$450,000,000
INTEGRATED HEALTH SERVICES, INC.
9 1/2% Senior Subordinated Notes due 2007
REGISTRATION RIGHTS AGREEMENT
May 22, 1997
▇▇▇▇▇ ▇▇▇▇▇▇ INC.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, LUFKIN & ▇▇▇▇▇▇▇▇
SECURITIES CORPORATION
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
SALOMON BROTHERS INC
▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Integrated Health Services, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇
Securities Corporation, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated and Salomon Brothers
Inc (the "Initial Purchasers"), upon the terms set forth in a purchase agreement
of even date herewith (the "Purchase Agreement"), an aggregate of $450,000,000
principal amount of its 9 1/2% Senior Subordinated Notes due 2007 (the "Notes").
The Notes will be issued pursuant to an indenture (the "Indenture") dated as of
May 30, 1997, between the Company and First Union National Bank of Virginia, as
trustee (the "Trustee"). As an inducement to the Initial Purchasers to enter
into the Purchase Agreement and in satisfaction of a condition to the
obligations of the Initial Purchasers thereunder, the Company agrees with the
Initial Purchasers, for the benefit of the holders of the Notes (including,
without limitation, the Initial Purchasers), as follows:
1. Registered Exchange Offer. The Company shall prepare and, as promptly as
reasonably practicable after the date on which the Company delivers the Notes to
the Initial Purchasers (the "Closing Date"), file with the Securities and
Exchange Commission (the "Commission") a registration statement on an
appropriate form under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to a proposed offer (the "Registered Exchange Offer") to the
holders of the Notes to issue and deliver to such holders, in exchange for the
Notes, a like principal amount of debt securities of the Company identical in
all material respects to, and entitled to substantially the same benefits of,
the Notes (the "New Notes"), shall use all reasonable efforts to cause such
registration statement to become effective under the Securities Act and,
following the declaration of the effectiveness of that registration statement,
shall use all reasonable efforts to commence the Registered Exchange Offer and
shall cause the same to remain open for a period of not less than the period
required under applicable Federal and state securities laws, and to be conducted
in accordance with such procedures as may be required by the applicable
provisions of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), it being the objective of such Registered Exchange Offer to enable each
holder of Notes electing to exchange Notes for New Notes (assuming that such
holder is not an affiliate of the Company within the meaning of the Securities
Act, acquires the New Notes in the ordinary course of such holder's business and
has no arrangements with any person to participate in the distribution of the
New Notes) to trade such New Notes from and after their receipt without any
limitations or restrictions under the Securities Act (subject to any applicable
requirement that broker-dealers deliver a prospectus meeting the requirements of
the Securities Act in connection with sales of New Notes received by them in the
Registered Exchange Offer). In connection with such Registered Exchange Offer,
the Company shall take such other action, including, without limitation,
appropriate filings under state securities laws, as may be necessary to realize
the foregoing objective. The New Notes may be issued in the Registered Exchange
Offer under (i) the Indenture or (ii) an indenture substantially similar to the
Indenture, and will not be subject to the transfer restrictions described in the
Offering Memorandum (subject to any applicable requirement that broker-dealers
deliver a prospectus meeting the requirements of the Securities Act in
connection with sales of New Notes received by them in the Registered Exchange
Offer), and the New Notes and the Notes will vote and consent together on all
matters as one class and neither the New Notes nor the Notes will have the right
to vote or consent as a separate class on any matter. The Company agrees that
for a period of 90 days after consummation of the Registered Exchange Offer it
will make available a prospectus meeting the requirements of the Securities Act
(which may be the prospectus used in connection with the Registered Exchange
Offer) to any broker-dealer for use in connection with any resale of New Notes
acquired by such broker-dealer in the Registered Exchange Offer.
2. Shelf Registration. If, because the Registered Exchange Offer would
violate any applicable law or the applicable interpretations of the Commission's
staff or because of any change in currently prevailing interpretations of the
Commission's staff, the Company is not permitted to effect the Registered
Exchange Offer as contemplated by Section 1 hereof or in the event the
Registered Exchange Offer is not for any other reason consummated within 240
days after the Closing Date, the Company shall take the following actions:
(a) The Company shall, as promptly as reasonably practicable after (i) the
Closing Date, in the event the Company is not permitted to effect the Registered
Exchange Offer as contemplated by Section 1 hereof because the Registered
Exchange Offer would violate an applicable law or an applicable interpretation
of the Commission's staff or because of a change in a currently prevailing
interpretation of the Commission's staff or (ii) 240 days after the Closing
Date,
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if the Registered Exchange Offer is not for any other reason consummated by such
date, file with the Commission and thereafter shall use all reasonable efforts
to cause to be declared effective a registration statement on an appropriate
form under the Securities Act relating to the offer and sale of the Notes by the
holders thereof from time to time in accordance with the methods of distribution
set forth in such registration statement and Rule 415 under the Securities Act
(hereafter, the "Shelf Registration").
(b) The Company shall use all reasonable efforts to keep the registration
statement relating to the Shelf Registration continuously effective in order to
permit the prospectus included therein to be usable by the holders of the Notes
for a period of two years from the date the registration statement is declared
effective or such shorter period that will terminate when all the Notes covered
by the registration statement have been sold pursuant to such registration
statement; provided, that the Company shall be deemed not to have used all
reasonable efforts to keep the registration statement effective during the
requisite period if it voluntarily takes any action that would result in holders
of Notes covered thereby not being able to offer and sell such securities during
that period, unless such action is required by applicable law, including, but
not limited to, reasonable periods necessary to prepare appropriate disclosure.
The foregoing proviso shall not apply to actions taken (or contemplated to be
taken) by the Company in good faith and for business reasons (a "Suspension
Event"), including, without limitation, the acquisition or divestiture of assets
or the offering or sale of securities, so long as the Company promptly
thereafter complies with the requirements of Section 3(h) hereof, if applicable.
Any such period during which the Company fails to keep the registration
statement effective and usable for offers and sales of Notes is referred to as a
"Suspension Period." A Suspension Period shall commence on and include the date
that the Company gives notice that the registration statement is no longer
effective or the prospectus included therein is no longer usable for offers and
sales of Notes and shall end on the date when each seller of Notes covered by
such registration statement either receives the copies of the supplemented or
amended prospectus contemplated by Section 3(h) hereof or is advised in writing
by the Company that use of the prospectus may be resumed.
(c) Notwithstanding any other provisions of this Agreement to the contrary,
the Company shall cause the registration statement and the related prospectus
and any amendment or supplement thereto, as of the effective date of such
registration statement, amendment or supplement, (i) to comply in all material
respects with the applicable requirements of the Securities Act and the rules
and regulations of the Commission and (ii) not to contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading other than
statements or omissions made in reliance upon and in conformity with information
furnished to the Company in writing by the Initial Purchasers expressly for use
in such registration statement and the related prospectus and any amendment or
supplement thereto.
3. Registration Procedures. In connection with any Shelf Registration
contemplated by Section 2 hereof and, to the extent applicable, the Registered
Exchange Offer contemplated by Section 1 hereof, the following provisions shall
apply:
(a) The Company shall furnish to the Initial Purchasers, prior to the
filing thereof with the Commission, a copy of the registration statement and
each amendment thereof and each supplement, if any, to the prospectus included
therein and shall obtain the consent (which shall not be unreasonably withheld
or delayed) of the Initial Purchasers to any such filing.
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(b) The Company shall advise the Initial Purchasers and the holders of the
Notes and the New Notes (to the extent applicable) in writing:
(i) when the registration statement and any amendment thereto has been
filed with the Commission and when the registration statement or any
post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or supplements to
the registration statement or the prospectus included therein or for
additional information;
(iii) of the issuance by the Commission of any stop order suspending
the effectiveness of the registration statement or the initiation of any
proceedings for that purpose;
(iv) of the receipt by the Company of any notification with respect to
the suspension of the qualification of the Notes and New Notes for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose; and
(v) of the happening of any event (other than a Suspension Event, in
which case the Company need only notify the Initial Purchasers and the
holders of the Notes that a Suspension Event exists) that requires the
Company to make changes in the registration statement or the prospectus in
order to make the statements therein not misleading (which advice shall be
accompanied by an instruction that such notice constitutes material nonpublic
information, and to suspend the use of the prospectus until the requisite
changes have been made, and which instruction shall require that such holders
shall not communicate such material nonpublic information to any third party
and shall not sell or purchase, or offer to sell or purchase, any securities
of the Company after receipt of such advice and prior to the effectiveness of
any action required to be taken by the Company pursuant to Section 3(h)
hereof).
(c) The Company shall use all reasonable efforts to prevent the issuance or
obtain the withdrawal of any order suspending the effectiveness of the
registration statement at the earliest possible time.
(d) The Company shall furnish to each holder of Notes included within the
coverage of the Shelf Registration, without charge, at least one copy of the
registration statement and any post-effective amendment thereto, including
financial statements and schedules, and, if the holder so requests in writing,
all exhibits (including those incorporated by reference).
(e) The Company shall deliver to each holder of Notes included within the
coverage of the Shelf Registration, if any, without charge, as many copies of
the prospectus (including each preliminary prospectus) included in the
registration statement with respect to the Shelf Registration and any amendment
or supplement thereto as such persons may reasonably request. The Company
consents, subject to the provisions of the Agreement, to the use of the
prospectus or any amendment or supplement thereto by each of the selling holders
of Notes in connection with the offering and sale of the Notes covered by the
prospectus, or any amendment or supplement thereto, included in such
registration statement.
(f) Prior to any public offering of Notes pursuant to the Shelf
Registration, the
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Company shall register or qualify or cooperate with the holders of securities
included therein and their respective counsel in connection with the
registration or qualification of such Notes for offer and sale under the
securities or blue sky laws of such jurisdictions in the United States as any
holder of Notes reasonably requests in writing and do any and all other acts or
things necessary or advisable to enable the offer and sale in such jurisdictions
of the securities covered by the Shelf Registration; provided that the Company
shall not be required to (i) qualify generally to do business in any
jurisdiction where it is not then so qualified, (ii) take any action that would
subject it to the service of process in suits, other than as to matters and
transactions relating to the Shelf Registration, in any jurisdiction where it is
not now subject or (iii) take any action which would subject it to general
service of process or to taxation in any jurisdiction where it is not then so
subject.
(g) The Company shall cooperate with the holders of the Notes to facilitate
the timely preparation and delivery of certificates representing Notes to be
sold in the Shelf Registration free of any restrictive legends and in such
denominations and registered in such names as the holders may request a
reasonable period of time prior to sales of Notes pursuant to the Shelf
Registration.
(h) Upon the occurrence of any event contemplated by Section 3(b)(v) above
(including, without limitation, any Suspension Event), the Company shall, as
promptly as reasonably practicable, prepare a post-effective amendment to the
registration statement or a supplement to the related prospectus or file any
other required document so that, as thereafter delivered to purchasers of the
Notes, the prospectus will not contain an untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein not
misleading.
(i) Not later than the effective date of the applicable registration
statement, the Company will provide a CUSIP number for the New Notes and provide
the applicable trustee with printed certificates for the Notes or New Notes, as
the case may be, in a form eligible for deposit with The Depository Trust
Company.
(j) The Company will use all reasonable efforts to comply with all rules
and regulations of the Commission to the extent and so long as they are
applicable to the Registered Exchange Offer or the Shelf Registration and will
make generally available to its security holders (or otherwise provide in
accordance with Section 11(a) of the Securities Act) an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act, no later than
45 days after the end of a 12-month period (or 90 days, if such period is a
fiscal year) beginning with the first month of the Company's first fiscal
quarter commencing after the effective date of the Shelf Registration, which
statement shall cover such 12-month period.
(k) The Company shall cause the Indenture (or an indenture substantially
identical to the Indenture in the case of a Registered Exchange Offer) to be
qualified under the Trust Indenture Act of 1939, as amended.
(l) The Company may require each holder of Notes to be sold pursuant to the
Shelf Registration to furnish to the Company such information regarding the
holder and the distribution of such Notes as the Company may from time to time
reasonably require for inclusion in the registration statement. The Company may
also require each holder of Notes participating in the Registered Exchange Offer
to represent to the Company that at the time of the consummation of the
Registered Exchange Offer (i) such holder is not an affiliate of the Company,
(ii) any New Notes received by such holder will be acquired in the ordinary
course of its business and (iii) such holder will have no arrangement or
understanding with any person to participate in the distribution of the
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Notes or the New Notes within the meaning of the Securities Act. Each holder
agrees by acquisition of Notes that, upon receipt of any notice from the Company
of the existence of any fact of the kind described in Section 3(b)(v) hereof,
such holder will forthwith discontinue disposition of Notes until such holder's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 3(h) hereof, or until it is advised in writing by the Company that the
use of the prospectus may be resumed, and has received copies of any additional
or supplemental filings with respect to the Prospectus. If so directed by the
Company, each holder will deliver to the Company (at the Company's expense) all
copies, other than permanent file copies then in such holder's possession, of
the prospectus covering such Notes current at the time of receipt of such
notice.
4. Registration Expenses. The Company shall bear all expenses incurred in
connection with the performance of its obligations under Sections 1 through 3
hereof and, in the event of a Shelf Registration, shall bear or reimburse the
holders of the Notes for the reasonable fees and disbursements of one firm of
counsel designated by the holders of a majority in principal amount of the Notes
to act as counsel for the holders of the Notes in connection therewith.
5. Indemnification. (a) The Company agrees to indemnify and hold harmless
(i) each Initial Purchaser, (ii) each holder of Notes and/or New Notes
(including broker-dealers receiving New Notes in the Registered Exchange Offer)
(each a "Holder"), (iii) each person, if any, who controls (within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act) any Initial
Purchaser or any Holder (any of the persons referred to in this clause (iii)
being hereinafter referred to as a "controlling person") and (iv) the respective
officers, directors, partners, employees, representatives and agents of any
Initial Purchaser or any Holder or any controlling person (any person referred
to in clause (i), (ii), (iii) or (iv) may hereinafter be referred to as a "Non-
Company Indemnitee"), to the fullest extent lawful, from and against any and all
losses, claims, damages, liabilities and judgments caused by any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement or prospectus (or any amendments or supplements thereto)
prepared in accordance with this Agreement, including any document incorporated
by reference therein, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except, with respect to any Non-Company
Indemnitee, insofar as such losses, claims, damages, liabilities or judgments
(1) are caused by any such untrue statement or omission or alleged untrue
statement or omission based upon information furnished in writing to the Company
by such Non- Company Indemnitee expressly for use therein or (2) with respect to
any preliminary prospectus, result from the fact that such Non-Company
Indemnitee sold Notes or New Notes to a person to whom there was not sent or
given, at or prior to the written confirmation of such sale, a copy of the final
prospectus, as amended or supplemented, if required under the Securities Act and
if the Company shall have previously furnished copies thereof to such
Non-Company Indemnitee in accordance with this Agreement and the final
prospectus, as amended or supplemented, would have corrected such untrue
statement or omission.
(b) In case any action shall be brought against any Non-Company Indemnitee
based upon any registration statement or prospectus, or any amendment or
supplement thereto, and with respect to which indemnity may be sought against
the Company, such Non-Company Indemnitee shall promptly notify the Company in
writing and the Company shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to such Non-Company Indemnitee and
payment of all fees and expenses. Such Non-Company Indemnitee shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of counsel shall be paid by such
Non-Company Indemnitee, unless (i) the employment of such
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counsel shall have been specifically authorized in writing by the Company, (ii)
the Company shall have failed to assume the defense and employ counsel or (iii)
the named parties to any such action (including any impleaded parties) include
both such Non-Company Indemnitee and the Company and such Non-Company Indemnitee
shall have been advised by counsel that it would be inappropriate for the same
counsel to represent such Non-Company Indemnitee and the Company (in which case
the Company shall not have the right to assume the defense of such action on
behalf of such Non-Company Indemnitee, it being understood, however, that the
Company shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) for the Non-Company Indemnitees, which firm shall be designated in
writing by the Non-Company Indemnitees and whose fees and expenses reasonably
incurred shall be reimbursed as they are incurred). The Company shall not be
liable for any settlement of any such action effected without the written
consent of the Company, but if settled with the written consent of the Company,
the Company agrees to indemnify and hold harmless any Non-Company Indemnitee
from and against any amounts payable pursuant to such written consent in
connection with such settlement. Notwithstanding the immediately preceding
sentence, if in any case where the fees and expenses of counsel are at the
expense of the Company and a Non-Company Indemnitee shall have requested the
Company to reimburse such Non-Company Indemnitee for such fees and expenses of
counsel as incurred, the Company agrees that it shall be liable for any
settlement of any action effected without its written consent if (i) such
settlement is entered into more than 30 business days after the receipt by the
Company of the aforesaid request and (ii) the Company shall have failed to
reimburse such Non-Company Indemnitee in accordance with such request for
reimbursement prior to the date of such settlement. The Company shall not,
without the prior written consent of such Non-Company Indemnitee, effect any
settlement of any pending or threatened proceeding in respect of which such
Non-Company Indemnitee is or could have been a party and indemnity could have
been sought hereunder by such Non-Company Indemnitee, unless such settlement
includes an unconditional release of such Non-Company Indemnitee from all
liability on claims that are the subject matter of such proceeding.
(c) Each Holder agrees to indemnify and hold harmless (i) the Company, (ii)
each of the Initial Purchasers, (iii) each other Holder, (iv) any person
controlling (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) the Company, any Initial Purchaser and each other Holder and (v)
the respective officers, directors, partners, employees, representatives and
agents of each of the parties referred to in clauses (i), (ii), (iii) and (iv),
to the same extent as the foregoing indemnity from the Company to each of the
Non-Company Indemnitees, but only with respect to information relating to such
Holder that was furnished in writing by such Holder expressly for use in any
registration statement (or any amendment or supplement thereto) prepared in
accordance with this Agreement. In no event shall the liability of any Holder
hereunder be greater in amount than the dollar amount of the proceeds received
by such Holder upon the sales of the Notes or New Notes giving rise to such
indemnification obligation.
(d) If the indemnification provided for in this Section 5 is unavailable to
an indemnified party in respect of any losses, claims, damages, liabilities or
judgments referred to herein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities and judgments in such proportion as is appropriate to reflect the
relative fault of the indemnifying party, on the one hand, and the indemnified
party, on the other hand, in connection with the statements or omissions which
resulted in such losses, claims, damages,
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liabilities or judgments, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party, on the one hand,
and the indemnified party, on the other hand, shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party, on the one hand, or
the indemnified party, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company, each Initial Purchaser and each Holder agree that it would not
be just and equitable if contribution pursuant to this Section 5(d) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The losses, claims, damages, liabilities or
judgments of an indemnified party referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim prior to
the indemnifying party's assumption of the defense thereof or subsequent thereto
to the extent permitted by the second sentence of Section 5(b) hereof.
Notwithstanding the provisions of this ▇▇▇▇▇▇▇ ▇, ▇▇▇▇ of the Holders shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the total amount received by such Holder with respect to the sale of Notes
or New Notes exceeds the amount of any damages which such Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations of Holders to contribute pursuant to this
Section 5(d) are several in proportion to the respective principal amount of
Notes and/or New Notes held by each of the Holders hereunder and not joint.
6. Additional Interest Under Certain Circumstances.
(a) Additional interest (the "Penalty Interest") shall be assessed as
follows:
(i) If a registration statement with respect to a Registered Exchange
Offer or a Shelf Registration is not filed with the Commission within 90 days
following the Closing Date, then commencing on the 91st day after the Closing
Date, Penalty Interest shall be accrued on the Notes over and above the
accrued interest at a rate of .25% per annum for the first 90 days
immediately following the 90th day after the Closing Date, such Penalty
Interest rate increasing by an additional .25% per annum at the beginning of
each subsequent 90-day period;
(ii) If a registration statement with respect to a Registered Exchange
Offer or a Shelf Registration is filed as contemplated by subsection 6(a)(i)
above and is not declared effective by the Commission within 180 days
following the Closing Date, then, commencing on the 181st day after the
Closing Date, Penalty Interest shall be accrued on the Notes over and above
the accrued interest at a rate of .25% per annum for the first 90 days
immediately following the 180th day after the Closing Date, such Penalty
Interest rate increasing by an additional .25% per annum at the beginning of
each subsequent 90 day period; and
(iii) If either (A) the Company has not exchanged New Notes for all
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Notes validly tendered in accordance with the terms of the Registered
Exchange Offer on or prior to 40 days after the date on which the
registration statement with respect to the Registered Exchange Offer was
declared effective, or (B) if applicable, a registration statement with
respect to a Shelf Registration has been declared effective and such
registration statement ceases to be effective prior to two years from its
original effective date (other than by reason of the occurrence of a
Suspension Event), then Penalty Interest shall be accrued on the Notes over
and above the accrued interest at a rate of .25% per annum for the first 60
days immediately following (x) the 40th day after such effective date in the
case of (A) above, or (y) the day such registration statement with respect to
a Shelf Registration ceases to be effective (other than by reason of the
occurrence of a Suspension Event) in the case of (B) above, such Penalty
Interest rate increasing by an additional .25% per annum at the beginning of
each subsequent 60-day period;
provided, however, that the Penalty Interest rate on the Notes may not exceed
1.0% per annum at any time; and provided, further, that (1) upon the filing of
the registration statement with respect to a Registered Exchange Offer or a
Shelf Registration (in the case of (i) above), (2) upon the effectiveness of the
registration statement filed with respect to a Registered Exchange Offer or a
Shelf Registration (in the case of (ii) above), or (3) upon the exchange of New
Notes for all Notes validly tendered in accordance with the terms of the
Registered Exchange Offer, or upon the effectiveness of the registration
statement filed with respect to a Shelf Registration which had ceased to remain
effective prior to two years from its original effective date (in the case of
(iii) above), Penalty Interest on the Notes as a result of such clause (i),
(ii), or (iii) shall immediately cease to accrue. The Penalty Interest specified
in this Section 6(a) shall be payable by the Company to the holders of Notes at
the times, in the manner and subject to the same terms and conditions set forth
in the Indenture, as nearly as may be, as though the rate set out in the Notes
had been increased, which payments shall be calculated pursuant to Section 6(b)
below. The interest rate on the Notes, inclusive of Penalty Interest, shall in
no event exceed 10 1/2% per annum.
(b) Any amounts of Penalty Interest due pursuant to clauses (i), (ii), or
(iii) of Section 6(a) above will be payable in cash on the interest payment
dates of the Notes.
The amount of Penalty Interest will be determined by multiplying the
applicable Penalty Interest rate by the principal amount of the Notes,
multiplied by a fraction, the numerator of which is the number of days such
Penalty Interest rate was applicable during such period (determined on the basis
of a 360-day year comprised of twelve 30-day months), and the denominator of
which is 360.
(c) If the Company effects the Registered Exchange Offer, the Company will
be entitled to close the Registered Exchange Offer provided that it has accepted
all Notes theretofore validly tendered in accordance with the terms of the
Registered Exchange Offer. Notes not tendered in the Registered Exchange Offer
shall bear interest at the same rates in effect at the time of issuance of the
Notes.
7. Miscellaneous.
(a) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, unless the Company has obtained the
written consent of holders of a majority in aggregate principal amount of the
Notes.
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(b) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail, telex,
telecopier or air courier which guarantees overnight delivery:
(1) If to a holder of Notes or New Notes, at the most current address
given by such holder to the Company in accordance with the provisions of
this Section 7(b), which address initially is, with respect to each holder,
the address of such holder to which confirmation of the sale of Notes or
New Notes to such holder was first sent, with a copy in like manner to the
Initial Purchasers c/o ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
(2) If to an Initial Purchaser, to the address specified in 7(b)(1);
(3) If to the Company, at the following address:
Integrated Health Services, Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged by recipient's telecopy
operator, if telecopied; and on the day delivered, if sent by overnight air
courier guaranteeing next day delivery.
(c) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties,
including, without limitation, and without the need for an express assignment,
subsequent holders of the Notes and the New Notes.
(d) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(e) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to its
conflicts of laws rules.
(g) Severability. If any one or more of the provisions contained herein, or
the application thereof in any circumstance, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.
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Please confirm that the foregoing correctly sets forth the agreement
between the Company and the Initial Purchasers.
Very truly yours,
INTEGRATED HEALTH SERVICES, INC.
By: /s/
---------------------------------
Name:
Title:
Accepted in New York, New York
May 22, 1997
▇▇▇▇▇ ▇▇▇▇▇▇ INC.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
SECURITIES CORPORATION
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
SALOMON BROTHERS INC
By: ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
By: /s/
-----------------------------------
Name:
Title:
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