property owned by such first person, whether or not such Indebtedness has been assumed, up to the greater of (A) the portion of such Indebtedness equivalent to the fair value of such property, and (B) if such Indebtedness has been assumed by such first person, the amount thereof so assumed, (v) all Capitalized Lease Obligations, (vi) the present value, determined on the basis of the implicit interest rate, of all basic rental obligations under all "synthetic" leases (i.e. leases accounted for by the lessee as operating leases under which the lessee is the "owner" of the leased property for Federal income tax purposes, and (vii) the full outstanding balance of trade receivables sold with full or limited recourse, other than solely for purposes of collection of delinquent accounts, PROVIDED that if the structure of any receivables sales program provides for "over-collateralization", the outstanding balance of the trade receivables attributable to the "over-collateralization" may be excluded, PROVIDED that neither trade payables and accrued expenses, in each case arising in the ordinary course of business, nor obligations in respect of insurance policies or performance or surety bonds which themselves are not guarantees of Indebtedness, shall be included. "TOTAL INTEREST EXPENSE" shall mean, for any period, total interest expense (including that which is capitalized and that which is attributable to Capital Leases, in accordance with GAAP) of the Borrower and its Subsidiaries on a consolidated basis with respect to all outstanding Indebtedness of the Borrower and its Subsidiaries including, without limitation, all commissions, discounts and other fees and charges owed with respect to letters of credit and net costs under Hedge Agreements, but excluding, however, any amortization of deferred financing costs, all as determined in accordance with GAAP. "TOTAL NET INDEBTEDNESS" shall mean at any time (i) Total Indebtedness at such time, LESS (ii) the excess at such time, if any, of the cash and Cash Equivalents of the Borrower and its Subsidiaries on a consolidated basis, over $5,000,000. "TOTAL SENIOR INDEBTEDNESS" shall mean at any time (i) Total Indebtedness at such time, LESS (ii) the then outstanding principal amount of the Convertible Subordinated Debentures due 2004. "TOTAL SWING LINE REVOLVING COMMITMENT" shall mean the sum of the Swing Line Revolving Commitments of the Lenders. "TYPE" shall mean any type of Loan determined with respect to the interest option applicable thereto, I.E., a Prime Rate Loan, Eurodollar Loan or Money Market Rate Loan. "UCC" shall mean the Uniform Commercial Code. "UNFUNDED CURRENT LIABILITY" of any Plan shall mean the amount, if any, by which the actuarial present value of the accumulated plan benefits under the Plan as of the close of its most recent plan year exceeds the fair market value of the assets allocable thereto, each determined in accordance with Statement of Financial Accounting Standards No. 87, based upon the actuarial assumptions used by the Plan's actuary in the most recent annual valuation of the Plan. 16 22 "UNITED STATES" and "U.S." each means United States of America. "UNPAID DRAWING" shall have the meaning provided in section 3.3(a). "UNUTILIZED GENERAL REVOLVING COMMITMENT" for any Lender at any time shall mean the excess of (i) such Lender's General Revolving Commitment at such time over (ii) the sum of the principal amount of General Revolving Loans made by such Lender and outstanding at such time and (y) such Lender's General Revolving Facility Percentage of Letter of Credit Outstandings at such time. "UNUTILIZED TOTAL GENERAL REVOLVING COMMITMENT" shall mean, at any time, the excess of (i) the Total General Revolving Commitment at such time over (ii) the sum of (x) the aggregate principal amount of all General Revolving Loans then outstanding plus (y) the aggregate Letter of Credit Outstandings at such time. "VALUE" shall mean, with respect to a Sale and Lease-Back Transaction, as of any particular time, the amount equal to the greater of (i) the net proceeds of the sale or transfer of the property leased pursuant to such Sale and Lease-Back Transaction or (ii) the fair value in the opinion of the Borrower, acting in good faith, of such property at the time of entering into such Sale and Lease-Back Transaction. "WHOLLY-OWNED SUBSIDIARY" shall mean each Subsidiary of the Borrower at least 95% of whose capital stock, equity interests and partnership interests, other than director's qualifying shares or similar interests, are owned directly or indirectly by the Borrower. "WRITTEN", "WRITTEN" or "IN WRITING" shall mean any form of written communication or a communication by means of telex, facsimile transmission, telegraph or cable. 1.2. COMPUTATION OF TIME PERIODS. In this Agreement in the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each means "to but excluding". 1.3. ACCOUNTING TERMS. Except as otherwise specifically provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; PROVIDED that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the Effective Date in GAAP or in the application thereof to such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purposes), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance with the requirements of this Agreement. 1.4. TERMS GENERALLY. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise, (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any person shall be construed to include such person's successors and assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to sections, Annexes and Exhibits shall be construed to refer to sections of, and Annexes and Exhibits to, this Agreement, and (e) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any and all real property, tangible and 17 23 intangible assets and properties, including cash, securities, accounts and contract rights, and interests in any of the foregoing. SECTION 2. AMOUNT AND TERMS OF LOANS. 2.1. COMMITMENTS FOR LOANS. Subject to and upon the terms and conditions herein set forth, each Lender severally agrees to make a loan or loans (each a "LOAN" and, collectively, the "LOANS") to the Borrower, and the Borrower shall be entitled to obtain Loans from the Lenders, which Loans shall be drawn, to the extent such Lender has a Commitment under a Facility for the Borrower, under the applicable Facility, as set forth below: (a) GENERAL REVOLVING FACILITY. Loans to the Borrower under the General Revolving Facility (each a "GENERAL REVOLVING LOAN" and, collectively, the "GENERAL REVOLVING LOANS") (i) may be made at any time and from time to time on and after the Closing Date and prior to the Maturity Date; (ii) shall be made only in U.S. Dollars; (iii) except as otherwise provided, may, at the option of the Borrower, be incurred and maintained as, or converted into, General Revolving Loans which are either Prime Rate Loans or Eurodollar Loans, PROVIDED that all General Revolving Loans made as part of the same Borrowing shall, unless otherwise specifically provided herein, consist of General Revolving Loans of the same Type; (iv) may be repaid or prepaid and reborrowed in accordance with the provisions hereof; (v) may only be made if after giving effect thereto the aggregate outstanding General Revolving Loans and Swing Line Revolving Loans do not exceed the Available Commitment Amount as of the end of the fiscal quarter most recently ended prior thereto for which financial statements have been delivered pursuant to section 8.1(a) or (b) hereof; (vi) may only be made if after giving effect thereto the Unutilized Total General Revolving Commitment exceeds the outstanding Swing Line Revolving Loans; and (vii) shall not exceed for any Lender at any time outstanding that aggregate principal amount which, when added to the product at such time of (A) such Lender's General Revolving Facility Percentage, TIMES (B) the aggregate Letter of Credit Outstandings, equals the General Revolving Commitment of such Lender at such time. (b) SWING LINE REVOLVING FACILITY. Loans to the Borrower under the Swing Line Revolving Facility (each a "SWING LINE REVOLVING LOAN" and, collectively, the "SWING LINE REVOLVING LOANS") (i) may be made at any time and from time to time on and after the Closing Date and prior to the Maturity Date; (ii) shall be made only in U.S. Dollars; (iii) shall have a maturity of 7 days or less; (iv) except as otherwise provided, may, at the option of the Borrower, be incurred as Swing Line Revolving Loans which are either Prime Rate Loans or Money Market Rate Loans, PROVIDED that all Swing Line Revolving Loans made as part of the same Borrowing shall, unless otherwise specifically provided herein, consist of Swing Line Revolving Loans of the same Type; (v) may be repaid or prepaid and reborrowed in accordance with the provisions hereof; (vi) may only be made if after giving effect thereto the aggregate outstanding General Revolving Loans and Swing Line Revolving Loans do not exceed the Available Commitment Amount as of the end of the fiscal quarter most recently ended prior thereto for which financial statements have been delivered pursuant to section 8.1(a) or (b) hereof; and (vii) shall not exceed for any Lender at any time outstanding such Lender's Swing Line Revolving Commitment at such time. 2.2. MINIMUM BORROWING AMOUNTS, ETC.; PRO RATA BORROWINGS. (a) The aggregate principal amount of each Borrowing by the Borrower shall not be less than the Minimum Borrowing Amount. More than one Borrowing may be incurred by the Borrower on any day, PROVIDED that (i) if there are two or more Borrowings on a single day under the same Facility which consist of Eurodollar Loans, each such Borrowing shall have a different initial Interest Period, and at no time shall there be more than 15 Borrowings under the General Revolving Facility which are Eurodollar Loans outstanding hereunder. (b) All Borrowings under a Facility shall be made by the Lenders PRO RATA on the basis of their respective Commitments under such Facility. It is understood that no Lender shall be responsible for any default 18 24 by any other Lender in its obligation to make Loans hereunder and that each Lender shall be obligated to make the Loans provided to be made by it hereunder, regardless of the failure of any other Lender to fulfill its Commitment hereunder. 2.3. NOTICE OF BORROWING. (a) Whenever the Borrower desires to incur Loans, it shall give the Administrative Agent at its Notice Office, (A) in the case of any Borrowing under the General Revolving Facility of Eurodollar Loans to be made hereunder, prior to 11:00 A.M. (local time at its Notice Office), at least three Business Days' prior written or telephonic notice thereof (in the case of telephonic notice, promptly confirmed in writing if so requested by the Administrative Agent), (B) in the case of any Borrowing under the General Revolving Facility of Prime Rate Loans to be made hereunder, prior to 11:00 A.M. (local time at its Notice Office) on the proposed date thereof written or telephonic notice thereof (in the case of telephonic notice, promptly confirmed in writing if so requested by the Administrative Agent), or (C) in the case of any Borrowing under the Swing Line Revolving Facility of any Loans to be made hereunder, prior to 2:00 P.M. (local time at its Notice Office) on the proposed date thereof (which shall in the case of any Money Market Rate Loans be within such period as the Administrative Agent shall have specified for the Quoted Rate for such Money Market Rate Loans) written or telephonic notice thereof (in the case of telephonic notice, promptly confirmed in writing if so requested by the Administrative Agent). Each such notice (each such notice, a "NOTICE OF BORROWING") shall (if requested by the Administrative Agent to be confirmed in writing), be substantially in the form of Exhibit B-1, and in any event shall be irrevocable and shall specify: (i) the Facility under which the Borrowing is to be incurred; (ii) the aggregate principal amount of the Loans to be made pursuant to such Borrowing; (iii) the date of the Borrowing (which shall be a Business Day); (iv) whether the Borrowing shall consist of Prime Rate Loans, Eurodollar Loans or Money Market Rate Loans; (v) if the Borrowing consists of Swing Line Revolving Loans, the maturity date thereof (which shall not be more than 7 days), and if such Swing Line Revolving Loans are Money Market Rate Loans, the Quoted Rate therefor; and (vi) if the requested Borrowing consists of Eurodollar Loans, the Interest Period to be initially applicable thereto. If the Borrower fails to specify in a Notice of Borrowing the maturity date of any Swing Line Revolving Loans, such maturity date shall be deemed to be 7 days. The Administrative Agent shall promptly give each Lender which has a Commitment under any applicable Facility written notice (or telephonic notice promptly confirmed in writing) of each proposed Borrowing under the applicable Facility, of such Lender's proportionate share thereof and of the other matters covered by the Notice of Borrowing relating thereto. (b) Whenever the Borrower proposes to submit a Notice of Borrowing with respect to Swing Line Revolving Loans which will be Money Market Rate Loans, it will prior to submitting such Notice of Borrowing notify the Administrative Agent of its intention and request the Administrative Agent to quote a fixed or floating interest rate (the "QUOTED RATE") to be applicable thereto prior to the proposed maturity thereof. The Administrative Agent will immediately so notify the Lenders with Commitments under the Swing Line Revolving Facility, and if all of such Lenders are agreeable to a particular interest rate for the proposed maturity of such Money Market Rate Loans if such Loans are made on or prior to a specified date, the Administrative Agent shall quote such interest rate to the Borrower as the Quoted Rate applicable to such proposed Money Market Rate Loans if made on or before such specified date for a maturity as so proposed by the Borrower. The Lenders with Commitments under the Swing Line Revolving Facility contemplate that any Quoted Rate will be a rate of interest which reflects a margin corresponding to (or greater than) the Applicable Eurodollar Margin in effect at the time of quotation of any Quoted Rate, over the then prevailing Federal Funds Effective Rate, or a commercial paper, call money, overnite repurchase or other commonly quoted interest rate, in each case as selected by such Lenders. Nothing herein shall obligate any Lender to approve or agree to a Quoted Rate. 19 25 (c) Without in any way limiting the obligation of the Borrower to confirm in writing any telephonic notice permitted to be given hereunder, the Administrative Agent may act prior to receipt of written confirmation without liability upon the basis of such telephonic notice believed by the Administrative Agent in good faith to be from an Authorized Officer of the Borrower entitled to give telephonic notices under this Agreement on behalf of the Borrower. In each such case, the Administrative Agent's record of the terms of such telephonic notice shall be conclusive absent manifest error. 2.4. DISBURSEMENT OF FUNDS. (a) No later than (x) 2:00 P.M. (local time at the Payment Office) on the date specified in each Notice of Borrowing relating to General Revolving Loans, or (y) 2:30 P.M. (local time at the Payment Office) on the date specified in each Notice of Borrowing relating to Swing Line Revolving Loans, each Lender with a Commitment under the Facility under which any Borrowing pursuant to such Notice of Borrowing is to be made will make available its PRO RATA share, if any, of each Borrowing under such Facility requested to be made on such date in the manner provided below. All amounts shall be made available to the Administrative Agent in U.S. dollars and immediately available funds at the Payment Office and the Administrative Agent promptly will make available to the Borrower by depositing to its account at the Payment Office the aggregate of the amounts so made available in the type of funds received. Unless the Administrative Agent shall have been notified by any Lender prior to the date of Borrowing that such Lender does not intend to make available to the Administrative Agent its portion of the Borrowing or Borrowings to be made on such date, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent on such date of Borrowing, and the Administrative Agent, in reliance upon such assumption, may (in its sole discretion and without any obligation to do so) make available to the Borrower a corresponding amount. If such corresponding amount is not in fact made available to the Administrative Agent by such Lender and the Administrative Agent has made available same to the Borrower, the Administrative Agent shall be entitled to recover such corresponding amount from such Lender. If such Lender does not pay such corresponding amount forthwith upon the Administrative Agent's demand therefor, the Administrative Agent shall promptly notify the Borrower, and the Borrower shall immediately pay such corresponding amount to the Administrative Agent. The Administrative Agent shall also be entitled to recover from such Lender or the Borrower, as the case may be, interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Administrative Agent to the Borrower to the date such corresponding amount is recovered by the Administrative Agent, at a rate per annum equal to (x) if paid by such Lender, the overnight Federal Funds Effective Rate or (y) if paid by the Borrower, the then applicable rate of interest, calculated in accordance with section 2.8, for the respective Loans (but without any requirement to pay any amounts in respect thereof pursuant to section 2.11). (b) Nothing herein and no subsequent termination of the Commitments pursuant to section 4.2 or 4.3 shall be deemed to relieve any Lender from its obligation to fulfill its commitments hereunder and in existence from time to time or to prejudice any rights which the Borrower may have against any Lender as a result of any default by such Lender hereunder. 2.5. REFUNDING OF, OR PARTICIPATION IN, SWING LINE REVOLVING LOANS. (a) If any Event of Default exists, any Lender which has Swing Line Revolving Loans owing to it (a "SWING LINE LENDER") may, in its sole and absolute discretion, direct that the Swing Line Revolving Loans owing to it be refunded by delivering a notice to such effect to the Administrative Agent, specifying the aggregate principal amount thereof (a "NOTICE OF SWING LINE REFUNDING"). Promptly upon receipt of a Notice of Swing Line Refunding, the Administrative Agent shall give notice of the contents thereof to the Lenders with General Revolving Commitments and, unless an Event of Default specified in section 10.1(h) in respect of the Borrower has occurred, the Borrower. Each such Notice of Swing Line Refunding shall be deemed to constitute delivery by the Borrower of a Notice of Borrowing requesting General Revolving Loans consisting of Prime Rate Loans in the amount of the Swing Line Revolving Loans to which it relates. Each Lender with a General Revolving Commitment (including the Swing Line Lender giving the Notice of Swing Line Refunding) hereby unconditionally agrees (notwithstanding that any of the conditions specified in section 6.2 hereof or elsewhere in this Agreement shall not have been satisfied, but subject to the provisions of paragraph (b) below) to make a General Revolving Loan to the Borrower in an amount equal to such Lender's General Revolving Facility Percentage of the aggregate amount of the Swing Line Revolving Loans to which such Notice of Swing Line Refunding relates. Each such Lender shall make the 20 26 amount of such General Revolving Loan available to the Administrative Agent in immediately available funds at the Payment Office not later than 2:00 P.M. (local time at the Payment Office), if such notice is received by such Lender prior to 10:30 A.M. (local time at its Domestic Lending Office), or not later than 2:00 P.M. (local time at the Payment Office) on the next Business Day, if such notice is received by such Lender after such time. The proceeds of such General Revolving Loans shall be made immediately available to the Swing Line Lender giving such Notice of Swing Line Refunding and applied by it to repay the principal amount of the Swing Line Revolving Loans to which such Notice of Swing Line Refunding related. The Borrower irrevocably and unconditionally agrees that, notwithstanding anything to the contrary contained in this Agreement, General Revolving Loans made as herein provided in response to a Notice of Swing Line Refunding shall constitute General Revolving Loans hereunder consisting of Prime Rate Loans. (b) If prior to the time a General Revolving Loan would otherwise have been made as provided above as a consequence of a Notice of Swing Line Refunding, any of the events specified in section 10.1(h) shall have occurred in respect of the Borrower or one or more of the Lenders with General Revolving Commitments shall determine that it is legally prohibited from making a General Revolving Loan under such circumstances, each Lender (other than the Swing Line Lender giving the Notice of Swing Line Refunding), or each Lender (other than such Swing Line Lender) so prohibited, as the case may be, shall, on the date such General Revolving Loan would have been made by it (the "PURCHASE DATE"), purchase an undivided participating interest in the outstanding Swing Line Revolving Loans to which such Notice of Swing Line Refunding related, in an amount (the "SWING LINE PARTICIPATION AMOUNT") equal to such Lender's General Revolving Facility Percentage of such Swing Line Revolving Loans. On the Purchase Date, each such Lender or each such Lender so prohibited, as the case may be, shall pay to the Swing Line Lender, in immediately available funds, such Lender's Swing Line Participation Amount, and promptly upon receipt thereof the Swing Line Lender shall, if requested by such other Lender, deliver to such Lender a participation certificate, dated the date of the Swing Line Lender's receipt of the funds from, and evidencing such Lender's participating interest in such Swing Line Revolving Loans and its Swing Line Participation Amount in respect thereof. If any amount required to be paid by a Lender to the Swing Line Lender pursuant to the above provisions in respect of any Swing Line Participation Amount is not paid on the date such payment is due, such Lender shall pay to the Swing Line Lender on demand interest on the amount not so paid at the overnight Federal Funds Effective Rate from the due date until such amount is paid in full. (c) Whenever, at any time after the Swing Line Lender has received from any other Lender such Lender's Swing Line Participation Amount, the Swing Line Lender receives any payment from or on behalf of the Borrower on account of the related Swing Line Revolving Loans, the Swing Line Lender will promptly distribute to such Lender its General Revolving Facility Percentage of such payment on account of its Swing Line Participation Amount (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender's participating interest was outstanding and funded); PROVIDED, HOWEVER, that in the event such payment received by the Swing Line Lender is required to be returned, such Lender will return to the Swing Line Lender any portion thereof previously distributed to it by the Swing Line Lender. (d) Each Lender's obligation to make General Revolving Loans and/or to purchase participations in connection with a Notice of Swing Line Refunding shall be absolute and unconditional, shall be solely for the benefit of the Swing Line Lender which gives such Notice of Swing Line Refunding, and shall not be affected by any circumstance, including, without limitation, (i) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against any other Lender, any Credit Party, or any other person, or any Credit Party may have against any Lender or other person, as the case may be, for any reason whatsoever; (ii) the occurrence or continuance of a Default or Event of Default; (iii) any event or circumstance involving a Material Adverse Effect upon the Borrower, (iv) any breach of any Credit Document by any party thereto; or (v) any other circumstance, happening or event, whether or not similar to any of the foregoing. 2.6. NOTES. (a) The Borrower's obligation to pay the principal of, and interest on, the Loans made to it by each Lender shall be evidenced (i) if General Revolving Loans, by a promissory note substantially in the form of Exhibit A-1 with blanks appropriately completed in conformity herewith (each a "GENERAL REVOLVING NOTE" and, collectively, the "GENERAL REVOLVING NOTES"), and (ii) if Swing Line Revolving Loans, by a promissory note 21 27 substantially in the form of Exhibit A-2 with blanks appropriately completed in conformity herewith (each a "SWING LINE REVOLVING NOTE" and, collectively, the "SWING LINE REVOLVING NOTES"). (b) The General Revolving Note issued to a Lender with a General Revolving Commitment shall: (i) be executed by the Borrower; (ii) be payable to the order of such Lender and be dated on or prior to the date the first Loan evidenced thereby is made; (iii) be in a stated principal amount equal to the General Revolving Commitment of such Lender and be payable in the principal amount of General Revolving Loans evidenced thereby; (iv) mature on the Maturity Date; (v) bear interest as provided in section 2.8 in respect of the Prime Rate Loans and Eurodollar Loans, as the case may be, evidenced thereby; (vi) be subject to mandatory prepayment as provided in section 5.2: and (vii) be entitled to the benefits of this Agreement and the other Credit Documents. (c) The Swing Line Revolving Note issued to a Lender with a Swing Line Revolving Commitment shall: (i) be executed by the Borrower; (ii) be payable to the order of such Lender and be dated on or prior to the date the first Loan evidenced thereby is made; (iii) be in a stated principal amount equal to the Swing Line Revolving Commitment of such Lender and be payable in the principal amount of Swing Line Revolving Loans evidenced thereby; (iv) mature as to any Swing Line Revolving Loan evidenced thereby on the maturity date, not later than the 7th day following the date such Swing Line Revolving Loan was made, specified in the applicable Notice of Borrowing; (v) bear interest as provided in section 2.8 in respect of the Prime Rate Loans or Money Market Rate Loans, as the case may be, evidenced thereby; (vi) be subject to mandatory prepayment as provided in section 5.2; and (vii) be entitled to the benefits of this Agreement and the other Credit Documents. (d) Each Lender will note on its internal records the amount of each Loan made by it and each payment in respect thereof and will, prior to any transfer of any Note, endorse on the reverse side thereof or the grid attached thereto the outstanding principal amount of Loans evidenced thereby. Failure to make any such notation or any error in any such notation shall not affect the Borrower's obligations in respect of such Loans. 2.7. CONVERSIONS OF GENERAL REVOLVING LOANS. The Borrower shall have the option to convert on any Business Day all or a portion at least equal to the applicable Minimum Borrowing Amount of the outstanding principal amount of the outstanding Loans comprising a Borrowing under the General Revolving Facility into a Borrowing or Borrowings under the same Facility of the other Type of Loan which can be made pursuant to such Facility, PROVIDED that: (i) no partial conversion of a Borrowing of Eurodollar Loans shall reduce the outstanding principal amount of the Eurodollar Loans made pursuant to such Borrowing to less than the Minimum Borrowing Amount applicable thereto; (ii) any conversion of Eurodollar Loans into Prime Rate Loans shall be made on, and only on, the last day of an Interest Period for such Eurodollar Loans; (iii) Prime Rate Loans may only be converted into Eurodollar Loans if no Default under section 10.1(a) or Event of Default is in existence on the date of the conversion unless the Required Lenders otherwise agree; and (iv) Borrowings of Eurodollar Loans resulting from this section 2.7 shall conform to the requirements of section 2.2. Each such conversion shall be effected by the Borrower giving the Administrative Agent at its Notice Office, prior to 11:00 A.M. (local time at such Notice Office), at least three Business Days' (or prior to 11:00 A.M. (local time at such Notice Office) same Business Day's, in the case of a conversion into Prime Rate Loans) prior written notice (or telephonic notice promptly confirmed in writing if so requested by the Administrative Agent) (each a "NOTICE OF CONVERSION"), substantially in the form of Exhibit B-2, specifying the Loans to be so converted, the Type of Loans to be converted into and, if to be converted into a Borrowing of Eurodollar Loans, the Interest Period to be initially applicable thereto. The Administrative Agent shall give each Lender prompt notice of any such proposed conversion affecting any of its Loans. For the avoidance of doubt, the prepayment or repayment of any Loans out of the proceeds of other Loans by the Borrower is not considered a conversion of Loans into other Loans. 2.8. INTEREST. (a) The unpaid principal amount of each General Revolving Loan which is (i) a Prime Rate Loan shall bear interest from the date of the Borrowing thereof until maturity (whether by acceleration or otherwise) at a fluctuating rate per annum which shall at all times be equal to the Prime Rate in effect from time to time; and (ii) a Eurodollar Loan shall bear interest from the date of the Borrowing thereof until maturity (whether by acceleration or otherwise) at a rate per annum which shall at all times be the 22 28 Applicable Eurodollar Margin (as defined below) for such General Revolving Loan PLUS the relevant Eurodollar Rate. (b) The unpaid principal amount of each Swing Line Revolving Loan which is (i) a Prime Rate Loan shall bear interest from the date of the Borrowing thereof until maturity (whether by acceleration or otherwise) at a fluctuating rate per annum which shall at all times be equal to the Prime Rate in effect from time to time; and (ii) a Money Market Rate Loan shall bear interest from the date of the Borrowing thereof until maturity (whether by acceleration or otherwise) at a rate per annum which shall be equal to the Quoted Rate therefor. (c) Notwithstanding the above provisions, if a Default under section 10.1(a) is in existence, or an Event of Default is in existence and the Administrative Agent or any Lender shall have notified the Borrower thereof in writing, all outstanding amounts of principal and, to the extent permitted by law, all overdue interest, in respect of each Loan shall bear interest, payable on demand, at a rate per annum equal to 2% per annum above the interest rate otherwise applicable thereto. If any amount (other than the principal of and interest on the Loans) payable by the Borrower under the Credit Documents is not paid when due, such amount shall bear interest, payable on demand, at a rate per annum equal to the Prime Rate in effect from time to time PLUS 2% per annum. (d) Interest shall accrue from and including the date of any Borrowing to but excluding the date of any prepayment or repayment thereof and shall be payable: (i) in the case of any Swing Line Revolving Loan, (A) in advance on a nonrefundable basis, if so agreed by the Borrower, or (B) in all other cases, on any prepayment (on the amount prepaid), at maturity (whether by acceleration or otherwise) and, after such maturity, on demand; and (ii) in the case of any General Revolving Loan, (A) which is a Prime Rate Loan, quarterly in arrears on the last Business Day of March, June, September and December, (B) which is a Eurodollar Loan, on the last day of each Interest Period applicable thereto and, in the case of an Interest Period in excess of three months, on the dates which are successively three months after the commencement of such Interest Period, and (C) in respect of each Loan, on any prepayment or conversion (on the amount prepaid or converted), at maturity (whether by acceleration or otherwise) and, after such maturity, on demand. (e) All computations of interest hereunder shall be made in accordance with section 12.7(b). (f) Each Reference Bank agrees to furnish the Administrative Agent timely information for the purpose of determining the Eurodollar Rate for any Borrowing consisting of Eurodollar Loans. If any one or more of the Reference Banks shall not timely furnish such information, the Administrative Agent shall determine the Eurodollar Rate on the basis of timely information furnished by the remaining Reference Banks. The Administrative Agent upon determining the interest rate for any Borrowing shall promptly notify the Borrower and the Lenders thereof. (g) As used herein, the term "APPLICABLE EURODOLLAR MARGIN", as applied to any Loan which is a Eurodollar Loan, means 32.5 basis points per annum; PROVIDED, that subsequent to the fiscal quarter of the Borrower ended nearest to June 30, 1997, the Applicable Eurodollar Margin will be determined by reference to the rate per annum indicated in the Pricing Grid Table which appears below, based on the ratio referred to in section 9.6 and identified in such Table. Changes in the Applicable Eurodollar Margin based upon changes in such ratio shall become effective on the date of the receipt by the Administrative Agent pursuant to section 8.1(a) or (b) of the financial statements of the Borrower, accompanied by the certificate referred to in section 8.1(c), demonstrating the computation of such ratio, based upon the ratio in effect at the end of the applicable period covered (in whole or in part) by such financial statements; PROVIDED that: 23 29 (i) If any financial statements referred to in section 8.1(a) or (b), or the related certificate referred to in section 8.1(c), are not timely delivered, the Administrative Agent may determine the Applicable Eurodollar Margin based upon a good faith estimate by the Borrower of such ratio as in effect at the end of the applicable period to be covered (in whole or in part) by such financial statements, PROVIDED that if upon delivery of such delinquent financial statements and related certificate, such financial statements indicate that such good faith estimate was incorrect and, as a result thereof, the Applicable Eurodollar Margin for any Loans was too low at such determination, the Applicable Eurodollar Margin for such Loans shall be increased, as appropriate, with retroactive effect to the date of the change made on the basis of such determination, and the Borrower will immediately pay to the Administrative Agent, for the account of the Lenders having Commitments in respect of the Facility under which such Loans were incurred all additional interest due by reason of such increased Applicable Eurodollar Margin. (ii) If subsequent to any such determination of the Applicable Eurodollar Margin and prior to the delivery of any subsequent financial statements, the Administrative Agent believes that there has been an increase in the amount of Total Net Indebtedness such that if the current amount of Total Net Indebtedness had been used to make such determination, instead of the amount of Total Net Indebtedness as of the date of the financial statements used in making such determination, the Applicable Eurodollar Margin would have been higher than as so determined, the Administrative Agent may require the Borrower to confirm to it the current amount of Total Net Indebtedness and the Administrative Agent may re-determine the Applicable Eurodollar Margin using such current amount, and if the Applicable Eurodollar Margin as so re-determined is higher, the Applicable Eurodollar Margin for Eurodollar Loans shall be increased, as appropriate, with retroactive effect to the date of the change made on the basis of the earlier determination, as specified in a notice from the Administrative Agent to the Borrower and the affected Lenders, and the Borrower will immediately pay to the Administrative Agent, for the account of the Lenders having Commitments in respect of the Facility under which such Loans were incurred all additional interest due by reason of such increased Applicable Eurodollar Margin. The Administrative Agent (x) may make any such re-determination on not more than one occasion during any particular period between the delivery dates of financial statements for successive periods hereunder, and (y) may only make any such re-determination as a result of an increase in the amount of Total Net Indebtedness which is attributable (in whole or in significant part) to the application by the Borrower of the proceeds of the offering of Convertible Subordinated Debentures due 2004 (or the identifiable cash and Cash Equivalents in which such proceeds have been temporarily invested) to a Permitted Acquisition, or a loan, advance or investment permitted hereby, or Consolidated Capital Expenditure, or other form of corporate expenditure. (iii) If subsequent to any such determination of the Applicable Eurodollar Margin and prior to the delivery of any subsequent financial statements, the Borrower recognizes that an event (such as, without limitation, an offering of its common stock) has occurred as a result of which there has been a decrease in the amount of Total Net Indebtedness such that if the current amount of Total Net Indebtedness had been used to make such determination, instead of the amount of Total Net Indebtedness as of the date of the financial statements used in making such determination, the Applicable Eurodollar Margin would have been lower than as so determined, the the Borrower may confirm to the Administrative Agent the current amount of Total Net Indebtedness and the Administrative Agent will promptly re-determine the Applicable Eurodollar Margin using such current amount, and if the Applicable Eurodollar Margin as so re-determined is lower, the Applicable Eurodollar Margin for Eurodollar Loans shall be decreased, as appropriate, with prospective effect, as specified in a notice promptly given by the Administrative Agent to the Borrower and the affected Lenders. The Borrower may not require the Administrative Agent to make any such re-determination on more than one occasion during the entire time this Agreement is effective. Any changes in the Applicable Eurodollar Margin shall be determined by the Administrative Agent and the Administrative Agent will promptly provide notice of such determinations to the Borrower and the Lenders. Any 24 30 such determination by the Administrative Agent pursuant to this section 2.7(g) shall be conclusive and binding absent manifest error. PRICING GRID TABLE (EXPRESSED IN BASIS POINTS)
==================================================================================================== Applicable Applicable TOTAL NET INDEBTEDNESS/EBITDA RATIO Eurodollar Facility Margin Fee Rate - ---------------------------------------------------------------------------------------------------- greater than or equal to 4.25 to 1.00 150.00 50.00 - ---------------------------------------------------------------------------------------------------- greater than or equal 4.00 to 1.00 and less than 4.25 to 1.00 140.00 40.00 - ---------------------------------------------------------------------------------------------------- greater than or equal 3.50 to 1.00 and less than 4.00 to 1.00 100.00 30.00 - ---------------------------------------------------------------------------------------------------- greater than or equal 3.00 to 1.00 and less than 3.50 to 1.00 75.00 25.00 - ---------------------------------------------------------------------------------------------------- greater than or equal 2.50 to 1.00 and less than 3.00 to 1.00 62.50 15.00 - ---------------------------------------------------------------------------------------------------- greater than or equal 2.00 to 1.00 and less than 2.50 to 1.00 57.50 12.50 - ---------------------------------------------------------------------------------------------------- greater than or equal 1.50 to 1.00 and less than 2.00 to 1.00 42.50 12.50 - ---------------------------------------------------------------------------------------------------- less than 1.50 to 1.00 32.50 12.50 ====================================================================================================
2.9. INTEREST PERIODS. (a) At the time the Borrower gives a Notice of Borrowing or Notice of Conversion in respect of the making of, or conversion into, a Borrowing of Eurodollar Loans (in the case of the initial Interest Period applicable thereto) or prior to 11:00 A.M. (local time at the applicable Notice Office) on the third Business Day prior to the expiration of an Interest Period applicable to a Borrowing of Eurodollar Loans, it shall have the right to elect by giving the Administrative Agent written or telephonic notice (in the case of telephonic notice, promptly confirmed in writing if so requested by the Administrative Agent) of the Interest Period applicable to such Borrowing, which Interest Period shall, at the option of the Borrower, be a one, two, three or six month period. Notwithstanding anything to the contrary contained above: (i) the initial Interest Period for any Borrowing of Eurodollar Loans shall commence on the date of such Borrowing (including the date of any conversion from a Borrowing of Prime Rate Loans) and each Interest Period occurring thereafter in respect of such Borrowing shall commence on the day on which the next preceding Interest Period expires; (ii) if any Interest Period begins on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period, such Interest Period shall end on the last Business Day of such calendar month; (iii) if any Interest Period would otherwise expire on a day which is not a Business Day, such Interest Period shall expire on the next succeeding Business Day, PROVIDED that if any Interest Period would otherwise expire on a day which is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the next preceding Business Day; 25 31 (iv) no Interest Period for any Loan may be selected which would end after the Maturity Date; and (v) no Interest Period may be elected at any time when a Default under section 10.1(a) or an Event of Default is then in existence unless the Required Lenders otherwise agree. (b) If upon the expiration of any Interest Period the Borrower has failed to (or may not) elect a new Interest Period to be applicable to the respective Borrowing of Eurodollar Loans as provided above, the Borrower shall be deemed to have elected to convert such Borrowing to Prime Rate Loans effective as of the expiration date of such current Interest Period. 2.10. INCREASED COSTS, ILLEGALITY, ETC. (a) In the event that (x) in the case of clause (i) below, the Administrative Agent or (y) in the case of clauses (ii) and (iii) below, any Lender, shall have determined on a reasonable basis (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto): (i) on any date for determining the Eurodollar Rate for any Interest Period that, by reason of any changes arising after the Effective Date affecting the interbank Eurodollar market, adequate and fair means do not exist for ascertaining the applicable interest rate on the basis provided for in the definition of Eurodollar Rate; or (ii) at any time, that such Lender shall incur increased costs or reductions in the amounts received or receivable hereunder in an amount which such Lender deems material with respect to any Eurodollar Loans (other than any increased cost or reduction in the amount received or receivable resulting from the imposition of or a change in the rate of taxes or similar charges) because of (x) any change since the Effective Date in any applicable law, governmental rule, regulation, guideline, order or request (whether or not having the force of law), or in the interpretation or administration thereof and including the introduction of any new law or governmental rule, regulation, guideline, order or request (such as, for example, but not limited to, a change in official reserve requirements, but, in all events, excluding reserves includable in the Eurodollar Rate pursuant to the definition thereof) and/or (y) other circumstances adversely affecting the interbank Eurodollar market or the position of such Lender in such market; or (iii) at any time, that the making or continuance of any Eurodollar Loan has become unlawful by compliance by such Lender in good faith with any change since the Effective Date in any law, governmental rule, regulation, guideline or order, or the interpretation or application thereof, or would conflict with any thereof not having the force of law but with which such Lender customarily complies or has become impracticable as a result of a contingency occurring after the Effective Date which materially adversely affects the interbank Eurodollar market; THEN, and in any such event, such Lender (or the Administrative Agent in the case of clause (i) above) shall (x) on or promptly following such date or time and (y) within 10 Business Days of the date on which such event no longer exists give notice (by telephone confirmed in writing) to the Borrower and to the Administrative Agent of such determination (which notice the Administrative Agent shall promptly transmit to each of the other applicable Lenders). Thereafter (x) in the case of clause (i) above, Eurodollar Loans shall no longer be available until such time as the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice by the Administrative Agent no longer exist, and any Notice of Borrowing or Notice of Conversion given by the Borrower with respect to Eurodollar Loans which have not yet been incurred or converted shall be deemed rescinded by the Borrower or, in the case of a Notice of Borrowing, shall, at the option of the Borrower, be deemed converted into a Notice of Borrowing for Prime Rate Loans to be made on the date of Borrowing contained in such Notice of Borrowing, (y) in the case of clause (ii) above, the Borrower shall pay to such Lender, upon written demand therefor, such additional amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise as such Lender shall determine) as shall be required to compensate such Lender, for such increased costs or reductions in amounts receivable hereunder 26 32 (a written notice as to the additional amounts owed to such Lender, showing the basis for the calculation thereof, which basis must be reasonable, submitted to the Borrower by such Lender shall, absent manifest error, be final and conclusive and binding upon all parties hereto) and (z) in the case of clause (iii) above, the Borrower shall take one of the actions specified in section 2.10(b) as promptly as possible and, in any event, within the time period required by law. (b) At any time that any Eurodollar Loan is affected by the circumstances described in section 2.10(a)(ii) or (iii), the Borrower may (and in the case of a Eurodollar Loan affected pursuant to section 2.10(a)(iii) the Borrower shall) either (i) if the affected Eurodollar Loan is then being made pursuant to a Borrowing, by giving the Administrative Agent telephonic notice (confirmed promptly in writing) thereof on the same date that the Borrower was notified by a Lender pursuant to section 2.10(a)(ii) or (iii), cancel said Borrowing, convert the related Notice of Borrowing into one requesting a Borrowing of Prime Rate Loans or require the affected Lender to make its requested Loan as a Prime Rate Loan, or (ii) if the affected Eurodollar Loan is then outstanding, upon at least one Business Day's notice to the Administrative Agent, require the affected Lender to convert each such Eurodollar Loan into a Prime Rate Loan, PROVIDED that if more than one Lender is affected at any time, then all affected Lenders must be treated the same pursuant to this section 2.10(b). (c) If any Lender shall have determined that after the Effective Date, the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged by law with the interpretation or administration thereof, or compliance by such Lender or its parent corporation with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank, or comparable agency, in each case made subsequent to the Effective Date, has or would have the effect of reducing by an amount reasonably deemed by such Lender to be material the rate of return on such Lender's or its parent corporation's capital or assets as a consequence of such Lender's commitments or obligations hereunder to a level below that which such Lender or its parent corporation could have achieved but for such adoption, effectiveness, change or compliance (taking into consideration such Lender's or its parent corporation's policies with respect to capital adequacy), then from time to time, within 15 days after demand by such Lender (with a copy to the Administrative Agent), the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or its parent corporation for such reduction. Each Lender, upon determining in good faith that any additional amounts will be payable pursuant to this section 2.10(c), will give prompt written notice thereof to the Borrower, which notice shall set forth, in reasonable detail, the basis of the calculation of such additional amounts, which basis must be reasonable, although the failure to give any such notice shall not release or diminish any of the Borrower's obligations to pay additional amounts pursuant to this section 2.10(c) upon the subsequent receipt of such notice. (d) Notwithstanding anything in this Agreement to the contrary, (i) no Lender shall be entitled to compensation or payment or reimbursement of other amounts under section 2.10 or 3.5 for any amounts incurred or accruing more than 90 days prior to the giving of notice to the Borrower of additional costs or other amounts of the nature described in such sections, and (ii) no Lender shall demand compensation for any reduction referred to in section 2.10(c) or payment or reimbursement of other amounts under section 3.5 if it shall not at the time be the general policy or practice of such Lender to demand such compensation, payment or reimbursement in similar circumstances under comparable provisions of other credit agreements. 2.11. COMPENSATION. The Borrower shall compensate each applicable Lender, upon its written request (which request shall set forth the detailed basis for requesting and the method of calculating such compensation), for all reasonable losses, expenses and liabilities (including, without limitation, any loss, expense or liability incurred by reason of the liquidation or reemployment of deposits or other funds required by such Lender to fund its Eurodollar Loans or Money Market Rate Loans) which such Lender may sustain: (i) if for any reason (other than a default by such Lender or the Administrative Agent) a Borrowing of Eurodollar Loans or Money Market Rate Loans does not occur on a date specified therefor in a Notice of Borrowing or Notice of Conversion (whether or not withdrawn by the Borrower or deemed withdrawn pursuant to section 2.10(a)); (ii) if any repayment, prepayment or conversion of any of its Eurodollar Loans or Money Market Rate Loans 27 33 occurs on a date which is not the last day of an Interest Period applicable thereto (in the case of Eurodollar Loans) or the maturity date thereof (in the case of any Money Market Rate Loans), as the case may be; (iii) if any prepayment of any of its Eurodollar Loans or Money Market Rate Loans, as the case may be, is not made on any date specified in a notice of prepayment given by the Borrower; or (iv) as a consequence of (x) any other default by the Borrower to repay its Eurodollar Loans or Money Market Rate Loans when required by the terms of this Agreement or (y) an election made pursuant to section 2.10(b). 2.12. CHANGE OF LENDING OFFICE; REPLACEMENT OF LENDERS. (a) Each Lender agrees that, upon the occurrence of any event giving rise to the operation of section 2.10(a)(ii) or (iii), 2.10(c) or 3.5 with respect to such Lender, it will, if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to designate another Applicable Lending Office for any Loans or Commitment affected by such event, PROVIDED that such designation is made on such terms that such Lender and its Applicable Lending Office suffer no economic, legal or regulatory disadvantage, with the object of avoiding the consequence of the event giving rise to the operation of any such section. (b) If any Lender requests any compensation, reimbursement or other payment under section 2.10(a)(ii) or (iii), 2.10(c) or 3.5 with respect to such Lender, or if any Lender is a Defaulting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with the restrictions contained in section 12.4(b)), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); PROVIDED that (i) the Borrower shall have received the prior written consent of the Administrative Agent, which consent shall not be unreasonably withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts), and (iii) in the case of any such assignment resulting from a claim for compensation, reimbursement or other payments required to be made under section 2.10(a)(ii) or (iii), 2.10(c) or 3.5 with respect to such Lender, such assignment will result in a reduction in such compensation, reimbursement or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply. (c) Nothing in this section 2.12 shall affect or postpone any of the obligations of the Borrower or the right of any Lender provided in section 2.10 or 3.5. SECTION 3. LETTERS OF CREDIT. 3.1. LETTERS OF CREDIT. (a) Subject to and upon the terms and conditions herein set forth, the Borrower may request a Letter of Credit Issuer at any time and from time to time on or after the Closing Date and prior to the date that is 15 Business Days prior to the Maturity Date to issue, for the account of the Borrower or any of its Subsidiaries and in support of (i) trade obligations of the Borrower and its Subsidiaries incurred in the ordinary course of business, and/or (ii) worker compensation, liability insurance, releases of contract retention obligations, contract performance guarantee requirements and other bonding obligations of the Borrower or any such Subsidiary incurred in the ordinary course of its business, and such other standby obligations of the Borrower and its Subsidiaries that are acceptable to the Letter of Credit Issuer, and subject to and upon the terms and conditions herein set forth, such Letter of Credit Issuer agrees to issue from time to time, irrevocable documentary or standby letters of credit denominated in Dollars in such form as may be approved by such Letter of Credit Issuer and the Administrative Agent (each such letter of credit (and each Existing Letter of Credit described in section 3.1(d)), a "LETTER OF CREDIT" and collectively, the "LETTERS OF CREDIT"). (b) Notwithstanding the foregoing, (i) no Letter of Credit shall be issued the Stated Amount of which, when added to the Letter of Credit Outstandings at such time, would exceed either (x) $15,000,000 or (y) when added to the aggregate principal amount of all General Revolving Loans then outstanding, plus the portion 28 34 of the Total General Revolving Commitment reserved for possible refunding of outstanding Swing Line Revolving Loans, an amount equal to the Total General Revolving Commitment at such time; (ii) no individual Letter of Credit (other than any Existing Letter of Credit) shall be issued which has an initial Stated Amount less than $100,000 unless such lesser Stated Amount is acceptable to the Letter of Credit Issuer; and (iii) each Letter of Credit shall have an expiry date (including any renewal periods) occurring not later than the earlier of (A) two years from the date of issuance thereof, unless a longer period is approved by the relevant Letter of Credit Issuer and Lenders (other than any Defaulting Lender) holding a majority of the Total General Revolving Commitment, and (B) 15 Business Days prior to the Maturity Date, in each case on terms acceptable to the Administrative Agent and the relevant Letter of Credit Issuer. (c) Notwithstanding the foregoing, in the event a Lender Default exists, no Letter of Credit Issuer shall be required to issue any Letter of Credit unless either (i) such Letter of Credit Issuer has entered into arrangements satisfactory to it and the Borrower to eliminate such Letter of Credit Issuer's risk with respect to the participation in Letters of Credit of the Defaulting Lender or Lenders, including by cash collateralizing such Defaulting Lender's or Lenders' General Revolving Facility Percentage of the Letter of Credit Outstandings; or (ii) the issuance of such Letter of Credit, taking into account the potential failure of the Defaulting Lender or Lenders to risk participate therein, will not cause the Letter of Credit Issuer to incur aggregate credit exposure hereunder with respect to General Revolving Loans and Letter of Credit Outstandings in excess of its General Revolving Commitment, and the Borrower has undertaken, for the benefit of such Letter of Credit Issuer, pursuant to an instrument satisfactory in form and substance to such Letter of Credit Issuer, not to thereafter incur Loans or Letter of Credit Outstandings hereunder which would cause the Letter of Credit Issuer to incur aggregate credit exposure hereunder with respect to Loans and Letter of Credit Outstandings in excess of its Commitment. (d) Annex VI hereto contains a description of all letters of credit outstanding on, and to continue in effect after, the Closing Date. Each such letter of credit issued by a bank that is or becomes a Lender under this Agreement on the Effective Date (each, an "EXISTING LETTER OF CREDIT") shall constitute a "Letter of Credit" for all purposes of this Agreement, issued, for purposes of section 3.4(a), on the Closing Date, and the Borrower, the Administrative Agent and the applicable Lenders hereby agree that, from and after such date, the terms of this Agreement shall apply to such Letters of Credit, superseding any other agreement theretofore applicable to them to the extent inconsistent with the terms hereof. 3.2. LETTER OF CREDIT REQUESTS: NOTICES OF ISSUANCE. (a) Whenever it desires that a Letter of Credit be issued, the Borrower shall give the Administrative Agent and the Letter of Credit Issuer written or telephonic notice (in the case of telephonic notice, promptly confirmed in writing if so requested by the Administrative Agent) which, if in the form of written notice shall be substantially in the form of Exhibit B-3, or transmit by electronic communication (if arrangements for doing so have been approved by the Letter of Credit Issuer), prior to 11:00 A.M. (local time at its Notice Office) at least three Business Days (or such shorter period as may be acceptable to the relevant Letter of Credit Issuer) prior to the proposed date of issuance (which shall be a Business Day) (each a "LETTER OF CREDIT REQUEST"), which Letter of Credit Request shall include such supporting documents that such Letter of Credit Issuer customarily requires in connection therewith (including, in the case of a Letter of Credit for an account party other than the Borrower, an application for, and if applicable a reimbursement agreement with respect to, such Letter of Credit). Any such documents executed in connection with the issuance of a Letter of Credit, including the Letter of Credit itself, are herein referred to as "LETTER OF CREDIT DOCUMENTS". In the event of any inconsistency between any of the terms or provisions of any Letter of Credit Document and the terms and provisions of this Agreement respecting Letters of Credit, the terms and provisions of this Agreement shall control. The Administrative Agent shall promptly notify each Lender of each Letter of Credit Request. (b) Each Letter of Credit Issuer shall, on the date of each issuance of a Letter of Credit by it, give the Administrative Agent, each applicable Lender and the Borrower written notice of the issuance of such Letter of Credit, accompanied by a copy to the Administrative Agent of the Letter of Credit or Letters of Credit issued by it. Each Letter of Credit Issuer shall provide to the Administrative Agent a quarterly (or monthly if requested by any applicable Lender) summary describing each Letter of Credit issued by such Letter of Credit Issuer and 29 35 then outstanding and an identification for the relevant period of the daily aggregate Letter of Credit Outstandings represented by Letters of Credit issued by such Letter of Credit Issuer. 3.3. AGREEMENT TO REPAY LETTER OF CREDIT DRAWINGS. (a) The Borrower hereby agrees to reimburse (or cause any Subsidiary for whose account a Letter of Credit was issued to reimburse) each Letter of Credit Issuer, by making payment directly to such Letter of Credit Issuer in immediately available funds at the payment office of such Letter of Credit Issuer, for any payment or disbursement made by such Letter of Credit Issuer under any Letter of Credit (each such amount so paid or disbursed until reimbursed, an "UNPAID DRAWING") immediately after, and in any event on the date on which, such Letter of Credit Issuer notifies the Borrower (or any such Subsidiary for whose account such Letter of Credit was issued) of such payment or disbursement (which notice to the Borrower (or such Subsidiary) shall be delivered reasonably promptly after any such payment or disbursement), such payment to be made in Dollars, with interest on the amount so paid or disbursed by such Letter of Credit Issuer, to the extent not reimbursed prior to 1:00 P.M. (local time at the payment office of the Letter of Credit Issuer) on the date of such payment or disbursement, from and including the date paid or disbursed to but not including the date such Letter of Credit Issuer is reimbursed therefor at a rate per annum which shall be the rate then applicable to General Revolving Loans which are Prime Rate Loans (plus an additional 3% per annum if not reimbursed by the third Business Day after the date of such payment or disbursement), any such interest also to be payable on demand. (b) The Borrower's obligation under this section 3.3 to reimburse, or cause a Subsidiary to reimburse, each Letter of Credit Issuer with respect to Unpaid Drawings (including, in each case, interest thereon) shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment which the Borrower may have or have had against such Letter of Credit Issuer, the Administrative Agent, any other Letter of Credit Issuer or any Lender, including, without limitation, any defense based upon the failure of any drawing under a Letter of Credit to conform to the terms of the Letter of Credit or any non-application or misapplication by the beneficiary of the proceeds of such drawing, PROVIDED, HOWEVER that the Borrower shall not be obligated to reimburse, or cause a Subsidiary to reimburse, a Letter of Credit Issuer for any wrongful payment made by such Letter of Credit Issuer under a Letter of Credit as a result of acts or omissions constituting willful misconduct or gross negligence on the part of such Letter of Credit Issuer. 3.4. LETTER OF CREDIT PARTICIPATIONS. (a) Immediately upon the issuance by a Letter of Credit Issuer of any Letter of Credit (and on the Closing Date with respect to any Existing Letter of Credit), such Letter of Credit Issuer shall be deemed to have sold and transferred to each Lender with a General Revolving Commitment, and each such Lender (each a "PARTICIPANT") shall be deemed irrevocably and unconditionally to have purchased and received from such Letter of Credit Issuer, without recourse or warranty, an undivided interest and participation, to the extent of such Lender's General Revolving Facility Percentage, in such Letter of Credit, each substitute letter of credit, each drawing made thereunder, the obligations of the Borrower under this Agreement with respect thereto (although Letter of Credit Fees shall be payable directly to the Administrative Agent for the account of the Lenders as provided in section 4.1(b) and the Participants shall have no right to receive any portion of any fees of the nature contemplated by section 4.1(c)), the obligations of any Subsidiary of the Borrower under any Letter of Credit Documents pertaining thereto, and any security for, or guaranty pertaining to, any of the foregoing. Upon any change in the Commitments of the Lenders pursuant to section 12.4(b), it is hereby agreed that, with respect to all outstanding Letters of Credit and Unpaid Drawings, there shall be an automatic adjustment to the participations pursuant to this section 3.4 to reflect the new General Revolving Facility Percentages of the assigning and assignee Lender. (b) In determining whether to pay under any Letter of Credit, a Letter of Credit Issuer shall not have any obligation relative to the Participants other than to determine that any documents required to be delivered under such Letter of Credit have been delivered and that they appear to comply on their face with the requirements of such Letter of Credit. Any action taken or omitted to be taken by a Letter of Credit Issuer under or in connection with any Letter of Credit if taken or omitted in the absence of gross negligence or willful misconduct, shall not create for such Letter of Credit Issuer any resulting liability. 30 36 (c) In the event that a Letter of Credit Issuer makes any payment under any Letter of Credit and the Borrower shall not have reimbursed (or caused any applicable Subsidiary to reimburse) such amount in full to such Letter of Credit Issuer pursuant to section 3.3(a), such Letter of Credit Issuer shall promptly notify the Administrative Agent, and the Administrative Agent shall promptly notify each Participant of such failure, and each Participant shall promptly and unconditionally pay to the Administrative Agent for the account of such Letter of Credit Issuer, the amount of such Participant's General Revolving Facility Percentage of such payment in U.S. Dollars and in same day funds, PROVIDED, HOWEVER, that no Participant shall be obligated to pay to the Administrative Agent its General Revolving Facility Percentage of such unreimbursed amount for any wrongful payment made by such Letter of Credit Issuer under a Letter of Credit as a result of acts or omissions constituting willful misconduct or gross negligence on the part of such Letter of Credit Issuer. If the Administrative Agent so notifies any Participant required to fund a payment under a Letter of Credit prior to 11:00 A.M. (local time at its Notice Office) on any Business Day, such Participant shall make available to the Administrative Agent for the account of the relevant Letter of Credit Issuer such Participant's General Revolving Facility Percentage of the amount of such payment on such Business Day in same day funds. If and to the extent such Participant shall not have so made its General Revolving Facility Percentage of the amount of such payment available to the Administrative Agent for the account of the relevant Letter of Credit Issuer, such Participant agrees to pay to the Administrative Agent for the account of such Letter of Credit Issuer, forthwith on demand such amount, together with interest thereon, for each day from such date until the date such amount is paid to the Administrative Agent for the account of such Letter of Credit Issuer at the Federal Funds Effective Rate. The failure of any Participant to make available to the Administrative Agent for the account of the relevant Letter of Credit Issuer its General Revolving Facility Percentage of any payment under any Letter of Credit shall not relieve any other Participant of its obligation hereunder to make available to the Administrative Agent for the account of such Letter of Credit Issuer its General Revolving Facility Percentage of any payment under any Letter of Credit on the date required, as specified above, but no Participant shall be responsible for the failure of any other Participant to make available to the Administrative Agent for the account of such Letter of Credit Issuer such other Participant's General Revolving Facility Percentage of any such payment. (d) Whenever a Letter of Credit Issuer receives a payment of a reimbursement obligation as to which the Administrative Agent has received for the account of such Letter of Credit Issuer any payments from the Participants pursuant to section 3.4(c) above, such Letter of Credit Issuer shall pay to the Administrative Agent and the Administrative Agent shall promptly pay to each Participant which has paid its General Revolving Facility Percentage thereof, in U.S. dollars and in same day funds, an amount equal to such Participant's General Revolving Facility Percentage of the principal amount thereof and interest thereon accruing after the purchase of the respective participations, as and to the extent so received. (e) The obligations of the Participants to make payments to the Administrative Agent for the account of each Letter of Credit Issuer with respect to Letters of Credit shall be irrevocable and not subject to counterclaim, set-off or other defense or any other qualification or exception whatsoever and shall be made in accordance with the terms and conditions of this Agreement under all circumstances, including, without limitation, any of the following circumstances: (i) any lack of validity or enforceability of this Agreement or any of the other Credit Documents; (ii) the existence of any claim, set-off defense or other right which the Borrower (or any Subsidiary) may have at any time against a beneficiary named in a Letter of Credit, any transferee of any Letter of Credit (or any person for whom any such transferee may be acting), the Administrative Agent, any Letter of Credit Issuer, any Lender, or other person, whether in connection with this Agreement, any Letter of Credit, the transactions contemplated herein or any unrelated transactions (including any underlying transaction between the Borrower (or any Subsidiary) and the beneficiary named in any such Letter of Credit), other than any claim which the Borrower (or any Subsidiary which is the account party with respect to a Letter of Credit) may have against any applicable Letter of Credit Issuer for gross negligence or wilful misconduct of such Letter of Credit Issuer in making payment under any applicable Letter of Credit; 31 37 (iii) any draft, certificate or other document presented under the Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (iv) the surrender or impairment of any security for the performance or observance of any of the terms of any of the Credit Documents: or (v) the occurrence of any Default or Event of Default. (f) To the extent the Letter of Credit Issuer is not indemnified by the Borrower, the Participants will reimburse and indemnify the Letter of Credit Issuer, in proportion to their respective General Revolving Facility Percentages, for and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, judgments, costs, expenses or disbursements of whatsoever kind or nature which may be imposed on, asserted against or incurred by the Letter of Credit Issuer in performing its respective duties in any way related to or arising out of its issuance of Letters of Credit, PROVIDED that no Participants shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, claims, actions, judgments, costs, expenses or disbursements resulting from the Letter of Credit Issuer's gross negligence or willful misconduct. 3.5. INCREASED COSTS. If after the Effective Date, the adoption of any applicable law, rule or regulation, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Letter of Credit Issuer or any Lender with any request or directive (whether or not having the force of law) by any such authority, central bank or comparable agency (in each case made subsequent to the Effective Date) shall either (i) impose, modify or make applicable any reserve, deposit, capital adequacy or similar requirement against Letters of Credit issued by such Letter of Credit Issuer or such Lender's participation therein, or (ii) shall impose on such Letter of Credit Issuer or any Lender any other conditions affecting this Agreement, any Letter of Credit or such Lender's participation therein; and the result of any of the foregoing is to increase the cost to such Letter of Credit Issuer or such Lender of issuing, maintaining or participating in any Letter of Credit, or to reduce the amount of any sum received or receivable by such Letter of Credit Issuer or such Lender hereunder (other than any increased cost or reduction in the amount received or receivable resulting from the imposition of or a change in the rate of taxes or similar charges), then, upon demand to the Borrower by such Letter of Credit Issuer or such Lender (a copy of which notice shall be sent by such Letter of Credit Issuer or such Lender to the Administrative Agent), the Borrower shall pay to such Letter of Credit Issuer or such Lender such additional amount or amounts as will compensate any such Letter of Credit Issuer or such Lender for such increased cost or reduction. A certificate submitted to the Borrower by any Letter of Credit Issuer or any Lender, as the case may be (a copy of which certificate shall be sent by such Letter of Credit Issuer or such Lender to the Administrative Agent), setting forth, in reasonable detail, the basis for the determination of such additional amount or amounts necessary to compensate any Letter of Credit Issuer or such Lender as aforesaid shall be conclusive and binding on the Borrower absent manifest error, although the failure to deliver any such certificate shall not release or diminish any of the Borrower's obligations to pay additional amounts pursuant to this section 3.5. Reference is hereby made to the provisions of section 2.10(d) for certain limitations upon the rights of a Letter of Credit Issuer or Lender under this section. 3.6. GUARANTY OF SUBSIDIARY LETTER OF CREDIT OBLIGATIONS. (a) The Borrower hereby unconditionally guarantees, for the benefit of the Administrative Agent and the Lenders, the full and punctual payment of the Obligations of each Subsidiary under each Letter of Credit Document to which such Subsidiary is now or hereafter becomes a party (such Obligations being subject to certain limitations as provided in section 3.3(b) hereof). Upon failure by any such Subsidiary to pay punctually any such amount, the Borrower shall forthwith on demand by the Administrative Agent pay the amount not so paid at the place and in the currency and otherwise in the manner specified in this Agreement or any applicable Letter of Credit Document. (b) As a separate, additional and continuing obligation, the Borrower unconditionally and irrevocably undertakes and agrees, for the benefit of the Administrative Agent and the Lenders, that, should any amounts not be recoverable from the Borrower under section 3.6(a) for any reason whatsoever (including, 32 38 without limitation, by reason of any provision of any Credit Document or any other agreement or instrument executed in connection therewith being or becoming void, unenforceable, or otherwise invalid under any applicable law) then, notwithstanding any notice or knowledge thereof by any Lender, the Administrative Agent, any of their respective Affiliates, or any other person, at any time, the Borrower as sole, original and independent obligor, upon demand by the Administrative Agent, will make payment to the Administrative Agent, for the account of the Lenders and the Administrative Agent, of all such obligations not so recoverable by way of full indemnity, in such currency and otherwise in such manner as is provided in the Credit Documents. (c) The obligations of the Borrower under this section shall be unconditional and absolute and, without limiting the generality of the foregoing shall not be released, discharged or otherwise affected by the occurrence, one or more times, of any of the following: (i) any extension, renewal, settlement, compromise, waiver or release in respect to any obligation of any Subsidiary under any Letter of Credit Document, by operation of law or otherwise; (ii) any modification or amendment of or supplement to this Agreement, any Note or any other Credit Document; (iii) any release, non-perfection or invalidity of any direct or indirect security for any obligation of the Borrower under this Agreement, any Note or any other Credit Document or of any Subsidiary under any Letter of Credit Document; (iv) any change in the corporate existence, structure or ownership of any Subsidiary or any insolvency, bankruptcy, reorganization or other similar proceeding affecting any Subsidiary or its assets or any resulting release or discharge of any obligation of any Subsidiary contained in any Letter of Credit Document; (v) the existence of any claim, set-off or other rights which the Borrower may have at any time against any Subsidiary, the Administrative Agent, any Lender or any other person, whether in connection herewith or any unrelated transactions; (vi) any invalidity or unenforceability relating to or against any Subsidiary for any reason of any Letter of Credit Document, or any provision of applicable law or regulation purporting to prohibit the payment by any Subsidiary of any Obligations in respect of any Letter of Credit; or (vii) any other act or omission to act or delay of any kind by any Subsidiary, the Administrative Agent, any Lender or any other person or any other circumstance whatsoever which might, but for the provisions of this section, constitute a legal or equitable discharge of the Borrower's obligations under this section. (d) The Borrower's obligations under this section shall remain in full force and effect until the Commitments shall have terminated and the principal of and interest on the Notes and all other amounts payable by the Borrower under the Credit Documents and by any Subsidiary under the Letter of Credit Documents shall have been paid in full. If at any time any payment of any of the Obligations of any Subsidiary in respect of any Letter of Credit Documents is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of such Subsidiary, the Borrower's obligations under this section with respect to such payment shall be reinstated at such time as though such payment had been due but not made at such time. (e) The Borrower irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any action be taken by any person against any Subsidiary or any other person, or against any collateral or guaranty of any other person. (f) Until the indefeasible payment in full of all of the Obligations and the termination of the Commitments of the Lenders hereunder, the Borrower shall have no rights, by operation of law or otherwise, 33 39 upon making any payment under this section to be subrogated to the rights of the payee against any Subsidiary with respect to such payment or otherwise to be reimbursed, indemnified or exonerated by any Subsidiary in respect thereof. (g) In the event that acceleration of the time for payment of any amount payable by any Subsidiary under any Letter of Credit Document is stayed upon insolvency, bankruptcy or reorganization of such Subsidiary, all such amounts otherwise subject to acceleration under the terms of any applicable Letter of Credit Document shall nonetheless be payable by the Borrower under this section forthwith on demand by the Administrative Agent. SECTION 4. FEES; COMMITMENTS. 4.1. FEES. (a) The Borrower agrees to pay to the Administrative Agent a Facility Fee ("FACILITY FEE") for the account of each Non-Defaulting Lender which has a General Revolving Commitment for the period from and including the Effective Date to but not including the date the Total General Revolving Commitment has been terminated, on the average daily amount of the Total General Revolving Commitment, whether used or unused, at the Applicable Facility Fee Rate, payable quarterly in arrears on the last Business Day of each March, June, September and December and the date the Total General Revolving Commitment is terminated. As used herein, the term "APPLICABLE FACILITY FEE RATE" means 12.5 basis points per annum; PROVIDED, that subsequent to the fiscal quarter of the Borrower ended nearest to June 30, 1997, the Applicable Facility Fee Rate will be determined by reference to the rate per annum indicated in the Pricing Grid Table which appears in section 2.8(g), based on the ratio referred to in section 9.6. Changes in the Applicable Facility Fee Rate shall be made and effective as of the same date as is provided in section 2.8(g) in the case of the determination or re-determination of the Applicable Eurodollar Margin. If any such change in the Applicable Facility Fee Rate is retroactive to a date in a period for which the Facility Fee has already been paid, the Borrower will immediately pay to the Administrative Agent for the account of the Lenders all additional Facility Fee due by reason of such increased Applicable Facility Fee Rate. Any changes in the Applicable Facility Fee Rate shall be determined by the Administrative Agent and the Administrative Agent will promptly provide notice of such determinations to the Borrower and the Lenders. Any such determination by the Administrative Agent pursuant to this section 4.1(a) shall be conclusive and binding absent manifest error. (b) The Borrower agrees to pay to the Administrative Agent, for the account of each Non- Defaulting Lender, PRO RATA on the basis of its General Revolving Facility Percentage, a fee in respect of each Letter of Credit (the "LETTER OF CREDIT FEE"), computed for each day at the rate per annum equal to the Applicable Eurodollar Margin then in effect on the Stated Amount of all Letters of Credit outstanding on such day. Accrued Letter of Credit Fees shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December and on the date on which the Total Commitment is terminated. (c) The Borrower agrees to pay directly to each Letter of Credit Issuer a fee in respect of each Letter of Credit issued by it (a "FACING FEE") computed at such rate as may be agreed between such Letter of Credit Issuer and the Borrower on the average daily Stated Amount of such Letter of Credit. Accrued Facing Fees shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December and on the date on which the Total General Revolving Commitment is terminated. (d) The Borrower agrees to pay directly to each Letter of Credit Issuer upon each drawing under, and/or amendment, extension, renewal or transfer of, a Letter of Credit issued by it such amount as shall at the time of such drawing, amendment, extension, renewal or transfer be the administrative charge which such Letter of Credit Issuer is customarily charging for drawings under or amendments, extensions, renewals or transfers of, letters of credit issued by it. (e) The Borrower shall pay to the Administrative Agent on the Effective Date and thereafter for its own account and/or for distribution to the Lenders such fees as heretofore agreed by the Borrower and the Administrative Agent. 34 40 (f) All computations of Fees shall be made in accordance with section 12.7(b). 4.2. VOLUNTARY REDUCTION OF COMMITMENTS. Upon at least three Business Days' prior written notice (or telephonic notice confirmed in writing) to the Administrative Agent at its Notice Office (which notice the Administrative Agent shall promptly transmit to each of the Lenders), the Borrower shall have the right, without premium or penalty, to terminate or to partially and permanently reduce (x) the Unutilized Total General Revolving Commitment, or (y) the Unutilized Total Swing Line Revolving Commitment, PROVIDED that (i) any such termination or reduction shall apply to proportionately and permanently reduce the applicable Commitment of each of the affected Lenders, (ii) any partial reduction of the Unutilized Total General Revolving Commitment pursuant to this section 4.2 shall be in the amount of at least $3,000,000 (or, if greater, in integral multiples of $1,000,000), and (iii) any partial reduction of the Unutilized Total Swing Line Revolving Commitment pursuant to this section 4.2 shall be in the amount of at least $250,000 (or, if greater, in integral multiples of $100,000). 4.3. MANDATORY ADJUSTMENTS OF COMMITMENTS, ETC. (a) The Total Commitment (and the Commitment of each Lender) shall terminate on August 15, 1997, unless the Closing Date has occurred on or prior to such date. (b) The Total Commitment (and the Commitment of each Lender) shall terminate on the earlier of (x) the Maturity Date and (y) the date on which a Change of Control occurs. (c) The Total General Revolving Commitment shall be permanently reduced, without premium or penalty, at the time that any mandatory prepayment of General Revolving Loans would be made pursuant to section 5.2(d) if General Revolving Loans were then outstanding in the full amount of the Total General Revolving Commitment, in an amount at least equal to the required prepayment of principal of General Revolving Loans which would be required to be made in such circumstance. Any such reduction shall apply to proportionately and permanently reduce the General Revolving Commitment of each of the affected Lenders, and any partial reduction of the Total General Revolving Commitment pursuant to this section 4.3(c) shall be in the amount of at least $1,000,000 (or, if greater, in integral multiples of $1,000,000). The Borrower will provide at least three (or such lesser number as the Administrative Agent may permit in the exercise of reasonable discretion) Business Days' prior written notice (or telephonic notice confirmed in writing) to the Administrative Agent at its Notice Office (which notice the Administrative Agent shall promptly transmit to each of the Lenders), of any reduction of the Total General Revolving Commitment pursuant to this section 4.3(c), specifying the date and amount of the reduction. 4.4. EXTENSION OF MATURITY DATE. At any time after July 1, 1998 and during the 30 day period following delivery by the Borrower pursuant to section 8.1(a) of its consolidated financial statements for its fiscal year then most recently ended, and annually thereafter during the 30 day period following delivery by the Borrower of its consolidated financial statements pursuant to section 8.1(a), the Borrower may request the Administrative Agent to determine if all of the Lenders are then willing to extend the Maturity Date for a single additional year. If the Borrower so requests, the Administrative Agent will so advise the Lenders. If all of the Lenders in their sole discretion are all willing to so extend the Maturity Date, after taking into account such considerations as any Lender may deem relevant, the Borrower, the other Borrowers, the Administrative Agent and all of the Lenders (including each Letter of Credit Issuer) shall execute and deliver a definitive written instrument so extending the Maturity Date. No such extension of the Maturity Date shall be valid or effective for any purpose unless such definitive written instrument is so signed and delivered within 60 days following the giving by the Administrative Agent of notice to the Lenders that the Borrower has requested such an extension. SECTION 5. PAYMENTS. 5.1. VOLUNTARY PREPAYMENTS. The Borrower shall have the right to prepay Loans, in whole or in part, without premium or penalty, from time to time on the following terms and conditions: (i) the Borrower shall give the Administrative Agent at the Notice Office written or telephonic notice (in the case of telephonic 35 41 notice, promptly confirmed in writing if so requested by the Administrative Agent) of its intent to prepay the Loans, the amount of such prepayment and (in the case of Eurodollar Loans or Money Market Rate Loans) the specific Borrowing(s) pursuant to which made, which notice shall be received by the Administrative Agent by (x) 11:00 A.M. (local time at the Notice Office) three Business Days prior to the date of such prepayment, in the case of any prepayment of Eurodollar Loans, (y) 11:00 A.M. (local time at the Notice Office) on the date of such prepayment, in the case of any prepayment of General Revolving Loans which are Prime Rate Loans, or (z) 2:00 P.M. (local time at the Notice Office) on the date of such prepayment, in the case of any prepayment of Swing Line Revolving Loans, and which notice shall promptly be transmitted by the Administrative Agent to each of the affected Lenders; (ii) in the case of prepayment of any Borrowings under the General Revolving Facility, each partial prepayment of any such Borrowing shall be in an aggregate principal of at least $3,000,000 or an integral multiple of $1,000,000 in excess thereof, in the case of Prime Rate Loans and at least $3,000,000 or an integral multiple of $1,000,000 in excess thereof, in the case of Eurodollar Loans; (iii) in the case of prepayment of any Borrowings under the Swing Line Revolving Facility, each partial prepayment of any such Borrowing shall be in an aggregate principal of at least $250,000 or an integral multiple of $100,000 in excess thereof; (iv) no partial prepayment of any Loans made pursuant to a Borrowing shall reduce the aggregate principal amount of the Loans outstanding pursuant to such Borrowing to an amount less than the Minimum Borrowing Amount applicable thereto; (v) each prepayment in respect of any Loans made pursuant to a Borrowing shall be applied PRO RATA among such Loans; and (vi) each prepayment of Eurodollar Loans or Money Market Rate Loans pursuant to this section 5.1 on any date other than the last day of the Interest period applicable thereto, in the case of Eurodollar Loans, or the maturity date thereof, in the case of Money Market Rate Loans, as the case may be, shall be accompanied by any amounts payable in respect thereof under section 2.11. 5.2. MANDATORY PREPAYMENTS. (a) If on any date (after giving effect to any other payments on such date) the sum of (i) the aggregate outstanding principal amount of General Revolving Loans PLUS (ii) the aggregate amount of Letter of Credit Outstandings, exceeds the Total General Revolving Commitment as then in effect, the Borrower shall prepay on such date that principal amount of General Revolving Loans and, after General Revolving Loans have been paid in full, Unpaid Drawings, in an aggregate amount at least equal to such excess. If, after giving effect to the prepayment of General Revolving Loans and Unpaid Drawings, the aggregate amount of Letter of Credit Outstandings exceeds the Total General Revolving Commitment as then in effect, the Borrower shall pay to the Administrative Agent an amount in cash and/or Cash Equivalents equal to such excess and the Administrative Agent shall hold such payment as security for the obligations of the Borrower hereunder pursuant to a cash collateral agreement to be entered into in form and substance reasonably satisfactory to the Administrative Agent and the Borrower (which shall permit certain investments in Cash Equivalents satisfactory to the Administrative Agent and the Borrower until the proceeds are applied to the secured obligations). (b) If on any date (after giving effect to any other payments on such date) the aggregate outstanding principal amount of Swing Line Revolving Loans exceeds the Unutilized Total General Revolving Commitment as then in effect, the Borrower shall prepay on such date that principal amount of Swing Line Revolving Loans in an aggregate amount at least equal to such excess. If on any date (after giving effect to any other payments on such date) the aggregate outstanding principal amount of Swing Line Revolving Loans exceeds the Total Swing Line Revolving Commitment as then in effect, the Borrower shall prepay on such date Swing Line Revolving Loans in an aggregate principal amount at least equal to such excess. (c) If on any date (after giving effect to any other payments on such date) the sum of (i) the aggregate outstanding principal amount of General Revolving Loans PLUS (ii) the aggregate outstanding principal amount of Swing Line Revolving Loans, exceeds the Available Commitment as of the end of the most recent fiscal quarter for which financial statements have been delivered pursuant to section 8.1(a) or (b), the Borrower shall prepay on such date that principal amount of General Revolving Loans and, after General Revolving Loans have been paid in full, Swing Line Revolving Loans, in an aggregate amount at least equal to such excess. (d) If during any fiscal year of the Borrower, the Borrower and its Subsidiaries have received cumulative Cash Proceeds during such fiscal year from one or more Asset Sales in an aggregate amount 36 42 exceeding 10% of the Borrower's Consolidated Net Worth at the beginning of such fiscal year, not later than the third Business Day following the date of receipt of any Cash Proceeds in excess of such amount, an amount at least equal to 100% of the Net Cash Proceeds then received in excess of such amount from any Asset Sale shall be applied as a mandatory prepayment of principal of the then outstanding General Revolving Loans; PROVIDED that if no Default under section 10.1(a) or Event of Default shall have occurred and be continuing and the making of such prepayment at such time would result in an obligation on the part of the Borrower to make a breakage payment in respect thereof under section 2.11 (which has not been waived by the Required Lenders), the Borrower may upon notice to the Administrative Agent (a copy of which notice the Administrative Agent shall promptly transmit to each affected Lender) postpone making such prepayment for a period of up to 30 days, or such shorter period as will result in no such breakage payment being payable; and PROVIDED, FURTHER, that (i) if no Default under section 10.1(a) or Event of Default shall have occurred and be continuing, (ii) the Borrower and its Subsidiaries have scheduled Consolidated Capital Expenditures during the following six months, and (iii) the Borrower notifies the Administrative Agent of the amount and nature thereof and of its intention to reinvest all or a portion of such Net Cash Proceeds in such Consolidated Capital Expenditures during such six month period, then no such prepayment shall be required to the extent the Borrower so indicates that such reinvestment will take place. If at the end of any such six month period any portion of such Net Cash Proceeds has not been so reinvested, such remaining amount shall be immediately applied as a mandatory prepayment of principal of the then outstanding General Revolving Loans. If the Borrower has postponed the date of making any mandatory prepayment in accordance with the first PROVISO to the first sentence of this section 5.2(d), during the period of such postponement the Borrower will not incur additional Loans or request additional Letters of Credit which would cause (x) the sum of the outstanding General Revolving Loans, plus the Letter of Credit Outstandings, plus the portion of the Total Unutilized General Revolving Commitment reserved for refunding of outstanding Swing Line Revolving Loans, to be greater than (y) the amount to which the Total General Revolving Commitment will be permanently reduced pursuant to section 4.3(c) as a consequence of the events giving rise to such mandatory prepayment. (e) On the date on which a Change of Control occurs, notwithstanding anything to the contrary contained in this Agreement, no further Borrowings shall be made and the then outstanding principal amount of all Loans, if any, shall become due and payable and shall be prepaid in full, and the Borrower shall contemporaneously either (i) cause all outstanding Letters of Credit to be surrendered for cancellation (any such Letters of Credit to be replaced by letters of credit issued by other financial institutions), or (ii) the Borrower shall pay to the Administrative Agent an amount in cash and/or Cash Equivalents equal to 100% of the Letter of Credit Outstandings and the Administrative Agent shall hold such payment as security for the obligations of the Borrower hereunder pursuant to a cash collateral agreement to be entered into in form and substance reasonably satisfactory to the Administrative Agent and the Borrower (which shall permit certain investments in Cash Equivalents satisfactory to the Administrative Agent and the Borrower until the proceeds are applied to the secured obligations). (f) With respect to each prepayment of Loans required by this section 5.2, the Borrower shall designate the Types of Loans which are to be prepaid and the specific Borrowing(s) pursuant to which such prepayment is to be made, PROVIDED that (i) the Borrower shall first so designate all Loans that are Prime Rate Loans and Eurodollar Loans with Interest Periods ending on the date of prepayment prior to designating any other Eurodollar Loans for prepayment, (ii) if the outstanding principal amount of Eurodollar Loans made pursuant to a Borrowing is reduced below the applicable Minimum Borrowing Amount as a result of any such prepayment, then all the Loans outstanding pursuant to such Borrowing shall be converted into Prime Rate Loans, and (iii) each prepayment of any Loans made pursuant to a Borrowing shall be applied PRO RATA among such Loans. In the absence of a designation by the Borrower as described in the preceding sentence, the Administrative Agent shall, subject to the above, make such designation in its sole discretion with a view, but no obligation, to minimize breakage costs owing under section 2.11. Any prepayment of Eurodollar Loans or Money Market Rate Loans pursuant to this section 5.2 shall in all events be accompanied by such compensation as is required by section 2.11. 5.3. METHOD AND PLACE OF PAYMENT. Except as otherwise specifically provided herein, all payments under this Agreement shall be made to the Administrative Agent for the ratable (based on its PRO RATA share) 37 43 account of the Lenders entitled thereto, not later than 11:00 A.M. (local time at the Payment Office) on the date when due and shall be made in immediately available funds and in lawful money of the United States of America at the Payment Office, it being understood that written notice by the Borrower to the Administrative Agent to make a payment from the funds in the Borrower's account at the Payment Office shall constitute the making of such payment to the extent of such funds held in such account. Any payments under this Agreement which are made later than 11:00 A.M. (local time at the Payment Office) shall be deemed to have been made on the next succeeding Business Day. Whenever any payment to be made hereunder shall be stated to be due on a day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest shall be payable during such extension at the applicable rate in effect immediately prior to such extension. 5.4. NET PAYMENTS. (a) All payments made by the Borrower hereunder, under any Note or any other Credit Document, will be made without setoff, counterclaim or other defense. Except as provided for in section 5.4(c), all such payments will be made free and clear of, and without deduction or withholding for, any present or future United States withholding taxes. The Borrower will furnish to the Administrative Agent within 45 days after the date of any withholding or deduction on account of United States withholding taxes certified copies of tax receipts, or other evidence satisfactory to each affected Lender, evidencing payment thereof by the Borrower. (b) Each Lender that is not a United States person (as such term is defined in section 7701(a)(30) of the Code) for Federal income tax purposes agrees to provide to the Borrower and the Administrative Agent on or prior to the Effective Date, or in the cases of a Lender that is an assignee or transferee of an interest under this Agreement pursuant to section 12.4 (unless the respective Lender was already a Lender hereunder immediately prior to such assignment or transfer and such Lender is in compliance with the provisions of this section 5.4(b)), on the date of such assignment or transfer to such Lender, (i) two accurate and complete original signed copies of Internal Revenue Service Form 4224 or 1001 (or successor forms) certifying to such Lender's entitlement to a complete exemption from United States withholding tax with respect to payments to be made under this Agreement, any Note or any other Credit Document, or (ii) if the Lender is not a "bank" within the meaning of section 881(c)(3)(A) of the Code and cannot deliver either Internal Revenue Service Form 1001 or 4224 pursuant to clause (i) above, (x) a certificate substantially in the form of Exhibit F (any such certificate, a "SECTION 5.4(b)(ii) CERTIFICATE") and (y) two accurate and complete original signed copies of Internal Revenue Service Form W-8 (or successor form) certifying to such Lender's entitlement to a complete exemption from United States withholding tax with respect to payments of interest to be made under this Agreement, any Note or any other Credit Document. In addition, each Lender agrees that from time to time after the Effective Date, when a lapse in time or change in circumstances renders the previous certification obsolete or inaccurate in any material respect, it will deliver to the Borrower and the Administrative Agent two new accurate and complete original signed copies of Internal Revenue Service Form 4224 or 1001, or Form W-8 and a Section 5.4(b)(ii) Certificate, as the case may be, and such other forms as may be required in order to confirm or establish the entitlement of such Lender to a continued exemption from or reduction in United States withholding tax with respect to payments under this Agreement, any Note or any other Credit Document, or it shall immediately notify the Borrower and the Administrative Agent of its inability to deliver any such Form or Certificate, in which case such Lender shall not be required to deliver any such Form or Certificate pursuant to this section 5.4(b). (c) Notwithstanding anything to the contrary contained in section 5.4(a), the Borrower shall be entitled, to the extent it is required to do so by law, to deduct or withhold income or other similar taxes imposed by the United States (or any political subdivision or taxing authority thereof or therein) from interest, fees or other amounts payable hereunder for the account of any Lender which is not a United States person (as such term is defined in section 7701(a)(30) of the Code) for United States federal income tax purposes and which has not provided to the Borrower such forms that establish a complete exemption from such deduction or withholding. 38 44 SECTION 6. CONDITIONS PRECEDENT. 6.1. CONDITIONS PRECEDENT AT CLOSING DATE. The obligation of the Lenders to make Loans, and of any Letter of Credit Issuer to issue Letters of Credit, is subject to the satisfaction of each of the following conditions on the Closing Date: (A) EFFECTIVENESS; NOTES. On or prior to the Closing Date, (i) the Effective Date shall have occurred and (ii) there shall have been delivered to the Administrative Agent for the account of each Lender the appropriate Note or Notes executed by the Borrower, in each case, in the amount, maturity and as otherwise provided herein. (B) FEES, ETC. The Borrower shall have paid or caused to be paid all fees required to be paid by it on or prior to such date pursuant to section 4 hereof and all reasonable fees and expenses of the Administrative Agent and of special counsel to the Administrative Agent which have been invoiced on or prior to such date in connection with the preparation, execution and delivery of this Agreement and the other Credit Documents and the consummation of the transactions contemplated hereby and thereby. (C) OTHER CREDIT DOCUMENTS, ETC. The Credit Parties named therein shall have duly executed and delivered and there shall be in full force and effect, and original counterparts shall have been delivered to the Administrative Agent, in sufficient quantities for the Administrative Agent and the Lenders, of, (i) the Subsidiary Guaranty (as modified, amended or supplemented from time to time in accordance with the terms thereof and hereof, the "SUBSIDIARY GUARANTY"), substantially in the form attached hereto as Exhibit C-1, and (ii) the Pledge Agreement (as modified, amended or supplemented from time to time in accordance with the terms thereof and hereof, the "PLEDGE AGREEMENT"), substantially in the form attached hereto as Exhibit C-2. Certificates for the shares of stock pledged under the Pledge Agreement, duly indorsed in blank, or accompanied by stock powers duly signed in blank, shall have been delivered to the Collateral Agent. (D) CORPORATE RESOLUTIONS AND APPROVALS. The Administrative Agent shall have received, in sufficient quantity for the Administrative Agent and the Lenders, certified copies of the resolutions of the Board of Directors of the Borrower and each other Credit Party, approving the Credit Documents to which the Borrower or any such other Credit Party, as the case may be, is or may become a party, and of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to the execution, delivery and performance by the Borrower or any such other Credit Party of the Credit Documents to which it is or may become a party. (E) INCUMBENCY CERTIFICATES. The Administrative Agent shall have received, in sufficient quantity for the Administrative Agent and the Lenders, a certificate of the Secretary or an Assistant Secretary of the Borrower and of each other Credit Party, certifying the names and true signatures of the officers of the Borrower or such other Credit Party, as the case may be, authorized to sign the Credit Documents to which the Borrower or such other Credit Party is a party and any other documents to which the Borrower or any such other Credit Party is a party which may be executed and delivered in connection herewith. (F) OPINION OF COUNSEL. On the Closing Date, the Administrative Agent shall have received an opinion, addressed to the Administrative Agent and each of the Lenders and dated the Closing Date, from Calfee, Halter & Griswold LLP, special counsel to the Borrower, substantially in the form of Exhibit D hereto and covering such other matters incident to the transactions contemplated hereby as the Administrative Agent may reasonably request, such opinion to be in form and substance satisfactory to the Administrative Agent. (G) EXISTING LINE OF CREDIT. The Borrower shall have terminated its line of credit with KeyBank and prepaid all borrowings thereunder. 39 45 (H) PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings and all documents incidental to the transactions contemplated hereby shall be satisfactory in substance and form to the Administrative Agent and the Lenders and the Administrative Agent and its special counsel and the Lenders shall have received all such counterpart originals or certified or other copies of such documents as the Administrative Agent or its special counsel or any Lender may reasonably request. 6.2. CONDITIONS PRECEDENT TO ALL CREDIT EVENTS. The obligations of the Lenders to make each Loan and/or of a Letter of Credit Issuer to issue each Letter of Credit is subject, at the time thereof, to the satisfaction of the following conditions: (A) NOTICE OF BORROWING, ETC. The Administrative Agent shall have received a Notice of Borrowing meeting the requirements of section 2.3 with respect to the incurrence of Loans or a Letter of Credit Request meeting the requirement of section 3.2 with respect to the issuance of a Letter of Credit. (B) NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time of each Credit Event and also after giving effect thereto, (i) there shall exist no Default or Event of Default and (ii) all representations and warranties of the Credit Parties contained herein or in the other Credit Documents shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the date of such Credit Event, except to the extent that such representations and warranties expressly relate to an earlier specified date, in which case such representations and warranties shall have been true and correct in all material respects as of the date when made. The acceptance of the benefits of each Credit Event shall constitute a representation and warranty by the Borrower to each of the Lenders that all of the applicable conditions specified in section 6.1 and/or 6.2, as the case may be, exist as of that time. All of the certificates, legal opinions and other documents and papers referred to in this section 6, unless otherwise specified, shall be delivered to the Administrative Agent for the account of each of the Lenders and, except for the Notes, in sufficient counterparts for each of the Lenders, and the Administrative Agent will promptly distribute to the Lenders their respective Notes and the copies of such other certificates, legal opinions and documents. SECTION 7. REPRESENTATIONS AND WARRANTIES. In order to induce the Lenders to enter into this Agreement and to make the Loans, and/or to issue and/or to participate in the Letters of Credit provided for herein, the Borrower makes the following representations and warranties to, and agreements with, the Lenders, all of which shall survive the execution and delivery of this Agreement and each Credit Event: 7.1. CORPORATE STATUS, ETC. Each of the Borrower and its Subsidiaries (i) is a duly organized or formed and validly existing corporation, partnership or limited liability company, as the case may be, in good standing under the laws of the jurisdiction of its formation and has the corporate, partnership or limited liability company power and authority, as applicable, to own its property and assets and to transact the business in which it is engaged and presently proposes to engage, and (ii) has duly qualified and is authorized to do business in all jurisdictions where it is required to be so qualified except where the failure to be so qualified would not have a Material Adverse Effect. 7.2. SUBSIDIARIES. Annex II hereto lists, as of the date hereof, each Subsidiary of the Borrower (and the direct and indirect ownership interest of the Borrower therein). 7.3. CORPORATE POWER AND AUTHORITY, ETC. Each Credit Party has the corporate power and authority to execute, deliver and carry out the terms and provisions of the Credit Documents to which it is party and has 40 46 taken all necessary corporate or other organizational action to authorize the execution, delivery and performance of the Credit Documents to which it is party. Each Credit Party has duly executed and delivered each Credit Document to which it is party and each Credit Document to which it is party constitutes the legal, valid and binding agreement or obligation of such Credit Party enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws generally affecting creditors' rights and by equitable principles (regardless of whether enforcement is sought in equity or at law). 7.4. NO VIOLATION. Neither the execution, delivery and performance by any Credit Party of the Credit Documents to which it is party nor compliance with the terms and provisions thereof (i) will contravene any provision of any law, statute, rule, regulation, order, writ, injunction or decree of any court or governmental instrumentality applicable to such Credit Party or its properties and assets, (ii) will conflict with or result in any breach of, any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien (other than any Lien created by any Security Document) upon any of the property or assets of such Credit Party pursuant to the terms of any promissory note, bond, debenture, indenture, mortgage, deed of trust, credit or loan agreement, or any other material agreement or instrument, to which such Credit Party is a party or by which it or any of its property or assets are bound or to which it may be subject, or (iii) will violate any provision of the certificate or articles of incorporation, code of regulations or by-laws, or other charter documents of such Credit Party. 7.5. GOVERNMENTAL APPROVALS. No order, consent, approval, license, authorization, or validation of, or filing, recording or registration with, or exemption by, any foreign or domestic governmental or public body or authority, or any subdivision thereof, is required to authorize or is required as a condition to (i) the execution, delivery and performance by any Credit Party of any Credit Document to which it is a party, or (ii) the legality, validity, binding effect or enforceability of any Credit Document to which any Credit Party is a party, other than any filings and recordings which may be required in connection with the perfection of any Liens created by the Security Documents. 7.6. LITIGATION. There are no actions, suits or proceedings pending or, to, the knowledge of the Borrower, threatened with respect to the Borrower or any of its Subsidiaries (i) that have, or could reasonably be expected to have, a Material Adverse Effect, or (ii) which question the validity or enforceability of any of the Credit Documents, or of any action to be taken by any Credit Party pursuant to any of the Credit Documents to which it is a party. 7.7. USE OF PROCEEDS; MARGIN REGULATIONS. (a) The proceeds of all Loans shall be utilized (i) to retire the Indebtedness referred to in section 6.1(g), to the extent not otherwise retired out of the proceeds of the issuance of the Convertible Subordinated Debentures due 2004, and (ii) for general corporate purposes not inconsistent with the requirements of this Agreement. (b) No part of the proceeds of any Credit Event will be used directly or indirectly to purchase or carry Margin Stock, or to extend credit to others for the purpose of purchasing or carrying any Margin Stock, in violation of any of the provisions of Regulation G, T, U or X of the Board of Governors of the Federal Reserve System. The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying any Margin Stock. At no time would more than 25% of the value of the assets of the Borrower or of the Borrower and its consolidated Subsidiaries that are subject to any "arrangement" (as such term is used in section 221.2(g) of such Regulation U) hereunder be represented by Margin Stock. 7.8. FINANCIAL STATEMENTS, ETC. (a) The Borrower has furnished to the Lenders and the Administrative Agent complete and correct copies of (i) the audited consolidated balance sheets of the Borrower and its consolidated subsidiaries as of June 30, 1996, and June 30, 1995, and the related audited consolidated statements of income, stockholders' equity, and cash flows for the fiscal years then ended, accompanied by the unqualified report thereon of the Borrower's independent accountants; and (ii) the unaudited condensed consolidated balance sheets of the Borrower and its consolidated subsidiaries as of March 31, 1997, and the related unaudited condensed consolidated statements of income and of cash flows of the Borrower and its 41 47 consolidated subsidiaries for the fiscal quarter or quarters then ended, as contained in the Form 10-Q Quarterly Report of the Borrower filed with the SEC. All such financial statements have been prepared in accordance with GAAP, consistently applied (except as stated therein), and fairly present the financial position of the Borrower and its consolidated subsidiaries as of the respective dates indicated and the consolidated results of their operations and cash flows for the respective periods indicated, subject in the case of any such financial statements which are unaudited, to the absence of footnotes and to normal audit adjustments which the Borrower reasonably believes will not involve a Material Adverse Effect. (b) The Borrower has received consideration which is the reasonable equivalent value of the obligations and liabilities that the Borrower has incurred to the Administrative Agent and the Lenders. The Borrower now has capital sufficient to carry on its business and transactions and all business and transactions in which it is about to engage and is now solvent and able to pay its debts as they mature and the Borrower, as of the Closing Date, owns property having a value, both at fair valuation and at present fair salable value, greater than the amount required to pay the Borrower's debts; and the Borrower is not entering into the Credit Documents with the intent to hinder, delay or defraud its creditors. (c) The Borrower has delivered or caused to be delivered to the Lenders prior to the execution and delivery of this Agreement (i) a copy of the Borrower's Report on Form 10-K as filed (without Exhibits) with the SEC for its fiscal year ended June 30, 1996, which contains a general description of the business and affairs of the Borrower and its Subsidiaries, (ii) a confidential information memorandum dated June 1997 prepared by the Administrative Agent (with assistance from the Borrower) which contains information with respect to the business, properties and operations of the Borrower and its Subsidiaries (the "CONFIDENTIAL INFORMATION MEMORANDUM"), and (iii) financial projections prepared by management of the Borrower for the Borrower and its Subsidiaries for the fiscal years 1997-2000, which are included as part of Tab VI of the Confidential Information Memorandum (the "FINANCIAL PROJECTIONS"). The Financial Projections were prepared on behalf of the Borrower in good faith after taking into account the existing and historical levels of business activity of the Borrower and its Subsidiaries, trends known to the Borrower, including general economic trends, and all other information, assumptions and estimates considered by management of the Borrower and its Subsidiaries to be pertinent thereto. The Financial Projections were considered by management of the Borrower, as of such date of preparation, to be realistically achievable; PROVIDED, that no representation or warranty is made as to the impact of future general economic conditions or as to whether the Borrower's projected consolidated results as set forth in the Financial Projections will actually be realized. No facts are known to the Borrower at the date hereof which, if reflected in the Financial Projections, would result in a material adverse change in the assets, liabilities, results of operations or cash flows reflected therein. 7.9. NO MATERIAL ADVERSE CHANGE. Since June 30, 1996, there has been no change in the condition, business or affairs of the Borrower and its Subsidiaries taken as a whole, or their properties and assets considered as an entirety, except for changes, none of which, individually or in the aggregate, has had or could reasonably be expected to have, a Material Adverse Effect. 7.10. TAX RETURNS AND PAYMENTS. Each of the Borrower and each of its Subsidiaries has filed all federal income tax returns and all other material tax returns, domestic and foreign, required to be filed by it and has paid all material taxes and assessments payable by it which have become due, other than those not yet delinquent and except for those contested in good faith. The Borrower and each of its Subsidiaries has established on its books such charges, accruals and reserves in respect of taxes, assessments, fees and other governmental charges for all fiscal periods as are required by GAAP. The Borrower knows of no proposed assessment for additional federal, foreign or state taxes for any period, or of any basis therefor, which, individually or in the aggregate, taking into account such charges, accruals and reserves in respect thereof as the Borrower and its Subsidiaries have made, could reasonably be expected to have a Material Adverse Effect. 7.11. TITLE TO PROPERTIES, ETC. The Borrower and each of its Subsidiaries has good and marketable title, in the case of real property, and good title (or valid leasehold interests, in the case of any leased property), in the case of all other property, to all of its properties and assets free and clear of Liens other than Liens permitted by section 9.3. The interests of the Borrower and each of its Subsidiaries in the properties reflected 42 48 in the most recent balance sheet referred to in section 7.8, taken as a whole, were sufficient, in the judgment of the Borrower, as of the date of such balance sheet for purposes of the ownership and operation of the businesses conducted by the Borrower and such Subsidiaries. 7.12. LAWFUL OPERATIONS, ETC. The Borrower and each of its Subsidiaries (i) holds all necessary federal, state and local governmental licenses, registrations, certifications, permits and authorizations necessary to conduct its business, and (ii) is in full compliance with all material requirements imposed by law, regulation or rule, whether federal, state or local, which are applicable to it, its operations, or its properties and assets, including without limitation, applicable requirements of the United States Food and Drug Administration, federal and state Medicaid and Medicare requirements, Environmental Laws and zoning ordinances, except for any failure to obtain and maintain in effect, or noncompliance, which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 7.13. ENVIRONMENTAL MATTERS. (a) The Borrower and each of its Subsidiaries is in compliance with all Environmental Laws governing its business except to the extent that any such failure to comply (together with any resulting penalties, fines or forfeitures) would not reasonably be expected to have a Material Adverse Effect. All licenses, permits, registrations or approvals required for the business of the Borrower and each of its Subsidiaries, as conducted as of the Closing Date, under any Environmental Law have been secured and the Borrower and each of its Subsidiaries is in substantial compliance therewith, except for such licenses, permits, registrations or approvals the failure to secure or to comply therewith is not reasonably likely to have a Material Adverse Effect. Neither the Borrower nor any of its Subsidiaries has received written notice, or otherwise knows, that it is in any respect in noncompliance with, breach of or default under any applicable writ, order, judgment, injunction, or decree to which the Borrower or such Subsidiary is a party or which would affect the ability of the Borrower or such Subsidiary to operate any real property and no event has occurred and is continuing which, with the passage of time or the giving of notice or both, would constitute noncompliance, breach of or default thereunder, except in each such case, such noncompliance, breaches or defaults as would not reasonably be expected to, in the aggregate, have a Material Adverse Effect. There are as of the Closing Date no Environmental Claims pending or, to the best knowledge of the Borrower, threatened wherein an unfavorable decision, ruling or finding would reasonably be expected to have a Material Adverse Effect. There are no facts, circumstances, conditions or occurrences on any Real Property now or at any time owned, leased or operated by the Borrower or any of its Subsidiaries or on any property adjacent to any such Real Property, which are known by the Borrower or as to which the Borrower or any such Subsidiary has received written notice, that could reasonably be expected (i) to form the basis of an Environmental Claim against the Borrower or any of its Subsidiaries or any Real Property of the Borrower or any of its Subsidiaries, or (ii) to cause such Real Property to be subject to any restrictions on the ownership, occupancy, use or transferability of such Real Property under any Environmental Law, except in each such case, such Environmental Claims or restrictions that individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect. (b) Hazardous Materials have not at any time been (i) generated, used, treated or stored on, or transported to or from, any Real Property of the Borrower or any of its Subsidiaries or (ii) released on any such Real Property, in each case where such occurrence or event is not in compliance with Environmental Laws and is reasonably likely to have a Material Adverse Effect. 7.14. COMPLIANCE WITH ERISA. Compliance by the Borrower with the provisions hereof and Credit Events contemplated hereby will not involve any prohibited transaction within the meaning of ERISA or section 4975 of the Code. At and as of the Effective date, the Borrower and each of its Subsidiaries: (i) has fulfilled all obligations under minimum funding standards of ERISA and the Code with respect to each Plan that is not a Multiemployer Plan or a Multiple Employer Plan, 43 49 (ii) has satisfied all respective contribution obligations in respect of each Multiemployer Plan and each Multiple Employer Plan, (iii) is in compliance in all material respects with all other applicable provisions of ERISA and the Code with respect to each Plan, each Multiemployer Plan and each Multiple Employer Plan, and (iv) has not incurred any liability under the Title IV of ERISA to the PBGC with respect to any Plan, any Multiemployer Plan, any Multiple Employer Plan, or any trust established thereunder. No Plan or trust created thereunder has been terminated, and there have been no Reportable Events, with respect to any Plan or trust created thereunder or with respect to any Multiemployer Plan or Multiple Employer Plan, which termination or Reportable Event will or could result in the termination of such Plan, Multiemployer Plan or Multi Employer Plan and give rise to a material liability of the Borrower or any ERISA Affiliate in respect thereof. 7.15. INTELLECTUAL PROPERTY, ETC. The Borrower and each of its Subsidiaries has obtained or has the right to use all material patents, trademarks, servicemarks, trade names, copyrights, licenses and other rights with respect to the foregoing necessary for the present and planned future conduct of its business, without any known conflict with the rights of others, EXCEPT for such patents, trademarks, servicemarks, trade names, copyrights, licenses and rights, the loss of which, and such conflicts, which in any such case individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect. 7.16. INVESTMENT COMPANY ACT, ETC. Neither the Borrower nor any of its Subsidiaries is subject to regulation with respect to the creation or incurrence of Indebtedness under the Investment Company Act of 1940, as amended, the Interstate Commerce Act, as amended, the Federal Power Act, as amended, the Public Utility Holding Company Act of 1935, as amended, or any applicable state public utility law. 7.17. BURDENSOME CONTRACTS; LABOR RELATIONS. Neither the Borrower nor any of its Subsidiaries (i) is subject to any burdensome contract, agreement, corporate restriction, judgment, decree or order, (ii) is a party to any labor dispute affecting any bargaining unit or other group of employees generally, (iii) is subject to any material strike, slow down, workout or other concerted interruptions of operations by employees of the Borrower or any Subsidiary, whether or not relating to any labor contracts, (iv) is subject to any significant pending or, to the knowledge of the Borrower, threatened, unfair labor practice complaint, before the National Labor Relations Board, and (v) is subject to any significant pending or, to the knowledge of the Borrower, threatened, grievance or significant arbitration proceeding arising out of or under any collective bargaining agreement, (vi) is subject to any significant pending or, to the knowledge of the Borrower, threatened, significant strike, labor dispute, slowdown or stoppage, or (vii) is, to the knowledge of the Borrower, involved or subject to any union representation organizing or certification matter with respect to the employees of the Borrower or any of its Subsidiaries, EXCEPT (with respect to any matter specified in any of the above clauses), for such matters as, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 7.18. EXISTING INDEBTEDNESS. Annex III sets forth a true and complete list, as of the date or dates set forth therein, of all Indebtedness (other than Capitalized Lease Obligations) of the Borrower and each of its Subsidiaries, on a consolidated basis, which (i) has an outstanding principal amount of at least $1,000,000, or (ii) is secured by any Lien on any property of the Borrower or any Subsidiary, and which will be outstanding on the Closing Date after giving effect to any Borrowing hereunder on the Closing Date, other than the Indebtedness created under the Credit Documents (all such Indebtedness of the Borrower, whether or not in a principal amount meeting such threshold or otherwise not required to be so listed on Annex III, herein the "EXISTING INDEBTEDNESS"). The Borrower has provided to the Administrative Agent prior to the date of execution hereof true and complete copies of all agreements and instruments governing the Indebtedness listed on Annex III (the "EXISTING INDEBTEDNESS AGREEMENTS"). 7.19. TRUE AND COMPLETE DISCLOSURE. All factual information (taken as a whole) heretofore or contemporaneously furnished by or on behalf of the Borrower or any of its Subsidiaries in writing to the 44 50 Administrative Agent or any Lender specifically for purposes of this Agreement, other than the Financial Projections (as to which representations are made only as provided in section 7.8), is, and all other such factual information (taken as a whole) hereafter furnished by or on behalf of such person in writing to any Lender specifically for purposes of this Agreement will be, true and accurate in all material respects on the date as of which such information is dated or certified and not incomplete by omitting to state any material fact necessary to make such information (taken as a whole) not misleading at such time in light of the circumstances under which such information was provided, except that any such future information consisting of financial projections prepared by management of the Borrower is only represented herein as being based on good faith estimates and assumptions believed by such persons to be reasonable at the time made, it being recognized by the Lenders that such projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ materially from the projected results. As of the Effective Date, there is no fact known to the Borrower or any of its Subsidiaries which has, or could reasonably be expected to have, a Material Adverse Effect which has not theretofore been disclosed in writing to the Lenders. SECTION 8. AFFIRMATIVE COVENANTS. The Borrower hereby covenants and agrees that so long as this Agreement is in effect and until such time as the Total Commitment has been terminated, no Notes are outstanding and the Loans, together with interest, Fees and all other Obligations hereunder, have been paid in full: 8.1. REPORTING REQUIREMENTS. The Borrower will furnish to each Lender and the Administrative Agent: (A) ANNUAL FINANCIAL STATEMENTS. Promptly and in any event within 90 days after the close of each fiscal year of the Borrower, the consolidated and consolidating balance sheets of the Borrower and its consolidated Subsidiaries as at the end of such fiscal year and the related consolidated and consolidating statements of income, of stockholder's equity and of cash flows for such fiscal year, in each case setting forth comparative figures for the preceding fiscal year, all in reasonable detail and accompanied by the opinion with respect to such consolidated financial statements of independent public accountants of recognized national standing selected by the Borrower, which opinion shall be unqualified and shall (i) state that such accountants audited such consolidated financial statements in accordance with generally accepted auditing standards, that such accountants believe that such audit provides a reasonable basis for their opinion, and that in their opinion such consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Borrower and its consolidated subsidiaries as at the end of such fiscal year and the consolidated results of their operations and cash flows for such fiscal year in conformity with generally accepted accounting principles, or (ii) contain such statements as are customarily included in unqualified reports of independent accountants in conformity with the recommendations and requirements of the American Institute of Certified Public Accountants (or any successor organization). (B) QUARTERLY FINANCIAL STATEMENTS. Promptly and in any event within 45 days after the close of each of the quarterly accounting periods in each fiscal year of the Borrower, the unaudited condensed consolidated and consolidating balance sheets of the Borrower and its consolidated Subsidiaries as at the end of such quarterly period and the related unaudited condensed consolidated and consolidating statements of income and of cash flows for such quarterly period, and setting forth, in the case of such unaudited consolidated statements of income and of cash flows, comparative figures for the related periods in the prior fiscal year, and which consolidated financial statements shall be certified on behalf of the Borrower by the Chief Financial Officer or other Authorized Officer of the Borrower, subject to changes resulting from normal year-end audit adjustments. (C) OFFICER'S COMPLIANCE CERTIFICATES. At the time of the delivery of the financial statements provided for in sections 8.1(a) and (b), a certificate on behalf of the Borrower of the Chief Financial Officer or other Authorized Officer of the Borrower to the effect that, to the best knowledge 45 51 of the Borrower, no Default or Event of Default exists or, if any Default or Event of Default does exist, specifying the nature and extent thereof, which certificate shall set forth the calculations required to establish compliance with the provisions of sections 9.6, 9.7 and 9.8 and to determine the Available Commitment Amount as of the end of such quarterly period. (D) BUDGET. Not later than 90 days after the commencement of any fiscal year of the Borrower and its Subsidiaries, a consolidated budget in reasonable detail for each of the four fiscal quarters of such fiscal year, and (if and to the extent prepared by management of the Borrower) for any subsequent fiscal years, as customarily prepared by management for its internal use, setting forth, with appropriate discussion, the forecasted balance sheet, income statement, operating cash flows and capital expenditures of the Borrower and its Subsidiaries for the period covered thereby, and the principal assumptions upon which forecasts and budget are based. (E) NOTICE OF DEFAULT, LITIGATION OR CERTAIN MATTERS INVOLVING MAJOR CUSTOMERS OR SUPPLIERS OR LEGAL REQUIREMENTS. Promptly, and in any event within three Business Days, in the case of clause (i) below, or five Business Days, in the case of clause (ii), (iii) or (iv) below, after the Borrower obtains actual knowledge thereof, notice of (i) the occurrence of any event which constitutes a Default or Event of Default, which notice shall specify the nature thereof, the period of existence thereof and what action the Borrower proposes to take with respect thereto, (ii) any litigation or governmental or regulatory investigation or proceeding pending against or involving the Borrower or any of its Material Subsidiaries which (A) involves any federal or state "anti-kickback" laws or regulations, or possible loss of any material governmental license, certification, license or authorization, or (B) the Borrower reasonably expects to have a Material Adverse Effect or a material adverse effect on the ability of the Borrower to perform its obligations hereunder or under any other Credit Document, (iii) any significant adverse change (in the Borrower's reasonable judgment) in the Borrower's or any Subsidiary's relationship with, or any significant event or circumstance which is in the Borrower's reasonable judgment likely to adversely affect the Borrower's or any Subsidiary's relationship with, (A) any customer (or related group of customers) representing more than 10% of the Borrower's consolidated revenues during its most recent fiscal year, or (B) any supplier which is significant to the Borrower and its Subsidiaries considered as an entirety, and (iv) any significant change in the reimbursement or other provisions of the Medicaid or Medicare programs which the Borrower reasonably expects to have a Material Adverse Effect. (F) AUDITORS' INTERNAL CONTROL COMMENT LETTERS, ETC. Promptly upon receipt thereof, a copy of each letter or memorandum commenting on internal accounting controls which is submitted to the Borrower by its independent accountants in connection with any annual audit made by them of the books of the Borrower. (G) ERISA. Promptly, and in any event within 10 days after the Borrower obtains actual knowledge of the occurrence of any of the following, the Borrower will deliver to each of the Lenders a certificate on behalf of the Borrower of an Authorized Officer of the Borrower setting forth the full details as to such occurrence and the action, if any, that the Borrower, such Subsidiary or such ERISA Affiliate is required or proposes to take, together with any notices required or proposed to be given to or filed with or by the Borrower, the Subsidiary, the ERISA Affiliate, the PBGC, a Plan participant or the Plan administrator with respect thereto: 46 52 (i) that a Reportable Event has occurred with respect to any Plan; (ii) the institution of any steps by the Borrower, any ERISA Affiliate, the PBGC or any other person to terminate any Plan; (iii) the institution of any steps by the Borrower or any ERISA Affiliate to withdraw from any Plan; (iv) the institution of any steps by the Borrower or any Subsidiary to withdraw from any Multiemployer Plan or Multiple Employer Plan, if such withdrawal could result in withdrawal liability (as described in Part 1 of Subtitle E of Title IV of ERISA) in excess of $1,000,000; (v) a non-exempt "prohibited transaction" within the meaning of section 406 of ERISA in connection with any Plan; (vi) that a Plan has an Unfunded Current Liability exceeding $1,000,000; (vii) any material increase in the contingent liability of the Borrower or any Subsidiary with respect to any post-retirement welfare liability; or (viii) the taking of any action by, or the threatening of the taking of any action by, the Internal Revenue Service, the Department of Labor or the PBGC with respect to any of the foregoing. (H) ENVIRONMENTAL MATTERS. Promptly upon, and in any event within 10 Business Days after, an officer of the Borrower obtains actual knowledge thereof, notice of any of the following environmental matters which involves any reasonable likelihood (in the Borrower's reasonable judgment) of resulting in a Material Adverse Effect: (i) any pending or threatened (in writing) Environmental Claim against the Borrower or any of its Subsidiaries or any Real Property owned or operated by the Borrower or any of its Subsidiaries; (ii) any condition or occurrence on or arising from any Real Property owned or operated by the Borrower or any of its Subsidiaries that (A) results in noncompliance by the Borrower or any of its Subsidiaries with any applicable Environmental Law or (B) would reasonably be expected to form the basis of an Environmental Claim against the Borrower or any of its Subsidiaries or any such Real Property; (iii) any condition or occurrence on any Real Property owned, leased or operated by the Borrower or any of its Subsidiaries that could reasonably be expected to cause such Real Property to be subject to any restrictions on the ownership, occupancy, use or transferability by the Borrower or any of its Subsidiaries of such Real Property under any Environmental Law; and (iv) the taking of any removal or remedial action in response to the actual or alleged presence of any Hazardous Material on any Real Property owned, leased or operated by the Borrower or any of its Subsidiaries as required by any Environmental Law or any governmental or other administrative agency. All such notices shall describe in reasonable detail the nature of the Environmental Claim and the Borrower's or such Subsidiary's response thereto. (I) SEC REPORTS AND REGISTRATION STATEMENTS. Promptly upon transmission thereof or other filing with the SEC, copies of all registration statements (other than the exhibits thereto and any registration statement on Form S-8 or its equivalent) and annual, quarterly or current reports that the Borrower or any of its Subsidiaries files with the SEC. (J) FINANCIAL STATEMENTS RELATING TO PERMITTED ACQUISITIONS. Promptly and in any event prior to or contemporaneously with the delivery of any financial statements referred to in section 8.1(a) or (b) covering any fiscal period during which a Permitted Acquisition has been completed, copies of the financial statements of the person or business unit which is the subject of such Permitted 47 53 Acquisition, which financial statements are to be utilized in computations of Consolidated EBIT and Consolidated EBITDA. (K) OTHER INFORMATION. With reasonable promptness, such other information or documents (financial or otherwise) relating to the Borrower or any of its Subsidiaries as any Lender (through the Administrative Agent) may reasonably request from time to time. 8.2. BOOKS, RECORDS AND INSPECTIONS. The Borrower will, and will cause each of its Subsidiaries to, (i) keep proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Borrower or such Subsidiaries, as the case may be, in accordance with GAAP, in the case of the Borrower, or which are reconcilable to GAAP, in the case of any Subsidiary; and (ii) permit, upon at least five Business Days' notice to the Chief Financial Officer or any other Authorized Officer of the Borrower, officers and designated representatives of the Administrative Agent or any of the Lenders to visit and inspect any of the properties or assets of the Borrower and any of its Subsidiaries in whomsoever's possession (but only to the extent the Borrower or such Subsidiary has the right to do so to the extent in the possession of another person), and to examine the books of account of the Borrower and any of its Subsidiaries and discuss the affairs, finances and accounts of the Borrower and of any of its Subsidiaries with, and be advised as to the same by, its and their officers and independent accountants and independent actuaries (the Borrower having been offered an opportunity to be present by telephone or in person for any discussions with such independent accountants or independent actuaries), if any, all at such reasonable times and intervals and to such reasonable extent as the Administrative Agent or any of the Lenders may request. 8.3. INSURANCE. The Borrower will, and will cause each of its Subsidiaries to, (a) maintain insurance coverage by such insurers and in such forms and amounts and against such risks as are generally consistent with the insurance coverage maintained by the Borrower and its Subsidiaries at the date hereof, and (b) forthwith upon the Administrative Agent's written request, furnish to the Administrative Agent such information about such insurance as the Administrative Agent may from time to time reasonably request, which information shall be prepared in form and detail satisfactory to the Administrative Agent and certified by an Authorized Officer of the Borrower. 8.4. PAYMENT OF TAXES AND CLAIMS. The Borrower will pay and discharge, and will cause each of its Subsidiaries to pay and discharge, all taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits, or upon any properties belonging to it, prior to the date on which penalties attach thereto, and all lawful claims which, if unpaid, might become a Lien or charge upon any properties of the Borrower or any of its Subsidiaries; PROVIDED that neither the Borrower nor any of its Subsidiaries shall be required to pay any such tax, assessment, charge, levy or claim which is being contested in good faith and by proper proceedings if it has maintained adequate reserves with respect thereto in accordance with GAAP; and PROVIDED, FURTHER, that the Borrower will not be considered to be in default of any of the provisions of this sentence if the Borrower or any Subsidiary fails to pay any such amount which, individually or in the aggregate, is immaterial to the Borrower and its Subsidiaries considered as an entirety. 8.5. CORPORATE FRANCHISES. The Borrower will do, and will cause each of its Subsidiaries to do, or cause to be done, all things necessary to preserve and keep in full force and effect its corporate or other organizational existence, rights, authority and franchises, PROVIDED that nothing in this section 8.5 shall be deemed to prohibit (i) any transaction permitted by section 9.2; (ii) the termination of existence of any Subsidiary if the Borrower determines that such termination is in its best interest; or (iii) the loss of any rights, authorities or franchises if the loss thereof, in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 8.6. GOOD REPAIR. The Borrower will, and will cause each of its Subsidiaries to, ensure that its material properties and equipment used or useful in its business in whomsoever's possession they may be, are kept in good repair, working order and condition, normal wear and tear excepted, and that from time to time there are made in such properties and equipment all needful and proper repairs, renewals, replacements, 48 54 extensions, additions, betterments and improvements, thereto, to the extent and in the manner customary for companies in similar businesses. 8.7. COMPLIANCE WITH STATUTES, ETC. The Borrower will, and will cause each of its Subsidiaries to, comply, in all material respects, with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all governmental bodies, domestic or foreign, in respect of the conduct of its business and the ownership of its property, other than those (i) being contested in good faith by appropriate proceedings, as to which adequate reserves are established to the extent required under GAAP, and (ii) the noncompliance with which would not have, and which would not be reasonably expected to have, a Material Adverse Effect or a material adverse effect on the ability of the Borrower to perform its obligations under any Credit Document. 8.8. COMPLIANCE WITH ENVIRONMENTAL LAWS. Without limitation of the covenants contained in section 8.7 hereof: (a) The Borrower will, and will cause each of its Subsidiaries to, (i) comply, in all material respects, with all Environmental Laws applicable to the ownership, lease or use of all Real Property now or hereafter owned, leased or operated by the Borrower or any of its Subsidiaries, and promptly pay or cause to be paid all costs and expenses incurred in connection with such compliance, except for such noncompliance as would not have, and which would not be reasonably expected to have, a Material Adverse Effect or a material adverse effect on the ability of the Borrower to perform its obligations under any Credit Document; and (ii) keep or cause to be kept all such Real Property free and clear of any Liens imposed pursuant to such Environmental Laws which are not permitted under section 9.3. (b) Without limitation of the foregoing, if the Borrower or any of its Subsidiaries shall generate, use, treat, store, release or dispose of, or permit the generation, use, treatment, storage, release or disposal of, Hazardous Materials on any Real Property now or hereafter owned, leased or operated by the Borrower or any of its Subsidiaries, or transport or permit the transportation of Hazardous Materials to or from any such Real Property, any such action shall be effected only in the ordinary course of business and in any event in compliance, in all material respects, with all Environmental Laws applicable thereto, except for such noncompliance as would not have, and which would not be reasonably expected to have, a Material Adverse Effect or a material adverse effect on the ability of the Borrower to perform its obligations under any Credit Document. (c) If required to do so under any applicable order of any governmental agency, the Borrower will undertake, and cause each of its Subsidiaries to undertake, any clean up, removal, remedial or other action necessary to remove and clean up any Hazardous Materials from any Real Property owned, leased or operated by the Borrower or any of its Subsidiaries in accordance with, in all material respects, the requirements of all applicable Environmental Laws and in accordance with, in all material respects, such orders of all governmental authorities, except (i) to the extent that the Borrower or such Subsidiary is contesting such order in good faith and by appropriate proceedings and for which adequate reserves have been established to the extent required by GAAP, or (ii) for such noncompliance as would not have, and which would not be reasonably expected to have, a Material Adverse Effect or a material adverse effect on the ability of the Borrower to perform its obligations under any Credit Document. 8.9. FISCAL YEARS, FISCAL QUARTERS. The Borrower will, for consolidated financial reporting purposes, continue to use June 30 as the end of its fiscal year and September 30, December 31, March 31 and June 30 as the end of its fiscal quarters. If the Borrower shall change any of its Subsidiaries' fiscal years or fiscal quarters (other than the fiscal year or fiscal quarters of a person which becomes a Subsidiary, made at the time such person becomes a Subsidiary, to conform to the Borrower's fiscal year and fiscal quarters or to conform to the fiscal year or fiscal quarters which the Borrower generally utilizes for its Subsidiaries), the Borrower will promptly, and in any event within 30 days following any such change, deliver a notice to the Administrative Agent and the Lenders describing such change and any material accounting entries made in connection therewith and stating whether such change will have any impact upon any financial computations to be made hereunder, and 49 55 if any such impact is foreseen, describing in reasonable detail the nature and extent of such impact. If the Required Lenders determine that any such change will have any impact upon any financial computations to be made hereunder which is adverse to the Lenders, the Borrower will, if so requested by the Administrative Agent, enter into an amendment to this Agreement, in form and substance satisfactory to the Administrative Agent and the Required Lenders, modifying any of the financial covenants or related provisions hereof in such manner as the Required Lenders determine is necessary to eliminate such adverse effect. 8.10. CERTAIN SUBSIDIARIES TO JOIN IN SUBSIDIARY GUARANTY. (a) In the event that at any time after the Closing Date (x) the Borrower has any Subsidiary (other than a Foreign Subsidiary as to which section 8.10(b) applies) which is not a party to the Subsidiary Guaranty, or (y) an Event of Default shall have occurred and be continuing and the Borrower has any Subsidiary which is not a party to the Subsidiary Guaranty, the Borrower will notify the Administrative Agent in writing of such event, identifying the Subsidiary in question and referring specifically to the rights of the Administrative Agent and the Lenders under this section. The Borrower will, within 30 days following request therefor from the Administrative Agent (who may give such request on its own initiative or upon request by the Required Lenders), cause such Subsidiary to deliver to the Administrative Agent, in sufficient quantities for the Lenders, (i) a joinder supplement, satisfactory in form and substance to the Administrative Agent and the Required Lenders, duly executed by such Subsidiary, pursuant to which such Subsidiary joins in the Subsidiary Guaranty as a guarantor thereunder, and (ii) if such Subsidiary is a corporation, resolutions of the Board of Directors of such Subsidiary, certified by the Secretary or an Assistant Secretary of such Subsidiary as duly adopted and in full force and effect, authorizing the execution and delivery of such joinder supplement, or if such Subsidiary is not a corporation, such other evidence of the authority of such Subsidiary to execute such joinder supplement as the Administrative Agent may reasonably request. (b) Notwithstanding the foregoing provisions of this section 8.10 or the provisions of section 8.11, the Borrower shall not, unless an Event of Default shall have occurred and be continuing, be required to cause a Foreign Subsidiary to join in the Subsidiary Guaranty or to cause the stock of any Foreign Subsidiary to be pledged pursuant to the Pledge Agreement if (i) to do so would subject the Borrower to liability for additional United States income taxes by virtue of section 956 of the Code in an amount the Borrower considers material, and (ii) the Borrower provides the Administrative Agent, within the 30-day period referred to in section 8.10(a) or section 8.11(a), as applicable, with documentation, including computations prepared by the Borrower's internal tax officer, its independent accountants or tax counsel, acceptable to the Required Lenders, in support thereof. 8.11. PLEDGE OF ADDITIONAL STOCK; RELEASE OF COLLATERAL. (a) In the event that at any time after the Closing Date the Borrower has any direct or indirect Subsidiary the stock in which owned by the Borrower or another Subsidiary is not at the time pledged to the Collateral Agent pursuant to the Pledge Agreement, the Borrower may, but shall not be obligated to, elect to (i) cause such stock to be so pledged by delivering the certificates therefor to the Collateral Agent, duly indorsed in blank or accompanied by separate stock powers duly executed in blank, (ii) deliver or cause to be delivered to the Collateral Agent an amendment or supplement to the Pledge Agreement signed by the pledging Credit Party providing for such pledge, in sufficient quantities for the Lenders, and (ii) if such pledging Credit Party is not already a Credit Party, resolutions of the Board of Directors of such pledging Credit Party, certified by the Secretary or an Assistant Secretary of such pledging Credit Party as duly adopted and in full force and effect, authorizing the execution and delivery of such amendment or supplement, or if such pledging Credit Party is not a corporation, such other evidence of the authority of such pledging Credit Party to execute such amendment or supplement as the Collateral Agent may reasonably request. (b) If no default under section 10.1(a) or Event of Default shall have occurred and be continuing, the Borrower shall be entitled to obtain a complete release of all Collateral covered by the Pledge Agreement 50 56 and a termination of the Pledge Agreement upon written notice to the Administrative Agent, and the Administrative Agent and the Collateral Agent shall in such circumstances take all such reasonable actions as may be necessary to effect such release and termination. 8.12. MOST FAVORED COVENANT STATUS. Should the Borrower at any time after August 1, 1997, issue any unsecured Indebtedness, or guarantee any secured or unsecured Indebtedness, denominated in U.S. dollars or any other currency, for money borrowed or represented by bonds, notes, debentures or similar securities in an aggregate amount exceeding $5,000,000, to any lender or group of lenders acting in concert with one another, or one or more institutional investors, pursuant to a loan agreement, credit agreement, note purchase agreement, indenture, guaranty or other similar instrument, which agreement, indenture, guaranty or instrument, includes affirmative or negative financial covenants (or any events of default or other type of restriction which would have the practical effect of any affirmative or negative financial covenant, including, without limitation, any "put" or mandatory prepayment of such Indebtedness upon the occurrence of specified financial ratios or other specified financial measurements) which are applicable to the Borrower and/or any of its Subsidiaries, other than those set forth herein or in any of the other Credit Documents, the Borrower shall promptly so notify the Administrative Agent and the Lenders and, if the Administrative Agent shall so request by written notice to the Borrower (after a determination has been made by the Required Lenders that any of the above-referenced documents or instruments contain any such provisions, which either individually or in the aggregate, are more favorable to the applicable creditors of the Borrower than any of the particular provisions set forth herein), the Borrower, the Administrative Agent and the Required Lenders shall promptly amend this Agreement to incorporate some or all of such provisions, in the discretion of the Administrative Agent and the Required Lenders, into this Agreement and, to the extent necessary and reasonably desirable to the Administrative Agent and the Required Lenders, into any of the other Credit Documents, all at the election of the Administrative Agent and the Required Lenders. If after any such provisions have been so incorporated into any of the Credit Documents, the entire amount of the other Indebtedness from which such provisions were incorporated is repaid, redeemed, prepaid or otherwise retired, the Lenders will promptly upon request of the Borrower cause the Credit Documents to be amended so as to eliminate such provisions which had been previously incorporated therein. 8.13. SENIOR DEBT. The Borrower will at all times ensure that (a) the claims of the Lenders in respect of the Obligations of the Borrower will not be subordinate to, and will in all respects at least rank PARI PASSU with, the claims of every other senior unsecured creditor of the Borrower, and (b) any Indebtedness subordinated in any manner to the claims of any other senior unsecured creditor of the Borrower will be subordinated in like manner to such claims of the Lenders. SECTION 9. NEGATIVE COVENANTS. The Borrower hereby covenants and agrees that on the Effective Date and thereafter for so long as this Agreement is in effect and until such time as the Total Commitment has been terminated, no Notes remain outstanding and the Loans, together with interest, Fees and all other Obligations incurred hereunder are paid in full: 9.1. CHANGES IN BUSINESS. Neither the Borrower nor any of its Subsidiaries will engage in any business if, as a result, the general nature of the business, taken on a consolidated basis, which would then be engaged in by the Borrower and its Subsidiaries, would be substantially changed from the general nature of the business engaged in by the Borrower and its Subsidiaries on the date hereof. 9.2. CONSOLIDATION, MERGER OR SALE OF ASSETS, ETC. The Borrower will not, and will not permit any Subsidiary to, wind up, liquidate or dissolve its affairs, or enter into any transaction of merger or consolidation or sell or otherwise dispose of any of its property or assets (but excluding any sale or disposition of obsolete or excess furniture, fixtures or equipment or excess vacant land in the ordinary course of business), or purchase, lease or otherwise acquire (in one transaction or a series of related transactions) all or any part of the property or assets of any person (excluding any purchases, leases or other acquisitions of property or assets in, and for 51 57 use in, the ordinary course of business) or agree to do any of the foregoing at any future time, EXCEPT that the following shall be permitted: (A) CAPITAL EXPENDITURES: Consolidated Capital Expenditures; (B) PERMITTED INVESTMENTS: the investments permitted pursuant to section 9.5; (C) CERTAIN INTERCOMPANY MERGERS, ETC.: if no Default or Event of Default shall have occurred and be continuing or would result therefrom, (i) the merger, consolidation or amalgamation of any Wholly-Owned Subsidiary with or into the Borrower or another Wholly-Owned Subsidiary, so long as in any merger, consolidation or amalgamation involving the Borrower it is the surviving or continuing or resulting corporation, or the liquidation or dissolution of any Subsidiary, or (ii) the transfer or other disposition of any property by the Borrower to any Wholly-Owned Subsidiary or by any Wholly- Owned Subsidiary to the Borrower or any other Wholly-Owned Subsidiary of the Borrower; (D) PERMITTED ACQUISITIONS: if no Default or Event of Default shall have occurred and be continuing or would result therefrom, the Borrower or any Subsidiary may make Permitted Acquisitions, PROVIDED that (i) at least five Business Days prior to the date of any such Permitted Acquisition which involves consideration (including the amount of any assumed Indebtedness and (without duplication) any outstanding Indebtedness of any person which becomes a Subsidiary as a result of such Permitted Acquisition) of $20,000,000 or more, the Borrower shall have delivered to the Administrative Agent an officer's certificate executed on behalf of the Borrower by an Authorized Officer of the Borrower, which certificate shall (A) contain the date such Permitted Acquisition is scheduled to be consummated, (B) contain the estimated purchase price of such Permitted Acquisition, (C) contain a description of the property and/or assets acquired in connection with such Permitted Acquisition, (D) demonstrate that at the time of making any such Permitted Acquisition the covenants contained in sections 9.6 and 9.7 shall be complied with on a PRO FORMA basis as if the properties and/or assets so acquired had been owned by the Borrower, and the Indebtedness assumed and/or incurred to acquire and/or finance same has been outstanding, for the 12 month period immediately preceding such acquisition (without giving effect to any credit for unobtained or unrealized gains or any adjustments to overhead in connection with any such Permitted Acquisition), and (E) if requested by the Administrative Agent, attach thereto a true and correct copy of the then proposed purchase agreement, merger agreement or similar agreement, partnership agreement and/or other contract entered into in connection with such Permitted Acquisition, and the most recent financial statements for the person or business unit which is the subject of such Permitted Acquisition; (E) PERMITTED DISPOSITIONS: if no Default or Event of Default shall have occurred and be continuing or would result therefrom, the Borrower or any of its Subsidiaries may (i) sell any property, land or building (including any related receivables or other intangible assets) to any person which is not a Subsidiary of the Borrower, or (ii) sell the entire capital stock (or other equity interests) and Indebtedness of any Subsidiary owned by the Borrower or any other Subsidiary to any person which is not a Subsidiary of the Borrower, or (iii) permit any Subsidiary to be merged or consolidated with a person which is not an Affiliate of the Borrower, or (iv) consummate any other Asset Sale with a person who is not a Subsidiary of the Borrower; PROVIDED that (A) the consideration for such transaction represents fair value (as determined by management of the Borrower), and at least 75% of such consideration consists of cash, (B) in the case of any such transaction involving consideration in excess of $5,000,000, at least five Business Days prior to the date of completion of such transaction the Borrower shall have delivered to the Administrative Agent an officer's certificate executed on behalf of the Borrower by an Authorized Officer of the Borrower, which certificate shall contain a description of the proposed transaction, the date such transaction is scheduled to be consummated, the estimated purchase price or other consideration for such transaction, financial information pertaining to compliance with the preceding clause (A), and which shall (if requested by the Administrative Agent) include a certified copy of the draft or definitive documentation pertaining thereto, and (C) 52 58 contemporaneously therewith, the Borrower prepays Loans as and to the extent contemplated by section 5.2(d); (F) CONTRIBUTIONS TO JOINT VENTURES, ETC.: if no Default or Event of Default shall have occurred and be continuing or would result therefrom, the Borrower or any of its Subsidiaries may contribute assets to joint ventures and other persons in accordance with section 9.5(p); and (G) LEASES: the Borrower or any of its Subsidiaries may enter into leases of property or assets not constituting Permitted Acquisitions in the ordinary course of business not otherwise in violation of this Agreement. To the extent (i) any Collateral is sold, transferred or disposed of as permitted by this section 9.2, or (ii) the Required Lenders (or all of the Lenders if required by section 13.12) waive the provisions of this section 9.2 with respect to the sale, transfer or other disposition of any Collateral, (a) such Collateral shall be sold, transferred or disposed of free and clear of the Liens created by the respective Security Documents; (b) if such Collateral includes all of the capital stock of a Subsidiary which is a party to the Subsidiary Guaranty or other Security Document, such capital stock shall be released from the Pledge Agreement and such Subsidiary shall be released from the Subsidiary Guaranty; and (c) the Administrative Agent and the Collateral Agent shall be authorized to take actions deemed appropriate by them in order to effectuate the foregoing. 9.3. LIENS. The Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with respect to any property or assets of any kind (real or personal, tangible or intangible) of the Borrower or any such Subsidiary whether now owned or hereafter acquired, or sell any such property or assets subject to an understanding or agreement, contingent or otherwise, to repurchase such property or assets (including sales of accounts receivable or notes with or without recourse to the Borrower or any of its Subsidiaries, other than for purposes of collection of delinquent accounts in the ordinary course of business) or assign any right to receive income, or file or permit the filing of any financing statement under the UCC or any other similar notice of Lien under any similar recording or notice statute, EXCEPT that the foregoing restrictions shall not apply to: (a) Liens for taxes not yet delinquent or Liens for taxes being contested in good faith and by appropriate proceedings for which adequate reserves (in the good faith judgment of the management of the Borrower) have been established; (b) Liens in respect of property or assets imposed by law which were incurred in the ordinary course of business, such as carriers', warehousemen's, materialmen's and mechanics' Liens and other similar Liens arising in the ordinary course of business, which do not in the aggregate materially detract from the value of such property or assets or materially impair the use thereof in the operation of the business of the Borrower or any Subsidiary; (c) Liens created by this Agreement or the other Credit Documents; (d) Liens (i) in existence on the Closing Date which are listed, and the Indebtedness secured thereby and the property subject thereto on the Closing Date described, in Annex IV, or (ii) arising out of the refinancing, extension, renewal or refunding of any Indebtedness secured by any such Liens, PROVIDED that the principal amount of such Indebtedness is not increased and such Indebtedness is not secured by any additional assets; (e) Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default under section 10.1(g); (f) Liens (other than any Lien imposed by ERISA) incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security; and mechanic's Liens, carrier's Liens, and other Liens to secure the 53 59 performance of tenders, statutory obligations, contract bids, government contracts, performance and return-of-money bonds and other similar obligations, incurred in the ordinary course of business (exclusive of obligations in respect of the payment for borrowed money), whether pursuant to statutory requirements, common law or consensual arrangements; (g) Leases or subleases granted to others not interfering in any material respect with the business of the Borrower or any of its Subsidiaries and any interest or title of a lessor under any lease not in violation of this Agreement; (h) easements, rights-of-way, zoning or deed restrictions, minor defects or irregularities in title and other similar charges or encumbrances not interfering in any material respect with the ordinary conduct of the business of the Borrower or any of its Subsidiaries considered as an entirety; (i) Liens arising from financing statements regarding property subject to leases not in violation of the requirements of this Agreement, PROVIDED that such Liens are only in respect of the property subject to, and secure only, the respective lease (and any other lease with the same or an affiliated lessor); and (j) Liens which (i) are placed upon equipment or machinery used in the ordinary course of business of the Borrower or any Subsidiary at the time of (or within 180 days after) the acquisition thereof by the Borrower or any such Subsidiary to secure Indebtedness incurred to pay or finance all or a portion of the purchase price thereof, PROVIDED that the Lien encumbering the equipment or machinery so acquired does not encumber any other asset of the Borrower or any such Subsidiary; or (ii) are existing on property or other assets at the time acquired by the Borrower or any Subsidiary or on assets of a person at the time such person first becomes a Subsidiary of the Borrower; PROVIDED that (A) any such Liens were not created at the time of or in contemplation of the acquisition of such assets or person by the Borrower or any of its Subsidiaries; (B) in the case of any such acquisition of a person, any such Lien attaches only to the property and assets of such person; and (C) in the case of any such acquisition of property or assets by the Borrower or any Subsidiary, any such Lien attaches only to the property and assets so acquired and not to any other property or assets of the Borrower or any Subsidiary; PROVIDED that (1) the Indebtedness secured by any such Lien does not exceed 100% of the fair market value of the property and assets to which such Lien attaches, determined at the time of the acquisition of such property or asset or the time at which such person becomes a Subsidiary of the Borrower (except in the circumstances described in clause (ii) above to the extent such Liens constituted customary purchase money Liens at the time of incurrence and were entered into in the ordinary course of business), and (2) the Indebtedness secured thereby is permitted by section 9.4(c); and 9.4. INDEBTEDNESS. The Borrower will not, and will not permit any of its Subsidiaries to, contract, create, incur, assume or suffer to exist any Indebtedness of the Borrower or any of its Subsidiaries, EXCEPT: (a) Indebtedness incurred under this Agreement and the other Credit Documents; (b) Indebtedness of the Borrower or any Subsidiary in respect of Capital Leases; PROVIDED that (i) the aggregate Capitalized Lease Obligations of the Borrower and its Subsidiaries, plus the aggregate outstanding principal amount of Indebtedness permitted under clause (c) below, shall not exceed $10,000,000 in the aggregate at any time outstanding, and (ii) at the time of any incurrence 54 60 thereof after the date hereof, and after giving effect thereto, no Event of Default shall have occurred and be continuing or would result therefrom; (c) Indebtedness of the Borrower or any Subsidiary subject to Liens permitted by section 9.3(j), including and any guaranty by the Borrower of any such Indebtedness; PROVIDED that (i) the aggregate principal amount of such Indebtedness shall not exceed $5,000,000 in the aggregate at any time outstanding, and (ii) at the time of any incurrence thereof after the date hereof, and after giving effect thereto, no Event of Default shall have occurred and be continuing or would result therefrom; (d) Existing Indebtedness, to the extent not otherwise permitted pursuant to the foregoing clauses; and any refinancing, extension, renewal or refunding of any such Existing Indebtedness not involving an increase in the principal amount thereof or a reduction of more than 10% in the remaining weighted average life to maturity thereof (computed in accordance with standard financial practice); (e) Indebtedness of the Borrower or any Subsidiary under Hedge Agreements entered into in the ordinary course of business; (f) Indebtedness of the Borrower to any of its Subsidiaries, and Indebtedness of any of the Borrower's Subsidiaries to the Borrower or to another Subsidiary of the Borrower, in each case to the extent permitted under section 9.5; (g) Guaranty Obligations permitted under section 9.5; (h) the Subordinated Indebtedness evidenced by the Convertible Subordinated Debentures due 2004, PROVIDED that the Borrower shall have successfully completed within 90 days following the Effective Date the sale of the Convertible Subordinated Debentures due 2004 to the initial purchasers as contemplated by the Preliminary Offering Memorandum dated July 17, 1997, in the aggregate principal amount described therein or in a greater aggregate principal amount; (i) any refinancing, extension, renewal or refunding of any Subordinated Indebtedness permitted by the foregoing clause (h) not involving an increase in the principal amount thereof, a reduction of more than 10% in the remaining weighted average life to maturity thereof (computed in accordance with standard financial practice), or any changes in the terms of subordination applicable thereto which is adverse to the interests of the Lenders; (j) the subordinated guaranties of Subsidiaries of the Borrower with respect to the Subordinated Indebtedness referred to in clauses (h) and (i) above, PROVIDED the terms of such subordination are substantially the same as contained in the subordinated guaranties originally issued in support of the Convertible Subordinated Debentures due 2004 as contemplated by the Preliminary Offering Memorandum dated July 17, 1997; and (k) additional unsecured Indebtedness of the Borrower not in excess of $25,000,000 aggregate principal amount outstanding at any time, to the extent not otherwise permitted pursuant to the foregoing clauses, PROVIDED that at the time of incurrence thereof, and after giving effect thereto, (i) the Borrower will be in compliance with section 9.6, and (ii) no Event of Default shall have occurred and be continuing or would result therefrom. 9.5. ADVANCES, INVESTMENTS, LOANS AND GUARANTY OBLIGATIONS. The Borrower will not, and will not permit any of its Subsidiaries to, (1) lend money or make advances to any person, (2) purchase or acquire any stock, obligations or securities of, or any other interest in, or make any capital contribution to, or other investment in, any person, (3) create, acquire or hold any Subsidiary, (4) be or become a party to any joint venture or partnership, or (5) be or become obligated under any Guaranty Obligations (other than those created in favor of the Lenders pursuant to the Credit Documents), EXCEPT: 55 61 (a) the Borrower or any of its Subsidiaries may invest in cash and Cash Equivalents; (b) any endorsement of a check or other medium of payment for deposit or collection, or any similar transaction in the normal course of business; (c) the Borrower and its Subsidiaries may acquire and hold receivables owing to them in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; (d) investments acquired by the Borrower or any of its Subsidiaries (i) in exchange for any other investment held by the Borrower or any such Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of the issuer of such other investment, or (ii) as a result of a foreclosure by the Borrower or any of its Subsidiaries with respect to any secured investment or other transfer of title with respect to any secured investment in default; (e) loans and advances to employees for business-related travel expenses, moving expenses, costs of replacement homes and other similar expenses, in each case incurred in the ordinary course of business, shall be permitted; (f) the Borrower may make Permitted Acquisitions in accordance with section 9.2((d); (g) investments in the capital of any Wholly-Owned Subsidiary which is not a Foreign Subsidiary; (h) to the extent not permitted by the foregoing clauses, existing investments in any Subsidiaries (and any increases thereof attributable to increases in retained earnings); (i) to the extent not permitted by the foregoing clauses, the existing loans, advances, investments and guarantees described on Annex V hereto; (j) any unsecured guaranty by the Borrower of any Indebtedness of a Subsidiary permitted by section 9.4, and any guaranty by any Subsidiary described in section 9.4; (k) investments of the Borrower and its Subsidiaries in Hedge Agreements; (l) loans and advances by any Subsidiary of the Borrower to the Borrower, PROVIDED that the Indebtedness represented thereby constitutes Subordinated Indebtedness; (m) loans and advances by the Borrower or by any Subsidiary of the Borrower to, or other investments in, any Subsidiary of the Borrower which is (i) a Subsidiary Guarantor, (ii) a Wholly-Owned Subsidiary, and (iii) not a Foreign Subsidiary; (n) loans and advances by any Subsidiary of the Borrower which is not a Subsidiary Guarantor to, or other investments by any such Subsidiary in, any other Subsidiary of the Borrower which is a Wholly-Owned Subsidiary; (o) Guaranty Obligations, not otherwise permitted by the foregoing clauses, of (i) the Borrower or any Subsidiary in respect of leases of the Borrower or any Subsidiary the entry into which is not prohibited by this Agreement, (ii) the Borrower or any Subsidiary in respect of any other person (other than in respect of (x) Indebtedness for borrowed money or represented by bonds, notes, debentures or similar securities, or (y) Indebtedness constituting Capital Leases) arising as a matter of applicable law because the Borrower or such Subsidiary is or is deemed to be a general partner of such other person, or (iii) the Borrower or any Subsidiary in respect of any other person (other than in respect of (x) Indebtedness for borrowed money or represented by bonds, notes, debentures or similar securities, or (y) Indebtedness constituting Capital Leases) arising in the ordinary course of business; 56 62 (p) any other loans, advances, investments (whether in the form of cash or contribution of property, and if in the form of a contribution of property, such property shall be valued for purposes of this clause (p) at the fair value thereof as reasonably determined by the Borrower) and Guaranty Obligations, including, without limitation, in or to or for the benefit of, Subsidiaries, joint ventures, or other persons, not otherwise permitted by the foregoing clauses, made after March 31, 1997 (such loans, advances and investments, collectively, "BASKET INVESTMENTS", and such Guaranty Obligations, collectively "BASKET GUARANTEES") described below: (i) if no Event of Default shall have occurred and be continuing, or would result therefrom, (A) Basket Investments of up to an aggregate amount not in excess of 15% of the Borrower's Consolidated Net Worth as of the end of its most recently completed fiscal year prior thereto for which financial statements have been delivered hereunder, taking into account the repayment of any loans or advances comprising such Basket Investments, and (B) additional Basket Investments made out of the proceeds of the issue and sale of the Convertible Subordinated Debentures due 2004, or the identifiable cash or Cash Equivalents in which such proceeds have been temporarily invested, shall be permitted to be made, in each case in persons whose principal business is related or complementary to, the businesses of the Borrower and its Subsidiaries, and (ii) if no Event of Default shall have occurred and be continuing, or would result therefrom, Basket Guarantees covering up to $15,000,000 aggregate principal amount of Indebtedness outstanding at any time, shall be permitted to be incurred. 9.6. TOTAL NET INDEBTEDNESS/CONSOLIDATED EBITDA RATIO. The Borrower will not at any time permit the ratio of (i) the amount of Total Net Indebtedness at such time to (ii) Consolidated EBITDA for any Testing Period, to exceed 4.50 to 1.00. 9.7. TOTAL SENIOR INDEBTEDNESS/CONSOLIDATED EBITDA RATIO. The Borrower will not at any time permit the ratio of (i) the amount of Total Senior Indebtedness at such time to (ii) Consolidated EBITDA for any Testing Period, to exceed 3.25 to 1.00. 9.8. INTEREST COVERAGE RATIO. The Borrower will not permit its Interest Coverage Ratio for any Testing Period to be less than 2.50 to 1.00. 9.9. MINIMUM CONSOLIDATED NET WORTH. The Borrower will not permit its Consolidated Net Worth at any time to be less than $222,300,000, EXCEPT that (i) effective as of the end of the Borrower's fiscal quarter ended June 30, 1997, and as of the end of each fiscal quarter thereafter, the foregoing amount (as it may from time to time be increased as herein provided), shall be increased by 50% of the consolidated net income of the Borrower and its Subsidiaries for the fiscal quarter ended on such date, if any, without deduction for minority interests, as determined in conformity with GAAP (there being no reduction in the case of any such consolidated net income which reflects a deficit), and (ii) the foregoing amount (as it may from time to time be increased as herein provided), shall be increased by (A) an amount equal to 100% of the cash proceeds (net of underwriting discounts and commissions and other customary fees and costs associated therewith) from any sale or issuance of equity by the Borrower after the Closing Date (other than any sale or issuance to management or employees pursuant to employee benefit plans of general application), plus (B) the principal amount of any Indebtedness which after the Effective Date is converted or exchanged into equity securities of the Borrower. 9.10. PREPAYMENTS AND REFINANCINGS OF SUBORDINATED DEBT, ETC. The Borrower will not, and will not permit any of its Subsidiaries to, make (or give any notice in respect thereof) any voluntary or optional payment or prepayment or redemption or acquisition for value of (including, without limitation, by way of depositing with the trustee with respect thereto money or securities before due for the purpose of paying when due) or exchange of, or refinance or refund, any Subordinated Indebtedness of the Borrower; PROVIDED that the Borrower may refinance or refund any such Subordinated Indebtedness in accordance with the applicable requirements of section 9.4 hereof. 9.11. TRANSACTIONS WITH AFFILIATES. The Borrower will not, and will not permit any Subsidiary to, enter into any transaction or series of transactions with any Affiliate (other than, in the case of the Borrower, any Subsidiary, and in the case of a Subsidiary, the Borrower or another Subsidiary) other than in the ordinary 57 63 course of business of and pursuant to the reasonable requirements of the Borrower's or such Subsidiary's business and upon fair and reasonable terms no less favorable to the Borrower or such Subsidiary than would obtain in a comparable arm's-length transaction with a person other than an Affiliate, EXCEPT (i) loans, advances and investments permitted by section 9.5, (ii) sales of goods to an Affiliate for use or distribution outside the United States which in the good faith judgment of the Borrower complies with any applicable legal requirements of the Code, or (iii) agreements and transactions with and payments to officers, directors and shareholders which are either (A) entered into in the ordinary course of business and not prohibited by any of the provisions of this Agreement, or (B) entered into outside the ordinary course of business, approved by the directors or shareholders of the Borrower, and not prohibited by any of the provisions of this Agreement. 9.12. LIMITATION ON CERTAIN RESTRICTIVE AGREEMENTS. The Borrower will not, and will not permit any of its Subsidiaries to, directly or indirectly, enter into, incur or permit to exist or become effective, any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of the Borrower or any Subsidiary to create, incur or suffer to exist any Lien upon any of its property or assets as security for Indebtedness, or (b) the ability of any such Subsidiary to pay dividends or make any other distributions on its capital stock or any other interest or participation in its profits owned by the Borrower or any Subsidiary of the Borrower, or pay any Indebtedness owed to the Borrower or a Subsidiary of the Borrower, or to make loans or advances to the Borrower or any of the Borrower's other Subsidiaries, or transfer any of its property or assets to the Borrower or any of the Borrower's other Subsidiaries, EXCEPT for such restrictions existing under or by reason of (i) applicable law, (ii) this Agreement and the other Credit Documents, (iii) customary provisions restricting subletting or assignment of any lease governing a leasehold interest, (iv) customary provisions restricting assignment of any licensing agreement entered into in the ordinary course of business, (v) customary provisions restricting the transfer of assets subject to Liens permitted under section 9.3(j), (vi) restrictions contained in the Existing Indebtedness Agreements as in effect on the Effective Date and customary restrictions affecting only a Subsidiary of the Borrower under any agreement or instrument governing any of the Indebtedness of a Subsidiary permitted pursuant to 9.4, (vii) any document relating to Indebtedness secured by a Lien permitted by section 9.3, insofar as the provisions thereof limit grants of junior liens on the assets securing such Indebtedness, and (viii) any operating lease or Capital Lease, insofar as the provisions thereof limit grants of a security interest in, or other assignments of, the related leasehold interest to any other person. 9.13. LIMITATION ON SALE AND LEASE-BACK TRANSACTIONS. The Borrower will not, nor will it permit any Subsidiary to, enter into any Sale and Lease-Back Transaction involving any individual property (or related group of properties as part of the same Sale and Lease-Back Transaction) having a Value over $2,000,000 unless either (a) the Borrower or such Subsidiary would be entitled to incur Indebtedness secured by a Lien on such property pursuant to section 9.4(c), or (b) the Borrower shall prepay Loans, and to the extent Loans are not so prepaid, shall voluntarily permanently reduce the Unutilized Total Commitment, by an amount at least equal to the Value of such Sale and Lease-Back Transaction. 9.14. PLAN TERMINATIONS, MINIMUM FUNDING, ETC. The Borrower will not, and will not permit any ERISA Affiliate to, (i) terminate any Plan or plans so as to result in liability of the Borrower or any ERISA Affiliate to the PBGC in excess of $1,000,000 in the aggregate, (ii) permit to exist one or more events or conditions which reasonably present a material risk of the termination by the PBGC of any Plan or Plans with respect to which the Borrower or any ERISA Affiliate would, in the event of such termination, incur liability to the PBGC in excess of $1,000,000 in the aggregate, or (iii) fail to comply with the minimum funding standards of ERISA and the Code with respect to any Plan. 58 64 SECTION 10. EVENTS OF DEFAULT. 10.1. EVENTS OF DEFAULT. Upon the occurrence of any of the following specified events (each an "EVENT OF DEFAULT"): (A) PAYMENTS: the Borrower shall (i) default in the payment when due of any principal of the General Revolving Loans; (ii) default, and such default shall continue for three or more Business Days, in the payment when due of any principal of the Swing Line Revolving Loans; (iii) default, and such default shall continue for three or more Business Days, in the payment when due of any reimbursement obligation in respect of any Unpaid Drawing; or (iv) default, and such default shall continue for five or more Business Days, in the payment when due of any interest on the Loans or any Fees or any other amounts owing hereunder or under any other Credit Document; or (B) REPRESENTATIONS, ETC.: any representation, warranty or statement made by the Borrower herein or in any other Credit Document or in any statement or certificate delivered or required to be delivered pursuant hereto or thereto shall prove to be untrue in any material respect on the date as of which made or deemed made; or (C) CERTAIN NEGATIVE COVENANTS: the Borrower shall (i) default in the due performance or observance by it of any term, covenant or agreement contained in sections 9.6 through 9.9, inclusive, or section 9.13, of this Agreement; or (ii) default, and such default shall continue for five or more Business Days after the Borrower shall first have obtained actual knowledge thereof or the Administrative Agent or any Lender shall have notified the Borrower thereof in writing, whichever shall first occur, in the due performance or observance by it of any other term, covenant or agreement contained in sections 9.2 through 9.5, inclusive, of this Agreement; or (D) OTHER COVENANTS: the Borrower shall default in the due performance or observance by it of any term, covenant or agreement contained in this Agreement or any other Credit Document, other than those referred to in section 10.1(a) or (b) or (c) above, and such default shall continue unremedied for a period of at least 30 days after notice by the Administrative Agent or the Required Lenders; or (E) DEFAULT UNDER OTHER AGREEMENTS: the Borrower or any of its Subsidiaries shall (i) default in any payment with respect to any Indebtedness (other than the Obligations) owed to any Lender, or having an unpaid principal amount of $1,000,000 or greater, and such default shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness, or (ii) default in the observance or performance of any agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto (and all grace periods applicable to such observance, performance or condition shall have expired), or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause any such Indebtedness to become due prior to its stated maturity; or any such Indebtedness of the Borrower or any of its Subsidiaries shall be declared to be due and payable, or shall be required to be prepaid (other than by a regularly scheduled required prepayment or redemption, prior to the stated maturity thereof); or (F) OTHER CREDIT DOCUMENTS: the Subsidiary Guaranty or any Security Document (once executed and delivered) shall cease for any reason (other than termination in accordance with its terms) to be in full force and effect; or any Credit Party shall default in any payment obligation thereunder; or any Credit Party shall default in any material respect in the due performance and observance of any other obligation thereunder and such default shall continue unremedied for a period of at least 30 days after notice by the Administrative Agent or the Required Lenders; or any Credit Party shall (or seek to) disaffirm or otherwise limit its obligations thereunder otherwise than in strict compliance with the terms thereof; or 59 65 (G) JUDGMENTS: one or more judgments or decrees shall be entered against the Borrower and/or any of its Subsidiaries involving a liability (exclusive of the amount thereof covered by insurance as to which the carrier has adequate claims paying ability and has not reserved its rights) of $5,000,000 or more in the aggregate for all such judgments and decrees for the Borrower and its Subsidiaries) and any such judgments or decrees shall not have been vacated, discharged or stayed or bonded pending appeal within 30 days from the entry thereof; or (H) BANKRUPTCY, ETC.: the Borrower or any of its Material Subsidiaries shall commence a voluntary case concerning itself under Title 11 of the United States Code entitled "Bankruptcy," as now or hereafter in effect, or any successor thereto (the "BANKRUPTCY CODE"); or an involuntary case is commenced against the Borrower or any of its Material Subsidiaries and the petition is not controverted within 10 days, or is not dismissed within 60 days, after commencement of the case; or a custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge of, all or substantially all of the property of the Borrower or any of its Material Subsidiaries; or the Borrower or any of its Material Subsidiaries commences (including by way of applying for or consenting to the appointment of, or the taking of possession by, a rehabilitator, receiver, custodian, trustee, conservator or liquidator (collectively, a "CONSERVATOR") of itself or all or any substantial portion of its property) any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency, liquidation, rehabilitation, conservatorship or similar law of any jurisdiction whether now or hereafter in effect relating to the Borrower or any of its Material Subsidiaries; or any such proceeding is commenced against the Borrower or any of its Material Subsidiaries to the extent such proceeding is consented by such person or remains undismissed for a period of 60 days; or the Borrower or any of its Material Subsidiaries is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Borrower or any of its Material Subsidiaries suffers any appointment of any conservator or the like for it or any substantial part of its property which continues undischarged or unstayed for a period of 60 days; or the Borrower or any of its Material Subsidiaries makes a general assignment for the benefit of creditors; or any corporate (or similar organizational) action is taken by the Borrower or any of its Material Subsidiaries for the purpose of effecting any of the foregoing; or (I) ERISA: (i) any of the events described in clauses (i) through (viii) of section 8.1(g) shall have occurred; or (ii) there shall result from any such event or events the imposition of a lien, the granting of a security interest, or a liability or a material risk of incurring a liability; and (iii) any such event or events or any such lien, security interest or liability, individually, and/or in the aggregate, has had, or could reasonably be expected to have, a Material Adverse Effect. 10.2. ACCELERATION, ETC. Upon the occurrence of any Event of Default, and at any time thereafter, if any Event of Default shall then be continuing, the Administrative Agent shall, upon the written request of the Required Lenders, by written notice to the Borrower, take any or all of the following actions, without prejudice to the rights of the Administrative Agent or any Lender to enforce its claims against the Borrower, except as otherwise specifically provided for in this Agreement (PROVIDED that, if an Event of Default specified in section 10.1(h) shall occur with respect to the Borrower, the result which would occur upon the giving of written notice by the Administrative Agent as specified in clauses (i) and (ii) below shall occur automatically without the giving of any such notice): (i) declare the Total Commitment terminated, whereupon the Commitment of each Lender shall forthwith terminate immediately without any other notice of any kind; (ii) declare the principal of and any accrued interest in respect of all Loans, all Unpaid Drawings and all obligations owing hereunder and thereunder to be, whereupon the same shall become, forthwith due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; (iii) terminate any Letter of Credit which may be terminated in accordance with its terms; and (iv) direct the Borrower to pay (and the Borrower hereby agrees that on receipt of such notice or upon the occurrence of an Event of Default with respect to the Borrower under section 10.1(h), it will pay) to the Administrative Agent an amount of cash equal to the aggregate Stated Amount of all Letters of Credit then outstanding (such amount to be held as security after the Borrower's reimbursement obligations in respect thereof). 60 66 10.3. APPLICATION OF LIQUIDATION PROCEEDS. All monies received by the Administrative Agent or any Lender from the exercise of remedies hereunder or under the other Credit Documents or under any other documents relating to this Agreement shall, unless otherwise required by the terms of the other Credit Documents or by applicable law, be applied as follows: (I) FIRST, to the payment of all expenses (to the extent not paid by the Borrower) incurred by the Administrative Agent and the Lenders in connection with the exercise of such remedies, including, without limitation, all reasonable costs and expenses of collection, attorneys' fees, court costs and any foreclosure expenses; (II) SECOND, to the payment PRO RATA of interest then accrued on the outstanding Loans; (III) THIRD, to the payment PRO RATA of any fees then accrued and payable to the Administrative Agent, any Letter of Credit Issuer or any Lender under this Agreement in respect of the Loans or the Letter of Credit Outstandings; (IV) FOURTH, to the payment PRO RATA of (A) the principal balance then owing on the outstanding Loans, (B) the amounts then due under Designated Hedge Agreements to creditors of the Company or any Subsidiary thereunder, subject to confirmation by the Administrative Agent of any calculations of termination or other payment amounts being made in accordance with normal industry practice, and (C) the Stated Amount of the Letter of Credit Outstandings (to be held and applied by the Administrative Agent as security for the reimbursement obligations in respect thereof); (V) FIFTH, to the payment to the Lenders of any amounts then accrued and unpaid under sections 2.10, 2.11 and 3.5 hereof, and if such proceeds are insufficient to pay such amounts in full, to the payment of such amounts PRO RATA; (VI) SIXTH, to the payment PRO RATA of all other amounts owed by the Borrower to the Administrative Agent, to any Letter of Credit Issuer or any Lender under this Agreement or any other Credit Document, and to any counterparties under any Designated Hedge Agreements of the Borrower and its Subsidiaries, and if such proceeds are insufficient to pay such amounts in full, to the payment of such amounts PRO RATA; and (VII) FINALLY, any remaining surplus after all of the Obligations have been paid in full, to the Borrower or to whomsoever shall be lawfully entitled thereto. SECTION 11. THE ADMINISTRATIVE AGENT. 11.1. APPOINTMENT. Each Lender hereby irrevocably designates and appoints KeyBank as Administrative Agent to act as specified herein and in the other Credit Documents, and each such Lender hereby irrevocably authorizes KeyBank as the Administrative Agent for such Lender, to take such action on its behalf under the provisions of this Agreement and the other Credit Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Credit Documents, together with such other powers as are reasonably incidental thereto. The Administrative Agent agrees to act as such upon the express conditions contained in this section 11. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein or in the other Credit Documents, nor any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against the Administrative Agent. The provisions of this section 11 are solely for the benefit of the Administrative Agent, and the Lenders, and the Borrower and its Subsidiaries shall not have any rights as a third party beneficiary of any of the provisions hereof. In performing its functions and duties under this Agreement, the Administrative Agent shall act solely as agent 61 67 of the Lenders and does not assume and shall not be deemed to have assumed any obligation or relationship of agency or trust with or for the Borrower or any of its Subsidiaries. 11.2. DELEGATION OF DUTIES. The Administrative Agent may execute any of its duties under this Agreement or any other Credit Document by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care except to the extent otherwise required by section 11.3. 11.3. EXCULPATORY PROVISIONS. Neither the Administrative Agent nor any of its respective officers, directors, employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such person under or in connection with this Agreement (except for its or such person's own gross negligence or willful misconduct) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by the Borrower or of its Subsidiaries or any of their respective officers contained in this Agreement, any other Credit Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Credit Document or for any failure of the Borrower or any Subsidiary of the Borrower or any of their respective officers to perform its obligations hereunder or thereunder. The Administrative Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement, or to inspect the properties, books or records of the Borrower or any of its Subsidiaries. The Administrative Agent shall not be responsible to any Lender for the effectiveness, genuineness, validity, enforceability, collectibility or sufficiency of this Agreement or any Credit Document or for any representations, warranties, recitals or statements made herein or therein or made in any written or oral statement or in any financial or other statements, instruments, reports, certificates or any other documents in connection herewith or therewith furnished or made by the Administrative Agent to the Lenders or by or on behalf of the Borrower or any of its Subsidiaries to the Administrative Agent or any Lender or be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained herein or therein or as to the use of the proceeds of the Loans or of the existence or possible existence of any Default or Event of Default. 11.4. RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, facsimile transmission, telex or teletype message, statement, order or other document or conversation believed by it, in good faith, to be genuine and correct and to have been signed, sent or made by the proper person or persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Borrower or any of its Subsidiaries), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Credit Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Credit Documents in accordance with a request of the Required Lenders (or all of the Lenders, as to any matter which, pursuant to section 12.12, can only be effectuated with the consent of all Lenders), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders. 11.5. NOTICE OF DEFAULT. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Administrative Agent has received notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give prompt notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders, PROVIDED that unless and until the Administrative Agent shall have received such directions, the 62 68 Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders. 11.6. NON-RELIANCE. Each Lender expressly acknowledges that neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates have made any representations or warranties to it and that no act by the Administrative Agent hereinafter taken, including any review of the affairs of the Borrower or any of its Subsidiaries, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent, or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, assets, operations, property, financial and other conditions, prospects and creditworthiness of the Borrower and its Subsidiaries and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon the Administrative Agent, or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement, and to make such investigation as it deems necessary to inform itself as to the business, assets, operations, property, financial and other conditions, prospects and creditworthiness of the Borrower and its Subsidiaries. The Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, assets, property, financial and other conditions, prospects or creditworthiness of the Borrower or any of its Subsidiaries which may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates. 11.7. INDEMNIFICATION. The Lenders agree to indemnify the Administrative Agent in its capacity as such ratably according to their respective General Revolving Loans and Unutilized General Revolving Commitments, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, reasonable expenses or disbursements of any kind whatsoever which may at any time (including, without limitation, at any time following the payment of the Obligations) be imposed on, incurred by or asserted against the Administrative Agent in its capacity as such in any way relating to or arising out of this Agreement or any other Credit Document, or any documents contemplated by or referred to herein or the transactions contemplated hereby or any action taken or omitted to be taken by the Administrative Agent under or in connection with any of the foregoing, but only to the extent that any of the foregoing is not paid by the Borrower, PROVIDED that no Lender shall be liable to the Administrative Agent for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements to the extent resulting solely from the Administrative Agent's gross negligence or willful misconduct. If any indemnity furnished to the Administrative Agent for any purpose shall, in the opinion of the Administrative Agent, be insufficient or become impaired, the Administrative Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished. The agreements in this section 11.7 shall survive the payment of all Obligations. 11.8. THE ADMINISTRATIVE AGENT IN INDIVIDUAL CAPACITY. The Administrative Agent and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrower, its Subsidiaries and their Affiliates as though not acting as Administrative Agent hereunder. With respect to the Loans made by it and all Obligations owing to it, the Administrative Agent shall have the same rights and powers under this Agreement as any Lender and may exercise the same as though it were not the Administrative Agent, and the terms "Lender" and "Lenders" shall include the Administrative Agent in its individual capacity. 11.9. SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may resign as the Administrative Agent upon 20 days' notice to the Lenders and the Borrower. The Required Lenders shall appoint from among the Lenders a successor Administrative Agent for the Lenders subject to prior approval by the Borrower (such approval not to be unreasonably withheld or delayed), whereupon such successor agent shall succeed to the rights, powers and duties of the Administrative Agent, and the term "Administrative Agent" shall include such successor agent effective upon its appointment, and the resigning Administrative Agent's rights, powers and duties as the Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement. After the retiring Administrative 63 69 Agent's resignation hereunder as the Administrative Agent, the provisions of this section 11 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. 11.10. OTHER AGENTS. Any Lender identified herein as a Co-Agent, Syndication Agent, Documentation Agent, Managing Agent, Manager or any other corresponding title, other than "Administrative Agent" and "Collateral Agent", shall have no right, power, obligation, liability, responsibility or duty under this Agreement or any other Credit Document except those applicable to all Lenders as such. Each Lender acknowledges that it has not relied, and will not rely, on any Lender so identified in deciding to enter into this Agreement or in taking or not taking any action hereunder. SECTION 12. MISCELLANEOUS. 12.1. PAYMENT OF EXPENSES ETC. (a) The Borrower will, whether or not the transactions herein contemplated are consummated, pay all reasonable out-of-pocket costs and expenses of the Administrative Agent in connection with the negotiation, preparation, execution and delivery of the Credit Documents and the documents and instruments referred to therein and any amendment, waiver or consent relating thereto (including, without limitation, the reasonable fees and disbursements of Jones, Day, Reavis & Pogue, special counsel to the Administrative Agent), and of the Administrative Agent and each of the Lenders in connection with the enforcement of the Credit Documents and the documents and instruments referred to therein (including, without limitation, the reasonable fees and disbursements of counsel for the Administrative Agent and for each of the Lenders and any allocated costs of internal counsel for any of the Lenders). (b) In the event of the bankruptcy, insolvency, rehabilitation or other similar proceeding in respect of the Borrower or any of its Subsidiaries, the Borrower will pay all costs of collection and defense, including reasonable attorneys' fees in connection therewith and in connection with any appellate proceeding or post-judgment action involved therein, which shall be due and payable together with all required service or use taxes. (c) The Borrower will pay and hold each of the Lenders harmless from and against any and all present and future stamp and other similar taxes with respect to the foregoing matters and save each of the Lenders harmless from and against any and all liabilities with respect to or resulting from any delay or omission (other than to the extent attributable to such Lender) to pay such taxes. (d) The Borrower will indemnify each Lender, its officers, directors, employees, representatives and agents (collectively, the "INDEMNITEES") from and hold each of them harmless against any and all losses, liabilities, claims, damages or expenses reasonably incurred by any of them as a result of, or arising out of, or in any way related to, or by reason of (i) any investigation, litigation or other proceeding (whether or not any Lender is a party thereto) related to the entering into and/or performance of any Credit Document or the use of the proceeds of any Loans hereunder or the consummation of any transactions contemplated in any Credit Document, other than any such investigation, litigation or proceeding arising out of transactions solely between any of the Lenders or the Administrative Agent, transactions solely involving the assignment by a Lender of all or a portion of its Loans and Commitment, or the granting of participations therein, as provided in this Agreement, or arising solely out of any examination of a Lender by any regulatory authority having jurisdiction over it, or (ii) the actual or alleged presence of Hazardous Materials in the air, surface water or groundwater or on the surface or subsurface of any Real Property owned, leased or at any time operated by the Borrower or any of its Subsidiaries, the release, generation, storage, transportation, handling or disposal of Hazardous Materials at any location, whether or not owned or operated by the Borrower or any of its Subsidiaries, if the Borrower or any such Subsidiary could have or is alleged to have any responsibility in respect thereof, the non-compliance of any Real Property with foreign, federal, state 64 70 and local laws, regulations and ordinances (including applicable permits thereunder) applicable to any Real Property, or any Environmental Claim asserted against the Borrower or any of its Subsidiaries, in respect of any Real Property owned, leased or at any time operated by the Borrower or any of its Subsidiaries, including, in each case, without limitation, the reasonable fees and disbursements of counsel incurred in connection with any such investigation, litigation or other proceeding (but excluding any such losses, liabilities, claims, damages or expenses to the extent incurred by reason of the gross negligence or willful misconduct of the person to be indemnified or of any other Indemnitee who is such person or an Affiliate of such person). To the extent that the undertaking to indemnify, pay or hold harmless any person set forth in the preceding sentence may be unenforceable because it is violative of any law or public policy, the Borrower shall make the maximum contribution to the payment and satisfaction of each of the indemnified liabilities which is permissible under applicable law. 12.2. RIGHT OF SETOFF. In addition to any rights now or hereafter granted under applicable law or otherwise, and not by way of limitation of any such rights, upon the occurrence of an Event of Default, each Lender is hereby authorized at any time or from time to time, without presentment, demand, protest or other notice of any kind to the Borrower or to any other person, any such notice being hereby expressly waived, to set off and to appropriate and apply any and all deposits (general or special) and any other Indebtedness at any time held or owing by such Lender (including, without limitation, by branches and agencies of such Lender wherever located) to or for the credit or the account of the Borrower against and on account of the Obligations and liabilities of the Borrower to such Lender under this Agreement or under any of the other Credit Documents, including, without limitation, all interests in Obligations the Borrower purchased by such Lender pursuant to section 12.4(b), and all other claims of any nature or description arising out of or connected with this Agreement or any other Credit Document, irrespective of whether or not such Lender shall have made any demand hereunder and although said Obligations, liabilities or claims, or any of them, shall be contingent or unmatured. 12.3. NOTICES. Except as otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including telegraphic, telex, facsimile transmission or cable communication) and mailed, telegraphed, telexed, transmitted, cabled or delivered, if to the Borrower, at Suite 220, 3201 Enterprise Parkway, Beachwood, Ohio 44122, attention: Chief Financial Officer (facsimile: (216) 464-8376); if to any Lender at its address specified for such Lender on Annex I hereto; if to the Administrative Agent, at its Notice Address; or at such other address as shall be designated by any party in a written notice to the other parties hereto. All such notices and communications shall be mailed, telegraphed, telexed, telecopied, or cabled or sent by overnight courier, and shall be effective when received. 12.4. BENEFIT OF AGREEMENT. (a) This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns, PROVIDED that the Borrower may not assign or transfer any of its rights or obligations hereunder without the prior written consent of all the Lenders. Each Lender may at any time grant participations in any of its rights hereunder or under any of the Notes to (x) another Lender that is not a Defaulting Lender or to an Affiliate of such Lender which is a commercial bank, financial institution or other "accredited investor" (as defined in SEC Regulation D), and (y) one or more Eligible Transferees, PROVIDED that in the case of any such participation, (i) the participant shall not have any rights under this Agreement or any of the other Credit Documents, including rights of consent, approval or waiver (the participant's rights against such Lender in respect of such participation to be those set forth in the agreement executed by such Lender in favor of the participant relating thereto), (ii) such Lender's obligations under this Agreement (including, without limitation, its Commitment hereunder) shall remain unchanged, (iii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iv) such Lender shall remain the holder of any Note for all purposes of this Agreement and (v) the Borrower, the Administrative Agent, and the other Lenders shall continue to deal solely and directly with the selling Lender in connection with such Lender's rights and obligations under this Agreement, and all amounts payable by the Borrower hereunder shall be determined as if such Lender had not sold such participation, except that the participant shall be entitled to the benefits of sections 2.10 and 2.11 of this Agreement to the extent that such Lender would be entitled to such benefits if the participation had not been entered into or sold, and, 65 71 PROVIDED FURTHER, that no Lender shall transfer, grant or sell any participation under which the participant shall have rights to approve any amendment to or waiver of this Agreement or any other Credit Document except to the extent such amendment or waiver would (w) extend the final scheduled maturity of the Loans in which such participant is participating (it being understood that any waiver of the making of, or the application of any amortization payment or other prepayment or the method of any application of any prepayment to the amortization of the Loans shall not constitute an extension of the final maturity date thereof), or reduce the rate or extend the time of payment of interest or Fees thereon (except in connection with a waiver of the applicability of any post-default increase in interest rates), or reduce the principal amount thereof, or increase such participant's participating interest in any Commitment over the amount thereof then in effect (it being understood that a waiver of any Default or Event of Default or of any mandatory prepayment or a mandatory reduction in the Total Commitment, or a mandatory prepayment, shall not constitute a change in the terms of any Commitment), (x) release any Credit Party from its obligations under the Subsidiary Guaranty except strictly in accordance with the terms hereof or thereof, (y) release all or substantially all of the Collateral except strictly in accordance with the terms hereof, or (z) consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement. (b) Notwithstanding the foregoing, (x) any Lender may assign all or a fixed portion of all of its Loans and/or Commitments, and its rights and obligations hereunder, which assignment does not have to be PRO RATA among the Facilities, to another Lender that is not a Defaulting Lender, or to an Affiliate of any Lender (including itself) which is not a Defaulting Lender and which is a commercial bank, financial institution or other "accredited investor" (as defined in SEC Regulation D), and (y) any Lender may assign all, or if less than all, a PRO RATA fixed portion, equal to at least $10,000,000 in the case of General Revolving Loans and/or General Revolving Commitments, in the aggregate for the assigning Lender or assigning Lenders, of all its Loans and/or Commitments and its rights and obligations hereunder, which assignment does not have to be PRO RATA among the Facilities, to one or more Eligible Transferees, each of which assignees shall become a party to this Agreement as a Lender by execution of an Assignment Agreement, PROVIDED that, (i) in the case of any assignment of a portion of the General Revolving Loans and/or General Revolving Commitments of a Lender, such Lender shall retain a minimum fixed portion thereof equal to at least $10,000,000, (ii) at the time of any such assignment Annex I shall be deemed modified to reflect the Commitments of such new Lender and of the existing Lenders, (iii) upon surrender of the old Notes, new Notes will be issued, at the Borrower's expense, to such new Lender and to the assigning Lender, such new Notes to be in conformity with the requirements of section 2.6 (with appropriate modifications) to the extent needed to reflect the revised Commitments, (iv) in the case of clause (y) only, the consent of the Administrative Agent and each Letter of Credit Issuer shall be required in connection with any such assignment (which consent shall not be unreasonably withheld or delayed), and (v) the Administrative Agent shall receive at the time of each such assignment, from the assigning or assignee Lender, the payment of a non-refundable assignment fee of $2,500 and, PROVIDED FURTHER, that such transfer or assignment will not be effective until recorded by the Administrative Agent on the Lender Register maintained by it as provided herein. To the extent of any assignment pursuant to this section 12.4(b) the assigning Lender shall be relieved of its obligations hereunder with respect to its assigned Commitments. At the time of each assignment pursuant to this section 12.4(b) to a person which is not already a Lender hereunder and which is not a United States person (as such term is defined in section 7701(a)(30) of the Code) for Federal income tax purposes, the respective assignee Lender shall provide to the Borrower and the Administrative Agent the appropriate Internal Revenue Service Forms (and, if applicable a Section 5.4(b)(ii) Certificate) described in section 5.4(b). To the extent that an assignment of all or any portion of a Lender's Commitment and related outstanding Obligations pursuant to this section 12.4(b) would, at the time of such assignment, result in increased costs under section 2.11 from those being charged by the respective assigning Lender prior to such assignment, then the Borrower shall not be obligated to pay such increased costs (although the Borrower shall be obligated to any other increased costs of the type described above resulting from changes after the date of the respective assignment). Nothing in this section 12.4(b) shall prevent or prohibit any Lender from pledging its Notes or Loans to a Federal Reserve Bank in support of borrowings made by such Lender from such Federal Reserve Bank. (c) Notwithstanding any other provisions of this section 12.4, no transfer or assignment of the interests or obligations of any Lender hereunder or any grant of participation therein shall be permitted if such 66 72 transfer, assignment or grant would require the Borrower to file a registration statement with the SEC or to qualify the Loans under the "Blue Sky" laws of any State. (d) Each Lender initially party to this Agreement hereby represents, and each person that became a Lender pursuant to an assignment permitted by this section 12.4 will, upon its becoming party to this Agreement, represent that it is a commercial lender, other financial institution or other "accredited" investor (as defined in SEC Regulation D) which makes or acquires loans in the ordinary course of its business and that it will make or acquire Loans for its own account in the ordinary course of such business, PROVIDED that subject to the preceding sections 12.4(a) and (b), the disposition of any promissory notes or other evidences of or interests in Indebtedness held by such Lender shall at all times be within its exclusive control. 12.5. NO WAIVER: REMEDIES CUMULATIVE. No failure or delay on the part of the Administrative Agent or any Lender in exercising any right, power or privilege hereunder or under any other Credit Document and no course of dealing between the Borrower and the Administrative Agent or any Lender shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or under any other Credit Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder or thereunder. The rights and remedies herein expressly provided are cumulative and not exclusive of any rights or remedies which the Administrative Agent or any Lender would otherwise have. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Administrative Agent or the Lenders to any other or further action in any circumstances without notice or demand. 12.6. PAYMENTS PRO RATA. (a) The Administrative Agent agrees that promptly after its receipt of each payment from or on behalf of the Borrower in respect of any Obligations, it shall distribute such payment to the Lenders (other than any Lender that has expressly waived in writing its right to receive its PRO RATA share thereof) PRO RATA based upon their respective shares, if any, of the Obligations with respect to which such payment was received. As to any such payment received by the Administrative Agent prior to 1:00 P.M. (local time at the Payment Office) in funds which are immediately available on such day, the Administrative Agent will use all reasonable efforts to distribute such payment in immediately available funds on the same day to the Lenders as aforesaid. (b) Each of the Lenders agrees that, if it should receive any amount hereunder (whether by voluntary payment, by realization upon security, by the exercise of the right of setoff or banker's lien, by counterclaim or cross action, by the enforcement of any right under the Credit Documents, or otherwise) which is applicable to the payment of the principal of, or interest on, the Loans or Fees, of a sum which with respect to the related sum or sums received by other Lenders is in a greater proportion than the total of such Obligation then owed and due to such Lender bears to the total of such Obligation then owed and due to all of the Lenders immediately prior to such receipt, then such Lender receiving such excess payment shall purchase for cash without recourse or warranty from the other Lenders an interest in the Obligations to such Lenders in such amount as shall result in a proportional participation by all of the Lenders in such amount, PROVIDED that if all or any portion of such excess amount is thereafter recovered from such Lender, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest. (c) Notwithstanding anything to the contrary contained herein, the provisions of the preceding sections 13.6(a) and (b) shall be subject to the express provisions of this Agreement which require, or permit, differing payments to be made to Lenders which are not Defaulting Lenders, as opposed to Defaulting Lenders. 12.7. CALCULATIONS: COMPUTATIONS. (a) The financial statements to be furnished to the Lenders pursuant hereto shall be made and prepared in accordance with GAAP consistently applied throughout the periods involved (except as set forth in the notes thereto or as otherwise disclosed in writing by the Borrower to the Lenders); PROVIDED, that if at any time the computations determining compliance with section 9 utilize accounting principles different from those utilized in the financial statements furnished to the Lenders, such computations shall set forth in reasonable detail a description of the differences and the effect upon such computations. 67 73 (b) All computations of interest on Loans hereunder and all computations of Facility Fees, Letter of Credit Fees and other Fees hereunder shall be made on the actual number of days elapsed over a year of 360 days. 12.8. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF OHIO. TO THE FULLEST EXTENT PERMITTED BY LAW, THE BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY JURISDICTION OTHER THAN THE STATE OF OHIO GOVERNS THIS AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS. Any legal action or proceeding with respect to this Agreement or any other Credit Document may be brought in the Courts of the State of Ohio, or of the United States for the Northern District of Ohio, and, by execution and delivery of this Agreement, the Borrower hereby irrevocably accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. The Borrower hereby further irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to the Borrower at its address for notices pursuant to section 12.3, such service to become effective 30 days after such mailing or at such earlier time as may be provided under applicable law. Nothing herein shall affect the right of the Administrative Agent or any Lender to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against the Borrower in any other jurisdiction. (b) The Borrower hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Agreement or any other Credit Document brought in the courts referred to in section 12.8(a) above and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. (c) Each of the parties to this Agreement hereby irrevocably waives all right to a trial by jury in any action, proceeding or counterclaim arising out of or relating to this Agreement, the other Credit Documents or the transactions contemplated hereby or thereby. 12.9. COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same agreement. A set of counterparts executed by all the parties hereto shall be lodged with the Borrower and the Administrative Agent. 12.10. EFFECTIVENESS. This Agreement shall become effective on the date (the "EFFECTIVE DATE") on which the Borrower and each of the Lenders shall have signed a copy hereof (whether the same or different copies) and shall have delivered the same to the Administrative Agent at the Notice Office of the Administrative Agent or, in the case of the Lenders, shall have given to the Administrative Agent telephonic (confirmed in writing), written telex or facsimile transmission notice (actually received) at such office that the same has been signed and mailed to it. 12.11. HEADINGS DESCRIPTIVE. The headings of the several sections and other portions of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement. 12.12. AMENDMENT OR WAIVER. Neither this Agreement nor any terms hereof or thereof may be changed, waived, discharged or terminated UNLESS such change, waiver, discharge or termination is in writing signed by the Borrower and the Required Lenders, PROVIDED that no such change, waiver, discharge or termination shall, without the consent of each Lender (other than a Defaulting Lender) affected thereby, (i) extend any interim or final maturity date provided for herein (including any extension of any interim or final maturity date to be effected in accordance with section 4.4 hereof) applicable to a Loan or a Commitment (it 68 74 being understood that any waiver of the making of, or application of any prepayment of or the method of application of any mandatory prepayment of the Loans shall not constitute an extension of such final maturity thereof), reduce the rate or extend the time of payment of interest (other than as a result of waiving the applicability of any post-default increase in interest rates) or Fees thereon, or reduce the principal amount thereof, or increase the Commitment of any Lender over the amount thereof then in effect (it being understood that a waiver of any Default or Event of Default or of any mandatory prepayment or a mandatory reduction in the Total Commitment shall not constitute a change in the terms of any Commitment of any Lender), (ii) release the Borrower from any obligations as a guarantor of its Subsidiaries' obligations under any Credit Document, (iii) release any Credit Party from the Subsidiary Guaranty, except in connection with a transaction permitted by section 9.2(e), (iv) release all or substantially all of the Collateral, except strictly in accordance with the provisions of section 8.11(b), (v) change the definition of the term "Change of Control" or any of the provisions of section 5.2(e) which are applicable upon a Change of Control, (vi) change the definition of the term "Permitted Acquisition" or any of the provisions of section 9.2(d) which are applicable to Permitted Acquisitions which would have the effect of depriving such Lender of its rights as contemplated by such definition, (vii) amend, modify or waive any provision of this section 12.12, or section 11.7, 12.1, 12.4, 12.6 or 12.7(b), or any other provision of any of the Credit Documents pursuant to which the consent or approval of all Lenders is by the terms of such provision explicitly required, (viii) reduce the percentage specified in, or otherwise modify, the definition of Required Lenders, or (ix) consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement. No provision of section 3 or 11 may be amended without the consent of (x) any Letter of Credit Issuer adversely affected thereby or (y) the Administrative Agent, respectively. 12.13. SURVIVAL. All indemnities set forth herein including, without limitation, in section 2.10, 2.11, 3.5, 11.7 or 12.1 shall survive the execution and delivery of this Agreement and the making and repayment of Loans. 12.14. DOMICILE OF LOANS. Each Lender may transfer and carry its Loans at, to or for the account of any branch office, subsidiary or affiliate of such Lender, PROVIDED that the Borrower shall not be responsible for costs arising under section 2.10 resulting from any such transfer (other than a transfer pursuant to section 2.12) to the extent not otherwise applicable to such Lender prior to such transfer. 12.15. CONFIDENTIALITY. Each Lender shall hold all non-public information obtained pursuant to the requirements of this Agreement which has been identified as such by the Borrower in accordance with its customary procedure for handling confidential information of this nature and in accordance with safe and sound banking practices and in any event may make disclosure reasonably required by any BONA FIDE transferee or participant in connection with the contemplated transfer of any Loans or Commitment or participation therein (PROVIDED that each such prospective transferee and/or participant shall execute an agreement for the benefit of the Borrower with such prospective transferor Lender and/or participant containing provisions substantially identical to those contained in this section 12.15), and to its auditors, attorneys or as required or requested by any governmental agency or representative thereof or pursuant to legal process, PROVIDED that, unless specifically prohibited by applicable law or court order, each Lender shall notify the Borrower of any request by any governmental agency or representative thereof (other than any such request in connection with an examination of the financial condition of such Lender by such governmental agency) for disclosure of any such non-public information prior to disclosure of such information, and PROVIDED FURTHER that in no event shall any Lender be obligated or required to return any materials furnished by or on behalf of the Borrower or any of its Subsidiaries. The Borrower hereby agrees that the failure of a Lender to comply with the provisions of this section 12.15 shall not relieve the Borrower of any of the obligations to such Lender under this Agreement and the other Credit Documents. 12.16. LENDER REGISTER. The Borrower hereby designates the Administrative Agent to serve as its agent, solely for purposes of this section 12.16, to retain a copy of each Assignment Agreement delivered to and accepted by it and to maintain a register (the "LENDER REGISTER") on or in which it will record the names and addresses of the Lenders, and the Commitments from time to time of each of the Lenders, the Loans made to the Borrower by each of the Lenders and each repayment and prepayment in respect of the principal amount of such Loans of each such Lender. Failure to make any such recordation, or (absent manifest error) any error in such recordation, shall not affect the Borrower's obligations in respect of such Loans. With respect to any 69 75 Lender, the transfer of any Commitment of such Lender and the rights to the principal of, and interest on, any Loan made pursuant to such Commitment shall not be effective until such transfer is recorded on the Lender Register maintained by the Administrative Agent with respect to ownership of such Commitment and Loans and prior to such recordation all amounts owing to the transferor with respect to such Commitment and Loans shall remain owing to the transferor. The registration of assignment or transfer of all or part of any Commitments and Loans shall be recorded by the Administrative Agent on the Lender Register only upon the acceptance by the Administrative Agent of a properly executed and delivered Assignment Agreement pursuant to section 12.4(b). The Borrower agrees to indemnify the Administrative Agent from and against any and all losses, claims, damages and liabilities of whatsoever nature which may be imposed on, asserted against or incurred by the Administrative Agent in performing its duties under this section 12.16, except to the extent the same result solely from the Administrative Agent's negligence or willful misconduct. The Lender Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. 12.17. LIMITATIONS ON LIABILITY OF THE LETTER OF CREDIT ISSUERS. The Borrower assumes all risks of the acts or omissions of any beneficiary or transferee of any Letter of Credit with respect to its use of such Letters of Credit. Neither any Letter of Credit Issuer nor any of its officers or directors shall be liable or responsible for: (a) the use which may be made of any Letter of Credit or any acts or omissions of any beneficiary or transferee in connection therewith; (b) the validity, sufficiency or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged; (c) payment by a Letter of Credit Issuer against presentation of documents that do not comply with the terms of a Letter of Credit, including failure of any documents to bear any reference or adequate reference to such Letter of Credit; or (d) any other circumstances whatsoever in making or failing to make payment under any Letter of Credit, EXCEPT that the Borrower (or a Subsidiary which is the account party in respect of the Letter of Credit in question) shall have a claim against a Letter of Credit Issuer, and a Letter of Credit Issuer shall be liable to the Borrower (or such Subsidiary), to the extent of any direct, but not consequential, damages suffered by the Borrower (or such Subsidiary) which the Borrower (or such Subsidiary) proves were caused by (i) such Letter of Credit Issuer's willful misconduct or gross negligence in determining whether documents presented under a Letter of Credit comply with the terms of such Letter of Credit or (ii) such Letter of Credit Issuer's willful failure to make lawful payment under any Letter of Credit after the presentation to it of documentation strictly complying with the terms and conditions of such Letter of Credit. In furtherance and not in limitation of the foregoing, a Letter of Credit Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation. 12.18. GENERAL LIMITATION OF LIABILITY. No claim may be made by the Borrower, any Lender, the Administrative Agent, any Letter of Credit Issuer or any other person against the Administrative Agent, any Letter of Credit Issuer, or any other Lender or the Affiliates, directors, officers, employees, attorneys or agents of any of them for any damages other than actual compensatory damages in respect of any claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by this Agreement or any of the other Credit Documents, or any act, omission or event occurring in connection therewith; and each of the Borrower, each Lender, the Administrative Agent and each Letter of Credit Issuer hereby, to the fullest extent permitted under applicable law, waives, releases and agrees not to sue or counterclaim upon any such claim for any special, consequential or punitive damages, whether or not accrued and whether or not known or suspected to exist in its favor. 12.19. NO DUTY. All attorneys, accountants, appraisers, consultants and other professional persons (including the firms or other entities on behalf of which any such person may act) retained by the Administrative Agent or any Lender with respect to the transactions contemplated by the Credit Documents shall have the right to act exclusively in the interest of the Administrative Agent or such Lender, as the case may be, and shall have no duty of disclosure, duty of loyalty, duty of care, or other duty or obligation of any type or nature whatsoever to the Borrower, to any of its Subsidiaries, or to any other person, with respect to any matters within the scope of such representation or related to their activities in connection with such representation. 70 76 12.20. LENDERS AND AGENT NOT FIDUCIARY TO BORROWER, ETC. The relationship among the Borrower and its Subsidiaries, on the one hand, and the Administrative Agent, each Letter of Credit Issuer and the Lenders, on the other hand, is solely that of debtor and creditor, and the Administrative Agent, each Letter of Credit Issuer and the Lenders have no fiduciary or other special relationship with the Borrower and its Subsidiaries, and no term or provision of any Credit Document, no course of dealing, no written or oral communication, or other action, shall be construed so as to deem such relationship to be other than that of debtor and creditor. 12.21. MARGIN STOCK. The Lenders are not relying on any direct or indirect security of any Margin Stock in extending the credit facilities provided for herein and this Agreement shall be construed in a manner consistent with such intention. 12.22. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties herein shall survive the making of Loans and the issuance of Letters of Credit hereunder, the execution and delivery of this Agreement, the Notes and the other documents the forms of which are attached as Exhibits hereto, the issue and delivery of the Notes, any disposition thereof by any holder thereof, and any investigation made by the Administrative Agent or any Lender or any other holder of any of the Notes or on its behalf. All statements contained in any certificate or other document delivered to the Administrative Agent or any Lender or any holder of any Notes by or on behalf of the Borrower or of its Subsidiaries pursuant hereto or otherwise specifically for use in connection with the transactions contemplated hereby shall constitute representations and warranties by the Borrower hereunder, made as of the respective dates specified therein or, if no date is specified, as of the respective dates furnished to the Administrative Agent or any Lender. [The balance of this page is intentionally blank; the next page is an unnumbered signature page.] 71 77 IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Agreement to be duly executed and delivered as of the date first above written. NCS HEALTHCARE, INC. NATIONAL CITY BANK BY: /s/ Jeffrey R. Steinhilber BY: /s/ Timothy G. Healy ------------------------------- ------------------------- SENIOR VICE PRESIDENT & CHIEF TITLE: VICE PRESIDENT FINANCIAL OFFICER KEYBANK NATIONAL ASSOCIATION, MELLON BANK, N.A. INDIVIDUALLY AS A LENDER, A LETTER OF CREDIT BY: /s/ Colleen P. McCullum ISSUER AND AS -------------------------- ADMINISTRATIVE AGENT TITLE: BANKING OFFICER BY: /s/ Thomas J. Purcell ------------------------------ STAR BANK, N.A. VICE PRESIDENT BY: /s/ David J. Dannemiller -------------------------- TITLE: VICE PRESIDENT NBD BANK, INDIVIDUALLY AND AS CO-AGENT BANK ONE, N.A. BY: /s/ Winfred S. Pinet BY: /s/ Jan E. Petrik ------------------------------ -------------------------- TITLE: FIRST VICE PRESIDENT TITLE: VICE PRESIDENT 78 ANNEX I INFORMATION AS TO LENDERS
============================================================================================================================= NAME OF LENDER COMMITMENT DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE - ----------------------------------------------------------------------------------------------------------------------------- KeyBank National KeyBank National Association KeyBank National Association, Association Key Center Cayman Islands Branch GENERAL REVOLVING 127 Public Square c/o KeyBank National Association COMMITMENT: Cleveland, Ohio 44114 Key Center 127 Public Square $40,000,000 CONTACTS/ NOTIFICATION METHODS: Cleveland, Ohio 44114 KeyBank National Association SWING LINE REVOLVING Key Center COMMITMENT: 127 Public Square Cleveland, Ohio 44114 $5,000,000 Attn.: Large Corporate Group Facsimile: (216) 689-4981 PRIMARY CONTACT: Thomas J. Purcell Vice President Direct Dial: (216) 689-4439 Facsimile: (216) 689-4981 CONTACT FOR BORROWINGS, PAYMENTS, ETC.: Sandy Wilder Large Corporate Group Phone: (216) 689-4448 FAX: (216) 689-4981 CONTACT FOR LETTERS OF CREDIT: International Department Fax: (216) 689-3683 WIRING INFORMATION: ABA # 041 001 039 Ref.: NCS HealthCare, Inc. Attention: Commercial Loan Operations
79
============================================================================================================================= NAME OF LENDER COMMITMENT DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE - ----------------------------------------------------------------------------------------------------------------------------- NBD Bank NBD Bank NBD Bank 611 Woodward Avenue 611 Woodward Avenue GENERAL REVOLVING Detroit, Michigan 48226 Detroit, Michigan 48226 COMMITMENT: CONTACTS/NOTIFICATION METHODS: $30,000,000 NBD Bank 611 Woodward Avenue Detroit, Michigan 48226 Attn.: Corporate and Institutional Banking Facsimile: (313) 225-1212 PRIMARY CONTACT: Winifred S. Pinet First Vice President Mail Suite 8074 Direct Dial: (313) 225-1313 BACK-UP CONTACT: Carvetta Q. Colquitt Direct Dial: (313) 225-3698 Facsimile: (313) 225-1212 CONTACT FOR BORROWINGS, PAYMENTS, ETC.: Carvetta Q. Colquitt Direct Dial: (313) 225-3698 Facsimile: (313) 225-1212 LETTER OF CREDIT NOTIFICATION: Madeline Savary Direct Dial: (313) 225-1349 PAYMENT INSTRUCTIONS: Tax ID # 38-0864715 ABA # 072 000 326 Account # 212115: Comm'l Loans No. ------ Attention: Commercial Loan Operations Reference: NCS HealthCare, Inc.
2 80
============================================================================================================================= NAME OF LENDER COMMITMENT DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE - ----------------------------------------------------------------------------------------------------------------------------- National City Bank National City Bank National City Bank National City Center National City Center GENERAL REVOLVING 1900 East Ninth Street 1900 East Ninth Street COMMITMENT: Cleveland, Ohio 44114 Cleveland, Ohio 44114 $15,000,000 CONTACTS/NOTIFICATION METHODS: Timothy G. Healy Vice President 10th Floor Locator Code 2104 Tel.: (216) 575-9440 Fax.: (216) 575-9396 Back-Up Contact: Cheryl Ging, CSR Locator 2104 Tel.: (216) 575-9208 Fax.: (216) 575-9396 CONTACT FOR BORROWINGS, PAYMENTS, ETC.: Joyce Johnson, Processor Locator 3032 Tel.: (216) 575-2145 Fax.: (216) 575-9620 PAYMENT INSTRUCTIONS: Tax ID # 34-6420310 ABA # 041 000 124 Account No. 151804 Attention: Commercial Loan Operations Reference: NCS HealthCare, Inc., Obligor #3667216702
3 81
============================================================================================================================= NAME OF LENDER COMMITMENT DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE - ----------------------------------------------------------------------------------------------------------------------------- Mellon Bank, N.A. Mellon Bank, N. A. Mellon Bank, N. A. One Mellon Bank Center One Mellon Bank Center GENERAL REVOLVING Suite 230 Suite 230 COMMITMENT: Pittsburgh, Pennsylvania 15259-0001 Pittsburgh, Pennsylvania 15259-0001 $15,000,000 CONTACTS/NOTIFICATION METHODS: Mellon Bank, N. A. Two Mellon Bank Center Suite 230 Pittsburgh, Pennsylvania 15259-0001 Attn.: Healthcare Banking Fax.: (412) 234-9010 PRIMARY CONTACT: Colleen McCullum Room 270 Tel.: (412) 236-3984 Fax.: (412) 234-9010 BACK-UP CONTACT: Richard Arrington Room 270 Tel.: (412) 234-7958 Fax.: (412) 234-9010 CONTACT FOR BORROWINGS, PAYMENTS, ETC.: Christine Bissel Corp. Loan Administration Room 153-2332 Three Mellon Bank Center Pittsburgh, Pennsylvania 15259 Tel.: (412) 234-6726 Fax.: (412) 234-5049 PAYMENT INSTRUCTIONS: ABA # 0430-0026-1 Attention: Commercial Loan Operations Reference: NCS HealthCare, Inc. Account No. 990873800
4 82 ============================================================================================================================= NAME OF LENDER COMMITMENT DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE - ----------------------------------------------------------------------------------------------------------------------------- Star Bank, N. A. Star Bank, N. A. Star Bank, N. A. Suite 211 Suite 211 GENERAL REVOLVING 1350 Euclid Avenue 1350 Euclid Avenue COMMITMENT: Cleveland, Ohio 44115 Cleveland, Ohio 44115 $15,000,000 CONTACTS/NOTIFICATION METHODS: David J. Dannemiller ML 4432 Tel.: (216) 623-9233 Fax.: (216) 623-9208 Back-up Contact: John W. Barrett Tel.: (216) 623-9221 Fax.: (216) 623-9208 CONTACT FOR BORROWINGS, PAYMENTS, ETC.: Cathy Siegel Star Bank, N. A. 13th Floor 6 East 4th Street Cincinnati, Ohio 45202 Tel.: (513) 632-4032 Fax.: (513) 632-2965 PAYMENT INSTRUCTIONS: Star Bank, N. A. 425 Walnut Street Cincinnati, Ohio 45201-1038 Tax ID # 31-0841368 ABA # 042 000 013 Attention: Commercial Loan Operations Reference: NCS HealthCare, Inc. Account No. 9901893
5 83
============================================================================================================================= NAME OF LENDER COMMITMENT DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE - ----------------------------------------------------------------------------------------------------------------------------- Bank One, N. A. Bank One, N. A. Bank One, N. A. Third Floor Third Floor GENERAL REVOLVING 600 Superior Avenue 600 Superior Avenue COMMITMENT: Cleveland, Ohio 44114 Cleveland, Ohio 44114 $20,000,000 CONTACTS/NOTIFICATION METHODS: Jan E. Petrik Vice President Internal Zip: OH2-5435 Bank One, N. A. P.O. Box 268 30 South Park Place Painesville, Ohio 44077 Tel.: (216) 352-5698 Fax.: (216) 352-5971 BACKUP CONTACT: Pamela LeRose [Painesville, Ohio address above] Tel.: (216) 352-5557 Fax.: (216) 352-5971 CONTACT FOR BORROWINGS, PAYMENTS, ETC.: For Bank-to-Bank Contact: Rose Gapinski [Cleveland, Ohio address above] Tel.: (216) 781-2360 Fax.: (216) 348-2972 For Outside Customer Contact: Pat Morgan [Painesville, Ohio address above] Tel.: (216) 352-5546 Fax.: (216) 352-5012 PAYMENT INSTRUCTIONS: Tax ID # 31-4148768 ABA # 044 0000 37 Attention: Rose Gapinski, Commercial Loan Operations Reference: NCS HealthCare, Inc., Loan #_______ =============================================================================================================================
6 EX-12.1 7 EXHIBIT 12.1 1 Exhibit 12.1
NCS HEALTHCARE, INC. Ratio of Earnings to Fixed Changes For the Period Ended June 30, 1992 1993 1994 1995 1996 .1997 ---- ---- ---- ---- ---- ----- Pretax net income $1,349 $1,509 $2,861 $3,404 4,208 19,927 Total fixed charges as calculated below 275 632 684 1,289 2,680 1,972 Less capitalized interest during the -- -- -- -- -- (50) period Less preferred stock dividend -- -- -- -- -- -- ------- ------- ------ ------ ---- requirement Adjusted earnings $ 1,624 $ 2,141 $3,545 $4,693 $6,888 $21,849 ======= ======= ====== ====== ====== ======= Interest (expensed) 108 428 525 1,089 2,282 1,143 Interest (capitalized) -- -- -- -- -- 50 Amortization of debt expense -- Amortization of debt discount or -- -- -- -- -- -- premium Interest portion of rent expense 167 204 159 200 398 779 ------- ------- ------ ------ ---- Adjusted fixed charges $275 $632 $684 $ 1,289 $ 2,680 $1,972 ======= ======= ====== ====== ====== ======= Ratio of earnings to fixed charges 5.9lx 3.39x 5.18x 3.64x 2.57x 11.08% ======= ======= ====== ====== ====== =======
EX-23.2 8 EXHIBIT 23.2 1 EXHIBIT 23.2 CONSENT OF INDEPENDENT AUDITORS We consent to the references to our firm under the caption "Experts" in the Registration Statement (Form S-3) and related Prospectus of NCS HealthCare, Inc. for the registration of $100,000,000 of aggregate principal amount of 5 3/4% Convertible Subordinated Debentures and up to 3,058,103 shares of its Class A Common Stock and to the incorporation by reference therein of our report dated August 1, 1997, with respect to the consolidated financial statements of NCS HealthCare, Inc. and subsidiaries included in its Annual Report (Form 10-K) for the year ended June 30, 1997 filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP Ernst & Young LLP Cleveland, Ohio September 8, 1997 EX-24.1 9 EXHIBIT 24.1 1 EXHIBIT 24.1 NCS HEALTHCARE, INC. POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that NCS HealthCare, Inc. hereby constitutes and appoints Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber, Thomas F. McKee, John J. Jenkins and David A. Basinski, Jr., or any one or more of them, its attorneys-in-fact and agents, each with full power of substitution and resubstitution for it in any and all capacities, to sign any or all amendments or post-effective amendments to this Registration Statement, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto each of such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary in connection with such matters and hereby ratifying and confirming all that each of such attorneys-in-fact and agents or his substitute or substitutes may do or cause to be done by virtue hereof. IN WITNESS WHEREOF, this Power of Attorney has been signed at Cleveland, Ohio this 12th day of September, 1997. NCS HEALTHCARE, INC. By: /s/ Jon H. Outcalt ---------------------- Jon H. Outcalt, Chairman of the Board 2 EXHIBIT 24.1 (CONTINUED) NCS HEALTHCARE, INC. CERTIFIED RESOLUTION I, Kevin B. Shaw, Secretary of NCS HealthCare, Inc., a Delaware corporation (the "Company"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on July 16, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements"), with respect to the Debentures and the shares of Class A Common Stock issuable upon the conversion of any or all of the Debentures, under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Kevin B. Shaw ----------------------- Kevin B. Shaw Secretary Dated: September 12, 1997 3 EXHIBIT 24.1 (CONTINUED) ADVANCED RX SERVICES, INC. CERTIFIED RESOLUTION I, Judith Bradac, Secretary of Advanced Rx Services, Inc., a New Jersey corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Judith Bradac ------------------------ Judith Bradac Secretary Dated: September 12, 1997 4 EXHIBIT 24.1 (CONTINUED) CHESHIRE LONG TERM CARE PHARMACY, INC. CERTIFIED RESOLUTION I, Kevin B. Shaw, Secretary of Cheshire Long Term Care Pharmacy, Inc., a Connecticut corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Kevin B. Shaw ----------------------- Kevin B. Shaw Secretary Dated: September 12, 1997 5 EXHIBIT 24.1 (CONTINUED) HLF ADULT HOME PHARMACY CORP. CERTIFIED RESOLUTION I, Jeffrey R. Steinhilber, Secretary of HLF Adult Home Pharmacy Corp., a New York corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Jeffrey R. Steinhilber ---------------------------------- Jeffrey R. Steinhilber Secretary Dated: September 12, 1997 6 EXHIBIT 24.1 (CONTINUED) KINETIC SERVICES, INC. CERTIFIED RESOLUTION I, Jon H. Outcalt, Secretary of Kinetic Services, Inc., a California corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Jon H. Outcalt ------------------------ Jon H. Outcalt Secretary Dated: September 12, 1997 7 EXHIBIT 24.1 (CONTINUED) LOOK DRUG STORES, INC. CERTIFIED RESOLUTION I, Jeffrey R. Steinhilber, Secretary of Look Drug Stores, Inc., a Wisconsin corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Jeffrey R. Steinhilber ----------------------------------- Jeffrey R. Steinhilber Secretary Dated: September 12, 1997 8 EXHIBIT 24.1 (CONTINUED) MANAGEMENT & NETWORK SERVICES, INC. CERTIFIED RESOLUTION I, Kevin B. Shaw, Secretary of Management & Network Services, Inc., an Ohio corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Kevin B. Shaw ---------------------------- Kevin B. Shaw Secretary Dated: September 12, 1997 9 EXHIBIT 24.1 (CONTINUED) MEDI CENTRE, INC. CERTIFIED RESOLUTION I, Jeffrey R. Steinhilber, Secretary of Medi Centre, Inc., a Michigan corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Jeffrey R. Steinhilber ------------------------------ Jeffrey R. Steinhilber Secretary Dated: September 12, 1997 10 EXHIBIT 24.1 (CONTINUED) NCS DAVEN DRUG, INC. CERTIFIED RESOLUTION I, Jon H. Outcalt, Secretary of NCS Daven Drug, Inc., an Ohio corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Jon H. Outcalt --------------------------- Jon H. Outcalt Secretary Dated: September 12, 1997 11 EXHIBIT 24.1 (CONTINUED) NCS HEALTHCARE OF ARKANSAS, INC. CERTIFIED RESOLUTION I, Kevin B. Shaw, Secretary of NCS HealthCare of Arkansas, Inc., an Ohio corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Kevin B. Shaw -------------------------- Kevin B. Shaw Secretary Dated: September 12, 1997 12 EXHIBIT 24.1 (CONTINUED) NCS HEALTHCARE OF CALIFORNIA, INC. CERTIFIED RESOLUTION I, Jon H. Outcalt, Secretary of NCS HealthCare of California, Inc., an Ohio corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Jon H. Outcalt ------------------------------ Jon H. Outcalt Secretary Dated: September 12, 1997 13 EXHIBIT 24.1 (CONTINUED) NCS HEALTHCARE OF FLORIDA, INC. CERTIFIED RESOLUTION I, Kevin B. Shaw, Secretary of NCS HealthCare of Florida, Inc., an Ohio corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Kevin B. Shaw ---------------------------- Kevin B. Shaw Secretary Dated: September 12, 1997 14 EXHIBIT 24.1 (CONTINUED) NCS HEALTHCARE OF ILLINOIS, INC. CERTIFIED RESOLUTION I, Kevin B. Shaw, Secretary of NCS HealthCare of Illinois, Inc., an Illinois corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Kevin B. Shaw ---------------------------------- Kevin B. Shaw Secretary Dated: September 12, 1997 15 EXHIBIT 24.1 (CONTINUED) NCS HEALTHCARE OF INDIANA, INC. CERTIFIED RESOLUTION I, Jeffrey R. Steinhilber, Secretary of NCS HealthCare of Indiana, Inc., an Indiana corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Jeffrey R. Steinhilber -------------------------------- Jeffrey R. Steinhilber Secretary Dated: September 12, 1997 16 EXHIBIT 24.1 (CONTINUED) NCS HEALTHCARE OF IOWA, INC. CERTIFIED RESOLUTION I, Kevin B. Shaw, Secretary of NCS HealthCare of Iowa, Inc., an Ohio corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Kevin B. Shaw -------------------------- Kevin B. Shaw Secretary Dated: September 12, 1997 17 EXHIBIT 24.1 (CONTINUED) NCS HEALTHCARE OF KANSAS, INC. CERTIFIED RESOLUTION I, Kevin B. Shaw, Secretary of NCS HealthCare of Kansas, Inc., an Ohio corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Kevin B. Shaw -------------------------------- Kevin B. Shaw Secretary Dated: September 12, 1997 18 EXHIBIT 24.1 (CONTINUED) NCS HEALTHCARE OF KENTUCKY, INC. CERTIFIED RESOLUTION I, Kevin B. Shaw, Secretary of NCS HealthCare of Kentucky, Inc., an Ohio corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Kevin B. Shaw -------------------------------- Kevin B. Shaw Secretary Dated: September 12, 1997 19 EXHIBIT 24.1 (CONTINUED) NCS HEALTHCARE OF MARYLAND, INC. CERTIFIED RESOLUTION I, Kevin B. Shaw, Secretary of NCS HealthCare of Maryland, Inc., an Ohio corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Kevin B. Shaw -------------------------------- Kevin B. Shaw Secretary Dated: September 12, 1997 20 EXHIBIT 24.1 (CONTINUED) NCS HEALTHCARE OF MICHIGAN, INC. CERTIFIED RESOLUTION I, Kevin B. Shaw, Secretary of NCS HealthCare of Michigan, Inc., an Ohio corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Kevin B. Shaw -------------------------------- Kevin B. Shaw Secretary Dated: September 12, 1997 21 EXHIBIT 24.1 (CONTINUED) NCS HEALTHCARE OF MODESTO, INC. CERTIFIED RESOLUTION I, Jon H. Outcalt, Secretary of NCS HealthCare of Modesto, Inc., an Ohio corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Jon H. Outcalt -------------------------------- Jon H. Outcalt Secretary Dated: September 12, 1997 22 EXHIBIT 24.1 (CONTINUED) NCS HEALTHCARE OF OHIO, INC. CERTIFIED RESOLUTION I, Kevin B. Shaw, Secretary of NCS HealthCare of Ohio, Inc., an Ohio corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Kevin B. Shaw -------------------------------- Kevin B. Shaw Secretary Dated: September 12, 1997 23 EXHIBIT 24.1 (CONTINUED) NCS HEALTHCARE OF OKLAHOMA, INC. CERTIFIED RESOLUTION I, Kevin B. Shaw, Secretary of NCS HealthCare of Oklahoma, Inc., an Oklahoma corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Kevin B. Shaw -------------------------------- Kevin B. Shaw Secretary Dated: September 12, 1997 24 EXHIBIT 24.1 (CONTINUED) NCS HEALTHCARE OF OREGON, INC. CERTIFIED RESOLUTION I, Judith Bradac, Secretary of NCS HealthCare of Oregon, Inc., an Ohio corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Judith Bradac -------------------------------- Judith Bradac Secretary Dated: September 12, 1997 25 EXHIBIT 24.1 (CONTINUED) NCS HEALTHCARE OF PENNSYLVANIA, INC. CERTIFIED RESOLUTION I, Kevin B. Shaw, Secretary of NCS HealthCare of Pennsylvania, Inc., a Pennsylvania corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Kevin B. Shaw -------------------------------- Kevin B. Shaw Secretary Dated: September 12, 1997 26 EXHIBIT 24.1 (CONTINUED) LOOMIS ENTERPRISES, INC. CERTIFIED RESOLUTION I, Kevin B. Shaw, Secretary of Loomis Enterprises, Inc., a Rhode Island corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Kevin B. Shaw -------------------------------- Kevin B. Shaw Secretary Dated: September 12, 1997 27 EXHIBIT 24.1 (CONTINUED) NCS HEALTHCARE OF SOUTH CAROLINA, INC. CERTIFIED RESOLUTION I, Kevin B. Shaw, Secretary of NCS HealthCare of South Carolina, Inc., an Ohio corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Kevin B. Shaw -------------------------------- Kevin B. Shaw Secretary Dated: September 12, 1997 28 EXHIBIT 24.1 (CONTINUED) NCS HEALTHCARE OF VERMONT, INC. CERTIFIED RESOLUTION I, Kevin B. Shaw, Secretary of NCS HealthCare of Vermont, Inc., an Ohio corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Kevin B. Shaw -------------------------------- Kevin B. Shaw Secretary Dated: September 12, 1997 29 EXHIBIT 24.1 (CONTINUED) NCS HEALTHCARE OF WASHINGTON, INC. CERTIFIED RESOLUTION I, Kevin B. Shaw, Secretary of NCS HealthCare of Washington, Inc., an Ohio corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Kevin B. Shaw -------------------------------- Kevin B. Shaw Secretary Dated: September 12, 1997 30 EXHIBIT 24.1 (CONTINUED) NCS QUALITY CARE PHARMACY, INC. CERTIFIED RESOLUTION I, Jon H. Outcalt, Secretary of NCS Quality Care Pharmacy, Inc., an Ohio corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Jon H. Outcalt -------------------------------- Jon H. Outcalt Secretary Dated: September 12, 1997 31 EXHIBIT 24.1 (CONTINUED) NCS SERVICES, INC. CERTIFIED RESOLUTION I, Judith Bradac, Secretary of NCS Services, Inc., an Ohio corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Judith Bradac -------------------------------- Judith Bradac Secretary Dated: September 12, 1997 32 EXHIBIT 24.1 (CONTINUED) RESCOT SYSTEMS GROUP, INC. CERTIFIED RESOLUTION I, Kevin B. Shaw, Secretary of Rescot Systems Group, Inc., a Pennsylvania corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Kevin B. Shaw -------------------------------- Kevin B. Shaw Secretary Dated: September 12, 1997 33 EXHIBIT 24.1 (CONTINUED) THRIFTY MEDICAL SUPPLY, INC. CERTIFIED RESOLUTION I, Kevin B. Shaw, Secretary of Thrifty Medical Supply, Inc., an Oklahoma corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Kevin B. Shaw -------------------------------- Kevin B. Shaw Secretary Dated: September 12, 1997 34 EXHIBIT 24.1 (CONTINUED) UNI-CARE HEALTH SERVICES, INC. CERTIFIED RESOLUTION I, Kevin B. Shaw, Secretary of Uni-Care Health Services, Inc., a New Hampshire corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Kevin B. Shaw -------------------------------- Kevin B. Shaw Secretary Dated: September 12, 1997 35 EXHIBIT 24.1 (CONTINUED) UNI-CARE HEALTH SERVICES OF MAINE, INC. CERTIFIED RESOLUTION I, Kevin B. Shaw, Secretary of Uni-Care Health Services of Maine, Inc., a New Hampshire corporation (the "Corporation"), do hereby certify that the following is a true copy of a resolution adopted by the Board of Directors on September 12, 1997, and that the same has not been changed and remains in full force and effect. RESOLVED FURTHER, that the Authorized Officers of the Corporation be, and each of them, acting singly, hereby is, authorized and directed, on behalf of the Corporation and in its name, to prepare or cause to be prepared a registration statement or registration statements on any appropriate form or forms, including exhibits (collectively, the "Registration Statements") for the purpose of registering the Guarantee under the Securities Act, and to prepare or cause to be prepared any amendments to such Registration Statements (including post-effective amendments), and preliminary prospectuses and prospectuses and any amendments or supplements to such preliminary prospectuses or prospectuses, to cause the same to be filed with the Commission, and to take any and all action that any such officer shall deem necessary or desirable in connection therewith. /s/ Kevin B. Shaw -------------------------------- Kevin B. Shaw Secretary Dated: September 12, 1997 -----END PRIVACY-ENHANCED MESSAGE-----