EXHIBIT 10.4
REVOLVING CREDIT AND SECURITY AGREEMENT
AMONG
THE BORROWERS LISTED ON SCHEDULE 1 ANNEXED HERETO,
AS BORROWERS
and
CAPITALSOURCE FINANCE LLC, AS AGENT
and
CAPITALSOURCE FINANCE LLC, AS SOLE LENDER
DATED AS OF
AUGUST 19, 2003
REVOLVING CREDIT AGREEMENT
TABLE OF CONTENTS
Page
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I. DEFINITIONS.................................................................................. 1
1.1. General Terms....................................................................... 1
II. ADVANCES, PAYMENT AND INTEREST............................................................... 1
2.1. The Revolving Facility.............................................................. 1
2.2. The Revolving Notes; Maturity....................................................... 2
2.3. Interest on the Revolving Notes..................................................... 3
2.4. Revolving Facility Disbursements; Requirement to Deliver Borrowing Certificate...... 3
2.5. Revolving Facility Collections; Repayment; Borrowing Availability and Lockbox....... 4
2.6. Promise to Pay; Manner of Payment................................................... 5
2.7. Repayment of Excess Advances........................................................ 6
2.8. Other Mandatory Prepayments......................................................... 6
2.9. Payments by Agent................................................................... 6
2.10. Grant of Security Interest; Collateral.............................................. 6
2.11. Collateral Administration........................................................... 8
2.12. Power of Attorney................................................................... 10
2.13. Notes............................................................................... 10
2.14. Replacement of Lost Notes........................................................... 10
2.15. Replacement of Lenders.............................................................. 11
III. FEES AND OTHER CHARGES....................................................................... 11
3.1. Commitment Fee...................................................................... 11
3.2. Unused Line Fee; Minimum Loan Fee................................................... 11
3.3. Collateral Management Fee........................................................... 12
3.4. Computation of Fees; Lawful Limits.................................................. 12
3.5. Default Rate of Interest............................................................ 13
IV. CONDITIONS PRECEDENT......................................................................... 13
4.1. Conditions to Initial Advance and Closing........................................... 13
4.2. Conditions to Each Advance.......................................................... 16
V. REPRESENTATIONS AND WARRANTIES............................................................... 16
5.1. Organization and Authority.......................................................... 16
5.2. Loan Documents...................................................................... 17
5.3. Subsidiaries, Capitalization and Ownership Interests................................ 17
5.4. Properties.......................................................................... 18
5.5. Other Agreements.................................................................... 18
5.6. Litigation.......................................................................... 18
5.7. Hazardous Materials................................................................. 19
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5.8. Tax Returns; Governmental Reports................................................... 19
5.9. Financial Statements and Reports.................................................... 19
5.10. Compliance with Law................................................................. 19
5.11. Intellectual Property............................................................... 20
5.12. Licenses and Permits; Labor......................................................... 20
5.13. No Default.......................................................................... 21
5.14. Disclosure.......................................................................... 21
5.15. Existing Indebtedness; Investments, Guarantees and Certain Contracts................ 21
5.16. Other Agreements.................................................................... 21
5.17. Insurance........................................................................... 21
5.18. Names; Location of Offices, Records and Collateral.................................. 22
5.19. Non-Subordination................................................................... 22
5.20. Accounts............................................................................ 22
5.21. Healthcare. ........................................................................ 23
5.22. Plan of Reorganization.............................................................. 23
5.23. Survival. .......................................................................... 24
VI. AFFIRMATIVE COVENANTS........................................................................ 24
6.1. Financial Statements, Reports and Other Information................................. 24
6.2. Payment of Obligations.............................................................. 26
6.3. Conduct of Business and Maintenance of Existence and Assets......................... 26
6.4. Compliance with Legal and Other Obligations......................................... 27
6.5. Insurance........................................................................... 27
6.6. True Books.......................................................................... 28
6.7. Inspection; Periodic Audits......................................................... 28
6.8. Further Assurances; Post Closing.................................................... 28
6.9. Payment of Indebtedness............................................................. 29
6.10. Lien Searches....................................................................... 29
6.11. Use of Proceeds..................................................................... 29
6.12. Collateral Documents; Security Interest in Collateral............................... 29
6.13. Taxes and Other Charges............................................................. 29
6.14. New Subsidiaries.................................................................... 30
6.15. Right of First Offer................................................................ 31
6.16. Supplemental Disclosure............................................................. 31
VII. NEGATIVE COVENANTS........................................................................... 31
7.1. Financial Covenants................................................................. 31
7.2. Permitted Indebtedness.............................................................. 32
7.3. Permitted Liens..................................................................... 32
7.4. Investments; New Facilities or Collateral; Subsidiaries............................. 33
7.5. Dividends; Redemptions.............................................................. 34
7.6. Transactions with Affiliates........................................................ 34
7.7. Charter Documents; Fiscal Year; Dissolution; Use of Proceeds........................ 35
7.8. Transfer of Assets.................................................................. 35
7.9. Contingent Obligations.............................................................. 36
7.10 IRS Form 8821....................................................................... 36
7.11. Negative Pledge..................................................................... 36
VIII. EVENTS OF DEFAULT............................................................................ 36
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IX. RIGHTS AND REMEDIES AFTER DEFAULT............................................................ 38
9.1. Rights and Remedies................................................................. 38
9.2. Application of Proceeds............................................................. 40
9.3. Rights of Agent to Appoint Receiver................................................. 40
9.4. Rights and Remedies not Exclusive................................................... 40
X. WAIVERS AND JUDICIAL PROCEEDINGS............................................................. 41
10.1. Waivers............................................................................. 41
10.2. Delay; No Waiver of Defaults........................................................ 41
10.3. Jury Waiver......................................................................... 42
10.4 Amendment and Waivers............................................................... 42
XI. EFFECTIVE DATE AND TERMINATION............................................................... 43
11.1. Effectiveness and Termination....................................................... 43
11.2. Survival............................................................................ 43
XII. AGENCY PROVISIONS............................................................................ 44
12.1. Agent............................................................................... 44
12.2. Consents............................................................................ 48
12.3. Set Off and Sharing of Payments..................................................... 48
12.4. Disbursement of Funds............................................................... 49
12.5. Settlements; Payments and Information............................................... 49
12.6. Dissemination of Information........................................................ 51
XIII. BORROWING AGENCY; IRS FORMS................................................................. 51
13.1. Borrowing Agency Provisions; Acknowledgement of Joint and Several Liability......... 51
13.2. Withholding Tax. ................................................................... 52
XIV. MISCELLANEOUS................................................................................ 54
14.1. Governing Law; Jurisdiction; Service of Process; Venue.............................. 54
14.2. Successors and Assigns; Assignments and Participations; New Lenders................. 54
14.3. Application of Payments; Reinstatement.............................................. 56
14.4. Indemnity........................................................................... 57
14.5. Notice.............................................................................. 58
14.6. Severability; Captions; Counterparts; Facsimile Signatures.......................... 58
14.7. Expenses............................................................................ 58
14.8. Entire Agreement.................................................................... 59
14.9. Agent Approvals..................................................................... 59
14.10. Confidentiality and Publicity....................................................... 59
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REVOLVING CREDIT AND SECURITY AGREEMENT
THIS REVOLVING CREDIT AND SECURITY AGREEMENT (this
"AGREEMENT") dated as of August 19, 2003, is entered into by and among the
Borrowers listed on Schedule 1 to this Agreement (each individually a "BORROWER"
and collectively, the "BORROWERS") and CAPITALSOURCE FINANCE LLC, a Delaware
limited liability company ("CAPITALSOURCE"), as administrative agent and
collateral agent for Lenders (in such capacities, the "AGENT"), and Lenders
party hereto.
WHEREAS, Borrowers have requested that Lenders make available
to Borrowers a revolving credit facility (the "REVOLVING FACILITY") in a maximum
principal amount at any time outstanding of up to Eleven Million Dollars
($11,000,000) (the "FACILITY CAP"), the proceeds of which shall be used by
Borrowers (i) to fund distributions under, and comply with certain requirements
of, the Plan of Reorganization (as defined herein) and (ii) to finance the
working capital and other general corporate needs of Borrowers in the ordinary
course of business and as permitted in this Agreement in connection with their
skilled nursing home and assisted living business and to conduct other
activities incidental thereto (the "BUSINESS"); and
WHEREAS, Lenders are willing to make the Revolving Facility
available to Borrowers upon the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt and adequacy of which hereby
are acknowledged, Borrowers, Agent and Lenders hereby agree as follows:
I. DEFINITIONS
1.1. GENERAL TERMS
For purposes of this Agreement and the other Loan Documents,
in addition to the definitions above and elsewhere in this Agreement, the terms
listed in Appendix A hereto shall have the meanings given such terms in Appendix
A, which is incorporated herein and made a part hereof. All capitalized terms
used which are not specifically defined shall have meanings provided in Article
9 of the UCC in effect on the date hereof to the extent the same are used or
defined therein. Unless otherwise specified herein or in Appendix A, this
Agreement and any agreement or contract referred to herein or in Appendix A
shall mean such agreement as modified, amended or supplemented from time to
time. Unless otherwise specified, as used in the Loan Documents or in any
certificate, report, instrument or other document made or delivered pursuant to
any of the Loan Documents, all accounting terms not defined in Appendix A
elsewhere in this Agreement shall have the meanings given to such terms in and
shall be interpreted in accordance with GAAP.
II. ADVANCES, PAYMENT AND INTEREST
2.1. THE REVOLVING FACILITY
(a) Subject to the provisions of this Agreement, each
Lender agrees to make available its Pro Rata Share of Advances to Borrowers
under the Revolving Facility from time to time during the Term, provided that,
(i) the Pro Rata Share of the Advances of any Lender shall not at any time
exceed its separate Commitment, and (ii) the aggregate amount of all Advances at
any one time outstanding under the Revolving Facility shall not exceed the
lesser of (a) the Facility Cap, and (b) the Availability. The obligations of
Lenders hereunder shall be several and not joint. The Revolving Facility is a
revolving credit facility, which may be drawn, repaid and redrawn, from time to
time as permitted under this Agreement. Any determination as to whether there is
Availability shall be made by reference to the most recent Borrowing Certificate
or Interim Borrowing Certificate delivered by Borrowers (subject to Agent's
right to set reserves pursuant to this Agreement). Unless otherwise permitted by
Agent, each Advance shall be in an amount of at least $1,000. Subject to the
provisions of this Agreement, Borrowers may request Advances under the Revolving
Facility up to and including the value, in U.S. Dollars, of the sum of (i)
eighty five percent (85%) of the Borrowing Base minus (ii) if applicable,
amounts reserved pursuant to this Agreement (such calculated amount being
referred to herein as the "Availability"). Advances under the Revolving Facility
automatically shall be made for the payment of interest on the Revolving Notes
and other Obligations on the date when due to the extent available and as
provided for herein.
(b) Agent has established the above-referenced advance
rate for Availability based upon Borrowers' actual recent collection history for
the Eligible Receivables for each payor class (i.e., Medicare, Medicaid,
commercial insurance, etc.) in a manner consistent with Agent's underwriting
practices and procedures, including without limitation Agent's review and
analysis of, among other things, Borrowers' historical returns, rebates,
discounts, credits and allowances (collectively, the "DILUTION ITEMS"), and
throughout the Term, if there are adverse changes in the collection history or
the Dilution Items, Agent, upon five (5) Business Days prior written notice to
Borrowing Agent, may, in its Permitted Discretion and as warranted by Agent's
underwriting practices and procedures in its credit judgment exercised in its
Permitted Discretion, adjust the liquidity factors and the advance rate for
Availability. Also, based on changes related to Borrowers after the Closing
Date, Agent shall have the right to establish from time to time, in its credit
judgment exercised in its Permitted Discretion, reserves against the Borrowing
Base, which reserves shall have the effect of reducing the amounts otherwise
eligible to be disbursed to Borrowers under the Revolving Facility pursuant to
this Agreement.
2.2. THE REVOLVING NOTES; MATURITY
(a) All Advances under the Revolving Facility shall be
evidenced by the Revolving Notes, payable to the order of each Lender in the
principal amount of the Commitment of such Lender, duly executed and delivered
by Borrowers. The Revolving Notes shall evidence the aggregate Indebtedness of
Borrowers to Lenders resulting from Advances under the Revolving Facility, from
time to time. Each Lender hereby is authorized, but is not obligated, to enter
the amount of such Lender's Pro Rata Share of each Advance under the Revolving
Facility and the amount of each payment or prepayment of principal or interest
thereon in the appropriate spaces on the reverse of or on an attachment to such
Lender's Revolving Note(s). Agent will account to Borrowers monthly with a
statement of Advances under the Revolving Facility and any charges and payments
made pursuant to this Agreement, and in the absence of manifest error, such
accounting rendered by Agent shall be deemed final,
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binding and conclusive unless Agent is notified by Borrowers in writing to the
contrary within fifteen (15) calendar days of Receipt of each accounting, which
notice shall be deemed an objection only to items specifically objected to
therein.
(b) All amounts outstanding under the Revolving Notes and
other Obligations under the Revolving Facility shall be due and payable in full,
if not earlier in accordance with this Agreement, on the Maturity Date.
2.3. INTEREST ON THE REVOLVING NOTES
Interest on Advances under the Revolving Notes shall accrue
from the respective dates of the Advances until the respective dates of
repayment of the Advances, in each case at an annual rate of the Prime Rate plus
2.5%, provided, however, that, notwithstanding any provision of any Loan
Document, the interest on outstanding Advances under the Revolving Notes shall
not be less than 7.25%, in each case calculated on the basis of a 360-day year
and for the actual number of calendar days elapsed in each interest calculation
period. Interest accrued on each Advance under the Revolving Notes shall be due
and payable on the first day of each calendar month in accordance with the
procedures provided for in Section 2.5 and Section 2.9, commencing on the first
day of the first calendar month after the Closing Date, and continuing until the
later of the expiration of the Term and the full performance and irrevocable
payment in full in cash of the Obligations (other than Unmatured Surviving
Obligations) and termination of this Agreement.
2.4. REVOLVING FACILITY DISBURSEMENTS; REQUIREMENT TO DELIVER
BORROWING CERTIFICATE
So long as no Default or Event of Default shall have occurred
and be continuing, Borrowing Agent on behalf of Borrowers and Senior Mortgage
Lender (but only to the extent permitted in the Senior Mortgage/Revolving Lender
Intercreditor Agreement) may give Agent irrevocable written notice requesting an
Advance of a specified amount under the Revolving Facility by notifying Agent
not later than 11:00 a.m. (New York City time) at least one (1) but not more
than four (4) Business Days before the proposed borrowing date of such requested
Advance (the "BORROWING DATE"), and delivering to Agent by noon (New York City
time) on the date of the proposed borrowing, a completed Interim Borrowing
Certificate and relevant supporting documentation satisfactory to Agent in its
Permitted Discretion, which shall (i) specify the proposed Borrowing Date of
such Advance, which shall be a Business Day, (ii) specify the principal amount
of such requested Advance, and (iii) certify the matters contained in Section
4.2. On a monthly basis, within thirty (30) days after the end of each month,
Borrowing Agent on behalf of Borrowers shall specify to Agent the amount of any
Medicare or Medicaid recoupments and/or recoupments of any third party payor
being sought, requested or claimed, or, to Borrowers' knowledge, threatened
against any Borrower or any Borrower's Affiliates. Each time a request for an
Advance is made, and, in any event and regardless of whether an Advance is being
requested, on Tuesday of each week during the Term (and more frequently if
Lender shall so request after and during the continuance of an Event of Default)
until the Obligations (other than Unmatured Surviving Obligations) are
indefeasibly paid in cash in full and this Agreement is terminated, Borrowers
shall deliver to Agent an Interim Borrowing Certificate, and on the date twenty
(20) days after the end of each calendar month,
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Borrower shall deliver to Agent a Borrowing Certificate. On each Borrowing Date,
each Borrower irrevocably authorizes Agent to disburse the proceeds of the
requested Advance to the appropriate Borrower's account(s) as set forth on
Schedule 2.4 (or to such other account as to which the appropriate Borrower
shall instruct Agent), in all cases for credit to the appropriate Borrower, via
Federal funds wire transfer no later than 4:00 p.m. (New York City time).
Notwithstanding the foregoing, so long as the Senior Mortgage Loan remains
outstanding all proceeds of each requested Advance shall be disbursed to the
Senior Mortgage Loan Blocked Account in accordance with the Senior
Mortgage/Revolving Lender Intercreditor Agreement.
2.5. REVOLVING FACILITY COLLECTIONS; REPAYMENT; BORROWING
AVAILABILITY AND LOCKBOX
Each Borrower shall maintain one or more lockbox accounts or blocked
accounts (individually, a "LOCKBOX ACCOUNT," and collectively, the "LOCKBOX
ACCOUNTS") with one or more financial institutions reasonably acceptable to
Agent (individually, a "LOCKBOX BANK," and collectively, the "LOCKBOX BANKS"),
and shall execute with each Lockbox Bank one or more agreements reasonably
acceptable to Agent (individually a "LOCKBOX AGREEMENT," and collectively, the
"LOCKBOX AGREEMENTS"), and such other agreements related thereto as Agent may
reasonably require. Each Borrower shall ensure that all collections of its
Accounts and all other cash payments received by such Borrower are paid and
delivered directly from Account Debtors and other Persons into the appropriate
Lockbox Account, provided, however, Borrowers may directly receive collections
from Private Pay Debtors so long as such collections are remitted to the
appropriate Lockbox Account within two (2) Business Days of receipt by such
Borrower. The Lockbox Agreements shall provide that the Lockbox Banks
immediately will transfer all funds paid into the Lockbox Accounts into a
depository account or accounts maintained by Agent or an Affiliate of Agent at a
financial institution selected by Agent from time to time (such account or
accounts, collectively, the "CONCENTRATION ACCOUNT"), except, with respect only
to Accounts payable by Medicaid/Medicare Account Debtors, as instructed by the
applicable Borrower to whom such Accounts are payable as permitted pursuant to
the applicable Lockbox Agreement. Agent agrees that, notwithstanding the
foregoing, (I) it shall instruct each Lockbox Bank to follow the instructions of
Borrowers until the earlier of (x) the occurrence and during the continuance of
an Event of Default or (y) the date upon which the outstanding balance of
Advances shall exceed $2,000,000 for a period of thirty (30) consecutive days
prior to the date of determination, at which time Agent may direct each Lockbox
Bank to remit funds into the Concentration Account; and (II) if, pursuant to
clause (I) it has directed each Lockbox Bank to remit funds into the
Concentration Account, and thereafter (x) the outstanding balance of Advances
shall be equal to or less than $2,000,000 for a period of thirty (30)
consecutive days prior to the date of determination, and (y) no Event of Default
shall have occurred and be continuing, Agent shall instruct each Lockbox Bank to
follow the instructions of Borrowers, and shall not require that each Lockbox
Bank remit funds into the Concentration Account. Notwithstanding and without
limiting any other provision of any Loan Document, Agent shall apply, on a daily
basis, all funds transferred into the Concentration Account pursuant to the
Lockbox Agreement and this Section 2.5, (i) if no Event of Default shall have
occurred and be continuing, to the payment of the Advances, with any excess
after payment of all outstanding Advances to be returned to Borrowers, and (ii)
if an Event of Default shall have occurred and be continuing, in such order and
manner as determined by Agent in accordance with this Agreement, with any excess
after repayment of the Obligations to be returned to
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Borrowers or, so long as the Senior Mortgage Loan remains outstanding, to the
Senior Mortgage Loan Blocked Account in accordance with the Senior
Mortgage/Revolving Lender Intercreditor Agreement. To the extent that any
Accounts collections of any Borrower or any other cash payments received by any
Borrower are not sent directly to the appropriate Lockbox Account but are
received by any Borrower, such collections and proceeds shall be held in trust
for the benefit of Agent and Lenders and immediately remitted (and in any event
within two (2) Business Days), in the form received, to the appropriate Lockbox
Account for immediate transfer to the Concentration Account. Each Borrower
acknowledges and agrees that compliance with the terms of this Section 2.5 is an
essential term of this Agreement, and that, in addition to and notwithstanding
any other rights Agent may have hereunder, under any other Loan Document, under
applicable law or at equity, upon each and every failure by any Borrower or any
of their Affiliates to comply with any such terms Agent shall be entitled to
assess a non-compliance fee which shall operate to increase the Revolving
Interest Rate by two percent (2.0%) per annum during any period of
non-compliance, whether or not a Default or an Event of Default occurs or is
declared, provided that nothing shall prevent Agent from considering any failure
to comply with the terms of this Section 2.5 to be a Default or an Event of
Default. All funds transferred to the Concentration Account for application to
the Obligations under the Revolving Facility shall be applied to reduce the
Obligations under the Revolving Facility, but, for purposes of calculating
interest hereunder, shall be subject to a seven (7) Business Day clearance
period. If as the result of collections of Accounts and/or any other cash
payments received by any Borrower pursuant to this Section 2.5 a credit balance
exists with respect to the Concentration Account, such credit balance shall not
accrue interest in favor of the appropriate Borrower, but shall be available to
the appropriate Borrower in accordance with the terms of this Agreement.
Notwithstanding the foregoing, so long as the Senior Mortgage Loan remains
outstanding (i) any amounts to be transferred to Borrowers (including, without
limitation, funds to be distributed from the Lockbox Accounts) shall be
disbursed to the Senior Mortgage Loan Blocked Account in accordance with the
Senior Mortgage/Revolving Lender Intercreditor Agreement and (ii) the Lockbox
Account and the Concentration Account shall be an Eligible Deposit Account. If
applicable, at any time prior to the execution of all or any of the Lockbox
Agreements and operation of all or any of the Lockbox Accounts, each Borrower
shall direct all collections or proceeds it receives on Accounts or from other
Collateral to the account(s) and in the manner specified by Agent in its
Permitted Discretion.
2.6. PROMISE TO PAY; MANNER OF PAYMENT.
(a) Any payments made by Borrowers (other than payments
automatically paid through Advances under the Revolving Facility as provided
herein), shall be made only by ACH or wire transfer on the date when due,
without offset or counterclaim, in U.S. Dollars, in immediately available funds
to such account within the domestic United States as may be indicated in writing
by Agent to Borrowers from time to time. Any such payment received after 4:00
p.m. New York City time on any date shall be deemed received on the following
Business Day. Whenever any payment hereunder shall be stated to be due or shall
become due and payable on a day other than a Business Day, the due date thereof
shall be extended to, and such payment shall be made on, the next succeeding
Business Day, and such extension of time in such case shall be included in the
computation of payment of any interest (at the Revolving Interest Rate then in
effect during such extension) and/or fees, as the case may be.
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(b) Borrowers absolutely and unconditionally promise to
pay the Obligations hereunder in accordance with the manner and terms hereof,
without any deduction whatsoever, without setoff, recoupment or counterclaim,
each of which claim or defense hereby is waived.
2.7. REPAYMENT OF EXCESS ADVANCES
Any balance of Advances under the Revolving Facility
outstanding at any time in excess of the lesser of the Facility Cap or the
Availability shall be immediately due and payable by Borrowers without the
necessity of any demand, at the Payment Office, whether or not a Default or
Event of Default has occurred or is continuing and shall be paid in the manner
specified in Section 2.9.
2.8. OTHER MANDATORY PREPAYMENTS
In addition to and without limiting any provision of any Loan
Document, if a Change of Control occurs, on or prior to the first Business Day
following the date of such Change of Control, Borrowers shall prepay the
Advances and all other Obligations (other than Unmatured Surviving Obligations)
in full in cash together with accrued interest thereon to the date of prepayment
and all other amounts owing to Agent and Lenders under the Loan Documents.
2.9. PAYMENTS BY AGENT
Should any amount required to be paid under any Loan Document
or, following the payment in full of the Senior Mortgage Loan, under any of the
Mezzanine Loan Documentation be unpaid, such amount may be paid by Agent, for
the account of Lenders or Mezzanine Loan Lenders, as the case may be, which
payment shall be treated as an Advance under the Revolving Facility as of the
date such payment is due, and each Borrower irrevocably authorizes disbursement
of any such funds to Agent, for the benefit of Lenders or Mezzanine Loan
Lenders, as the case may be, by way of direct payment of the relevant amount,
interest or Obligations without necessity of any demand in accordance with
Section 2.6 whether or not a Default or Event of Default has occurred or is
continuing. No payment or prepayment of any amount by Agent, Lenders or any
other Person shall entitle any Person to be subrogated to the rights of Agent or
Lenders under any Loan Document unless and until the Obligations (other than
Unmatured Surviving Obligations) have been fully performed and paid irrevocably
in cash and this Agreement has been terminated. Any sums expended by Agent or
Lenders as a result of any Borrower's or any Guarantor's failure to pay, perform
or comply with any Loan Document or any of the Obligations, or, following the
payment in full of the Senior Mortgage Loan, with respect to any failure to pay,
perform or comply with any of the Mezzanine Loan Documentation, may be charged
to Borrowers' account as an Advance under the Revolving Facility and added to
the Obligations.
2.10. GRANT OF SECURITY INTEREST; COLLATERAL
(a) To secure the payment and performance of the
Obligations, each Borrower hereby grants to Agent, for the benefit of itself and
Lenders, a continuing security interest in and
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Lien upon, and pledges to Agent, for the benefit of itself and Lenders, all of
its right, title and interest in and to and upon all of the following property
and interests in property of such Borrower, now owned or hereafter acquired
(collectively and each individually, the "COLLATERAL"):
(i) all of such Borrower's present and future Accounts,
and all Instruments, Contracts and Chattel Paper
relating to or arising out of any Accounts;
(ii) all of such Borrower's present and future Government
Contracts and rights thereunder and the related
Government Accounts and proceeds thereof, now or
hereafter owned or acquired by such Borrower;
provided, however, that Agent shall not have a
security interest in any rights under any Government
Contract of such Borrower or in the related
Government Account where the taking of such security
interest would be a violation of an express
prohibition contained in the Government Contract (for
purposes of this limitation, the fact that a
Government Contract is subject to, or otherwise
refers to, Title 31, Section 203 or Title 41, Section
15 of the United States Code shall not be deemed an
express prohibition against assignment thereof) or is
prohibited by applicable law;
(iii) all now owned or hereafter acquired Deposit Accounts
into which proceeds from Accounts are deposited;
(iv) all Books and Records, whether now owned or hereafter
acquired; and
(v) any and all replacements and proceeds of any of the
foregoing.
(b) Notwithstanding the foregoing provisions of this
Section 2.10, such grant of a security interest shall not extend to, and the
term "Collateral" shall not include, (x) any General Intangible, contract,
agreement or document of any Borrower to the extent that (i) such General
Intangible, contract, agreement or document is not assignable or capable of
being encumbered as a matter of law or under the terms of any license or other
agreement applicable thereto (but solely to the extent that any such restriction
shall be enforceable under applicable law) without the consent of the licensor
thereof or other applicable party thereto, and (ii) such consent has not been
obtained; provided, however, that the foregoing grant of a security interest
shall extend to, and the term "Collateral" shall include, each of the following:
(a) any General Intangible which is in the nature of an Account or a right to
the payment of money or a proceed of, or otherwise related to, the enforcement
or collection of, any Account or right to the payment of money, (b) any and all
proceeds of any General Intangible, contract, agreement or document that is
otherwise excluded to the extent that the assignment, pledge or encumbrance of
such proceeds is not so restricted, and (c) upon obtaining the consent of any
such licensor or other applicable party with respect to any such otherwise
excluded General Intangible, contract, agreement or document, such General
Intangible, contract, agreement or document as well as any and all proceeds
thereof that might theretofore have been excluded from such grant of a security
interest and from the term "Collateral"; (y) any asset of any Borrower to the
extent that (i) such asset subject to a contract, agreement or document
otherwise permitted pursuant to this Agreement, which contract, agreement or
document restricts the grant of such security interest
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(but solely to the extent that any such restriction shall be enforceable under
applicable law) without the consent of the other party to such contract,
agreement or document, and (ii) such consent has not been obtained; provided,
however, that the foregoing grant of a security interest shall extend to, and
the term "Collateral" shall include, each of the following: (a) any and all
proceeds of any asset that is otherwise excluded to the extent that the
assignment, pledge or encumbrance of such proceeds is not so restricted, and (b)
upon obtaining the consent of the other party to any such contract, agreement or
document with respect to any such otherwise excluded asset, such asset as well
as any and all proceeds thereof that might theretofore have been excluded from
such grant of a security interest and from the term "Collateral" ; and (z) any
Permit of any Borrower to the extent that the assignment of such Permit would
violate the law applicable to such Permit, or materially impair the validity of
such Permit. Each Borrower shall use all reasonable efforts (which shall not
include the unreasonable expenditure of funds) to obtain any such required
consent, provided, however in the event Borrowers are unable to obtain the
required Landlord Consent and Waiver for any location at which books and records
are kept, Borrowers shall maintain a duplicate set of such books and records at
a location owned by a Borrower or with respect to which a Landlord Consent and
Waiver reasonably satisfactory to Agent shall have been obtained.
(c) Upon the execution and delivery of this Agreement,
and upon the proper filing of the necessary financing statements, the proper
delivery of the necessary stock certificates, without any further action, Agent
will have a good, valid and perfected first priority Lien and security interest
in the Collateral, subject to no transfer or other restrictions or Liens of any
kind in favor of any other Person except for Permitted Liens, except for
security interests in money. No financing statement relating to any of the
Collateral is on file in any public office except those (i) on behalf of Agent,
and/or (ii) in connection with or with respect to Permitted Liens.
2.11. COLLATERAL ADMINISTRATION
(a) All Collateral (except Deposit Accounts) will at all
times be kept by Borrowers at the locations set forth on Schedule 5.18B hereto,
and such other locations as Borrowers shall identify to Agent upon ten (10)
calendar days prior written notice, and in any case shall not be moved outside
the continental United States.
(b) Each Borrower shall keep accurate and complete
records of its Accounts and all payments and collections thereon and shall
submit such records to Agent on such periodic bases as Agent may request. In
addition, if Accounts of any Borrower in an aggregate face amount in excess of
$200,000 become ineligible because they fall within one of the specified
categories of ineligibility set forth in the definition of Eligible Receivables,
Borrowers shall notify Agent of such occurrence on the first Business Day
following such occurrence and the Borrowing Base shall thereupon be adjusted to
reflect such occurrence. If requested by Agent, after the occurrence and during
the continuance of an Event of Default, Borrowers shall execute and deliver to
Agent formal written assignments of all of its Accounts weekly or daily as Agent
may request, including all Accounts created since the date of the last
assignment, together with copies of claims, invoices and/or other information
related thereto. Subject to the Senior Mortgage/Revolving Lender Intercreditor
Agreement, to the extent that collections from such assigned accounts exceed the
amount of the Obligations, such excess amount shall not accrue
8
interest in favor of Borrowers, but shall be available to Borrowers upon
Borrowers' written request and so long as the Senior Mortgage Loan shall remain
outstanding, shall be disbursed on each Business Day to the Senior Mortgage Loan
Blocked Account.
(c) Whether or not an Event of Default has occurred, any
of Agent's officers, employees, representatives or agents shall have the right,
at any time during normal business hours, in the name of Agent, any designee of
Agent or any Borrower, to verify the validity, amount or any other matter
relating to any Accounts of Borrower; provided that unless an Event of Default
has occurred and is continuing, such verification shall only verify account
balances and shall not give notice of Agent's security interest. Borrowers shall
cooperate fully with Agent in an effort to facilitate and promptly conclude such
verification process.
(d) To expedite collection, each Borrower shall endeavor
in the first instance to make collection of its Accounts for Agent. Agent shall
have the right at all times after the occurrence and during the continuance of
an Event of Default to notify (i) Account Debtors owing Accounts to Borrowers
other than Medicaid/Medicare Account Debtors that their Accounts have been
assigned to Agent and to collect such Accounts directly in its own name and to
charge collection costs and expenses, including reasonable attorney's fees, to
Borrowers, and (ii) Medicaid/Medicare Account Debtors that Borrowers have waived
any and all defenses and counterclaims they may have or could interpose in any
such action or procedure brought by Agent to obtain a court order recognizing
the collateral assignment or security interest and lien of Agent in and to any
Account or other Collateral payable by Medicaid/Medicare Account Debtors and
that Agent is seeking or may seek to obtain a court order recognizing the
collateral assignment or security interest and lien of Agent in and to all
Accounts and other Collateral payable by Medicaid/Medicare Account Debtors.
(e) As and when determined by Agent in its Permitted
Discretion, Agent will perform the searches described in clauses (i) and (ii)
below against Borrowers and Guarantors (the results of which are to be
consistent with Borrowers' representations and warranties under this Agreement),
all at Borrowers' expense: (i) UCC searches with the Secretary of State and
local filing offices of each jurisdiction where any Borrower and/or any
Guarantors are organized and/or maintain their respective executive offices, a
place of business or assets; and (ii) judgment, federal tax lien and corporate
and partnership tax lien searches, in each jurisdiction searched under clause
(i) above, provided that unless an Event of Default shall have occurred and
during the continuance thereof, the Borrowers shall not be required to pay for
more than one such search in any fiscal quarter under clause (i) and clause (ii)
above.
(f) Borrowers (i) shall provide prompt written notice to
its current bank to transfer all items, collections and remittances to the
Concentration Account, (ii) shall provide prompt written notice to each Account
Debtor (other than a Private Pay Debtor) directing them to make payments to the
appropriate Lockbox Account, and Borrowers hereby authorizes Agent, upon any
failure to send such notice and directions within ten (10) calendar days after
the date of this Agreement (or ten (10) calendar days after the Person becomes
an Account Debtor (other than a Private Pay Debtor)), to send any and all
similar notices and directions to such Account Debtors and (iii) shall do such
further acts and deeds that may be lawfully required by Agent to make, create,
maintain, continue or perfect Agent's security interest in the Lockbox Accounts
or the Collateral. At Agent's request, Borrowers shall immediately deliver to
Agent all items for
9
which Agent must receive possession to obtain a perfected security interest and
all notes, certificates, and documents of title, Chattel Paper, warehouse
receipts, Instruments, and any other similar instruments constituting Collateral
except for promissory notes in a principal amount less than $100,000 provided
that the aggregate principal amount of all such promissory notes shall be less
than $500,000.
2.12. POWER OF ATTORNEY
Agent is hereby irrevocably made, constituted and appointed the true
and lawful attorney for each Borrower (without requiring Agent to act as such)
with full power of substitution to do the following: (i) upon the occurrence and
during the continuance of an Event of Default, endorse the name of such Borrower
upon any and all checks, drafts, money orders, and other instruments for the
payment of money that are payable to such Borrower and constitute collections on
its Accounts; (ii) execute and/or file in the name of such Borrower any
financing statements, amendments to financing statements, schedules,
assignments, instruments, documents, and statements that it is obligated to give
Agent under any of the Loan Documents; (iii) do such further acts and deeds in
the name of any Borrower that Agent may reasonably deem necessary to make,
create, maintain, continue or perfect Agent's, for the benefit of itself and
Lenders, security interest or lien or right in any Collateral; and (iv) upon the
occurrence and during the continuance of an Event of Default, do such other and
further acts and deeds in the name of such Borrower that Agent may reasonably
deem necessary or desirable to enforce Agent's security interest or lien or
rights in any Collateral. In addition, if any Borrower breaches its obligation
hereunder to direct payments of Accounts or the proceeds of any other Collateral
to the appropriate Lockbox Account, Agent, as the irrevocably made, constituted
and appointed true and lawful attorney for such Borrower pursuant to this
paragraph, may, by the signature or other act of any of Agent's officers or
authorized signatories (without requiring any of them to do so), direct any
federal, state or private payor or fiscal intermediary to pay proceeds of
Accounts or any other Collateral to the appropriate Lockbox Account.
2.13. NOTES
Upon Agent's or any Lender's request, and in any event within three (3)
Business Days of any such request, Borrowers shall execute and deliver to Agent
new Revolving Notes and/or divide or split the Revolving Notes in exchange for
then existing Revolving Notes in such smaller amounts or denominations as Agent
or such Lender shall specify in their respective sole and absolute discretion,
provided, that the aggregate principal amount of such new Revolving Notes does
not exceed the aggregate principal amount of the Revolving Notes outstanding at
the time such request is made.
2.14. REPLACEMENT OF LOST NOTES
Upon receipt of evidence reasonably satisfactory to Borrowers of the
mutilation, destruction, loss or theft of any Revolving Note and the ownership
thereof, Borrowers shall, upon the written request of the holder of such
Revolving Note, execute and deliver in replacement thereof a new Revolving Note
in the same form, in the same original principal amount, so mutilated,
destroyed, lost or stolen; and such Revolving Note so mutilated, destroyed, lost
or stolen shall then be deemed no longer outstanding hereunder. If the Revolving
Note
10
being replaced has been mutilated, it shall be surrendered to Borrowers after
Agent's receipt of the replacement Revolving Note; and if such replaced
Revolving Note has been destroyed, lost or stolen, the holder of such Revolving
Note shall furnish Borrowers with an indemnity in writing reasonably acceptable
to Borrowers to save them harmless in respect of such replaced Revolving Note.
2.15. REPLACEMENT OF LENDERS
If, and on each occasion that, a Lender (i) makes a demand for
additional costs or other payments pursuant to Section 6.13 below; (ii) has
failed to perform its obligation to make an Advance required by such Lender
hereunder; or (iii) refuses to approve any requested amendment or modification
which requires unanimous Lender consent and is consented to by the Requisite
Lenders, Borrowers may at their sole expense and effort, upon at least 5
Business Days' prior irrevocable written notice to each of such Lender and
Agent, in whole permanently replace the Commitments of such Lender; provided
that such notice (x) must be given not later than the sixtieth day following the
date of a demand for additional costs or other payments made by such Lender or
the date of any such refusal; and (y) may be given at any time while such
failure to perform is continuing. Any such replacement Lender shall (a) be an
Eligible Assignee (or, if the Senior Mortgage Loan is outstanding, a Qualified
Transferee), (b) be acceptable to Agent, such acceptance not to be unreasonably
withheld or delayed, and (c) upon the effective date of replacement purchase the
Obligations owed to such replaced Lender for an amount equal to the outstanding
principal amount thereof plus accrued and unpaid interest and fees due such
Lender (which interest and fees will be paid to the replacement Lender when
collected from Borrowers) and shall thereupon for all purposes become a "Lender"
hereunder. The notice from Borrowers replacing a Lender shall specify an
effective date for the replacement of the Commitment of such Lender, which date
shall not be later than the tenth day after the day such notice is given. Upon
the effective date of repayment of any such Lender's Commitments pursuant to
this Section 2.15, and the execution by the replacement Lender of a Lender
Addition Agreement, such Lender shall cease to be a Lender hereunder. No such
termination of the Commitment of any such Lender and the purchase of the
Advances of any such Lender pursuant to this Section 2.15 shall affect (A) any
liability or obligation of Borrowers or any other Lender to such terminated
Lender which accrued on or prior to the date of such termination or (B) the
rights of such terminated Lender hereunder in respect of any such liability or
obligation. A Lender shall not be required to make any such assignment if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances
entitling the Borrower to require such assignment cease to apply.
Notwithstanding anything herein to the contrary, Borrowers shall have no right
to replace a Lender pursuant to this Section 2.15 at any time that CapitalSource
is the sole Lender.
III. FEES AND OTHER CHARGES
3.1. COMMITMENT FEE
On or before the Closing Date, Borrowers shall pay to Agent 1%
of the Facility Cap as a nonrefundable commitment fee.
3.2. UNUSED LINE FEE; MINIMUM LOAN FEE
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(a) Borrowers shall pay to Agent for the ratable benefit
of Lenders an unused line fee (the "UNUSED LINE FEE") in an amount equal to
0.042% per month of the difference derived by subtracting (i) the daily average
amount of the balances under the Revolving Facility outstanding during the
preceding month, from (ii) the Facility Cap. The Unused Line Fee shall be
payable monthly in arrears on the first day of each successive calendar month
(starting with the first calendar month following the month in which the Closing
Date occurs).
(b) In the event the daily average amount of the balances
under the Revolving Facility outstanding during any calendar month is less than
$2,000,000 (the "MINIMUM AVERAGE MONTHLY LOAN AMOUNT") Borrowers shall pay to
Agent for the benefit of Lenders a minimum loan fee in an amount equal to 0.042%
per month on the amount by which the Minimum Average Monthly Loan Amount exceeds
such daily average amount of unpaid balances. Such fee shall be calculated on
the basis of a year of 360 days and actual days elapsed and such fee shall be
charged to Borrowers' account on the first day of each month with respect to the
prior month. In the event Borrowers request that Agent cease charging the
minimum loan fee set forth in this Section 3.2(b), the Unused Line Fee shall
automatically increase to 0.083% per month effective on the first month
following the date of such request.
3.3. COLLATERAL MANAGEMENT FEE
Borrowers shall pay Agent for its own account as additional
interest a monthly collateral management fee (the "COLLATERAL MANAGEMENT FEE")
equal to 0.083% per month calculated on the basis of the daily average amount of
the balances under the Revolving Facility outstanding during the preceding
month. The Collateral Management Fee shall be payable monthly in arrears on the
first day of each successive calendar month (starting with the first calendar
month following the month in which the Closing Date occurs).
3.4. COMPUTATION OF FEES; LAWFUL LIMITS
All fees hereunder shall be computed on the basis of a year of
360 days and for the actual number of days elapsed in each calculation period,
as applicable. In no contingency or event whatsoever, whether by reason of
acceleration or otherwise, shall the interest and other charges paid or agreed
to be paid to Agent, for the benefit of Lenders for the use, forbearance or
detention of money hereunder exceed the maximum rate permissible under
applicable law which a court of competent jurisdiction shall, in a final
determination, deem applicable hereto. If, due to any circumstance whatsoever,
fulfillment of any provision hereof, at the time performance of such provision
shall be due, shall exceed any such limit, then, the obligation to be so
fulfilled shall be reduced to such lawful limit, and, if Agent or Lenders shall
have received interest or any other charges of any kind which might be deemed to
be interest under applicable law in excess of the maximum lawful rate, then such
excess shall be applied first to any unpaid fees and charges hereunder, then to
unpaid principal balance owed by Borrowers hereunder, and if the then remaining
excess interest is greater than the previously unpaid principal balance, Agent
and Lenders shall promptly refund such excess amount to Borrowers and the
provisions hereof shall be deemed amended to provide for such permissible rate.
The terms and provisions of this Section 3.4 shall control to the extent any
other provision of any Loan Document is inconsistent herewith.
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3.5. DEFAULT RATE OF INTEREST
Upon the occurrence and during the continuation of an Event of
Default, the Revolving Interest Rate of interest in effect at such time with
respect to the Obligations shall be increased by 3.0% per annum (the "DEFAULT
RATE").
IV. CONDITIONS PRECEDENT
4.1. CONDITIONS TO INITIAL ADVANCE AND CLOSING
The obligations of Lenders to consummate the transactions
contemplated herein and to make the initial Advance under the Revolving Facility
(the "INITIAL ADVANCE") are subject to the satisfaction of Agent of the
following:
(a) (i) Borrowers shall have delivered to Agent (A) the Loan Documents to
which they are a party, each duly executed by an authorized officer of each
Borrower and the other parties thereto, and (B) a Borrowing Certificate for the
most recent month ended 20 days or more prior to the Closing Date and an Interim
Borrowing Certificate for the most recent week ended prior to the Closing Date
for the Initial Advance under the Revolving Facility executed by an authorized
officer of Borrowing Agent, and (ii) each Guarantor shall have delivered to
Agent the Loan Documents to which such Guarantor is a party, each duly executed
and delivered by such Guarantor or an authorized officer of such Guarantor, as
applicable, and the other parties thereto;
(b) all in form and substance satisfactory to Agent in
its Permitted Discretion, Agent shall have received (i) each document
(including, without limitation, any Uniform Commercial Code financing statement)
required by any Loan Document or under law or reasonably requested by Agent to
be filed, registered or recorded to create in favor of Agent, a perfected
security interest upon the Collateral, and (ii) evidence of each such filing,
registration or recordation and of the payment by Borrowers of any necessary
fee, or tax relating thereto;
(c) Agent shall have received (i) the Charter and Good
Standing Documents, all in form and substance reasonably acceptable to Agent,
(ii) a certificate of the secretary or assistant secretary of each Borrower
dated the Closing Date, as to the incumbency and signature of the Persons
executing the Loan Documents, in form and substance reasonably acceptable to
Agent, (iii) the written legal opinions of counsel and/or special counsel for
Borrowers, in form and substance satisfactory to Agent in its Permitted
Discretion and to its counsel, and (iv) a certificate executed by an authorized
officer of each Borrower, which shall constitute a representation and warranty
by such Borrower as of the Closing Date that the conditions contained in this
Section 4.1 shall have been satisfied; provided that for purposes of giving this
representation and warranty, each Borrower may assume that any condition which
requires satisfaction of Agent or Lenders has been satisfied;
(d) Agent shall have completed examinations, the results
of which shall be satisfactory in form and substance to Agent, of the
Collateral, the financial statements and the books, records, business,
obligations, financial condition and operational state of each Borrower and the
Guarantor, and Borrowers shall have demonstrated to Agent's reasonable
satisfaction that (i) its operations comply, in all material respects, with all
applicable federal, state, foreign and local laws, statutes and regulations,
(ii) its operations are not the subject of any
13
governmental investigation, evaluation or any remedial action which could
reasonably be expected to result in any material expenditure or liability, and
(iii) they have no liabilities or obligations (whether contingent or otherwise)
that are material, other than those set forth in the financial statements or
other information delivered to Agent;
(e) Agent shall have received all fees, charges and
expenses payable to Agent on or prior to the Closing Date pursuant to the Loan
Documents;
(f) all in form and substance satisfactory to Agent in
its Permitted Discretion, Agent shall have received such consents, approvals and
agreements (which shall not include any Landlord Waivers and Consents with
respect to any lease set forth on Schedule 5.4) from such third parties as Agent
and its counsel shall determine are necessary or desirable to (i) perfect any
security interest or Lien granted to the Agent or the Lenders pursuant to the
Security Documents, and/or (ii) permit the execution of and performance under
the Loan Documents without any conflict with any other material agreement,
document, instrument to which any Borrower is a party or by which any of its
properties or assets are bound or subject;
(g) Borrowers shall, in the reasonable judgment of Agent,
be in compliance with Section 6.5, and Agent shall have received (i) summaries
of all insurance policies required for compliance with Section 6.5 and (ii)
original certificates of such insurance policies confirming (x) that insurance
policies required for compliance with Section 6.5 are in effect, (y) that the
premiums due and owing on or prior to the Closing Date with respect to such
insurance policies have been paid in full and (y) that, subject to Senior
Mortgage/Revolving Lender Intercreditor Agreement, such insurance policies name
Agent as an additional insured;
(h) All corporate and other proceedings, documents,
instruments and other legal matters in connection with the transactions
contemplated by the Loan Documents (including, but not limited to, those
relating to corporate and capital structures of Borrowers) shall be reasonably
satisfactory to Agent;
(i) After giving effect to the making of the Initial
Advance and the application of all proceeds of the Initial Advance (including
the application of such proceeds that will occur within 30 days after the
Closing Date):
(i) the ratio of (x) the amount of Total Debt on
the Closing Date to (y) EBITDA for the twelve month period
ended on the last day of the second month prior to the Closing
Date shall not exceed 6.5 to 1;
(ii) the ratio of (x) the amount of Senior Debt
on the Closing Date to (y) EBITDA for the twelve month period
ended on the last day of the second month prior to the Closing
Date shall not exceed 4 to 1; and
(iii) the ratio of (a) EBITDA to (b) Interest
Expense, in each case for the twelve month period ended on the
last day of the second month prior to the Closing Date, shall
be not less than 1.75 to 1.
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(j) After giving effect to the Plan of Reorganization, no
material default shall exist pursuant to any of Borrowers' obligations under any
material contract and Borrowers shall be in material compliance with all
applicable laws in all material respects;
(k) Borrowers shall have established the Lockbox
Accounts pursuant to Section 2.5;
(l) Agent shall have received copies of all (i) material
licenses and permits required for Borrowers to conduct the business in which it
is currently engaged or is contemplated pursuant to the Loan Documents, and (ii)
all material intercompany agreements, management agreements, documents related
to borrowed money, capital leases and other contracts;
(m) Agent shall have completed its legal due diligence
examinations of Borrowers, the results of which shall be satisfactory in form
and substance to Agent, as evidenced by Agent's execution of the Loan Documents;
(n) Agent shall have received final executed copies of
the Senior Mortgage Loan Documentation, the Mezzanine Loan Documentation and the
Revolving Loan A Documentation, all of which shall contain terms and provisions
reasonably satisfactory to Agent and the transactions contemplated therein shall
be consummated concurrently with the Closing Date;
(o) Agent shall have received final executed copies of
the Senior Mortgage Intercreditor Agreement and the Senior Mortgage/Revolving
Lender Intercreditor Agreement;
(p) Agent shall have received a certificate of the
Secretary or Assistant Secretary of the Parent, dated as of the Closing Date,
certifying (x) that attached thereto is a true, correct and complete copy of the
Confirmation Order (including the Plan of Reorganization attached to the
Confirmation Order) and (y) the effectiveness of the Confirmation Order shall
not have been stayed by any court;
(q) The terms and conditions of the Plan of
Reorganization shall not have been amended or modified from the form of the Plan
of Reorganization attached to the Confirmation Order without the approval of the
Requisite Lenders; provided, however, that modifications which in the reasonable
judgment of Agent do not impair or adversely affect the rights and remedies of
Lenders may be implemented by Borrowers without such approval. All conditions
precedent to the effectiveness of the Plan of Reorganization shall have been
satisfied (or waived), the Confirmation Order shall not have been stayed by any
court and the Effective Date shall have occurred or shall occur concurrently
with the closing;
(r) Borrowers shall have executed and filed IRS Form 8821
with the appropriate office of the Internal Revenue Service;
(s) There shall be no Material Adverse Change in
Borrowers' business or general financial condition from that existing as at
December 31, 2002, including, Borrowers shall not have experienced (1) a
reduction in the average Medi-Cal rate of more than 10% from the rates in effect
at December 31, 2002 on the properties being financed with the Senior
15
Mortgage Term Loan, other than material changes in Medicare Part B Therapy
payments; (2) any adverse regulatory survey which could reasonably be expected
to jeopardize materially the licensure of any Facility of Borrowers; (3) a
reduction in average Medicaid reimbursement rates for California Facilities of
more than 10%; (4) a material increase in liability insurance premiums; and (5)
EBITDA of Borrowers on a Consolidated Basis, for the twelve month period ending
on the last day of the most recent month prior to the Closing Date, of less than
$40,000,000; and
(t) Agent shall have received such other documents,
certificates, consents and information as Agent may reasonably request, all in
form and substance reasonably satisfactory to Agent.
4.2. CONDITIONS TO EACH ADVANCE
The obligations of Lenders to make any Advance (including,
without limitation, the Initial Advance) are subject to the satisfaction, in the
sole judgment of Agent in its Permitted Discretion, of the following conditions
precedent:
(a) Borrowers shall have delivered to Agent a Borrowing
Certificate or Interim Borrowing Certificate for the Advance executed by an
authorized officer of Borrowing Agent on behalf of Borrowers, which shall
constitute a representation and warranty by Borrowers as of the Borrowing Date
of such Advance that the conditions contained in this Section 4.2 have been
satisfied;
(b) Each of the representations and warranties made by
Borrowers in or pursuant to the Loan Documents shall be accurate in all material
respects, before and after giving effect to such Advance, and no Default or
Event of Default shall have occurred or be continuing or would exist after
giving effect to such Advance on such date;
(c) Immediately after giving effect to the requested
Advance, the aggregate outstanding principal amount of Advances under the
Revolving Facility shall not exceed the lesser of Availability and the Facility
Cap;
(d) Since the Closing Date, there has been no Material
Adverse Change;
(e) Agent shall have received all fees, charges and
expenses payable to Agent and/or Lenders on or prior to such date pursuant to
the Loan Documents; and
(f) no Default or Event of Default shall have occurred or
be continuing or would exist after giving effect to the Advance under the
Revolving Facility or the funding of the Advance on such date.
V. REPRESENTATIONS AND WARRANTIES
Each Borrower, jointly and severally, represents and warrants
as of the date hereof, the Closing Date, and each Borrowing Date as follows:
5.1. ORGANIZATION AND AUTHORITY
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Each Borrower is a corporation, limited liability company or
limited partnership duly organized, validly existing and in good standing under
the laws of its state of formation. Each Borrower (i) has all requisite power
and authority to own its properties and assets and to carry on its business as
now being conducted and as contemplated in the Loan Documents, (ii) is duly
qualified to do business in every jurisdiction in which failure so to qualify
could reasonably be expected to have a Material Adverse Effect, and (iii) has
all requisite power and authority (A) to execute, deliver and perform the Loan
Documents to which it is a party, (B) to borrow hereunder, (C) to consummate the
transactions contemplated under the Loan Documents, and (D) to grant the Liens
with regard to the Collateral pursuant to the Security Documents to which it is
a party. No Borrower is an "investment company" registered or required to be
registered under the Investment Company Act of 1940, as amended, or is
controlled by such an "investment company."
5.2. LOAN DOCUMENTS
The execution, delivery and performance by each Borrower of
the Loan Documents to which it is a party, and the consummation of the
transactions contemplated thereby, (a) have been duly authorized by all
requisite action of each such Borrower and have been duly executed and delivered
by or on behalf of such Borrower; (b) do not violate in any material respect any
provisions of (i) applicable law, statute, rule, regulation, ordinance or tariff
applicable to such Borrower, (ii) any order of any Governmental Authority
binding on each such Borrower or any of its properties; or (iii) any material
agreement between any such Borrower and its shareholders, members, partners or
equity owners or among any such shareholders, members, partners or equity
owners; (c) do not violate any provision of the certificate of incorporation or
bylaws (or any other equivalent governing agreement or document) of any such
Borrower, (d) are not in conflict with, and do not result in a breach or default
of or constitute an event of default, or an event, fact, condition or
circumstance which, with notice or passage of time, or both, would constitute or
result in a conflict, breach, default or event of default under, any indenture,
agreement or other instrument to which such Borrower is a party, or by which the
properties or assets of such Borrower are bound, the effect of which could
reasonably be expected to have a Material Adverse Effect; (e) except as set
forth therein, will not result in the creation or imposition of any Lien of any
nature upon any of the properties or assets of any Borrower, and (f) except for
those which have been obtained, do not require the consent, approval or
authorization of, or filing, registration or qualification with, any
Governmental Authority or any other Person. When executed and delivered, each of
the Loan Documents to which any Borrower is a party will constitute the legal,
valid and binding obligation of such Borrower, enforceable against such Borrower
in accordance with its terms, subject to the effect of any applicable
bankruptcy, moratorium, insolvency, reorganization or other similar law
affecting the enforceability of creditors' rights and to the effect of general
principles of equity which may limit the availability of equitable remedies
(whether in a proceeding at law or in equity).
5.3. SUBSIDIARIES, CAPITALIZATION AND OWNERSHIP INTERESTS
As of the Closing Date, no Borrower has any Subsidiaries other
than those Persons listed as Subsidiaries on Schedule 5.3. Schedule 5.3 also
states, as of the Closing Date, the authorized and issued capitalization of each
such Borrower and each such Subsidiary, and the
17
number and class of equity securities and/or ownership, voting or partnership
interests issued and outstanding (including options, warrants and other rights
to acquire any of the foregoing). The outstanding equity securities and/or
ownership, voting or partnership interests of each Borrower have been duly
authorized and validly issued and are fully paid and nonassessable, and, as of
the Closing Date, each Person listed on Schedule 5.3 owns beneficially and of
record all the equity securities and/or ownership, voting or partnership
interests it is listed as owning free and clear of any Liens other than Liens
created by the Security Documents. As of the Closing Date, except as listed on
Schedule 5.3, no Borrower owns an interest or participates or engages in any
joint venture, partnership or similar arrangements with any Person.
5.4. PROPERTIES
Each Borrower (i) is the sole owner and has good, valid and
marketable title to, or a valid leasehold interest in, all of its properties and
assets, including the Collateral, whether personal or real, subject to no
transfer restrictions other than the transfer provisions set forth in the Senior
Loan Documents or Liens of any kind except for Permitted Liens, and (ii) is in
compliance in all material respects with each lease to which it is a party or
otherwise bound. Schedule 5.4 lists, as of the Closing Date, all real properties
(and their locations) owned or leased by or to, and all other assets or property
that are leased or licensed by, Borrowers and all leases (including leases of
leased real property) covering or with respect to such properties and assets.
Each Borrower enjoys peaceful and undisturbed possession under all such leases
and such leases are all the leases necessary for the operation of such
properties and assets, are valid and subsisting and are in full force and
effect.
5.5. OTHER AGREEMENTS
Except as set forth in Schedule 5.5, no Borrower is (i) a
party to any judgment, order or decree or any agreement, document or instrument,
or subject to any restriction, which would materially adversely affect its
ability to execute and deliver, or perform under, any Loan Document or to pay
the Obligations, (ii) in default in the performance, observance or fulfillment
of any obligation, covenant or condition contained in any agreement, document or
instrument to which it is a party or to which any of its properties or assets
are subject, which default, if not remedied within any applicable grace or cure
period could reasonably be expected to have a Material Adverse Effect, nor is
there any event, fact, condition or circumstance which, with notice or passage
of time or both, would constitute or result in a conflict, breach, default or
event of default under, any of the foregoing which, if not remedied within any
applicable grace or cure period could reasonably be expected to have a Material
Adverse Effect, or (iii) a party or subject to any agreement, document or
instrument with respect to, or obligation to pay any, service or management fee
with respect to, the ownership, operation, leasing or performance of any of its
business or any facility, nor is there any manager with respect to any such
facility other than a Person that is a Borrower or a Guarantor.
5.6. LITIGATION
Except as set forth in Schedule 5.6, there is no action, suit,
proceeding or investigation pending or, to their knowledge, threatened against
any Borrower that (i) questions or could prevent the validity of any of the Loan
Documents or the right of any Borrower to enter
18
into any Loan Document or to consummate the transactions contemplated thereby,
(ii) could reasonably be expected to be or have, either individually or in the
aggregate, any Material Adverse Change or Material Adverse Effect, or (iii)
could reasonably be expected to result in any Change of Control or other change
in the current ownership, control or management of Borrower. No Borrower is
aware that there is any basis for the foregoing. No Borrower is a party or
subject to any order, writ, injunction, judgment or decree of any Governmental
Authority that could reasonably be expected to be or have, either individually
or in the aggregate, any Material Adverse Change or Material Adverse Effect.
There is no action, suit, proceeding or investigation initiated by any Borrower
currently pending that could reasonably be expected to be or have, either
individually or in the aggregate, any Material Adverse Change or Material
Adverse Effect. Borrowers have no existing accrued and/or unpaid Indebtedness to
any Governmental Authority or any other governmental payor that could reasonably
be expected to be or have, either individually or in the aggregate, any Material
Adverse Change or Material Adverse Effect.
5.7. HAZARDOUS MATERIALS
Each Borrower is in compliance in all material respects with
all applicable Environmental Laws. No Borrower has been notified of any action,
suit, proceeding or investigation (i) relating in any way to compliance by or
liability of such Borrower under any Environmental Laws, (ii) which otherwise
deals with any Hazardous Substance or any Environmental Law, or (iii) which
seeks to suspend, revoke or terminate any license, permit or approval necessary
for the generation, handling, storage, treatment or disposal of any Hazardous
Substance, which individually or in the aggregate could reasonably be expected
to have a Material Adverse Effect.
5.8. TAX RETURNS; GOVERNMENTAL REPORTS
Except as set forth in Schedule 5.8, each Borrower (i) has
filed all material federal, state, foreign (if applicable) and local tax returns
and other reports which are required by law to be filed by such Borrower, and
(ii) has paid all material taxes, assessments, fees and other governmental
charges, including, without limitation, payroll and other employment related
taxes, in each case that are due and payable, except only for items that such
Borrower is contesting in good faith.
5.9. FINANCIAL STATEMENTS AND REPORTS
All financial statements and financial information relating to
Borrowers that have been or may hereafter be delivered to Agent by Borrowers are
accurate and complete in all material respects and have been prepared in
accordance with GAAP consistently applied with prior periods. No Borrower has
any material obligations or liabilities of any kind not disclosed in such
financial information or statements, and since the date of the most recent
financial statements submitted to Agent, there has not occurred any Material
Adverse Change, Material Adverse Effect or Liability Event or, to Borrower's
knowledge, any other event or condition that could reasonably be expected to
have a Material Adverse Effect or Liability Event.
5.10. COMPLIANCE WITH LAW
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Each Borrower (i) is in compliance with all laws, statutes,
rules, regulations, ordinances and tariffs of any Governmental Authority
applicable to such Borrower and/or such Borrower's business, assets or
operations, including, without limitation, ERISA and Healthcare Laws, and (ii)
is not in violation of any order of any Governmental Authority or other board or
tribunal, except where noncompliance or violation could not reasonably be
expected to have a Material Adverse Effect. There is no event, fact, condition
or circumstance known to Borrowers which, with notice or passage of time, or
both, would constitute or result in any noncompliance with, or any violation of,
any of the foregoing, in each case except where noncompliance or violation could
not reasonably be expected to have a Material Adverse Effect. No Borrower has
received any notice that such Borrower is not in compliance in any respect with
any of the requirements of any of the foregoing. No Borrower has (a) engaged in
any Prohibited Transactions as defined in Section 406 of ERISA and Section 4975
of the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder, (b) failed to meet any applicable minimum funding
requirements under Section 302 of ERISA in respect of its plans and no funding
requirements have been postponed or delayed, (c) knowledge of any event or
occurrence which would cause the Pension Benefit Guaranty Corporation to
institute proceedings under Title IV of ERISA to terminate any of the employee
benefit plans, (d) fiduciary responsibility under ERISA for investments with
respect to any plan existing for the benefit of Persons other than its employees
or former employees, or (e) withdrawn, completely or partially, from any
multi-employer pension plans so as to incur liability under the MultiEmployer
Pension Plan Amendments of 1980, which individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect. With respect to each
Borrower, there exists no event described in Section 4043 of ERISA, excluding
Subsections 4043(b)(2) and 4043(b)(3) thereof, for which the thirty (30) day
notice period contained in 12 C.F.R. Section 2615.3 has not been waived and
which individually or in the aggregate with all other such events could
reasonably be expected to have a Material Adverse Effect. Each Borrower has
maintained in all material respects all records required to be maintained by the
Joint Commission on Accreditation of Healthcare Organizations, the Food and Drug
Administration, Drug Enforcement Agency and State Boards of Pharmacy and the
federal and state Medicare and Medicaid programs as required by the Healthcare
Laws and, to the best knowledge of Borrower, there are no presently existing
circumstances which likely would result in material violations of the Healthcare
Laws. There is no Liability Event.
5.11. INTELLECTUAL PROPERTY
Except as set forth on Schedule 5.11, as of the Closing Date
no Borrower owns, licenses or utilizes, and is a party to, any patents, patent
applications, trademarks, trademark applications, service marks, registered
copyrights, copyright applications, copyrights, trade names, trade secrets,
software or licenses (collectively, the "INTELLECTUAL PROPERTY").
5.12. LICENSES AND PERMITS; LABOR
Each Borrower is in substantial compliance with and has all
Permits and Intellectual Property necessary or required by applicable law or
Governmental Authority for the operation of its businesses. All of the foregoing
are in full force and effect and not in known conflict in any material respect
with the rights of others. No Borrower is (i) in breach of or default under the
provisions of any of the foregoing, nor is there any event, fact, condition or
20
circumstance which, with notice or passage of time or both, would constitute or
result in a conflict, breach, default or event of default under, any of the
foregoing which, if not remedied within any applicable grace or cure period
could reasonably be expected to have a Material Adverse Effect, (ii) a party to
or subject to any agreement, instrument or restriction that is so unusual or
burdensome that it could reasonably be expected to have a Material Adverse
Effect, and (iii) has been involved in any labor dispute, strike, walkout or
union organization which could reasonably be expected to have a Material Adverse
Effect.
5.13. NO DEFAULT
There does not exist any Default or Event of Default.
5.14. DISCLOSURE
No Loan Document nor any other agreement, document,
certificate, or statement furnished to Agent by or on behalf of any Borrower in
connection with the transactions contemplated by the Loan Documents, nor any
representation or warranty made by any Borrower in any Loan Document, contains
any untrue statement of material fact or omits to state any fact necessary to
make the statements therein not materially misleading. There is no fact known to
any Borrower which has not been disclosed to Agent in writing which could
reasonably be expected to have a Material Adverse Effect.
5.15. EXISTING INDEBTEDNESS; INVESTMENTS, GUARANTEES AND CERTAIN
CONTRACTS
Except as contemplated or permitted by the Loan Documents, the
Plan of Reorganization or as otherwise set forth on Schedule 5.15, no Borrower
(i) has any outstanding Indebtedness for Borrowed Money or Contingent
Obligations, (ii) is subject or party to any mortgage, note, indenture,
indemnity or guarantee of, with respect to or evidencing any Indebtedness for
Borrowed Money or Contingent Obligations of any other Person, or (iii) does not
own or hold any long-term debt investments in, and does not have any outstanding
advances to or any outstanding guarantees for the obligations of, or any
outstanding borrowings from, any Person. Each Borrower has performed all
material obligations required to be performed by such Borrower pursuant to or
connection with any items listed on Schedule 5.15 and there has occurred no
breach, default or event of default under any document evidencing any such items
or any fact, circumstance, condition or event which, with the giving of notice
or passage of time or both, would constitute or result in a breach, default or
event of default thereunder, which, if not remedied within any applicable grace
or cure period could reasonably be expected to have a Material Adverse Effect.
5.16. OTHER AGREEMENTS
Except as set forth on Schedule 5.16, as of the Closing Date,
there are no existing or proposed agreements, arrangements, understandings or
transactions between any Borrower and any of such Borrower's officers, members,
managers, directors, stockholders, partners, other interest holders, employees
or Affiliates or any members of their respective immediate families.
5.17. INSURANCE
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Each Borrower has in full force and effect such insurance
policies as are customary in its industry and as may be required pursuant to
Section 6.5 hereof. All such insurance policies as of the Closing Date are
listed and described on Schedule 5.17.
5.18. NAMES; LOCATION OF OFFICES, RECORDS AND COLLATERAL
During the preceding five years prior to the Closing Date, no
Borrower has conducted business under or used any name (whether corporate,
partnership or assumed) other than as shown on Schedule 5.18A. Borrowers are the
sole owner of all of its names listed on Schedule 5.18A, and any and all
business done and invoices issued in such names are Borrowers' sales, business
and invoices. Each trade name of each Borrower represents a division or trading
style of such Borrower. As of the Closing Date, each Borrower maintains its
places of business and chief executive offices only at the locations set forth
on Schedule 5.18B, and all Accounts of each Borrower arise, originate and are
located, and all of the Collateral and all books and records in connection
therewith or in any way relating thereto or evidence the Collateral are located
and shall be only, in and at such locations. All of the Collateral is located
only in the continental United States.
5.19. NON-SUBORDINATION
The Obligations are not subordinated in any way to any other
obligations of any Borrower or to the rights of any other Person except to the
extent any Lien may have priority over the Liens of Agent in certain of the
Collateral (other than Accounts) as contemplated in the Plan of Reorganization.
5.20. ACCOUNTS
In determining which Accounts are Eligible Receivables, Agent
may rely on all statements and representations made in this Agreement or in the
Borrowing Certificate, Interim Borrowing Certificate or any other writing
delivered by Borrowers with respect to Accounts. Unless otherwise indicated in
writing to Agent or except as hereafter set forth, each Account of Borrowers (i)
is genuine and in all respects what is purports to be and is not evidenced by a
judgment, (ii) arises out of a completed, bona fide sale and delivery of goods
or rendering of Services by Borrowers in the ordinary course of business and in
accordance with the terms and conditions of all purchase orders, contracts,
certifications, participations, certificates of need and other documents
relating thereto or forming a part of the contract between the applicable
Borrower and the applicable Account Debtor, (iii) is for a liquidated amount
maturing as stated in a claim or invoice covering such sale of goods or
rendering of Services, a copy of which has been furnished or is available to
Agent, (iv) together with Agent's security interest therein, is not and will not
be in the future (by voluntary act or omission by Borrowers), subject to any
offset, lien, deduction, defense, dispute, counterclaim or other adverse
condition, is absolutely owing to Borrowers and is not contingent in any respect
or for any reason (except Accounts owed or owing by Medicaid/Medicare Account
Debtors that may be subject to offset or deduction under applicable law), (v)
there are no facts, events or occurrences which in any way impair the validity
or enforceability thereof or tend to reduce the amount payable thereunder from
the face amount of the claim or invoice and statements delivered to Agent with
respect thereto, (vi) to the best of Borrowers' knowledge, (A) the Account
Debtor thereunder had the capacity to contract at
22
the time any contract or other document giving rise thereto was executed and (B)
such Account Debtor is solvent, (vii) to the best of Borrowers' knowledge,
subject to subsection (x) below, there are no proceedings or actions which are
threatened or pending against any Account Debtor thereunder which might result
in any material adverse change in such Account Debtor's financial condition or
the collectability of such Account, (viii) has been billed and forwarded to the
Account Debtor for payment in accordance with applicable laws and is in
compliance and conformance with any requisite procedures, requirements and
regulations governing payment by such Account Debtor with respect to such
Account, and, if due from a Medicaid/Medicare Account Debtor, is properly
payable directly to the applicable Borrower, (ix) Borrowers have obtained and
currently have all Permits necessary in the generation thereof, and (x)
Borrowers have disclosed to Agent on each Borrowing Certificate the amount of
all Accounts of Borrowers for which Medicaid/Medicare is the Account Debtor and
for which payment has been denied and subsequently appealed pursuant to the
procedure described in the definition of Eligible Receivables hereof, and
Borrowers are pursuing all available appeals in respect of such Accounts.
Notwithstanding anything in this Section 5.20 to the contrary, the failure of
any Account other than an Eligible Receivable to satisfy the requirements of
this Section 5.20 shall not constitute a Default or Event of Default unless
Accounts other than Eligible Accounts having an aggregate face amount of
$250,000 or greater fail to comply with the provisions of this Section 5.20.
5.21. HEALTHCARE
Without limiting or being limited by any other provision of
any Loan Document, Borrowers have timely filed or caused to be filed all
material cost and other reports of every kind required by law, agreement or
otherwise. Subject to subsection (x) of Section 5.20, there are no claims,
actions or appeals pending (and Borrowers have not filed any claims or reports
which could reasonably result in any such claims, actions or appeals) before any
commission, board or agency or other Governmental Authority, including, without
limitation, any intermediary or carrier, the Provider Reimbursement Review Board
or the Administrator of the Health Care Financing Administration, with respect
to any state or federal Medicare or Medicaid cost reports or claims filed by
Borrower, or any disallowance by any commission, board or agency or other
Governmental Authority in connection with any audit of such cost reports which
claims, actions or appeals, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect. No validation review or program
integrity review related to Borrowers or the consummation of the transactions
contemplated herein or to the Collateral have been conducted by any commission,
board or agency or other Governmental Authority in connection with the Medicare
or Medicaid programs, and to the knowledge of Borrowers, no such reviews are
scheduled, pending or threatened against or affecting any of the providers, any
of the Collateral or the consummation of the transactions contemplated hereby,
which, individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect.
5.22. PLAN OF REORGANIZATION.
Agent has received a copy of the Confirmation Order and the
Confirmation Order has not been stayed by any court. All other conditions
precedent to the confirmation and effectiveness of the Plan of Reorganization
have been satisfied or waived and the Effective Date has occurred.
23
5.23. SURVIVAL.
Each Borrower makes the representations and warranties
contained herein with the knowledge and intention that Agent is relying and will
rely thereon. All such representations and warranties will survive the execution
and delivery of this Agreement and the making of the Advances under the
Revolving Facility.
VI. AFFIRMATIVE COVENANTS
Each Borrower, jointly and severally, covenants and agrees
that, until full performance and satisfaction, and indefeasible payment in full
in cash, of all the Obligations (other than Unmatured Surviving Obligations) and
termination of this Agreement:
6.1. FINANCIAL STATEMENTS, REPORTS AND OTHER INFORMATION
(a) Financial Reports. Borrowers shall furnish to Agent
and each Lender (i) as soon as available and in any event within one hundred
twenty (120) calendar days after the end of each fiscal year of Borrowers,
annual financial statements of Borrowers on a Consolidated Basis and on a
consolidating basis, including the notes thereto, consisting of a consolidated
and consolidating balance sheet at the end of such completed fiscal year and the
related consolidated and consolidating statements of income, consolidated (but
not consolidating) retained earnings, consolidated (but not consolidating) cash
flows and consolidated (but not consolidating) owners' equity for such completed
fiscal year, which consolidated financial statements shall be audited and shall
be accompanied by an opinion of a Big Four accounting firm (or other independent
certified public accounting firm reasonably satisfactory to Agent), which
opinion shall not be qualified as to going concern or scope of audit; (ii) as
soon as available and in any event within forty-five (45) calendar days after
the end of each fiscal quarter of Borrowers (other than the last fiscal quarter
of each fiscal year), unaudited financial statements of Borrowers on a
Consolidated Basis and on a consolidating basis consisting of a consolidated and
consolidating balance sheet and consolidated and consolidating statements of
income, consolidated (but not consolidating) retained earnings and consolidated
(but not consolidating) cash flows and consolidated (but not consolidating)
owners' equity as of the end of such fiscal quarter; and (iii) as soon as
available and in any event within thirty (30) calendar days after the end of
each calendar month (other than the last calendar month of a fiscal quarter),
unaudited financial statements of Borrowers on a Consolidated Basis consisting
of a balance sheet and statements of income, retained earnings, cash flows and
owners' equity as of the end of the immediately preceding calendar month. All
such financial statements shall be prepared in accordance with GAAP consistently
applied with prior periods. With each such financial statement, Borrowing Agent
shall also deliver a certificate of its chief financial officer stating that (A)
such person has reviewed the relevant terms of the Loan Documents and the
condition of Borrowers, (B) no Default or Event of Default has occurred or is
continuing, or, if any of the foregoing has occurred or is continuing,
specifying the nature and status and period of existence thereof and the steps
taken or proposed to be taken with respect thereto, and (C) Borrowers are in
compliance with all financial covenants attached as Annex I hereto. Such
certificate shall be accompanied by the calculations necessary to show
compliance with the financial covenants in a form reasonably satisfactory to
Agent. All consolidating statements required under this Section 6.1(a) or
elsewhere in this Agreement shall
24
be prepared for each Business Group of Borrowers and its Subsidiaries and not
with respect to any individual Borrower or Subsidiary.
(b) Other Materials. Borrowers shall furnish to Agent as
soon as available, and in any event within ten (10) calendar days after the
preparation or issuance thereof or at such other time as set forth below: (i)
any reports, returns, information, notices and other materials that Parent shall
send to its stockholders, members, partners or other equity owners at any time,
(ii) all Medicare and Medicaid cost reports and other document and materials
filed by Borrowers and any other reports, materials or other information
regarding or otherwise relating to Medicaid or Medicare prepared by, for or on
behalf of Borrowers, (iii) concurrently with the delivery of financial
statements under Section 6.1(a), any other material reports, materials or other
information regarding or otherwise relating to Medicaid or Medicare prepared by,
for, or on behalf of, Borrowers or any of their Subsidiaries during the period
to which such financial statements relate, including, without limitation, (A)
copies of material licenses and permits required by any applicable federal,
state, foreign or local law, statute ordinance or regulation or Governmental
Authority for the operation of its business, (B) Medicare and Medicaid provider
numbers and material agreements, (C) state surveys pertaining to any healthcare
facility operated or owned or leased by Borrowers or any of their Affiliates or
Subsidiaries and (D) material participating agreements relating to medical
plans, (iv) within twenty (20) calendar days after the end of each calendar
month for such month, a revenue report and accounts receivable and accounts
payable aging schedules, (v) within thirty (30) calendar days after the end of
each calendar month for such month, a report of census and occupancy percentage
by payor type, (vi) promptly upon receipt thereof, copies of any reports, if
any, submitted to Borrowers by their independent accountants in connection with
any interim audit of the books of such Person or any of its Affiliates and
copies of each management control letter, if any, provided by such independent
accountants, and (vii) such additional information, documents, statements,
reports and other materials as Agent may reasonably request from a credit or
security perspective or otherwise from time to time.
(c) Notices. Borrowers shall promptly, and in any event
within five (5) Business Days after any Borrower or any authorized officer of
any Borrower obtain knowledge thereof, notify Agent in writing of (i) any
pending or threatened litigation, suit, investigation, arbitration, dispute
resolution proceeding or administrative proceeding brought or initiated by any
Borrower or otherwise affecting or involving or relating to any Borrower or any
of its property or assets to the extent (A) (x) with respect to professional
liability claims, the amount in controversy exceeds $5,000,000 (provided that
Borrowers shall notify Agent if in their judgment any such claim has merit and
the Borrowers' potential exposure with respect thereto is greater than
$500,000), and (y) with respect to all other claims the amount in controversy
exceeds $500,000 or (B) to the extent any of the foregoing seeks injunctive
relief which could reasonably be expected to have a Material Adverse Effect,
(ii) the occurrence of any Default or Event of Default, which notice shall
specify the nature and status thereof, the period of existence thereof and what
action is proposed to be taken with respect thereto, (iii) any other
development, event, fact, circumstance or condition that could reasonably be
expected to have a Material Adverse Effect, in each case describing the nature
and status thereof and the action proposed to be taken with respect thereto,
(iv) any notice received by any Borrower from any payor of a material claim,
suit or other action such payor has, claims or has filed against Borrower, (v)
any matter(s) materially and adversely affecting the value, enforceability or
collectability of the
25
Collateral, including, without limitation, claims or disputes in the amount of
$250,000 or more in the aggregate, in existence at any one time, (vi) any notice
given by any Borrower to any other lender of any Borrower (with a copy of such
notice), (vii) receipt of any notice or request from any Governmental Authority
or governmental payor regarding any material liability or claim of liability,
(viii) receipt of any notice by any Borrower regarding termination of any
manager of any facility owned, operated or leased by Borrowers, and/or (ix) if
any Account becomes evidenced or secured by an Instrument or Chattel Paper.
(d) Consents. Borrowers shall use reasonable efforts
(which shall not include the unreasonable payment of money) to obtain and
deliver from time to time all required consents, approvals and agreements from
such third parties as Agent shall determine are necessary or desirable in its
Permitted Discretion and that are reasonably satisfactory to Agent to (i)
perfect any security interest or lien granted to the Agent or the Lenders
pursuant to the Security Documents, and/or (ii) permit the execution of and
performance under the Loan Documents without any conflict with any other
material agreement, document or instrument to which any Borrower is a party or
by which any of its properties or assets are bound or subject (but in no event
shall any Landlord Waivers or Consents be required with respect to leases in
existence on the Closing Date so long as for any books and records kept at a
location for which Borrowers are not able to obtain a Landlord Consent and
Waiver, Borrowers keep a duplicate up to date set of such books and records at a
location owned by a Borrower or with respect to which a Landlord Waiver and
Consent had been obtained which is reasonably acceptable to Agent).
(e) Operating Budget. Borrowers shall furnish to Agent on
or prior to the Closing Date and for each fiscal year of Borrowers thereafter
not more than sixty (60) calendar days after the commencement of such fiscal
year, consolidated and consolidating by Business Group month by month projected
operating budgets, annual projections, profit and loss statements, balance
sheets and cash flow reports of and for Borrowers on Consolidated Basis for such
upcoming fiscal year (including an income statement for each month and a balance
sheet as at the end of the last month in each fiscal quarter), in each case
prepared in accordance with GAAP consistently applied with prior periods.
6.2. PAYMENT OF OBLIGATIONS
Borrowers shall make full and timely indefeasible payment in
cash of the principal of and interest on the Loans, Advances and all other
Obligations.
6.3. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE AND ASSETS
Each Borrower shall (i) conduct its business in accordance
with good business practices customary to the industry, (ii) engage principally
in the same or similar lines of business substantially as heretofore conducted,
(iii) collect its Accounts in the ordinary course of business, (iv) maintain all
of its material properties, assets and equipment used or useful in its business
in good repair, working order and condition (normal wear and tear excepted and
except as may be disposed of in the ordinary course of business and in
accordance with the terms of the Loan Documents and otherwise as determined by
such Borrower using commercially reasonable business judgment), (v) from time to
time to make all necessary or desirable repairs, renewals and replacements
thereof, as determined by such Borrower using commercially reasonable
26
business judgment, (vi) maintain and keep in full force and effect its existence
and all material Permits and qualifications to do business and good standing in
each jurisdiction in which the ownership or lease of property or the nature of
its business makes such Permits or qualification necessary and in which failure
to maintain such Permits or qualification could reasonably be likely to have a
Material Adverse Effect, and (vii) remain in good standing and maintain
operations in all jurisdictions in which failure to do so could reasonably be
expected to have a Material Adverse Effect.
6.4. COMPLIANCE WITH LEGAL AND OTHER OBLIGATIONS
Each Borrower shall (i) comply in all material respects with
all laws, statutes, rules, regulations, ordinances and tariffs of all
Governmental Authorities applicable to it or its business, assets or operations,
(ii) pay all material taxes, assessments, fees, governmental charges, claims for
labor, supplies, rent and all other obligations or liabilities of any kind,
except liabilities being contested in good faith and against which adequate
reserves have been established, (iii) perform in accordance with its terms each
contract, agreement or other arrangement to which it is a party or by which it
or any of the Collateral is bound, except where the failure to comply, pay or
perform could not reasonably be expected to have a Material Adverse Effect, (iv)
maintain and comply in all material respects with all Permits necessary to
conduct its business and comply in all material respects with any new or
additional requirements that may be imposed on it or its business, and (v)
appropriately file all Medicaid/Medicare cost reports.
6.5. INSURANCE
Each Borrower shall (i) keep all of its insurable properties
and assets adequately insured in all material respects against losses, damages
and hazards as are customarily insured against by businesses engaging in similar
activities or owning similar assets or properties and at least the minimum
amount required by applicable law, including, without limitation, medical
malpractice and professional liability insurance, as applicable; and maintain
general public liability insurance at all times against liability on account of
damage to persons and property having such limits, deductibles, exclusions and
co-insurance and other provisions as are customary for a business engaged in
activities similar to those of such Borrower; and (ii) maintain insurance under
all applicable workers' compensation laws; all of the foregoing insurance
policies to (A) be reasonably satisfactory in form and substance to Agent, (B)
name Agent as loss payee with respect to insurance covering the Collateral and
additional insured under any general liability policy, and (C) expressly provide
that they cannot be altered, amended, modified or canceled without thirty (30)
Business Days prior written notice to Agent and that they inure to the benefit
of Agent notwithstanding any action or omission or negligence of or by any
Borrower or any insured thereunder. By the funding of the Initial Advance, the
Agent hereby acknowledges that the insurance in place on the Closing Date is
satisfactory to Agent.
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6.6. TRUE BOOKS
Each Borrower shall (i) keep true, complete and accurate books
of record and account in accordance with commercially reasonable business
practices in which true and correct entries are made of all of its and their
dealings and transactions in all material respects; and (ii) set up and maintain
on its books such reserves as may be required by GAAP with respect to doubtful
accounts and all taxes, assessments, charges, levies and claims and with respect
to its business, and include such reserves in its quarterly as well as year end
financial statements.
6.7. INSPECTION; PERIODIC AUDITS
Each Borrower shall permit the representatives of Agent, at
the expense of Borrowers, from time to time during normal business hours upon
reasonable notice, to (i) visit and inspect any of such Borrower's offices or
properties or any other place where Collateral is located to inspect the
Collateral and/or to examine or audit all of such Borrower's books of account,
records, reports and other papers, (ii) make copies and extracts therefrom, and
(iii) discuss such Borrower's business, operations, prospects, properties,
assets, liabilities, condition and/or Accounts with its officers and independent
public accountants (and by this provision such officers and accountants are
authorized to discuss the foregoing); provided that so long as no Default or
Event of Default has occurred and is continuing, Borrowers shall not have to pay
expenses (x) for more than three (3) audits in any fiscal year and (y) in
respect of audits in excess of $100,000 in the aggregate per fiscal year.
6.8. FURTHER ASSURANCES; POST CLOSING
At Borrowers' cost and expense, Borrowers shall (i) within
five (5) Business Days after Agent's demand, take such further actions, obtain
such consents and approvals and duly execute and deliver such further
agreements, assignments, instructions or documents as Agent may request in its
Permitted Discretion to give effect to or carry out the terms of the Loan
Documents and the consummation of the transactions contemplated thereby, whether
before, at or after the performance and/or consummation of the transactions
contemplated hereby or the occurrence of a Default or Event of Default, (ii)
without limiting and notwithstanding any other provision of any Loan Document,
execute and deliver, or cause to be executed and delivered, such agreements and
documents, and take or cause to be taken such actions, and otherwise perform,
observe and comply with such obligations, as are set forth on Schedule 6.8, and
(iii) upon the exercise by Agent or any of its Affiliates of any power, right,
privilege or remedy pursuant to any Loan Document or under applicable law or at
equity which requires any consent, approval, registration, qualification or
authorization of any Governmental Authority, execute and deliver, or cause the
execution and delivery of, all applications, certificates, instruments and other
documents that may be so required for such consent, approval, registration,
qualification or authorization. Without limiting the foregoing, upon the
exercise by Agent or any of its Affiliates of any right or remedy under any Loan
Document which requires any consent, approval or registration with, consent,
qualification or authorization by, any Person, Borrowers shall execute and
deliver, or cause the execution and delivery of, all applications, certificates,
instruments and other documents that Agent, any Lender or their respective
Affiliates may be required to obtain for such consent, approval, registration,
qualification or authorization.
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6.9. PAYMENT OF INDEBTEDNESS
Except as otherwise prescribed in the Loan Documents,
Borrowers shall pay, discharge or otherwise satisfy at or before maturity
(subject to applicable grace periods and, in the case of trade payables, to
ordinary course payment practices) all of its material obligations and
liabilities, except when the amount or validity thereof is being contested in
good faith by appropriate proceedings and against which adequate reserves have
been established.
6.10. LIEN SEARCHES
If Liens other than Permitted Liens exist, Borrowers
immediately shall take, execute and deliver all actions, documents and
instruments necessary to release and terminate such Liens, unless such Liens are
being contested in good faith by appropriate proceedings and against which
adequate reserves have been established.
6.11. USE OF PROCEEDS
Borrowers shall use the proceeds from the Revolving Facility
only for the purposes set forth in the first "WHEREAS" clause of this Agreement.
6.12. COLLATERAL DOCUMENTS; SECURITY INTEREST IN COLLATERAL
Each Borrower shall (i) execute, obtain, deliver, file,
register and/or record any and all financing statements, continuation
statements, stock powers, instruments and other documents, or cause the
execution, filing, registration, recording or delivery of any and all of the
foregoing, that are necessary or required under law or otherwise or reasonably
requested by Agent to be executed, filed, registered, obtained, delivered or
recorded to create, maintain, perfect, preserve, validate or otherwise protect
the pledge of the Collateral to Agent and Agent's perfected first priority Lien
on the Collateral (and each Borrower irrevocably grants Agent the right, at
Agent's option, to file any or all of the foregoing), (ii) immediately upon
learning thereof, report to Agent any reclamation, return or repossession of
goods in excess of $100,000.00 (individually or in the aggregate), and (iii)
defend the Collateral and Agent's perfected first priority Lien thereon against
all claims and demands of all Persons at any time claiming the same or any
interest therein adverse to Agent or any Lender, and pay all costs and expenses
(including, without limitation, in-house documentation and diligence fees and
legal expenses and reasonable attorneys' fees and expenses) in connection with
such defense, which may at Agent's discretion be added to the Obligations.
6.13. TAXES AND OTHER CHARGES
All payments and reimbursements to Agent, for the benefit of
Lenders, made under any Loan Document shall be free and clear of and without
deduction for all taxes, levies, imposts, deductions, assessments, charges or
withholdings, and all liabilities with respect thereto of any nature whatsoever,
excluding taxes to the extent imposed on each Lender's net income or franchise
taxes imposed in lieu of taxes on net income. If Borrowers shall be required by
law to deduct any such amounts from or in respect of any sum payable under any
Loan Document to Agent, for the benefit of Lenders, then the sum payable to
Agent, for the benefit of Lenders, shall
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be increased as may be necessary so that, after making all required deductions,
each Lender receives an amount equal to the sum it would have received had no
such deductions been made. Notwithstanding any other provision of any Loan
Document, if at any time after the Closing (a) any change in any existing law,
regulation, treaty or directive or in the interpretation or application thereof,
(b) any new law, regulation, treaty or directive enacted or any interpretation
or application thereof, or (c) compliance by Agent or any Lender with any
request or directive (whether or not having the force of law) from any
Governmental Authority: (i) subjects Agent or such Lender to any tax, levy,
impost, deduction, assessment, charge or withholding of any kind whatsoever with
respect to any Loan Document, or changes the basis of taxation of payments to
Agent, for the benefit of Lenders, of any amount payable thereunder (except for
net income taxes, or franchise taxes imposed in lieu of net income taxes,
imposed generally by federal, state or local taxing authorities with respect to
interest or commitment fees or other fees payable hereunder or changes in the
rate of tax on the overall net income of Agent and/or each Lender), or (ii)
imposes on Agent or Lenders any other condition or increased cost in connection
with the transactions contemplated thereby or participations therein; and the
result of any of the foregoing is to increase the cost to Agent or Lenders of
making or continuing any Loan hereunder or to reduce any amount receivable
hereunder, then, in any such case, Borrowers shall promptly pay to Agent, for
the benefit of Lenders, any additional amounts necessary to compensate Agent and
each Lender, on an after-tax basis, for such additional cost or reduced amount
as determined by such Lender; provided that the Borrowers shall not be obligated
to compensate the Agent or any Lender from any such additional amounts that
relate to a period prior to 180 days before the date of notice for the Agent or
the applicable Lender of such additional cost. If Agent or any Lender becomes
entitled to claim any additional amounts pursuant to this Section 6.13 it shall
promptly notify Borrowing Agent of the event by reason of which Agent or such
Lender has become so entitled, and each such notice of additional amounts
payable pursuant to this Section 6.13 submitted by Agent or such Lender to
Borrowers shall, absent manifest error, be final, conclusive and binding for all
purposes. At the request of Agent, Borrowers shall cause to be delivered to
Agent within ten (10) calendar days after the end of each calendar month a
report of ADP wire transfers evidencing payment of payroll taxes for the
immediately preceding calendar month.
6.14. NEW SUBSIDIARIES
Within thirty (30) calendar days of any Person becoming a
Subsidiary (other than an Excluded Subsidiary) after the Closing Date, Borrowers
shall cause such Person to (a) deliver to Agent a Joinder Agreement to this
Agreement and to each other Loan Document or a Guaranty and Security Agreement
to which Borrowers or Guarantors are a party duly executed by such Person, which
Joinder Agreement or Guaranty and Security Agreement shall be in the forms of
the attached Exhibits C and D, respectively, (b) provide Agent with copies of
such Person's organizational documents, material contracts, financial
information, and any other information reasonably requested by Agent, on behalf
of the Lenders, in order to perform legal and financial diligence and Uniform
Commercial Code, tax and judgment lien searches, (c) cause to be delivered a
written legal opinion of counsel substantially consistent with the opinions of
counsel delivered on the Closing Date and otherwise in form and substance
reasonably satisfactory to Agent which shall cover such matters incident to the
transactions contemplated by this Section 6.14 and the other agreements and
instruments executed and delivered pursuant hereto in substantially the form as
delivered at the Closing and (d) cause such Person to duly
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execute and deliver such further agreements, assignments, instructions or
documents as Agent may request in its Permitted Discretion with respect to the
purposes, terms and conditions of the Loan Documents.
6.15. RIGHT OF FIRST OFFER
If at any time Borrowers propose to enter into any type of
financing to refinance in full the outstanding Obligations (a "FINANCING"), then
Borrowers shall, before entering into such Financing with any third party,
notify the Agent in writing of their desire to enter into a Financing, such
notice (the "PROPOSAL NOTICE") to set out with particularity the type of
Financing that the Borrowers wish to consummate. Agent shall have five (5)
Business Days (the "ACCEPTANCE PERIOD") after Receipt of the Proposal Notice to
inform the Borrowers of its willingness to provide the Financing (the
"ACCEPTANCE NOTICE"), which Acceptance Notice shall be accompanied by a term
sheet or proposal letter setting forth in detail the proposed terms and
conditions upon which Agent would be prepared to provide the Financing. After
the receipt of the Acceptance Notice, the Borrowers shall have the right, within
five (5) Business Days (the "NEGOTIATION PERIOD") to accept such proposal,
during which period the Agent and the Borrowers may negotiate in good faith the
terms of the Agent's proposal and to execute a mutually acceptable commitment
letter. If no Acceptance Notice is received by Borrowing Agent by the end of the
Acceptance Period or if the parties are unable to agree to the terms of the
Financing by the end of the Negotiation Period, then Borrowers shall have the
right, for a period of one hundred eighty (180) days following the expiration of
the later of the Acceptance Period or the Negotiation Period (the "CLOSING
PERIOD"), to offer the Financing to a third party as set forth in the Proposal
Notice on terms and conditions which are, in the aggregate, more beneficial to
the Borrowers than the terms set forth in the Acceptance Notice. If the
Borrowers are not able to consummate such Financing prior to the expiration of
the Closing Period, the Borrowers shall not be entitled to consummate the
Financing with a third party without again complying with this Section 6.15. Any
failure by Agent or any Lender to issue an Acceptance Notice shall not be
construed as a waiver of any of the terms, covenants or conditions of any of the
Loan Documents. For purposes of this Section 6.15, "Lender" shall include
CapitalSource Finance LLC and any of its parents, subsidiaries or Affiliates.
6.16. SUPPLEMENTAL DISCLOSURE
From time to time as may be reasonably requested by Agent
(which request may not be more frequent than once per fiscal quarter unless an
Event of Default shall have occurred and be continuing), the Borrowers shall
supplement the following Schedules: Schedule 2.4, Schedule 5.3, Schedule 5.11,
Schedule 5.18A and Schedule 5.18B.
VII. NEGATIVE COVENANTS
Each Borrower, jointly and severally, covenants and agrees
that, until full performance and satisfaction, and indefeasible payment in full
in cash, of all the Obligations (other than Unmatured Surviving Obligations) and
termination of this Agreement:
7.1. FINANCIAL COVENANTS
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No Borrower shall violate the financial covenants set forth on
Annex I to this Agreement, which is incorporated herein and made a part hereof.
7.2. PERMITTED INDEBTEDNESS
No Borrower shall create, incur, assume or suffer to exist any
Indebtedness for Borrowed Money, except the following (collectively, "PERMITTED
INDEBTEDNESS"): (a) Indebtedness under the Loan Documents; (b) the Senior
Mortgage Loan; (c) any Indebtedness set forth on Schedule 7.2 and any
Indebtedness which refinances or replaces such Indebtedness to the extent such
refinanced Indebtedness does not increase the total principal amount thereof,
extend the maturity date, accelerate the amortization or is otherwise on terms
and conditions which are not materially more onerous to the Borrowers
("Permitted Refinanced Indebtedness"); (d) (i) Capitalized Lease Obligations
incurred after the Closing Date and Indebtedness incurred pursuant to purchase
money Liens permitted by Section 7.3(v) and any Permitted Refinanced
Indebtedness with respect thereto, provided that the aggregate amount thereof
outstanding at any time shall not exceed $5,000,000; and (ii) Indebtedness on a
non-recourse (other than customary carve-outs for non-recourse financings) basis
to any assets of any Borrower or any Guarantor other than the asset or assets
that are collateral securing such Indebtedness and which is secured by a Lien
permitted pursuant to Section 7.3(v) and any Permitted Refinancing Indebtedness
with respect thereto; provided that the aggregate amount outstanding at any time
shall not exceed $30,000,000; (e) Indebtedness in connection with advances made
by a stockholder in order to cure any default of the financial covenants set
forth on Annex I; provided, however, that such Indebtedness shall be on an
unsecured basis, subordinated in right of repayment and remedies to all of the
Obligations and to all of Agent's rights and in form and substance reasonably
satisfactory to Agent; (f) borrowings incurred in the ordinary course of
business and not exceeding $10,000,000 individually or in the aggregate
outstanding at any one time; provided, however, that such Indebtedness shall be
on an unsecured basis, subordinated in right of repayment and remedies to all of
the Obligations and to all of Agent's rights and in form and substance
satisfactory to Agent; (g) Indebtedness from time to time owing to any Borrower;
(h) Indebtedness of any Borrower arising out of an Interest Rate Agreement
entered into in the ordinary course of business; (i) Indebtedness constituting
Priority Claims; (j) Indebtedness in respect of insurance premiums payable to
the Insurance Subsidiary in an aggregate amount not to exceed $10,000,000 and
(k) additional unsecured Indebtedness in the ordinary course of business in an
aggregate amount not to exceed $2,000,000. Notwithstanding anything in this
Section 7.2 or this Agreement to the contrary, the aggregate amount of
Indebtedness for Borrowed Money of Borrowers on a Consolidated Basis, exclusive
of the Obligations and the "Obligations" as such term is defined in the
Revolving Loan A Agreement, shall not exceed $255,000,000 in the aggregate.
7.3. PERMITTED LIENS
No Borrower shall create, incur, assume or suffer to exist any
Lien upon, in or against, or pledge of, any of the Collateral or any of its
properties or assets, whether now owned or hereafter acquired, except the
following (collectively, "PERMITTED LIENS"): (i) Liens under the Loan Documents
or otherwise arising in favor of Agent; (ii) Liens securing the Senior Mortgage
Loan, subject to the Senior Mortgage/Revolving Lender Intercreditor Agreement,
(iii) Liens imposed by law for taxes, assessments or charges of any Governmental
Authority for claims not
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yet due or which are being contested in good faith by appropriate proceedings
and with respect to which adequate reserves or other appropriate provisions are
being maintained by such Person in accordance with GAAP; (iv) (A) statutory
Liens of landlords (provided that with respect to any landlord for leased
locations acquired after the Closing Date, the applicable Borrower shall have
used reasonable efforts (which shall not include the unreasonable payment of
money) to cause such landlord to execute a Landlord Waiver and Consent in form
and substance reasonably satisfactory to Agent in its Permitted Discretion;
provided, further, in the event Borrowers are unable to obtain any such Landlord
Waiver and Consent, Borrowers shall maintain a duplicate up to date set of any
books and records maintained at the location related to the real property owned
by the applicable landlord at a location owned by a Borrower or with respect to
which a Landlord Waiver and Consent reasonably satisfactory to Agent shall have
been obtained) and of carriers, warehousemen, mechanics, materialmen, and (B)
other Liens imposed by law or that arise by operation of law in the ordinary
course of business from the date of creation thereof, in each case only for
amounts not yet due or which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves or other appropriate
provisions are being maintained by such Person in accordance with GAAP; (v)
Liens (A) incurred or deposits made in the ordinary course of business
(including, without limitation, surety bonds and appeal bonds) in connection
with workers' compensation, unemployment insurance and other types of social
security benefits or to secure the performance of tenders, bids, leases,
contracts (other than for the repayment of Indebtedness), statutory obligations
and other similar obligations, or (B) arising as a result of progress payments
under government contracts; (vi) purchase money Liens and Liens securing
Capitalized Lease Obligations (A) securing Indebtedness permitted under Section
7.2(c), or (B) in connection with the purchase by such Person of assets in the
normal course of business, provided that (x) such payables shall not exceed any
limits on Indebtedness provided for herein and shall otherwise be Permitted
Indebtedness hereunder and (y) with respect to Indebtedness incurred pursuant to
Section 7.2(c)(ii) such Liens shall not extend to or cover any property of such
Borrower other than the property being acquired and improvements thereon or
which is the subject of the applicable Capital Lease, (vii) easements,
rights-of-way, restrictions and other similar encumbrances which do not
materially interfere with the conduct of the business of Borrowers and their
Subsidiaries; (viii) any intercompany Liens between a Borrower or Guarantor on
the one hand and another Borrower or Guarantor on the other; (ix) any interest
or title of a lessor under a operating lease; (x) Liens securing the Priority
Claims; and (xi) Liens disclosed on Schedule 7.3.
7.4. INVESTMENTS; NEW FACILITIES OR COLLATERAL; SUBSIDIARIES
No Borrower, directly or indirectly, shall (a) purchase, own,
hold, invest in or otherwise acquire obligations or stock or securities of, or
any other interest in, or all or substantially all of the assets of, any Person
or any joint venture or (b) make or permit to exist any loans, advances or
guarantees to or for the benefit of any Person or assume, guarantee, endorse,
contingently agree to purchase or otherwise become liable for or upon or incur
any obligation of any Person (collectively, an "INVESTMENT"), in each case,
other than (i) Investments in any Borrower or any Subsidiary of any Borrower;
(ii) Investments in any Person to the extent such Person either (x) becomes a
Borrower or a Guarantor under this Agreement, (y) with respect to investments by
Parent in any Person or Subsidiary (other than a Borrower), becomes a borrower
or a guarantor under the Revolving Loan A Documentation or the Mezzanine Loan
Documentation or (z) with respect to investments existing on the Closing Date by
Parent in any
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Person or Subsidiary which is a borrower or guarantor under the Senior Mortgage
Loan Documentation; (iii) Investments in Cash Equivalents; (iv) Investments
listed on Schedule 7.4; (v) trade credit extended in the ordinary course of
business, (vi) advances for business travel and similar temporary advances made
in the ordinary course of business to officers, directors and employees, (vii)
the endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; (vii) guaranties by any
Borrower or any Guarantor of obligations of another Borrower or another
Guarantor, to the extent the obligation guaranteed is otherwise permitted under
this Agreement; (viii) Investments in the Insurance Subsidiary in an amount not
to exceed $1,500,000; and (ix) additional Investments in an amount not to exceed
$2,000,000. No Borrower, directly or indirectly, shall purchase, own, operate,
hold, invest in or otherwise acquire any facility, property or assets or any
Collateral that is not located at the locations set forth on Schedule 5.18B
unless such Borrower shall provide to Agent at least ten (10) Business Days
prior written notice. No Borrower shall have any Subsidiaries other than (i)
another Borrower, or (ii) such Subsidiaries which execute a Joinder Agreement or
a Guaranty and Security Agreement pursuant to Section 6.14 or (iii) Excluded
Subsidiaries.
7.5. DIVIDENDS; REDEMPTIONS
No Borrower shall (i) declare, pay or make any dividend or distribution on any
shares of capital stock or other securities or interests (other than dividends
or distributions payable in its stock, or split-ups or reclassifications of its
stock); (ii) apply any of its funds, property or assets to the acquisition,
redemption or other retirement of any capital stock or other securities or
interests or of any options to purchase or acquire any of the foregoing
(provided, however, that such Borrower may redeem its capital stock from any
terminated employee pursuant to, but only to the extent required or permitted
under, the terms of the related employment or other agreements with such
employee, as long as no Default or Event of Default has occurred and is
continuing or would be caused by or result therefrom), or (iii) otherwise make
any payments or Distributions to any stockholder, member, partner or other
equity owner in such Person's capacity as an equity owner. Notwithstanding the
foregoing, (x) any Borrower may make Distributions and other payments to the
owner of such Borrower or to any obligor under the Mezzanine Loan or the Senior
Mortgage Term Loan B for the purpose of making required payments with respect
thereto; and (y) after the payment in full of the Mezzanine Loan and the Senior
Mortgage Term Loan B, and provided no Default or Event of Default shall have
occurred, be continuing or would exist after giving effect thereto, any Borrower
may make dividends or Distribution. In addition, no Borrower shall make any
payment of any management, service or related or similar fee to any Person or
with respect to any facility owned, operated or leased by Borrower except in the
manner permitted under the Management Agreements and the Management Fee
Subordination Agreements; provided that Borrower shall not make or suffer to
exist any payment of fees under any Management Agreement if a Default of Event
of Default has occurred and is continuing or would result therefrom.
7.6. TRANSACTIONS WITH AFFILIATES
Except as set forth on Schedule 7.6, no Borrower shall enter
into or consummate any transaction of any kind with any of its Affiliates or any
Guarantor or any of their respective Affiliates other than: (i) salary, bonus,
employee stock option and other compensation and employment arrangements with
directors or officers in the ordinary course of business, provided,
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that no payment of any bonus shall be permitted if an Event of Default under
Section (VIII)(a) has occurred and remains in effect or would be caused by or
result from such payment; (ii) distributions and dividends permitted pursuant to
Section 7.4 or Section 7.5, (iii) transactions on overall terms at least as
favorable to such Borrower as would be the case in an arm's length transaction
between unrelated parties of equal bargaining power, and (iv) payments permitted
under and pursuant to written agreements entered into by and between such
Borrower and one or more of its Affiliates that both (A) reflect and constitute
transactions on overall terms at least as favorable to such Borrower as would be
the case in an arm's-length transaction between unrelated parties of equal
bargaining power, and (B) are subject to such terms and conditions as determined
by Agent in its Permitted Discretion; provided, that notwithstanding the
foregoing or any provision of any Loan Document, no Borrower shall (Y) enter
into or consummate any transaction or agreement pursuant to which it becomes a
party to any mortgage, note, indenture or guarantee evidencing any Indebtedness
for Borrowed Money or Contingent Obligations of any of its Affiliates (other
than a Borrower or a Guarantor pursuant to the Loan Documents) or otherwise
becomes responsible or liable, as a guarantor, surety or otherwise, pursuant to
any agreement for any Indebtedness for Borrowed Money or Contingent Obligations
of any such Affiliate (other than a Borrower or a Guarantor pursuant to the Loan
Documents) or (Z) make any payment to any of its Affiliates in excess of
$100,000 without the prior written consent of Agent. By execution of this
Agreement, the Agent consents to the payments made to Affiliates pursuant to the
agreements set forth on Schedule 7.6.
7.7. CHARTER DOCUMENTS; FISCAL YEAR; DISSOLUTION; USE OF PROCEEDS
No Borrower shall (i) amend, modify, restate or change its
certificate of incorporation or formation or bylaws or similar charter documents
in a manner that would be adverse to Agent or any Lender, (ii) change its fiscal
year unless Borrowers demonstrate to Agent's reasonable satisfaction compliance
with the covenants contained herein for both the fiscal year in effect prior to
any change and the new fiscal year period by delivery to Agent of appropriate
interim and annual pro forma, historical and current compliance certificates for
such periods and such other information as Agent may reasonably request, (iii)
amend, alter or suspend or terminate or make provisional in any material way,
any Permit material to the business of such Borrower without the prior written
consent of Agent, which consent shall not be unreasonably withheld or delayed,
or (iv) use any proceeds of any Advance for "purchasing" or "carrying" "margin
stock" as defined in Regulations U, T or X of the Board of Governors of the
Federal Reserve System.
7.8. TRANSFER OF ASSETS
No Borrower shall sell, lease, transfer, pledge, assign or
otherwise dispose of any Collateral or any interest therein or agree to do any
of the foregoing, except that:
(a) the sale, transfer, lease or other disposition by any
Borrower or any Guarantor of assets aggregating for all Borrowers and Guarantors
not more than $5,000,000 during in the Term; and
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(b) the sale, transfer, lease or other disposition by any
Borrower or any Guarantor of not more than five (5) Facilities during the Term,
provided that any such sale, transfer, lease or other disposition shall not
result in a Default or Event of Default; and
7.9. CONTINGENT OBLIGATIONS
No Borrower shall enter into any Contingent Obligations or
assume, guarantee, endorse, contingently agree to purchase or otherwise become
liable for or upon or incur any obligation of any Person except for (a)
Contingent Obligations permitted pursuant to Section 7.2 or Section 7.4; (b)
Contingent Obligations of any Borrower or any Guarantor for any Borrower or any
Guarantor, to the extent the underlying obligation is otherwise permitted under
this Agreement; (c) Contingent Obligations set forth in Schedule 7.9 hereof; and
(d) refinancings and replacements of Contingent Obligations otherwise permitted
hereunder.
7.10 IRS FORM 8821
No Borrower shall alter, amend, restate, or otherwise modify,
or withdraw, terminate or re-file the IRS Form 8821 required to be filed
pursuant to the Conditions Precedent in Section 4.1 hereof.
7.11. NEGATIVE PLEDGE
No Borrower shall pledge or grant a Lien on any stock or other
equity interests of any Subsidiary which it owns at any time to any Person other
than to Agent for itself and the benefit of Lenders.
VIII. EVENTS OF DEFAULT
The occurrence of any one or more of the following shall constitute an
"EVENT OF DEFAULT":
(a) any Borrower shall fail to pay any amount on the
Obligations or provided for in any Loan Document when due (whether on any
payment date, at maturity, by reason of acceleration, by notice of intention to
prepay, by required prepayment or otherwise);
(b) any representation, statement or warranty made or
deemed made by any Borrower or any Guarantor in any Loan Document or in any
other certificate, document, report or opinion delivered in conjunction with any
Loan Document to which it is a party, shall not be true and correct in all
material respects or shall have been false or misleading in any material respect
on the date when made or deemed to have been made;
(c) any Borrower or any Guarantor or other party thereto
other than Agent or any Lender, shall be in violation, breach or default of, or
shall fail to perform, observe or comply with any covenant, obligation or
agreement set forth in, any Loan Document and such violation, breach, default or
failure shall not be cured within a fifteen (15) calendar day cure period
commencing from the earlier of (i) Receipt by such Person of written notice of
such breach,
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default, violation or failure, and (ii) the time at which such Person or any
authorized officer thereof knew or became aware, or should have known or been
aware, of such failure, violation, breach or default; provided that, (A) the
cure period set forth above shall not apply to any other Default or Event of
Default set forth in any other provision of this Article VIII as to which no
cure period or a different cure period is provided and (B) with respect to the
covenants set forth in Sections 6.1, 6.2, 6.3(i), (ii) and (iii), 6.5, 6.8, 6.9,
6.11, 6.12, 6.14 and Article VII there shall be no cure period;
(d) (i) any of the Loan Documents ceases to be in full
force and effect, or (ii) any Lien created thereunder ceases to constitute a
valid perfected first priority Lien on the Collateral (other than Priority
Liens) in accordance with the terms thereof, or Agent ceases to have a valid
perfected first priority security interest (subject only to Priority Liens) in
any of the Collateral or any securities pledged to Agent pursuant to the
Security Documents;
(e) one or more judgments or decrees is rendered against
any Borrower or Guarantor in an amount in excess of $2,000,000 individually or
in the aggregate, which is/are not satisfied, stayed, vacated or discharged of
record for a period of thirty (30) consecutive calendar days after being
rendered;
(f) (i) any default occurs, which is not cured or waived
(x) in the payment of any amount with respect to Indebtedness under the Senior
Mortgage Loan Documentation, the Mezzanine Loan Documentation, the Revolving
Loan A Documentation, any Priority Claims or in respect of any other
Indebtedness (other than the Obligations) of any Borrower or Guarantor in excess
of $2,000,000; or (y) in the performance, observance or fulfillment of any
provision contained in any agreement, contract, document or instrument under or
pursuant to which any Indebtedness described in clause (x) above was issued,
created, assumed, guaranteed or secured and such default continues for more than
any applicable grace period or permits the holder of any such Indebtedness to
accelerate the maturity thereof; or (ii) any such Indebtedness of any Borrower
or Guarantor is declared to be due and payable or is required to be prepaid
(other than by a regularly scheduled payment or a voluntary prepayment permitted
under this Agreement) prior to the stated maturity thereof, or any obligation of
such Person for the payment of Indebtedness (other than the Obligations) is not
paid when due or within any applicable grace period, or any such obligation
becomes or is declared to be due and payable before the expressed maturity
thereof (other than as a result of a voluntary prepayment permitted under this
Agreement);
(g) any Borrower or any Guarantor shall (i) be unable to
pay its debts generally as they become due, (ii) make a general assignment for
the benefit of its creditors, (iii) commence a proceeding for the appointment of
a receiver, trustee, liquidator or conservator of itself or of the whole or any
substantial part of its property, or (iv) file a petition seeking reorganization
or liquidation or similar relief under any Debtor Relief Law or any other
applicable law or statute;
(h) (i) a court of competent jurisdiction shall (A) enter
an order, judgment or decree appointing a custodian, receiver, trustee,
liquidator or conservator of any Borrower or Guarantor or the whole or any
substantial part of any such Person's properties, which shall continue unstayed
and in effect for a period of sixty (60) consecutive calendar days, (B) shall
37
approve a petition filed against any Borrower or Guarantor seeking
reorganization, liquidation or similar relief under the any Debtor Relief Law or
any other applicable law or statute, which is not dismissed within sixty (60)
calendar days or, (C) under the provisions of any Debtor Relief Law or other
applicable law or statute, assume custody or control of any Borrower or
Guarantor or of the whole or any substantial part of any such Person's
properties, which is not irrevocably relinquished within sixty (60) calendar
days, or (ii) there is commenced against any Borrower or Guarantor any
proceeding or petition seeking reorganization, liquidation or similar relief
under any Debtor Relief Law or any other applicable law or statute, which (A) is
not unconditionally dismissed within sixty (60) calendar days after the date of
commencement, or (B) is with respect to which any Borrower or Guarantor takes
any action to indicate its approval of or consent to;
(i) (i) any Change of Control occurs, (ii) any Material
Adverse Effect or Material Adverse Change occurs, or (iii) any Liability Event
occurs;
(j) Agent receives any indication or evidence that any
Borrower or Guarantor may have directly or indirectly been engaged in any type
of activity which, in Agent's Permitted Discretion, might result in forfeiture
of any material Collateral to any Governmental Authority which shall have
continued unremedied for a period of ten (10) calendar days after written notice
from Agent;
(k) an Event of Default occurs under any other Loan
Document;
(l) any Borrower or Guarantor is criminally indicted or
convicted under any law that could lead to a forfeiture of any Collateral;
(m) the issuance of any process for levy, attachment or
garnishment or execution upon or prior to any judgment against any Borrower or
Guarantor or any of their property or assets in an aggregate amount greater than
$2,000,000;
then, and in any such event, notwithstanding any other provision of any Loan
Document, Agent may (and at the request of Requisite Lenders, shall), by notice
to Borrowers (i) terminate its obligations to make Advances hereunder, whereupon
the same shall immediately terminate and (ii) declare all or any of the
Revolving Notes, all interest thereon and all other Obligations to be due and
payable immediately (except in the case of an Event of Default under Section
VIII(g) or (h), in which event all of the foregoing shall automatically and
without further act by Agent be due and payable), provided that, with respect to
non-material breaches or violations that constitute Events of Default under
clause (ii) of Section VIII(d), there shall be a three (3) Business Day cure
period commencing from the earlier of (A) Receipt by the applicable Person of
written notice of such breach or violation or of any event, fact or circumstance
constituting or resulting in any of the foregoing, and (B) the time at which
such Person or any authorized officer thereof knew or became aware, or should
have known or been aware, of such breach or violation and resulting Event of
Default or of any event, fact or circumstance constituting or resulting in any
of the foregoing)), in each case without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by Borrower.
IX. RIGHTS AND REMEDIES AFTER DEFAULT
9.1. RIGHTS AND REMEDIES
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(a) In addition to the acceleration provisions set forth
in Article VIII above, upon the occurrence and continuation of an Event of
Default, Agent shall have the right to (and at the request of Requisite Lenders,
shall) exercise any and all rights, options and remedies provided for in any
Loan Document, under the UCC or at law or in equity, including, without
limitation, the right to (i) apply any property of any Borrower held by Agent,
for the benefit of Lenders to reduce the Obligations, (ii) foreclose the Liens
created under the Security Documents, (iii) realize upon, take possession of
and/or sell any Collateral or securities pledged (other than Collateral
consisting of Accounts owed or owing by Medicaid/Medicare Account Debtors absent
a court order or compliance with applicable law) with or without judicial
process, (iv) exercise all rights and powers with respect to the Collateral as
any Borrower, as applicable, might exercise (other than with respect to
Collateral consisting of Accounts owed or owing by Medicaid/Medicare Account
Debtors absent a court order or compliance with applicable law), (v) collect and
send notices regarding the Collateral (other than with respect to Collateral
consisting of Accounts owed or owing by Medicaid/Medicare Account Debtors absent
a court order or compliance with applicable law), with or without judicial
process, (vi) by its own means or with judicial assistance, enter any premises
at which Collateral and/or pledged securities are located, or dispose of the
Collateral and/or pledged securities on such premises without any liability for
rent, storage, utilities, or other sums (other than amounts agreed to by Agent
in any agreement with any landlord or lessor), and no Borrower shall resist or
interfere with such action, (vii) at Borrowers' expense, require that all or any
part of the Collateral be assembled and made available to Agent at any
reasonable place designated by Agent, (viii) reduce or otherwise change the
Facility Cap, and/or (ix) relinquish or abandon any Collateral or securities
pledged or any Lien thereon. Notwithstanding any provision of any Loan Document,
Agent, in its Permitted Discretion, shall have the right, at any time that any
Borrower fails to do so, and from time to time, without prior notice, to: (i)
obtain insurance covering any of the Collateral to the extent required
hereunder; (ii) pay for the performance of any of Obligations; (iii) discharge
taxes or Liens on any of the Collateral that are in violation of any Loan
Document unless such Borrower is in good faith with due diligence by appropriate
proceedings contesting those items; and (iv) pay for the maintenance and
preservation of the Collateral. Such expenses and advances shall be added to the
Obligations until reimbursed to Agent and shall be secured by the Collateral,
and such payments by Agent shall not be construed as a waiver by Agent or
Lenders of any Event of Default or any other rights or remedies of Agent and
Lenders.
(b) Borrowers agree that notice received by any of them
it at least ten (10) calendar days before the time of any intended public sale,
or the time after which any private sale or other disposition of Collateral is
to be made, shall be deemed to be reasonable notice of such sale or other
disposition. If permitted by applicable law, any perishable Collateral which
threatens to speedily decline in value or which is sold on a recognized market
may be sold immediately by Agent without prior notice to Borrowers. At any sale
or disposition of Collateral or securities pledged, Agent may (to the extent
permitted by applicable law) purchase all or any part thereof free from any
right of redemption by Borrowers which right is hereby waived and released.
Borrowers covenants and agrees not to, and not to permit or cause any of its
Subsidiaries to, interfere with or impose any obstacle to Agent's exercise of
its rights and remedies with respect to the Collateral. Agent, in dealing with
or disposing of the Collateral or any part thereof, shall not be required to
give priority or preference to any item of Collateral or otherwise to marshal
assets or to take possession or sell any Collateral with judicial process.
39
9.2. APPLICATION OF PROCEEDS
In addition to any other rights, options and remedies Agent
and Lenders have under the Loan Documents, the UCC, at law or in equity, all
dividends, interest, rents, issues, profits, fees, revenues, income and other
proceeds collected or received from collecting, holding, managing, renting,
selling, or otherwise disposing of all or any part of the Collateral or any
proceeds thereof upon exercise of its remedies hereunder shall be applied in the
following order of priority: (i) first, to the payment of all reasonable costs
and expenses of such collection, storage, lease, holding, operation, management,
sale, disposition or delivery and of conducting Borrowers' business and of
maintenance, repairs, replacements, alterations, additions and improvements of
or to the Collateral, and to the payment of all sums which Agent or Lenders may
be required or may elect to pay, if any, for taxes, assessments, insurance and
other charges upon the Collateral or any part thereof, and all other payments
that Agent or Lenders may be required or authorized to make under any provision
of this Agreement (including, without limitation, in each such case, reasonable
in house documentation and diligence fees and legal expenses, search, audit,
recording, professional and filing fees and expenses and reasonable attorneys'
fees and all expenses, liabilities and advances made or incurred in connection
therewith); (ii) second, to the payment of all Obligations as provided herein
and as determined by Agent in its sole discretion; (iii) third, to the
satisfaction of the Senior Mortgage Loan as provided in the Senior
Mortgage/Revolving Lender Intercreditor Agreement; and (iv) fourth, to the
payment of any surplus then remaining to Borrowers, unless otherwise provided by
law or directed by a court of competent jurisdiction, provided that Borrowers
shall be liable for any deficiency if such proceeds are insufficient to satisfy
the Obligations or any of the other items referred to in this section.
9.3. RIGHTS OF AGENT TO APPOINT RECEIVER
Without limiting and in addition to any other rights, options
and remedies Agent and Lenders have under the Loan Documents, the UCC, at law or
in equity, upon the occurrence and continuation of an Event of Default, Agent
and Lenders shall have the right to apply for and have a receiver appointed by a
court of competent jurisdiction in any action taken by Agent to enforce its
rights and remedies in order to manage, protect and preserve the Collateral and
continue the operation of the business of Borrowers and to collect all revenues
and profits thereof and apply the same to the payment of all reasonable expenses
and other charges of such receivership including the reasonable compensation of
the receiver and to the payments as aforesaid until a sale or other disposition
of such Collateral shall be finally made and consummated.
9.4. RIGHTS AND REMEDIES NOT EXCLUSIVE
Agent shall have the right in its sole discretion to determine
which rights, Liens and/or remedies Agent or Lenders may at any time pursue,
relinquish, subordinate or modify, and such determination will not in any way
modify or affect any of Agent's or Lenders' rights, Liens or remedies under any
Loan Document, applicable law or equity. The enumeration of any rights and
remedies in any Loan Document is not intended to be exhaustive, and all rights
and remedies of Agent and Lenders described in any Loan Document are cumulative
and are not alternative to or exclusive of any other rights or remedies which
Agent or Lenders otherwise may
40
have. The partial or complete exercise of any right or remedy shall not preclude
any other further exercise of such or any other right or remedy.
X. WAIVERS AND JUDICIAL PROCEEDINGS
10.1. WAIVERS
(a) Except as expressly provided for herein, each
Borrower hereby waives set-off, counterclaim, demand, presentment, protest, all
defenses with respect to any and all instruments and all notices and demands of
any description, and the pleading of any statute of limitations as a defense to
any demand under any Loan Document. Each Borrower hereby waives any and all
defenses and counterclaims it may have or could interpose in any action or
procedure brought by Agent or any Lender to obtain an order of court recognizing
the assignment of, or Lien of Agent, for the benefit of itself and Lenders, in
and to, any Collateral, whether or not payable by a Medicaid/Medicare Account
Debtor. With respect to any action hereunder, Agent conclusively may rely upon,
and shall incur no liability to Borrowers in acting upon, any request or other
communication that Agent reasonably believes to have been given or made by a
person authorized on Borrower's behalf, whether or not such person is listed on
the incumbency certificate delivered pursuant to Section 4.1 hereof. In each
such case, each Borrower hereby waives the right to dispute Agent's action based
upon such request or other communication, absent manifest error.
(b) If it is at any time determined that any Borrower is
liable as a guarantor of any portion of the Obligations (and not as a co-obligor
or co-borrower), the liability of each Borrower hereunder shall be absolute and
unconditional irrespective of (a) the insolvency of, or the voluntary or
involuntary bankruptcy, assignment for the benefit of creditors, reorganization
or other similar proceedings affecting any other Borrower or any of its assets,
or (b) any other circumstance or claim which might otherwise constitute a
defense available to, or a discharge of, any Person that is a Borrower in
respect of the Obligations. No payment made by any Borrower, or received or
collected by Agent or any Lender from any Borrower by virtue of any action,
proceeding or set-off in reduction or in payment of the Obligations shall be
deemed to modify, release or otherwise affect the liability of any Borrower
under the Loan Documents, and each Borrower shall remain liable for the
Obligations until all Obligations are paid in full.
10.2. DELAY; NO WAIVER OF DEFAULTS
No course of action or dealing, renewal, release or extension
of any provision of any Loan Document, or single or partial exercise of any such
provision, or delay, failure or omission on Agent's or Lenders' part in
enforcing any such provision shall affect the liability of any Borrower or
Guarantor or operate as a waiver of such provision or affect the liability of
any Borrower or Guarantor or preclude any other or further exercise of such
provision. No waiver by any party to any Loan Document of any one or more
defaults by any other party in the performance of any of the provisions of any
Loan Document shall operate or be construed as a waiver of any future default,
whether of a like or different nature, and each such waiver shall be limited
solely to the express terms and provisions of such waiver. Notwithstanding any
other provision of any Loan Document, by completing the Closing under this
Agreement and/or by making Advances, neither Agent nor any Lender waives any
breach of any representation or
41
warranty of under any Loan Document, and all of Agent's and Lenders' claims and
rights resulting from any such breach or misrepresentation are specifically
reserved.
10.3. JURY WAIVER
EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION ARISING UNDER THE LOAN
DOCUMENTS OR IN ANY WAY CONNECTED WITH OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES WITH RESPECT TO THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
THEREBY, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE. EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND
THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES
TO THE WAIVER OF THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY.
10.4 AMENDMENT AND WAIVERS
(a) Except as otherwise provided herein, no amendment,
modification, termination, or waiver of any provision of this Agreement or any
Loan Document, or consent to any departure by Borrowers therefrom, shall in any
event be effective unless the same shall be in writing and signed by the
Requisite Lenders, Agent and Borrowers; provided, that no amendment,
modification, termination, or waiver shall, unless in writing and signed by each
Lender directly affected thereby, do any of the following: (i) increase the
Commitment of such Lender; (ii) reduce the principal of, rate of interest (other
than default interest) on or fees payable with respect to any Loan; (iii) extend
the scheduled due date or reduce the amount due on any scheduled due date, of
any installment of principal, interest, or fees payable with respect to any
Loan, or waive, forgive, extend, defer or postpone the payment thereof; (iv)
change the percentage of the Commitments, of the aggregate unpaid principal
amount of the Loans, or of Lenders which shall be required for Lenders or any of
them to take any action hereunder; (v) except as otherwise permitted herein or
in the other Loan Documents, release any Guaranty or release any material
portion of the Collateral (provided, that consent to such release shall not be
required if such release is made after and during the continuance of an Event of
Default in connection with the sale or disposition of the Collateral by Agent);
(vi) amend, modify or waive this Section 10.4 or the definitions of the terms
used in this Section 10.4 insofar as the definitions affect the substance of
this Section 10.4; (vii) consent to the assignment or other transfer by
Borrowers or any other party (other than any Lender) to any Loan Documents of
any of their rights and obligations under any Loan Document; or (viii) increase
the Advance Rate or change the definition of Eligible Receivables or Borrowing
Base; and, provided, further, that no amendment, modification, termination or
waiver affecting the rights or duties of Agent under any Loan Document shall in
any event be effective, unless in writing and signed by Agent, in addition to
Lenders required herein above to take such action.
(b) Each amendment, modification, termination or waiver
shall be effective only in the specific instance and for the specific purpose
for which it was given. No amendment,
42
modification, termination or waiver shall be required for Agent to take
additional Collateral pursuant to any Loan Document.
(c) Any amendment, modification, termination, waiver or
consent effected in accordance with this Section 10.4 shall be binding upon each
Lender and Borrowers.
XI. EFFECTIVE DATE AND TERMINATION
11.1. EFFECTIVENESS AND TERMINATION
Subject to Agent's and Lenders' rights to accelerate the Loans
and terminate and cease making and funding Advances if any Event of Default has
occurred and is continuing, this Agreement shall continue in full force and
effect until the full performance and indefeasible payment in cash of all
Obligations, unless terminated sooner as provided in this Section 11.1.
Borrowers may terminate this Agreement at any time upon not less than fifteen
(15) calendar days' prior written notice to Agent and upon full performance and
indefeasible payment in full in cash of all Obligations on or prior to such 15th
calendar day after Receipt by Agent of such written notice, provided, however,
that, notwithstanding any other provision of any Loan Document, (x) Borrowers
shall have no right to terminate this Agreement until the second anniversary of
the Closing Date (unless either (i) Borrowers shall pay to Agent, for the pro
rata benefit of Lenders, an amount equal to the Unused Line Fee that would
accrue during the period from such termination to such second anniversary or
(ii) such termination occurs in connection with a Change of Control); and (y)
Borrowers shall have no right to terminate this Agreement until the termination
and indefeasible payment in full of all Obligations (other than Unmatured
Surviving Obligations) hereunder and all obligations under the Mezzanine Loan
Documentation and the Senior Mortgage Term Loan B. All of the Obligations shall
be immediately due and payable upon any such termination on the termination date
stated in any notice of termination (the "TERMINATION DATE"); provided that,
notwithstanding any other provision of any Loan Document, the Termination Date
shall be effective no earlier than the first Business Day following the
expiration of the fifteen (15) calendar days' prior written notice period.
Notwithstanding any other provision of any Loan Document, no termination of this
Agreement shall affect any Lender's or Agent's rights or any of the Obligations
existing as of the effective date of such termination, and the provisions of the
Loan Documents shall continue to be fully operative until the Obligations (other
than Unmatured Surviving Obligations) have been fully performed and indefeasibly
paid in cash in full. The Liens granted to Agent, for the benefit of itself and
Lenders, under the Security Documents and the financing statements filed
pursuant thereto and the rights and powers of Agent and Lenders shall continue
in full force and effect notwithstanding the fact that Borrowers' borrowings
hereunder may from time to time be in a zero or credit position until all of the
Obligations (other than Unmatured Surviving Obligations) have been fully
performed and indefeasibly paid in full in cash.
11.2. SURVIVAL
All obligations, covenants, agreements, representations,
warranties, waivers and indemnities made by any Borrower in any Loan Document
shall survive the execution and delivery of the Loan Documents, the Closing, the
making of the Advances and any termination of this Agreement until all
Obligations (other than Unmatured Surviving Obligations) are fully
43
performed and indefeasibly paid in full in cash. The obligations and provisions
of Sections 3.4, 3.5, 6.13, 10.1, 10.3, 11.1, 11.2, 14.4, 14.7 and 14.9 shall
survive termination of the Loan Documents and any payment, in full or in part,
of the Obligations.
XII. AGENCY PROVISIONS
12.1. AGENT
(a) Appointment. Each Lender hereby designates and
appoints CapitalSource as the administrative agent and the collateral agent,
under this Agreement and the other Loan Documents, and each Lender hereby
irrevocably authorizes CapitalSource, as the administrative agent and the
collateral agent for such Lender, to take such action or to refrain from taking
such action on its behalf under the provisions of this Agreement and the other
Loan Documents and to exercise such powers and perform such duties as are
delegated to Agent by the terms of this Agreement and the other Loan Documents,
together with such other powers as are reasonably incidental thereto. Agent
agrees to act as such on the conditions contained in this Article. Except for
rights specifically noted, the provisions of this Article are solely for the
benefit of Agent and Lenders, and Borrowers shall have no rights as a
third-party beneficiary of any of the provisions hereof. Agent may perform any
of its duties hereunder, or under the Loan Documents, by or through its agents
or employees.
(b) Nature of Duties. In performing its functions and
duties under this Agreement, Agent is acting solely on behalf of Lenders and its
duties are administrative in nature and it does not assume and shall not be
deemed to have assumed any obligation toward or relationship of agency or trust
with or for Lenders, other than as expressly set forth herein and in the other
Loan Documents, or for Borrowers. Agent shall have no duties, obligations or
responsibilities except those expressly set forth in this Agreement or in the
other Loan Documents. Agent shall not have by reason of this Agreement a
fiduciary relationship in respect of any Lender. Except for information,
notices, reports, and other documents expressly required to be furnished to
Lenders by Agent hereunder or given to Agent for the account of or with copies
for Lenders, each Lender shall make its own independent investigation of the
financial condition and affairs of Borrowers in connection with the extension of
credit hereunder and shall make its own appraisal of the creditworthiness of
Borrowers, and Agent shall have no duty or responsibility, either initially or
on a continuing basis, to provide any Lender with any credit or other
information with respect thereto, whether coming into its possession before the
Closing Date or at any time or times thereafter. If Agent seeks the consent or
approval of any Lenders to the taking or refraining from taking any action
hereunder, then Agent shall send prior written notice thereof to each Lender.
Agent shall promptly notify (in writing) each Lender any time that the
applicable percentage of Lenders have instructed Agent to act or refrain from
acting pursuant hereto.
(c) Rights, Exculpation, Etc. Neither Agent nor any of
its officers, directors, managers, members, equity owners, employees or agents
shall be liable to any Lender for any action lawfully taken or omitted by them
hereunder or under any of the other Loan Documents, or in connection herewith or
therewith. Notwithstanding the foregoing, Agent shall be obligated on the terms
set forth herein for performance of its express duties and obligations
hereunder, and Agent shall be liable with respect to its own gross negligence or
willful misconduct. Agent shall
44
not be liable for any apportionment or distribution of payments made by it in
good faith, and if any such apportionment or distribution is subsequently
determined to have been made in error, the sole recourse of any Lender to whom
payment was due but not made shall be to recover from other Lenders any payment
in excess of the amount to which they are determined to be entitled (and such
other Lenders hereby agree to return to such Lender any such erroneous payments
received by them). In performing its functions and duties hereunder, Agent shall
exercise the same care which it would in dealing with loans for its own account.
Agent shall not be responsible to any Lender for any recitals, statements,
representations or warranties made by Borrowers herein or for the execution,
effectiveness, genuineness, validity, enforceability, collectibility, or
sufficiency of this Agreement or any of the other Loan Documents or the
transactions contemplated thereby, or for the financial condition of Borrowers.
Agent shall not be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions, or conditions of this
Agreement or any of the Loan Documents or the financial condition of Borrowers,
or the existence or possible existence of any Default or Event of Default. Agent
may at any time request instructions from Lenders with respect to any actions or
approvals which by the terms of this Agreement or of any of the other Loan
Documents Agent is permitted or required to take or to grant, and Agent shall be
absolutely entitled to refrain from taking any action or to withhold any
approval and shall not be under any liability whatsoever to any Person for
refraining from taking any action or withholding any approval under any of the
Loan Documents until it shall have received such instructions from the
applicable percentage of Lenders. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against Agent as a result of Agent
acting or refraining from acting under this Agreement or any of the other Loan
Documents in accordance with the instructions of the applicable percentage of
Lenders and notwithstanding the instructions of Lenders, Agent shall have no
obligation to take any action if it, in good faith believes that such action
exposes Agent or any of its officers, directors, managers, members, equity
owners, employees or agents to any personal liability unless Agent receives an
indemnification reasonably satisfactory to it from Lenders with respect to such
action.
(d) Reliance. Agent shall be entitled to rely upon any
written notices, statements, certificates, orders or other documents or any
telephone message or other communication (including any writing, telex, telecopy
or telegram) believed by it in good faith to be genuine and correct and to have
been signed, sent or made by the proper Person, and with respect to all matters
pertaining to this Agreement or any of the other Loan Documents and its duties
hereunder or thereunder, upon advice of legal counsel, independent accountants,
and other experts selected by Agent in its sole discretion.
(e) Indemnification. Each Lender, severally and not
jointly, agrees to reimburse and indemnify Agent and its officers, directors,
managers, members, equity owners, employees and agents (to the extent not
reimbursed by Borrowers or the Guarantors), ratably according to their
respective Pro Rata Share in effect on the date on which indemnification is
sought under this subsection of the total outstanding obligations (or, if
indemnification is sought after the date upon which the Commitments shall have
terminated and the Loans shall have been paid in full, ratably in accordance
with their Pro Rata Share immediately prior to such date of the total
outstanding obligations), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses,
advances, or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against Agent or
45
any of its officers, directors, managers, members, equity owners, employees or
agents in any way relating to or arising out of this Agreement or any of the
other Loan Documents or any action taken or omitted by Agent under this
Agreement or any of the other Loan Documents; provided, however, that no Lender
shall be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses, advances
or disbursements resulting from Agent's gross negligence or willful misconduct.
The obligations of Lenders under this Article XII shall survive the payment in
full of the Obligations and the termination of this Agreement.
(f) CapitalSource Individually. With respect to the Loans
made by it, and the Revolving Notes issued to it, CapitalSource shall have and
may exercise the same rights and powers hereunder and under the other Loan
Documents and is subject to the same obligations and liabilities as and to the
extent set forth herein and the other Loan Documents as any other Lender. The
terms "Lenders" or "Requisite Lenders" or any similar terms shall, unless the
context clearly otherwise indicates, include CapitalSource in its individual
capacity as a Lender or one of the Requisite Lenders. CapitalSource may lend
money to, and generally engage in any kind of banking, trust or other business
with any Borrower or any Subsidiary of any Borrower as if it were not acting as
Agent pursuant hereto.
(g) Successor Agent.
(i) Resignation. Agent may resign from the
performance of all its functions and duties hereunder at any time by giving at
least thirty (30) days' prior written notice to Borrowers and Lenders. Such
resignation shall take effect upon the acceptance by a successor Agent of
appointment pursuant to clause (ii) below or as otherwise provided below.
(ii) Appointment of Successor. Upon any such
notice of resignation pursuant to clause (g)(i) above, Requisite Lenders shall
appoint a successor Agent with, so long as no Event of Default shall have
occurred and be continuing, the consent of Borrowing Agent (which consent shall
not be unreasonably withheld or delayed). If a successor Agent shall not have
been so appointed within said thirty (30) day period, the retiring Agent, upon
notice to Borrowers, may, on behalf of Lenders, then appoint a successor Agent
who shall serve as Agent until such time, as Requisite Lenders (with, so long as
no Event of Default shall have occurred and be continuing, the consent of
Borrowing Agent (which consent shall not be unreasonably withheld or delayed)),
appoint a successor Agent as provided above. If no successor Agent has been
appointed pursuant to the foregoing within said thirty (30) day period, the
resignation shall become effective and Requisite Lenders shall thereafter
perform all the duties of Agent hereunder, until such time, if any, as Requisite
Lenders appoint a successor Agent as provided above.
(iii) Successor Agent. Upon the acceptance of any
appointment as Agent under the Loan Documents by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and, upon the
earlier of such acceptance or the effective date of the retiring Agent's
resignation, the retiring Agent shall be discharged from its duties and
obligations under the Loan Documents, except that any indemnity rights or other
rights in favor of such retiring Agent shall continue. After any retiring
Agent's resignation as Agent under the Loan Documents, the
46
provisions of this Article XII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under the Loan Documents.
(h) Collateral Matters.
(i) Collateral. Each Lender agrees that any
action taken by Agent or the Requisite Lenders (or, where required by the
express terms of this Agreement, a greater proportion of Lenders) in accordance
with the provisions of this Agreement or of the other Loan Documents relating to
the Collateral, and the exercise by Agent or the Requisite Lenders (or, where so
required, such greater proportion) of the powers set forth herein or therein,
together with such other powers as are reasonably incidental thereto, shall be
authorized and binding upon all of Lenders and Agent. Without limiting the
generality of the foregoing, Agent shall have the sole and exclusive right and
authority to (i) act as the disbursing and collecting agent for Lenders with
respect to all payments and collections arising in connection herewith and with
the Loan Documents in connection with the Collateral; (ii) execute and deliver
each Loan Document relating to the Collateral and accept delivery of each such
agreement delivered by Borrowers or any of their Subsidiaries; (iii) act as
collateral agent for Lenders for purposes of the perfection of all security
interests and Liens created by such agreements and all other purposes stated
therein; (iv) manage, supervise and otherwise deal with the Collateral; (v) take
such action as is necessary or desirable to maintain the perfection and priority
of the security interests and Liens created or purported to be created by the
Loan Documents relating to the Collateral, and (vi) except as may be otherwise
specifically restricted by the terms hereof or of any other Loan Document,
exercise all remedies given to such Agent and Lenders with respect to the
Collateral under the Loan Documents relating thereto, applicable law or
otherwise.
(ii) Release of Collateral. Lenders hereby
irrevocably authorize Agent, and Agent and Lenders agree for the benefit of
Borrowers, to release any Lien granted to or held by Agent for the benefit of
Lenders upon (A) all Collateral upon termination of this Agreement and payment
and satisfaction in full of all Obligations (other than Unmatured Surviving
Obligations); or (B) any portion of the Collateral which is sold, transferred or
otherwise disposed of in accordance with the provisions of this Agreement, if
Borrowers certify to Agent that such sale, transfer or other disposition is made
in compliance with the provisions of this Agreement (and Agent may rely in good
faith conclusively on any such certificate, without further inquiry). Upon at
least five (5) Business Days prior written request by any Borrower, Agent shall
(and is hereby irrevocably authorized by Lenders to) execute such documents as
may be necessary to evidence the release of the Liens granted to Agent for the
benefit of Lenders herein or pursuant hereto upon all or any portion of the
Collateral in accordance with the previous sentence.
(iii) Absence of Duty. Agent shall have no
obligation whatsoever to any Lender or any other Person to assure that the
property covered by this Agreement or the Loan Documents exists or is owned by
Borrowers or is cared for, protected or insured or has been encumbered or that
the Liens granted to Agent on behalf of Lenders herein or pursuant hereto have
been properly or sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure, or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent in this Section 12.1(h) or in any of the Loan
47
Documents, it being understood and agreed that in respect of the property
covered by this Agreement or the Loan Documents or any act, omission, or event
related thereto, Agent may act in any manner consistent with the provisions of
this Agreement and the other Loan Documents and as it may otherwise deem
appropriate, in its Permitted Discretion, given Agent's own interest in property
covered by this Agreement or the Loan Documents as one of Lenders and that Agent
shall have no duty or liability whatsoever to any of the other Lenders;
provided, that Agent shall exercise the same care which it would in dealing with
loans for its own account. Notwithstanding the foregoing, Agent shall be liable
with respect to its own gross negligence or willful misconduct.
(i) Agency for Perfection. Each Lender hereby appoints
Agent as agent for the purpose of perfecting Lenders' security interest in
Collateral which, in accordance with Article 9 of the UCC in any applicable
jurisdiction, can be perfected only by possession. Should any Lender (other than
Agent) obtain possession of any such Collateral, such Lender shall notify Agent
thereof, and, promptly upon Agent's request therefor, shall deliver such
Collateral to Agent or in accordance with Agent's instructions.
(j) Exercise of Remedies. Except as set forth in Section
12.3, each Lender agrees that it will not have any right individually to enforce
or seek to enforce this Agreement or any Loan Document or to realize upon any
collateral security for the Loans, it being understood and agreed that such
rights and remedies may be exercised only by Agent.
12.2. CONSENTS
(a) In the event Agent requests the consent of a Lender
and does not receive a written denial thereof within five (5) Business Days
after such Lender's receipt of such request, then such Lender will be deemed to
have given such consent so long as such request contained a notice stating that
such failure to respond within five (5) Business Days would be deemed to be a
consent by such Lender.
(b) In the event Agent requests the consent of a Lender
in a situation where such Lender's consent would be required and such consent is
denied, then Agent may, at its option, require such Lender to assign its
interest in the Loans to Agent for a price equal to the then outstanding
principal amount thereof plus accrued and unpaid interest and fees due such
Lender, which interest and fees will be paid when collected from Borrowers. In
the event that Agent elects to require any Lender to assign its interest to
Agent pursuant to this Section 12.2, Agent will so notify such Lender in writing
within forty-five (45) days following such Lender's denial, and such Lender will
assign its interest to Agent no later than five (5) days following receipt of
such notice.
12.3. SET OFF AND SHARING OF PAYMENTS
In addition to any rights and remedies now or hereafter
granted under applicable law and not by way of limitation of any such rights,
upon the occurrence and during the continuance of any Event of Default, each
Lender is hereby authorized by Borrowers at any time or from time to time, to
the fullest extent permitted by law, with reasonably prompt subsequent notice to
Borrowers or to any other Person (any prior or contemporaneous notice being
hereby
48
expressly waived) to set off and to appropriate and to apply any and all (a)
balances (general or special, time or demand, provisional or final) held by such
Lender at any of its offices for the account of Borrowers or the Guarantors
(regardless of whether such balances are then due to Borrowers or the
Guarantors), and (b) other property at any time held or owing by such Lender or
such holder to or for the credit or for the account of Borrowers or the
Guarantors, against and on account of any of the Obligations which are not paid
when due; except that no Lender shall exercise any such right without the prior
written consent of Agent; provided, however, that the failure to give notice to
Borrowers shall not affect the validity of such set-off and application. Any
Lender which has exercised its right to set off or otherwise has received any
payment on account of the Obligations shall, to the extent the amount of any
such set off or payment exceeds its Pro Rata Share of payments obtained by all
of Lenders on account of such Obligations, purchase for cash participations in
each such other Lender's Pro Rata Share of Obligations as would be necessary to
cause such Lender to share such excess with each other Lender or holder in
accordance with their respective Pro Rata Shares; provided, however, that if all
or any portion of such excess payment or benefits is thereafter recovered from
such purchasing Lender, such purchase shall be rescinded, and the purchase price
and benefits returned, to the extent of such recovery. Borrowers agrees, to the
fullest extent permitted by law, that (a) any Lender may exercise its right to
set off with respect to amounts in excess of its Pro Rata Share of the
Obligations and may sell participations in such excess to other Lenders and
holders, and (b) any Lender or holder so purchasing a participation in the Loans
made or other Obligations held by other Lenders or holders may exercise all
rights of set-off, bankers' lien, counterclaim or similar rights with respect to
such participation as fully as if such Lender were a direct holder of Loans and
other Obligations in the amount of such participation.
12.4. DISBURSEMENT OF FUNDS
Agent may, on behalf of Lenders, disburse funds to Borrowers
for Advances requested. Each Lender shall reimburse Agent on demand for its Pro
Rata Share of all funds disbursed on its behalf by Agent, or if Agent so
requests, each Lender will remit to Agent its Pro Rata Share of any Advance
before Agent disburses same to Borrowers. If Agent elects to require that funds
be made available prior to disbursement to Borrowers, Agent shall advise each
Lender by telephone, telex or telecopy of the amount of such Lender's Pro Rata
Share of such requested Advance no later than one (1) Business Day prior to the
funding date applicable thereto, and each such Lender shall pay Agent such
Lender's Pro Rata Share of such requested Loan, in same day funds, by wire
transfer to Agent's account not later than 3:00 p.m. (Eastern Time) on the day
prior to the funding date. If any Lender fails to pay the amount of its Pro Rata
Share forthwith upon Agent's demand, Agent shall promptly notify Borrowers, and
Borrowers shall immediately repay such amount to Agent. Any repayment required
pursuant to this Section 12.4 shall be without premium or penalty. Nothing in
this Section 12.4 or elsewhere in this Agreement or the other Loan Documents,
including without limitation the provisions of Section 12.5, shall be deemed to
require Agent to advance funds on behalf of any Lender or to relieve any Lender
from its obligation to fulfill its commitments hereunder or to prejudice any
rights that Agent or Borrowers may have against any Lender as a result of any
default by such Lender hereunder.
12.5. SETTLEMENTS; PAYMENTS AND INFORMATION
(a) Advances and Payments; Interest and Fee Payments.
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(i) The amount outstanding pursuant to Advances
may fluctuate from day to day through Agent's disbursement of funds to, and
receipt of funds from, Borrower. In order to minimize the frequency of transfers
of funds between Agent and each Lender notwithstanding terms to the contrary set
forth in Section 12.4, Advances and repayments may be settled according to the
procedures described in Sections 12.5(a)(ii) and 12.5(a)(iii) of this Agreement.
Payments of principal, interest and fees in respect of the Loans will be
settled, in accordance with each Lender's Pro Rata Share on the first Business
Day after such payments are received. Notwithstanding these procedures, each
Lender's obligation to fund its Pro Rata Share of any advances made by Agent to
Borrowers will commence on the date such advances are made by Agent. Such
payments will be made by such Lender without set-off, counterclaim or reduction
of any kind.
(ii) Once each week, or more frequently
(including daily), if Agent so elects (each such day being a "SETTLEMENT DATE"),
Agent will advise each Lender by 1 p.m. (Eastern Time) by telephone, telex, or
telecopy of the amount of each such Lender's Pro Rata Share of the outstanding
Advances. In the event payments are necessary to adjust the amount of such
Lender's share of the Advances to such Lender's Pro Rata Share of the Advances,
the party from which such payment is due will pay the other, in same day funds,
by wire transfer to the other's account not later than 3:00 p.m. (Eastern Time)
on the Business Day following the Settlement Date.
(iii) On the first Business Day of each month
("INTEREST SETTLEMENT DATE"), Agent will advise each Lender by telephone or
facsimile of the amount of interest and fees charged to and collected from
Borrowers for the proceeding month in respect of the Advances. Provided that
such Lender has made all payments required to be made by it under this
Agreement, Agent will pay to such Lender, by wire transfer to such Lender's
account (as specified by such Lender on Schedule 2 of this Agreement as amended
by such Lender from time to time after the date hereof pursuant to the notice
provisions contained herein) not later than 3 p.m. (Eastern Time) on the next
Business Day following the Interest Settlement Date such Lender's share of such
interest and fees.
(b) Availability of Lenders' Pro Rata Share.
(i) Unless Agent has been notified by a Lender
prior to any proposed funding date of such Lender's intention not to fund its
Pro Rata Share of the Advance amount requested by Borrowers, Agent may assume
that such Lender will make such amount available to Agent on the proposed
funding date or the Business Day following the next Settlement Date, as
applicable. If such amount is not, in fact, made available to Agent by such
Lender when due, Agent will be entitled to recover such amount on demand from
such Lender without set-off, counterclaim, or deduction of any kind.
(ii) Nothing contained in this Section 12.5(b)
will be deemed to relieve a Lender of its obligation to fulfill its commitments
or to prejudice any rights Agent or Borrowers may have against such Lender as a
result of any default by such Lender under this Agreement.
(c) Return of Payments.
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(i) If Agent pays an amount to a Lender under
this Agreement in the belief or expectation that a related payment has been or
will be received by Agent from Borrowers and such related payment is not
received by Agent, then Agent will be entitled to recover such amount from such
Lender without set-off, counterclaim or deduction of any kind.
(ii) If Agent determines at any time that any
amount received by Agent under this Agreement must be returned to Borrowers or
paid to any other Person pursuant to any solvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement, Agent will not be
required to distribute any portion thereof to any Lender. In addition, each
Lender will repay to Agent on demand any portion of such amount that Agent has
distributed to such Lender, together with interest at such rate, if any, as
Agent is required to pay to Borrowers or such other Person, without set-off,
counterclaim or deduction of any kind.
12.6. DISSEMINATION OF INFORMATION
Agent will distribute promptly to each Lender copies of all
notices, schedules, reports, projections, financial statements, agreements and
other material and other information, including, but not limited to, Borrowers'
requests for Advances and financial and reporting information received from
Borrowers or its Subsidiaries or generated by a third party (and excluding only
internal information generated by CapitalSource for its own use as a Lender or
as Agent), as provided for in this Agreement and the other Loan Documents as
received by Agent. Agent shall promptly give notice to Lenders of the receipt or
sending of any notice, schedule, report, projection, financial statement or
other document or information pursuant to this Agreement or any of the other
Loan Documents and shall promptly forward a copy thereof to each Lender. Agent
shall request information from Borrowers or its Subsidiaries as Lenders may
request from time to time. Agent shall not be liable to Lenders for any failure
to comply with its obligations under this Section 12.6, except to the extent
that such failure is attributable to Agent's gross negligence or willful
misconduct.
XIII. BORROWING AGENCY; IRS FORMS
13.1. BORROWING AGENCY PROVISIONS; ACKNOWLEDGEMENT OF JOINT AND
SEVERAL LIABILITY
(a) Each Borrower hereby irrevocably designates Borrowing
Agent to be its attorney and agent and in such capacity to borrow, sign and
endorse notes, and execute and deliver all instruments, documents, writings and
further assurances now or hereafter required hereunder, on behalf of such
Borrower, and hereby authorizes Agent to pay over or credit all loan proceeds
hereunder in accordance with the request of Borrowing Agent.
(b) The handling of this credit facility as a
co-borrowing facility and the designation by each Borrower of Borrowing Agent as
its borrowing agent in the manner set forth in this Agreement is solely as an
accommodation to Borrowers and at their request. None of Agent nor any Lender
shall incur liability to any Borrower as a result thereof. To induce Agent and
Lenders to do so and in consideration thereof, each Borrower hereby indemnifies
Agent and each Lender and holds Agent and each Lender harmless from and against
any and all liabilities, expenses, losses, damages and claims of damage or
injury asserted against Agent or any Lender by any Person arising from or
incurred by reason of the handling of the financing arrangements
51
of Borrowers as provided herein, reliance by Agent or any Lender on any request
or instruction from Borrowing Agent or any other action taken by Agent or any
Lender with respect to this Section 13 except due to willful misconduct or gross
negligence by the indemnified party.
(c) All Obligations shall be joint and several, and each
Borrower shall make payment upon the maturity of the Obligations by acceleration
or otherwise, and such obligation and liability on the part of each Borrower
shall in no way be affected by any extensions, renewals and forbearance granted
by Agent or any Lender to any other Borrower, failure of Agent or any Lender to
give such Borrower notice of borrowing or any other notice, any failure of Agent
or any Lender to pursue or preserve its rights against any other Borrower, the
release by Agent or any Lender of any Collateral now or thereafter acquired from
any other Borrower, and such agreement by each Borrower to pay upon any notice
issued pursuant thereto is unconditional and unaffected by prior recourse by
Agent or any Lender to the other Borrowers or any Collateral for such Borrower's
Obligations or the lack thereof.
(d) Each Borrower expressly understands, agrees and
acknowledges that (i) Borrowers are all Affiliated entities by common ownership,
(ii) each Borrower desires to have the availability of one common credit
facility instead of separate credit facilities, (iii) each Borrower has
requested that Lenders extend such a common credit facility on the terms herein
provided, (iv) Lenders will be lending against, and relying on a lien upon, all
of Borrowers' assets even though the proceeds of any particular loan made
hereunder may not be advanced directly to a particular Borrower, (v) each
Borrower will nonetheless benefit by the making of all such loans by each Lender
and the availability of a single credit facility of a size greater than each
could independently warrant, (vi) all of the representations, warranties,
covenants, obligations, conditions, agreements and other terms contained in the
Loan Documents shall be applicable to and shall be binding upon each Borrower
and (vii) each Borrower has executed the Revolving Notes as co-makers of the
Revolving Notes and that it would not be able to obtain the credit provided by
Lenders hereunder without the financial support provided by the other Borrowers.
(e) Each Borrower expressly waives any and all rights of
subrogation, reimbursement, indemnity, exoneration, contribution of any other
claim which such Borrower may now or hereafter have against the other Borrowers
or other Persons directly or contingently liable for the Obligations hereunder,
or against or with respect to the other Borrowers' property (including, without
limitation, any property which is Collateral for the Obligations), arising from
the existence or performance of this Agreement, until termination of this
Agreement and repayment in full of the Obligations (other than the Unmatured
Surviving Obligations).
13.2. WITHHOLDING TAX.
(a) If any Lender is a "foreign corporation, partnership
or trust" within the meaning of the Internal Revenue Code, such Lender agrees
with and in favor of Agent and Borrowers, to deliver to Agent and Borrowers:
(i) if such Lender claims an exemption from, or
a reduction of, withholding tax under a United States of America tax
treaty, properly completed IRS Forms W-8BEN before the payment of any
interest in the first calendar year and before
52
the payment of any interest in each third succeeding calendar year
during which interest may be paid under this Agreement;
(ii) if such Lender claims that interest paid
under this Agreement is exempt from United States of America
withholding tax because it is effectively connected with a United
States of America trade or business of such Lender, two properly
completed and executed copies of IRS Form W-8ECI before the payment of
any interest is due in the first taxable year of such Lender and in
each succeeding taxable year of such Lender during which interest may
be paid under this Agreement, and, if applicable, IRS Form W-9; and
(iii) such other form or forms as may be required
under the Internal Revenue Code or other laws of the United States of
America as a condition to exemption from, or reduction of, United
States of America withholding tax.
Such Lender agrees to promptly notify Agent and Borrowers of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States of America tax treaty by providing IRS
Form FW-8BEN and such Lender sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations owing to such Lender, such
Lender agrees to notify Borrowers and Agent of the percentage amount in which it
is no longer the beneficial owner of Obligations of Borrowers to such Lender. To
the extent of such percentage amount, Agent will treat such Lender's IRS Form
W-8BEN as no longer valid.
(c) If any Lender claiming exemption from United States
of America withholding tax by filing IRS Form W-8ECI with Agent sells, assigns,
grants a participation in, or otherwise transfers all or part of the Obligations
owing to such Lender, such Lender agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Internal Revenue Code.
(d) If any Lender is entitled to a reduction in the
applicable withholding tax, Agent may withhold from any interest payment to such
Lender an amount equivalent to the applicable withholding tax after taking into
account such reduction. If the forms or other documentation required by
subsection (a) of this Section are not delivered to Agent, then Agent may
withhold from any interest payment to such Lender not providing such forms or
other documentation an amount equivalent to the applicable withholding tax.
(e) If the Internal Revenue Service or any other
Governmental Authority of the United States of America or other jurisdiction
asserts a claim that Agent did not properly withhold tax from amounts paid to or
for the account of any Lender (because the appropriate form was not delivered,
was not properly executed, or because such Lender failed to notify Agent of a
change in circumstances which rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason) such Lender shall
indemnify Agent and Borrowers fully for all amounts paid, directly or
indirectly, by Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the
53
amounts payable to Agent and Borrowers under this Section, together with all
costs and expenses (including reasonably attorneys fees and expenses). The
obligation of Lenders under this subsection shall survive the payment of all
Obligations and the resignation or replacement of Agent.
XIV. MISCELLANEOUS
14.1. GOVERNING LAW; JURISDICTION; SERVICE OF PROCESS; VENUE
The Loan Documents shall be governed by and construed in
accordance with the internal laws of the State of New York without giving effect
to its choice of law provisions (other than Section 5-1401 of the New York
General Obligation Law). Any judicial proceeding against Borrowers with respect
to the Obligations, any Loan Document or any related agreement may be brought in
any federal or state court of competent jurisdiction located in the City of New
York, State of New York (any such court, individually a "New York Court," and
all such courts collectively, the "New York Courts"), provided nothing in this
Agreement shall be deemed or operate to preclude Agent from bringing suit or
taking other legal action in any jurisdiction to the extent, but only to the
extent, it is required to bring suit in such jurisdiction to realize on the
Collateral or any other security for the Obligations (any such court and any New
York Court, individually a "Qualified Court" and collectively, the "Qualified
Courts"), and provided, further that Agent, Lenders and Borrowers acknowledge
that any appeals from a Qualified Court may have to be heard by a court located
outside of the jurisdiction where such Qualified Court sits. By execution and
delivery of each Loan Document to which it is a party, each Borrower (i) accepts
the non-exclusive jurisdiction of the Qualified Courts and irrevocably agrees to
be bound by any judgment rendered thereby, (ii) waives personal service of
process, (iii) agrees that service of process upon it may be made by certified
or registered mail, return receipt requested, pursuant to Section 14.5 hereof
and (iv) waives any objection to jurisdiction and venue of any action instituted
hereunder in any Qualified Court and agrees not to assert any defense to an
action brought in any Qualified Court based on lack of jurisdiction, venue or
convenience. Any judicial proceedings against Agent or any Lender involving,
directly or indirectly, the Obligations, any Loan Document or any related
agreement shall be brought only in a New York Court. All parties acknowledge
that they participated in the negotiation and drafting of this Agreement and
that, accordingly, no party shall move or petition a court construing this
Agreement to construe it more stringently against one party than against any
other.
14.2. SUCCESSORS AND ASSIGNS; ASSIGNMENTS AND PARTICIPATIONS; NEW
LENDERS
(a) Each Lender may at any time assign all or a portion
of its rights and delegate all or a portion of its obligations under this
Agreement and the other Loan Documents (including all its rights and obligations
with respect to the Loans) to one or more Persons (a "TRANSFEREE"); provided,
that (i) (x) unless an Event of Default shall have occurred and be continuing or
(y) subject to the Senior Mortgage/Revolving Lender Intercreditor Agreement,
such Transferee is an Eligible Assignee, the Borrowing Agent shall have
consented to such Transferee (such consent not to be unreasonably withheld or
delayed) and (ii) such Transferee and such assigning Lender shall execute and
deliver to Agent for acceptance and recording in the Register, a Lender Addition
Agreement, satisfactory to Agent. Agent shall give Borrowers notice if Agent
sells or assigns its rights and obligations hereunder. Upon such execution,
delivery, acceptance and recording, from and after the effective date determined
pursuant to such
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Lender Addition Agreement, (i) the Transferee thereunder shall be a party hereto
and, to the extent provided in such Lender Addition Agreement, shall have the
same rights, benefits and obligations as it would if it were a Lender hereunder,
and (ii) the assigning Lender shall be relieved of its obligations hereunder
with respect to its Commitment or assigned portion thereof, as the case may be,
to the extent that such obligations shall have been expressly assumed by the
Transferee pursuant to such Lender Addition Agreement. Borrowers hereby
acknowledge and agree that any assignment will give rise to a direct obligation
of Borrowers to the Transferee and that the Transferee shall be considered to be
a "Lender" hereunder. Borrowers may not sell, assign or transfer any interest in
this Agreement, any of the other Loan Documents, or any of the Obligations, or
any portion thereof, including Borrowers' rights, title, interests, remedies,
powers, and duties hereunder or thereunder without the prior written consent of
Agent and each Lender.
(b) Each Lender may at any time sell participations in
all or any part of its rights and obligations under this Agreement and the other
Loan Documents (including all its rights and obligations with respect to the
Loans) to one or more Persons (a "PARTICIPANT"). In the event of any such sale
by a Lender of a participation to a Participant, such Lender's obligations under
this Agreement to the other parties to this Agreement shall remain unchanged,
such Lender shall remain solely responsible for the performance thereof, such
Lender shall remain the holder of any such Loan (and any Revolving Note
evidencing such Loan) for all purposes under this Agreement and the other Loan
Documents and Borrowers and Agent shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations under
this Agreement and the other Loan Documents. Any agreement pursuant to which any
Lender shall sell any such participation shall provide that such Lender shall
retain the sole right and responsibility to exercise such Lender's rights and
enforce each of Borrowers' obligations hereunder, including the right to consent
to any amendment, supplement, modification or waiver of any provision of this
Agreement or any of the other Loan Documents; provided, that such participation
agreement may provide that such Lender will not agree, without the consent of
the Participant, to any amendment, supplement, modification or waiver of: (i)
any reduction in the principal amount, interest rate (other than default
interest) or fees payable with respect to any Loan in which such holder
participates; (ii) any extension of the termination date of this Agreement or
the date fixed for any payment of principal, interest or fees payable with
respect to any Loan in which such holder participates; and (iii) any release of
all or substantially all of the Collateral (other than in accordance with the
terms of this Agreement or the Loan Documents).
(c) Agent, on behalf of Borrowers, shall maintain at its
address referred to in Section 14.5 a copy of each Lender Addition Agreement
delivered to it and a register (the "REGISTER") for the recordation of the names
and addresses of Lenders and the Commitment of, and the principal amount of the
Loans owing to, and the Revolving Notes evidencing such Loans owned by, each
Lender from time to time. Notwithstanding anything in this Agreement to the
contrary, each of Borrowers, Agent and Lenders shall treat each Person whose
name is recorded in the Register as the owner of the Loan, the Revolving Notes
and the Commitment recorded therein for all purposes of this Agreement. The
Register shall be available for inspection by Borrowers or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
55
(d) Notwithstanding anything in this Agreement to the
contrary, no assignment under Subsection 14.2(a) of any rights or obligations
under or in respect of the Loans or the Revolving Notes evidencing such Loans
shall be effective unless and until Agent shall have recorded the assignment
pursuant to Subsection 14.2(c). Upon its receipt of a Lender Addition Agreement
executed by an assigning Lender and a Transferee, Agent shall (i) promptly
accept such Lender Addition Agreement and (ii) on the effective date determined
pursuant thereto record the information contained therein in the Register and
give prompt notice of such acceptance and recordation to Lenders and Borrowers.
On or prior to such effective date, the assigning Lender shall surrender any
outstanding Revolving Notes held by it all or a portion of which are being
assigned, and Borrowers, at their own expense, shall, upon the request of Agent
by the assigning Lender or the Transferee, as applicable, execute and deliver to
Agent new Revolving Notes to reflect the interest held by the assigning Lender
and its Transferee.
(e) Except as otherwise provided in this Section 14.2 no
Lender shall, as between Borrowers and that Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of participation in, all or any part of the Loans or
other Obligations owed to such Lender. Each Lender may furnish any information
concerning Borrowers and its Subsidiaries in the possession of that Lender from
time to time to assignees and participants (including prospective assignees and
participants); provided, however, that prior to the disclosure by a Lender of
such information, Lender shall obtain an agreement from the Person to whom such
disclosure is proposed to be made to hold such information confidential in
accordance with the provisions of Section 14.10.
(f) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time create a security interest in all or any
portion of its rights under this Agreement, including, without limitation, the
Loans owing to it and the Revolving Notes held by it.
(g) Borrowers agree to use their commercially reasonable
efforts to assist any Lender (at such Lender's expense) in assigning or selling
participations in all or any part of any Loans made by such Lender to another
Person identified by such Lender.
(h) Notwithstanding anything in the Loan Documents to the
contrary, (i) CapitalSource and its Affiliates shall not be required to execute
and deliver a Lender Addition Agreement in connection with any transaction
involving its Affiliates or lenders, (ii) no lender to or funding source of
CapitalSource or its Affiliates shall be considered a Transferee and (iii) there
shall be no limitation or restriction on CapitalSource's ability to assign or
otherwise transfer any Loan Document to any such Affiliate or lender; provided,
however, CapitalSource shall continue to be liable as a "Lender" under the Loan
Documents unless such Affiliate or lender executes a Lender Addition Agreement
and thereby becomes a "Lender."
14.3. APPLICATION OF PAYMENTS; REINSTATEMENT
Any payments with respect to the Obligations and any and all
proceeds of Collateral shall be credited and applied in such manner and order as
Agent shall decide in its Permitted Discretion, subject to the express terms
regarding application of proceeds in the Concentration Account provided in
Section 2.5 hereof. To the extent that any payment made or received with respect
to the Obligations is subsequently invalidated, determined to be fraudulent
56
or preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver, custodian or any other Person under any Debtor Relief Law,
common law or equitable cause or any other law, then the Obligations intended to
be satisfied by such payment shall be revived and shall continue as if such
payment had not been received by Agent or any Lender. In order to assist a
Lender in assigning its rights to a potential Transferee as provided herein,
Borrowers shall, if requested by Agent, arrange for an opinion of counsel, in
form and substance satisfactory to Agent and such Transferee (it being agreed
that an opinion substantially in the form delivered by Latham & Watkins on the
Closing Date is satisfactory), to be delivered to Agent and such Transferee.
14.4. INDEMNITY
Borrowers jointly and severally shall indemnify Agent, each
Lender, its and their Affiliates and its and their respective managers, members,
officers, employees, Affiliates, agents, representatives, successors, assigns,
accountants and attorneys (collectively, the "INDEMNIFIED PERSONS") from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits and costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, reasonable fees and
disbursements of counsel and in-house documentation and diligence fees and legal
expenses) which may be imposed on, incurred by or asserted against any
Indemnified Person with respect to or arising out of, or in any litigation,
proceeding or investigation instituted or conducted by any Person with respect
to any aspect of, or any transaction contemplated by or referred to in, or any
matter related to, any Loan Document or any agreement, document or transaction
contemplated thereby, whether or not such Indemnified Person is a party thereto,
except to the extent that any of the foregoing arises out of the gross
negligence or willful misconduct of such Indemnified Person. If any Indemnified
Person uses in-house counsel for any purpose for which Borrowers are responsible
to pay or indemnify, Borrowers expressly agree that their indemnification
obligations include reasonable charges for such work. Agent agrees to give
Borrowers reasonable notice of any event of which Agent becomes aware for which
indemnification may be required under this Section 14.4, and Agent may elect
(but is not obligated) to direct the defense thereof, provided that the
selection of counsel shall be subject to Borrowers' consent, which consent shall
not be unreasonably withheld or delayed. Any Indemnified Person may, in its
reasonable discretion, take such actions as it deems necessary and appropriate
to investigate, defend or settle any event or take other remedial or corrective
actions with respect thereto as may be necessary for the protection of such
Indemnified Person or the Collateral. Notwithstanding the foregoing, if any
insurer agrees to undertake the defense of an event (an "INSURED EVENT"), Agent
agrees not to exercise its right to select counsel to defend the event if that
would cause Borrowers' insurer to deny coverage; provided, however, that Agent
reserves the right to retain counsel to represent any Indemnified Person with
respect to an Insured Event at its sole cost and expense. To the extent that
Agent or any Lender obtains recovery from a third party other than an
Indemnified Person of any of the amounts that Borrowers have paid to Agent or
any Lender pursuant to the indemnity set forth in this Section 14.4, then Agent
and/or any Lender shall promptly pay to Borrowers the amount of such recovery.
Without limiting any of the foregoing, Borrowers jointly and severally indemnify
the Indemnified Parties for all claims for brokerage fees or commissions (other
than claims of a broker with whom such Indemnified Party has directly contracted
in writing) which may be made in connection with respect to any aspect of, or
any transaction contemplated by or
57
referred to in, or any matter related to, any Loan Document or any agreement,
document or transaction contemplated thereby.
14.5. NOTICE
Any notice or request under any Loan Document shall be given
to any party to this Agreement at such party's address set forth beneath its
signature on the signature page to this Agreement, or at such other address as
such party may hereafter specify in a notice given in the manner required under
this Section 14.5. Any notice or request hereunder shall be given only by, and
shall be deemed to have been received upon (each, a "RECEIPT"): (i) registered
or certified mail, return receipt requested, on the date on which such received
as indicated in such return receipt, (ii) delivery by a nationally recognized
overnight courier, one (1) Business Day after deposit with such courier, or
(iii) facsimile or electronic transmission, in each case upon telephone or
further electronic communication from the recipient acknowledging receipt
(whether automatic or manual from recipient), as applicable.
14.6. SEVERABILITY; CAPTIONS; COUNTERPARTS; FACSIMILE SIGNATURES
If any provision of any Loan Document is adjudicated to be
invalid under applicable laws or regulations, such provision shall be
inapplicable to the extent of such invalidity without affecting the validity or
enforceability of the remainder of the Loan Documents which shall be given
effect so far as possible. The captions in the Loan Documents are intended for
convenience and reference only and shall not affect the meaning or
interpretation of the Loan Documents. The Loan Documents may be executed in one
or more counterparts (which taken together, as applicable, shall constitute one
and the same instrument) and by facsimile transmission, which facsimile
signatures shall be considered original executed counterparts. Each party to
this Agreement agrees that it will be bound by its own facsimile signature and
that it accepts the facsimile signature of each other party.
14.7. EXPENSES
Borrowers shall pay, whether or not the Closing occurs, all
reasonable costs and expenses incurred by Agent and/or its Affiliates,
including, without limitation, documentation and diligence fees and expenses,
all out-of-pocket charges and expenses (including, without limitation, UCC and
judgment and tax lien searches and UCC filings and fees for post-Closing UCC and
judgment and tax lien searches and wire transfer fees and audit expenses), and
reasonable attorneys' fees and expenses, (i) in any effort to enforce, protect
or collect payment of any Obligation or to enforce any Loan Document or any
related agreement, document or instrument, (ii) in connection with entering
into, negotiating, preparing, reviewing and executing the Loan Documents and/or
any related agreements, documents or instruments, (iii) arising in any way out
of administration of the Obligations, (iv) in connection with instituting,
maintaining, preserving, enforcing and/or foreclosing on Agent's Liens in any of
the Collateral or securities pledged under the Loan Documents, whether through
judicial proceedings or otherwise, (v) in defending or prosecuting any actions,
claims or proceedings arising out of or relating to Agent's and Lenders'
transactions with Borrowers, (vi) in seeking, obtaining or receiving any advice
with respect to its rights and obligations under any Loan Document and any
related agreement, document or instrument, and/or (vii) in connection with any
modification, restatement,
58
supplement, amendment, waiver or extension of any Loan Document and/or any
related agreement, document or instrument. All of the foregoing shall be charged
to Borrowers' account and shall be part of the Obligations. If Agent or any
Lender uses in-house counsel for any purpose under any Loan Document for which
Borrowers is responsible to pay or indemnify, Borrowers expressly agree that
their Obligations include reasonable charges for such work commensurate with the
fees that would otherwise be charged by outside legal counsel selected by Agent,
any Lender or such Affiliate in its sole discretion for the work performed.
Without limiting the foregoing, Borrowers shall pay all taxes (other than taxes
based upon or measured by each Lender's income or revenues or any personal
property tax), if any, in connection with the issuance of any Revolving Note and
the filing and/or recording of any documents and/or financing statements.
14.8. ENTIRE AGREEMENT
This Agreement and the other Loan Documents to which Borrowers
are parties constitute the entire agreement between Borrowers, Agent and Lenders
with respect to the subject matter hereof and thereof, and supersede all prior
agreements and understandings, if any, relating to the subject matter hereof or
thereof. Any promises, representations, warranties or guarantees not herein
contained and hereinafter made shall have no force and effect unless in writing
signed by Borrowers, Agent and Lenders, as appropriate. No provision of this
Agreement may be changed, modified, amended, restated, waived, supplemented,
discharged, canceled or terminated orally or by any course of dealing or in any
other manner other than by an agreement in writing signed by Agent, Requisite
Lenders and Borrowers. Each party hereto acknowledges that it has been advised
by counsel in connection with the negotiation and execution of this Agreement
and is not relying upon oral representations or statements inconsistent with the
terms and provisions hereof.
14.9. AGENT APPROVALS
Unless expressly provided herein to the contrary, any
approval, consent, waiver or satisfaction of Agent or Lenders with respect to
any matter that is subject of any Loan Document may be granted or withheld by
Agent in its Permitted Discretion.
14.10. CONFIDENTIALITY AND PUBLICITY
Borrowers, Agent and Lenders agree, and agree to cause each of
their respective Affiliates, (i) not to transmit or disclose provision of any
Loan Document to any Person (other than to their respective directors, advisors
and officers on a need-to-know basis and except as set forth in this Section
14.10) without the prior written consent of Agent, in the case of Borrowers, or
Borrowing Agent, in the case of Agent and Lenders, (ii) to inform all Persons of
the confidential nature of the Loan Documents and to direct them not to disclose
the same to any other Person and to require each of them to be bound by these
provisions. Agent and each Lender reserves the right to review and approve all
materials that Borrowers or any of their Affiliates prepare that contain Agent's
or such Lender's name or describe or refer to any Loan Document, any of the
terms thereof or any of the transactions contemplated thereby. Each Borrower
reserves the right to review and approve all materials that Agent, Lenders or
any of their Affiliates prepare that contain such Borrower's name or describe or
refer to any Loan
59
Document, any of the terms thereof or any of the transactions contemplated
thereby. No Borrower shall, and shall not permit any of its Affiliates to, use
Agent's or any Lender's name (or the name of any of Agent's Affiliates) in
connection with any of its business operations. Neither Agent nor any Lender
shall, and shall not permit any of its respective Affiliates to, use any
Borrower's name (or the name of any of any Borrower's Affiliates) in connection
with any of its business operations. Nothing contained in any Loan Document is
intended to permit or authorize any Borrower or any of its Affiliates to
contract on behalf of Agent or any Lender, or except as expressly provided in
the Loan Documents to permit Agent or any Lender to contract on behalf of any
Borrower. Further, Borrowers agree that Agent or any Lender or any Affiliate of
Agent or any Lender may (i) disclose a general description of transactions
arising under the Loan Documents for advertising, marketing or other similar
purposes, (ii) use any Borrower's or Guarantor's name, logo or other indicia
germane to such party in connection with such advertising, marketing or other
similar purposes, (iii) disclose confidential information (it being understood
that with respect to (a) and (b) below the Persons to whom such disclosure is
made will be informed of the confidential nature of such information and
instructed to keep such information confidential) (a) to its examiners, lenders,
affiliates, outside auditors, counsel and other professional advisors, (b) to
Agent, any Lender or to any prospective Transferees and Participant, (c) as
required or requested by any Governmental Authority or representative thereof,
(d) to the extent required by applicable laws or regulations or by subpoena or
similar legal process, (e) in connection with the exercise of any remedies
hereunder or any suit, action or proceeding relating to this Agreement or any
other Loan Document or the enforcement of rights hereunder or thereunder, (f)
with the consent of Borrowers or (h) to the extent such information becomes
publicly available other than as a result of a breach of this Section or becomes
available to the Agent or any Lender on a nonconfidential basis from a source
other than the Borrowers or any of its Affiliates.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
60
IN WITNESS WHEREOF, each of the parties has duly executed this
Revolving Credit and Security Agreement as of the date first written above.
BORROWERS
BRIARCLIFF NURSING AND
REHABILITATION CENTER, LP
By: Briarcliff Nursing and Rehabilitation
Center GP, LLC, its general partner
CAREHOUSE HEALTHCARE CENTER, LLC
CLAIRMONT BEAUMONT, LP
By: Clairmont Beaumont GP, LLC, its
general partner
CLAIRMONT LONGVIEW, LP
By: Clairmont Longview GP, LLC, its
general partner
THE CLAIRMONT TYLER, LP
By: The Clairmont Tyler GP, LLC, its
general partner
COLONIAL NEW BRAUNFELS CARE CENTER, LP
By: Colonial New Braunfels GP, LLC, its
general partner
COLONIAL TYLER CARE CENTER, LP
By: Colonial Tyler GP, LLC, its general
partner
COMANCHE NURSING CENTER, LP
By: Comanche Nursing Center GP, LLC, its
general partner
CORONADO NURSING CENTER, LP
By: Coronado Nursing Center GP, LLC, its
general partner
DEVONSHIRE CARE CENTER, LLC
THE EARLWOOD, LLC
FLATONIA OAK MANOR, LP
By: Flatonia Oak Manor GP, LLC, its
general partner
FOUNTAIN CARE CENTER, LLC
FOUNTAIN SENIOR ASSISTED LIVING, LLC
GUADALUPE VALLEY NURSING CENTER, LP
By: Guadalupe Valley Nursing Center GP,
LLC, its general partner
HALLETTSVILLE REHABILITATION AND NURSING CENTER, LP
By: Hallettsville Rehabilitation GP, LLC
its general partner
HOSPITALITY NURSING AND REHABILITATION CENTER, LP
By: Hospitality Nursing GP, LLC, its
general partner
LIVE OAK NURSING CENTER, LP
By: Live Oak Nursing Center GP, LLC, its
general partner
MONUMENT REHABILITATION AND NURSING CENTER, LP
By: Monument Rehabilitation Center GP,
LLC, its general partner
OAK CREST NURSING CENTER, LP
By: Oak Crest Nursing Center GP, LLC, its
general partner
OAKLAND MANOR NURSING CENTER, LP
By: Oakland Manor, GP, LLC, its general
partner
SKILLED HEALTHCARE II, LLC
SOUTHWOOD CARE CENTER, LP
By: Southwood Care Center GP, LLC, its
general partner
SPRING SENIOR ASSISTED LIVING, LLC
TEXAS CITYVIEW CARE CENTER, LP
By: Texas Cityview Care Center, GP, LLC,
its general partner
TEXAS HERITAGE OAKS NURSING AND
REHABILITATION CENTER, LP
By: Texas Heritage Oaks Nursing and
Rehabilitation Center GP, LLC, its
general partner
TOWN AND COUNTRY MANOR, LP
By: Town and Country Manor GP, LLC, its
general partner
VALLEY HEALTHCARE CENTER, LLC
VILLA MARIA HEALTHCARE CENTER, LLC
WEST SIDE CAMPUS OF CARE, LP
By: West Side Campus of Care GP, LLC,
its general partner
WILLOW CREEK HEALTHCARE CENTER, LLC
By: \s\ Roland G. Rapp
------------------------------
Name: Roland G. Rapp
Title: Secretary
Address for Notices:
--------------------
Fountain View, Inc.
27442 Portola Parkway, Suite 200
Foothill Ranch, California 92610
Attention: General Counsel
Telephone: (949) 282-5822
Facsimile: (949) 282-5820
E-Mail: rrapp@fountainviewinc.net
AGENT
-----
CAPITALSOURCE FINANCE LLC
By: \s\ Jim Pieczynski
------------------------------
Name: Jim Pieczynski
Its: Director
Address for Notices:
--------------------
CapitalSource Finance LLC
4445 Willard Avenue, 12th Floor
Chevy Chase, Maryland 20815
Attention: Healthcare Finance Group,
Portfolio Manager
Telephone: (301) 841-2700
Facsimile: (301) 841-2340
E-Mail: aheller@capitalsource.com
EXHIBITS
Exhibit A -- Form of Borrowing Base Certificate
Exhibit B -- Form of Interim Borrowing Base Certificate
Exhibit C -- Form of Joinder Agreement
Exhibit D -- Form of Guaranty and Security Agreement
SCHEDULES
Schedule 1 -- Borrowers
Schedule 2 -- Commitments
Schedule 2.4 -- Borrower's Deposit Accounts
Schedule 5.3 -- Capitalization, Organization Chart (including all
subsidiaries and authorized/issued capitalization and
Joint Ventures
Schedule 5.4 -- Liens; Real and Personal Property Owned or Leased; Leases
Schedule 5.5 -- Defaults; Service Fees; Managers
Schedule 5.6 -- Litigation
Schedule 5.8 -- Taxes
Schedule 5.10 -- Liability Event
Schedule 5.11 -- Intellectual Property
Schedule 5.15 -- Existing Indebtedness
Schedule 5.16 -- Shareholder Agreements
Schedule 5.17 -- Insurance
Schedule 5.18A -- Corporate Names
Schedule 5.18B -- Places of Business
Schedule 6.8 -- Further Assurances/Post Closing
Schedule 7.2 -- Permitted Indebtedness
Schedule 7.3 -- Liens
Schedule 7.4 -- Investments
Schedule 7.6 -- Affiliate Transactions
Schedule 7.9 -- Contingent Obligations
ANNEX I
FINANCIAL COVENANTS
1) Minimum EBITDA
Borrowers shall not permit EBITDA as of the end of any fiscal quarter during any
fiscal year (calculated for the four fiscal quarter period ended as of the end
of such fiscal quarter) to be less than the amounts set forth below
corresponding to such fiscal year.
FISCAL YEAR ENDED MINIMUM EBITDA
----------------- --------------
12/31/03 $42,000,000
12/31/04 and as at the end of each fiscal $45,000,000
quarter during each fiscal year thereafter
2) Net Total Leverage Ratio (Total Debt to EBITDA)
Borrowers shall not permit the Net Total Leverage Ratio of Borrowers on a
Consolidated Basis as of the end of any fiscal quarter during any fiscal year
(calculated as of the end of such fiscal quarter) to exceed 6.5 to 1.
3) Net Senior Leverage Ratio (Senior Debt to EBITDA)
Borrowers shall not permit the Net Senior Leverage Ratio of Borrowers on a
Consolidated Basis as of the end of any fiscal quarter during any fiscal year
(calculated as of the end of such fiscal quarter) to exceed 4 to 1.
4) Net Interest Coverage Ratio (EBITDA/Interest Expense)
Borrowers shall not permit the Net Interest Coverage Ratio of Borrowers on a
Consolidated Basis as of the end of any fiscal quarter during any fiscal year
(calculated as of the end of such fiscal quarter) to be less than 1.75 to 1.
5) Fixed Charge Coverage Ratio (EBITDA/Fixed Charges)
Borrowers shall not permit the Fixed Charge Ratio of Borrowers on a Consolidated
Basis as of the end of any fiscal quarter during any fiscal year (calculated as
of the end of such fiscal quarter) to be less than the ratio set forth below for
such fiscal year:
FISCAL YEAR ENDED FIXED CHARGE COVERAGE RATIO
----------------- ---------------------------
December 31, 2003 1.10 to 1
Annex 1 - Page 1
December 31, 2004 and at the end 1.25 to 1
of each fiscal quarter during each
fiscal year thereafter
6) Tangible Net Worth
Until full performance and satisfaction, and indefeasible payment in full in
cash, of all the Obligations (other than Unmatured Surviving Obligations),
Borrowers on a Consolidated Basis will at all times maintain Tangible Net Worth
of not less than ($100,000,000).
7) Minimum Liquidity
At Closing and at all other times Borrowers shall have not less than $2,000,000
of Available Cash on hand.
8) Capital Expenditures
Borrowers on a Consolidated Basis shall not permit Maintenance Capital
Expenditures made during any fiscal year to exceed $7,000,000.
For purposes of the covenants set forth in this Annex I, the
terms listed below shall have the following meanings:
"Available Cash" shall mean, for any date of determination,
the sum without duplication of the following for Borrowers: (a) unrestricted
cash on hand on such date, (b) Cash Equivalents held on such date, and (c) the
unborrowed Availability on and as of such date.
"EBITDA" shall mean, for any period, the sum, without
duplication, of the following for Borrowers on a Consolidated Basis (i) Net
Income, (ii) Interest Expense, (iii) taxes on income, whether paid, payable or
accrued, (iv) depreciation expense, (v) amortization expense, (vi) the impact on
Net Income of FASB 121 and 142, (vii) Restructuring Costs and (viii) the impact
on Net Income of any gains and losses from the sales of fixed assets, and (ix)
the impact on Net Income of any extraordinary items, each calculated for such
period in accordance with GAAP.
"Fixed Charge Coverage Ratio" shall mean, as of any date of
determination, the ratio for Borrowers on a Consolidated Basis of (i) EBITDA to
(ii) Fixed Charges, in each case for the four fiscal quarter period ended as of
such date of determination.
"Fixed Charges" shall mean for any period for Borrowers on a
Consolidated Basis, the sum during such period of (i) Total Debt Service, (ii)
Capital Expenditures not financed with Non-Recourse Indebtedness, (iii) taxes on
income whether paid, payable or accrued, and (iv) dividends whether paid,
payable or accrued, each calculated in accordance with GAAP.
Annex 1 - Page 2
"Intangible Assets" means all intangible assets (determined in
conformity with GAAP) including, without limitation, goodwill, intellectual
property, licenses, organizational costs, deferred amounts, covenants not to
compete, unearned income, restricted funds, investments in Subsidiaries,
intercompany receivables and accumulated depreciation.
"Interest Expense" shall mean, for any period, total interest
expense (including attributable to Capital Leases in accordance with GAAP) of
Borrowers on a Consolidated Basis for such period, calculated in accordance with
GAAP, including capitalized interest, provided, however, for purposes of this
Agreement for any fiscal quarter ended prior to September 30, 2004, Interest
Expense shall be calculated as follows: (i) for the four fiscal quarters ended
September 30, 2003 Interest Expense shall equal $23,700,000, (ii) for the four
fiscal quarters ended December 31, 2003, Interest Expense shall equal actual
Interest Expense for the fiscal quarter ended December 31, 2003 multiplied by 4,
(iii) for the four fiscal quarters ended March 31, 2004, Interest Expense shall
equal actual Interest Expense for the 2 fiscal quarters ended March 31, 2004
multiplied by 2 and (iv) for the four fiscal quarters ended June 30, 2004,
Interest Expense shall equal actual Interest Expense for the three fiscal
quarters ended June 30, 2004 multiplied by 1.33.
"Maintenance Capital Expenditures" shall mean Capital
Expenditures other than Capital Expenditures that are made in connection with
the acquisition by Borrower or any Subsidiary of Borrower of a Facility or the
operations related to a Facility.
"Net Income" shall mean, for any period, the net income (or
loss) of Borrowers on a Consolidated Basis for such period, determined in
conformity with GAAP, provided that there shall be excluded (i) the income (or
loss) of any Person in which any other Person (other than Borrowers) has a joint
interest, but the amount of dividends or other distributions actually paid to a
Borrower by such Person shall be included in net income (or loss), (ii) the
income (or loss) of any Person accrued prior to the date it became a Borrower or
is merged into or consolidated with a Borrower or that Person's assets are
acquired by a Borrower, (iii) the income of any Subsidiary of any Borrower to
the extent that the declaration or payment of dividends or similar distributions
of that income by such Subsidiary is not at the time permitted by operation of
the terms of the charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to such Subsidiary, (iv)
compensation expense resulting from the issuance of capital stock, stock options
or stock appreciation rights issued to former or current employees, including
officers, of any Borrower or any Subsidiary of any Borrower, or the exercise of
such options or rights, in each case to the extent the obligation (if any)
associated therewith is not expected to be settled by the payment of cash by a
Borrower or any Subsidiary thereof, and (v) compensation expense resulting from
the repurchase of capital stock, options and rights described in clause (v) of
this definition of Net Income.
"Net Interest Coverage Ratio" shall mean, as of any date of
determination, the ratio for Borrowers on a Consolidated Basis of (i) EBITDA, to
(ii) Interest Expense, in each case for the four fiscal quarter period ended as
of such date of determination.
"Net Senior Leverage Ratio" shall mean, as of any date of
determination, the ratio for Borrowers on a Consolidated Basis of (i) the amount
of Senior Debt as of such date of
Annex 1 - Page 3
determination, to (ii) EBITDA for the four fiscal quarter period ended as of
such date of determination.
"Net Total Leverage Ratio" shall mean, as of any date of
determination, the ratio for Borrowers on a Consolidated Basis of (i) the amount
of Total Debt as of such date of determination, to (ii) EBITDA for the four
fiscal quarter period ended as of such date of determination.
"Restructuring Costs" shall mean, for any period,
restructuring and/or reorganization costs relating to the Bankruptcy Case
incurred by Borrowers on a Consolidated Basis during such period, calculated in
accordance with GAAP.
"Senior Debt" shall mean at any date of determination, the sum
of the amount (determined in accordance with GAAP) on such date of determination
of (i) the Obligations, (ii) Indebtedness in respect of the Senior Mortgage
Loan, (iii) Indebtedness in respect of the Mezzanine Loan, (iv) Indebtedness in
respect of the Revolving Loan A and (v) Indebtedness in respect of Priority
Claims.
"Tangible Net Worth" shall mean assets (excluding Intangible
Assets) less liabilities (determined in accordance with GAAP).
"Total Debt" shall mean, as of any date of determination, the
aggregate amount of Indebtedness for Borrowed Money on such date of
determination of Borrowers, on a Consolidated Basis calculated in accordance
with GAAP.
"Total Debt Service" shall mean for any period the sum during
such period of (i) scheduled or other required payments of principal on Total
Debt during such period, and (ii) Interest Expense during such period, in each
case calculated exclusive of (x) payments on Total Debt which was repaid or
satisfied in full prior to the Closing Date and which does not survive after the
Closing Date and (y) payments on Total Debt required to be made pursuant to the
Plan of Reorganization on, or within thirty (30) days after, the Closing Date.
Annex 1 - Page 4
APPENDIX A
DEFINITIONS
"Account Debtor" shall mean any Person who is obligated under
an Account.
"Accounts" shall mean all "accounts" (as defined in the UCC)
of Borrowers (or, if referring to another Person, of such other Person),
including without limitation, accounts, accounts receivables, monies due or to
become due and obligations in any form (whether arising in connection with
contracts, contract rights, Instruments, General Intangibles or Chattel Paper),
in each case whether arising out of goods sold or services rendered or from any
other transaction and whether or not earned by performance, now or hereafter in
existence, and all documents of title or other documents representing any of the
foregoing, and all collateral security and guaranties of any kind, now or
hereafter in existence, given by any Person with respect to any of the
foregoing.
"Advance" shall mean a borrowing under the Revolving Facility.
Any amounts paid by Agent or any Lender on behalf of Borrowers or any Guarantor
under any Loan Document shall be an Advance for purposes of the Agreement.
"Affiliate" shall mean, as to any Person, any other Person (a)
that, directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person, (b) who is a
director or officer (i) of such Person, (ii) of any Subsidiary of such Person,
or (iii) of any Person described in clause (a) above with respect to such
Person, or (c) which, directly or indirectly through one or more intermediaries,
is the beneficial or record owner (as defined in Rule 13d-3 of the Securities
Exchange Act of 1934, as amended, as the same is in effect on the date hereof)
of ten percent (10%) or more of any class of the outstanding voting stock,
securities or other equity or ownership interests of such Person. For purposes
of this definition, the term "control" (and the correlative terms, "controlled
by" and "under common control with") shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies, whether through ownership of securities or other interests, by
contract or otherwise.
"Agent" shall have the meaning given in the introductory
paragraph to this Agreement.
"Agreement" shall have the meaning given in the introductory
paragraph to this Agreement.
"Availability" shall have the meaning given in Section 2.1(a)
of this Agreement.
"Bankruptcy Case" shall mean the bankruptcy case described in
and which is the subject of the Plan of Reorganization.
"Books and Records" means collectively, the books and records
of Borrowers relating specifically to and evidencing the Accounts.
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"Borrowers" and "Borrower" shall have the meaning given in the
introductory paragraph to this Agreement.
"Borrowing Agent" shall mean Skilled Healthcare, LLC, a
Delaware limited liability company, in its capacity as agent for Borrowers, as
specified in Section 13.1.
"Borrowing Base" shall mean, as of any date of determination,
the net collectible U.S. Dollar value of Eligible Receivables, as determined
with reference to the most recent Borrowing Certificate or Interim Borrowing
Certificate and otherwise in accordance with this Agreement; provided, however,
that if as of such date the most recent Borrowing Certificate or Interim
Borrowing Base Certificate is as of a date more than four Business Days before,
the Borrowing Base shall be determined by Agent in its sole discretion. For
purposes hereof, "net collectible U.S. Dollar value" shall mean the amount
Borrowers bill third-party payors less deductible obligations and contractual
allowances.
"Borrowing Certificate" shall mean a Borrowing Certificate
substantially in the form of Exhibit A.
"Business Day" shall mean any day other than a Saturday,
Sunday or other day on which the Federal Reserve, any Lender or the Cash
Management Bank is closed.
"Business Group" shall mean (a) the Subsidiaries of Parent
that are borrowers under this Agreement, the Mezzanine Loan Documentation or the
Senior Mortgage Loan Documentation or Subsidiaries of such borrowers; (b) the
long term care business (other than such business as is covered by clause (a));
(c) the pharmacy business; (d) the locomotion business, and (e) corporate
headquarters and overhead.
"Capital Expenditures" shall mean, for any period, the sum
(without duplication) of all expenditures (whether paid in cash or accrued as
liabilities) during such period that are or should be treated as capital
expenditures under GAAP.
"Capital Lease" shall mean, as to any Person, a lease of any
interest in any kind of property or asset by that Person as lessee that is,
should be or should have been recorded as a "capital lease" in accordance with
GAAP.
"Capitalized Lease Obligations" shall mean all obligations of
any Person under Capital Leases, in each case, taken at the amount thereof
accounted for as a liability in accordance with GAAP.
"CapitalSource" shall have the meaning given in the
introductory paragraph to this Agreement.
"Cash Equivalents" shall mean (a) securities issued, or
directly and fully guaranteed or insured, by the United States or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities of not more than six
months from the date of acquisition, (b) U.S. dollar denominated time deposits,
certificates of deposit and bankers' acceptances of (i) any Lender, (ii) any
domestic commercial bank of recognized standing having capital and surplus in
excess of $500,000,000,
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or (ii) any bank (or the parent company of such bank) whose short-term
commercial paper rating from S&P is at least A-2 or the equivalent thereof or
from Moody's is at least P-2 or the equivalent thereof in each case with
maturities of not more than six months from the date of acquisition (any bank
meeting the qualifications specified in clauses (b)(i), (ii) or (iii), an
"APPROVED BANK"), (c) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clause (a), above,
entered into with any Approved Bank, (d) commercial paper issued by any Approved
Bank or by the parent company of any Approved Bank and commercial paper issued
by, or guaranteed by, any industrial or financial company with a short-term
commercial paper rating of at least A-2 or the equivalent thereof by S&P or at
least P-2 or the equivalent thereof by Moody's, or guaranteed by any industrial
company with a long term unsecured debt rating of at least A or the equivalent
thereof, from S&P or A2 or the equivalent thereof from Moody's and in each case
maturing within six months after the date of acquisition and (e) investments in
money market funds substantially all of whose assets are comprised of securities
of the type described in clauses (a) through (d) above.
"Cash Management Bank" shall mean Wells Fargo Bank, in its
capacity as the cash management bank for Borrowers, or any other cash management
bank selected by Borrowers in accordance with the provisions of this Agreement.
"Change of Control" shall mean, (a) with respect to Parent,
the occurrence of any of the following: (i) a merger, consolidation,
reorganization, recapitalization or share or interest exchange, sale or transfer
or any other transaction or series of transactions in which its stockholders,
managers, partners or interest holders immediately prior to such transaction or
series of transactions receive, in exchange for the stock or interests owned by
them, cash, property or securities of the resulting or surviving entity or any
Affiliate thereof, and, as a result thereof, Persons who, individually or in the
aggregate, were holders of 35% or more of its voting stock, securities or
equity, partnership or ownership interests immediately prior to such transaction
or series of transactions hold less than 35% of the voting stock, securities or
other equity, partnership or ownership interests of the resulting or surviving
entity or such Affiliate thereof, calculated on a fully diluted basis, (ii) a
direct or indirect sale, transfer or other conveyance or disposition, in any
single transaction or series of transactions, of all or substantially all of its
assets, or (iii) any "change in/of control" or "sale" or "disposition" or
similar event as defined in any document governing indebtedness of Parent which
gives the holder of such indebtedness the right to accelerate or otherwise
require payment of such indebtedness prior to the maturity date thereof and (b)
Parent shall cease to own or control, directly or indirectly, 100% of the equity
interests of each Borrower.
"Charter and Good Standing Documents" shall mean, for each
Borrower (i) a copy of the certificate of incorporation or formation (or other
charter document) certified as of a date before the Closing Date reasonably
satisfactory to Agent by the applicable Governmental Authority of the
jurisdiction of incorporation or organization of such Person, (ii) a copy of the
bylaws or similar organizational documents of certified as of a date before the
Closing Date reasonably satisfactory to Agent by the corporate secretary or
assistant secretary of such Person, (iii) an original certificate of good
standing as of a date reasonably acceptable to Agent issued by the applicable
Governmental Authority of the jurisdiction of incorporation or organization of
such Person and of every other jurisdiction in which such Person is required to
be in good standing, and (iv) copies of the resolutions of the Board of
Directors or managers (or other
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applicable governing body) and, if required, stockholders, members or other
equity owners authorizing the execution, delivery and performance of the Loan
Documents to which such Person is a party, certified by an authorized officer of
such Person as of the Closing Date.
"Closing" shall mean the satisfaction, or written waiver by
Agent and the Requisite Lenders, of all of the conditions precedent set forth in
the Agreement required to be satisfied prior to the consummation of the
transactions contemplated hereby.
"Closing Date" shall mean the date the Closing occurs.
"Collateral" shall mean, collectively and each individually,
all collateral and/or security granted to Agent, for the benefit of itself and
Lenders, by Borrowers and/or the Guarantors pursuant to the Loan Documents.
"Commitment" or "Commitments" shall mean (a) as to any Lender,
the aggregate commitment of such Lender to make Advances and draws, as set forth
on Schedule 2 or in the most recent Lender Addition Agreement executed by such
Lender, and (b) as to all Lenders, the aggregate commitment of all Lenders to
make Advances and draws.
"Confirmation Order" shall mean the order pursuant to Section
1129 of the Bankruptcy Code confirming Borrowers' Plan of Reorganization entered
by the court in Borrower's case on July 10, 2003, which order shall be in form
and substance reasonably acceptable to Agent.
"Consolidated Basis" shall mean, with respect to Parent and
Borrowers, the consolidation in accordance with GAAP of the accounts or other
items of Parent and its Subsidiaries.
"Contingent Obligations" shall mean, as to any Person, any
obligation of such Person guaranteeing or intending to guaranty any
Indebtedness, leases, dividends or other obligations ("PRIMARY OBLIGATIONS") of
any other Person (the "PRIMARY OBLIGOR") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (a) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, or (d) otherwise to assure or to
hold harmless the owner of such primary obligation against loss in respect
thereof, provided, however, that the term "Contingent Obligation" shall not
include endorsements of instruments for deposit or collection in the ordinary
course of business.
"Debtor Relief Law" shall mean, collectively, the Bankruptcy
Code of the United States of America and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization or similar debtor relief laws from time to time in
effect affecting the rights of creditors generally, as amended from time to
time.
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"Default" shall mean any event, fact, circumstance or
condition that, with the giving of applicable notice or passage of time or both,
would constitute or be or result in an Event of Default.
"Deposit Account" shall mean, collectively, the Lockbox
Accounts and all bank or other depository accounts of Borrowers.
"Distribution" shall mean any fee, payment, bonus or other
remuneration of any kind, and any repayment of or debt service on loans or other
indebtedness.
"Eligible Assignee" means (a) a commercial bank, commercial
finance company, asset based lender, insurance company, mutual fund entity or
other financial institution having total assets in excess of $250,000,000 and
which is regularly engaged in making, purchasing or investing in revolving
loans; (b) any Lender; (c) any Affiliate of any Lender; (d) Highbridge/Zwirn
Capital Management, LLC or any of its Affiliates, and (e) any other Person
consented to by Borrowing Agent (such consent not to be unreasonably withheld or
delayed).
"Eligible Deposit Account" shall mean a separate and
identifiable account from all other funds held by the holding institution that
is either (a) an account or accounts maintained with a federal or
state-chartered depository institution or trust company which complies with the
definition of Eligible Institution or (b) a segregated trust account or accounts
maintained with a federal or state chartered depository institution or trust
company acting in its fiduciary capacity which, in the case of a state chartered
depository institution or trust company, is subject to regulations substantially
similar to 12 C.F.R. Section 9.10(b), having in either case a combined capital
and surplus of at least $50,000,000 and subject to supervision or examination by
federal and state authority. An Eligible Deposit Account will not be evidenced
by a certificate of deposit, passbook or other instrument.
"Eligible Institution" shall mean a depository institution or
trust company, the short term unsecured debt obligations or commercial paper of
which are rated at least "A- 1+" by S&P, "P-1" by Moody's or "F-1+" by Fitch, if
rated by such Rating Agency, in the case of accounts in which funds are held for
thirty (30) days or less (or, in the case of accounts in which funds are held
for more than thirty (30) days, the long term unsecured debt obligations of
which are rated at least "AA" by Fitch or S&P or "Aa2" by Moody's, if rated by
such Rating Agency). Notwithstanding the foregoing, (a) Bank of America and
Wells Fargo Bank, N.A. shall be deemed Eligible Institutions so long as their
short term unsecured debt obligations or commercial paper are rated at least
"A-2+" by S&P, "P-2" by Moody's or "F-1" by Fitch, if rated by such Rating
Agency, in the case of accounts in which funds are held for thirty (30) days or
less (or, in the case of accounts in which funds are held for more than thirty
(30) days, the long term unsecured debt obligations of which are rated at least
"A" by Fitch or S&P or "A2" by Moody's, if rated by such Rating Agency) and (b)
for accounts into which checks are deposited by Borrowers from Private Pay
Debtors, other than the Lockbox Account, a depository institution or trust
company, that insures deposits held by such a depository institution or trust
company through the Federal Deposit Insurance Corporation, so long as the
amounts on deposit in all accounts of any Borrower at such institution does not
exceed $100,000 at any one time.
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"Eligible Receivables" shall mean each Account arising in the
ordinary course of Borrowers' business from the sale of goods or rendering of
Services unless:
(a) it is not subject to a valid perfected first priority
security interest in favor of Agent, subject to no other Lien (other than Liens
in favor of the Senior Mortgage Loan Lender to the extent it is expressly
subordinated to Agent's Lien in accordance with the Senior Mortgage/Revolving
Lender Intercreditor Agreement);
(b) it is not evidenced by an invoice, statement or other
documentary evidence reasonably satisfactory to Agent; provided, that Agent in
its Permitted Discretion may from time to time include as Accounts that are not
evidenced by an invoice, statement or other documentary evidence reasonably
satisfactory to Agent as Eligible Receivables and determine the advance rate,
liquidity factors and reserves applicable to Advances made on any such Accounts;
(c) it or any portion thereof (in which case only such
portion shall not be an Eligible Receivable) is payable by a beneficiary,
recipient or subscriber individually and not directly by a Medicaid/Medicare
Account Debtor or commercial medical insurance carrier acceptable to the Agent;
(d) it arises out of services rendered or a sale made to,
or out of any other transaction between Borrowers or any of their Subsidiaries
and, one or more Affiliates of Borrowers or any of their Subsidiaries;
(e) it remains unpaid for longer than the earlier of (i)
150 calendar days after the first to occur of the claim date or the invoice
date, and (ii) 180 calendar days after the applicable Services were rendered;
(f) with respect to all Accounts owed by any particular
Account Debtor and/or its Affiliates, if more than ten 10% of the aggregate
balance of all such Accounts (other than accounts being disputed by such Account
Debtor) owing from such Account Debtor and/or its Affiliates remain unpaid for
longer than the earlier of (i) 150 calendar days after the first to occur of the
claim date or the invoice date, and (ii) 180 calendar days after the applicable
Services were rendered;
(g) with respect to all Accounts owed by any particular
Account Debtor and/or its Affiliates, 25% or more of all such Accounts are not
deemed Eligible Receivables for any reason hereunder (which percentage may, in
Agent's sole discretion, be increased or decreased);
(h) with respect to all Accounts owed by any particular
Account Debtor and/or its Affiliates (except Medicaid/Medicare Account Debtors),
if, and only to the extent, such Accounts exceed 20% of the aggregate value of
all Eligible Receivables included in Borrowing Base at any one time (including
Accounts from Medicaid/Medicare Account Debtors);
(i) any covenant, agreement, representation or warranty
contained in any Loan Document with respect to such Account has been breached
and remains uncured after applicable cure periods;
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(j) the Account Debtor for such Account has commenced a
voluntary case under any Debtor Relief Law or has made an assignment for the
benefit of creditors, or a decree or order for relief has been entered by a
court having jurisdiction in respect of such Account Debtor in an involuntary
case under any Debtor Relief Law, or any other petition or application for
relief under any Debtor Relief Law has been filed against such Account Debtor,
or such Account Debtor has failed, suspended business, ceased to be solvent, or
has consented to or suffered a receiver, trustee, liquidator or custodian to be
appointed for it or for all or a significant portion of its assets or affairs;
(k) it arises from the sale of property or services
rendered to one or more Account Debtors outside the continental United States or
that have their principal place of business or chief executive offices outside
the continental United States;
(l) it represents the sale of goods or rendering of
services to an Account Debtor on a bill-and-hold, guaranteed sale,
sale-and-return, sale on approval, consignment or any other repurchase or return
basis or is evidenced by Chattel Paper or an Instrument of any kind or has been
determined pursuant to judgment;
(m) the applicable Account Debtor for such Account is any
Governmental Authority, unless rights to payment of such Account have been
assigned to Agent pursuant to the Assignment of Claims Act of 1940, as amended
(31 U.S.C. Section 3727, et seq. and 41 U.S.C. Section 15, et seq.), or
otherwise all with applicable statutes or regulations respecting the assignment
of government Accounts have been complied with (for example, with respect to all
Account payable directly by a Medicaid/Medicare Account Debtor);
(n) to the extent, but only to the extent that, it is
subject to any offset, credit (including any resource or other income credit or
offset) deduction, defense, discount, chargeback, freight claim, allowance,
adjustment, dispute or counterclaim, or is contingent in any respect or for any
reason;
(o) there is any agreement with an Account Debtor for any
deduction from such Account, except for discounts or allowances made in the
ordinary course of business for prompt payment, all of which discounts or
allowances are reflected in the calculation of the face value of each invoice
related thereto, such that only the discounted amount of such Account after
giving effect to such discounts and allowances shall be considered an Eligible
Receivable;
(p) to the extent, but only to the extent that, any
return, rejection or repossession of goods or services related to it has
occurred;
(q) it is not payable to Borrowers;
(r) to the extent, but only to the extent that, any of
Borrowers has agreed to accept or has accepted any non-cash payment for such
Account;
(s) with respect to any Account arising from the sale of
goods, the goods have not been shipped to the Account Debtor or its designee;
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(t) with respect to any Account arising from the
performance of Services, the Services have not been actually performed or the
Services were undertaken in material violation of any applicable law; or
(u) such Account fails to meet such other specifications
and requirements which may from time to time be established by Agent in its
Permitted Discretion.
"Environmental Laws" shall mean, collectively and each
individually ,the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Superfund Amendment and Reauthorization Act of 1986,
the Resource Conservation and Recovery Act, the Toxic Substances Control Act,
the Clean Air Act, the Clean Water Act, any other "Superfund" or "Superlien" law
and all other federal, state and local and foreign environmental, land use,
zoning, health, chemical use, safety and sanitation laws, statutes, ordinances
and codes relating to the protection of the environment and/or governing the
use, storage, treatment, generation, transportation, processing, handling,
production or disposal of Hazardous Substances, in each case, as amended, and
the rules, regulations, policies, guidelines, interpretations, decisions, orders
and directives of Governmental Authorities with respect thereto.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and the regulations thereunder.
"Event of Default" shall mean the occurrence of any event set
forth in Article VIII.
"Exchange Act" shall mean Securities Exchange Act of 1934, as
amended.
"Excluded Subsidiary" shall mean any Subsidiary that is (i) a
Mezzanine Loan Borrower, (ii) a borrower under the Senior Mortgage Loan
Documentation, (iii) a Revolving Loan A Borrower, (iv) a partner in an entity
described in clause (i), (ii) or (iii), and (iv) a Person designated by
Borrowing Agent as an excluded Subsidiary.
"Facility" shall mean, individually, any facility providing
Services and operated by any of Borrowers.
"Facility Cap" shall have the meaning given in the first
WHEREAS clause in this Agreement.
"Fitch" shall mean Fitch, Inc.
"GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time as applied by
nationally recognized accounting firms.
"Government Accounts" shall be defined to mean all Accounts
arising out of or with respect to any Government Contract.
"Government Contracts" shall be defined to mean all contracts
with any Government Authority, and all amendments thereto.
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"Governmental Authority" shall mean any federal, state,
municipal, national, local or other governmental department, court, commission,
board, bureau, agency or instrumentality or political subdivision thereof, or
any entity or officer exercising executive, legislative or judicial, regulatory
or administrative functions of or pertaining to any government or any court, in
each case, whether of the United States or a state, territory or possession
thereof, a foreign sovereign entity or country or jurisdiction or the District
of Columbia.
"Guarantor" shall mean, collectively and each individually,
all guarantors of the Obligations or any part thereof.
"Guaranty" shall mean any guaranty of the obligations of
Borrowers executed by a Guarantor in favor of Agent for its benefit and for the
ratable benefit of Lenders.
"Hazardous Substances" shall mean, without limitation, any
flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde
foam insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, hazardous wastes, hazardous or toxic substances or
related materials as defined in or subject to any applicable Environmental Law.
"Healthcare Laws" shall mean all applicable statutes, laws,
ordinances, rules and regulations of any Governmental Authority with respect to
regulatory matters primarily relating to patient healthcare, healthcare
providers and healthcare services (including without limitation Section 1128B(b)
of the Social Security Act, as amended, 42 U.S.C. Section 1320a-7(b) (Criminal
Penalties Involving Medicare or State Health Care Programs), commonly referred
to as the "Federal Anti-Kickback Statute," and the Social Security Act, as
amended, Section 1877, 42 U.S.C. Section 1395nn (Prohibition Against Certain
Referrals), commonly referred to as "Stark Statute").
"Indebtedness" of any Person shall mean, without duplication,
(a) all items (other than trade payables and current accrued liabilities) which,
in accordance with GAAP, would be included in determining total liabilities as
shown on the liability side of the balance sheet of such Person as of the date
as of which Indebtedness is to be determined, including any lease which, in
accordance with GAAP would constitute a capital lease, (b) all indebtedness
secured by any mortgage, pledge, security, Lien or conditional sale or other
title retention agreement to which any property or asset owned or held by such
Person is subject, whether or not the indebtedness secured thereby shall have
been assumed, (c) all indebtedness of others which such Person has directly or
indirectly guaranteed, endorsed (otherwise than for collection or deposit in the
ordinary course of business), discounted or sold with recourse or agreed
(contingently or otherwise) to purchase or repurchase or otherwise acquire, or
in respect of which such Person has agreed to supply or advance funds (whether
by way of loan, stock, equity or other ownership interest purchase, capital
contribution or otherwise) or otherwise to become directly or indirectly liable.
"Indebtedness for Borrowed Money" of any Person shall mean,
without duplication, (a) all Indebtedness of such Person for borrowed money,
whether or not evidenced by bonds, debentures, notes or similar instruments, (b)
all Capitalized Lease Obligations of such Person, (c) all Indebtedness of such
Person secured by any mortgage, pledge, security, Lien or
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conditional sale or other title retention agreement to which any property or
asset owned or held by such Person is subject, whether or not the indebtedness
secured thereby shall have been assumed, (d) all Indebtedness for the deferred
purchase price of property and (e) all direct or indirect guaranties of any or
all of the foregoing.
"Indemnified Persons" shall have the meaning assigned to it in
Section 14.4 hereof.
"Insurance Subsidiary" shall mean the offshore insurance
subsidiary to be formed by the Parent.
"Insurer" shall mean a Person that insures another Person
against any costs incurred in the receipt by such other Person of Services, or
that has an agreement with any Borrower to compensate it for providing Services
to such Person.
"Intellectual Property" shall have the meaning assigned to it
in Section 5.11 hereof.
"Interest Rate Agreement" shall mean any interest rate swap,
cap or collar agreement or other similar agreement or arrangement designed to
hedge the position with respect to interest rates.
"Interim Borrowing Certificate" shall mean an Interim
Borrowing Certificate substantially in the form of Exhibit B.
"Internal Revenue Code" shall mean the Internal Revenue Code
of 1986, as amended, and the regulations thereunder.
"Inventory" shall mean all "inventory" (as defined in the UCC)
of Borrowers (or, if referring to another Person, of such other Person), now
owned or hereafter acquired, and all documents of title or other documents
representing any of the foregoing, and all collateral security and guaranties of
any kind, now or hereafter in existence, given by any Person with respect to any
of the foregoing.
"Joinder Agreement" shall mean an agreement in form and
substance acceptable to Agent in its Permitted Discretion, the material terms of
which shall provide that a Person shall become a party to and become bound by
the terms of this Agreement and/or the other Loan Documents in the same capacity
and to the same extent as a Borrower.
"Landlord Waiver and Consent" shall mean a waiver/consent in
form and substance reasonably satisfactory to Agent from the owner/lessor of any
premises not owned by Borrowers at which any of the Collateral is now or
hereafter located for the purpose of providing Agent access to such Collateral,
in each case as such may be modified, amended or supplemented from time to time.
"Lender Addition Agreement" shall mean an agreement among
Agent, a Lender and such Lender's assignee regarding their respective rights and
obligations with respect to assignments of the Loans and other interests under
this Agreement.
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"Lenders" shall mean the financial institutions, from time to
time named on Schedule 2 under the heading "Lenders", their respective
successors and permitted assigns (but not, except as expressly set forth herein,
any participant that is not otherwise a party to this Agreement).
"Liability Event" shall mean any event, fact, condition or
circumstance or series thereof (i) in or for which any Borrower becomes liable
or otherwise responsible for any material amount owed or owing to any Medicaid
or Medicare program by a provider under common ownership with such Borrower or
any provider owned by such Borrower pursuant to any applicable law, ordinance,
rule, decree, order or regulation of any Governmental Authority after the
failure of any such provider to pay any such amount when owed or owing, (ii) in
which material Medicaid or Medicare payments to any Borrower are lawfully
set-off against payments to such or any other Borrowers to satisfy any liability
of or for any material amounts owed or owing to any Medicaid or Medicare program
by a provider under common ownership with such Borrower or any provider owned by
such Borrower pursuant to any applicable law, ordinance, rule, decree, order or
regulation of any Governmental Authority, or (iii) any of the foregoing under
clauses (i) or (ii) in each case pursuant to statutory or regulatory provisions
that are similar to any applicable law, ordinance, rule, decree, order or
regulation of any Governmental Authority referenced in clauses (i) and (ii)
above or successor provisions thereto.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, restriction, lien or charge of any kind (including any agreement to
give any of the foregoing, any conditional sale or other title retention
agreement or any lease in the nature thereof), or any other arrangement pursuant
to which title to the property is retained by or vested in some other Person for
security purposes.
"Loan" or "Loans" shall mean, individually and collectively,
all Advances under the Revolving Facility.
"Loan Documents" shall mean, collectively and each
individually, this Agreement, the Revolving Notes, the Security Documents, the
Guaranties (if any), the Senior Mortgage/Revolving Lender Intercreditor
Agreement, the Landlord Waiver and Consents, the Borrowing Certificates, and all
other agreements, documents, instruments and certificates heretofore or
hereafter executed or delivered to Agent or Lenders in connection with any of
the foregoing or the Loans, as the same may be amended, modified or supplemented
from time to time.
"Lockbox Accounts" shall mean the accounts maintained by
Borrowers at the Lockbox Banks into which all collections or payments on their
Accounts and other Collateral are paid.
"Lockbox Agreements" shall have the meaning given in Section
2.5 of this Agreement.
"Lockbox Banks" shall have the meaning given in Section 2.5 of
this Agreement.
"Management Agreement" shall have the meaning given such term
in the Management Fee Subordination Agreement.
A-11
"Management Fee Subordination Agreement" shall mean that
certain Management Fees Subordination Agreement among Agent, the managers and
Borrowers executed in connection herewith, as the same may be amended, modified,
restated or supplemented from time to time.
"Material Adverse Effect" or "Material Adverse Change" shall
mean any event, condition or circumstance or set of events, conditions or
circumstances or any change(s) which (i) has, had or could reasonably be
expected to have any material adverse effect upon or change in the validity or
enforceability of any Loan Document, (ii) has been or could reasonably be
expected to be material and adverse to the value of the Collateral or to the
business, operations, prospects, properties, assets, liabilities or condition of
Borrowers and the Guarantors taken as a whole, or (iii) has materially impaired
or could reasonably be expected to materially impair the ability of any Borrower
or Guarantor to perform the Obligations or to consummate the transactions under
the Loan Documents executed by such Person.
"Maturity Date" shall mean the earliest of (i) the occurrence
of any automatic acceleration upon an Event of Default as provided for in this
Agreement, (ii) Agent's acceleration and demand for payment following an Event
of Default pursuant to the provisions of this Agreement and (iii) the last day
of the Term.
"Medicaid/Medicare Account Debtor" shall mean any Account
Debtor which is (i) the United States of America acting under the Medicaid or
Medicare program established pursuant to the Social Security Act or any other
federal healthcare program, including, without limitation, CHAMPUS, (ii) any
state or the District of Columbia acting pursuant to a health plan adopted
pursuant to Title XIX of the Social Security Act or any other state health care
program, or (iii) any agent, carrier, administrator or intermediary for any of
the foregoing.
"Mezzanine Loan" shall mean that certain $23,000,000 term loan
made by the Mezzanine Loan Lenders in favor of the Mezzanine Borrowers pursuant
to the Mezzanine Loan Documentation.
"Mezzanine Loan Agent" shall mean CapitalSource Finance LLC
and any successor agent under the Mezzanine Loan Documentation.
"Mezzanine Loan Agreement" shall mean that certain Mezzanine
Loan Agreement dated as of the Closing Date by and among the Mezzanine Lenders,
the Mezzanine Borrowers and Parent.
"Mezzanine Loan Borrowers" shall mean Borrowers under the
Mezzanine Loan Agreement from time to time.
"Mezzanine Loan Documentation" shall mean, collectively, the
Mezzanine Loan Agreement and all other agreements, documents, instruments and
certificates executed and delivered in connection therewith.
"Mezzanine Loan Lenders" shall mean Lenders party to the
Mezzanine Loan Documentation from time to time and shall include their
successors and assigns.
A-12
"Moody's" shall mean Moody's Investor Service, Inc.
"Non-Recourse Indebtedness" means Indebtedness for Borrowed
Money permitted to be incurred by Parent or any Subsidiary of Parent pursuant to
Section 7.2(d)(ii) of this Agreement or Section 7.2(d)(ii) or (iii) of the
Revolving Loan A Agreement.
"Obligations" shall mean all present and future obligations,
Indebtedness and liabilities of Borrowers and/or the Guarantors to Agent or
Lenders at any time and from time to time of every kind, nature and description,
direct or indirect, secured or unsecured, joint and several, absolute or
contingent, due or to become due, matured or unmatured, now existing or
hereafter arising, contractual or tortious, liquidated or unliquidated, under
any of the Loan Documents or otherwise relating to Revolving Notes and/or Loans,
including, without limitation, all applicable fees, charges and expenses and/or
all amounts paid or advanced by Agent or any Lender on behalf of or for the
benefit of any Borrower and/or any Guarantor for any reason at any time,
including in each case obligations of performance as well as obligations of
payment and interest that accrue after the commencement of any proceeding under
any Debtor Relief Law by or against any such Person.
"Parent" shall mean Fountain View, Inc., a Delaware
corporation.
"Payment Office" shall mean initially the address set forth
beneath Agent's name on the signature page of this Agreement, and thereafter,
such other office of Agent within the United States, if any, which it may
designate by notice to Borrowers to be the Payment Office.
"Permits" shall mean collectively all licenses, leases,
powers, permits, franchises, certificates, authorizations, approvals,
certificates of need, provider numbers and other rights.
"Permitted Discretion" shall mean a determination or judgment
made by Agent in good faith in the exercise of reasonable (from the perspective
of a secured lender) business judgment.
"Permitted Fund Manager" means any nationally recognized
manager of investment funds investing in revolving debt interests provided such
entity (A) is investing through a fund with committed capital of at least Two
Hundred Fifty Million and No/100 Dollars ($250,000,000.00), and (B) is not
subject to a bankruptcy proceeding on the date of determination.
"Permitted Liens" shall have the meaning given in Section 7.3
of this Agreement.
"Permitted Refinanced Indebtedness" shall have the meaning
given in Section 7.2 of this Agreement.
"Person" shall mean an individual, a partnership, a
corporation, a limited liability company, a business trust, a joint stock
company, a trust, an unincorporated association, a joint venture, a Governmental
Authority or any other entity of whatever nature.
"Plan of Reorganization" or "Plan" shall mean Debtors' Third
Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code,
dated April 22, 2003, in Case
A-13
No. LA 01-39678BB through LA 01-39697BB and LA 01-45516BB, LA 01-45520BB and LA
01-45525BB, in the United States Bankruptcy Court for the Central District of
California, Los Angeles Division, as such may be modified, amended or
supplemented from time to time.
"Prime Rate" shall mean a fluctuating interest rate per annum
equal at all times to the rate of interest announced publicly from time to time
by Citibank, N.A. as its base or prime rate; provided, that such rate is not
necessarily the best rate offered to its customers, and, should Agent be unable
to determine such rate, such other indication of the prevailing prime rate of
interest for substantial money center lending institutions as may reasonably be
chosen by Agent. Each change in the Prime Rate shall result in a corresponding
and simultaneously change in the interest rate applicable to Advances under this
Agreement.
"Priority Claims" shall mean Class 1, Class 2, Class 3, Class
4 and Class 7 claims under the Plan of Reorganization and any other liens given
priority under the Plan of Reorganization and outstanding on the Closing Date.
"Priority Liens" shall mean Liens permitted pursuant to
Section 7.3(ii), (iii), (iv), (v), (vi), (vii), (ix), (xi) and Liens set forth
on Part A of Schedule 7.3.
"Private Pay Debtor" shall mean an Account Debtor that is not
a Government Authority or a commercial medical insurance carrier.
"Pro Rata Share" shall mean with respect to matters relating
to a particular Commitment of a Lender, the percentage obtained by dividing (i)
such Commitment of such Lender by (ii) all such Commitments of all Lenders;
provided, however, that if any Commitment of Lenders is terminated pursuant to
the terms hereof, then "Pro Rata Share" shall mean the percentage obtained by
dividing (x) the aggregate amount of such Lender's outstanding Loans related to
such Commitment by (y) the aggregate amount of all outstanding Loans related to
such Commitment; in any case as such percentage may be adjusted by assignments
permitted pursuant to Section 14.2.
"Qualified Transferee" shall have the meaning set forth in the
Senior Mortgage/Revolving Lender Intercreditor Agreement.
"Rating Agencies" shall mean each of S&P, Moody's and Fitch,
or any other nationally recognized statistical rating agency which has been
approved by Agent.
"Receipt" shall have the meaning given in Section 14.5 of this
Agreement.
"Register" shall have the meaning given in Section 14.2(c) of
this Agreement.
"Requisite Lenders" shall mean Lenders holding or being
responsible for (i) 100%, if there are only two Lenders, and (ii) at least
66-2/3% if there are more than two Lenders, in each case, of the sum of (a) all
outstanding Loans and (b) all unutilized Commitments.
"Revolving Facility" shall have the meaning given in the first
WHEREAS clause in this Agreement.
A-14
"Revolving Interest Rate" shall mean the rate of interest set
forth in Section 2.3 hereof.
"Revolving Loan A" shall mean that certain $21,000,000 maximum
amount of revolving loans made by the Revolving Loan A Lenders in favor of the
Revolving Loan A Borrowers pursuant to the Revolving Loan A Documentation.
"Revolving Loan A Agreement" shall mean that certain Revolving
Credit and Security Agreement dated as of the Closing Date by and among the
Revolving Loan A Borrowers, CapitalSource, as agent for the Revolving Loan A
Lenders, and the Revolving Loan A Lenders.
"Revolving Loan A Borrowers" shall mean Borrowers from time to
time under the Revolving Loan A Agreement.
"Revolving Loan A Documentation" shall mean, collectively, the
Revolving Loan A Agreement and all other agreements, documents, instruments and
certificates executed and delivered in connection therewith.
"Revolving Loan A Lenders" shall mean the parties other than
the Revolving Loan A Borrowers party to the Revolving Loan A Documentation from
time to time and shall include their successors and assigns.
"Revolving Note" shall mean, collectively and each
individually, the promissory note(s) payable to the order of Agent executed by
Borrowers evidencing the Revolving Facility, as the same may be modified,
amended or supplemented from time to time.
"S&P" shall mean Standard & Poor's Ratings Group, a division
of the McGraw Hill companies.
"Security Documents" shall mean this Agreement, the Lockbox
Agreements, and all other documents or instruments necessary to create or
perfect the Liens in the Collateral, as such may be modified, amended or
supplemented from time to time.
"Senior Mortgage Intercreditor Agreement" shall mean that
certain Intercreditor Agreement dated the Closing Date by and among Mezzanine
Loan Agent and the Senior Mortgage Loan Lender.
"Senior Mortgage Loan" shall mean that certain $95,000,000
Senior Mortgage Loan made by the Senior Mortgage Loan Lender in favor of the
Senior Mortgage Loan Borrowers pursuant to the Senior Mortgage Loan
Documentation.
"Senior Mortgage Loan Agreement" shall mean that certain Loan
Agreement dated as of the Closing Date among Senior Mortgage Loan Lender, the
Senior Mortgage Loan Borrowers.
"Senior Mortgage Loan Blocked Account" shall mean that certain
Cash Management Account established by the Senior Mortgage Loan Lender pursuant
to the Cash
A-15
Management Agreement between Senior Mortgage Loan Borrower and Senior Mortgage
Loan Lender.
"Senior Mortgage Loan Borrowers" shall mean the borrowers
party to the Senior Mortgage Loan Agreement from time to time and shall include
their respective successors and assigns.
"Senior Mortgage Loan Documentation" shall mean, collectively,
the Senior Mortgage Loan Agreement and all other agreements, documents,
instruments and certificates executed and delivered in connection therewith.
"Senior Mortgage Loan Lender" shall mean Column Financial,
Inc. and its successors and assigns under the Senior Mortgage Loan
Documentation.
"Senior Mortgage Term Loan B" shall mean that certain
$10,000,000 Term Loan B made pursuant to the Senior Mortgage Loan Documentation.
"Senior Mortgage/Revolving Lender Intercreditor Agreement"
shall mean that certain Intercreditor and Subordination Agreement dated the
Closing Date by and among CapitalSource, as a Revolving Loan A Lender and as
agent for the Revolving Loan A Lenders, the Senior Mortgage Loan Lender, the
Revolving Loan A Borrowers and the Senior Mortgage Loan Borrowers.
"Services" shall mean medical and health care services
provided to a Person, including, but not limited to, medical and health care
services which are covered by a policy of insurance issued by an Insurer,
physician services, nurse and therapist services, dental services, hospital
services, skilled nursing facility services, comprehensive outpatient
rehabilitation services, home health care services, pharmacy services,
residential and out-patient behavioral healthcare services.
"Subsidiary" shall mean, as to any other Person, any Person in
which more than 50% of all equity, membership, partnership or other ownership
interests is owned directly or indirectly by such Person or by one or more of
such Person's Subsidiaries.
"Term" shall mean the period commencing on the date set forth
on the first page hereof and ending on the date that is five (5) years after the
Closing Date.
"UCC" shall mean the Uniform Commercial Code as in effect in
the State of New York from time to time.
"Unmatured Surviving Obligations" shall mean indemnity
Obligations with respect to which no claim has been made and which pursuant to
the provisions of this Agreement survive termination of this Agreement.
A-16
EXHIBIT A
BORROWING CERTIFICATE
dated as of___________________, 2003
________________, a _________ corporation, as Borrowing Agent for
itself and for the other Borrowers (as defined in the Revolving Credit and
Security Agreement dated as of ___________________, 2003, by and among Borrowers
and CapitalSource Finance LLC, as administrative agent and collateral agent for
Lenders (in such capacities, the "AGENT"), and the Lenders party thereto, (as
amended, supplemented or modified from time to time, the "LOAN AGREEMENT"; all
capitalized terms not defined herein have the meanings given them in the Loan
Agreement)) by the undersigned officer hereby certifies to Agent in accordance
with the Loan Agreement and other Loan Documents that:
A. Borrowing Base and Compliance
Pursuant to the Security Documents, Agent, on behalf of Lenders, has
been granted a lien on all Accounts of Borrowers. Set forth on Schedule 1 is a
true and correct calculation of Availability calculated in accordance with the
Loan Agreement. All of the Accounts included as Eligible A/R on Schedule 1 are
Eligible Receivables.
B. Borrowing Notice (TO BE COMPLETED AND EFFECTIVE ONLY IF BORROWERS ARE
REQUESTING AN ADVANCE)
(1) In accordance with Sections 2.4 and 4.2(a) of the Loan
Agreement, Borrowing Agent on behalf of Borrowers hereby irrevocably requests
from Agent an Advance under the Revolving Facility pursuant to the Loan
Agreement in the aggregate principal amount of $_________ ("REQUESTED ADVANCE")
to be made on _________________, _________ (the "BORROWING DATE"), which day is
a Business Day.
(2) Immediately after giving effect to the Requested Advance, the
aggregate outstanding principal amount of Advances will not exceed the lesser of
(i) the Availability and (ii) the Facility Cap.
C. General Certifications
Borrowing Agent further certifies to Agent that each of the
conditions contained in Section 4.2 of the Loan Agreement are as of the date
hereof, and will be as of the Borrowing Date (if applicable), satisfied,
including, without limitation, receipt by Agent of all fees, charges and
expenses payable to Agent on or prior to such Borrowing Date pursuant to the
Loan Documents.
Exhibit A-1
IN WITNESS WHEREOF, the undersigned has caused this certificate to be
executed as of the day first written above.
__________________________, AS BORROWING
AGENT
By: ____________________________________
Name: ___________________________
Title: __________________________
Exhibit A-2
SCHEDULE 1
TO
[NAMES OF BORROWERS]
BORROWING CERTIFICATE
FOR PERIOD ENDING - (__/__/__)
Private
A SECTION A: A/R AVAILABILITY Medicare Medicaid Insurance Pay Total
-------- -------- --------- --- -----
1 Beginning A/R (from prev. certificate) -
----------------------------------------------------------------
2 (+) Sales (New A/R) -
----------------------------------------------------------------
3 (+/-) Debit/Credit Memos -
----------------------------------------------------------------
4 (+/-) Adjustments -
----------------------------------------------------------------
5 (-) Posted A/R Collections -
----------------------------------------------------------------
6 Ending A/R (Date _____________) 0 0 0 0 -
----------------------------------------------------------------
7 Ineligible Receivables (A) 0 -
----------------------------------------------------------------
8 Eligible A/R (6-7) 0 0 0 0 -
----------------------------------------------------------------
9 Liquidity Factor 100.0% 100.0% 100.0% 100.0%
----------------------------------------------------------------
10 Net Eligible A/R (8*9) 0 0 0 0 -
----------------------------------------------------------------
11 (-) Unposted A/R Collections -
------------
12 Adjusted Net A/R Availability (10-9) -
------------
13 Advance Rate 85%
------------
14 A/R Availability (12*13) -
------------
B SECTION B: GROSS AVAILABILITY
1 A/R Availability -
------------
2 (+) Approved Overadvance -
------------
3 (-) Reserves -
------------
4 Collateral Availability (1+2-3) -
------------
5 Facility Cap -
------------
6 Gross Availability (lesser of Collateral Availability and Facility Cap) -
------------
(A) Attach a supporting schedule showing all Receivables that are not
Eligible Receivables pursuant to the definitions in the Loan Agreement. If there
is any discrepancy between the definition of Eligible Receivables as set forth
in the Loan Agreement and any of the information set forth in this certificate,
Schedule 1 or any supporting documentation, the provisions of the Loan Agreement
shall control.
Exhibit A-3
EXHIBIT B
INTERIM BORROWING CERTIFICATE
dated as of___________________, 2003
_______________________, a ________ corporation, as Borrowing Agent for
itself and for the other Borrowers (as defined in the Revolving Credit and
Security Agreement dated as of ___________________, 2003, by and among Borrowers
and CapitalSource Finance LLC, as administrative agent and collateral agent for
Lenders (in such capacities, the "AGENT"), and the Lenders party thereto, (as
amended, supplemented or modified from time to time, the "LOAN AGREEMENT"; all
capitalized terms not defined herein have the meanings given them in the Loan
Agreement)) by the undersigned officer hereby certifies to Agent in accordance
with the Loan Agreement and other Loan Documents that:
A. Borrowing Base and Compliance
Pursuant to the Security Documents, Agent, on behalf of Lenders, has
been granted a lien on all Accounts of Borrowers. Set forth on Schedule 1 is a
true and correct calculation of Availability calculated in accordance with the
Loan Agreement. All of the Accounts included as Eligible A/R on Schedule 1 are
Eligible Receivables.
B. Borrowing Notice (TO BE COMPLETED AND EFFECTIVE ONLY IF BORROWERS ARE
REQUESTING AN ADVANCE)
(1) In accordance with Sections 2.4 and 4.2(a) of the Loan
Agreement, Borrowing Agent on behalf of Borrowers hereby irrevocably requests
from Agent an Advance under the Revolving Facility pursuant to the Loan
Agreement in the aggregate principal amount of $_________ ("REQUESTED ADVANCE")
to be made on _________________, _________ (the "BORROWING DATE"), which day is
a Business Day.
(2) Immediately after giving effect to the Requested Advance, the
aggregate outstanding principal amount of Advances will not exceed the lesser of
(i) the Availability and (ii) the Facility Cap.
C. General Certifications
Borrowing Agent further certifies to Agent that each of the
conditions contained in Section 4.2 of the Loan Agreement are as of the date
hereof, and will be as of the Borrowing Date (if applicable), satisfied,
including, without limitation, receipt by Agent of all fees, charges and
expenses payable to Agent on or prior to such Borrowing Date pursuant to the
Loan Documents.
Exhibit B-1
IN WITNESS WHEREOF, the undersigned has caused this certificate to be
executed as of the day first written above.
______________________, AS BORROWING AGENT
By: _____________________________________
Name: _____________________________
Title: ____________________________
Exhibit B-2
SCHEDULE 1
TO
[NAMES OF BORROWERS]
INTERIM BORROWING CERTIFICATE
FOR PERIOD ENDING - (__ /__ /__)
Private
A SECTION A: A/R AVAILABILITY Medicare Medicaid Insurance Pay Total
-------- -------- --------- --- -----
Beginning Eligible A/R (Line 8 from prev.
1 Borrowing Certificate)
----------------------------------------------------------------
2 (+) Estimated Sales (Beds * Days * Rate) -
----------------------------------------------------------------
3 (-) Posted A/R Collections -
----------------------------------------------------------------
Ending Estimated Eligible A/R (Date
4 __________) 0 0 0 0 -
----------------------------------------------------------------
5 Liquidity Factor 100.0% 100.0% 100.0% 100.0%
----------------------------------------------------------------
6 Net Eligible A/R (4*5) 0 0 0 0 -
----------------------------------------------------------------
7 (-) Unposted A/R Collections -
--------
8 Adjusted Net A/R Availability (6-7) -
--------
9 Advance Rate 85%
--------
10 A/R Availability (8*9) -
--------
B SECTION B: GROSS AVAILABILITY
1 A/R Availability -
--------
2 (+) Approved Overadvance -
--------
3 (-) Reserves -
--------
4 Collateral Availability (1+2-3) -
--------
5 Facility Cap -
--------
6 Gross Availability (lesser of Collateral Availability and Facility Cap) -
--------
Exhibit B-3
EXHIBIT C
FORM OF JOINDER AGREEMENT
This JOINDER AGREEMENT, dated as of ______________ __, 20__ (this
"Joinder Agreement"), made by the entity or entities that are signatories hereto
(collectively, the "Additional Borrowers"), in favor of CapitalSource Finance
LLC ("CapitalSource"), as administrative agent and collateral agent (in such
capacity, "Agent") for the Lenders (as defined below).
W I T N E S S E T H :
WHEREAS, various borrowers party thereto from time to time
(collectively, "Borrowers," and each, a "Borrower"), the lenders party thereto
from time to time (the "Lenders"), and Agent are parties to that certain
Revolving Credit and Security Agreement, dated as of August 19, 2003 (as such
may from time to time be renewed, refunded, replaced, refinanced, amended,
amended and restated, modified or supplemented, the "Credit Agreement").
Capitalized terms not defined herein have the meanings given to them in the
Credit Agreement.
WHEREAS, the parties to this Joinder Agreement wish to amend Schedule 1
to the Credit Agreement in the manner hereinafter set forth and, pursuant to
Section 6.l4 of the Credit Agreement, join the Additional Borrowers as Borrowers
under the Credit Agreement.
NOW, THEREFORE, in consideration of the premises, the parties hereto
hereby agree as follows:
A G R E E M E N T:
1. Each of the undersigned Additional Borrowers hereby
acknowledges that it has received and reviewed a copy of the Credit Agreement
and acknowledges and agrees to:
(a) join the Credit Agreement as a Borrower (with the
same effect as if initially named therein), as indicated with its signature
below;
(b) be bound by all covenants, agreements and
acknowledgements attributable to a Borrower in the Credit Agreement, including,
without limitation, the grant of security interest in the Collateral (as defined
in the Credit Agreement) under the Credit Agreement; and
(c) perform all obligations and duties required of it by
the Credit Agreement as a Borrower.
Exhibit C-1
2. Each of the undersigned hereby represents and warrants that
the representations and warranties with respect to it contained in Article 5 of
the Credit Agreement and in each of the other Loan Documents to which such
signatory is a party, by virtue of this Joinder Agreement or otherwise, or which
are contained in any certificate furnished by or on behalf of such signatory,
are true and correct on the date hereof as if made on and as of the date hereof
(except where such representation or warranty expressly relates to an earlier
date, in which case such representation or warranty was true and correct as of
such date).
3. The address and jurisdiction of incorporation of each of the
undersigned is set forth below its name on the signature pages hereto.
4. THIS JOINDER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT
TO ITS CHOICE OF LAW PROVISIONS (OTHER THAN SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATION LAW).
[Remainder of page intentionally blank]
Exhibit C-2
IN WITNESS WHEREOF, each of the undersigned has caused this JOINDER
AGREEMENT to be duly executed by its proper and duly authorized officer as of
the date first set forth above.
ADDITIONAL BORROWER:
_________________________
a _______________________
By: _____________________________
Name:
Title:
Address:
Jurisdiction of Incorporation:
ACKNOWLEDGED AND AGREED TO:
CAPITALSOURCE FINANCE LLC
By: ___________________________
Name:
Title:
Exhibit C-3
EXHIBIT D TO
LOAN AGREEMENT
EXHIBIT D
GUARANTY AND SECURITY AGREEMENT
THIS GUARANTY AND SECURITY AGREEMENT(this "AGREEMENT") is made as of
___________ 20___, by ______________________________, a _____________
corporation ("GUARANTOR"), to and for the benefit of CAPITALSOURCE FINANCE LLC,
a Delaware limited liability company as administrative agent and collateral
agent for the Lenders (as defined below) ("AGENT").
WHEREAS, the borrowers party thereto (each a "BORROWER" and collectively,
"BORROWERS"), Agent and the lenders party thereto ("LENDERS") have entered into
that certain Revolving Credit and Security Agreement (as amended, supplemented
or modified from time to time, the "CREDIT AGREEMENT"), dated as of
______________, 2003 (the "Closing Date"), pursuant to which Borrowers have
agreed to borrow from Lenders, and Lenders have agreed to lend to Borrowers,
certain amounts pursuant to a revolving credit facility, all in accordance with
and subject to the terms and conditions set forth in the Credit Agreement, which
borrowings are evidenced by the Revolving Notes executed and delivered to
Lenders by Borrowers, dated as of the Closing Date (together collectively and
each individually, the "NOTE", and together with all of the other agreements,
documents, instruments, certificates, reports and financing statements
heretofore or hereafter executed or delivered in connection therewith or with
the Advances to be made under the Credit Agreement, as the same may be amended,
supplemented or modified from time to time, the "LOAN DOCUMENTS");
WHEREAS, Guarantor has become a Subsidiary (as defined in the Credit
Agreement) of a Borrower and, pursuant to Section 6.14 of the Credit Agreement,
as a condition incident to the obligation of Lenders to make additional Advances
to Borrowers, Guarantor is required, and has agreed, to execute and deliver this
Agreement and to grant to Agent on behalf of Lenders a security interest in the
Collateral as security for Guarantor's obligations under this Agreement;
WHEREAS, Lenders are willing to make additional Advances under the
Credit Agreement and the other Loan Documents only upon the condition that
Guarantor executes and delivers to Agent this Agreement and agrees to perform
and to comply with its obligations under this Agreement; and
WHEREAS, Guarantor acknowledges and confirms that, as [an affiliate] [a
subsidiary] of a Borrower, (a) it will benefit from the advancement of funds
under the Revolving Facility to Borrowers, (b) the Loans by Lenders constitute
valuable consideration to Guarantor, (c) this Agreement is intended to be an
inducement to Lenders to continue to extend credit and the Loans to Borrowers,
and (d) Lenders are relying upon this Agreement in making and advancing the
Loans to Borrowers.
NOW, THEREFORE, in consideration of the foregoing and of the covenants
and agreements hereinafter set forth, the receipt and sufficiency of which are
hereby acknowledged, and as an inducement for Lenders to continue making
Advances to Borrowers under the Credit
Exhibit D-1
Agreement and the other Loan Documents, Guarantor, intending to be legally bound
hereby, agrees as follows:
1. All capitalized terms in this Agreement and not
defined herein shall have the defined meanings provided in the Credit Agreement.
2. Guarantor unconditionally and absolutely guarantees
(i) the due and punctual payment and performance when due of the principal of
the Note and the interest thereon and of the Obligations and any and all other
monies and amounts due or which may become due on or with respect to any of the
foregoing, and the due and punctual performance and observance by Borrowers of
all of the other terms, covenants, agreements and conditions of the Loan
Documents, in any case whether according to the present terms thereof, at any
earlier or accelerated date or dates or pursuant to any extension of time or to
any change in the terms, covenants, agreements and conditions thereof now or at
any time hereafter made or granted, (ii) all liabilities and obligations of
Guarantor hereunder, and (iii) all costs, expenses and liabilities (including,
without limitation, reasonable attorneys fees and expenses, documentation and
diligence fees and legal expenses, and search, audit, recording, professional
and filing fees and expenses) that may be incurred or advanced by Agent and/or
Lenders in any way in connection with the foregoing and/or otherwise required to
be paid by Guarantor hereunder (collectively, such items in clauses (i) through
(iii) being the "GUARANTEED OBLIGATIONS"). Guarantor acknowledges that this
Agreement shall be deemed a continuing guaranty of the Guaranteed Obligations
under the Loan Documents.
3. This Agreement is a guaranty of payment and not a
guaranty of collection. If any Guaranteed Obligation is not satisfied when due,
whether by acceleration or otherwise, Guarantor shall forthwith satisfy such
Guaranteed Obligation, upon demand, and no such satisfaction shall discharge the
obligations of Guarantor hereunder until all Guaranteed Obligations have been
indefeasibly paid in cash and performed and satisfied in full and the Credit
Agreement terminated. The liability of Guarantor under this Agreement shall be
primary and direct and not conditional or contingent upon the enforceability of
any obligation, the solvency of Borrowers, any Borrower or any other Person, any
obligation or circumstance which might otherwise constitute a legal or equitable
discharge or defense of a surety or guaranty or the pursuit by Agent of any
remedies it may have against Borrowers or any other guarantor of the Guaranteed
Obligations or any other Person. Without limiting the generality of the
foregoing, Agent shall not be required to make any demand on Borrowers or any
other guarantor of the Guaranteed Obligations or any other Person or to sell at
foreclosure or otherwise pursue or exhaust its remedies against any Collateral
of Borrowers or any other guarantor of the Guaranteed Obligations or any other
Person before, simultaneously with or after enforcing its rights and remedies
hereunder against Guarantor, and any one or more successive and/or concurrent
actions may be brought against Guarantor in the same action brought against
Borrowers or any other guarantor of the Guaranteed Obligations or any other
Person or in separate actions, as often as Agent may deem advisable, in its sole
discretion. The obligations of Guarantor hereunder shall not in any way be
affected by any action taken or not taken by Agent, which action or inaction is
hereby consented and agreed to by Guarantor, or by the partial or complete
unenforceability or invalidity of any other guaranty or surety agreement,
pledge, assignment, Lien or other security interest or security for any of the
Guaranteed Obligations or of
Exhibit D-2
the value, genuineness, validity or enforceability of the Collateral or any of
the Guaranteed Obligations.
4. (A) To secure the payment and performance of the
Guaranteed Obligations, Guarantor hereby grants to Agent, for the benefit of
itself and Lenders, a continuing security interest in and Lien upon, and pledges
to Agent, for the benefit of itself and Lenders, all of its right, title and
interest in and to and upon all of the following property and interests in
property of Guarantor, now owned or hereafter acquired (collectively and each
individually, the "Collateral"), which security interest is intended to be a
first priority security interest:
(i) all of its present and future
Accounts, and all Instruments, Contracts and Chattel Paper
relating to or arising out of any Accounts;
(ii) all of its present and future
Government Contracts and rights thereunder and the related
Government Accounts and proceeds thereof, now or hereafter
owned or acquired by Guarantor; provided, however, that Agent
shall not have a security interest in any rights under any
Government Contract of Guarantor or in the related Government
Account where the taking of such security interest would be a
violation of an express prohibition contained in the
Government Contract (for purposes of this limitation, the fact
that a Government Contract is subject to, or otherwise refers
to, Title 31, Section 203 or Title 41, Section 15 of the
United States Code shall not be deemed an express prohibition
against assignment thereof) or is prohibited by applicable
law;
(iii) all now owned or hereafter acquired
Deposit Accounts into which proceeds from Accounts are
deposited;
(iv) all Books and Records, whether now
owned or hereafter acquired; and
(v) any and all replacements and
proceeds of any of the foregoing.
(B) Notwithstanding the foregoing provisions of this
Section 4, such grant of a security interest shall not extend to, and
the term "Collateral" shall not include, (x) any General Intangible,
contract, agreement or document of Guarantor to the extent that (i)
such General Intangible, contract, agreement or document is not
assignable or capable of being encumbered as a matter of law or under
the terms of any license or other agreement applicable thereto (but
solely to the extent that any such restriction shall be enforceable
under applicable law) without the consent of the licensor thereof or
other applicable party thereto, and (ii) such consent has not been
obtained; provided, however, that the foregoing grant of a security
interest shall extend to, and the term "Collateral" shall include, each
of the following: (a) any General Intangible which is in the nature of
an Account or a right to the payment of money or a proceed of, or
otherwise related to, the enforcement or collection of, any Account or
right to the payment of money, (b) any and all proceeds of any General
Intangible, contract, agreement or document that is otherwise excluded
to the extent that the assignment, pledge or encumbrance of such
proceeds is not so restricted, and (c) upon obtaining the consent of
any such licensor or
Exhibit D-3
other applicable party with respect to any such otherwise excluded
General Intangible, contract, agreement or document, such General
Intangible, contract, agreement or document as well as any and all
proceeds thereof that might theretofore have been excluded from such
grant of a security interest and from the term "Collateral"; (y) any
asset of Guarantor to the extent that (i) such asset subject to a
contract, agreement or document otherwise permitted pursuant to this
Agreement, which contract, agreement or document restricts the grant of
such security interest (but solely to the extent that any such
restriction shall be enforceable under applicable law) without the
consent of the other party to such contract, agreement or document, and
(ii) such consent has not been obtained; provided, however, that the
foregoing grant of a security interest shall extend to, and the term
"Collateral" shall include, each of the following: (a) any and all
proceeds of any asset that is otherwise excluded to the extent that the
assignment, pledge or encumbrance of such proceeds is not so
restricted, and (b) upon obtaining the consent of the other party to
any such contract, agreement or document with respect to any such
otherwise excluded asset, such asset as well as any and all proceeds
thereof that might theretofore have been excluded from such grant of a
security interest and from the term "Collateral" ; and (z) any Permit
of Guarantor to the extent that the assignment of such Permit would
violate the law applicable to such Permit, or materially impair the
validity of such Permit. Guarantor shall use all reasonable efforts
(which shall not include the unreasonable expenditure of funds) to
obtain any such required consent, provided, however in the event
Guarantor is unable to obtain the required Landlord Consent and Waiver
for any location at which books and records are kept, Guarantor shall
maintain a duplicate set of such books and records at a location owned
by a Guarantor or with respect to which a Landlord Consent and Waiver
reasonably satisfactory to Agent shall have been obtained.
(C) Upon the execution and delivery of this Agreement,
and upon the proper filing of the necessary financing statements, the
proper delivery of the necessary stock certificates, in each case as
applicable, then without any further action, Agent will have a good,
valid and perfected first priority Lien and security interest in the
Collateral, subject to no transfer or other restrictions or Liens of
any kind in favor of any other Person except for Permitted Liens,
except for security interests in money. No financing statement relating
to any of the Collateral is on file in any public office except those
(i) on behalf of Agent, and/or (ii) in connection with or with respect
to the Permitted Liens.
(D) Guarantor shall (i) execute, obtain, deliver, file,
register and/or record any and all financing statements, continuation
statements, stock powers, instruments and other documents, or cause the
execution, filing, registration, recording or delivery of any and all
of the foregoing, that are necessary or required under law or otherwise
or reasonably requested by Agent to be executed, filed, registered,
obtained, delivered or recorded to create, maintain, perfect, preserve,
validate or otherwise protect the pledge of the Collateral to Agent and
Agent's perfected first priority Lien on the Collateral (and Guarantor
irrevocably grants Agent the right, at Agent's option, to file any or
all of the foregoing), (ii) immediately upon learning thereof, report
to Agent any reclamation, return or repossession of goods in excess of
$100,000.00 (individually or in the aggregate), and (iii) defend the
Collateral and Agent's perfected first priority Lien thereon against
all claims and demands of all Persons at any time claiming the same or
Exhibit D-4
any interest therein adverse to Agent or any Lender, and pay all costs
and expenses (including, without limitation, in-house documentation and
diligence fees and legal expenses and reasonable attorneys' fees and
expenses) in connection with such defense, which may at Agent's
discretion be added to the Obligations..
(E) Guarantor agrees that notice received by it at least
ten (10) calendar days before the time of any intended public sale, or
the time after which any private sale or other disposition of
Collateral is to be made, shall be deemed to be reasonable notice of
such sale or other disposition. If permitted by applicable law, any
perishable Collateral which threatens to speedily decline in value or
which is sold on a recognized market may be sold immediately by Agent
without prior notice to Guarantor. At any sale or disposition of
Collateral or securities pledged, Agent may (to the extent permitted by
applicable law) purchase all or any part thereof free from any right of
redemption by Guarantor which right is hereby waived and released.
Guarantor covenants and agrees not to, and not to permit or cause any
of its Subsidiaries to, interfere with or impose any obstacle to
Agent's exercise of its rights and remedies with respect to the
Collateral. Agent, in dealing with or disposing of the Collateral or
any part thereof, shall not be required to give priority or preference
to any item of Collateral or otherwise to marshal assets or to take
possession or sell any Collateral with judicial process.
(F) In addition to any other rights, options and remedies
Agent and Lenders have under the Loan Documents, the UCC, at law or in
equity, all dividends, interest, rents, issues, profits, fees,
revenues, income and other proceeds collected or received from
collecting, holding, managing, renting, selling, or otherwise disposing
of all or any part of the Collateral or any proceeds thereof upon
exercise of its remedies hereunder shall be applied in the following
order of priority: (i) first, to the payment of all reasonable costs
and expenses of such collection, storage, lease, holding, operation,
management, sale, disposition or delivery and of conducting Guarantors'
business and of maintenance, repairs, replacements, alterations,
additions and improvements of or to the Collateral, and to the payment
of all sums which Agent or Lenders may be required or may elect to pay,
if any, for taxes, assessments, insurance and other charges upon the
Collateral or any part thereof, and all other payments that Agent or
Lenders may be required or authorized to make under any provision of
this Agreement (including, without limitation, in each such case,
reasonable in house documentation and diligence fees and legal
expenses, search, audit, recording, professional and filing fees and
expenses and reasonable attorneys' fees and all expenses, liabilities
and advances made or incurred in connection therewith); (ii) second, to
the payment of all Obligations as provided herein and as determined by
Agent in its sole discretion; (iii) third, to the satisfaction of the
Senior Mortgage Loan as provided in the Senior Mortgage/Revolving
Lender Intercreditor Agreement; and (iv) fourth, to the payment of any
surplus then remaining to Guarantor, unless otherwise provided by law
or directed by a court of competent jurisdiction, provided that
Guarantor shall be liable for any deficiency if such proceeds are
insufficient to satisfy the Obligations or any of the other items
referred to in this section.
(G) Without limiting and in addition to any other rights,
options and remedies Agent and Lenders have under this Agreement, the
Loan Documents, the UCC, at law or
Exhibit D-5
in equity, upon the occurrence and continuation of an Event of Default,
Agent and Lenders shall have the right to apply for and have a receiver
appointed by a court of competent jurisdiction in any action taken by
Agent to enforce its rights and remedies in order to manage, protect
and preserve the Collateral and continue the operation of the business
of Guarantor and to collect all revenues and profits thereof and apply
the same to the payment of all reasonable expenses and other charges of
such receivership including the reasonable compensation of the receiver
and to the payments as aforesaid until a sale or other disposition of
such Collateral shall be finally made and consummated.
(H) All Collateral (except Deposit Accounts) will at all
times be kept by Guarantor at the locations set forth on Schedule 4(H)
hereto, and such other locations as Guarantor shall identify to Agent
upon ten (10) calendar days prior written notice, and in any case shall
not be moved outside the continental United States.
(I) Guarantor shall keep accurate and complete records of
its Accounts and all payments and collections thereon and shall submit
such records to Agent on such periodic bases as Agent may request. In
addition, if Accounts of Guarantor in an aggregate face amount in
excess of $200,000 become ineligible because they fall within one of
the specified categories of ineligibility set forth in the definition
of Eligible Receivables, Guarantor shall notify Agent of such
occurrence on the first Business Day following such occurrence and the
Borrowing Base shall thereupon be adjusted to reflect such occurrence.
If requested by Agent, after the occurrence and during the continuance
of an Event of Default, Guarantor shall execute and deliver to Agent
formal written assignments of all of its Accounts weekly or daily as
Agent may request, including all Accounts created since the date of the
last assignment, together with copies of claims, invoices and/or other
information related thereto. Subject to the Senior Mortgage/Revolving
Lender Intercreditor Agreement, to the extent that collections from
such assigned accounts exceed the amount of the Obligations, such
excess amount shall not accrue interest in favor of Guarantor, but
shall be available to Guarantor upon Guarantors' written request and so
long as the Senior Mortgage Loan shall remain outstanding, shall be
disbursed on each Business Day to the Senior Mortgage Loan Blocked
Account.
(J) Whether or not an Event of Default has occurred, any
of Agent's officers, employees, representatives or agents shall have
the right, at any time during normal business hours, in the name of
Agent, any designee of Agent or any Borrower, to verify the validity,
amount or any other matter relating to any Accounts of Guarantor;
provided unless an Event of Default has occurred and is continuing,
such verification shall only verify account balances and shall not give
notice of Agent's security interest. Guarantor shall cooperate fully
with Agent in an effort to facilitate and promptly conclude such
verification process.
(K) To expedite collection, Guarantor shall endeavor in
the first instance to make collection of its Accounts for Agent. Agent
shall have the right at all times after the occurrence and during the
continuance of an Event of Default to notify (i) Account Debtors owing
Accounts to Guarantor other than Medicaid/Medicare Account Debtors
Exhibit D-6
that their Accounts have been assigned to Agent and to collect such
Accounts directly in its own name and to charge collection costs and
expenses, including reasonable attorney's fees, to Guarantor, and (ii)
Medicaid/Medicare Account Debtors that Guarantor has waived any and all
defenses and counterclaims they may have or could interpose in any such
action or procedure brought by Agent to obtain a court order
recognizing the collateral assignment or security interest and lien of
Agent in and to any Account or other Collateral payable by
Medicaid/Medicare Account Debtors and that Agent is seeking or may seek
to obtain a court order recognizing the collateral assignment or
security interest and lien of Agent in and to all Accounts and other
Collateral payable by Medicaid/Medicare Account Debtors.
(L) As and when determined by Agent in its Permitted
Discretion, Agent will perform the searches described in clauses (i)
and (ii) below against Guarantor (the results of which are to be
consistent with Guarantors' representations and warranties under this
Agreement), all at Guarantors' expense: (i) UCC searches with the
Secretary of State and local filing offices of each jurisdiction where
Guarantor is organized and/or maintains its executive offices, a place
of business or assets; and (ii) judgment, federal tax lien and
corporate and partnership tax lien searches, in each jurisdiction
searched under clause (i) above, provided that unless an Event of
Default shall have occurred and during the continuance thereof,
Guarantor shall not be required to pay for more than one such search in
any fiscal quarter under clause (i) and clause (ii) above.
(M) Guarantor (i) shall provide prompt written notice to
its current bank to transfer all items, collections and remittances to
the Concentration Account, (ii) shall provide prompt written notice to
each Account Debtor (other than a Private Pay Debtor) directing them to
make payments to the appropriate Lockbox Account, and Guarantor hereby
authorizes Agent, upon any failure to send such notice and directions
within ten (10) calendar days after the date of this Agreement (or ten
(10) calendar days after the Person becomes an Account Debtor (other
than a Private Pay Debtor)), to send any and all similar notices and
directions to such Account Debtors and (iii) shall do such further acts
and deeds that may be lawfully required by Agent to make, create,
maintain, continue or perfect Agent's security interest in the Lockbox
Accounts or the Collateral. At Agent's request, Guarantor shall
immediately deliver to Agent all items for which Agent must receive
possession to obtain a perfected security interest and all notes,
certificates, and documents of title, Chattel Paper, warehouse
receipts, Instruments, and any other similar instruments constituting
Collateral except for promissory notes in a principal amount less than
$100,000 provided that the aggregate principal amount of all such
promissory notes shall be less than $500,000.
5. Guarantor hereby represents and warrants to Agent
(which representations and warranties shall survive the execution and delivery
of this Agreement and the making of Advances under the Credit Agreement) as
follows:
(A) Guarantor is a corporation, duly organized,
validly existing and in good standing under the laws of the State of
[INSERT], and all of Guarantor's issued and outstanding shares of
capital stock, equity securities and other ownership interests are
owned of record and beneficially directly by [ ], free and clear of
all Liens,
Exhibit D-7
mortgages, pledges, security interests, hypothecations, assignments,
charges, rights, encumbrances or transfer or other restrictions
(individually, "ENCUMBRANCE" and collectively, "ENCUMBRANCES") in favor
of any other Person or otherwise, except for Encumbrances in favor of
Agent pursuant to the Loan Documents;
(B) Guarantor (i) has all requisite power and
authority to own the Collateral and its properties and assets and to
carry on its business as now being conducted, and (ii) is duly
qualified to do business in every jurisdiction in which failure so to
qualify could reasonably be expected to have or result in a Material
Adverse Effect;
(C) Guarantor has all requisite power and
authority (i) to execute, deliver and perform this Agreement, (ii) to
consummate the transactions contemplated hereunder, and (iii) to grant
the Liens and security interests with regard to the Collateral granted
hereby;
(D) The execution, delivery and performance by
Guarantor of this Agreement and the consummation of the transactions
contemplated hereby, (a) have been duly authorized by all requisite
action of Guarantor and have been duly executed and delivered by or on
behalf of Guarantor; (b) do not violate in any material respect any
provisions of (i) applicable law, statute, rule, regulation, ordinance
or tariff applicable to Guarantor, (ii) any order of any Governmental
Authority binding on Guarantor or any of its properties; or (iii) any
material agreement between Guarantor and its shareholders, members,
partners or equity owners or among any such shareholders, members,
partners or equity owners; (c) do not violate any provision of the
certificate of incorporation or bylaws (or any other equivalent
governing agreement or document) of Guarantor, (d) are not in conflict
with, and do not result in a breach or default of or constitute an
event of default, or an event, fact, condition or circumstance which,
with notice or passage of time, or both, would constitute or result in
a conflict, breach, default or event of default under, any indenture,
agreement or other instrument to which Guarantor is a party, or by
which the properties or assets of Guarantor are bound, the effect of
which could reasonably be expected to have a Material Adverse Effect;
(e) except as set forth therein, will not result in the creation or
imposition of any Lien of any nature upon any of the properties or
assets of Guarantor, and (f) except for those which have been obtained,
do not require the consent, approval or authorization of, or filing,
registration or qualification with, any Governmental Authority or any
other Person. When executed and delivered, this Agreement will
constitute the legal, valid and binding obligation of Guarantor,
enforceable against Guarantor in accordance with its terms, subject to
the effect of any applicable bankruptcy, moratorium, insolvency,
reorganization or other similar law affecting the enforceability of
creditors' rights and to the effect of general principles of equity
which may limit the availability of equitable remedies (whether in a
proceeding at law or in equity).
(E) Guarantor is not (i) a party to any
judgment, order or decree or any agreement, document or instrument, or
subject to any restriction, which would materially adversely affect its
ability to execute and deliver, or perform under, this Agreement or to
pay the Guaranteed Obligations, (ii) in default in the performance,
observance or
Exhibit D-8
fulfillment of any obligation, covenant or condition contained in any
agreement, document or instrument to which it is a party or to which
any of its properties or assets are subject, which default, if not
remedied within any applicable grace or cure period, could reasonably
be expected to have a Material Adverse Effect, nor is there any event,
fact, condition or circumstance which, with notice or passage of time,
or both, would constitute or result in a conflict, breach, default or
event of default under, any of the foregoing which, if not remedied
within any applicable grace or cure period, could reasonably be
expected to have a Material Adverse Effect, or (iii) a party or subject
to any agreement, document or instrument with respect to, or obligation
to pay any, service or management fee with respect to, the ownership,
operation, leasing or performance of any of its business or any
facility, nor is there any manager with respect to any such facility
other than a Person that is a Borrower or a Guarantor;
(F) Guarantor (i) is in compliance with all
laws, statutes, rules, regulations, ordinances and tariffs of any
Governmental Authority applicable to Guarantor and/or Guarantor's
business, assets or operations, including, without limitation, ERISA
and Healthcare Laws, and (ii) is not in violation of any order of any
Governmental Authority or other board or tribunal, except where
noncompliance or violation could not reasonably be expected to have a
Material Adverse Effect. There is no event, fact, condition or
circumstance known to Guarantor which, with notice or passage of time,
or both, would constitute or result in any noncompliance with, or any
violation of, any of the foregoing, in each case except where
noncompliance or violation could not reasonably be expected to have a
Material Adverse Effect. Guarantor has not received any notice that
Guarantor is not in compliance in any respect with any of the
requirements of any of the foregoing;
(G) There is no action, suit, proceeding or
investigation pending or, to its knowledge, threatened against
Guarantor that (i) questions or could prevent the validity of this
Agreement or the right of Guarantor to enter into this Agreement or to
consummate the transactions contemplated hereby, (ii) could reasonably
be expected to be or have, either individually or in the aggregate, any
Material Adverse Change or Material Adverse Effect, or (iii) could
reasonably be expected to result in any Change of Control or other
change in the current ownership, control or management of Guarantor.
Guarantor is not aware that there is any basis for the foregoing.
Guarantor is not a party or subject to any order, writ, injunction,
judgment or decree of any Governmental Authority that could reasonably
be expected to be or have, either individually or in the aggregate, any
Material Adverse Change or Material Adverse Effect. There is no action,
suit, proceeding or investigation initiated by Guarantor currently
pending that could reasonably be expected to be or have, either
individually or in the aggregate, any Material Adverse Change or
Material Adverse Effect. Guarantor has no existing accrued and/or
unpaid Indebtedness to any Governmental Authority or any other
governmental payor that could reasonably be expected to be or have,
either individually or in the aggregate, any Material Adverse Change or
Material Adverse Effect.;
(H) None of the business or properties of
Guarantor, any relationship between Guarantor and any other Person, any
circumstance in connection with the
Exhibit D-9
execution, delivery and performance of this Agreement, or the
consummation of the transactions contemplated hereby, requires a
consent, approval or authorization of, or filing, registration or
qualification which has not been obtained with, any Governmental
Authority or any other Person;
(I) Guarantor is not a party to and has not
entered into any agreement, document or instrument that conflicts with
this Agreement or that otherwise relates to the Guaranteed Obligations;
(J) The obligations of Guarantor under this
Agreement are not subordinated in any way to any other obligations of
Guarantor or to the rights of any other Person;
(K) Guarantor is in substantial compliance with
and has all Permits and Intellectual Property necessary or required by
applicable law or Governmental Authority for the operation of its
businesses. All of the foregoing are in full force and effect and not
in known conflict in any material respect with the rights of others.
Guarantor is not (i) in breach of or default under the provisions of
any of the foregoing, nor is there any event, fact, condition or
circumstance which, with notice or passage of time or both, would
constitute or result in a conflict, breach, default or event of default
under, any of the foregoing which, if not remedied within any
applicable grace or cure period could reasonably be expected to have a
Material Adverse Effect, (ii) a party to or subject to any agreement,
instrument or restriction that is so unusual or burdensome that it
could reasonably be expected to have a Material Adverse Effect, and
(iii) has been involved in any labor dispute, strike, walkout or union
organization which could reasonably be expected to have a Material
Adverse Effect;
(L) No representation or warranty made by
Guarantor in this Agreement contains any untrue statement of material
fact or omits to state any fact necessary to make the statements herein
or therein not materially misleading. There is no fact known to
Guarantor which Guarantor has not disclosed to Agent in writing which
could reasonably be expected to have a Material Adverse Effect;
(M) During the five years prior to the date
hereof, Guarantors has not conducted business under or used any other
name (whether corporate, partnership or assumed);
(N) The foregoing representations and warranties
are made with the knowledge and intention that Agent is relying and
will rely thereon. All such representations and warranties shall
survive the execution and delivery of this Agreement.
6. Guarantor hereby waives demand, presentment, protest,
notice of dishonor or non-payment, as well as all defenses with respect to any
and all instruments, notice of acceptance hereof, notice of Loans or Advances
made, credit extended, collateral received or delivered, or any other action
taken by Agent in reliance hereon, and all other demands and
Exhibit D-10
notices of any description, except such as are expressly provided for herein, it
being the intention hereof that Guarantor shall remain liable as a principal
until the full amount of all Guaranteed Obligations shall have been indefeasibly
paid in full in cash and performed and satisfied in full (other than the
Unmatured Surviving Obligations) and the Credit Agreement terminated,
notwithstanding any act, omission, or anything else which might otherwise
operate as a legal or equitable discharge of Guarantor.
7. Guarantor acknowledges and agrees that its
obligations as Guarantor shall not be impaired, modified, changed, released or
limited in any manner whatsoever by any impairment, modification, change,
release or limitation of the liability of Borrowers or any other guarantor of
the Guaranteed Obligations or any other Person or its estate in bankruptcy
resulting from the operation of any present or future provision of the
bankruptcy laws or other similar statute, or from the decision of any court.
8. Guarantor acknowledges and agrees that Agent shall
have the full right and power, in its sole discretion and without any notice to
or consent from Guarantor and without affecting or discharging, in whole or in
part, the liability of Guarantor hereunder to deal in any manner with the
Guaranteed Obligations and any security or guaranties therefor, including,
without limitation, to (A) release, extend, renew, compromise or substitute and
administer the Guaranteed Obligations and other obligations under the Loan
Documents in any manner it sees fit, (B) release any or all collateral for the
Guaranteed Obligations, (C) release any guarantor of the Guaranteed Obligations,
(D) extend the time for payment of the Guaranteed Obligations or any part
thereof, (D) change the interest rate on the Guaranteed Obligations or any Note
under the Credit Agreement, (E) reduce or increase the outstanding principal
amount of the Guaranteed Obligations or any Note under the Credit Agreement, (F)
accelerate the Guaranteed Obligations, (G) make any change, amendment or
modification whatsoever to the terms or conditions of the Loan Documents, (H)
extend, in whole or in part, on one or any number of occasions, the time for the
payment of any principal or interest or any other amount pursuant to any Note or
for the performance of any term or condition of the Loan Documents, (I) settle,
compromise, release, substitute, impair, enforce or exercise, or fail or refuse
to enforce or exercise, any claims, rights, or remedies, of any kind or nature,
which Agent may at any time have against Borrowers or any other guarantor of the
Guaranteed Obligations or any other Person, or with respect to any security
interest of any kind held by Agent at any time, whether under any Loan Document
or otherwise, (J) release or substitute any security interest of any kind held
by Agent at any time, (K) collect and retain or liquidate any collateral subject
to such security interest, (L) make advances for the purpose of performing any
term or covenant contained in the Loan Documents with respect to which Borrowers
or any other guarantor of the Guaranteed Obligations is in default, (M)
foreclose on any of the Collateral, (N) grant waivers or indulgences, (O) take
additional collateral, (P) obtain any additional guarantors, (Q) take a deed in
lieu of foreclosure and/or (R) take or fail to take any other action whatsoever
with respect to the Guaranteed Obligations. Guarantor hereby waives and agrees
not to assert against Agent any rights which a guarantor or surety could
exercise. Notwithstanding any other provision of this Agreement or any other
Loan Document, Guarantor agrees that Agent has no duties of any nature
whatsoever to Guarantor, whether express or implied, by virtue of this
Agreement, operation of law or otherwise.
Exhibit D-11
9. Guarantor agrees that its obligations hereunder are
irrevocable and independent of the obligations of Borrowers or any other
guarantor of the Guaranteed Obligations or any other Person. Guarantor shall
take all necessary and appropriate actions to ensure that this Agreement is and
remains enforceable against Guarantor in accordance with its terms and that
Guarantor complies with each of its obligations hereunder and thereunder.
Guarantor shall not (a) cause or permit to be done, or enter into or make or
become a party to any agreement (oral or written), arrangement or commitment to
do or cause to be done, any of the things prohibited by this Agreement or that
would breach this Agreement or any other instrument, agreement, arrangement,
commitment or document to which Guarantor is a party or by which it or any of
its properties or assets is or may be bound or subject, or (b) enter into or
make or become a party to any agreement, document or instrument or arrangement
that conflicts with this Agreement or that would prevent Guarantor from
complying with and performing under this Agreement.
10. Guarantor agrees that it shall have no right of
subrogation whatever with respect to the Guaranteed Obligations guaranteed
hereby or to any collateral securing such Guaranteed Obligations unless and
until such Guaranteed Obligations have been irrevocably and indefeasibly paid in
full in cash and performed in full (other than the Unmatured Surviving
Obligations) and the Credit Agreement and this Agreement have been terminated.
11. Guarantor agrees that this Agreement shall inure to
the benefit of, and may be enforced by, Agent and Lenders, all future holders of
any Note or any of the Guaranteed Obligations or any of the Collateral and all
Transferees (as defined below), and each of their respective successors and
permitted assigns, and shall be binding upon and enforceable against Guarantor
and Guarantor's assigns and successors. Guarantor agrees that it may not assign,
delegate or transfer this Agreement or any of its rights or obligations under
this Agreement without the prior written consent of Agent. Nothing contained in
this Agreement or any other Loan Document shall be construed as a delegation to
Agent of Guarantor's duty of performance, including, without limitation, any
duties under any account or contract in which Agent has a security interest or
Lien. GUARANTOR ACKNOWLEDGES THAT AGENT AT ANY TIME AND FROM TIME TO TIME MAY
SELL, ASSIGN OR GRANT PARTICIPATING INTERESTS IN OR TRANSFER ALL OR ANY PART OF
ITS RIGHTS OR OBLIGATIONS UNDER, THIS AGREEMENT, ANY NOTE, THE GUARANTEED
OBLIGATIONS, THE COLLATERAL AND/OR THE LOAN DOCUMENTS TO ONE OR MORE OTHER
PERSONS, INCLUDING, WITHOUT LIMITATION, FINANCIAL INSTITUTIONS (EACH SUCH
TRANSFEREE, ASSIGNEE OR PURCHASER, A "TRANSFEREE"). In such case, the Transferee
shall have all of the rights and benefits with respect to the portion of such
Guaranteed Obligations, any Note, this Agreement, the Collateral and the Loan
Documents held by it as fully as if such Transferee were the original holder
thereof (including without limitation rights of set-off and recoupment), and
shall become vested with all of the powers and rights given to Agent hereunder
with respect thereto, and shall be deemed to be "Agent" for all purposes
hereunder, the predecessor Agent shall thereafter be forever released and fully
discharged from any liability or responsibility hereunder with respect to the
rights and interests so assigned, and either Agent or any Transferee may be
designated as the sole agent to manage the transactions and obligations
contemplated herein. Notwithstanding any other provision of this Agreement,
Agent may disclose to any Transferee all information, and may furnish to such
Exhibit D-12
Transferee copies of reports, financial statements, certificates, and documents
obtained under any provision of this Agreement or any Loan Document.
12. Guarantor hereby agrees to take or cause to be taken
such further actions, to obtain such consents and approvals and to duly execute,
deliver and file or cause to be executed, delivered and filed such further
agreements, assignments, instructions, documents and instruments as may be
necessary or as may be reasonably requested by Agent in its sole discretion in
order to fully effectuate the purposes, terms and conditions of this Agreement
and the consummation of the transactions contemplated hereby and performance and
payment of the Guaranteed Obligations hereunder, whether before, at or after the
performance and/or consummation of the transactions contemplated hereby or the
occurrence of a Default or Event of Default under any Loan Document.
13. Notwithstanding and without limiting or being limited
by any other provision of this Agreement or the Loan Documents, Guarantor shall
pay all costs and expenses incurred by Agent or any of its Affiliates,
including, without limitation, documentation and diligence fees and expenses,
all search, audit, appraisal, recording, professional and filing fees and
expenses and all other out-of-pocket charges and expenses (including, without
limitation, UCC and judgment and tax lien searches and UCC filings and fees for
post-Closing UCC and judgment and tax lien searches), and reasonable attorneys'
fees and expenses (a) in any effort to enforce this Agreement and/or any related
agreement, document or instrument, or to effect collection hereunder or
thereunder, (b) in connection with entering into, negotiating, preparing,
reviewing and executing this Agreement, (c) arising in any way out of
administration of the Guaranteed Obligations or the security interests or Liens
created with respect thereto, including without limitation, any wire transfer
fees or audit expenses or filing or recordation fees, (d) in connection with
instituting, maintaining, preserving and enforcing Agent's rights hereunder or
under all related agreements, documents and instruments, (e) in defending or
prosecuting any actions, claims or proceedings arising out of or relating to
this Agreement and/or any related agreement, document or instrument, (f) in
seeking or receiving any advice with respect to its rights and obligations under
this Agreement and/or all related agreements, documents and instruments, and/or
(g) in connection with any modification, amendment, supplement, waiver or
extension of this Agreement and/or any related agreement, document or
instrument, and all of the same shall be part of the Guaranteed Obligations. If
Agent or any of its Affiliates uses in-house counsel for any of the purposes set
forth above or any other purposes under this Agreement for which Guarantor is
responsible to pay or indemnify, Guarantor expressly agrees that its Obligations
include reasonable charges for such work commensurate with the fees that would
otherwise be charged by outside legal counsel selected by Agent or such
Affiliate in its sole discretion for the work performed.
14. Any notice or request under this Agreement shall be
given to any party to this Agreement at such party's address set forth below, or
at such other address as such party may hereafter specify in a notice given in
the manner required under this Section 14. Any notice or request hereunder shall
be given only by, and shall be deemed to have been received upon (each, a
"RECEIPT"): (i) registered or certified mail, return receipt requested, on the
date on which such received as indicated in such return receipt, (ii) delivery
by a nationally recognized overnight courier, one (1) Business Day after deposit
with such courier, or (iii) facsimile or
Exhibit D-13
electronic transmission, in each case upon telephone or further electronic
communication from the recipient acknowledging receipt (whether automatic or
manual from recipient), as applicable.
If to Agent:
CapitalSource Finance LLC
4445 Willard Avenue, 12th Floor
Chevy Chase, Maryland 20815
Attention: Loan Management Officer
Telephone: (301) 841-2700
Facsimile: (301) 841-2340
E-mail: aheller@capitalsource.com
If to Guarantors:
C/O FOUNTAIN VIEW, INC.
27442 Portola Parkway, Suite 200
Foothill Ranch, California 92610
Attention: Roland Rapp, Esq., General Counsel
Telephone: (949) 282-5822
Facsimile: (949) 282-5820
E-mail: rrapp@fountainviewinc.net
15. No course of action or dealing, renewal, release or
extension of any provision of this Agreement, or single or partial exercise of
any such provision, or delay, failure or omission on Agent's part in enforcing
any such provision shall affect the liability of Guarantor or operate as a
waiver of such provision or affect the liability of Guarantor or preclude any
other or further exercise of such provision. No waiver by any party to this
Agreement of any one or more defaults by any other party in the performance of
any of the provisions of this Agreement shall operate or be construed as a
waiver of any future default, whether of a like or different nature, and each
such waiver shall be limited solely to the express terms and provisions of such
waiver.
16. If any term or provision of this Agreement is
adjudicated to be invalid under applicable laws or regulations, such provision
shall be inapplicable to the extent of such invalidity or unenforceability
without affecting the validity or enforceability of, the remainder of this
Agreement which shall be given effect so far as possible.
17. Agent shall have the right in its sole discretion to
determine which rights, powers, Liens, security interests or remedies Agent may
at any time pursue, relinquish, subordinate or modify or to take any other
action with respect thereto and such determination will not in any way modify or
affect any of Agent's rights, powers, Liens, security interests or remedies
hereunder or under any of the Loan Documents or under applicable law or at
equity. The enumeration of the rights and remedies herein is not intended to be
exhaustive. The rights and remedies of Agent described herein are cumulative and
are not alternative to or exclusive of any other rights or remedies which Agent
or Lenders otherwise may have. The partial or
Exhibit D-14
complete exercise of any right or remedy shall not preclude any other further
exercise of such or any other right or remedy.
18. This Agreement shall be effective on the date hereof
and shall continue in full force and effect until full performance (other than
Unmatured Surviving Obligations) and indefeasible payment in full in cash of all
Guaranteed Obligations and termination of this Agreement and the Credit
Agreement, all in accordance with the Credit Agreement, and the rights and
powers granted to Agent hereunder shall continue in full force and effect
notwithstanding the termination of this Agreement or the fact that Borrower's
borrowings under the Credit Agreement may from time to time be temporarily in a
zero or credit position until all of the Guaranteed Obligations have been
indefeasibly paid in full in cash and performed and satisfied in full. Guarantor
waives any rights which it may have under the UCC or otherwise to demand the
filing of termination statements with respect to the Collateral, and Agent shall
not be required to send such termination statements to Guarantor, or to file
them with any filing office, unless and until this Agreement and the Credit
Agreement shall have been terminated in accordance with their respective terms
and all Guaranteed Obligations shall have been performed in full (other than
Unmatured Surviving Obligations) and indefeasibly paid in full in cash.
19. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York without giving effect
to its choice of law provisions (other than Section 5-1401 of the New York
General Obligation Law). Any judicial proceeding with respect to the
Obligations, any Loan Document or any related agreement may be brought in any
federal or state court of competent jurisdiction located in the City of New
York, State of New York (any such court, individually a "New York Court," and
all such courts collectively, the "New York Courts"), provided nothing in this
Agreement shall be deemed or operate to preclude Agent from bringing suit or
taking other legal action in any jurisdiction to the extent, but only to the
extent, it is required to bring suit in such jurisdiction to realize on the
Collateral or any other security for the Obligations (any such court and any New
York Court, individually a "Qualified Court" and collectively, the "Qualified
Courts"), and provided, further that Agent, Lenders and Guarantor acknowledge
that any appeals from a Qualified Court may have to be heard by a court located
outside of the jurisdiction where such Qualified Court sits. By execution and
delivery of this Agreement, Guarantor (i) accepts the non-exclusive jurisdiction
of the Qualified Courts and irrevocably agrees to be bound by any judgment
rendered thereby, (ii) waives personal service of process, (iii) agrees that
service of process upon it may be made by certified or registered mail, return
receipt requested, pursuant to Section 14 hereof and (iv) waives any objection
to jurisdiction and venue of any action instituted hereunder in any Qualified
Court and agrees not to assert any defense to an action brought in any Qualified
Court based on lack of jurisdiction, venue or convenience. Any judicial
proceedings against Agent or any Lender involving, directly or indirectly, the
Obligations, any Loan Document or any related agreement shall be brought only in
a New York Court. All parties acknowledge that they participated in the
negotiation and drafting of this Agreement and that, accordingly, no party shall
move or petition a court construing this Agreement to construe it more
stringently against one party than against any other.
20. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one and the same
instrument. This Agreement may be
Exhibit D-15
executed by facsimile transmission, which facsimile signatures shall be
considered original executed counterparts for purposes of this Section 21, and
Guarantor agrees that it will be bound by its own facsimile signature and that
it accepts the facsimile signature of each other party to this Agreement.
21. Notwithstanding and without limiting any other
provision of this Agreement or any Loan Document, Guarantor shall indemnify
Agent, each Lender, its and their Affiliates and its and their respective
managers, members, officers, employees, Affiliates, agents, representatives,
successors, assigns, accountants and attorneys (collectively, the "INDEMNIFIED
PERSONS") from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits and costs, expenses and
disbursements of any kind or nature whatsoever (including, without limitation,
reasonable fees and disbursements of counsel and in-house documentation and
diligence fees and legal expenses) which may be imposed on, incurred by or
asserted against any Indemnified Person with respect to or arising out of, or in
any litigation, proceeding or investigation instituted or conducted by any
Person with respect to any aspect of, or any transaction contemplated by or
referred to in, or any matter related to, this Agreement or any agreement,
document or transaction contemplated hereby, whether or not such Indemnified
Person is a party thereto, except to the extent that any of the foregoing arises
out of the gross negligence or willful misconduct of such Indemnified Person. If
any Indemnified Person uses in-house counsel for any purpose for which Guarantor
is responsible to pay or indemnify, Guarantor expressly agrees that its
indemnification obligations include reasonable charges for such work. Agent
agrees to give Guarantor reasonable notice of any event of which Agent becomes
aware for which indemnification may be required under this Section 21, and Agent
may elect (but is not obligated) to direct the defense thereof, provided that
the selection of counsel shall be subject to Guarantor's consent, which consent
shall not be unreasonably withheld or delayed. Any Indemnified Person may, in
its reasonable discretion, take such actions as it deems necessary and
appropriate to investigate, defend or settle any event or take other remedial or
corrective actions with respect thereto as may be necessary for the protection
of such Indemnified Person or the Collateral. Notwithstanding the foregoing, if
any insurer agrees to undertake the defense of an event (an "INSURED EVENT"),
Agent agrees not to exercise its right to select counsel to defend the event if
that would cause Guarantor's insurer to deny coverage; provided, however, that
Agent reserves the right to retain counsel to represent any Indemnified Person
with respect to an Insured Event at its sole cost and expense. To the extent
that Agent or any Lender obtains recovery from a third party other than an
Indemnified Person of any of the amounts that Guarantor has paid to Agent or any
Lender pursuant to the indemnity set forth in this Section 21, then Agent and/or
any Lender shall promptly pay to Guarantor the amount of such recovery. Without
limiting any of the foregoing, Guarantor indemnifies the Indemnified Parties for
all claims for brokerage fees or commissions (other than claims of a broker with
whom such Indemnified Party has directly contracted in writing) which may be
made in connection with respect to any aspect of, or any transaction
contemplated by or referred to in, or any matter related to, this Agreement or
any agreement, document or transaction contemplated thereby.
22. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION ARISING UNDER THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR INCIDENTAL
TO THE DEALINGS OF THE PARTIES
Exhibit D-16
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED THEREBY, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE. EACH PARTY HEREBY AGREES AND CONSENTS
THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A
JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE
PARTIES TO THE WAIVER OF THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY.
23. This Agreement constitutes the entire agreement
between Guarantor, Agent and Lenders with respect to the subject matter hereof
and supersedes all prior agreements and understandings, if any, relating to the
subject matter hereof. Any promises, representations, warranties or guarantees
not herein contained and hereinafter made shall have no force and effect unless
in writing signed by Guarantor, Agent and Lenders, as appropriate. No provision
of this Agreement may be changed, modified, amended, restated, waived,
supplemented, discharged, canceled or terminated orally or by any course of
dealing or in any other manner other than by an agreement in writing signed by
Agent, Requisite Lenders and Guarantor. Each party hereto acknowledges that it
has been advised by counsel in connection with the negotiation and execution of
this Agreement and is not relying upon oral representations or statements
inconsistent with the terms and provisions hereof.
24. This Agreement is not intended to benefit or confer
any rights upon Borrowers or upon any third party other than Agent and Lenders,
who are intended beneficiaries hereof and for whose benefit this Agreement is
explicitly made.
25. Guarantor, Agent and Lenders agree (a) to treat this
Agreement and all provisions hereof confidentially and not to transmit any copy
hereof or thereof or disclose the contents hereof or thereof, in whole or in
part, to any Person (including, without limitation, any financial institution or
intermediary) without Agent's prior written consent, other than to Guarantor's
advisors and officers on a need-to-know basis, (b) to inform all such Persons
who receive information concerning this Agreement of the confidential nature
hereof and shall direct them to treat the same confidentially and not to
disclose it to any other Person, and (c) to be bound by these provisions. Agent
and Lenders shall have the right to review and approve all materials that
Guarantor or any Guarantors prepare that contain Agent's name or describe or
refer to this Agreement or any of the terms hereof or thereof or any of the
transactions contemplated hereby or thereby. Guarantor reserves the right to
review and approve all materials that Agent, Lenders or any of their Affiliates
prepare that contain Guarantor's name or describe or refer to this Agreement,
any of the terms hereof or thereof or any of the transactions contemplated
hereby or thereby. Notwithstanding any other provision of this Agreement,
Guarantor shall not, and shall not permit any of its Subsidiaries to, use
Agent's name (or the name of any of Agent's Affiliates) in connection with any
of its business operations. Nothing contained in this Agreement is intended to
permit or authorize Guarantor to make any contract on behalf of Agent. Neither
Agent nor Lenders shall, and shall not permit any of its respective Affiliates
to, use Guarantor's name (or the name of any of either Guarantor's Affiliates)
in connection with any of its business operations.
Exhibit D-17
26. Upon the exercise by Agent or any of its Affiliates
of any power, right, privilege or remedy pursuant to this Agreement or under
applicable law or at equity which requires any consent, approval, registration,
qualification or authorization of any Governmental Authority, Guarantor will
execute and deliver, or will cause the execution and delivery of, all
applications, certificates, instruments and other documents that may be so
required for such consent, approval, registration, qualification or
authorization.
27. In addition to and notwithstanding any other
provision of this Agreement, Agent, in its sole discretion, shall have the
right, at any time that Guarantor fails to do so, without prior notice to
Guarantor, to (i) obtain insurance covering any of the Collateral as and to the
extent required under the Credit Agreement; (ii) pay for the performance of any
of the Guarantor's obligations hereunder; (iii) discharge taxes, liens, security
interests, or other encumbrances at any time levied or placed on any of the
Collateral in violation of this Agreement unless Guarantor is in good faith with
due diligence by appropriate proceedings contesting those items; and (iv) pay
for the maintenance and preservation of any of the Collateral. Such expenses and
advances shall be added to the Guaranteed Obligations until reimbursed to Agent
and shall be secured by the Collateral. Any such payments and advances by Agent
shall not be construed as a waiver by Agent of an Event of Default or any other
rights, remedies or powers of Agent or Lenders hereunder or otherwise.
28. Unless expressly provided herein to the contrary, any
approval, consent, waiver or satisfaction of Agent or Lenders with respect to
any matter that is subject of this Agreement may be granted or withheld by Agent
in its Permitted Discretion.
29. In any litigation, arbitration or other dispute
resolution proceeding relating to this Agreement, or to any of the other Loan
Documents, Guarantor waives any and all defenses, objections and counterclaims
it may have or could interpose with respect to any director, officer, employee
or agent of Guarantor and/or its and their Affiliates being deemed to be
employees or managing agents of Guarantor for purposes of all applicable law or
court rules regarding the production of witnesses by notice for testimony
(whether in a deposition, at trial or otherwise). Guarantor waives any and all
defenses, objections and counterclaims it may have or could interpose with
respect to Agent's counsel in any such dispute resolution proceeding examining
any such individuals as if under cross-examination and using any discovery
deposition of any of them in that proceeding as if it were an evidence
deposition. Guarantor waives any and all defenses, objections and counterclaims
it may have or could interpose with respect to it using all commercially
reasonable efforts to produce in any such dispute resolution proceeding, at the
time and in the manner requested by Agent, all Persons, documents (whether in
tangible, electronic or other form) and/or other things under its control and
relating to the dispute in any jurisdiction that recognizes that (or any
similar) distinction.
IN WITNESS WHEREOF, Guarantor has executed this Guaranty and
Security Agreement as of the day and year first above written.
___________________________
Exhibit D-18
By:_________________________________
Its:________________________________
CAPITALSOURCE FINANCE LLC
By:_________________________________
Its:________________________________
Exhibit D-19
Schedule 4(H)
Location of Collateral
SCHEDULE 1
BORROWERS
1. Carehouse Healthcare Center, LLC, a Delaware limited liability company
2. Devonshire Care Center, LLC, a Delaware limited liability company
3. The Earlwood, LLC, a Delaware limited liability company
4. Fountain Care Center, LLC, a Delaware limited liability company
5. Fountain Senior Assisted Living, LLC, a Delaware limited liability company
6. Spring Senior Assisted Living, LLC, a Delaware limited liability company
7. Valley Healthcare Center, LLC, a Delaware limited liability company
8. Villa Maria Healthcare Center, LLC, a Delaware limited liability company
9. Willow Creek Healthcare Center, a Delaware limited liability company
10. Texas Cityview Care Center, LP, a Delaware limited partnership
11. Clairmont Beaumont, LP, a Delaware limited partnership
12. Clairmont Longview, LP, a Delaware limited partnership
13. The Clairmont Tyler, LP, a Delaware limited partnership
14. Colonial New Braunfels Care Center, LP, a Delaware limited partnership
15. Colonial Tyler Care Center, LP, a Delaware limited partnership
16. Coronado Nursing Center, LP, a Delaware limited partnership
17. Hallettsville Rehabilitation and Nursing Center, LP, a Delaware limited
partnership
18. Texas Heritage Oaks Nursing and Rehabilitation Center, LP, a Delaware
limited partnership
19. Hospitality Nursing and Rehabilitation Center, LP, a Delaware limited
partnership
20. Monument Rehabilitation and Nursing Center, LP, a Delaware limited
partnership
21. Oak Crest Nursing Center, LP, a Delaware limited partnership
22. Flatonia Oak Manor, LP, a Delaware limited partnership
23. Oakland Manor Nursing Center, LP, a Delaware limited partnership
24. Southwood Care Center, LP, a Delaware limited partnership
25. Town and Country Manor, LP, a Delaware limited partnership
26. West Side Campus of Care, LP, a Delaware limited partnership
27. Comanche Nursing Center, LP, a Delaware limited partnership
28. Guadalupe Valley Nursing Center, LP, a Delaware limited partnership
29. Briarcliff Nursing and Rehabilitation Center, LP, a Delaware limited
partnership
30. Live Oak Nursing Center, LP, a Delaware limited partnership
Schedule 1 - Page 1
31. Skilled Healthcare II, LLC, a Delaware limited liability company
Schedule 1 - Page 2
SCHEDULE 2
Lenders Commitment
- ------- ----------
CAPITALSOURCE FINANCE LLC $11,000,000
4445 Willard Avenue, 12th Floor
Chevy Chase, Maryland 20815
Attention: Corporate Finance Group
Portfolio Manager
Telephone: 301-841-2700
Facsimile: 301-841-2360
E-Mail: aheller@capitalsource.com
Wire Instructions:
Bank: Bank of America, Baltimore, Maryland
Account: 003930559738
ABA: 052001633
Account Name: CapitalSource Funding LLC
Reference: Fountain View
Schedule 1 - Page 3
Schedule 1
BORROWERS
1. Carehouse Healthcare Center, LLC, a Delaware limited liability company
2. Devonshire Care Center, LLC, a Delaware limited liability company
3. The Earlwood, LLC, a Delaware limited liability company
4. Fountain Care Center, LLC, a Delaware limited liability company
5. Fountain Senior Assisted Living, LLC, a Delaware limited liability company
6. Spring Senior Assisted Living, LLC, a Delaware limited liability company
7. Valley Healthcare Center, LLC, a Delaware limited liability company
8. Villa Maria Healthcare Center, LLC, a Delaware limited liability company
9. Willow Creek Healthcare Center, LLC, a Delaware limited liability company
10. Texas Cityview Care Center, LP, a Delaware limited partnership
11. Clairmont Beaumont, LP, a Delaware limited partnership
12. Clairmont Longview, LP, a Delaware limited partnership
13. The Clairmont Tyler, LP, a Delaware limited partnership
14. Colonial New Braunfels Care Center, LP, a Delaware limited partnership
15. Colonial Tyler Care Center, LP, a Delaware limited partnership
16. Coronado Nursing Center, LP, a Delaware limited partnership
17. Hallesttsville Rehabilitation and Nursing Center, LP, a Delaware limited
partnership
18. Texas Heritage Oaks Nursing and Rehabilitation Center, LP, a Delaware
limited partnership
19. Hospitality Nursing and Rehabilitation Center, LP, a Delaware limited
partnership
20. Monument Rehabilitation and Nursing Center, LP, a Delaware limited
partnership
21. Oak Crest Nursing Center, LP, a Delaware limited partnership
22. Flatonia Oak Manor, LP, a Delaware limited partnership
23. Oakland Manor Nursing Center, LP, a Delaware limited partnership
24. Southwood Care Center, LP, a Delaware limited partnership
25. Town and Country Manor, LP, a Delaware limited partnership
26. West Side Campus of Care, LP, a Delaware limited partnership
27. Comanche Nursing Center, LP, a Delaware limited partnership
28. Guadalupe Valley Nursing Center, LP, a Delaware limited partnership
29. Briarcliff Nursing and Rehabilitation Center, LP, a Delaware limited
partnership
30. Live Oak Nursing Center, LP, a Delaware limited partnership
31. Skilled Healthcare II, LLC, a Delaware limited liability company
Schedule 2
COMMITMENTS
Lenders Commitment
------- ----------
CAPITALSOURCE FINANCE LLC $11,000,000
4445 Willard Avenue, 12th Floor
Chevy Chase, Maryland 20815
Attention: Corporate Finance Group
Portfolio Manager
Telephone: 301-841-2700
Facsimile: 301-841-2360
E-Mail: aheller@capitalsource.com
Wire Instructions:
Bank: Bank of America, Baltimore, Maryland
Account: 003930559738
ABA: 052001633
Account Name: CapitalSource Funding LLC
Reference: Fountain View
Schedule 2.4
BORROWER'S DEPOSIT ACCOUNTS
BANK ADDRESS ACCOUNT NUMBER
- -------------------------------------------------------------
2030 Main Street
Wells Fargo Bank Irvine, CA 92614 - 7255 4010010973
- -------------------------------------------------------------
Schedule 5.3
CAPITALIZATION, ORGANIZATION CHART (INCLUDING ALL SUBSIDIARIES,
AUTHORIZED/ISSUED CAPITALIZATION) AND JOINT VENTURES
None.
Schedule 5.4
OWNED PROPERTIES:
None.
LEASEHOLD PROPERTIES
None.
Schedule 5.5
DEFAULTS; SERVICE FEES; MANAGERS
None.
Schedule 5.6
LITIGATION
None.
Schedule 5.8
TAXES
None.
Schedule 5.10
LIABILITY EVENT
None.
Schedule 5.11
INTELLECTUAL PROPERTY
None.
Schedule 5.15
EXISTING INDEBTEDNESS
None.
Schedule 5.16
SHAREHOLDER AGREEMENTS
None.
Schedule 5.17
INSURANCE
DESC. OF INSURANCE POLICY POLICY LIMITS OF
COVERAGE CARRIER NUMBER PERIOD INSURANCE
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
Professional/ Lexington (AIG) 2004776 4/10/01 - Professional Liability
General Liability 04/10/04 $4,000,000 Per Med. Inc.
$5,000,000 Agg. Per Loc.
General Liability
$1,000,000 Each Occ.
$5,000,000 Agg. Per Loc.
$50,000 Fire Damage
$5,000 Med. Expense
$5,000,000 Policy Aggregate
- -----------------------------------------------------------------------------------------------
California Workers' State Compensation 1672742-02 1/1/03- $1,000,000 Statutory
Compensation Insurance Fund 1/1/04 Limits - W/C and
Employers Liability
- -----------------------------------------------------------------------------------------------
Employment Practices Lexington (AIG) 1052217 3/1/03- $5,000,000 Ea. Event
Liability 3/1/04 $5,000,000 Policy Agg.
- -----------------------------------------------------------------------------------------------
Texas Excess Lexington (AIG) 650-0147 4/1/03 - $5,000,000 Ea. Event
Employers Liability 4/1/04 $5,000,000 Policy Agg.
- -----------------------------------------------------------------------------------------------
DESC. OF RETRO SIR/ ANNUAL BROKER/
COVERAGE DATE DEDUCTIBLE PREMIUM CONTACT
- ---------------------------------------------------------------------------------------------
Professional/ Summit = $250,000 CA per claim $ 360,938 Dennis Heney
General Liability 4/10/2001 Chris Mc Tigue
FV9 = Aon LA
4/10/2002 $1,000,000 TX per
claim
No SIR Aggregate
- ---------------------------------------------------------------------------------------------
California Workers' N/A None $7,200,000 Dennis Heney
Compensation Chris Mc Tigue
Carol Gibson
Aon LA
- ---------------------------------------------------------------------------------------------
Employment Practices 3/1/2000 $50,000 $ 345,516 Dennis Heney
Liability Christopher
Mc Tigue
Aon LA
- ---------------------------------------------------------------------------------------------
Texas Excess N/A $1,000,000 $ 426,164 Dennis Heney
Employers Liability Christopher
Mc Tigue
Aon LA
- ---------------------------------------------------------------------------------------------
Schedule 5.17
DESC. OF INSURANCE POLICY POLICY LIMITS OF
COVERAGE CARRIER NUMBER PERIOD INSURANCE
- ------------------------------------------------------------------------------------------------
Property Travelers 4/15/03 - Blanket Limit - $150 million
4/15/04 Replacement Cost
Quake/Windstorm/Flood Incl.
CA Earthquake $25 million
- ------------------------------------------------------------------------------------------------
California Auto American Home (AIG) 64597-78 5/30/03 - $1,000,000 CSL
05/30/04 $1,000,000 UM/UIM
$5,000 MEDICAL
- ------------------------------------------------------------------------------------------------
Texas Auto American Home (AIG) 64597-79 5/30/03 - $1,000,000 CSL
05/30/04 $1,000,000 UM/UIM
$5,000 MEDICAL
- ------------------------------------------------------------------------------------------------
Directors & Officers AIG 002410795 5/31/03 - $10,000,000 Aggregate
Liability 5/31/04
- ------------------------------------------------------------------------------------------------
Fiduciary Liability AIG 002410704 5/31/03 - $2,000,000 Aggregate
5/31/04
- -----------------------------------------------------------------------------------------------
DESC. OF RETRO SIR/ ANNUAL BROKER/
COVERAGE DATE DEDUCTIBLE PREMIUM CONTACT
- ---------------------------------------------------------------------------------------------
Property N/A Ded. All Risk $ 537,823 Heritage Program
$100,000/Quake 5% Lockton Kansas City
Windstorm 5% Tim Fortin
Bob Eckhart
- ---------------------------------------------------------------------------------------------
California Auto N/A $500 Deductible $ 52,761 Dennis Heney
Comprehensive Christopher
$500 Deductible Mc Tigue
Collision Aon LA
- ---------------------------------------------------------------------------------------------
Texas Auto N/A $500 Deductible $ 58,750 Dennis Heney
Comprehensive Christopher
$500 Deductible Mc Tigue
Collision Aon LA
- ---------------------------------------------------------------------------------------------
Directors & Officers 1/13/1997 $100,000 SIR $ 154,515 Heritage Program
Liability
(Incl. $6,615 Lockton NY
Broker fee)
- ---------------------------------------------------------------------------------------------
Fiduciary Liability 5/31/2003 $10,000 SIR $ 6,630 Heritage Program
Lockton NY
- ---------------------------------------------------------------------------------------------
Schedule 5.17
DESC. OF INSURANCE POLICY POLICY LIMITS OF
COVERAGE CARRIER NUMBER PERIOD INSURANCE
- -----------------------------------------------------------------------------------------------
Travel Accident The Hartford ETB 104559 4/9/02 - $150,000 Benefit
4/9/05 Per employee Accidental
Death or Dismemberment
$1,000,000 Aggregate
- -----------------------------------------------------------------------------------------------
Crime National Union 8526611 9/22/02- $2,000,000
(AIG) 9/22/03 Employee Dishonesty
Forgery or Alteration
Theft - inside and outside
Robbery and Safe Burglary
Computer Fraud
Money Orders and
Counterfeit
- -----------------------------------------------------------------------------------------------
DESC. OF RETRO SIR/ ANNUAL BROKER/
COVERAGE DATE DEDUCTIBLE PREMIUM CONTACT
- ---------------------------------------------------------------------------------------------
Travel Accident N/A None $ 4,392 Aon LA
Karen Frick
- ---------------------------------------------------------------------------------------------
Crime N/A $75,000 Each Claim $ 20,747 Dennis Heney
Christopher
Mc Tigue
Aon LA
- ---------------------------------------------------------------------------------------------
TOTAL $9,168,236
Schedule 5.18A
CORPORATE NAMES
CURRENT NAMES (AS OF EFFECTIVE DATE)
1. Carehouse Healthcare Center, LLC, a Delaware limited liability company
2. Devonshire Care Center, LLC, a Delaware limited liability company
3. The Earlwood, LLC, a Delaware limited liability company
4. Fountain Care Center, LLC, a Delaware limited liability company
5. Fountain Senior Assisted Living, LLC, a Delaware limited liability company
6. Spring Senior Assisted Living, LLC, a Delaware limited liability company
7. Valley Healthcare Center, LLC, a Delaware limited liability company
8. Villa Maria Healthcare Center, LLC, a Delaware limited liability company
9. Willow Creek Healthcare Center, a Delaware limited liability company
10. Texas Cityview Care Center, LP, a Delaware limited partnership
11. Clairmont Beaumont, LP, a Delaware limited partnership
12. Clairmont Longview, LP, a Delaware limited partnership
13. The Clairmont Tyler, LP, a Delaware limited partnership
14. Colonial New Braunfels Care Center, LP, a Delaware limited partnership
15. Colonial Tyler Care Center, LP, a Delaware limited partnership
16. Coronado Nursing Center, LP, a Delaware limited partnership
17. Hallesttsville Rehabilitation and Nursing Center, LP, a Delaware limited
partnership
18. Texas Heritage Oaks Nursing and Rehabilitation Center, LP, a Delaware
limited partnership
19. Hospitality Nursing and Rehabilitation Center, LP, a Delaware limited
partnership
20. Monument Rehabilitation and Nursing Center, LP, a Delaware limited
partnership
21. Oak Crest Nursing Center, LP, a Delaware limited partnership
22. Flatonia Oak Manor, LP, a Delaware limited partnership
23. Oakland Manor Nursing Center, LP, a Delaware limited partnership
24. Southwood Care Center, LP, a Delaware limited partnership
25. Town and Country Manor, LP, a Delaware limited partnership
26. West Side Campus of Care, LP, a Delaware limited partnership
27. Comanche Nursing Center, LP, a Delaware limited partnership
28. Guadalupe Valley Nursing Center, LP, a Delaware limited partnership
29. Briarcliff Nursing and Rehabilitation Center, LP, a Delaware limited
partnership
30. Live Oak Nursing Center, LP, a Delaware limited partnership
31. Skilled Healthcare, LLC, a Delaware limited liability company
Schedule 5.18A
PREVIOUS NAMES
(PRIOR TO EFFECTIVE DATE)
None.
Schedule 5.18B
PLACES OF BUSINESS
CHIEF EXECUTIVE OFFICES:
1. 27442 Portola Parkway, Suite 200, Foothill Ranch, CA 92610
2. 19365 FM 2252, Suite 5, Garden Ridge, TX 78266
PLACES OF BUSINESS:
1. 3201 N. Ware Road, 194 McAllen, TX 78501
2. 1020 S. 23rd Street, 148 Beaumont, TX 77707
3. 5801 Bryant Irvin Road, 210 Fort Worth, TX 76132
4. 3201 N. Fourth Street, 178 Longview, TX 75605
5. 900 S. Baxter, 120 Tyler, TX 75701
6. 821 US Hwy 81 West, New Braunfels, TX 78139
7. 930 S. Baxter, 172 Tyler, TX 75701
8. 3200 Parkway, 119 Big Spring, TX 79720
9. 1751 N. 15th Street, 221 Abilene, TX 79603
10. 1210 Eastwood Drive, 150 Sequin, TX 78155
11. Hwy 90A West, 120 Hallettsville, TX 77964
12. 5301 University Avenue, 159 Lubbock, TX 79413
13. Route 2, Box 116, 100 George West, TX 78022
14. 4710 Slide Road, 117 Lubbock, TX 79414
15. 120 State Loop 92, 110 La Grange, TX 78945
16. 1902 FM 3036, 92 Rockport, TX 78382
17. 624 N. Converse Street, 90 Flatonia, TX 78941
18. 1400 N. Main Street, 120 Gidding, TX 78942
19. 3759 Valley View Road, 120 Austin, TX 78704
20. 625 N. Main Street, 126 Boerne, TX 78006
21. 1950 Las Vegas Trail South, White Settlement, TX 76108
Schedule 6.8
FURTHER ASSURANCES/POST CLOSING
1. Thirty (30) days after the Closing Date, certified copies of all insurance
policies required to be delivered pursuant to Section 4.1(g).
2. Forty-five (45) days after the Closing Date, delivery of all control
account agreements not delivered as of the Closing Date as required by
Section 6.8.
Schedule 7.2
PERMITTED INDEBTEDNESS
Indebtedness as contemplated or permitted by the Loan Documents and the
Plan of Reorganization.
Schedule 7.3
LIENS
None.
Schedule 7.4
INVESTMENTS
None.
Schedule 7.6
AFFILIATE TRANSACTIONS
Intercompany agreements to provide services and supplies at the facilities.
Schedule 7.9
CONTINGENT OBLIGATIONS
None.