1
Exhibit 4.4
================================================================================
FIRST SUPPLEMENTAL
INDENTURE OF TRUST AND SECURITY AGREEMENT
Dated as of November 1, 1991
BY AND AMONG
NATIONAL HEALTH CORPORATION
LEVERAGED EMPLOYEE STOCK OWNERSHIP TRUST,
NATIONAL HEALTH CORPORATION,
NATIONAL HEALTH INVESTORS, INC.
AND
NATIONAL HEALTHCORP L.P.
TO
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, as Indenture Trustee
AND
▇▇▇▇▇▇▇ ▇▇▇▇▇ TRUST COMPANY, NATIONAL ASSOCIATION,
as Florida Co-Indenture Trustee
================================================================================
EXHIBIT B
(to First Amendment to Note Agreement)
2
TABLE OF CONTENTS
SECTION HEADING PAGE
Recitals.............................................................................. 1
SECTION 1. AMENDMENT OF THE GRANTING CLAUSES OF THE INDENTURE.................... 2
SECTION 2. EXCHANGE OF NOTES..................................................... 2
SECTION 3. AMENDMENT OF SECTION 1 OF THE ORIGINAL INDENTURE...................... 3
Section 3.1. Amendment of Section 1.1 of the Original Indenture................ 3
Section 3.2. Definitions....................................................... 12
SECTION 4. AMENDMENT OF SECTION 2 OF THE INDENTURE............................... 12
Section 4.1. Amendment of Section 2.1 of the Indenture......................... 12
Section 4.2. Amendment of Section 2.10 of the Indenture........................ 12
SECTION 5. AMENDMENT OF SECTION 3 OF THE INDENTURE............................... 12
SECTION 6. AMENDMENT OF SECTION 4 OF THE ORIGINAL INDENTURE...................... 14
Section 6.1. Amendment of Heading and First Sentence of Section 4.............. 14
Section 6.2. Amendment of Section 4.1 of the Original Indenture................ 14
Section 6.3. Amendment of Section 4.2 of the Original Indenture................ 14
Section 6.4. Amendment of Section 4.3 of the Original Indenture................ 14
Section 6.5. Amendment of Section 4.4 of the Original Indenture................ 15
Section 6.6. Amendment of Section 4.5 of the Original Indenture................ 16
Section 6.7. Amendment of Section 4.6 of the Original Indenture................ 17
Section 6.8. Amendment of Section 4.7 of the Original Indenture................ 18
Section 6.9. Amendment of Section 4.8 of the Original Indenture................ 19
Section 6.10. Amendment of Section 4.9 of the Original Indenture................ 20
Section 6.11. Amendment of Section 4.10 of the Original Indenture............... 20
Section 6.12. Amendment of Section 4.11 of the Original Indenture............... 22
Section 6.13. Amendment of Section 4.12......................................... 24
Section 6.14. Amendment of Section 4.14......................................... 24
Section 6.15. Amendment of Section 4.16 of the Original Indenture............... 25
Section 6.16. Amendment of Section 4.17 of the Original Indenture............... 25
Section 6.17. Amendment of Section 4.18 of the Original Indenture............... 25
Section 6.18. Amendment of Section 4.19 of the Original Indenture............... 26
Section 6.19. Amendment of Section 4.20 of the Original Indenture............... 26
Section 6.20. Amendment of Section 4.21 of the Original Indenture............... 28
Section 6.21. Amendment of Section 4.22 of the Original Indenture............... 32
Section 6.22. Amendment of Section 4 of the Original Indenture.................. ▇▇
-▇-
▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ OF SECTION 7 OF THE INDENTURE................................ 38
Section 7.1. Amendment of Section 7.1 of the Original Indenture................. 38
SECTION 8. AMENDMENT OF SECTION 8 OF THE INDENTURE................................ 38
Section 8.1. Amendment of Section 8.1 of the Original Indenture................. 38
SECTION 9. AMENDMENT OF SECTION 9 OF INDENTURE.................................... 41
Section 9.1. Amendment of Section 9.4(c)(ii) of the Original Indenture......... 41
SECTION 10. MISCELLANEOUS........................................................... 41
Section 10.1. Successors and Assigns.............................................. 41
Section 10.2. Severability........................................................ 41
Section 10.3. Notices............................................................. 41
Section 10.4. Counterparts........................................................ 42
Section 10.5. Law Governing....................................................... 42
Section 10.6. Expenses, Stamp Tax Indemnity....................................... 42
Section 10.7. Modification Not To Effect Liability of Parties Under Original
Indenture........................................................... 42
Section 10.8. Ratification........................................................ 43
Section 10.9. References to Indenture............................................. 43
Signature.............................................................................. 44
Exhibit A -- Form of Substitute Series A Note
Exhibit B -- Form of Substitute Series B Note
-ii-
4
FIRST SUPPLEMENTAL
INDENTURE OF TRUST AND SECURITY AGREEMENT
THIS FIRST SUPPLEMENTAL INDENTURE OF TRUST AND SECURITY AGREEMENT (this
"First Supplemental Indenture"), dated as of November 1, 1991, by and among
NATIONAL HEALTH CORPORATION LEVERAGED STOCK OWNERSHIP TRUST, a trust organized
under the laws of the State of Tennessee (the "Issuer"), NATIONAL HEALTH
INVESTORS, INC., a Maryland corporation (the "REIT"), NATIoNAL HEALTH
CORPORATION, a Tennessee corporation ("National"), NATIONAL HEALTHCORP L.P., a
Delaware limited partnership ("NHLP"), and STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking association,
as Indenture Trustee (the "Indenture Trustee") having a corporate trust office
at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust
Department and ▇▇▇▇▇▇▇ ▇▇▇▇▇ TRUST COMPANY, NATIONAL ASSOCIATION, a national
banking association, as Florida Co-Indenture Trustee (the "Florida Co-Indenture
Trustee") having a corporate office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust Department.
RECITALS:
A. The Issuer, National, NHLP, the Indenture Trustee and the Florida Co-
Trustee entered into that certain Indenture of Trust and Security Agreement
dated as of October 1, 1990 (the "Original Indenture" and, together with this
First Supplemental Indenture, the "Indenture"), setting forth the terms and
provisions of the Issuer's $20,000,000 aggregate principal amount of the Series
A Senior Secured ESOP Notes due June 1, 2003 (the "Series A Notes") and
$30,000,000 aggregate principal amount of the Series B Senior Secured ESOP
Notes due December 1, 2005 (the "Series B Notes" and collectively with the
Senior A Notes, the "Notes").
B. NHLP and the REIT have entered into that certain Contribution and
Assumption Agreement dated October 17, 1991 (the "Contribution Agreement")
pursuant to which NHLP has transferred certain assets, including its interest
in a portion of the Mortgaged Premises (the "Transferred Premises") to the
REIT. In connection with the transfer of the Transferred Premises, NHLP, the
REIT, the Indenture Trustee and the Florida Co-Indenture Trustee have entered
into those certain Assumption Agreements each dated as of November 1, 1991
pursuant to which (i) the REIT has acknowledged that it is accepting the
Transferred Premises subject to the lien of the respective Mortgages, (ii) the
REIT has assumed the obligation to perform the covenants contained in the
respective Mortgages and in the Indenture, as supplemented hereby and as may be
further supplemented and amended, and (iii) NHLP has acknowledged that it has
retained all of its liabilities for the obligations secured by each Mortgage.
C. The transfer of the Transferred Premises pursuant to the Contribution
Agreement resulted in a violation of certain covenants contained in the
Original Indenture and the parties have requested that the Holders of the Notes
waive such violations and consent to the transfer contemplated by the
Contribution Agreement. The Holders of the Notes have granted their temporary
consent by letters dated October 18, 1991,
5
November 15, 1991 and November 27, 1991, subject to execution and delivery of
final, documentation. The Holders of the Notes have agreed to formalize their
consent in accordance with the terms and conditions contained in those certain
First Amendments to Note Agreement (the "First Amendment") dated as of November
1, 1991 between the Issuer and each Holder. As one of the conditions precedent
to granting their consent and waiver under the First Amendment, the Holders
have required, as a condition precedent to the effectiveness of their waiver
and consent that the Issuer, National, NHLP and the REIT enter into this
Supplemental Indenture and the Issuer, National, NHLP and the REIT, in
consideration for such waivers and in order to induce the Purchasers into
entering into the First Amendment, have agreed to do so.
Now, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt of which is hereby acknowledged, NHLP, the
REIT, National and the Issuer have executed and delivered this First
Supplemental Indenture and certain of the other agreements referred to herein
to which they are a party.
SECTION 1. AMENDMENT OF THE GRANTING CLAUSES OF THE INDENTURE.
Granting Clause Sixth of the Indenture is hereby amended by deleting the
words "or ss.9" in the third line thereof and inserting in lieu thereof ", ss.9
or ss.4.25".
SECTION 2. EXCHANGE OF NOTES.
On a date to be mutually agreed upon between the Holders and the Issuer
(but in any event not later than December 20, 1991), the Issuer shall execute
and deliver substitute Series A Notes in the form attached hereto as Exhibit P
(the "Substitute Series A Notes"), in an aggregate principal amount of and
registered in the name of the Holders of the outstanding Series A Notes (the
"Old Series A Notes") and substitute Series B Notes in the form attached hereto
as Exhibit Q (the "Substitute Series B Notes"), in an aggregate principal
amount of and registered in the name of the Holders of the outstanding Series B
Notes (the "Old Series B Notes"). The Substitute Series A Notes and the
Substitute Series B Notes are hereinafter collectively referred to as the
"Substitute Notes". The Old Series A Notes and the Old Series B Notes are
hereinafter collectively referred to as the "Old Notes". The Substitute Notes
shall be dated the date of the Old Notes, and the Indenture Trustee shall ▇▇▇▇
on each Substitute Note (i) the date to which interest and principal have been
paid on such Old Note, and (ii) all payments and prepayments of principal
previously made on such Old Note that are allocable to such Substitute Note. On
the Recording Date, the Indenture Trustee shall duly authenticate the
Substitute Notes and deliver such Substitute Notes to ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, upon surrender to the Indenture
Trustee of the Old Series A Notes and Old Series B Notes. Upon receipt of such
Old Notes, the Indenture Trustee shall ▇▇▇▇ the Old Notes "Cancelled" and shall
destroy the Old Notes, and shall deliver a certificate to the Issuer specifying
that such destruction has been made.
-2-
6
SECTION 3. AMENDMENT OF SECTION 1 OF THE ORIGINAL INDENTURE.
Section 3.1. Amendment of Section 1.1 of the Original Indenture. Section
1.1 of the Original Indenture is hereby amended as follows:
(a) The definitions of "Affiliate", "Cash Flow", "Consolidated Adjusted
Net Worth", "Consolidated Current Assets", "Consolidated Current Liabilities",
"Consolidated Current Debt", "Consolidated Deferred Income", "Consolidated
Funded Debt", "Consolidated Investment Net Worth", "Consolidated Net Income",
"Consolidated Net Worth", "Consolidated Total Assets", "Convertible
Subordinated Funded Debt", "Covenant Funded Debt", "Debt Service", "Interest
Charges", "Minority Interests", "Non-Convertible Subordinated Funded Debt" and
"Subsidiary" are hereby amended to read in their entirety as follows:
"Affiliate" shall mean a Person (other than a Subsidiary of
NHLP, National, NHC or the REIT, as the case may be) (1) which,
directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with,
NHLP, National, NHC or the REIT, as the case may be, (2) which
beneficially owns or holds 5% or more of the Voting Equity Interest
of NHLP, National, NHC, or the REIT, as the case may be, or (3) 5%
or more of the Voting Equity Interest of which is beneficially
owned or held by NHLP, National, NHC, or the REIT, as the case may
be, or a Subsidiary. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or
otherwise.
"Cash Flow" shall mean the sum of the following amounts for the
immediately preceding 12 month period (all as determined without giving effect
to any proposed incurrence of additional Funded Debt): (i) Consolidated Net
Income, (ii) depreciation and amortization of assets, (iii) Interest Charges
and (iv) Operating Lease Payments. In the case of a determination of Cash Flow
for NHLP, such calculation shall be made for NHLP and its Restricted
Subsidiaries. In the case of a determination of Cash Flow for the REIT, such
calculation shall be made for the REIT and its consolidated Subsidiaries on a
consolidated basis. In the case of a determination of Cash Flow for the
Constituent Companies, such calculation shall be made for the REIT and its
consolidated Subsidiaries and NHLP and its Restricted Subsidiaries on a
combined basis, without duplication and eliminating intercompany items.
-3-
7
"Consolidated Adjusted Net Worth" shall mean, as of the
date of any determination thereof, (a) with respect to NHLP
and its Restricted Subsidiaries, (i) total equity of
NHLP and its Restricted Subsidiaries plus (ii) Subordinated
Funded Debt of NHLP and its Restricted Subsidiaries plus
(iii) of NHLP and its Restricted Subsidiaries and minus (iv)
Minority Interests of NHLP and its Restricted Subsidiaries,
all on a consolidated basis and (b) with respect to the REIT
and its consolidated Subsidiaries, (i) total equity of the
REIT and its consolidated Subsidiaries plus (ii) Subordinated
Funded Debt of the REIT and its consolidated Subsidiaries
minus (iii) Minority Interests of the REIT and its
consolidated Subsidiaries, all on a consolidated basis.
"Consolidated Current Assets" and "Consolidated Current
Liabilities" shall mean such assets and liabilities of, as
the case may be, (i) NHLP and its Restricted Subsidiaries,
(ii) the REIT and its consolidated Subsidiaries and (iii)
without duplication, the Constituent Companies, in each case
as shall be determined in accordance with GAAP to constitute
current assets and current liabilities, respectively.
"Consolidated Current Debt" shall mean with respect to
NHLP and its Restricted Subsidiaries, all Current Debt of
NHLP and its Restricted Subsidiaries, determined on a
consolidated basis eliminating intercompany items and (b)
with respect to the REIT and its consolidated Subsidiaries,
all Current Debt of the REIT and its consolidated
Subsidiaries, determined on a consolidated basis eliminating
intercompany items.
"Consolidated Deferred Income" shall mean with respect
to NHLP and its Restricted Subsidiaries, deferred income of
NHLP and its Restricted Subsidiaries as shall be determined
in accordance with GAAP and as reflected as such on the
balance sheets of NHLP.
"Consolidated Funded Debt" shall mean (a) with respect
to NHLP and its Restricted Subsidiaries, all Funded Debt of
NHLP and its Restricted Subsidiaries, determined on a
consolidated basis eliminating intercompany items and (b)
with respect to the REIT and its consolidated Subsidiaries,
all Funded Debt of the REIT and its consolidated
Subsidiaries, determined on a consolidated basis eliminating
intercompany items.
"Consolidated Investment Net Worth" shall mean, as of
the date of any determination thereof, (a) with respect to
NHLP and its Restricted Subsidiaries, (i) total equity of
NHLP and its Restricted
-4-
8
Subsidiaries plus (ii) Convertible Subordinated Funded Debt
of NHLP and its Restricted Subsidiaries plus (iii)
Consolidated Deferred Income of NHLP and its Restricted
Subsidiaries and minus (iv) Minority Interests of NHLP and
its Restricted Subsidiaries on a consolidated basis and (b)
with respect to the REIT and its consolidated Subsidiaries,
(i) total equity of the REIT and its consolidated
Subsidiaries plus (ii) Convertible Subordinated Funded Debt
of the REIT and its consolidated Subsidiaries and minus (iii)
Minority Interests of the REIT and its consolidated
Subsidiaries, all on a consolidated basis.
"Consolidated Net Income" for any period shall mean (a)
with respect to NHLP and its Restricted Subsidiaries, the
gross revenues of NHLP and its Restricted Subsidiaries for
such period less all expenses and other proper charges
(including taxes on income), determined on a consolidated
basis after eliminating earnings or losses attributable to
outstanding Minority Interests of NHLP and its Restricted
Subsidiaries, but excluding in any event:
(i) any gains or losses on the sale or other
disposition of investments or fixed or capital assets, and
any taxes on such excluded gains and any tax deductions or
credits on account of any such excluded losses;
(ii) the proceeds of any life insurance policy;
(iii) net earnings and losses of any Restricted
Subsidiary accrued prior to the date it became a
Restricted Subsidiary;
(iv) net earnings and losses of any corporation
(other than a Restricted Subsidiary), substantially all the
assets of which have been acquired in any manner by NHLP or
any Restricted Subsidiary, realized by such corporation prior
to the date of such acquisition;
(v) net earnings and losses of any corporation
(other than a Restricted Subsidiary) with which NHLP or a
Restricted Subsidiary shall have consolidated or which shall
have merged into or with NHLP or a Restricted Subsidiary prior
to the date of such consolidation or merger;
(vi) net earnings of any business entity (other
than a Restricted Subsidiary) in which NHLP or any Restricted
Subsidiary has an ownership interest unless either (A) the
total net earnings from all of such business entities do not
exceed 10% of Consolidated Net Income for the period for
which Consolidated
-5-
9
Net Income is being determined or (B) such net earnings shall
have, actually been received by NHLP or such Restricted
Subsidiary in the form of cash distributions;
(vii) any portion of the net earnings of any
Restricted Subsidiary which for any reason is unavailable
for payment of dividends to NHLP or any other Restricted
Subsidiary;
(viii) earnings resulting from any reappraisal,
revaluation or write-up of assets;
(ix) any deferred or other credit representing
any excess of the equity in any Subsidiary at the date of
acquisition thereof over the amount invested in such
Subsidiary;
(x) any gain arising from the acquisition of any
Securities of the Constituent Companies; and
(xi) any establishment or reversal of any
contingency reserve, except to the extent that provision for
such contingency reserve shall have been made from income
arising during such period; and
(b) with respect to the REIT and its consolidated
Subsidiaries, the gross revenues of the the REIT and its
consolidated Subsidiaries for such period less all expenses
and other proper charges (including taxes on income),
determined on a consolidated basis after eliminating earnings
or losses attributable to outstanding Minority Interests of
the the REIT and its consolidated Subsidiaries, but excluding
in any event:
(i) any gains or losses on the sale or other
disposition of investments or fixed or capital assets, and
any taxes on such excluded gains and any tax deductions or
credits on account of any such excluded losses;
(ii) the proceeds of any life insurance policy;
(iii) net earnings and losses of any consolidated
Subsidiary accrued prior to the date it became a consolidated
Subsidiary;
(iv) net earnings and losses of any corporation
(other than a consolidated Subsidiary of the REIT),
substantially all the assets of which have been acquired in
any manner by the REIT or
-6-
10
any consolidated Subsidiary of the REIT, realized by such
corporation prior to the date of such acquisition;
(v) net earnings and losses of any corporation
(other than a consolidated Subsidiary) with which the REIT or
a consolidated Subsidiary of the REIT shall have consolidated
or which shall have merged into or with the REIT or a
consolidated Subsidiary of the REIT prior to the date of such
consolidation or merger;
(vi) net earnings of any business entity (other
than a consolidated Subsidiary of the REIT) in which the REIT
or any consolidated Subsidiary of the REIT has an ownership
interest unless either (A) the total net earnings from all of
such business entities do not exceed 10% of Consolidated Net
Income for the period for which Consolidated Net Income is
being determined or (B) such net earnings shall have actually
been received by the REIT or such consolidated Subsidiary
in the form of cash distributions;
(vii) any portion of the net earnings of any
consolidated Subsidiary of the REIT which for any reason is
unavailable for payment of dividends to the REIT or any other
consolidated Subsidiary of the REIT;
(viii) earnings resulting from any reappraisal,
revaluation or write-up of assets;
(ix) any deferred or other credit representing
any excess of the equity in any Subsidiary of the REIT at the date
of acquisition thereof over the amount invested in such Subsidiary;
(x) any gain arising from the acquisition of any
Securities of the Constituent Companies; and
(xi) any establishment or reversal of any
contingency reserve, except to the extent that provision for such
contingency reserve shall have been made from income arising during
such period.
"Consolidated Net Worth" shall mean as of the date of any
determination thereof without duplication and eliminating
intercompany items, total equity of the Constituent Companies plus
Subordinated Funded Debt of NHLP and its Restricted Subsidiaries
and the REIT and its consolidated Subsidiaries, and minus Minority
Interests of NHLP and its Restricted Subsidiaries and the REIT and
its consolidated Subsidiaries, all on a combined basis.
-7-
11
"Consolidated Total Assets" shall mean, as of the date of any
determination thereof, (a) with respect to NHLP and its Restricted
Subsidiaries, the total amount of all assets of NHLP and its
Restricted Subsidiaries (less depreciation, depletion, and other
properly deductible valuation reserves) and (b) with respect to
the REIT and its consolidated Subsidiaries, the total amount of all
assets of the REIT and its consolidated Subsidiaries (less
depreciation, depletion, and other properly deductible valuation
reserves).
"Convertible Subordinated Funded Debt" shall mean (a) with
respect to NHLP and its Restricted Subsidiaries, all unsecured
Funded Debt of NHLP which contains or has applicable thereto
subordination provisions substantially in the form set forth in
Exhibit Z attached hereto (or such other provisions as may be
approved by the holders of at least 64% of the aggregate principal
amount of the Notes (evidenced by a written consent of such
holders)) providing for the subordination thereof to other Funded
Debt of NHLP, including in Funded Debt of NHLP, without limitation,
the Guaranty Agreement, and which entitles the holder thereof to
convert the principal amount of such debt into an Equity Interest
of NHLP and (b) with respect to the REIT and its consolidated
Subsidiaries, all unsecured Funded Debt of the REIT which contains
or has applicable thereto subordination provisions substantially in
the form set forth in Exhibit Z attached hereto (or such other
provisions as may be approved by the holders of at least 64% of the
aggregate principal amount of the Notes (evidenced by a written
consent of such holders)) providing for the subordination thereof
to other Funded Debt of the REIT, including in Funded Debt of the
REIT, without limitation, the REIT Guaranty, and which entitles the
holder thereof to convert the principal amount of such debt into an
Equity Interest of the REIT.
"Covenant Funded Debt" shall mean (a) with respect to NHLP
and its Restricted Subsidiaries, the sum of Senior Funded Debt of
NHLP plus Non-Convertible Subordinated Funded Debt of NHLP and (b)
with respect to the REIT and its consolidated Subsidiaries, the sum
of Senior Funded Debt of the REIT plus NonConvertible Subordinated
Funded Debt of the REIT.
"Debt Service" for any period shall mean the sum of (i)
Interest Charges for such period plus (ii) Operating Lease payments
for such period and plus (iii) principal of Funded Debt payable
during such period, in each case without duplication and
eliminating intercompany items.
-8-
12
"Interest Charges" for any period shall mean all interest and
amortization of debt discount and expense on any particular
Indebtedness for which such calculations are being made. 12
Computations of Interest Charges on a pro forma basis for
Indebtedness having a variable interest rate shall be calculated at
the rate in effect on the date of any determination.
"Minority Interests" shall mean (a) with respect to NHLP and
its Restricted Subsidiaries, any Equity Interest of any class of a
Restricted Subsidiary (other than directors' qualifying shares as
required by law) that is not owned by NHLP and/or one or more of
its Restricted Subsidiaries and (b) with respect to the REIT and
its consolidated Subsidiaries, any Equity Interest' of any class of
a consolidated Subsidiary of the REIT (other than directors'
qualifying shares as required by law) that is not owned by the REIT
and/or one or more of its consolidated Subsidiaries. Minority
Interests shall be valued by valuing Minority Interests
constituting preferred stock at the voluntary or involuntary
liquidating value of such preferred stock, whichever is greater,
and by valuing Minority Interests constituting common stock at the
book value of capital and surplus applicable thereto adjusted, if
necessary, to reflect any changes from the book value of such
common stock required by the foregoing method of valuing Minority
Interests in preferred stock.
"Non-Convertible Subordinated Funded Debt" shall mean (a)
with respect to NHLP and its Restricted Subsidiaries, 75% of
unsecured Funded Debt of NHLP which contains or has applicable
thereto subordination provisions substantially in the form set
forth in Exhibit Z attached hereto (or such other provisions as may
be approved by the holders of at least 64% of the aggregate unpaid
principal amount of the Notes (evidenced by a written consent of
such holders)) providing for the subordination thereof to other
Funded Debt of NHLP, including, without limitation, the Guaranty
Agreement, and which does not entitle the holder thereof to convert
the principal amount of such debt into an Equity Interest of NHLP
and (b) with respect to the REIT and its consolidated Subsidiaries,
75% of unsecured Funded Debt of the REIT which contains or has
applicable thereto subordination provisions substantially in the
form set forth in Exhibit Z attached hereto (or such other
provisions as may be approved by the holders of at least 64% of the
aggregate unpaid principal amount of the Notes (evidenced by a
written consent of such holders)) providing for the subordination
thereof to other Funded Debt of the REIT, including, without
limitation, the REIT Guaranty, and which does not entitle
-9-
13
the holder thereof to convert the principal amount of such debt into an Equity
Interest of the REIT.
"Subordinated Funded Debt" shall mean (a) with respect to
NHLP and its Restricted Subsidiaries, the sum of Convertible i 6
Subordinated Funded Debt of NHLP and its Restricted Subsidiaries
plus Non-Convertible Subordinated Funded Debt of NHLP and its
Restricted Subsidiaries, and (b) with respect to the REIT and its
consolidated Subsidiaries, the sum of Convertible Subordinated
Funded Debt of the REIT and its consolidated Subsidiaries plus
Non-Convertible Subordinated Funded Debt of the REIT and its
consolidated Subsidiaries.
(b) Section 1.1 of the Original Indenture is hereby further amended by
amending the definition of "Fiscal Year" by adding after the word National in
the first line thereof ", the REIT" and by adding at the end thereof "provided
further, that the Fiscal Year of NHLP and the REIT shall in any event end on
the same day."
(c) Section 1.1 of the Original Indenture is hereby further amended by
amending the first sentence of the definition of "Make-Whole Premium Amount" to
read in its entirety as follows:
"Make-Whole Premium Amount" as at any date a payment thereof is due
(the "payment date") in connection with a payment or prepayment in
respect of the Notes shall mean the excess of (i) the present value
as at the payment date of the Prepaid Cash Flows, discounted
semiannually at an annual rate which is equal to the Treasury Rate
plus (A) in the case of any payment pursuant to ss.3.7 hereof,
1.50% and (B) in the case of any other payment hereunder pursuant
to which a premium is expressed to be due and payable, 0.50% over,
in each case, (ii) the aggregate principal amount of the Notes then
to be paid or prepaid.
(d) Section 1.1 of the Original Indenture is hereby further amended by
amending the last sentence of the definition of "Subsidiary" to read in its
entirety as follows:
The term "Subsidiary" shall mean a subsidiary of NHLP, National,
NHC, or the REIT, as the context shall require.
(e) Section 1.1 of the Indenture is hereby further amended by adding
thereto the following new definitions in alphabetical order:
"Assumption Agreements" shall mean the separate Assumption
Agreements, each dated as of November 1, 1991 among NHLP, the REIT,
the Indenture Trustee and the Florida Co-Indenture Trustee.
-10-
14
"Combined Subordinated Funded Debt" shall mean all unsecured Funded Debt
of NHLP and all unsecured Funded Debt of the REIT, in each case which contains
or has applicable thereto subordination provisions substantially in the form set
forth in Exhibit Z attached hereto (or such other provisions as may be approved
by the holders of at least 64% of the aggregate principal amount of the Notes
(evidenced by a written consent of such holders)) providing for the
subordination thereof to other Funded Debt of NHLP and the REIT, respectively.
"Constituent Companies" shall mean NHLP, its Restricted Subsidiaries and
the REIT and its consolidated Subsidiaries, taken as a whole.
"Current Assets" and "Current Liabilities" shall mean such assets and
liabilities as shall be determined in accordance with GAAP to constitute current
assets and current liabilities, respectively.
"First Amendments" means the separate First Amendments to Note Agreement
each dated as of November 1, 1991 between the Issuer and each Holder.
"Homewood Facility" shall mean the Homewood Health Care Center in Glasgow,
Kentucky.
"Pro Forma Debt Service" shall mean for the 12-month period immediately
succeeding the date of determination thereof, the maximum aggregate amount of
Debt Service which would have become payable in such period determined on a pro
forma basis giving effect as of the beginning of such period to the incurrence
of any Indebtedness and Operating Leases and any concurrent retirement of
outstanding Indebtedness or termination of any Operating Leases. In the case of
a determination of Pro Forma Debt Service for NHLP, such calculation shall be
made for NHLP and its Restricted Subsidiaries on a consolidated basis. In the
case of a determination of Pro Forma Debt Service for the REIT, such calculation
shall be made for the and its consolidated Subsidiaries on a consolidated basis.
In the case of a determination of Pro Forma Debt Service for the Constituent
Companies, such calculation shall be made for the REIT and its consolidated
Subsidiaries and NHLP and its Restricted Subsidiaries on a combined basis,
without duplication and eliminating intercompany items.
-11-
15
"Prospectus" shall mean the Prospectus dated October 9, 1991
in connection with the issuance and sale of the REIT's Senior
Subordinated Convertible Debentures Due 2006.
"REIT" shall mean National Health Investors, Inc., a Maryland
corporation.
"REIT Debentures" shall mean the Senior Subordinated
Convertible Debentures Due 2006 of the REIT, as described in the
Prospectus, in an aggregate principal amount of not less than
$50,000,000 and not more than $110,000,000.
Section 3.2. Definitions. Unless otherwise defined herein, other
capitalized terms used herein shall have the meanings given thereto in the
Original Indenture.
SECTION 4. AMENDMENT OF SECTION 2 OF THE INDENTURE.
Section 4.1. Amendment of Section 2.1 of the Indenture. The last sentence
of Section 2.1(a) of the Indenture is hereby amended to read in its entirety as
follows:
The Series A Notes shall be substantially in the form attached to
the First Supplemental Indenture as Exhibit A and the Series B Notes
shall be substantially in the form attached to the First
Supplemental Indenture as Exhibit B and shall be subject to required
and optional prepayment as provided in ss.3.
Section 4.2. Amendment of Section 2.10 of the Indenture. Section 2.10 of
the Indenture is hereby amended by changing the percentage "10.69%" to "10.50%"
each place it appears therein and by changing the percentage "10.87%" to
"10.68%" each place it appears therein.
SECTION 5. AMENDMENT OF SECTION 3 OF THE INDENTURE.
Section 3 of the Indenture is hereby amended by adding thereto the
following new Section 3.7.
Section 3.7. Purchase Upon a Debt Downgrade. If, on December
31, 1992, the Notes are not rated "2" (or an NAIC equivalent rating)
or higher by the National Association of Insurance Commissioners
(the "NAIC"), each Holder of any Notes shall be entitled to tender
the Notes held thereby to NHLP for purchase pursuant to this ss.3.7.
The Holder may tender the Notes held by it at any time from and
after December 31, 1992 through the later to occur of (a) April 1,
1993 and (b) if a request for a
-12-
16
reconsideration of the downgrading has been submitted by any Holder,
the later of (i) the day prior to the date on which the NAIC has
responded to such request, if such response results in the Notes
being rated "2" (or on NAIC equivalent rating) or higher; provided,
however, that if the Notes are not rated "2" (or a NAIC equivalent
rating) or higher on December 31, 1992 and thereafter (but prior to
April 1, 1993) the Notes are rated "2" (or an NAIC equivalent
rating) or higher, the Holders' right to tender shall continue
through April 1, 1993 and (ii) 90 days after the day prior to the
date on which the NAIC has responded to such request if such
response results in the Notes being rated lower than "2" (or an NAIC
equivalent rating) (such period, the "Downgrade Tender Period").
NHLP hereby agrees that if any holder of the Notes shall have
requested NHLP to consent to any request for a rating on the Notes
as provided in Section 4.1 of the First Amendment, it will not
unreasonably withhold its consent to any such request.
At any time during the Downgrade Tender Period, the holder or
holders of any Notes shall have the privilege, upon written notice
(the "Downgrade Tender Notice") to NHLP, of tendering all Notes held
by such holder or holders serving such Downgrade Tender Notice to
NHLP for purchase and thereupon NHLP shall be obligated to purchase
such Notes on the thirtieth Business Day after receipt of such
Downgrade Tender Notice, and NHLP covenants and agrees to purchase
or cause to be purchased on such day all Notes held by such holder
or holders serving such Downgrade Tender Notice to NHLP.
In the event that any holder or holders of the Notes shall have
elected to tender for purchase all of the Notes held thereby
pursuant to this ss.3.7, then NHLP shall promptly, but in any event
within five days after the receipt of any Downgrade Tender Notice,
deliver written notice of such election to tender to each other
holder of the Notes and, notwithstanding the provisions of the
immediately preceding paragraph, the right of each such other holder
to tender for purchase (by delivery of a Downgrade Tender Notice)
all of the Notes had thereby pursuant to this ss.3.7 shall remain in
effect until 25 days after receipt by such holders of the notice
from NHLP required to be delivered pursuant to this paragraph;
provided, however, that the provisions of this sentence shall only
apply with respect to notices required to be delivered pursuant to
this paragraph to the extent that such notices redate to Downgrade
Tender Notices made by holders of the Notes prior to the expiration
of the Downgrade Tender Period.
-13-
17
All purchases of the Notes pursuant to this ss.3.7 shall be made by
NHLP by the payment of the aggregate principal amount remaining
unpaid on such Notes and accrued interest thereon to the date of the
prepayment of such Notes, together with the Make-Whole Premium
Amount. Any purchases of less than all of the outstanding Notes made
pursuant to this ss.3.7 shall be applied to the payment in full of
the Notes held by the holders providing a Downgrade Tender Notice.
The amounts of the scheduled prepayments on all Notes not purchased
shall be unchanged by such purchase.
SECTION 6. AMENDMENT OF SECTION 4 OF THE ORIGINAL INDENTURE.
Section 6.1. Amendment of Heading and First Sentence of Section 4. The
heading and first sentence of Section 4 are hereby amended to read in their
entirety as follows:
SECTION 4 COVENANTS OF NHLP AND THE REIT
NHLP and the REIT, as the case may be, hereby covenant,
represent and warrant with the Indenture Trustee for the benefit of the
Indenture Trustee and the holders of the Notes as follows:
Section 6.2. Amendment of Section 4.1 of the Original Indenture. Section
4.1 of the Original Indenture is hereby amended by adding thereto the following
new sentence at the end thereof:
The REIT will at all times preserve, warrant and defend the
Indenture Trustee's title and right in and to the Facilities to be
Transferred against the claims of all Persons.
Section 6.3. Amendment of Section 4.2 of the Original Indenture. The text
of Section 4.2 of the Original Indenture through the word "business" occurring
immediately prior to the first proviso therein is hereby amended to read in its
entirety as follows:
Section 4.2. Existence. NHLP and the REIT each will preserve
and keep in full force and effect, NHLP will cause each Restricted
Subsidiary to preserve and keep in full force and effect and the
REIT will cause each of its consolidated Subsidiaries to preserve
and keep in full force and effect its legal existence as a limited
partnership, general partnership or corporation, as the case may be,
and all licenses and permits necessary to the proper conduct of its
business,
Section 6.4. Amendment of Section 43 of the Original Indenture. Section
4.3 of the Original Indenture is hereby amended by adding thereto the following
new paragraphs at the end thereof:
-14-
18
The REIT covenants and agrees to perform, abide by and to be
governed and restricted by each and all of the terms, provisions,
restrictions, covenants and agreements set forth in each Operative
Agreement to which it is a party, and in each and every supplement
thereto or amendment thereof which may at any time or from time to
time be executed and delivered by the parties thereto or their
successors and assigns, to the same extent as though each and all of
said terms, provisions, restrictions, covenants and agreements were
fully set out herein and as though any amendments or supplements to
each of such Operative Agreements were fully set out in an amendment
or supplement to this Indenture.
The REIT will at any time and from time to time, at its own
expense, do, execute, acknowledge and deliver to the Noteholders
and/or the Indenture Trustee such further act, deed, conveyance,
transfer, instrument, document and assurance and take such further
action, if the Noteholders and/or the Indenture Trustee may from
time to time reasonably request, in order to further carry out the
intent and purpose of this Indenture and to establish and protect
the rights, intentions and remedies created, or intended to be
created, in favor of the Noteholders, including, without limitation,
the execution, delivery and recordation and filing of mortgages,
security agreements and financing statements and continuation
statements under the Uniform Commercial Code required by applicable
law to be so recorded or filed so as to make effective of record the
lien intended to be created thereby.
Section 6.5. Amendment of Section 4.4 of the Original Indenture. Section
4.4 of the Original Indenture is hereby amended to read in its entirety as
follows:
Section 4.4. Insurance. NHLP and the REIT each will maintain,
NHLP will cause each Restricted Subsidiary to maintain and the REIT
will cause each of its consolidated Subsidiaries to maintain
insurance coverage by financially sound and reputable insurers
accorded a rating by A.M. Best Company, Inc. at the time of issuance
of any policy of in the case of professional liability and property
insurance, A:VII or higher, in the case of property insurance on
boilers and machinery, A:1X or higher, and in the case of all other
policies, A:XII or higher, such insurance coverage to be in such
forms and amounts and against such risks as are customary for
business entities of established reputation engaged in the same or a
similar business and owning and operating similar properties;
provided, that NHLP or the REIT, as the case may be, will, on the
date of renewal of any such policy, obtain such insurance policy
from a financially sound and reputable insurer
-15-
19
accorded a rating by A.M. Best Company, Inc. of A:XII or higher at
the time of issuance of such policy.
Section 6.6. Amendment of Section 4.5 of the Original Indenture. Section
4.5 of the Original Indenture is hereby amended to read in its entirety as
follows:
Section 4.5. Taxes, Claims for Labor and Materials, Compliance
with Laws. NHLP and the REIT each will promptly pay and discharge,
NHLP will cause each Restricted Subsidiary promptly to pay and
discharge and the REIT will cause each of its consolidated
Subsidiaries promptly to pay and discharge, all lawful taxes,
assessments and governmental charges or levies imposed (upon NHLP,
the REIT, such Restricted Subsidiary or such consolidated
Subsidiary, respectively, or upon or in respect of all or any part
of the Property or business of NHLP, the REIT, such Restricted
Subsidiary or such consolidated Subsidiary, all trade accounts
payable in accordance with usual and customary business terms, and
all claims for work, labor or materials, which if unpaid might
become a Lien upon any property of NHLP, the REIT, such Restricted
Subsidiary or such consolidated Subsidiary; provided NHLP, the REIT,
such Restricted Subsidiary or such consolidated Subsidiary shall not
be required to pay any such tax, assessment, charge, levy, account
payable or claim if (i) the validity, applicability or amount
thereof is being contested in good faith by appropriate actions or
proceedings which will prevent the forfeiture or sale of any
Property of NHLP, the REIT, such Restricted Subsidiary or such
consolidated Subsidiary or any material interference with the use
thereof by NHLP, the REIT, such Restricted Subsidiary or such
consolidated Subsidiary, and (ii) NHLP, the REIT, such Restricted
Subsidiary or such consolidated Subsidiary shall set aside on its
books, reserves deemed by it to be adequate with respect thereto.
NHLP and the REIT will promptly comply, NHLP will cause each
Subsidiary to comply and the REIT will cause each of its
consolidated Subsidiaries to comply with all laws, ordinances or
governmental rules and regulations to which it is subject, the
violation of which could materially and adversely affect the
properties, business, prospects, profits or condition of NHLP, the
REIT or the Constituent Companies taken as a whole or would result
in any Lien except:
(a) Liens for property taxes and assessments or
governmental charges or levies and Liens securing claims or
demands of mechanics and materialmen, provided that payment
thereof is not at the time required by this ss.4.5;
-16-
20
(b) Liens of or resulting from any judgment or award,
the time for the appeal or petition for rehearing of which
shall not have expired, or in respect of which NHLP, the REIT,
a Restricted Subsidiary or any consolidated Subsidiary of the
REIT shall at any time in good faith be prosecuting an appeal
or proceeding for a review and in respect of which a stay of
execution pending such appeal or proceeding for review shall
have been secured;
(c) Liens incidental to the conduct of business or the
ownership of properties and assets (including Liens in
connection with worker's compensation, unemployment insurance
and other like laws, warehousemen's and attorneys' liens and
statutory landlords' liens) and Liens to secure the
performance of bids, tenders or trade contracts, or to secure
statutory obligations, surety or appeal bonds or other liens
of like general nature incurred in the ordinary course of
business and not in connection with the borrowing of money,
provided in each case, the obligation secured is not overdue
or, if overdue, is being contested in good faith by
appropriate actions or proceedings; and
(d) minor survey exceptions or minor encumbrances,
easements or reservations, or rights of others for
rights-of-way, utilities and other similar purposes, or zoning
or other restrictions as to the use of real properties, which
are necessary for the conduct of the activities of NHLP, the
REIT, NHLP's Restricted Subsidiaries and the REIT's
consolidated Subsidiaries or which customarily exist on
properties of corporations engaged in similar activities and
similarly situated and which do not in any event materially
impair their use in the operation of the business of NHLP, the
REIT, NHLP's Restricted Subsidiaries and the REIT's
consolidated Subsidiaries.
Section 6.7. Amendment of Section 4.6 of the Original Indenture. Section
4.6 of the Original Indenture is hereby amended to read in its entirety as
follows:
Section 4.6. Maintenance. NHLP and the REIT will:
(a) maintain, preserve and keep, and NHLP will cause each
Restricted Subsidiary to maintain, preserve and keep and the REIT
will cause each of its consolidated Subsidiaries to maintain,
preserve and keep, its properties which are used or useful in the
conduct of its business (whether owned in fee or a leasehold
-17-
21
interest) in good repair and working order and from time to time
will make all necessary repairs, replacements, renewals and
additions so that at all times the efficiency thereof shall be
maintained; and
(b) without limiting the requirements set forth in clause (a),
maintain the Financed Facilities (i) in accordance with the
Mortgages and the Note and Mortgage Assignments, (ii) in compliance
with all requirements (other than the requirement of having a
provider contract in existence) necessary to allow the Financed
Facilities to qualify at all times as eligible providers for
"Medicare" and "Medicaid" and, (iii) as eligible providers of
"Medicare" and maintain its other Property in good condition,
reasonable wear and tear excepted, and make all necessary renewals,
replacements, additions, betterments and improvements thereto all in
accordance with customary industry standards, provided that if NHLP
shall determine, as evidenced by a resolution of its Board of
Directors, that continued compliance with all requirements of
"Medicare" and "Medicaid" or continued participation as a "Medicare"
provider is not in the best interests of NHLP, the Financed
Facilities shall not be required to be so maintained.
Section 6.8. Amendment of Section 4.7 of the Original Indenture. Section
4.7 of the Original Indenture is hereby amended to read in its entirety as
follows:
Section 4.7. Nature of Business. (a) Neither NHLP nor any
Restricted Subsidiary 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 NHLP and its Restricted
Subsidiaries would be substantially changed from the general nature
of the business engaged in by NHLP and its Restricted Subsidiaries
on the date of this Indenture; provided, however, that NHLP may
establish the REIT and may transfer certain of its nursing home
facilities described in the Prospectus under the heading "The
Healthcare Facilities" (including the Financed Facilities in
accordance with and subject to the Assumption Agreements) to the
REIT, in accordance with and as provided in the Prospectus.
(b) Neither the REIT nor any of its consolidated 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 REIT and its consolidated Subsidiaries would be
substantially changed from the general nature of the business to be
engaged in by the REIT and its consolidated Subsidiaries as
described in the Prospectus, and the REIT will at all times conduct
its business so as to qualify for taxation as a Real
-18-
22
Estate Investment Trust under Sections 856 through 860 of the
Internal Revenue Code of 1986, as amended.
Section 6.9. Amendment of Section 4.8 of the Original Indenture. Section
4.8 of the Original Indenture is hereby amended to read in its entirety as
follows:
Section 4.8. Compliance with Environmental Laws. (a) NHLP
shall, and shall cause its Restricted Subsidiaries to, and the REIT
shall, and shall cause its consolidated Subsidiaries to, carry on
the business and operations at its Properties and all Properties
managed by it to comply in all material respects, and will comply in
all material respects with all applicable Federal, state, regional,
county or local laws, statutes, rules, regulations or ordinances,
concerning public health, safety or the environment including
without limitation, any such applicable law, statute, rule,
regulation or ordinance relating to releases, discharges or.
emissions of Hazardous Substances to air, water, land or
groundwater, to the withdrawal or use of groundwater, to the use and
handling of polychlorinated biphenyls or asbestos, to the disposal,
treatment, storage or management of hazardous or solid waste, or
Hazardous Substances or crude oil, fractious petroleum, petroleum
derivatives or by-products, or to exposure to toxic or hazardous
materials, to the handling, transportation, discharge or release of
gaseous or liquid Hazardous Substances and any regulation, order,
notice or demand issued pursuant to such law, statute or ordinance,
in each case applicable to the property of the REIT and its
Subsidiaries and NHLP and its Subsidiaries and General Partners or
the operation, construction or modification of any thereof,
including, but not limited to the following, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986,
42 U.S.C. ss.9601 et seq., the Solid Waste Disposal Act, as amended
by the Resource Conservation and Recovery Act of 1976, as amended by
the Solid and Hazardous Waste Amendments of 1984, 42 U.S.C. ss.6901
et seq., the Federal Water Pollution Control Act, as amended by the
Clean Water Act of 1977, 33 U.S.C. ss.1251 et seq., the Toxic
Substances Control Act of 1976, 15 U.S.C. ss.2601 et seq., the
Emergency Planning and Community Right-to-Know Act of 1986, 42
U.S.C. ss.11001 et seq., the Clean Air Act of 1966, as amended, 42
U.S.C. ss.7401 et seq., the National Environmental Policy Act of
1975, 42 U.S.C. ss.4321, the Rivers and Harbours Act of 1899, 33
U.S.C. ss.401 et seq., the Endangered Species Act of 1973, as
amended, 16 U.S.C. ss.1531, et seq., the Occupational Safety and
Health Act of 1970, as amended, 29 U.S.C. ss.651 et seq., the Safe
Drinking Water Act of 1974, as amended, 42 U.S.C. Section 300(f) et
-19-
23
seq., ss.2601, et seq., and all rules, regulations and guidance
documents promulgated or published thereunder.
(b) NHLP shall, and shall cause its Restricted Subsidiaries
to, and the REIT shall, and shall cause its consolidated
Subsidiaries to, prevent the imposition of any liens or encumbrances
against the Properties for the costs of any response, removal, or
remedial action or clean up of Hazardous Substances.
Section 6.10. Amendment of Section 4.9 of the Original Indenture. Section
4.9 of the Original Indenture is hereby amended by adding thereto the following
new sentence at the end thereof:
The REIT will give advance written notice to the Indenture
Trustee of any proposed change in the REIT's name or location of its
principal office and will execute and deliver to the Indenture
Trustee at least 60 days prior to the occurrence of any such change,
all additional financing statements, as the Indenture Trustee may
require, or as may be required by law in order to publish notice of
and to continue the lien and security interest of this Indenture on
and in respect of the Mortgaged Property.
Section 6.11. Amendment of Section 4.10 of the Original Indenture. (a)
Paragraphs (a) and (b) of Section 4.10 of the Original Indenture are hereby
amended to read in their entirety as follows:
(a) NHLP and the REIT each will not, and NHLP will not permit
any Restricted Subsidiary and the REIT will not permit any
consolidated Subsidiary to, consolidate with or be a party to a
merger with any other Person (other than a transaction in accordance
with the provisions of ss.4.2); provided, however, that:
(1) any Restricted Subsidiary may merge or consolidate
with or into NHLP or another Wholly-owned Restricted
Subsidiary so long as in any merger or consolidation involving
NHLP, NHLP shall be the surviving or continuing entity; and
(2) NHLP may consolidate or merge with any other Person
if: (i) NHLP shall be the surviving or continuing entity and
(ii) at the time of such consolidation or merger, and after
giving effect thereto no Default or Event of Default shall
have occurred and be continuing.
(3) any consolidated Subsidiary of the REIT may merge or
consolidate with or into the REIT or another
-20-
24
Wholly-owned consolidated Subsidiary of the REIT so long as in
any merger or consolidation involving the REIT, the REIT shall
be the surviving or continuing entity; and
(4) The REIT may consolidate or merge with any other
Person if: (i) the REIT shall be the surviving or continuing
entity; and (ii) at the time of such consolidation or merger,
and after giving effect thereto no Default or Event of Default
shall have occurred and be continuing.
(b) NHLP will not, and will not permit any Restricted
Subsidiary to sell, lease, transfer, abandon or otherwise dispose of
any Financed Facility or all or any substantial part of the assets
of NHLP and its Restricted Subsidiaries and the REIT will not and
will not permit any of its consolidated Subsidiaries to sell, lease,
transfer, abandon or otherwise dispose of any Financed Facility or
all or any substantial part of the assets of the REIT and its
consolidated subsidiaries (in each case other than in connection
with a transaction in accordance with the provisions of ss.4.2);
provided that the foregoing restrictions do not apply to:
(1) the sale, lease, transfer or other disposition of
assets of a Restricted Subsidiary to NHLP or another
Restricted Subsidiary or the sale, lease, transfer or other
disposition of assets of a consolidated Subsidiary of the REIT
to the REIT or another consolidated Subsidiary thereof;
(2) the sale, lease or other disposition of any or all
of the Owned Facilities (including, without limitation, the
Facilities to be Transferred); provided, however, that either
(i) the Indenture Trustee retains a first mortgage on such
assets and NHLP continues to either manage any Owned Facility
so transferred pursuant to a Management Agreement in
accordance with the provisions of ss.4.22 or operate as lessee
any Owned Facility so transferred pursuant to a lease
agreement in form and substance satisfactory to the Holders of
the Notes or (ii) NHLP provides a Substitute Financed Facility
pursuant to ss.10 with respect to each Owned Facility so
transferred; or
(3) the transfer of those nursing home facilities
described under "The Healthcare Facilities" in the Prospectus
but, with respect to such facilities that are Financed
Facilities, only in accordance with the First Amendment and
-21-
25
the Assumption Agreements and subject to the limitations set
forth in paragraph 2 above.
(b) The last paragraph of Section 4.10 of the Original Indenture is
hereby amended by adding at the end thereof the following new sentence:
As used in this ss.4.10, a sale, lease or other disposition of
assets shall be deemed to be a "substantial part" of the assets of
the REIT and its consolidated Subsidiaries only if the book value of
such assets when added to the book value of all other assets sold,
leased or otherwise disposed of by the REIT and its consolidated
Subsidiaries during the immediately preceding Four-Quarter Period of
the REIT exceeds 15% of Consolidated Total Assets determined as of
the end of the immediately preceding Fiscal Quarter.
Section 6.12. Amendment of Section 4.11 of the Original Indenture. Section
4.11 of the Original Indenture is hereby amended to read in its entirety as
follows:
(a) NHLP will not permit at any time either:
(i) the ratio of Covenant Funded Debt of NHLP and its
Restricted Subsidiaries to Consolidated Adjusted Net Worth of
NHLP and its Restricted Subsidiaries to exceed 3.5:1;
provided, however, that the ratio of Covenant Funded Debt of
NHLP and its Restricted Subsidiaries to Consolidated Adjusted
Net Worth of NHLP and its Restricted Subsidiaries may increase
to not more than 4.0:1.0 for any number of nonconsecutive Four
Quarter Periods; or
(ii) the ratio of Consolidated Current Debt of NHLP and
its Restricted Subsidiaries to Consolidated Adjusted Net Worth
of NHLP and its Restricted Subsidiaries to exceed 1.0:1.0;
provided, however, that for purposes of this ss.4.11(a)(ii),
Consolidated Current Debt of NHLP and its Restricted
Subsidiaries shall not include current maturities of Funded
Debt of NHLP and its Restricted Subsidiaries.
(b) The REIT will not permit at any time either:
(i) the ratio of Covenant Funded Debt of the REIT and
its consolidated Subsidiaries to Consolidated Adjusted Net
Worth of the REIT and its consolidated Subsidiaries to exceed
3.5:1; provided, however, that the
-22-
26
ratio of Covenant Funded Debt of the REIT and its consolidated
Subsidiaries to Consolidated Adjusted Net Worth of the REIT
and its consolidated Subsidiaries may increase to not more
than 4.0:1.0 for any number of nonconsecutive Four Quarter
Periods; or
(ii) the ratio of Consolidated Current Debt to
Consolidated Adjusted Net Worth of the REIT and its
consolidated Subsidiaries to exceed 1.0:1.0; provided,
however, that for purposes of this ss.4.11(b)(ii),
Consolidated Current Debt of the REIT and its consolidated
Subsidiaries shall not include current maturities of Funded
Debt of the REIT and its consolidated Subsidiaries.
(c) Neither NHLP or the REIT will permit at any time either:
(i) the ratio of (A) the sum of Covenant Funded Debt
of NHLP and its Restricted Subsidiaries plus Covenant Funded
Debt of the REIT and its consolidated Subsidiaries to (B) the
sum of Consolidated Adjusted Net Worth of NHLP and its
Restricted Subsidiaries plus Consolidated Adjusted Net Worth
of the REIT and its consolidated Subsidiaries to exceed 3.5:1;
provided, however, that the ratio of (A) the sum of Covenant
Funded Debt of NHLP and its Restricted Subsidiaries plus
Covenant Funded Debt of the REIT and its consolidated
Subsidiaries to (B) the sum of Consolidated Adjusted Net Worth
of NHLP and its Restricted Subsidiaries plus Consolidated
Adjusted Net Worth of the REIT and its consolidated
Subsidiaries may increase to not more than 4.0:1.0 for any
number of nonconsecutive Four Quarter Periods; or
(ii) the ratio of (A) the sum of Consolidated Current
Debt of NHLP and its Restricted Subsidiaries plus Consolidated
Current Debt of the REIT and its consolidated Subsidiaries to
(B) Consolidated Adjusted Net Worth of NHLP and its Restricted
Subsidiaries plus Consolidated Adjusted Net Worth of the REIT
and its consolidated Subsidiaries to exceed 1.0:1.0; provided,
however, that for purposes of this ss.5.12(c)(ii),
Consolidated Current Debt of NHLP and its Restricted
Subsidiaries shall not include current maturities of Funded
Debt of NHLP and its Restricted Subsidiaries
-23-
27
and Consolidated Current Debt of the REIT and its consolidated
Subsidiaries shall not include current maturities of Funded
Debt of the REIT and its consolidated Subsidiaries.
(d) Neither NHLP nor the REIT shall incur any additional
Combined Subordinated Funded Debt if, after giving effect to the
issuance of such Indebtedness, the aggregate unpaid principal amount
of Combined Subordinated Funded Debt would exceed $150,000,000.
Section 6.13. Amendment of Section 4.12. Section 4.12 of the Original
Indenture is hereby amended to read in its entirety as follows:
Section 4.12. Ratio of Cash Flow to Pro Forma Debt Service.
(a) NHLP will at all times keep and maintain the ratio of Cash
Flow to Pro-Forma Debt Service at 1.30 to 1.00 or greater.
(b) The Constituent Companies will at all times keep and
maintain the ratio of Cash Flow to Pro Forma Debt Service at 1.30 to
1.00 or greater.
(c) The REIT and its consolidated Subsidiaries (i) will at all
times after the release of the Additional Collateral keep and
maintain and (ii) shall have attained prior to and as a condition to
the incurrence of any indebtedness (other than the REIT Debentures)
the ratio of Cash Plow to Pro Forma Debt Service at 1.20 to 1.00 or
greater.
Section 6.14. Amendment of Section 4.14. Section 4.14 of the Original
Indenture is hereby amended to read in its entirety as follows:
Section 4.14. Current Ratio.
(a) NHLP will at all times keep and maintain the ratio of
Consolidated Current Assets of NHLP and its Restricted Subsidiaries
to Consolidated Current Liabilities of NHLP and its Restricted
Subsidiaries at not less than 1.5 to 1.0.
(b) The Constituent Companies will at all times keep and
maintain the ratio of without duplication, the sum of (i)
Consolidated Current Assets of NHLP and its Restricted Subsidiaries
plus Consolidated Current Assets of the REIT and its consolidated
Subsidiaries to without duplication, the sum of (ii)
-24-
28
Consolidated Current Liabilities of NHLP and its Restricted
Subsidiaries plus Consolidated Current Assets of the REIT and
its consolidated Subsidiaries at not less than 1.3 to 1.0.
(c) The REIT and its consolidated subsidiaries will at all
times keep and maintain the ratio of Consolidated Current Assets of
the REIT and its consolidated Subsidiaries to Consolidated Current
Liabilities of the REIT and its consolidated Subsidiaries at not
less than 1.0 to 1.0.
Section 6.15. Amendment of Section 4.16 of the Original Indenture. Section
4.16 of the Original Indenture is hereby amended by adding thereto the following
new sentence at the end thereof:
The REIT will not, and will not permit any of its consolidated
Subsidiaries to, become or be liable in respect of any Guaranty
except the REIT Guaranty and Guaranties of the REIT which are
limited in amount to a stated principal amount of Indebtedness
thereby guaranteed and provided that the Indebtedness represented
thereby shall have been incurred within the applicable limitations
provided in ss.4.11.
Section 6.16. Amendment of Section 4.17 of the Original Indenture. Section
4.17 of the Original Indenture is hereby amended to read in its entirety as
follows:
Section 4.17. Purchase of Notes by NHLP or the REIT. Neither
NHLP nor any of its Subsidiaries or Affiliates nor the REIT nor any
of its Subsidiaries or Affiliates, directly or indirectly, may
purchase or make any offer to purchase any Notes unless an offer has
been made to purchase Notes, pro rata, from all holders of the Notes
at the same time and upon the same terms. In case NHLP or any of its
Subsidiaries or Affiliates or the REIT or any of its Subsidiaries or
Affiliates purchases any Notes, such Notes shall thereafter be
cancelled and no Notes shall be issued in substitution therefor.
Notwithstanding the foregoing, NHLP may purchase and make offers to
purchase Notes in accordance with ss.3.6 hereof and any Notes so
purchased shall not be required to be cancelled and new Notes may be
issued in substitution therefor.
Section 6.17. Amendment of Section 4.18 of the Original Indenture. Section
4.18 of the Original Indenture is hereby amended to read in its entirety as
follows:
Section 4.18. Transactions with Affiliates. NHLP will not, and
will not permit any Restricted Subsidiary to, and the REIT will not,
and will not permit any consolidated Subsidiary to, enter into or be
a party to any transaction or arrangement with any Affiliate
-25-
29
or Subsidiary (including, without limitation, the purchase
from, sale to or exchange of property with, or the rendering
of any service by or for, any Affiliate or Subsidiary), except
(i) in the ordinary course of and pursuant to the reasonable
requirements of NHLP's, such Restricted Subsidiary's, the
REIT's or such consolidated Subsidiary's business and upon
fair and reasonable terms no less favorable to NHLP, such
Restricted Subsidiary, the REIT or such consolidated
Subsidiary than would obtain in a comparable arm's-length
transaction with a Person other than an Affiliate or a
Subsidiary and (ii) except for transactions between NHLP and
the REIT pursuant to which NHLP may transfer certain of its
nursing home facilities described in the Prospectus under the
heading "The Healthcare Facilities" (including certain of the
Financed Facilities in accordance with and subject to the
Assumption Agreements) to the REIT in accordance with and as
provided in the Prospectus.
Section 6.18. Amendment of Section 4.19 of the Original Indenture.
Paragraph (a) of Section 4.19 of the Original Indenture is hereby amended to
read in its entirety as follows:
(a) Investments, loans and advances by NHLP and its
Restricted Subsidiaries in and to Restricted Subsidiaries,
Equity Subsidiaries and the REIT, including any investment in
a corporation which, after giving effect to such investment,
will become a Restricted Subsidiary or an Equity Subsidiary;
provided, however, that additional investments, loans and
advances by NHLP and its Restricted Subsidiaries in the REIT
shall not be allowed at any time if and when more than 10% of
Consolidated Total Assets of the REIT shall be invested in
non-health care related property.
Section 6.19. Amendment of Section 4.20 of the Original Indenture. Section
4.20 of the Original Indenture is hereby amended to read in its entirety as
follows:
Section 4.20. ERISA Compliance.
(a) NHLP will not, and will not permit any Restricted
Subsidiary to, permit any Pension Plans at any time maintained
by NHLP (or any Restricted Subsidiary) to have any Unfunded
Vested Pension Liabilities and the REIT will not, and will not
permit any of its consolidated Subsidiaries to, permit any
Pension Plans at any time maintained by the REIT or any
consolidated Subsidiary to have any Unfunded Vested Pension
Liabilities. As used herein "Unfunded Vested Pension
Liability" shall mean an excess of the actuarial present value
of accumulated vested Pension Plan benefits as at the end of
the immediately preceding Pension Plan year of
-26-
30
such Pension Plans (or as of any more recent valuation date)
over the net assets allocated to such Pension Plans which are
available for benefits, all as determined and disclosed in the
most recent actuarial valuation report for such Pension Plans
(b) All assumptions and methods used to determine the
actuarial valuation of vested employee benefits under all
Pension Plans at any time maintained by NHLP or any Restricted
Subsidiary, or the REIT or any consolidated Subsidiary and the
present value of assets of such Pension Plans shall be
reasonable in the good faith judgment of NHLP or the REIT, as
the case may be, and shall comply with all requirements of
law.
(c) NHLP will not, and will not permit any Restricted
Subsidiary to, and the REIT will not, and will not permit any
of its consolidated Subsidiaries to, cause any Pension Plan
which it maintains or in which it participates at any time to:
(1) engage in any non-exempt, "prohibited
transaction" (as such term is defined in ERISA);
(2) incur any "accumulated funding deficiency" (as
such term is defined in ERISA), whether or not waived;
or
(3) terminate any such Pension Plan in a manner
which could result in the imposition of a lien on any
property of the NHLP or any of its Restricted
Subsidiaries or the REIT or any of its consolidated
Subsidiaries, as the case may be, pursuant to ERISA.
(d) NHLP will not, and will not permit any Restricted
Subsidiary to, and the REIT will not, and will not permit any
of its consolidated Subsidiaries to, permit any condition to
exist in connection with any Pension Plan which might
constitute grounds for the PBGC to institute proceedings to
have such Pension Plan terminated or a trustee appointed to
administer such Pension Plan.
(e) NHLP will not, and will not permit any Restricted
Subsidiary to, and the REIT will not, and will not permit any
of its consolidated Subsidiaries to, withdraw from any
Multiemployer Plan if such withdrawal shall subject NHLP or
any Restricted Subsidiary or the REIT or any of its
consolidated Subsidiaries to withdrawal liability (as
described under Part 1 of Subtitle E of Title IV of ERISA).
-27-
31
Section 6.20. Amendment of Section 4.21 of the Original Indenture. Section
4.21 of the Original Indenture is hereby amended to read in its entirety as
follows:
Section 4.21. Reports and Rights of Inspection. NHLP will
keep, and will cause each Restricted Subsidiary to keep, and the
REIT will keep, and will cause each of its consolidated Subsidiaries
to keep proper books of record and account in which full and correct
entries will be made of all dealings or transactions of or in
relation to the business and affairs of NHLP or such Restricted
Subsidiary and the REIT or such consolidated Subsidiary, as the case
may be, in accordance with GAAP consistently applied (except for
changes disclosed in the financial statements furnished to you
pursuant to this ss.4.21 and concurred in by the independent public
accountants referred to in ss.4.21(b) hereof), and will furnish to
the Indenture Trustee and each Institutional Holder of the then
outstanding Notes (in duplicate if so specified below or otherwise
requested):
(a) Quarterly Statements. As soon as available and in any
event within 45 days after the end of each Fiscal Quarter (except
the last) of each Fiscal Year, copies of:
(1) consolidated and consolidating balance sheets of
(A) NHLP and its Restricted Subsidiaries and (B) the REIT and its
consolidated Subsidiaries, in each case as of the close of such
Fiscal Quarter, setting forth in comparative form the consolidated
figures for the Fiscal Year then most recently ended,
(2) consolidated and consolidating statements of
operations of (A) NHLP and its Restricted Subsidiaries and (B) the
REIT and its consolidated Subsidiaries, in each case for such Fiscal
Quarter and for the portion of the Fiscal Year ending with such
period, in each case setting forth in comparative form the
consolidated figures for the corresponding periods of the preceding
Fiscal Year,
(3) consolidated and consolidating statements of cash
flows of (A) NHLP and its Restricted Subsidiaries and (B) the REIT
and its consolidated Subsidiaries, in each case for the portion of
the Fiscal Year ending with such Fiscal Quarter, setting forth in
comparative form the consolidated figures for the corresponding
period of the preceding Fiscal Year,
(4) combined balance sheets of the Constituent Companies
as of the close of such Fiscal Quarter, setting forth in
-28-
32
comparative form the consolidated figures for the Fiscal Year then
most recently ended,
(5) combined statements of operations of the Constituent
Companies for such Fiscal Quarter and for the portion of the Fiscal
Year ending with such period, in each case setting forth in
comparative form the consolidated figures for the corresponding
periods of the preceding Fiscal Year, and
(6) combined statements of cash flows of the Constituent
Companies for the portion of the Fiscal Year ending with such Fiscal
Quarter, setting forth in comparative form the consolidated figures
for the corresponding period of the preceding Fiscal Year,
all in reasonable detail and certified as complete and correct by an
authorized financial officer of NHLP;
(b) Annual Statements. As soon as available and in any event
within 90 days after the close of each Fiscal Year of NHLP and the
REIT, copies of:
(1) consolidated and consolidating balance sheets of
(A) NHLP and its Restricted Subsidiaries and (13) the REIT and its
consolidated subsidiaries, in each case as of the close of such
Fiscal Year, and
(2) consolidated and consolidating statements of income
and retained earnings and cash flows of (A) NHLP and its Restricted
Subsidiaries for such Fiscal Year and (B) the REIT and its
consolidated subsidiaries, in each case setting forth in comparative
form the consolidated figures for the preceding Fiscal Year, all in
reasonable detail and accompanied by a report thereon of a firm of
independent public accountants of recognized national standing
selected by NHLP to the effect that the consolidated financial
statements have been prepared in conformity with GAAP and present
fairly, in all material respects, the financial condition of NHLP
and its Restricted Subsidiaries and the REIT and its consolidated
Subsidiaries, as the case may be and that the examination of such
accountants in connection with such financial statements has been
made in accordance with generally accepted auditing standards; and
(3) combined balance sheets of the Constituent
Companies, in each case as of the close of such Fiscal Year, and
-29-
33
(4) combined statements of income and retained earnings
and cash flows of the Constituent Companies,
in each case setting forth in comparative form the combined figures
for the preceding Fiscal Year, all reasonable detail and certified
as complete and correct by an authorized financial officer of NHLP
and the REIT;
(c) Audit Reports. Promptly upon receipt thereof, one copy of
each interim or special audit made by independent accountants of the
books of NHLP or any Restricted Subsidiary or the REIT or any
consolidated Subsidiary and any management letter received from such
accountants;
(d) SEC and Other Reports. Promptly upon their becoming
available, one copy of each financial statement, report, notice or
proxy statement sent by (i) NHLP to public holders of Limited
Partnership Interests generally and (ii) the REIT to any holders of
any of its debt or equity securities, and of each regular or
periodic report, and any registration statement or prospectus filed
by NHLP or any Subsidiary thereof or the REIT or any Subsidiary
thereof with any securities exchange or the Securities and Exchange
Commission or any successor agency, and copies of any orders in any
proceedings to which NHLP or any of its Subsidiaries or the REIT or
any of its Subsidiaries is a party, issued by any governmental
agency, Federal or state, having jurisdiction over NHLP or any of
its Subsidiaries or the REIT (other than routine health care notices
issued by Federal or state agencies administering the Medicare or
Medicaid programs);
(e) ERISA Reports. Promptly upon the occurrence thereof,
written notice of (i) a Reportable Event with respect to any Pension
Plan described in Section 4043 of ERISA and the regulations issued
thereunder (other than a Reportable Event not subject to the
provision for a 30-day notice to the PBGC under such regulations),
(ii) the institution of any steps by NHLP, the REIT, any ERISA
Affiliate, the PBGC or any other person to terminate any Pension
Plan, which steps would subject NHLP or the REIT to any liability to
the PBGC; (iii) the institution of any steps by NHLP, the REIT or
any ERISA Affiliate to withdraw from any Pension Plan, which steps
would subject NHLP or any ERISA Affiliate to any withdrawal
liability; (iv) a "prohibited transaction" within the meaning of
Section 406 of ERISA in connection with any Pension Plan; (v) any
material increase in the contingent liability of NHLP or any
Restricted Subsidiary or the
-30-
34
REIT or any consolidated Subsidiary with respect to any post
retirement welfare liability; or (vi) 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;
(f) Officers' Certificates. Within the periods provided in
paragraphs (a) and (b) above, certificates of an authorized
financial officer of (i) NHLP, (ii) the REIT and (iii) NHLP and the
REIT, each stating that such officer has reviewed the provisions of
this Agreement and setting forth: (i) the information and
computations (in sufficient detail) required in order to establish
whether NHLP, the REIT, and the Constituent Companies, as the case
may be, were in compliance with the requirements of ss.4.11 through
ss.4.14 at the end of the period covered by the financial statements
then being furnished, and (ii) whether there existed as of the date
of such financial statements and whether, to the best of such
officer's knowledge, there exists on the date of the certificate or
existed at any time during the period covered by such financial
statements any Default or Event of Default and, if any such
condition or event exists on the date of the certificate, specifying
the nature and period of existence thereof and the action NHLP, the
REIT or the Constituent Companies, as the case may be, is taking and
proposes to take with respect thereto;
(g) Accountant's Certificates. Within the period provided in
paragraph (b) above, a certificate of the accountants who render an
opinion with respect to such financial statements, stating that they
have reviewed this Indenture and stating further whether, in making
their audit, such accountants have become aware of any Default or
Event of Default under any of the terms or provisions of this
Indenture insofar as any such teens or provisions pertain to or
involve accounting matters or determinations, and if any such
condition or event then exists, specifying the nature and period of
existence thereof;
(h) Unrestricted Subsidiaries. Within the respective periods
provided in paragraph (b) above, financial statements of the
character and for the dates and periods as in said paragraph (b)
provided covering each Unrestricted Subsidiary of NHLP that is also
a consolidated Subsidiary of NHLP; and
(i) Requested Information. With reasonable promptness, such
other data and information as any Institutional Holder may
reasonably request, including, without limitation, a report on the
value of the Additional Collateral.
-31-
35
Without limiting the foregoing, NHLP and the REIT will permit each
Institutional Holder of the then outstanding Notes (or such Persons
as such Institutional Holder may designate), to visit and inspect,
under NHLP's or the REIT's (as the case may be) guidance, any of the
properties of NHLP or any Restricted Subsidiary or the REIT or any
consolidated Subsidiary thereof, to examine all of their books of
account, records, reports and other papers, to make copies and
extracts therefrom and to discuss their respective affairs, finances
and accounts with their respective officers, employees, and
independent public accountants (and by this provision NHLP and the
REIT authorizes said accountants to discuss with each Institutional
Holder the finances and affairs of NHLP and its Restricted
Subsidiaries and the REIT and its consolidated Subsidiaries) all at
such reasonable times and as often as may be reasonably requested.
NHLP and the REIT shall not be required to pay or reimburse any such
holder for expenses which any such holder may incur in connection
with any such visitation or inspection, provided that if such
visitation or inspection is made during any period when a Default or
an Event of Default shall have occurred and be continuing, NHLP and
the REIT each agrees to reimburse such holder for all such expenses
promptly on demand.
Section 6.21. Amendment of Section 4.22 of the Original Indenture. Section
4.22 of the Original Indenture is hereby amended to read in its entirety as
follows:
Section 4.22. Management Agreements. NHLP will at all times
keep in force and effect a Management Agreement with respect to each
of the Managed Facilities.
Section 6.22. Amendment of Section 4 of the Original Indenture. Section 4
of the Original Indenture is hereby further amended by adding thereto after
Section 4.24 the following new Sections 4.25 and 4.26:
Section 4.25. Pledge of Additional Collateral by the REIT. (a)
The REIT hereby covenants and agrees that on the Transfer Date it
shall deposit and pledge with the Indenture Trustee, as additional
collateral under this Indenture, Permitted Investments, cash and,
subject to the limitations set forth below, mortgages on facilities
owned by the REIT and assignments of mortgages from the REIT, in the
aggregate having a book value on such date of not less than
$20,000,000 (the "Additional Collateral"). The Trustee shall hold
such Additional Collateral in a separate and segregated account
under this Indenture to be designated the "Additional Collateral
Account", and all such Additional Collateral and any Permitted
Investments from time to
-32-
36
time constituting a part thereof are hereby pledged and assigned to
the Indenture Trustee and the Florida Co-Indenture Trustee and shall
at all times constitute additional security for the Notes and all
other indebtedness hereby secured. If a Default or Event of Default
has occurred and is continuing to the knowledge of the Indenture
Trustee, all moneys and Permitted Investments on deposit as part of
the Additional Collateral Account shall be applied to the repayment
of the Notes in the manner provided for in ss.8.11 in respect of the
proceeds and avails of the collateral.
(b) If no Default or Event of Default shall exist, any
interest, investment earnings or other distribution on any part of
the Additional Collateral shall be paid over to or upon the order of
the REIT not more frequently than quarterly, provided that the book
value of Additional Collateral on deposit in the Additional
Collateral Account shall at such times equal or exceed $20,000,000.
If a Default or Event of Default shall exist, all interest,
investment earnings or other distributions on any part of the
Additional Collateral shall be held by the Trustee as part of the
Trust Estate.
(c) So long as no Default or Event of Default shall have
occurred and be continuing, the REIT may substitute new Additional
Collateral for any or all of the Additional Collateral from time to
time on deposit in the Additional Collateral Account and may
otherwise direct the investment of the Additional Collateral. The
REIT shall give the Indenture Trustee and the holders of the Notes
written notice not less than 120 days prior to the date on which the
REIT proposes to pledge any Additional Collateral consisting of
property other than Permitted Investments in substitution for any
Additional Collateral then had pursuant to this Indenture. Unless a
Default or Event of Default has occurred and is continuing, the
Indenture Trustee shall execute a release in respect of the
Additional Collateral then held pursuant to this Indenture on the
date of substitution upon compliance by the REIT with the following
requirements:
(i) In the event that the REIT has elected to pledge a
facility owned by the REIT, then in such event, prior to any
release of such Additional Collateral, the Indenture Trustee
shall have received:
(A) a mortgage or deed of trust with respect to
such facility in form and substance satisfactory to the
Indenture Trustee, duly executed, acknowledged and
delivered by the REIT, in full force and effect and
recorded or filed for record, together with all
-33-
37
necessary financing statements and similar notices if
and to the extent permitted or required by applicable
law, in each public office wherein such recording or
filing is deemed necessary or appropriate by the
Indenture Trustee and its counsel to perfect the lien
thereof as a valid first mortgage lien on such facility
as against creditors of or purchasers from the REIT; and
(B) an Opinion of Counsel for the REIT to the
effect that the Mortgage with respect to such facility
has been duly authorized, executed and delivered by the
REIT and constitutes a legal, valid and binding
instrument enforceable in accordance with its terms,
subject to bankruptcy and equitable principles, no
approval, consent or withholding of objection on the
part of, or filing registration or qualification with
any governmental body, Federal, state or local, is
necessary in connection with the execution and delivery
by the REIT of such mortgage or the performance by the
REIT of any of the matters required of the REIT
thereunder and compliance by the REIT with all of the
provisions of such mortgage will not conflict with or
result in any breach of any of the provisions of or
constitute a default under or result in the creation or
imposition of any lien or encumbrances on any property
of the REIT pursuant to the provisions of the Articles
of Incorporation or By-laws of the REIT or any other
agreement or instrument to which the REIT is a party or
by which the REIT may be bound and further to the effect
that all licenses relating to the operation and use of
such facility are in full force and effect in the name
of the REIT and that no further licenses or permits are
required under any local, state or Federal law,
ordinance, rule or regulation in order to conduct the
business of the REIT at such facility.
(ii) In the event that the REIT has elected to pledge a
mortgage held by it as mortgagee, then in such event, prior to
any release of such Additional Collateral, the Indenture
Trustee shall have received:
(A) an assignment of such mortgage, duly executed,
acknowledged and delivered by the REIT (and consented to
by the owner of such facility) in full force and effect
and recorded or filed for record,
-34-
38
together with all necessary financing statements and
similar notices if and to the extent permitted or
required by applicable law, in each public office
wherein such recording or filing is deemed necessary or
appropriate by the Indenture Trustee and its counsel to
perfect the lien thereof as a valid first mortgage lien
on such facility as against creditors of or purchasers
from the REIT; and
(B) an Opinion of Counsel for the owner of such
facility to the effect that the mortgage and the consent
to the assignment thereof have each been duly
authorized, executed and delivered by the owner thereof
and each constitutes a legal, valid and binding
instrument enforceable in accordance with its terms,
subject to bankruptcy and equitable principles, no
approval, consent or withholding of objection on the
part of, or filing registration or qualification with
any governmental body, Federal, state or local, is
necessary in connection with the execution and delivery
by the owner thereof of such mortgage and the consent to
the assignment thereof or the performance by the owner
thereof of any of the matters required of the owner
thereof, and compliance by the owner thereof with all of
the provisions of such mortgage and consent to the
assignment thereof will not conflict with or result in
any breach of any of the provisions of or constitute a
default under or result in the creation or imposition of
any lien or encumbrances on any property of the owner
thereof pursuant to the provisions of the organizational
documents or By-laws of the owner thereof or any other
agreement or instrument of which the owner thereof is a
party or by which the owner thereof may be bound, and
(ii) an Opinion of Counsel for the REIT to the effect
that the mortgage assignment with respect to such
facility has each been duly authorized, executed and
delivered by the REIT and constitutes a legal, valid and
binding instrument enforceable in accordance with its
terms subject to bankruptcy and equitable principles,
no approval, consent or withholding of objection on the
part of, or filing registration or qualification with
any governmental body, Federal, state or local, is
necessary in connection with the execution and delivery
by the REIT of such assignment or the performance by the
REIT of any of the matters
-35-
39
required of the REIT thereunder, and compliance by the
REIT with all of the provisions of such assignment will
not conflict with or result in any breach of any of the
provisions of or constitute a default under or result in
the creation or imposition of any lien or encumbrances
on any property of the REIT pursuant to the provisions
of the Articles of Incorporation or By-laws of the REIT
or any other agreement or instrument to which the REIT
is a party or by which the REIT may be bound and further
to the effect that all licenses relating to the
operation and use of such facility are in full force and
effect in the name of the owner of such Facility and
that no further licenses or permits are required under
any local, state or Federal law, ordinance, rule or
regulation in order to conduct the business of the owner
at such Acquired Facility.
(iii) In the case of both (i) and (ii) above, a survey,
a mortgage title insurance policy, a report of insurance
brokers, an Environmental Audit and a list of licenses and
permits in form and substance satisfactory to the Indenture
Trustee.
(iv) Such other opinions, certificates, and other
instruments as the Indenture Trustee or the holders of not
less than 64% in aggregate principal amount of the Notes
outstanding may reasonably request.
(v) the REIT shall pay all reasonable costs, charges
and expenses in any way relating to or incurred in connection
with the substitution of Additional Collateral and transfers
into and out of the Additional Collateral Account, including
reasonable attorneys' fees and expenses, recording fees,
premiums covering title insurance and all applicable taxes
which may be incurred or imposed by reason of such
transactions.
(d) The REIT hereby covenants and agrees to maintain
Additional Collateral on deposit in the Additional Collateral
Account having a book value of not less than $20,000,000 and, each
fiscal quarter, to provide to each Holder of a Note a written report
listing the investments constituting the Additional Collateral (and
showing the issuer thereof, the interest rate thereon and the
maturity date thereof, if applicable) then on deposit in the
Additional Collateral Account. Mortgages on facilities not owned by
the REIT and pledged hereunder shall be valued at the book
-36-
40
value of the outstanding indebtedness secured thereby;
provided, however, that if such mortgage is in default, such
mortgage shall be valued at the fair market value of the
underlying property, as determined by an Appraiser; provided
further, however, that the book value of the outstanding
indebtedness secured by a mortgage cannot exceed the fair
market value of the underlying property, whether or not such
indebtedness is in default. Any facility owned by the REIT and
pledged hereunder and the underlying property securing any
mortgage pledged by the REIT hereunder shall be appraised by
an Appraiser initially upon the pledge thereof hereunder and
thereafter at each three-year anniversary of such pledge
hereunder; provided, however, that any holder of any Notes may
request such an appraisal or appraisals of any such Facility
or property at any time or from time to time. The REIT hereby
covenants and agrees to pay all costs and expenses of all such
appraisals required or requested pursuant hereto.
(e) The Indenture Trustee shall use its best efforts to
release the Additional Collateral to or upon the order of the
REIT within five Business Days after receipt of evidence
satisfactory to the Holders of the first to occur of (i) at
least 75% of the original aggregate principal amount of the
REIT Debentures having been converted to common stock, (ii)
the REIT shall have attained a ratio of Cash Flow to Pro Forma
Debt Service of 1.50 to 1.00 or greater or (iii) the release
of the lien of the Indenture.
Section 4.26. Limitation on Optional Redemption of REIT
Debentures. The REIT will not exercise any option to redeem
any of the REIT Debentures if at the time of such action a
Default or Event of Default shall exist and be continuing or
would exist immediately after giving effect to such action.
Section 4.27. Prepayment of Notes in Connection with
Lack of Consent on Homewood Facility. If, on or before April
1, 1992, the Holders have not received evidence satisfactory
to them that the United States Department of Housing and Urban
Development shall have consented to the transfer of the
Homewood Facility to the REIT, a principal amount of Notes
equal to the principal amount of indebtedness then secured by
the HUD-mortgage on the Homewood Facility shall be prepaid
pursuant to ss.3.2.
-37-
41
SECTION 7. AMENDMENT OF SECTION 7 OF THE INDENTURE.
Section 7.1. Amendment of Section 7.1 of the Original Indenture. Section
7.1 of the Original Indenture is hereby amended by adding thereto the following
new sentence at the end thereof:
All amounts received from time to time by the Indenture Trustee from
NHLP with respect to the Assignments shall beheld held by the
Indenture Trustee and applied to the payments and prepayments of
principal of, premium, if any, and interest on the allocable portion
of the Notes to which such payments relate which have become due and
payable or will become due and payable on the date of receipt of any
of the foregoing payments or prior to the first day of the month
next succeeding the date of any such receipt, and the balance
thereof shall be paid to the REIT.
SECTION 8. (f)AMENDMENT OF SECTION 8 OF THE INDENTURE.
Section 8.1. Amendment of Section 8.1 of the Original Indenture. (a)
Sections 8.1(f) and 8.1(g) of the Original Indenture are hereby amended to read
in their entirety as follows:
(f) Default shall be made in the payment when due (whether by
lapse of time, by declaration, by call for redemption or otherwise)
of the principal of or interest on any Funded Debt or Current Debt
in excess of $100,000 in aggregate principal amount (other than the
Funded Debt evidenced by the Notes) of the Issuer, NHLP, National or
the REIT or any Restricted Subsidiary of NHLP or National or any
consolidated Subsidiary of the REIT and such default shall continue
beyond the period of grace, if any, allowed with respect thereto; or
(g) Default or the happening of any event shall occur under
any indenture, agreement, or other instrument under which Funded
Debt or Current Debt in excess of $100,000 in aggregate principal
amount of the Issuer, NHLP, National or the REIT or any Restricted
Subsidiary of NHLP or National or any consolidated Subsidiary of the
REIT may be issued and such default or event shall continue for a
period of time sufficient to permit the acceleration of the maturity
of any Funded Debt or Current Debt of the Issuer, NHLP, National or
the REIT or any Restricted Subsidiary of NHLP or National or any
consolidated Subsidiary of the REIT outstanding thereunder; or
-38-
42
(b) Section 8.1(i) of the Original Indenture is hereby amended to
read in its entirety as follows:
(i) Any default shall occur under any lease agreement between
the REIT and NHLP under which any Facility to be Transferred is
being leased or any default shall occur in the observance or
performance of any covenant or agreement contained in the REIT
Guaranty, the Guaranty Agreement, the Stock Purchase Agreement, the
Stock Pledge Agreement, the NHLP Loan Agreement, the Assignment of
NHLP Note or the Assumption Agreements and such default shall
continue for more than 30 days; or
(b) Sections 8.1(k) and 8.1(1) of the Original Indenture are hereby
amended to read in their entirety as follows:
(k) If any representation or warranty made by National, NHLP,
NHC or the REIT in the Guaranty Agreement or the REIT Guaranty, or
in any written statement or certificate furnished by National, NHLP,
NHC or the REIT pursuant thereto or hereto, is untrue in any
material respect as of the date of the issuance or making thereof;
or
(1) NHLP or the REIT shall fail to comply in any respect with
the provisions of one or more Mortgages or the Note and Mortgage
Assignments to which it is a party or by which it may be bound, and
such failure continues for more than a period of 30 days; or
(c) Sections 8.1(n), 8.1(o), 8.1(p), 8.1(q) and 8.1(r) of the Original
Indenture are hereby amended to read in their entirety as follows:
(n) This Indenture, any Note Purchase Agreement, the Guaranty
Agreement, the REIT Guaranty or any Assumption Agreement shall cease
to be in full force and effect for any reason whatsoever, including,
without limitation, a final non-appealable determination by any
governmental body or court of competent jurisdiction that such
agreement is invalid, void or unenforceable or National, NHC or NHLP
shall contest or deny in writing the validity or enforceability of
any of its obligations under the Guaranty Agreement or the REIT
shall contest or deny in writing the validity or enforceability of
any of its obligations under the REIT Guaranty; or
-39-
43
(o) Final judgment or judgments of a court or courts of
competent jurisdiction for the payment of money aggregating in
excess of $1,00O,000 is or are outstanding against National, NHLP or
any Restricted Subsidiary of NHLP, NHC, the Issuer or the REIT or
any consolidated Subsidiary of the REIT, as the case may be, or
against any property or assets of any thereof and any one of such
judgments has remained unpaid, unvacated, unhanded or unstayed by
appeal or otherwise for a period of 90 days from the date of its
entry; or
(p) A custodian, trustee or receiver is appointed for the
Issuer (excluding the appointment of a successor Plan Trustee or a
custodian in accordance with the terms of the Trust Agreement),
National, NHLP, NHC or any Restricted Subsidiary of any thereof or
the REIT or any consolidated Subsidiary thereof or for any material
part of the property of any of them and is not discharged within 30
days after such appointment, or
(q) The Issuer, National, NHLP, NHC or any Restricted
Subsidiary of any thereof or the REIT or any consolidated Subsidiary
thereof becomes insolvent or bankrupt, is generally not paying its
debts as they become due or makes an assignment for the benefit of
creditors, or the Issuer, National, NHLP, NHC or any Restricted
Subsidiary of any thereof or the REIT or any consolidated Subsidiary
thereof causes an order for relief to be entered with respect to it
under applicable Federal bankruptcy law or applies for or consents
to the appointment of a custodian, trustee or receiver for the
Issuer, National, NHLP, NHC or any Restricted Subsidiary of any
thereof or the REIT or any consolidated Subsidiary thereof or for
any material part of the property of any of them; or
(r) Bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings for relief under any bankruptcy or
similar law or laws for the relief of debtors, are instituted by or
against the Issuer, National, NHLP, NHC or any Restricted Subsidiary
of any thereof or the REIT or any consolidated Subsidiary thereof
and, if instituted against the Issuer, National, NHLP, NHC or any
Restricted Subsidiary of any thereof or the REIT or any consolidated
Subsidiary thereof are not dismissed within 60 days after such
institution or are consented to.
-40-
44
SECTION 9. AMENDMENT OF SECTION 9 OF THE INDENTURE.
Section 9.1. Amendment of Section 9.4(c)(ii) of the Original Indenture.
Section 9.4(c)(ii) of the Indenture is hereby amended by adding thereto the
following new text:
and with respect to each of the Sun City Facility and the Pinellas
Facility, a Mortgage in substantially the form attached hereto as
Exhibit C-3 except that the mortgagee thereunder shall be the REIT
and NHLP, a Managed Facility Note, a Note and Mortgage Assignment
(and a consent thereto) from the REIT and NHLP, a Management
Agreement and a Collateral Assignment of Management Agreement Fees
and financing statements or assignments of the financing statements
with respect to each such Facility and the equipment located
thereon, which Mortgages and financing statements and Note and
Mortgage Assignment shall be recorded or filed for record in each
public office in which such recording or fling is deemed necessary
or appropriate by the Note Purchasers or their special counsel.
SECTION 10. MISCELLANEOUS.
Section 10.1. Successors and Assigns. Whenever any of the parties hereto
is referred to, such reference shall be deemed to include the successors and
assigns of such party; and all the covenants, premises and agreements in this
First Supplemental Indenture contained shall bind and inure to the benefit of
the respective successors and assigns of the parties whether so expressed or
not.
Section 10.2. Severability. In case any one or more of the provisions
contained in this First Supplemental Indenture shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
effected or impaired thereby.
Section 10.3. Notices. All communications provided for herein shall be
given as provided for in Section 14.3 of the Original Indenture; provided,
however, that notice to the REIT shall be addressed as follows:
National Health Investors, Inc.
Suite 1402, City Center
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Secretary
-41-
45
Section 10.4. Counterparts. This First Supplemental Indenture may be
executed, acknowledged and delivered in any number of counterparts, each of such
counterparts constituting an original but all together only one instrument.
Section 10.5. Law Governing. This First Supplemental Indenture shall be
construed in accordance with, and governed by, the laws of the State of
Illinois.
Section 10.6. Expenses, Stamp Tax Indemnity. Whether or not the
transactions herein contemplated shall be consummated, NHLP agrees to pay all
expenses relating to the subject matter of this First Supplemental Indenture,
including but not limited to:
(a) the cost of reproducing this First Supplemental Indenture, the
First Amendments, the Assumption Agreements and the REIT and all other
documents required or contemplated hereunder;
(b) the reasonable fees and disbursements of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇,
special counsel to the Holders and Day, ▇▇▇▇▇ & ▇▇▇▇▇▇, special counsel to
the Indenture Trustee;
(c) the reasonable out-of-pocket expenses of the Note Holders, the
Indenture Trustee and the Florida Co-Indenture Trustee; and
(d) all recording, filing fees and stamp taxes in connection with
the recordation or filing and rerecordation or refiling of Assumption
Agreements and any related documents and other notices thereof.
The obligations of NHLP under this ss.7.6 shall survive the payment or
prepayment of the Notes and the termination of the Indenture.
Section 10.7. Modification Not To Effect Liability of Parties Under
Original Indenture. The Issuer, NHLP, National and the REIT each hereby consents
to the execution of this First Supplemental Indenture, the Assumption Agreements
and the REIT Guaranty by the parties thereto and hereby acknowledge that such
documents shall in no way limit the liabilities of the parties under the
Mortgages, the Indenture, the Guaranty, any other Operative Agreement or any
other document or instrument executed and delivered in connection with the
issuance of the Notes. Upon an Event of Default under the Indenture, the
Noteholders may proceed to enforce their rights under the Guaranty and the
liability of the Guarantors under the Guaranty shall continue to be absolute and
unconditional and shall not in any manner be affected or impaired by the
acceptance of the Noteholders of the REIT Guaranty or by any failure, neglect or
omission on the part of the Noteholders to proceed first to collect under the
REIT Guaranty. There shall be no obligation on the part of the Noteholders at
any time to first resort for payment under the REIT Guaranty or any of the
property held as collateral therefor, nor any requirement to exhaust its
remedies under the REIT Guaranty, before making a claim under the Notes, the
Indenture, the Mortgages or the
-42-
46
Guaranty or resorting to any collateral, security, property or liens for any
rights whatsoever securing the obligations under any thereof.
Section 10.8. Ratification. Except to the extent hereby modified, amended
or waived, the Original Indenture is in all respects hereby ratified, confirmed
and approved by the parties hereto.
Section 10.9. References to Indenture. Any and all notices, requests,
certificates and other instruments executed and delivered concurrently with or
after the execution of the Supplemental Indenture may refer to the Indenture
without making specific reference to this Supplemental Indenture, but
nevertheless all such references shall be deemed to include this Supplemental
Indenture unless the context shall otherwise require.
-43-
47
IN WITNESS WHEREOF, NHLP, National, the Issuer and the REIT have each
caused this First Supplemental Indenture to be executed, and State Street Bank
and Trust Company of Connecticut, National Association, as Indenture Trustee, in
evidence of its acceptance of the trusts hereby created, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Trust
Company, National Association, as Florida Co-Indenture Trustee has caused this
Indenture to be executed, all as of the day and year first above written.
NATIONAL HEALTHCORP L.P.
By NHC, Inc.,
Its Managing General Partner
By
-----------------------------------------
Its
By National Health Corporation,
Its Administrative General Partner
By
-----------------------------------------
Its
NATIONAL HEALTH CORPORATION
By
-----------------------------------------
Its
NATIONAL HEALTH INVESTORS, INC.
By
-----------------------------------------
Its
-44-
48
NATIONAL HEALTH CORPORATION
LEVERAGED EMPLOYEE STOCK
OWNERSHIP TRUST
By
------------------------------------
As Co-Trustee of the Issuer
By
------------------------------------
As Co-Trustee of the Issuer
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL
ASSOCIATION, as Indenture Trustee
By
------------------------------------
Its
▇▇▇▇▇▇▇ ▇▇▇▇▇ TRUST COMPANY,
NATIONAL ASSOCIATION, as Florida
Co-Indenture Trustee
By
------------------------------------
Its
-45-
