Exhibit 10(a)
CONFORMED COPY
$2,300,000,000
CREDIT AGREEMENT
dated as of
February 28, 1995
among
National Medical Enterprises, Inc.
The Lenders Party Hereto
Morgan Guaranty Trust Company of New York
Bank of America National Trust and Savings Association
The Bank of New York
Bankers Trust Company
as Arranging Agents
and
Morgan Guaranty Trust Company of New York
as Administrative Agent
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Arranged by:
J.P. Morgan Securities Inc.
BA Securities, Inc.
The Bank of New York
BT Securities Corporation
as Co-Arrangers
TABLE OF CONTENTS*
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ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . 2
SECTION 1.02. Accounting Terms and Determinations . . . . . . . 28
SECTION 1.03. Tranches and Types of Borrowings. . . . . . . . . 28
ARTICLE II
THE CREDITS
SECTION 2.01. Term Commitments. . . . . . . . . . . . . . . . . 28
SECTION 2.02. Revolving Credit Commitments. . . . . . . . . . . 29
SECTION 2.03. Notice of Syndicated Borrowing. . . . . . . . . . 29
SECTION 2.04. Notice to Lenders; Funding of Syndicated
Loans . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.05. Notes . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 2.06. Scheduled Amortization and Mandatory
Prepayments of Term Loans . . . . . . . . . . . . 32
SECTION 2.07. Maturity and Mandatory Prepayments of
Revolving Credit Loans. . . . . . . . . . . . . . 35
SECTION 2.08. Optional Prepayments. . . . . . . . . . . . . . . 36
SECTION 2.09. Notice of Syndicated Prepayment . . . . . . . . . 36
SECTION 2.10. Interest Rates. . . . . . . . . . . . . . . . . . 37
SECTION 2.11. Method of Electing Interest Rates . . . . . . . . 38
SECTION 2.12. Commitment Fees . . . . . . . . . . . . . . . . . 40
SECTION 2.13. Termination or Reduction of Commitments . . . . . 40
SECTION 2.14. Letters of Credit . . . . . . . . . . . . . . . . 41
SECTION 2.15. General Provisions as to Payments . . . . . . . . 49
SECTION 2.16. Funding Losses. . . . . . . . . . . . . . . . . . 50
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* The Table of Contents is not a part of this Agreement.
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SECTION 2.17. Computation of Interest and Fees. . . . . . . . . 50
SECTION 2.18. Swingline Loans.. . . . . . . . . . . . . . . . . 51
ARTICLE III
CONDITIONS
SECTION 3.01. Closing . . . . . . . . . . . . . . . . . . . . . 53
SECTION 3.02. Release of NME's Existing Security
Interests and NME Hospitals' Existing
Guarantees. . . . . . . . . . . . . . . . . . . . 58
SECTION 3.03. Borrowings. . . . . . . . . . . . . . . . . . . . 59
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power . . . . . . . . . . 60
SECTION 4.02. Corporate and Governmental
Authorization; No Contravention . . . . . . . . . 60
SECTION 4.03. Binding Effect. . . . . . . . . . . . . . . . . . 60
SECTION 4.04. Priority of Security Interests. . . . . . . . . . 60
SECTION 4.05. Financial Information . . . . . . . . . . . . . . 61
SECTION 4.06. Litigation. . . . . . . . . . . . . . . . . . . . 62
SECTION 4.07. Compliance with ERISA . . . . . . . . . . . . . . 63
SECTION 4.08. Compliance with Laws. . . . . . . . . . . . . . . 63
SECTION 4.09. Environmental Matters . . . . . . . . . . . . . . 63
SECTION 4.10. Taxes . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 4.11. Subsidiaries. . . . . . . . . . . . . . . . . . . 64
SECTION 4.12. Not an Investment Company . . . . . . . . . . . . 65
SECTION 4.13. Full Disclosure . . . . . . . . . . . . . . . . . 65
SECTION 4.14. Certain Documents . . . . . . . . . . . . . . . . 65
SECTION 4.15. Legality of Acquisition; Representations
in Merger Agreement Correct . . . . . . . . . . . 65
SECTION 4.16. No Stock Payments.. . . . . . . . . . . . . . . . 66
SECTION 4.17. Hospital Sales. . . . . . . . . . . . . . . . . . 66
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ARTICLE V
COVENANTS
SECTION 5.01. Information . . . . . . . . . . . . . . . . . . . 66
SECTION 5.02. Payment of Obligations. . . . . . . . . . . . . . 71
SECTION 5.03. Maintenance of Property; Insurance. . . . . . . . 71
SECTION 5.04. Conduct of Business, Maintenance of
Existence and Limitation on Mergers and
Sales of Assets . . . . . . . . . . . . . . . . . 71
SECTION 5.05. Compliance with Laws. . . . . . . . . . . . . . . 73
SECTION 5.06. Inspection of Property, Books and
Records . . . . . . . . . . . . . . . . . . . . . 73
SECTION 5.07. Fixed Charge Ratio. . . . . . . . . . . . . . . . 73
SECTION 5.08. Debt Ratio. . . . . . . . . . . . . . . . . . . . 74
SECTION 5.09. Adjusted Consolidated Net Worth . . . . . . . . . 74
SECTION 5.10. Limitations on Debt . . . . . . . . . . . . . . . 74
SECTION 5.11. Capital Expenditures. . . . . . . . . . . . . . . 76
SECTION 5.12. Restricted Payments . . . . . . . . . . . . . . . 76
SECTION 5.13. Investments . . . . . . . . . . . . . . . . . . . 76
SECTION 5.14. Negative Pledge . . . . . . . . . . . . . . . . . 77
SECTION 5.15. Leases. . . . . . . . . . . . . . . . . . . . . . 79
SECTION 5.16. Asset Sales . . . . . . . . . . . . . . . . . . . 80
SECTION 5.17. Hospital Swaps. . . . . . . . . . . . . . . . . . 81
SECTION 5.18. Restrictions on Other Agreements. . . . . . . . . 81
SECTION 5.19. No Change of Accounting Practices. . . . . . . . 82
SECTION 5.20. No Sales of Receivables . . . . . . . . . . . . . 82
SECTION 5.21. Use of Proceeds . . . . . . . . . . . . . . . . . 82
SECTION 5.22. Restriction on Prepaying or Extending
Other Debt. . . . . . . . . . . . . . . . . . . . 83
SECTION 5.23. Limitation on Activities. . . . . . . . . . . . . 83
SECTION 5.24. Senior Status . . . . . . . . . . . . . . . . . . 84
SECTION 5.25. Loans to AMI. . . . . . . . . . . . . . . . . . . 84
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default . . . . . . . . . . . . . . . . 84
SECTION 6.02. Notice of Default . . . . . . . . . . . . . . . . 88
SECTION 6.03. Cash Cover. . . . . . . . . . . . . . . . . . . . 88
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ARTICLE VII
THE AGENTS
SECTION 7.01. Appointment and Authorization . . . . . . . . . . 88
SECTION 7.02. Agents and Affiliates . . . . . . . . . . . . . . 89
SECTION 7.03. Action by any Administrative Agent. . . . . . . . 89
SECTION 7.04. Consultation with Experts . . . . . . . . . . . . 89
SECTION 7.05. Liability of the Agents . . . . . . . . . . . . . 89
SECTION 7.06. Indemnification . . . . . . . . . . . . . . . . . 90
SECTION 7.07. Credit Decision . . . . . . . . . . . . . . . . . 90
SECTION 7.08. Successor Administrative Agent. . . . . . . . . . 90
SECTION 7.09. Agents' Fees. . . . . . . . . . . . . . . . . . . 91
SECTION 7.10. Arranging Agents. . . . . . . . . . . . . . . . . 91
SECTION 7.11. Security Agreement. . . . . . . . . . . . . . . . 91
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair. . . . . . . . . . . . . . . 91
SECTION 8.02. Illegality. . . . . . . . . . . . . . . . . . . . 92
SECTION 8.03. Increased Cost and Reduced Return . . . . . . . . 93
SECTION 8.04. Taxes . . . . . . . . . . . . . . . . . . . . . . 95
SECTION 8.05. Base Rate Loans Substituted for Affected
Euro-Dollar Loans . . . . . . . . . . . . . . . . 97
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices . . . . . . . . . . . . . . . . . . . . . 98
SECTION 9.02. No Waivers. . . . . . . . . . . . . . . . . . . . 98
SECTION 9.03. Expenses; Indemnification . . . . . . . . . . . . 99
SECTION 9.04. Sharing of Set-Offs . . . . . . . . . . . . . . . 99
SECTION 9.05. Amendments and Waivers. . . . . . . . . . . . . . 100
SECTION 9.06. Successors and Assigns. . . . . . . . . . . . . . 102
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SECTION 9.07. No Reliance on Margin Stock as
Collateral. . . . . . . . . . . . . . . . . . . . 104
SECTION 9.08. Confidentiality . . . . . . . . . . . . . . . . . 104
SECTION 9.09. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . 105
SECTION 9.10. GOVERNING LAW; SUBMISSION TO
JURISDICTION. . . . . . . . . . . . . . . . . . . 105
SECTION 9.11. Counterparts; Integration;
Effectiveness . . . . . . . . . . . . . . . . . . 105
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Commitment Schedule
Pricing Schedule
Schedule 4.06 - Pending Litigation
Schedule 4.07 - Erisa Exceptions
Exhibit A-1 - Term Note
Exhibit A-2 - Revolving Credit Note
Exhibit A-3 - Swingline Note
Exhibit B - Security Agreement
Exhibit C - Senior Officer's Closing Certificate
Exhibit D-1 - Opinion of Gibson, Dunn & Crutcher, Special Counsel for the
Borrower
Exhibit D-2 - Opinion of Skadden, Arps, Slate, Meagher & Flom, Special Counsel
for the Borrower
Exhibit D-3 - Opinion of Maples & Calder, Special Counsel for NME Cayman
Exhibit E - Opinion of Scott Brown, General Counsel for the Borrower
Exhibit F - Opinion of Internal Counsel for AM Holdings
Exhibit G - Opinion of Special Counsel for the Administrative Agent
Exhibit H - Assignment and Assumption Agreement
Exhibit I - List of Existing Letters of Credit
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CREDIT AGREEMENT
AGREEMENT dated as of February 28, 1995 among NATIONAL MEDICAL
ENTERPRISES, INC., the LENDERS party hereto, MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, THE BANK OF
NEW YORK and BANKERS TRUST COMPANY, as Arranging Agents, and MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, as Administrative Agent.
WHEREAS, terms used in these recitals have the meanings assigned to
them in Section 1.01 hereof;
WHEREAS, the Borrower has agreed to acquire AM Holdings and its
Subsidiaries pursuant to the Merger Agreement;
WHEREAS, concurrently with the Merger or within 60 days thereafter,
the Borrower desires to purchase, redeem or otherwise refinance up to
$626,000,000 of its own outstanding Debt and up to $1,091,000,000 of the
outstanding Debt of AMI, a wholly-owned subsidiary of AM Holdings;
WHEREAS, the Borrower desires to borrow Term Loans in the aggregate
amount of $1,800,000,000 to enable it to (i) purchase, redeem or otherwise
refinance such outstanding Debt of the Borrower and AMI, (ii) obtain a portion
of the cash to be paid for the shares of AM Holdings as provided in the Merger
Agreement and (iii) pay transaction costs incurred in connection with the
foregoing transactions;
WHEREAS, the Borrower desires to have available to it a revolving
credit facility in the aggregate amount of $500,000,000 pursuant to which it may
(i) borrow to finance the Acquisition, (ii) borrow to meet the working capital
needs of the Borrower and its Subsidiaries after the Acquisition is consummated
and (iii) obtain Letters of Credit to replace certain letters of credit now
outstanding and to meet the needs of the Borrower and its Subsidiaries for
further letters of credit in the ordinary course of business after the
Acquisition is consummated;
WHEREAS, this Agreement is intended by the Borrower to replace NME's
Existing Credit Agreement, which in turn was intended by the Borrower to replace
the credit
agreement described therein as the "Existing Credit Agreement"; and
WHEREAS, the obligations of the Borrower under this Agreement are to
be secured under the Security Agreement equally and ratably with its obligations
under the Advance Account Agreement, the Overdraft Facility Agreement and the
Metrocrest Reimbursement Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. The following terms, as used herein, have
the following meanings:
"Acquisition" means the acquisition of AM Holdings by the Borrower as
described in the Merger Agreement.
"Additional Letter of Credit" means any letter of credit issued
hereunder by an LC Issuing Bank on or after the Closing Date.
"Adjusted Consolidated Net Worth" means, at any date, the consolidated
stockholders' equity of the Borrower and its Consolidated Subsidiaries minus the
amount (if any) by which their Consolidated Intangible Assets exceed
$2,650,000,000, all determined as of such date. "Consolidated Intangible
Assets" means, at any date, the sum of (i) all write-ups (other than write-ups
resulting from foreign currency translations and write-ups of assets of a going
concern business made within twelve months after the acquisition of such
business) subsequent to November 30, 1994 in the book value of any asset and
(ii) all unamortized debt discount and expense, unamortized deferred charges,
goodwill, patents, trademarks, service marks, trade names, anticipated future
benefit of tax loss carry-forwards, copyrights, organization or developmental
expenses and other intangible assets, all determined as of such date with
respect to the Borrower and its Consolidated Subsidiaries.
"Adjusted London Interbank Offered Rate" has the meaning set forth in
Section 2.10(b).
"Administrative Agent" means Morgan Guaranty Trust Company of New
York, in its capacity as Administrative Agent
2
for the Lenders hereunder, and its successors in such capacity.
"Administrative Questionnaire" means, with respect to each Lender, an
administrative questionnaire in the form prepared by the Administrative Agent
and submitted to the Administrative Agent (with a copy to the Borrower) duly
completed by such Lender.
"Advance Account Agreement" means the Advance Account Agreement dated
as of December 16, 1993 between the Borrower and Bank of America N.T. & S.A., as
amended from time to time.
"Affiliate" means, with respect to any Person, (i) any Person that
directly, or indirectly through one or more intermediaries, controls such Person
(a "Controlling Person") or (ii) any Person which is controlled by or is under
common control with a Controlling Person. As used herein, the term "control"
means possession, directly or indirectly, of the power to direct or cause the
direction of the management of a Person by voting securities, by contract or
otherwise.
"Agents" means the Arranging Agents, the Collateral Agent and the
Administrative Agent, and "Agent" means any one of them.
"AM Holdings" means American Medical Holdings, Inc., a Delaware
corporation, and its successors.
"AM Holdings' Latest Form 10-Q" means AM Holdings' quarterly report on
Form 10-Q for the quarter ended November 30, 1994, as filed with the SEC
pursuant to the Exchange Act.
"AMI" means American Medical International, Inc., a Delaware
corporation, and its successors.
"AMI Post-1991 Debt Securities" means AMI's 11% Senior Notes due 2000,
9 1/2% Senior Subordinated Notes due 2006, 13 1/2% Senior Subordinated Notes due
2001, 15% Junior Subordinated Debentures due 2005 and outstanding at November
30, 1994, in the aggregate face amount of approximately $568,700,000.
"AMI Redemptions" means the redemption by AMI of all of its 11 1/4%
Sinking Funds Debentures due 2015 and its 9 1/2% Convertible Subordinated
Debentures due 2001, as described under the heading "The Merger and Financing --
Related Transactions" in the Prospectus.
3
"AMI Tender Offers" means tender offers and consent solicitations to
purchase for cash any and all of the AMI Post-1991 Debt Securities, 6 1/2% Dual
Currency Notes due 1997 and 5% Swiss Franc Bonds due 1996 as described under the
heading "The Merger and Financing -- Related Transactions" in the Prospectus.
"AMI's Existing Credit Agreement" means the Credit and Guaranty
Agreement dated as of August 18, 1993 among AMI and AM Holdings, the lenders
referred to therein, Chemical Bank as Administrative Agent, The Bank of Nova
Scotia as Co-Administrative Agent, and The Long Term Credit Bank of Japan, Ltd.,
as Co-Administrative Agent, as in effect immediately before the Closing Date.
"AMI's Existing Security Agreements" means the Holding Security
Agreement, the Collateral Trust Security Agreement, the Borrower Pledge and
Security Agreement and the Finco Guaranty and Security Agreement, as each of
such terms is defined in AMI's Existing Credit Agreement.
"Applicable Lending Office" means, with respect to any Lender, (i) in
the case of its Base Rate Loans, its Domestic Lending Office and (ii) in the
case of its Euro-Dollar Loans, its Euro-Dollar Lending Office.
"Arranging Agents" means Morgan Guaranty Trust Company of New York,
Bank of America National Trust and Savings Association, The Bank of New York and
Bankers Trust Company, in their respective capacities as Arranging Agents for
the Lenders hereunder, and their respective successors in such capacities, and
"Arranging Agent" means any one of them.
"Asset Sale" means any Disposition of any asset by the Borrower or any
Included Subsidiary, except:
(i) any Disposition of an asset to the Borrower or an Included
Subsidiary;
(ii) any Disposition of an asset resulting from a Casualty Event;
(iii) any Disposition in the ordinary course of business of any asset
other than an Equity Interest in another Person;
(iv) any Disposition that constitutes a Hospital Sale or Hospital
Swap;
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(v) any Disposition of a Designated Investment; or
(vi) any dissolution, liquidation or winding-up of a Person in which
the Borrower or any Included Subsidiary has an Equity Interest.
The term "Asset Sale" shall also include any merger or consolidation which the
Borrower elects to treat as an Asset Sale pursuant to Section 5.04(d).
"Assignee" has the meaning set forth in Section 9.06(c).
"Base Rate" means, for any day, a rate per annum equal to the higher
of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the
Federal Funds Rate for such day.
"Base Rate Loan" means (i) a Syndicated Loan which bears interest at
the Base Rate pursuant to the applicable Notice of Borrowing or Notice of
Interest Rate Election or the provisions of Section 2.18(g) or Article VIII,
(ii) a Swingline Loan or (iii) an overdue amount which was a Base Rate Loan
immediately before it became overdue.
"Base Rate Margin" means a rate per annum determined in accordance
with the Pricing Schedule.
"Benefit Arrangement" means at any time an employee benefit plan
within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
"Borrower" means National Medical Enterprises, Inc., a Nevada
corporation, and its successors.
"Borrower's Latest Form 10-Q" means the Borrower's quarterly report on
Form 10-Q for its Fiscal Quarter ended November 30, 1994, as filed with the SEC
pursuant to the Exchange Act.
"Borrowing" has the meaning set forth in Section 1.03.
"Casualty Event" means (i) any destruction of or damage to property
through one or more related events for which any of the Combined Companies may
be entitled to receive insurance proceeds or restitution payments or (ii) any
condemnation of property, or any transfer or other
5
disposition of property in lieu of condemnation, for which any of the Combined
Companies may be entitled to receive a condemnation award or other compensation.
"Casualty Proceeds" means, with respect to any Casualty Event, all
insurance proceeds (except proceeds of business interruption insurance),
restitution payments, condemnation awards and other compensation received by the
Borrower or any Included Subsidiary in respect thereof.
"Closing Date" means the date on or after the Effective Date on which
the Merger is consummated and all the other conditions set forth in Section 3.01
have been satisfied (or waived in accordance with Section 9.05).
"Collateral" has the meaning set forth in
Section 1 of the Security Agreement.
"Collateral Agent" means Morgan Guaranty Trust Company of New York, in
its capacity as Collateral Agent under the Security Agreement, and its
successors in such capacity.
"Combined Basis", when used with respect to determining any amount,
means that such amount is to be determined by combining (i) the relevant amount
determined with respect to the Borrower and its Consolidated Subsidiaries on a
consolidated basis and (ii) the relevant amount determined with respect to AM
Holdings and its Consolidated Subsidiaries on a consolidated basis.
"Combined Companies" means the Borrower and its Consolidated
Subsidiaries and AM Holdings and its Consolidated Subsidiaries. Unless the
context otherwise requires, whenever an amount is to be determined hereunder
with respect to the Combined Companies, such amount shall be determined (i) as
of any time or for any period before the Merger is consummated, on a Combined
Basis and (ii) as of any time or for any period after the Merger is consummated,
for the Borrower and its Consolidated Subsidiaries on a consolidated basis.
"Commitment" means a Term Commitment, a Revolving Credit Commitment or
the Swingline Commitment and "Commitments" means all or any combination of them.
"Commitment Fee Rate" means a rate per annum determined in accordance
with the Pricing Schedule.
"Commitment Schedule" means the Commitment Schedule attached hereto.
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"Consolidated Capital Expenditures" means, for any period, the gross
amount of all additions to property, plant and equipment of the Borrower and its
Consolidated Subsidiaries for such period; PROVIDED that
(i) for any portion of such period before the Closing Date,
"Consolidated Capital Expenditures" shall be determined on a Combined
Basis,
(ii) Consolidated Capital Expenditures shall not include any Hospital
Purchase to the extent that Unexpended Proceeds of Hospital Sales and
Casualty Events are applied (or deemed to be applied) to pay for such
Hospital Purchase pursuant to subsection (b) or (g) of Section 2.06,
(iii) Consolidated Capital Expenditures shall not include amounts spent
to restore, repair or replace property affected by a Casualty Event, up to
the amount of Casualty Proceeds received with respect to such Casualty
Event, and
(iv) subject to clause (ii), if the Borrower acquires a going concern
business after the Closing Date, "Consolidated Capital Expenditures" shall
include (x) the book value of the property, plant and equipment of such
business immediately before such acquisition and (y) the amount (if any) by
which such property, plant and equipment are written up in connection with
such acquisition, PROVIDED that this clause (iv) shall not apply to the
Acquisition.
"Consolidated EBITDA" means, for any period, the sum of (i) the
consolidated net income of the Borrower and its Consolidated Subsidiaries for
such period plus (ii) to the extent deducted in determining such consolidated
net income, the sum of (A) interest expense, (B) income taxes and (C)
depreciation, amortization and other similar non-cash charges; PROVIDED that (x)
for any portion of such period before the Closing Date, Consolidated EBITDA
shall be determined on a Combined Basis and (y) Consolidated EBITDA shall be
calculated so as to exclude the effect of (1) any gain or loss that is
classified as extraordinary in accordance with GAAP and (2) any gain or loss
from any Asset Sale, Hospital Sale, Hospital Swap or Disposition of a Designated
Investment.
"Consolidated Interest Expense" means, for any period, the
consolidated interest expense of the Borrower and its Consolidated Subsidiaries
for such period; PROVIDED that, if such period begins before the Closing Date
and ends
7
after the Closing Date, Consolidated Interest Expense for such period will be
calculated by annualizing the consolidated interest expense of the Borrower and
its Consolidated Subsidiaries for the portion of such period which is on and
after the Closing Date (i.e., by multiplying such consolidated interest expense
by a fraction of which the numerator is 365 days and the denominator is the
number of days in such period on and after the Closing Date).
"Consolidated Plant, Property and Equipment" means, at any time, the
consolidated plant, property and equipment shown on a consolidated balance sheet
of the Borrower and its Consolidated Subsidiaries as of the end of the most
recent Fiscal Year ended prior to such time; PROVIDED that, if such Fiscal Year
ended before the Closing Date, such consolidated plant, property and equipment
shall be determined on a Combined Basis.
"Consolidated Rental Expense" means, for any period, the consolidated
rental expense of the Borrower and its Consolidated Subsidiaries for such
period; PROVIDED that, for any portion of such period before the Closing Date,
"Consolidated Rental Expense" shall be determined on a Combined Basis.
"Consolidated Subsidiary" means, as to any Person at any date, any
Subsidiary or other entity the accounts of which would be consolidated with
those of such Person in its consolidated financial statements if such statements
were prepared as of such date. Unless otherwise specified, "Consolidated
Subsidiary" means a Consolidated Subsidiary of the Borrower.
"Continuing Director" means (i) any individual who is a director of
the Borrower on the date of this Agreement and (ii) any individual who becomes a
director of the Borrower after the date of this Agreement and is elected or
nominated for election as a director of the Borrower by a majority of the
individuals who were Continuing Directors immediately before such election or
nomination.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business and deferred compensation payable to members of management of such
Person, (iv) all obligations of such Person as lessee which are capitalized in
accordance with GAAP and (v) all
8
Guarantees by such Person of obligations of other Persons of the types described
in the foregoing clauses (i) through (iv), inclusive (any such Guarantee to be
included in any calculation of the amount of such Person's Debt at an amount
equal to the principal amount guaranteed thereby). If such Person Guarantees
Debt of another Person by causing a letter of credit to be issued in support
thereof, the "Debt" of such Person includes (without duplication) such Person's
obligations to reimburse the issuing bank for drawings in respect of principal
under such letter of credit.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Designated International Subsidiaries" means (i) International-NME,
Inc., a California corporation, and its successors and (ii) NME (Australia) Pty.
Limited, an Australian corporation, and its successors.
"Designated Investment" means (i) any Investment beneficially owned by
the Borrower or any Subsidiary in Hillhaven, Westminster or any Designated
International Subsidiary or (ii) any Investment acquired by the Borrower or any
Subsidiary upon any Disposition of a Designated Investment.
"Disposition" means, with respect to any asset, any sale, transfer,
disposition, exchange, liquidation or other comparable transaction resulting in
a realization of all or part of the value of such asset.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized by law to
close; PROVIDED that, when used in Section 2.14 with respect to any action to be
taken by or with respect to any LC Issuing Bank, the term "Domestic Business
Day" shall not include any day on which commercial banks are authorized by law
to close in the jurisdiction where the LC Office of such LC Issuing Bank is
located.
"Domestic Lending Office" means, as to each Lender, its office located
at its address set forth in its Administrative Questionnaire (or identified in
its Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Lender may hereafter designate as its Domestic Lending Office by
notice to the Borrower and the Administrative Agent.
9
"Effective Date" means the date this Agreement becomes effective in
accordance with Section 9.11.
"Environmental Laws" means any and all federal, state and local
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, plans, injunctions, permits, concessions, grants, franchises,
licenses, agreements and other governmental restrictions relating to the
environment, the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, Hazardous Substances or
wastes into the environment including, without limitation, ambient air, surface
water, ground water or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, Hazardous Substances or wastes or the
clean-up or other remediation thereof.
"Equity Interest" means (i) in the case of a corporation, any shares
of its capital stock, (ii) in the case of a partnership, any partnership
interest (whether general or limited), (iii) in the case of any other business
entity, any participation or other interest in the equity or profits thereof or
(iv) any warrant, option or other right to acquire any Equity Interest described
in the foregoing clauses (i), (ii) and (iii), other than a right to convert a
debt security into, or exchange a debt security for, any such Equity Interest.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA Group" means the Borrower, its Included Subsidiaries and all
members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower or any Included Subsidiary, are treated as a single employer under
Section 414 of the Internal Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Lender, its office,
branch or Affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or Affiliate of such
Lender as it may hereafter designate as
10
its Euro-Dollar Lending Office by notice to the Borrower and the Administrative
Agent.
"Euro-Dollar Loan" means (i) a Loan which bears interest at a
Euro-Dollar Rate pursuant to the applicable Notice of Syndicated Borrowing or
Notice of Interest Rate Election or (ii) an overdue amount which was a
Euro-Dollar Loan immediately before it became overdue.
"Euro-Dollar Margin" means a rate per annum determined in accordance
with the Pricing Schedule.
"Euro-Dollar Rate" means a rate of interest determined pursuant to
Section 2.10(b) on the basis of an Adjusted London Interbank Offered Rate.
"Euro-Dollar Reference Banks" means the principal London offices of
Morgan Guaranty Trust Company of New York, Bank of America National Trust and
Savings Association, The Bank of New York and Bankers Trust Company.
"Euro-Dollar Reserve Percentage" has the meaning set forth in Section
2.10(b).
"Event of Default" has the meaning set forth in Section 6.01.
"Excess Casualty Proceeds" has the meaning set forth in Section
2.06(g).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Subsidiaries" means (i) the Designated International
Subsidiaries and their respective Subsidiaries, (ii) NME Psychiatric and its
Subsidiaries, other than its Subsidiaries owning on-campus psychiatric
facilities to be retained, and (iii) any Immaterial Subsidiaries.
"Existing Letters of Credit" means the letters of credit issued before
the Closing Date pursuant to AMI's Existing Credit Agreement and listed in
Exhibit I hereto.
"Extension of Credit" means the making of a Loan or the issuance or
extension of a Letter of Credit.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
11
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day, PROVIDED that (i) if such day is not a Domestic
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so published on the
next succeeding Domestic Business Day, and (ii) if no such rate is so published
on such next succeeding Domestic Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to Morgan Guaranty Trust Company of New
York on such day on such transactions as determined by the Administrative Agent.
"Final Maturity Date" means August 31, 2001 or, if such day is not a
Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day.
"Financial Obligations" of any Person means at any date, without
duplication:
(i) all Debt of such Person,
(ii) all obligations of such Person to reimburse any bank or other
Person in respect of amounts paid under a letter of credit or similar
instrument or to make any payment pursuant to a Hedging Obligation,
(iii) all Debt that is secured by a Lien on any asset of such Person but
is not otherwise an obligation of such Person, PROVIDED that the amount of
any Financial Obligation described in this clause (iii) shall be deemed to
be equal to the lesser of the amount of the relevant Debt or the book value
of the asset or assets of such Person securing such Debt, and
(iv) all Guarantees by such Person of Financial Obligations of other
Persons of the types described in clauses (i) and (ii) of this definition.
"Financing Documents" means this Agreement (including the Schedules
and Exhibits hereto), the Notes and the Security Agreement, and "Financing
Document" means any one of them.
"Finco" means American Medical Finance Company, a Delaware
corporation, and its successors.
"First Tier Subsidiary" means any Subsidiary in which any Equity
Interest is held directly by the Borrower.
12
"Fiscal Quarter" means a fiscal quarter of the Borrower.
"Fiscal Year" means a fiscal year of the Borrower.
"GAAP" means at any time generally accepted accounting principles as
then in effect in the United States, applied on a basis consistent (except for
changes with which the Borrower's independent public accountants have concurred)
with the most recent audited consolidated financial statements of the Borrower
and its Consolidated Subsidiaries theretofore delivered to the Lenders.
"Group of Loans" means at any time a group of Syndicated Loans of the
same Tranche consisting of (i) all Loans of such Tranche which are Base Rate
Loans at such time or (ii) all Loans of such Tranche which are Euro-Dollar Loans
having the same Interest Period at such time; PROVIDED that, if a Loan of any
particular Lender is converted to or made as a Base Rate Loan pursuant to
Section 8.02 or 8.05, such Loan shall be included in the same Group or Groups of
Loans from time to time as it would have been in if it had not been so converted
or made.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
payment obligation of any other Person, including without limiting the
generality of the foregoing, any obligation, direct or indirect, contingent or
otherwise, of such Person (i) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Debt or other payment obligation (whether
arising by virtue of partnership arrangements, by agreement to keep-well, to
purchase assets, goods, securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for the
purpose of assuring in any other manner the obligee of such Debt or other
payment obligation of the payment thereof or to protect such obligee against
loss in respect thereof (in whole or in part), PROVIDED that the term Guarantee
shall not include endorsements for collection or deposit in the ordinary course
of business. The term "Guarantee" used as a verb has a corresponding meaning.
"Hazardous Substances" means any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives, by-products
and other hydrocarbons, or any substance having any constituent elements
displaying any of the foregoing characteristics.
13
"HealthSouth" means HealthSouth Rehabilitation Corporation, a Delaware
corporation, and its successors.
"Hedging Obligation" means, with respect to any Person, any obligation
of such Person under (i) any interest rate swap agreement, interest rate cap
agreement or interest rate collar agreement, (ii) any foreign exchange contract
or currency swap agreement or (iii) any other agreement or arrangement of a type
designed to protect a Person against fluctuations in interest rates or currency
exchange rates.
"Hillhaven" means The Hillhaven Corporation, a Nevada corporation, and
its successors.
"Hospital" means a hospital, outpatient clinic, long-term care
facility, Medical Office Building or other comparable facility that is used or
useful in providing healthcare services.
"Hospital Assets" means one or more Hospitals and/or Equity Interests
in a Person that owns one or more Hospitals. The term "Hospital Assets" shall
also include, with respect to each Hospital, any Related Business that is
purchased or sold together with such Hospital and/or Equity Interests in a
Person that owns such Hospital, but not any Related Business that is purchased
or sold separately.
"Hospital Purchase" means any purchase or other acquisition of
Hospital Assets by the Borrower or an Included Subsidiary from any Person other
than the Borrower and its Affiliates.
"Hospital Sale" means any sale or other disposition of Hospital Assets
by the Borrower or any Included Subsidiary after the Closing Date to any Person
other than the Borrower or a Wholly-Owned Included Subsidiary.
"Hospital Swap" means an exchange of one or more Hospital Assets owned
by the Borrower or any Included Subsidiary for one or more Hospital Assets owned
by one or more Persons other than the Borrower and its Affiliates. If a
transaction involves both such an exchange of Hospital Assets and payment of
other consideration, such transaction shall be deemed to be a Hospital Swap only
to the extent that it involves such an exchange of Hospital Assets.
"Immaterial Subsidiary" mean (i) a Subsidiary that is not actively
engaged in business and has assets of less than $5,000,000 and liabilities of
less than $5,000,000, (ii) a Subsidiary that is actively engaged in business and
14
has assets of less than $1,000,000 and liabilities of less than $1,000,000 or
(iii) Assured Investors Life Company, until the date on which the California
Department of Insurance approves the pledge by the Borrower to the Collateral
Agent under the Security Agreement of all of the capital stock thereof.
"Included Subsidiary" means any Subsidiary that is not an Excluded
Subsidiary.
"Indemnitee" has the meaning set forth in Section 9.03(b).
"Interest Period" means, with respect to each Euro-Dollar Loan, the
period commencing on the date of borrowing specified in the applicable Notice of
Borrowing or on the date specified in the applicable Notice of Interest Rate
Election and ending one, two, three or six months thereafter, as the Borrower
may elect in the applicable notice; PROVIDED that:
(a) any Interest Period which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest Period shall end on the
next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to clauses (c) and (d) below, end on the last Euro-Dollar
Business Day of a calendar month;
(c) in the case of Revolving Credit Euro-Dollar Loans, any Interest
Period which would otherwise end after the Final Maturity Date shall end on
the Final Maturity Date; and
(d) in the case of Term Euro-Dollar Loans, if any Interest Period
includes a date on which a payment of principal of the Term Loans is
required to be made pursuant to Section 2.06(a) but does not end on such
date, then (i) the principal amount (if any) of each Term Euro-Dollar Loan
required to be repaid on such date shall have an Interest Period ending on
such date and (ii) the remainder (if any) of each such Term Euro-Dollar
Loan shall have an Interest Period
15
determined as set forth above.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"International Non-Recourse Debt" means Debt of a Designated
International Subsidiary as to which (i) neither the Borrower nor any Included
Subsidiary (a) provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute Debt), (b) is directly or
indirectly liable (as a guarantor or otherwise) or (c) is the lender; and (ii)
no default in respect thereof (including any right that the holders thereof may
have to take enforcement action against an Excluded Subsidiary) would permit
(upon notice, lapse of time or both) any holder of any other Debt of the
Borrower or any Included Subsidiary (except any such Debt outstanding as of the
close of business on the Closing Date as permitted by subsection (d) or (e) of
Section 5.10) to declare a default on such other Debt or cause it to become
payable prior to its stated maturity.
"Investment" means, with respect to any Person, any investment by such
Person in any other Person (including an Affiliate) in the form of direct or
indirect loans, Guarantees of Debt or other payment obligations, advances or
capital contributions (excluding commission, travel and similar advances to
officers and employees made in the ordinary course of business), purchases or
other acquisitions for consideration of Debt, Equity Interests or other
securities and all other items that are or would be classified as investments on
a balance sheet prepared in accordance with GAAP; PROVIDED that an acquisition
of assets, Equity Interests or other securities by the Borrower shall not be
deemed to be an Investment to the extent that the consideration given by it for
such acquisition consists of its own common stock.
"Investment Grade Rating" means a rating of senior long-term unsecured
debt securities of the Borrower as (i) BBB- or higher by S&P or (ii) Baa3 or
higher by Moody's.
"LC Fee Rate" means a rate per annum determined in accordance with the
Pricing Schedule.
"LC Indemnitees" has the meaning set forth in Section 2.14(n).
"LC Issuing Bank" means Morgan Guaranty Trust Company of New York,
each Lender listed in Exhibit I hereto as the issuer of an Existing Letter of
Credit and any other
16
Lender which the Borrower shall have designated as an "LC Issuing Bank" by
notice to the Administrative Agent with the consent of the Arranging Agents
(which consent shall not be unreasonably withheld), each in its capacity as an
LC Issuing Bank under the letter of credit facility described in Section 2.14.
"LC Office" means, with respect to any LC Issuing Bank, the office at
which it books any Letter of Credit issued by it.
"Lenders" means the Term Lenders, the Revolving Credit Lenders and the
Swingline Bank.
"Letter of Credit" means any Existing Letter of Credit or Additional
Letter of Credit.
"Letter of Credit Liabilities" means, at any time, the sum, without
duplication, of (i) the aggregate amount that is (or may thereafter become)
available for drawing under all Letters of Credit outstanding at such time plus
(ii) the aggregate unpaid amount of all Reimbursement Obligations outstanding at
such time.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement that has the practical effect of creating a security
interest, in respect of such asset. For purposes of this Agreement, the
Borrower or any Included Subsidiary shall be deemed to own subject to a Lien any
asset which it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such asset.
"Loan" means a Term Loan, a Revolving Credit Loan or a Swingline Loan
and "Loans" means all or any combination of the foregoing.
"London Interbank Offered Rate" has the meaning set forth in Section
2.10(b).
"Material Adverse Effect" means (i) a material adverse effect on the
business, operations, properties, financial condition or prospects of the
Combined Companies, considered as a whole, (ii) an adverse effect on the
validity, perfection or priority of any Lien created or purported to be created
by the Security Agreement or (iii) an adverse effect on the validity or
enforceability of any material provision of any Financing Document.
17
"Material Commitments" means one or more commitments or other
contractual agreements (except the Commitments) of one or more Persons to make
loans or advances or otherwise extend credit to the Borrower and/or one or more
Included Subsidiaries, arising in one or more related transactions, in an
aggregate amount exceeding $25,000,000.
"Material Financial Obligations" means non-contingent Financial
Obligations (other than the Notes and the Letter of Credit Liabilities) of the
Borrower and/or one or more Included Subsidiaries, arising in one or more
related transactions, in an aggregate principal or face amount exceeding
$25,000,000; PROVIDED that, for purposes of this definition and clauses (g) and
(h) of Section 6.01, (i) contingent obligations of the Borrower or any Included
Subsidiary to reimburse a bank or other Person for amounts not yet drawn under a
letter of credit or similar instrument shall be deemed to be non-contingent (and
to have been accelerated) if they are required to be prepaid or cash
collateralized as a result of a default under the relevant reimbursement
agreement and (ii) contingent obligations of the Borrower or any Included
Subsidiary under any Hedging Obligation shall be deemed to be non-contingent
(and to have been accelerated) if such Hedging Obligation is terminated by
reason of a default by the Borrower or any Included Subsidiary.
"Material Plan" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $25,000,000.
"Medical Office Building" means any facility which is used or useful
in providing healthcare services primarily because the offices of doctors are
located therein.
"Medical Office Sale-Leaseback Transaction" means any Sale-Leaseback
Transaction with respect to one or more Medical Office Buildings.
"Merger" means the merger of AM Holdings into AMH Acquisition Co. as
provided in the Merger Agreement.
"Merger Agreement" means the Merger Agreement dated as of October 10,
1994 among the Borrower, AM Holdings and AMH Acquisition Co., a wholly-owned
Subsidiary of the Borrower.
"Metrocrest Bank" means each bank that is a party to the Metrocrest
Reimbursement Agreement from time to time.
18
"Metrocrest Bonds" means the bonds issued by the Metrocrest Hospital
Authority to finance facilities leased and operated by NME Hospitals Dallas,
Inc., a Delaware corporation.
"Metrocrest Issuing Bank" means The Bank of New York, in its capacity
as Issuing Bank and Agent under the Metrocrest Reimbursement Agreement, and its
successors in such capacity.
"Metrocrest Reimbursement Agreement" means the Letter of Credit and
Reimbursement Agreement dated as of November 1, 1994 among the Borrower, the
banks party thereto, and The Bank of New York, as Issuing Bank and Agent
thereunder, as amended from time to time.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means at any time an employee pension benefit
plan within the meaning of Section 4001(a)(3) of ERISA to which any member of
the ERISA Group is then making or accruing an obligation to make contributions
or has within the preceding five plan years made contributions, including for
these purposes any Person which ceased to be a member of the ERISA Group during
such five year period.
"Net Cash Proceeds" means, with respect to (i) any Hospital Sale, (ii)
any Disposition of a Designated Investment, (iii) any Asset Sale, (iv) any
Medical Office Sale-Leaseback Transaction or (v) any sale of Equity Interests
(each of the foregoing being a "Sale"), the cash proceeds received by the
Borrower or any Included Subsidiary in respect of such Sale (including, without
limitation, cash received pursuant to, or upon any sale or other disposition of,
any instrument evidencing an obligation of the purchaser to make payments to the
Borrower or such Subsidiary), minus
(w) any expenses reasonably incurred by the Borrower or such
Subsidiary in respect of such Sale,
(x) any taxes paid or payable by the Borrower or such Subsidiary in
respect of such Sale,
(y) the principal amount of any Debt which is secured by a Lien on any
of the assets sold in such Sale and repaid upon consummation of such Sale
and
(z) in the case of any Disposition of any Investment in Hillhaven, the
portion (if any) of such cash proceeds that the Borrower is obligated to
pay to
19
Horizon Healthcare under arrangements publicly disclosed prior to the date
hereof;
PROVIDED that the amounts referred to in (w) and (x) shall be determined on the
basis of a certificate prepared in good faith by a Senior Officer of the
Borrower.
"NME Cayman" means N.M.E. International (Cayman) Limited, a Cayman
Islands company, and its successors.
"NME Hospitals" means NME Hospitals, Inc., a Delaware corporation, and
its successors.
"NME Non-Recourse Debt" means Debt of the Borrower or any Included
Subsidiary incurred to finance Capital Expenditures permitted by Section 5.11;
PROVIDED that the lender or other obligee of such Debt has no recourse (except
for breach of representations, warranties and/or covenants customary in asset-
based financing) to assets of the Borrower or any Subsidiary other than the
assets financed by such Capital Expenditures and cash flows attributable
thereto.
"NME Properties Corp." means NME Properties Corp., a Tennessee
corporation, and its successors.
"NME Properties, Inc." means NME Properties, Inc., a Delaware
corporation, and its successors.
"NME Tender Offers" means tender offers by NME to purchase for cash
any and all of an aggregate of approximately $169,500,000 principal amount of
NME's outstanding Medium Term Notes, with maturities ranging from 1996 to 1998,
as described under the heading "The Merger and Financing -- Related
Transactions" in the Prospectus.
"NME's Existing Credit Agreement" means the $464,700,000 Credit
Agreement dated as of April 13, 1994 among the Borrower, as Borrower and Account
Party, Bank of America National Trust and Savings Association, The Bank of New
York, Bankers Trust Company and Morgan Guaranty Trust Company of New York as
Banks, and Morgan Guaranty Trust Company of New York, as the Issuing Bank and
Administrative Agent, as in effect immediately before the Closing Date.
"NME's Existing Security Agreement" means the Security Agreement dated
as of April 13, 1994 between NME and Morgan Guaranty Trust Company of New York,
as Agent, under which the outstanding common stock of NME Hospitals is pledged
to secure NME's obligations under NME's Existing Credit Agreement and the
Metrocrest Reimbursement Agreement.
20
"NME Psychiatric" means NME Psychiatric Properties, Inc., a Delaware
corporation, and its successors.
"Notes" means promissory notes of the Borrower, substantially in the
form of Exhibit A-1, A-2 or A-3 hereto, issued hereunder to evidence the
obligation of the Borrower to repay the Term Loans, the Revolving Credit Loans
and the Swingline Loans, respectively, and "Note" means any one of such
promissory notes.
"Notice of Borrowing" means a Notice of Syndicated Borrowing (as
defined in Section 2.03) or a Notice of Swingline Borrowing (as defined in
Section 2.18(b)).
"Notice of Interest Rate Election" has the meaning set forth in
Section 2.11.
"Outstanding Revolving Credit Amounts" means, with respect to any
Revolving Credit Lender at any time, (i) the outstanding principal amount of
each of its Revolving Credit Loans, (ii) its Revolving Credit Percentage of each
of the outstanding Letter of Credit Liabilities and (iii) each outstanding
participation in Swingline Loans (if any) held by it pursuant to Section
2.18(g), all determined at such time after giving effect to any prior
assignments by or to such Revolving Credit Lender pursuant to Section 9.06(c).
"Overdraft Facility Agreement" means the Financing Facility Agreement
dated as of December 16, 1992 between the Borrower and Bank of America N.T. &
S.A., as amended by the First Amendment thereto dated as of September 27, 1993
and further amended from time to time after the date hereof.
"Parent" means, with respect to any Lender, any Person controlling
such Lender.
"Participant" has the meaning set forth in Section 9.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Performance Investment Plan" means the 1989 Performance Investment
Plan adopted by the Borrower's board of directors on March 10, 1989.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or
21
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Plan" means at any time an employee pension benefit plan (other than
a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"Pricing Level" has the meaning set forth in the Pricing Schedule.
"Pricing Schedule" means the Pricing Schedule attached hereto.
"Prime Rate" means the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York in New York City from time to time as its
Prime Rate.
"Prospectus" means the preliminary prospectus included in Amendment
No.1 to the registration statement on Form S-3 relating to the offering and sale
of the Senior Notes and the Subordinated Notes, as filed by the Borrower with
the SEC on January 30, 1995.
"Rate Period" has the meaning set forth in the Pricing Schedule.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Reimbursement Obligations" means, at any time, all obligations of the
Borrower to reimburse the LC Issuing Banks pursuant to Section 2.14 for amounts
paid by the LC Issuing Banks in respect of drawings under Letters of Credit,
including any portion of any such obligation to which a Lender has become
subrogated pursuant to clause (i) of Section 2.14(k).
"Related Business" means, in relation to any Hospital, a healthcare
business affiliated or associated with such Hospital or any business related or
ancillary to any healthcare business operated at such Hospital.
22
"Required Lenders" means at any time the Required Term Lenders and the
Required Revolving Credit Lenders.
"Required Revolving Credit Lenders" means, at any time, Revolving
Credit Lenders having more than 50% of the Revolving Credit Exposures at such
time.
"Required Term Lenders" means, at any time, Term Lenders holding Notes
evidencing more than 50% of the aggregate outstanding principal amount of the
Term Loans at such time or, if no Term Loans are then outstanding, having more
than 50% in aggregate amount of the Term Commitments at such time.
"Revolving Credit Availability Period" means the period from and
including the Closing Date to but excluding the Final Maturity Date.
"Revolving Credit Commitment" means (i) with respect to any Lender
listed on the Commitment Schedule, the amount set forth opposite its name on the
Commitment Schedule as its Revolving Credit Commitment or (ii) with respect to
any Assignee, the amount of the transferor Lender's Revolving Credit Commitment
assigned to such Assignee pursuant to Section 9.06(c), in each case as such
amount may be reduced from time to time pursuant to Section 2.13 or changed as a
result of an assignment pursuant to Section 9.06(c).
"Revolving Credit Exposure" means, with respect to any Revolving
Credit Lender at any time, (i) its Revolving Credit Commitment at such time or
(ii) if its Revolving Credit Commitment shall have terminated, the sum of its
Outstanding Revolving Credit Amounts at such time.
"Revolving Credit Lender" means each lender having a Revolving Credit
Commitment set forth opposite its name on the Commitment Schedule, each Assignee
which becomes a Revolving Credit Lender pursuant to Section 9.06(c), and their
respective successors.
"Revolving Credit Loan" means a loan made by a Revolving Credit Lender
pursuant to Section 2.02 or Section 2.18(g); PROVIDED that, if any such loan or
loans (or portions thereof) are combined or subdivided pursuant to a Notice of
Interest Rate Election, the term "Revolving Credit Loan" shall refer to the
combined principal amount resulting from such combination or to each of the
separate principal amounts resulting from such subdivision, as the case may be.
"Revolving Credit Percentage" means, with respect to any Revolving
Credit Lender at any time, the percentage
23
equivalent to a fraction the numerator of which is the amount of such Lender's
Revolving Credit Commitment at such time and the denominator of which is the
aggregate amount of all the Revolving Credit Commitments at such time.
"S&P" means Standard & Poors' Ratings Group.
"Sale-Leaseback Transaction" means any arrangement with any Person
pursuant to which the Borrower or any Included Subsidiary leases, for a term
exceeding one year, any property that has been or is to be sold or otherwise
transferred by the Borrower or any Included Subsidiary directly or indirectly to
such Person.
"SEC" means the United States Securities and Exchange Commission.
"Secured Obligations" has the meaning set forth in Section 1 of the
Security Agreement.
"Security Agreement" means a Security Agreement among the Borrower,
NME Cayman and the Collateral Agent, substantially in the form of Exhibit B
hereto, as such agreement may be amended from time to time in accordance with
the terms thereof.
"Senior Notes" means senior unsecured notes of the Borrower having the
terms and conditions described in the Prospectus, with such changes (if any) as
shall be satisfactory to the Arranging Agents.
"Senior Officer of the Borrower" means an Executive Vice President, a
Senior Vice President or the Treasurer of the Borrower.
"South Miami Hospitals" means South Miami Hospitals, Inc., a Florida
corporation, and its successors.
"Subordinated Notes" means subordinated notes of the Borrower having
the terms and conditions described in the Prospectus, with such changes (if any)
as shall be satisfactory to the Arranging Agents.
"Subsidiary" means, as to any Person, any corporation or other entity
of which Equity Interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned by such Person. Unless otherwise specified,
"Subsidiary" means a Subsidiary of the Borrower.
24
"Super-Majority Term Lenders" means, at any time, Term Lenders holding
Notes evidencing more than 75% of the aggregate outstanding principal amount of
the Term Loans at such time or, if no Term Loans are then outstanding, having
more than 75% in aggregate amount of the Term Commitments at such time.
"Swingline Bank" means Morgan Guaranty Trust Company of New York, in
its capacity as the Swingline Bank under the swingline facility described in
Section 2.18, and its successors in such capacity.
"Swingline Commitment" means the obligation of the Swingline Bank to
make Swingline Loans to the Borrower in aggregate principal amount at any one
time outstanding not to exceed $10,000,000.
"Swingline Loan" means a loan made by the Swingline Bank pursuant to
Section 2.18(a).
"Swingline Loan Availability Period" means the period from and
including the Closing Date to but excluding the Swingline Maturity Date.
"Swingline Maturity Date" means the day that is 30 days before the
Final Maturity Date.
"Syndicated Borrowing" means a Term Borrowing pursuant to Section 2.01
or a Revolving Credit Borrowing pursuant to Section 2.02 or Section 2.18(g).
"Syndicated Loan" means any Term Loan or Revolving Credit Loan.
"Temporary Cash Investment" means any Investment in (i) direct
obligations of the United States or any agency thereof, or obligations
guaranteed by the United States or any agency thereof, (ii) commercial paper
rated at least A-1 by S&P and P-1 by Moody's, (iii) time deposits with,
including certificates of deposit issued by, any office located in the United
States of any Lender, or of any other bank or trust company which is organized
under the laws of the United States or any state thereof and has capital,
surplus and undivided profits aggregating at least $1,000,000,000 or (iv)
repurchase agreements with respect to securities described in clause (i) above
entered into with an office located in the United States of any Lender or any
bank or trust company meeting the criteria specified in clause (iii) above;
PROVIDED in each case that such Investment matures within one year from the date
of acquisition thereof by the Borrower or an Included Subsidiary.
25
"Term Commitment" means (i) with respect to any Lender listed on the
Commitment Schedule, the amount set forth opposite its name on the Commitment
Schedule as its Term Commitment or (ii) with respect to any Assignee, the amount
of the transferor Lender's Term Commitment assigned to such Assignee pursuant to
Section 9.06(c), in each case as such amount may be reduced from time to time
pursuant to Section 2.13 or changed as a result of an assignment pursuant to
Section 9.06(c).
"Term Exposure" means, with respect to any Term Lender at any time,
the sum of (i) the aggregate principal amount of its Term Loans outstanding at
such time and (ii) the unused amount of its Term Commitment (if then in effect)
at such time, all determined after giving effect to any assignments by or to
such Term Lender pursuant to Section 9.06(c).
"Term Lender" means each lender having a Term Commitment set forth
opposite it name on the Commitment Schedule, each Assignee which becomes a Term
Lender pursuant to Section 9.06(c), and their respective successors.
"Term Loan" means a loan made by a Lender pursuant to Section 2.01;
PROVIDED that, if any such loan or loans (or portions thereof) are combined or
subdivided pursuant to a Notice of Interest Rate Election, the term "Term Loan"
shall refer to the combined principal amount resulting from such combination or
to each of the separate principal amounts resulting from such subdivision, as
the case may be.
"Term Loan Amortization Dates" means the dates listed in Section
2.06(a) on which scheduled repayments of the Term Loans are to be made.
"Term Loan Amortization Payments" means, at any time, the scheduled
repayments of the Term Loans to be made on the Term Loan Amortization Dates
pursuant to Section 2.06(a), as the amounts of such scheduled repayments shall
have theretofore been reduced pursuant to Section 2.06.
"Term Loan Availability Period" means the period from and including
the Closing Date to and including May 31, 1995.
"Total Credit Exposure" means with respect to any Lender at any time,
an amount equal to the sum of (i) its Term Exposure at such time and (ii) its
Revolving Credit Exposure at such time.
26
"Total Debt" means at any date, without duplication, all Debt of the
Borrower and its Included Subsidiaries, other than Guarantees by the Borrower or
any Included Subsidiary in effect on November 30, 1994 of Debt of Hillhaven or
HealthSouth that was outstanding on November 30, 1994.
"Tranche" (i) when used with respect to a Loan, refers to the
determination whether such Loan is a Term Loan, a Revolving Credit Loan or a
Swingline Loan and (ii) when used with respect to a Commitment, refers to the
determination whether such Commitment is a Term Commitment, a Revolving Credit
Commitment or the Swingline Commitment.
"Type" refers to the determination whether a Loan is a Base Rate Loan
or a Euro-Dollar Loan.
"Unexpended Proceeds of Hospital Sales and Casualty Events" means at
any time the aggregate amount of all Net Cash Proceeds of Hospital Sales and
Excess Casualty Proceeds theretofore received by the Borrower and its Included
Subsidiaries which have not yet been either reinvested in Hospital Purchases or
applied to prepay Term Loans pursuant to subsection (b) or (g) of Section 2.06.
"Unfunded Liabilities" means, with respect to any Plan at any time,
the amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
"United States" means the United States of America, including the
States and the District of Columbia, but excluding its territories and
possessions.
"Westminster" means Westminster Health Care Holdings PLC, a United
Kingdom public limited company, and its successors.
"Wholly-Owned Included Subsidiary" means any Included Subsidiary all
of the shares of capital stock or other ownership interests of which (except
directors' qualifying shares) are at the time directly or indirectly owned by
the Borrower.
27
SECTION 1.02. ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with GAAP as
in effect from time to time; PROVIDED that, if the Borrower notifies the
Administrative Agent that the Borrower wishes to amend any covenant in Article V
to eliminate the effect of any change in GAAP on the operation of such covenant
(or if the Administrative Agent notifies the Borrower that the Required Lenders
wish to amend Article V for such purpose), then the Borrower's compliance with
such covenant shall be determined on the basis of GAAP as in effect immediately
before the relevant change in GAAP became effective, until either such notice is
withdrawn or such covenant is amended in a manner satisfactory to the Borrower
and the Required Lenders.
SECTION 1.03. TRANCHES AND TYPES OF BORROWINGS. The term "Borrowing"
denotes the aggregation of Loans of the same Tranche and Type to be made to the
Borrower pursuant to Article II on the same date and, in the case of Euro-Dollar
Loans, having the same Interest Period. Borrowings are classified for purposes
of this Agreement by reference to either or both of the Tranche and Type of the
Loans comprising such Borrowing (E.G., a "Term Borrowing" is a Borrowing
comprised of Term Loans, a "Euro-Dollar Borrowing" is a Borrowing comprised of
Euro-Dollar Loans and a "Term Euro-Dollar Borrowing" is a Borrowing comprised of
Term Loans that are Euro-Dollar Loans).
ARTICLE II
THE CREDITS
SECTION 2.01. TERM COMMITMENTS. Each Term Lender severally agrees,
on the terms and conditions set forth in this Agreement, to make term loans to
the Borrower pursuant to this Section from time to time during the Term Loan
Availability Period; PROVIDED that the aggregate principal amount of all such
term loans made by such Term Lender shall not exceed its Term Commitment. Each
Borrowing under this Section shall be made from the several Term Lenders ratably
in proportion to their respective Term Commitments. Each such Borrowing shall
be in an aggregate principal amount of $50,000,000 or any larger multiple of
$10,000,000; PROVIDED that any such Borrowing may be in the aggregate amount of
the unused Term Commitments. The Term Commitments are not revolving in nature,
and amounts of the Term Loans repaid or prepaid may not be reborrowed.
28
SECTION 2.02. REVOLVING CREDIT COMMITMENTS. Each Revolving Credit
Lender severally agrees, on the terms and conditions set forth in this
Agreement, to make loans to the Borrower pursuant to this Section from time to
time during the Revolving Credit Availability Period; PROVIDED that such
Lender's Outstanding Revolving Credit Amounts shall not, in the aggregate, at
any time exceed its Revolving Credit Commitment. Each such Borrowing shall be
made from the several Revolving Credit Lenders ratably in proportion to their
respective Revolving Credit Commitments. Each such Borrowing shall be in an
aggregate amount of $10,000,000 or any larger multiple of $1,000,000; PROVIDED
that (i) any such Borrowing may be in the aggregate amount of the unused
Revolving Credit Commitments and (ii) if such Borrowing is made on the Swingline
Maturity Date, such Borrowing may be in the aggregate amount of the Swingline
Loans outstanding on such date. Within the foregoing limits, the Borrower may
borrow under this Section, repay, or to the extent permitted by Section 2.09,
prepay Revolving Credit Loans and reborrow at any time during the Revolving
Credit Availability Period under this Section.
SECTION 2.03. NOTICE OF SYNDICATED BORROWING. The Borrower shall
give the Administrative Agent notice (a "Notice of Syndicated Borrowing") not
later than (x) 11:00 A.M. (New York City time) on the date of each Base Rate
Borrowing pursuant to Section 2.01 or 2.02 and (y) 1:00 P.M. (New York City
time) on the third Euro-Dollar Business Day before each Euro-Dollar Borrowing
pursuant to Section 2.01 or 2.02, specifying:
(i) the date of such Borrowing, which shall be a Domestic Business
Day in the case of a Base Rate Borrowing or a Euro-Dollar Business Day in
the case of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) the Tranche and Type of Loans comprising such Borrowing, and
(iv) in the case of a Euro-Dollar Borrowing, the duration of the
initial Interest Period applicable thereto.
Each Interest Period specified in a Notice of Syndicated Borrowing shall comply
with the provisions of the definition of Interest Period.
SECTION 2.04. NOTICE TO LENDERS; FUNDING OF SYNDICATED LOANS. (a)
Upon receipt of a Notice of
29
Syndicated Borrowing pursuant to Section 2.03, the Administrative Agent shall
promptly notify each Term Lender or Revolving Credit Lender (as appropriate) of
the contents thereof and of such Lender's share of such Borrowing. Such Notice
of Syndicated Borrowing shall not thereafter be revocable by the Borrower.
(b) Not later than 1:00 P.M. (New York City time) on the date of each
Borrowing pursuant to Section 2.01 or 2.02, each Term Lender or Revolving Credit
Lender, as the case may be, shall make available its share of such Borrowing, in
Federal or other funds immediately available in New York City, to the
Administrative Agent at its address referred to in Section 9.01. Unless the
Administrative Agent determines that any applicable condition specified in
Article III has not been satisfied, the Administrative Agent shall (i) apply the
funds so received from the Lenders to repay all Swingline Loans (if any) then
outstanding, together with interest accrued thereon, and (ii) make the remainder
of such funds available to the Borrower at the Administrative Agent's aforesaid
address.
(c) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Syndicated Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available to the Administrative Agent on the date of such Borrowing in
accordance with subsection (b) of this Section and the Administrative Agent may,
in reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Lender shall not have so
made its share of such Borrowing available to the Administrative Agent, such
Lender and the Borrower severally agree to repay to the Administrative Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to the Borrower until
the date such amount is repaid to the Administrative Agent, at (i) in the case
of the Borrower, a rate per annum equal to the higher of the Federal Funds Rate
and the interest rate applicable to such Borrowing pursuant to Section 2.10 and
(ii) in the case of such Lender, the Federal Funds Rate. If such Lender shall
repay to the Administrative Agent such corresponding amount, such amount so
repaid shall constitute such Lender's Loan included in such Borrowing for
purposes of this Agreement. If the Borrower shall repay such corresponding
amount, such repayment shall not affect any rights the Borrower may have against
any defaulting Lender.
30
SECTION 2.05. NOTES. (a) The Borrower's obligation to repay each
Tranche of Loans of each Lender shall be evidenced by a single Note payable to
the order of such Lender for the account of its Applicable Lending Office in an
amount equal to the aggregate unpaid principal amount of such Lender's Loans of
such Tranche.
(b) Each Lender may, by notice to the Borrower and the Administrative
Agent, request that each Type of Loans of such Lender of a particular Tranche be
evidenced by a separate Note in an amount equal to the aggregate unpaid
principal amount of such Loans. Each such Note shall be in substantially the
form of Exhibit A-1 or A-2 hereto, as the case may be, with appropriate
modifications to reflect the fact that it evidences solely a Type of Loans of
the relevant Tranche. Each reference in this Agreement to a "Note" or the
"Notes" of such Lender shall be deemed to refer to and include any or all of
such Notes, as the context may require.
(c) Upon receipt of each Lender's Notes pursuant to Section 3.01(i),
the Administrative Agent shall forward such Notes to such Lender. Each Lender
shall record the date, amount, Tranche and Type of each Loan made by it and the
date and amount of each payment of principal made with respect thereto, and may,
if such Lender so elects in connection with any transfer or enforcement of any
of its Notes, endorse on the schedule forming a part thereof appropriate
notations to evidence the foregoing information with respect to each such Loan
evidenced thereby then outstanding; PROVIDED that the failure of any Lender to
make any such recordation or endorsement shall not affect the obligations of the
Borrower under any of the Financing Documents. Each Lender is hereby
irrevocably authorized by the Borrower so to endorse its Notes and to attach to
and make a part of any Note a continuation of any such schedule as and when
required.
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SECTION 2.06. SCHEDULED AMORTIZATION AND MANDATORY PREPAYMENTS OF
TERM LOANS. (a) SCHEDULED AMORTIZATION. On each date set forth below, the
Borrower shall repay, and there shall become due and payable, the aggregate
principal amount of Term Loans set forth below opposite such date:
Term Loan Term Loan
Amortization Dates Amortization Payments
------------------ ---------------------
August 31, 1995 $45,000,000
November 30, 1995
45,000,000
February 29, 1996 45,000,000
May 31, 1996 45,000,000
August 31, 1996 45,000,000
November 30, 1996 45,000,000
February 28, 1997 45,000,000
May 31, 1997 45,000,000
August 31, 1997 56,250,000
November 30, 1997 56,250,000
February 28, 1998 56,250,000
May 31, 1998 56,250,000
August 31, 1998 78,750,000
November 30, 1998 78,750,000
February 28, 1999 78,750,000
May 31, 1999 78,750,000
August 31, 1999 90,000,000
November 30, 1999 90,000,000
February 29, 2000 90,000,000
May 31, 2000 90,000,000
August 31, 2000 101,250,000
November 30, 2000 101,250,000
February 28, 2001 101,250,000
May 31, 2001 101,250,000
August 31, 2001 135,000,000
PROVIDED that in any event all the outstanding Term Loans shall be repaid in
full not later than the Final Maturity Date. Any mandatory prepayment of Term
Loans pursuant to any other subsection of this Section shall reduce the amounts
of subsequent Term Loan Amortization Payments as
32
provided in said subsection, and any optional prepayment of Term Loans pursuant
to Section 2.08 shall reduce the amounts of subsequent Term Loan Amortization
Payments as provided in Section 2.08.
(b) HOSPITAL SALES. If the Borrower or any Included Subsidiary
receives any Net Cash Proceeds of a Hospital Sale and fails to apply such Net
Cash Proceeds, within 360 days after its receipt thereof, to pay for one or more
Hospital Purchases, the Borrower shall, on the first Euro-Dollar Business Day
after the end of such 360-day period, prepay an aggregate principal amount of
the Term Loans equal to the portion of such Net Cash Proceeds that was not
applied to Hospital Purchases within such 360-day period. Net Cash Proceeds
shall be deemed to have been applied to pay for a Hospital Purchase if, within
such 360 day period, the Borrower or such Subsidiary (i) pays in cash the
purchase price with respect to such Hospital Purchase, (ii) pays the principal
of a promissory note or similar obligation constituting part of the
consideration for such Hospital Purchase, (iii) pays any Debt that was
outstanding prior to such Hospital Purchase and secured by a Lien on any or all
of the assets being acquired or (iv) repays the principal of any Revolving
Credit Loans borrowed to finance such Hospital Purchase. If at any time during
the relevant 360-day period the Borrower determines that all or any part of any
Net Cash Proceeds of a Hospital Sale will not be applied to pay for Hospital
Purchases within such 360-day period, the Borrower shall, within five Euro-
Dollar Business Days after making such determination, prepay an aggregate
principal amount of Term Loans equal to the amount of such Net Cash Proceeds as
to which such determination has been made (whereupon the amount to be prepaid
pursuant to this subsection on the first Euro-Dollar Business Day after the end
of such 360-day period will be correspondingly reduced). Any prepayment of Term
Loans pursuant to this subsection shall reduce ratably the amounts of all
subsequent Term Loan Amortization Payments.
(c) DISPOSITIONS OF AND DISTRIBUTIONS ON DESIGNATED INVESTMENTS. If
(i) the Borrower or any Subsidiary receives any Net Cash Proceeds from any
Disposition (to a Person other than the Borrower or a Wholly-Owned Included
Subsidiary) of any Designated Investment or (ii) the Borrower receives any
extraordinary dividend or distribution on any Equity Interest in any Designated
International Subsidiary (other than a dividend or distribution of Net Cash
Proceeds referred to in clause (i)), the Borrower shall, substantially
concurrently with the receipt of such Net Cash Proceeds, dividend or
distribution, prepay an aggregate principal amount of Term
33
Loans equal to the sum of (x) 75% of such Net Cash Proceeds, dividend or
distribution plus (y) any portion of the remaining 25% of such Net Cash
Proceeds, dividend or distribution that is not required to be applied to prepay
Revolving Credit Loans pursuant to Section 2.07(b). Any prepayment of Term
Loans pursuant to this subsection shall (i) reduce the five Term Loan
Amortization Payments due from August 31, 2000 to August 31, 2001, inclusive, in
inverse order of maturity, until such five Term Loan Amortization Payments have
been paid in full, and (ii) thereafter reduce ratably the amounts of all other
Term Loan Amortization Payments to become due after the relevant Net Cash
Proceeds are received.
(d) SALES OF OTHER ASSETS. If the Borrower or any Subsidiary
receives any Net Cash Proceeds of any Asset Sale, the Borrower shall, within
five Euro-Dollar Business Days after such Net Cash Proceeds are received, prepay
an aggregate principal amount of Term Loans equal to such Net Cash Proceeds.
Any prepayment of Term Loans pursuant to this subsection shall reduce ratably
the amounts of all subsequent Term Loan Amortization Payments.
(e) ISSUANCE OR SALE OF EQUITY. If the Borrower or any Included
Subsidiary receives (i) any Net Cash Proceeds from the issuance or sale of
Equity Interests in the Borrower or such Subsidiary or (ii) any repayment of
inter-company loans upon the exercise of options outstanding under the
Borrower's Performance Investment Plan, the Borrower shall, within five Euro-
Dollar Business Days after such Net Cash Proceeds or repayment are received,
prepay an aggregate principal amount of Term Loans equal to such Net Cash
Proceeds or repayment; PROVIDED that this subsection shall not apply to (i) any
issuance or sale of Equity Interests to the Borrower or a Wholly-Owned Included
Subsidiary or (ii) any Net Cash Proceeds of any issuance or sale of common stock
of the Borrower to be issued as part of the consideration for the Acquisition.
Any prepayment of Term Loans pursuant to this subsection shall reduce ratably
the amounts of all subsequent Term Loan Amortization Payments.
(f) CASUALTY EVENTS. If a Casualty Event occurs on or after the
Closing Date, and if at any time after it occurs the Borrower or any Included
Subsidiary receives Casualty Proceeds in respect thereof which exceed the
expected cost of any restoration, repair or replacement of the property affected
thereby by $250,000 or more (whether as a result of a determination not to
restore, repair or replace or otherwise), the Borrower shall promptly notify the
Administrative Agent of the receipt of such excess
34
Casualty Proceeds ("Excess Casualty Proceeds") and the amount thereof. Within
360 days after the receipt thereof, the Borrower shall cause such Excess
Casualty Proceeds to be applied either (i) to pay for one or more Hospital
Purchases or (ii) to prepay Term Loans, in all respects as if such Excess
Casualty Proceeds were Net Cash Proceeds of a Hospital Sale subject to the
provisions of subsection (b) of this Section. Any prepayment of Term Loans
pursuant to this subsection shall reduce ratably the amounts of all subsequent
Term Loan Amortization Payments.
(g) SALE/LEASEBACKS. If the Borrower or any Included Subsidiary
receives any Net Cash Proceeds of any Medical Office Sale-Leaseback Transaction,
the Borrower shall, within five Euro-Dollar Business Days after such Net Cash
Proceeds are received, prepay an aggregate principal amount of Term Loans equal
to such Net Cash Proceeds. Any prepayment of Term Loans pursuant to this
subsection shall reduce ratably the amounts of all subsequent Term Loan
Amortization Payments.
(h) MINIMUM AMOUNT TO BE PREPAID. If the aggregate principal amount
of Term Loans to be prepaid pursuant to subsection (b), (c), (d), (e), (f) or
(g) of this Section on any day is less than $10,000,000, such prepayment shall
be deferred until the first day on which both (i) the cumulative aggregate
unpaid principal amount to be prepaid pursuant to all said subsections is at
least $10,000,000 and (ii) an Interest Period applicable to any Group of Term
Loans ends.
SECTION 2.07. MATURITY AND MANDATORY PREPAYMENTS OF REVOLVING CREDIT
LOANS. (a) MATURITY. Each Revolving Credit Loan shall mature, and the
principal amount thereof shall be due and payable, on the Final Maturity Date.
(b) MANDATORY PREPAYMENTS. If (i) the Borrower or any Subsidiary
receives any Net Cash Proceeds from any Disposition (to a Person other than the
Borrower or a Wholly-Owned Included Subsidiary) of any Designated Investment or
(ii) the Borrower receives any extraordinary dividend or distribution on any
Equity Interest in any Designated International Subsidiary (other than a
dividend or distribution of Net Cash Proceeds referred to clause (i)), the
Borrower shall, substantially concurrently with the receipt of such Net Cash
Proceeds, dividend or distribution, prepay an aggregate principal amount of the
Revolving Credit Loans equal to the lesser of (x) 25% of such Net Cash Proceeds,
dividend or distribution or (y) the aggregate principal amount of the Revolving
Credit Loans then outstanding; PROVIDED that the aggregate principal
35
amount of Revolving Credit Loans repaid by the Borrower pursuant to this
subsection shall not exceed $200,000,000 on a cumulative basis. No prepayment
of Revolving Credit Loans pursuant to this Section 2.07(b) shall reduce the
Revolving Credit Commitments.
SECTION 2.08. OPTIONAL PREPAYMENTS OF SYNDICATED LOANS. The Borrower
may at its option, by Notice of Syndicated Prepayment given in accordance with
Section 2.09, prepay any Group of Loans (subject, in the case of a Group of
Euro-Dollar Loans, to Section 2.16), in each case in whole at any time, or from
time to time in part in amounts aggregating at least $10,000,000, by paying the
principal amount to be prepaid together with interest accrued thereon to the
date of prepayment. Each such optional prepayment shall be applied to prepay
ratably the Loans of the several Lenders included in such Group of Loans. Any
prepayment of the Term Loans pursuant to this subsection shall be applied first,
to reduce the amount of the next succeeding Term Loan Amortization Payment until
it is paid in full, and thereafter, to reduce ratably the amounts of all
subsequent Term Loan Amortization Payments.
SECTION 2.09. NOTICE OF SYNDICATED PREPAYMENT. (a) The Borrower
shall give the Administrative Agent notice (a "Notice of Syndicated Prepayment")
not later than (x) 11:00 A.M. (New York City time) on the date of each
prepayment of Syndicated Base Rate Loans and (y) 1:00 P.M. (New York City time)
on the third Euro-Dollar Business Day before each prepayment of Euro-Dollar
Loans, specifying:
(i) the date of such prepayment, which shall be a Domestic Business
Day in the case of a prepayment of Base Rate Loans or a Euro-Dollar
Business Day in the case of a prepayment of Euro-Dollar Loans,
(ii) the aggregate amount of such prepayment, and
(iii) the Group or Groups of Loans to which such prepayment is to be
applied.
If the Borrower fails to specify the Group or Groups of Loans to which any such
prepayment is to be applied, such Group or Groups of Loans shall be selected by
the Administrative Agent. Each repayment or prepayment of Syndicated Loans
shall be applied ratably to the Loans included in the Group or Groups of Loans
selected by the Borrower or the Administrative Agent, as the case may be.
(b) Upon receipt of a Notice of Syndicated Prepayment, the
Administrative Agent shall promptly notify
36
each relevant Lender of the contents thereof and of such Lender's ratable share
of such prepayment and such Notice of Syndicated Prepayment shall not thereafter
be revocable by the Borrower; PROVIDED that, in the case of a prepayment
required by Section 2.06(c) or 2.07(b), the Notice of Syndicated Prepayment may
be conditioned on the closing of the sale of the relevant Investment.
SECTION 2.10. INTEREST RATES. (a) Each Base Rate Loan shall bear
interest on the outstanding principal amount thereof, for each day from and
including the date such Loan is made to but excluding the date it becomes due,
at a rate per annum equal to the sum of the Base Rate for such day plus the Base
Rate Margin (if any) for such day. Such interest shall be payable in arrears on
the last Domestic Business Day of each calendar month and, with respect to the
principal amount of any Base Rate Loan converted to a Euro-Dollar Loan, on the
date such amount is so converted. Any overdue principal of or interest on any
Base Rate Loan shall bear interest, payable on demand, for each day until paid
at a rate per annum equal to the sum of 2% plus the rate otherwise applicable to
Base Rate Loans for such day.
(b) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for each day during each Interest Period applicable
thereto, at a rate per annum equal to the sum of the Euro-Dollar Margin for such
day plus the Adjusted London Interbank Offered Rate applicable to such Interest
Period. Such interest shall be payable for each Interest Period on the last day
thereof and, if such Interest Period is longer than three months, three months
after the first day thereof.
The "Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient obtained (rounded
upward, if necessary, to the next higher 1/100 of 1%) by dividing (i) the
applicable London Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar
Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Interest Period
means the average (rounded upward, if necessary, to the next higher 1/16 of 1%)
of the respective rates per annum at which deposits in dollars are offered to
each of the Euro-Dollar Reference Banks in the London interbank market at
approximately 11:00 A.M. (London time) two Euro-Dollar Business Days before the
first day of such Interest Period in an amount approximately equal to the
principal amount of the Euro-Dollar Loan of such Euro-Dollar
37
Reference Bank to which such Interest Period is to apply and for a period of
time comparable to such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any Lender to
United States residents).
(c) Any overdue principal of or interest on any Euro-Dollar Loan
shall bear interest, payable on demand, for each day until paid, at a rate per
annum equal to the higher of (i) the sum of 2% plus the Euro-Dollar Margin for
such day plus the quotient obtained (rounded upward, if necessary, to the next
higher 1/100 of 1%) by dividing (x) the average (rounded upward, if necessary,
to the next higher 1/16 of 1%) of the respective rates per annum at which one
day (or, if such amount due remains unpaid more than three Euro-Dollar Business
Days, then for such other period of time not longer than six months as the
Administrative Agent may select) deposits in dollars in an amount approximately
equal to such overdue payment due to each of the Euro-Dollar Reference Banks are
offered to such Euro-Dollar Reference Bank in the London interbank market for
the applicable period determined as provided above by (y) 1.00 minus the
Euro-Dollar Reserve Percentage (or, if the circumstances described in clause (a)
or (b) of Section 8.01 shall exist, at a rate per annum equal to the sum of 2%
plus the rate applicable to Base Rate Loans for such day) and (ii) the sum of 2%
plus the Euro-Dollar Margin for such day plus the Adjusted London Interbank
Offered Rate applicable to such Loan at the date such payment was due.
(d) Each Euro-Dollar Reference Bank agrees to use its best efforts to
furnish quotations to the Administrative Agent as contemplated hereby. If any
Euro-Dollar Reference Bank does not furnish a timely quotation, the
Administrative Agent shall determine the relevant interest rate on the basis of
the quotation or quotations furnished by the remaining Euro-Dollar Reference
Bank or Banks or, if none of such quotations is available on a timely basis, the
provisions of Section 8.01 shall apply.
38
SECTION 2.11. METHOD OF ELECTING INTEREST RATES. (a) The Loans
included in each Syndicated Borrowing shall bear interest initially at the type
of rate specified by the Borrower in the applicable Notice of Syndicated
Borrowing. Thereafter, the Borrower may from time to time elect to change or
continue the type of interest rate borne by each Group of Loans (subject in each
case to the provisions of Article VIII), as follows:
(i) if such Loans are Base Rate Loans, the Borrower may elect to
convert such Loans to Euro-Dollar Loans as of any Euro-Dollar Business Day;
and
(ii) if such Loans are Euro-Dollar Loans, the Borrower may elect to
convert such Loans to Base Rate Loans or elect to continue such Loans as
Euro-Dollar Loans for an additional Interest Period, in each case effective
on the last day of the then current Interest Period applicable to such
Loans.
Each such election shall be made by delivering a notice (a "Notice of Interest
Rate Election") to the Administrative Agent at least three Euro-Dollar Business
Days before the conversion or continuation selected in such notice is to be
effective. A Notice of Interest Rate Election may, if it so specifies, apply to
only a portion of the aggregate principal amount of the relevant Group of Loans;
PROVIDED that (i) such portion is allocated ratably among the Loans comprising
such Group and (ii) the portion to which such Notice applies, and the remaining
portion to which it does not apply, are each $10,000,000 or any larger multiple
of $1,000,000.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such notice
applies;
(ii) the date on which the conversion or continuation selected in such
notice is to be effective, which shall comply with the applicable clause of
subsection (a) above;
(iii) if the Loans comprising such Group are to be converted to Euro-
Dollar Loans, the duration of the initial Interest Period applicable
thereto; and
(iv) if such Loans are to be continued as Euro-Dollar Loans for an
additional Interest Period, the duration of such additional Interest
Period.
39
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
(c) Upon receipt of a Notice of Interest Rate Election from the
Borrower pursuant to subsection (a) above, the Administrative Agent shall
promptly notify each relevant Lender of the contents thereof and such notice
shall not thereafter be revocable by the Borrower. If the Borrower fails to
deliver a timely Notice of Interest Rate Election to the Administrative Agent
for any Group of Euro-Dollar Loans, such Loans shall be converted to Base Rate
Loans on the last day of the then current Interest Period applicable thereto.
SECTION 2.12. COMMITMENT FEES. (a) TERM COMMITMENTS. The Borrower
shall pay to the Administrative Agent, for the account of the Term Lenders
ratably in proportion to their Term Commitments, a commitment fee for each day
at the Commitment Fee Rate on the aggregate unused amount of the Term
Commitments on such day. Such commitment fee shall accrue from and including
the Effective Date to but excluding the last day of the Term Loan Availability
Period (or any earlier date on which the Term Commitments are fully utilized or
terminate in their entirety).
(b) REVOLVING CREDIT COMMITMENTS. The Borrower shall pay to the
Administrative Agent, for the account of the Revolving Credit Lenders ratably in
proportion to their Revolving Credit Commitments, a commitment fee for each day
at the Commitment Fee Rate on the amount by which the aggregate Revolving Credit
Commitments exceed the aggregate Outstanding Revolving Credit Amounts on such
day. Such commitment fee shall accrue from and including the Effective Date to
but excluding the Final Maturity Date (or any earlier date on which the
Revolving Credit Commitments terminate in their entirety).
(c) PAYMENTS. Fees accrued under this Section shall be payable
quarterly on each March 31, June 30, September 30 and December 31 and on the
date on which the Term Commitments or Revolving Credit Commitments, as the case
may be, terminate in their entirety.
SECTION 2.13. TERMINATION OR REDUCTION OF COMMITMENTS. (a) TERM
COMMITMENTS. During the Term Loan Availability Period, the Borrower may, upon
at least three Domestic Business Days' notice to the Administrative Agent, (i)
terminate the Term Commitments at any time or (ii) ratably reduce from time to
time, by an aggregate amount of $10,000,000 or any multiple of $1,000,000 in
excess thereof,
40
the aggregate unused amount of the Term Commitments. Unless previously
terminated, the Term Commitments shall terminate at the end of the Term Loan
Availability Period.
(b) REVOLVING CREDIT COMMITMENTS. The Borrower may, upon at least
three Domestic Business Days' notice to the Administrative Agent, (i) terminate
the Revolving Credit Commitments at any time, if there are no Outstanding
Revolving Credit Amounts and no outstanding Swingline Loans at such time, or
(ii) ratably reduce from time to time by an aggregate amount of $10,000,000 or
any multiple of $1,000,000 in excess thereof, the aggregate amount of the
Revolving Credit Commitments in excess of the sum of (x) the aggregate
Outstanding Revolving Credit Amounts of all the Revolving Credit Lenders plus
(y) the aggregate principal amount of all Swingline Loans outstanding at such
time. Unless previously terminated, the Revolving Credit Commitments shall
terminate at the close of business on the Final Maturity Date.
(c) SWINGLINE COMMITMENT. The Borrower may, upon at least three
Domestic Business Days' notice to the Administrative Agent, terminate the
Swingline Commitment at any time, if no Swingline Loans are outstanding at such
time. Unless previously terminated, the Swingline Commitment shall terminate at
the close of business on the Swingline Maturity Date.
SECTION 2.14. LETTERS OF CREDIT. (a) EXISTING LETTERS OF CREDIT.
On the Closing Date, each LC Issuing Bank that has issued an Existing Letter of
Credit shall be deemed, without further action by any party hereto, to have sold
to each Revolving Credit Lender, and each such Lender shall be deemed, without
further action by any party hereto, to have purchased from such LC Issuing Bank,
a participation in such Existing Letter of Credit and the related Letter of
Credit Liabilities equal to such Lender's Revolving Credit Percentage thereof.
The Borrower and the banks party hereto that are also party to AMI's Existing
Credit Agreement agree that, concurrently with such sale, the participations in
the Existing Letters of Credit sold to such banks under AMI's Existing Credit
Agreement shall be automatically cancelled without further action by any of the
parties thereto. On and after the Closing Date each Existing Letter of Credit
shall constitute a Letter of Credit for all purposes hereof.
(b) ISSUANCE OF ADDITIONAL LETTERS OF CREDIT. Any LC Issuing Bank
may, but shall not be obligated to, issue letters of credit for the account of
the Borrower from time to time pursuant to this subsection (b) during the period
from and including the Closing Date to but excluding
41
the date that is 30 days before the Final Maturity Date; PROVIDED that,
immediately after each such letter of credit is issued:
(i) the aggregate amount of the Letter of Credit Liabilities then
outstanding will not exceed $100,000,000 and
(ii) in the case of each Revolving Credit Lender, the sum of (x) all
its Outstanding Revolving Credit Amounts and (y) its Revolving Credit
Percentage of all outstanding Swingline Loans will not exceed its Revolving
Credit Commitment.
Upon the issuance by any LC Issuing Bank of an Additional Letter of Credit
pursuant to this subsection (b), such LC Issuing Bank shall be deemed, without
further action by any party hereto, to have sold to each Revolving Credit
Lender, and each such Lender shall be deemed, without further action by any
party hereto, to have purchased from such LC Issuing Bank, a participation in
such Letter of Credit and the related Letter of Credit Liabilities equal to such
Lender's Revolving Credit Percentage thereof.
(c) EXPIRY DATES. No Letter of Credit shall have an expiry date
later than the fifth Domestic Business Day prior to the Final Maturity Date.
Subject to the preceding sentence:
(i) each Additional Letter of Credit shall, when issued, have an
expiry date on or before the first anniversary of the date on which it is
issued; and
(ii) the expiry date of any Letter of Credit may, at the request of the
Borrower, be extended from time to time for a period not exceeding one year
so long as the relevant LC Issuing Bank agrees to so extend such Letter of
Credit (or, in the case of an "evergreen" Letter of Credit, its right to
give a notice to prevent the extension thereof expires) no earlier than
three months before the then existing expiry date thereof.
(d) NOTICE OF PROPOSED ISSUANCE. The Borrower shall give the
relevant LC Issuing Bank and the Administrative Agent at least three Domestic
Business Days' prior notice specifying the date each Additional Letter of Credit
is to be issued and describing the proposed terms of such Letter of Credit and
the nature of the transactions proposed to be supported thereby.
42
(e) CONDITIONS TO ISSUANCE. No LC Issuing Bank shall issue any
Additional Letter of Credit unless (i) such Letter of Credit shall be
satisfactory in form and substance to such LC Issuing Bank, (ii) the Borrower
shall have executed and delivered such other instruments and agreements relating
to such Letter of Credit as such LC Issuing Bank shall have reasonably
requested, (iii) such LC Issuing Bank shall have confirmed with the
Administrative Agent on the date of such issuance that the amounts specified in
clauses (i) and (ii) of subsection (b) above will not be exceeded immediately
after such Letter of Credit is issued and (iv) such LC Issuing Bank shall not
have been notified in writing by the Borrower, the Administrative Agent or the
Required Revolving Credit Lenders that any condition specified in clause (c) or
(d) of Section 3.03 is not satisfied on the date such Letter of Credit is to be
issued.
(f) NOTICE OF PROPOSED EXTENSIONS OF EXPIRY DATES. Each LC Issuing
Bank shall give the Administrative Agent at least three Domestic Business Days'
notice prior to extending the expiry date of any Letter of Credit issued by it
(or, in the case of an "evergreen" Letter of Credit, allowing it to be
extended), specifying (i) the date on which such extension is to be made and
(ii) the date to which such expiry date is to be so extended. Such LC Issuing
Bank shall not extend (or allow the extension of) the expiry date of such Letter
of Credit if it shall have been notified by the Administrative Agent (at the
request of the Required Revolving Credit Lenders) that any condition specified
in clause (c) or (d) of Section 3.03 is not satisfied on the date such Letter of
Credit is to be extended.
(g) NOTICE OF ACTUAL ISSUANCES AND EXTENSIONS. Promptly upon issuing
any Additional Letter of Credit or extending any Letter of Credit (or allowing
any "evergreen" Letter of Credit to be extended), the relevant LC Issuing Bank
will notify the Administrative Agent of the date of such Letter of Credit, the
amount thereof, the beneficiary or beneficiaries thereof and the expiry date or
extended expiry date thereof. Upon receipt of such notice the Administrative
Agent shall promptly notify each Revolving Credit Lender of the contents thereof
and the amount of such Lender's participation in the relevant Letter of Credit.
(h) FEES. The Borrower shall pay to the Administrative Agent, for
the account of the Revolving Credit Lenders ratably in accordance with their
respective Revolving Credit Percentages, a letter of credit fee for each day at
the LC Fee Rate on the aggregate amount available for drawings (whether or not
conditions for
43
drawing thereunder have been satisfied) under all Letters of Credit outstanding
on such day. Such letter of credit fee shall be payable with respect to each
Letter of Credit in arrears on the last Domestic Business Day of each calendar
quarter for so long as such Letter of Credit is outstanding and on the final
expiry date thereof. The Borrower shall pay to each LC Issuing Bank additional
fronting fees and reasonable expenses in the amounts and at the times agreed
between the Borrower and such LC Issuing Bank. The LC Issuing Banks shall
furnish to the Administrative Agent upon request such information as the
Administrative Agent shall require in order to calculate the amount of any fee
payable for the account of the Revolving Credit Lenders under this subsection
(h).
(i) DRAWINGS. Upon receipt from the beneficiary of any Letter of
Credit of a demand for payment under such Letter of Credit, the relevant LC
Issuing Bank shall determine in accordance with the terms of such Letter of
Credit whether such demand for payment should be honored.
If such LC Issuing Bank determines that any such demand for payment should be
honored, such LC Issuing Bank shall make available to such beneficiary in
accordance with the terms of such Letter of Credit the amount of the drawing
under such Letter of Credit. Such LC Issuing Bank shall thereupon notify the
Borrower and the Administrative Agent of the amount of such drawing paid by it.
(j) REIMBURSEMENT AND OTHER PAYMENTS BY THE BORROWER. (A) If any
amount is drawn under any Letter of Credit, the Borrower irrevocably and
unconditionally agrees to reimburse the relevant LC Issuing Bank for all amounts
paid by such LC Issuing Bank upon such drawing, together with any and all
reasonable charges and expenses which such LC Issuing Bank may pay or incur
relative to such drawing and interest on the amount drawn at the Federal Funds
Rate for each day from and including the date such amount is drawn to but
excluding the date such reimbursement payment is due and payable. Such
reimbursement payment shall be due and payable (x) at or before 1:00 P.M. (New
York City time) on the date the LC Issuing Bank notifies the Borrower of such
drawing, if such notice is given at or before 10:00 A.M. (New York City time) on
such date, or (y) at or before 10:00 A.M. (New York City time) on the first
Domestic Business Day after the date such notice is given, if such notice is
given after 10:00 A.M. (New York City time); PROVIDED that no payment otherwise
required by this sentence to be made by the Borrower at or before 1:00 P.M. (New
York City time) on any day shall be overdue hereunder if arrangements for such
payment satisfactory to the LC Issuing Bank, in its reasonable discretion, shall
have been made by
44
the Borrower at or before 1:00 P.M. (New York City time) on such day and such
payment is actually made at or before 3:00 P.M. (New York City time) on such
day.
(B) In addition, the Borrower agrees to pay to the LC Issuing Bank
interest on any and all amounts not paid by the Borrower when due hereunder with
respect to a Letter of Credit issued by such LC Issuing Bank, for each day from
and including the date when such amount becomes due to but excluding the date
such amount is paid in full, whether before or after judgment, payable on
demand, at a rate per annum equal to the sum of 2% plus the rate applicable to
Base Rate Loans for such day.
(C) Each payment to be made by the Borrower pursuant to this subsection
(j) shall be made to the relevant LC Issuing Bank in Federal or other funds
immediately available to it at its address referred to in Section 9.01.
(k) PAYMENTS BY REVOLVING CREDIT LENDERS WITH RESPECT TO LETTERS OF
CREDIT. (i) If the Borrower fails to reimburse an LC Issuing Bank as and when
required by subsection (j) above for all or any portion of any amount drawn
under a Letter of Credit issued by it, such LC Issuing Bank may notify the
Administrative Agent of such unreimbursed amount and request that the Revolving
Credit Lenders reimburse such LC Issuing Bank for their respective Revolving
Credit Percentages thereof. Upon receiving any such notice from an LC Issuing
Bank, the Administrative Agent shall promptly notify each Revolving Credit
Lender of the unreimbursed amount and such Lender's share thereof. Upon
receiving such notice from the Administrative Agent, each Revolving Credit
Lender shall make available to such LC Issuing Bank an amount equal to such
Revolving Credit Lender's share of such unreimbursed amount as set forth in such
notice, in Federal or other funds immediately available to such LC Issuing Bank,
by 3:00 P.M. (New York City time) on the Domestic Business Day following such
Lender's receipt of such notice from the Administrative Agent, together with
interest on such amount for each day from and including the date of such drawing
to but excluding the day such payment is due from such Lender at the Federal
Funds Rate for such day, at such LC Issuing Bank's address referred to in
Section 9.01. Upon payment in full thereof, such Revolving Credit Lender shall
be subrogated to the rights of the LC Issuing Bank against the Borrower to the
extent of such Lender's pro rata share of the related Reimbursement Obligation
(including interest accrued thereon). Nothing in this subsection (k) shall
affect any rights any Revolving Credit Lender may have against any LC Issuing
Bank for any
45
action or omission for which such LC Issuing Bank is not indemnified under
subsection (o) of this Section.
(ii) If any Revolving Credit Lender fails to pay any amount required
to be paid by it pursuant to clause (i) of this subsection (k) on the date on
which such payment is due, interest shall accrue on such Revolving Credit
Lender's obligation to make such payment, for each day from and including the
date such payment became due to but excluding the date such Revolving Credit
Lender makes such payment, whether before or after judgment, at a rate per annum
equal to (x) for each day from the day such payment is due to the third
succeeding Domestic Business Day, inclusive, the Federal Funds Rate for such day
as determined by the LC Issuing Bank and (y) for each day thereafter the sum of
2% plus the Base Rate for such day. Any payment made by any Revolving Credit
Lender after 3:00 P.M. (New York City time) on any Domestic Business Day shall
be deemed for purposes of the preceding sentence to have been made on the next
succeeding Domestic Business Day.
(iii) If the Borrower shall reimburse any LC Issuing Bank for any
drawing with respect to which any Revolving Credit Lender shall have made funds
available to such LC Issuing Bank in accordance with clause (i) of this
subsection (k), such LC Issuing Bank shall promptly upon receipt of such
reimbursement distribute to such Revolving Credit Lender its pro rata share
thereof, including interest, to the extent received by such LC Issuing Bank.
(l) EXCULPATORY PROVISIONS. The Borrower's obligations under this
Section shall be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment which the
Borrower may have or have had against any LC Issuing Bank, any Lender, the
beneficiary of any Letter of Credit or any other Person. The Borrower assumes
all risks of the acts or omissions of any beneficiary of any Letter of Credit
with respect to its use of such Letter of Credit. None of the LC Issuing Banks,
the Revolving Credit Lenders and their respective officers, directors, employees
and agents shall be responsible for, and the obligations of each Revolving
Credit Lender to make payments to each LC Issuing Bank and of the Borrower to
reimburse each LC Issuing Bank for drawings pursuant to this Section (other than
obligations resulting solely from the gross negligence or willful misconduct of
the relevant LC Issuing Bank) shall not be excused or affected by, among other
things, (i) the use which may be made of any Letter of Credit or any acts or
omissions of any beneficiary or transferee in connection therewith; (ii) the
validity, sufficiency or genuineness of
46
documents presented under any Letter of Credit or of any endorsements thereon,
even if such documents should in fact prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (iii) payment by any LC Issuing
Bank against presentation of documents to it which do not comply with the terms
of the relevant Letter of Credit or (iv) any dispute between or among the
Borrower, any of its Subsidiaries, the beneficiary of any Letter of Credit or
any other Person or any claims or defenses whatsoever of the Borrower, any of
its Subsidiaries or any other Person against the beneficiary of any Letter of
Credit. No LC Issuing Bank shall be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit. Any
action taken or omitted by any LC Issuing Bank or any Revolving Credit Lender
under or in connection with any Letter of Credit and the related drafts and
documents, if done without willful misconduct or gross negligence, shall be
binding upon the Borrower and shall not place any LC Issuing Bank or any
Revolving Credit Lender under any liability to the Borrower.
(m) RELIANCE, ETC. Each LC Issuing Bank shall be entitled (but not
obligated) to rely, and shall be fully protected in relying, on the
representation and warranty by the Borrower set forth in the last sentence of
Section 3.03 to establish whether the conditions specified in clauses (c) and
(d) of Section 3.03 are met in connection with any issuance or extension of a
Letter of Credit. Each LC Issuing Bank shall be entitled to rely, and shall be
fully protected in relying, upon advice and statements of legal counsel,
independent accountants and other experts selected by such LC Issuing Bank and
upon any Letter of Credit, draft, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document believed by it in good faith to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and may accept documents that appear on their face to be in order,
without responsibility for further investigation, regardless of any notice or
information to the contrary unless the beneficiary and the Borrower shall have
notified such LC Issuing Bank that such documents do not comply with the terms
and conditions of such Letter of Credit. Any LC Issuing Bank shall be fully
justified in refusing to take any action requested of it under this Section in
respect of any Letter of Credit issued by it unless it shall first have received
such advice or concurrence of the Required Revolving Credit Lenders as it
reasonably deems appropriate or it shall first be indemnified to its reasonable
satisfaction by the Revolving
47
Credit Lenders against any and all liability and expense which may be incurred
by it by reason of taking or continuing to take, or omitting or continuing to
omit, any such action. Notwithstanding any other provision of this Section,
each LC Issuing Bank shall in all cases be fully protected in acting, or in
refraining from acting, under this Section in respect of any Letter of Credit in
accordance with a request of the Required Revolving Credit Lenders, and such
request and any action taken or failure to act pursuant thereto shall be binding
upon the Revolving Credit Lenders and all future holders of participations in
such Letter of Credit; PROVIDED that this sentence shall not affect any rights
the Borrower may have against the Revolving Credit Lenders that made such
request.
(n) INDEMNIFICATION BY THE BORROWER. The Borrower agrees to
indemnify and hold harmless each Revolving Credit Lender, each LC Issuing Bank
and the Administrative Agent (collectively, the "LC Indemnitees") from and
against any and all claims and damages, losses, liabilities, costs or expenses
(including, without limitation, the fees and disbursements of counsel) which any
such LC Indemnitee may reasonably incur (or which may be claimed against any
such LC Indemnitee by any Person whatsoever) by reason of or in connection with
the execution and delivery or transfer of or payment or failure to pay under any
Letter of Credit or any actual or proposed use of any Letter of Credit,
including any claims, damages, losses, liabilities, costs or expenses which
the LC Issuing Bank may incur by reason of or in connection with the failure of
any Revolving Credit Lender to fulfill or comply with its obligations to any LC
Issuing Bank hereunder (but nothing herein contained shall affect any rights the
Borrower may have against any such defaulting Revolving Credit Lender); PROVIDED
that the Borrower shall not be required to indemnify any LC Indemnitee for any
claims, damages, losses, liabilities, costs or expenses to the extent, but only
to the extent, caused by (i) the willful misconduct or gross negligence of any
LC Issuing Bank in determining whether a request presented under any Letter of
Credit issued by it complied with the terms of such Letter of Credit or (ii) any
LC Issuing Bank's failure to pay under any Letter of Credit issued by it after
the presentation to it of a request strictly complying with the terms and
conditions of such Letter of Credit. Nothing in this subsection (n) is intended
to limit the obligations of the Borrower under any other provision of this
Section.
(o) INDEMNIFICATION BY THE LENDERS. Each Revolving Credit Lender
shall, ratably in accordance with its Revolving Credit Commitment, indemnify
each LC Issuing
48
Bank, its Affiliates and their respective directors, officers, agents and
employees (to the extent not reimbursed by the Borrower) against any cost,
expense (including fees and disbursements of counsel), claim, demand, action,
loss or liability (except such as result from such indemnitee's gross negligence
or willful misconduct or any LC Issuing Bank's failure to pay under any Letter
of Credit issued by it after the presentation to it of a request strictly
complying with the terms and conditions of such Letter of Credit) that any such
indemnitee may suffer or incur in connection with this Section or any action
taken or omitted by such indemnitee under this Section.
(p) DUAL CAPACITIES. In its capacity as a Revolving Credit Lender,
each LC Issuing Bank shall have the same rights and obligations under this
Section as any other Revolving Credit Lender.
SECTION 2.15. GENERAL PROVISIONS AS TO PAYMENTS. (a) The Borrower
shall make each payment of (x) principal of, and interest on, the Loans and fees
hereunder, not later than 12:00 Noon (New York City time) on the date when due,
in Federal or other funds immediately available in New York City, to the
Administrative Agent at its address referred to in Section 9.01 and (y) of
amounts constituting Reimbursement Obligations and any other amounts payable in
connection with any Letter of Credit in accordance with the provisions of
Section 2.14. The Administrative Agent will promptly distribute to each Lender
its ratable share (if any) of each such payment received by the Administrative
Agent for the account of the Lenders. Whenever any payment of principal of, or
interest on, the Base Rate Loans or of fees or of Reimbursement Obligations
shall be due on a day which is not a Domestic Business Day, the date for payment
thereof shall be extended to the next succeeding Domestic Business Day.
Whenever any payment of principal of, or interest on, the Euro-Dollar Loans
shall be due on a day which is not a Euro-Dollar Business Day, the date for
payment thereof shall be extended to the next succeeding Euro-Dollar Business
Day unless such Euro-Dollar Business Day falls in another calendar month, in
which case the date for payment thereof shall be the next preceding Euro-Dollar
Business Day. If the date for any payment of principal or any Reimbursement
Obligation is extended by operation of law or otherwise, interest thereon shall
be payable for such extended time.
(b) Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to any Lenders
hereunder that the Borrower will not make such payment in full, the
49
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each Lender on such
due date an amount equal to the amount then due such Lender. If and to the
extent that the Borrower shall not have so made such payment, each Lender shall
repay to the Administrative Agent forthwith on demand the amount so distributed
to such Lender together with interest thereon, for each day from the date such
amount is distributed to such Lender until the date such Lender repays such
amount to the Administrative Agent, at the Federal Funds Rate.
SECTION 2.16. FUNDING LOSSES. If the Borrower makes any payment of
principal with respect to any Euro-Dollar Loan or any Euro-Dollar Loan is
converted to a Base Rate Loan (pursuant to Article II, VI or VIII or otherwise)
on any day other than the last day of an Interest Period applicable thereto, or
the last day of an applicable period fixed pursuant to Section 2.10(c), or if
the Borrower fails to borrow or prepay or convert any Euro-Dollar Loans after
notice has been given to any Lender in accordance with Section 2.04(a) or
2.11(c), such Borrower shall reimburse each Lender within 15 days after demand
for any resulting loss or expense incurred by it (or by an existing or
prospective Participant in the related Loan), including (without limitation) any
loss incurred in obtaining, liquidating or employing deposits from third
parties, but excluding loss of margin for the period after any such payment or
conversion or failure to borrow or prepay or convert, PROVIDED that such Lender
shall have delivered to the Borrower a certificate setting forth in reasonable
detail the amount of such loss or expense and the method of calculation thereof,
which certificate shall be conclusive in the absence of manifest error.
SECTION 2.17. COMPUTATION OF INTEREST AND FEES. (a) Interest based
on the Prime Rate hereunder shall be computed on the basis of a year of 365 days
(or 366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest and
fees shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
(b) The Administrative Agent shall determine each interest rate
applicable to the Loans hereunder and each Commitment Fee Rate and LC Fee Rate
applicable hereunder. The Administrative Agent shall give prompt notice to the
Borrower and the relevant Lenders of each rate of interest,
50
Commitment Fee Rate and LC Fee Rate so determined, and its determination thereof
shall be conclusive in the absence of manifest error; PROVIDED that, if the
Administrative Agent makes such determinations for any Rate Period on the basis
of an estimated Pricing Level set forth in a certificate delivered by the
Borrower pursuant to Section 5.01(i) and subsequently determines (or receives a
certificate pursuant to Section 5.01(i) establishing) that a higher Pricing
Level applies during such Rate Period, the Administrative Agent shall promptly
notify the Borrower and the Lenders of such higher Pricing Level and, within two
Domestic Business Days after receiving such notice, the Borrower shall pay to
the Administrative Agent, for the accounts of the relevant Lenders, the
additional interest, additional commitment fees and additional letter of credit
fees that should have been paid prior to such time by reason of the
applicability of such higher Pricing Level. If the Administrative Agent makes
such determinations on the basis of a Pricing Level estimated by the Borrower
and subsequently determines (or receives a certificate pursuant to Section
5.01(i) establishing) that a lower Pricing Level applied during the relevant
Rate Period, no adjustment shall be made for any resulting overpayments of
interest, commitment fees or letter of credit fees theretofore made by the
Borrower on the basis of the higher Pricing Level estimated by it.
SECTION 2.18. SWINGLINE LOANS. (a) SWINGLINE COMMITMENT. The
Swingline Bank agrees, on the terms and conditions set forth in this Agreement,
to make loans to the Borrower pursuant to this Section from time to time during
the Swingline Loan Availability Period; PROVIDED that the aggregate principal
amount of such loans at any one time outstanding shall not exceed either (i) the
Swingline Commitment or (ii) the aggregate unused amount of the Revolving Credit
Commitments. Each loan under this Section shall be in a principal amount of at
least $1,000,000 and shall be a Base Rate Loan. Within the foregoing limits,
the Borrower may borrow under this Section, repay Swingline Loans and reborrow
at any time during the Swingline Loan Availability Period under this Section.
(b) NOTICE OF SWINGLINE BORROWING. The Borrower shall give the
Swingline Bank notice (a "Notice of Swingline Borrowing") not later than 2:00
P.M. (New York City time) on the date of each Swingline Borrowing, specifying
(i) the date of such Borrowing, which shall be a Domestic Business Day, and (ii)
the amount of such Borrowing.
(c) FUNDING OF SWINGLINE LOANS. Not later than 3:00 P.M. (New York
City time) on the date of each Swingline Borrowing, the Swingline Bank shall,
unless the Swingline
51
Bank determines that any applicable condition specified in Article III has not
been satisfied, make available the amount of such Swingline Borrowing, in
Federal or other funds immediately available in New York City, to the Borrower
at the Swingline Bank's address referred to in Section 9.01.
(d) OPTIONAL PREPAYMENT OF SWINGLINE LOANS. The Borrower may prepay
the Swingline Loans in whole at any time, or from time to time in part in a
principal amount of at least $1,000,000, by giving notice of such prepayment to
the Swingline Bank not later than 12:00 Noon (New York City time) on the date of
prepayment and paying the principal amount to be prepaid, together with interest
accrued thereon to the date of prepayment, to the Swingline Bank at its address
referred to in Section 9.01, in Federal or other funds immediately available in
New York City, not later than 3:00 P.M. on the date of prepayment.
(e) MANDATORY PREPAYMENT OF SWINGLINE LOANS. On the date of each
Borrowing pursuant to Section 2.01 or 2.02, the Borrower shall prepay all
Swingline Loans then outstanding, together with interest accrued thereon to the
date of prepayment.
(f) FINAL MATURITY OF SWINGLINE LOANS. All Swingline Loans
outstanding on the Swingline Maturity Date shall be due and payable on such date
together with interest accrued thereon to such date.
(g) REFUNDING UNPAID SWINGLINE LOANS. If (i) the Swingline Loans are
not paid in full on the Swingline Maturity Date or (ii) the Swingline Loans
become immediately due and payable pursuant to Section 6.01, the Swingline Bank
(or the Administrative Agent on its behalf) may, by notice to the Revolving
Credit Lenders (including the Swingline Bank, in its capacity as a Revolving
Credit Lender), require each Revolving Credit Lender to pay to the Swingline
Bank an amount equal to such Lender's Revolving Credit Percentage of the
aggregate unpaid principal amount of the Swingline Loans then outstanding. Such
notice shall specify the date on which such payments are to be made, which shall
be the first Domestic Business Day after such notice is given. Not later than
12:00 Noon (New York City time) on the date so specified, each Revolving Credit
Lender shall pay the amount so notified to it to the Swingline Bank at its
address referred to in Section 9.01, in Federal or other funds immediately
available in New York City. The amount so paid by each Revolving Credit Lender
shall constitute a Revolving Credit Base Rate Loan to the Borrower; PROVIDED
that, if the Revolving Credit Lenders are prevented from making such Base
52
Rate Loans to the Borrower by the provisions of the United States Bankruptcy
Code or otherwise, the amount so paid by each Revolving Credit Lender shall
constitute a purchase by it of a participation in the unpaid principal amount of
the Swingline Loans (and interest accruing thereon after the date of such
payment). Each Revolving Credit Lender's obligation to make such payment to the
Swingline Bank under this subsection (g) shall be absolute and unconditional and
shall not be affected by any circumstance, including, without limitation, (i)
any set-off, counterclaim, recoupment, defense or other right which such Lender
or any other Person may have against the Swingline Bank or the Borrower, (ii)
the occurrence or continuance of a Default or an Event of Default or the
termination of the Revolving Credit Commitments, (iii) any adverse change in the
condition (financial or otherwise) of the Borrower or any other Person, (iv) any
breach of this Agreement by the Borrower or any other Lender or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing; PROVIDED that no Revolving Credit Lender shall be obligated to
make any payment to the Swingline Bank under this subsection (g) with respect to
a Swingline Loan made by the Swingline Bank at a time when it knew that a
Default had occurred and was continuing.
ARTICLE III
CONDITIONS
SECTION 3.01. CLOSING. The closing hereunder shall occur when all
the following conditions have been satisfied (or waived in accordance with
Section 9.05):
(i) the Administrative Agent shall have received a duly executed Note,
dated on or before the Closing Date and complying with the provisions of
Section 2.05, for each Tranche of Loans of each Lender;
(ii) the Administrative Agent shall have received fully executed
counterparts of the Security Agreement, substantially in the form of
Exhibit B hereto, together with the stock certificates and promissory note
listed in Schedule I thereto;
(iii) the Administrative Agent shall have received evidence
satisfactory to it that (A) all letters of credit issued under NME's
Existing Credit Agreement have been canceled, (B) the Borrower will pay in
full on the Closing Date the principal of all loans and reimbursement
obligations then outstanding under NME's
53
Existing Credit Agreement and all interest and fees accrued thereunder and
(C) the direct-pay letter of credit issued by Credit Suisse to support
commercial paper issued by MP Funding Corporation for the benefit of
certain Subsidiaries of the Borrower shall have been canceled;
(iv) the Administrative Agent shall have received evidence satisfactory
to it that (A) the commitments of the lenders under AMI's Existing Credit
Agreement have been terminated, (B) no letters of credit (except the
Existing Letters of Credit) are outstanding under AMI's Existing Credit
Agreement, (C) all participations in the Existing Letters of Credit
purchased (or deemed to have been purchased) under AMI's Existing Credit
Agreement have been canceled, (D) NME will make a loan to AMI on the
Closing Date in an amount sufficient to pay in full the principal of all
loans and reimbursement obligations then outstanding under AMI's Existing
Credit Agreement and all interest and fees accrued thereunder and (E) AMI
will apply the proceeds of such loan to pay such amounts in full on the
Closing Date;
(v) the Administrative Agent shall have received evidence satisfactory
to it that (A) all security interests created by AMI's Existing Security
Agreements have been released, (B) termination statements have been filed
or delivered for filing under the Uniform Commercial Code as required to
evidence the termination of such security interests and (C) all stock
certificates and other instruments pledged under AMI's Existing Security
Agreements have either been delivered to the Collateral Agent to be held as
part of the Collateral under the Security Agreement or returned to AMI or
AM Holdings;
(vi) the Administrative Agent shall have received evidence satisfactory
to it that the Borrower will apply proceeds of the Term Loans (A) to pay
all amounts payable by it on the Closing Date pursuant to the NME Tender
Offers, (B) to pay, or lend to AMI the amount required to pay, all amounts
payable on the Closing Date pursuant to the AMI Tender Offers and (C) to
lend to AMI the amount required to pay all amounts payable on the Closing
Date pursuant to the AMI Redemptions;
(vii) the Administrative Agent shall have received evidence
satisfactory to it that the Borrower has received the net cash proceeds of
the issuance and sale of at least $300,000,000 aggregate principal amount
of
54
Senior Notes and at least $900,000,000 aggregate principal amount of
Subordinated Notes;
(viii) the Administrative Agent shall have received evidence
satisfactory to it that, in addition to the funds available under this
Agreement and the net cash proceeds of the issuance and sale of Senior
Notes and Subordinated Notes referred to in clause (vii) above, the
Borrower has at least $135,000,000 (less any amount theretofore invested in
South Miami Hospitals as permitted by Section 5.13(e)) of cash available to
finance the Acquisition;
(ix) the Administrative Agent shall have received evidence satisfactory
to it that the Merger has been consummated substantially on the terms set
forth in the Merger Agreement;
(x) the Administrative Agent shall have received evidence satisfactory
to it that the total consideration paid or to be paid by the Borrower and
its Subsidiaries as a result of the Acquisition to the former holders of
common stock of AM Holdings and options to purchase such common stock will
not exceed $1,542,800,000 (or $1,563,100,000 if the Merger is consummated
after March 31, 1995) in cash and 34,104,000 shares of common stock of the
Borrower, except to the extent that any stockholders of AM Holdings who
elect appraisal rights may receive more than $19 per share of common stock
of AM Holdings (or more than $19.25 per share if the Merger is consummated
after March 31, 1995);
(xi) the Administrative Agent shall not have received notice from the
Required Lenders stating that they have determined in good faith that (i)
any order, decree, judgment, ruling or injunction exists which restrains or
otherwise prevents the consummation of the Acquisition in the manner
contemplated by the Merger Agreement, the consummation of any of the NME
Tender Offers, the AMI Tender Offers or the AMI Redemptions in the manner
described in the Prospectus or the making of the Loans or (ii) any action,
suit or proceeding is pending or threatened in which there is a reasonable
possibility of an adverse decision which would have a Material Adverse
Effect;
(xii) the Administrative Agent shall not have received notice from the
Required Lenders stating that they have determined in good faith that any
event has
55
occurred since November 30, 1994 which has had (or is reasonably likely to
have) a Material Adverse Effect;
(xiii) the Administrative Agent shall have received a certificate dated
the Closing Date, substantially in the form of Exhibit C hereto, signed by
a Senior Officer of the Borrower;
(xiv) the Administrative Agent shall have received an opinion of
Gibson, Dunn & Crutcher, special counsel for the Borrower, dated the
Closing Date and addressed to the Administrative Agent, the LC Issuing
Banks and the Lenders, substantially in the form of Exhibit D-1 hereto and
covering such other matters incident to the transactions contemplated by
this Agreement as any Arranging Agent shall reasonably request;
(xv) the Administrative Agent shall have received an opinion of
Skadden, Arps, Slate, Meagher & Flom, special counsel for the Borrower,
dated the Closing Date and accompanied by a reliance letter addressed to
the Administrative Agent, the LC Issuing Banks and the Lenders, covering
the matters set forth in Exhibit D-2 hereto and such other matters incident
to the transactions contemplated by this Agreement as any Arranging Agent
shall reasonably request;
(xvi) the Administrative Agent shall have received an opinion of Maples
& Calder, special counsel for NME Cayman, dated the Closing Date and
addressed to the Administrative Agent, the LC Issuing Banks and the
Lenders, substantially in the form of Exhibit D-3 hereto and covering such
other matters incident to the transactions contemplated by this Agreement
as any Arranging Agent shall reasonably request;
(xvii) the Administrative Agent shall have received an opinion of
internal counsel for the Borrower, dated the Closing Date and addressed to
the Administrative Agent, the LC Issuing Banks and the Lenders,
substantially in the form of Exhibit E hereto and covering such other
matters incident to the transactions contemplated by this Agreement as any
Arranging Agent shall reasonably request;
(xviii) the Administrative Agent shall have received an opinion of
internal counsel for AM Holdings, dated the Closing Date and addressed to
the Administrative Agent, the LC Issuing Banks and the Lenders,
substantially in the form of Exhibit F hereto and covering such other
matters incident to the
56
transactions contemplated by this Agreement as any Arranging Agent shall
reasonably request;
(xix) the Administrative Agent shall have received an opinion of Davis
Polk & Wardwell, special counsel for the Administrative Agent, dated the
Closing Date and addressed to the Administrative Agent, the Issuing Banks
and the Lenders, substantially in the form of Exhibit G hereto and covering
such other matters incident to the transactions contemplated by this
Agreement as any Arranging Agent shall reasonably request;
(xx) the Administrative Agent shall have received a certificate of the
Secretary of the Borrower, dated the Closing Date, as to the articles of
incorporation and bylaws of the Borrower, no amendments thereto, the
adoption by the Borrower's board of directors of the resolutions referred
to in clause (xix) below and the incumbency and signature of any officer of
the Borrower who executed or will execute any Financing Document or any
other document to be delivered pursuant to this Agreement, together with
evidence of the incumbency of such Secretary;
(xxi) the Administrative Agent shall have received a copy (in form and
substance satisfactory to the Arranging Agents) of the resolutions of the
Borrower's board of directors authorizing the borrowings provided for
herein and the execution, delivery and performance of the Financing
Documents, certified by the Secretary of the Borrower to be in full force
and effect without modification on the Closing Date;
(xxii) the Administrative Agent shall have received a true copy of any
consent or approval of any Person (other than consents given by holders of
the AMI Post-1991 Debt Securities pursuant to the AMI Tender Offers) which
may be required in connection with the transactions contemplated by this
Agreement, including, without limitation, any consent required under the
Advance Account Agreement and the Overdraft Facility Agreement,
(xxiii) the Borrower shall have paid or made arrangements satisfactory
to the Administrative Agent for paying (i) the fees to be paid on or before
the Closing Date pursuant to the letter agreement dated November 30, 1994
between the Borrower and the Co-Arrangers and (ii) all expenses payable by
the Borrower on or before the Closing Date pursuant to Section
57
9.03(a) of this Agreement and Section 10.03(a) of NME's Existing Credit
Agreement;
(xxiv) all approvals, consents and other actions by or in respect of,
or filings with any governmental body, agency, official, authority or other
Person required in connection with the Acquisition or the transactions
contemplated by the Financing Documents shall have been obtained, taken or
made (except for any such approvals, consents, actions or filings with any
Person (other than any governmental body, agency, official or authority) as
to which the failure to have obtained, taken or made them is not, in the
aggregate, material);
(xxv) the Administrative Agent shall have received evidence
satisfactory to it that (A) sufficient consents have been obtained from the
holders of the AMI Post-1991 Debt Securities pursuant to the AMI Tender
Offers to eliminate the restrictive covenants intended to be eliminated
thereby, (B) the NME Tender Offers and the AMI Tender Offers have been
consummated or will be consummated on or immediately after the Closing Date
and (C) notices of redemption for the AMI Redemptions have been given or
will be given on or immediately after the Closing Date;
(xxvi) the Metrocrest Reimbursement Agreement shall be in full force
and effect on terms and conditions satisfactory to the Co-Arrangers;
(xxvii) the Borrower shall have paid in full all upfront fees payable
to the Lenders in the amounts previously agreed upon between the Borrower
and the Lenders; and
(xxviii) the Administrative Agent shall have received all documents it
may reasonably request relating to the existence of the Borrower, the
corporate authority for and the validity of the Financing Documents, the
consummation of the Merger, the creation and perfection of the Liens
contemplated by the Security Agreement and any other matters relevant
thereto, all in form and substance reasonably satisfactory to the Arranging
Agents.
When the closing hereunder occurs, the Administrative Agent shall promptly
notify the Borrower and the Lenders of the Closing Date, and such notice shall
be conclusive and binding on all parties hereto.
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SECTION 3.02. RELEASE OF NME'S EXISTING SECURITY INTERESTS AND NME
HOSPITALS' EXISTING GUARANTEES. The parties hereto that are also parties to
NME's Existing Credit Agreement, NME's Existing Security Agreement and the
Metrocrest Reimbursement Agreement agree that, concurrently with the closing
hereunder on the Closing Date, without any further action by any party thereto:
(i) the commitments of the banks under NME's Existing Credit
Agreement shall terminate;
(ii) the security interests created by NME's Existing Security
Agreement shall be released and the Agent (as such term is defined therein)
shall deliver the stock certificate evidencing the shares of common stock
of NME Hospitals pledged thereunder to the Collateral Agent to be held as
part of the Collateral under the Security Agreement;
(iii) the Hospitals Guaranty (as such term is defined in NME's
Existing Credit Agreement) shall terminate; and
(iv) the Hospitals Guaranty (as such term is defined in the
Metrocrest Reimbursement Agreement) shall terminate.
SECTION 3.03. BORROWINGS. The obligation of any Lender to make a
Loan on the occasion of any Borrowing (other than a Syndicated Loan pursuant to
Section 2.18(g)) and the obligation of the Swingline Bank to make any Swingline
Loan are each subject to the satisfaction of the following conditions:
(a) the fact that the Closing Date shall have occurred on or prior to
April 28, 1995;
(b) receipt (i) by the Administrative Agent of a Notice of Syndicated
Borrowing as required by Section 2.03 or (ii) by the Swingline Bank of a
Notice of Swingline Borrowing as required by Section 2.18(b), as the case
may be;
(c) the fact that, immediately before and after such Extension of
Credit, no Default shall have occurred and be continuing; and
(d) the fact that the representations and warranties of the Borrower
contained in this Agreement and the Security Agreement shall be true on and
as of the date of such Extension of Credit.
59
Each Extension of Credit (including each issuance or extension of a Letter of
Credit) shall be deemed to be a representation and warranty by the Borrower on
the date of such Extension of Credit as to the facts specified in clauses (c)
and (d) of this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. CORPORATE EXISTENCE AND POWER. The Borrower is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Nevada, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted.
SECTION 4.02. CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO
CONTRAVENTION. The execution, delivery and performance by the Borrower of the
Financing Documents (i) are within its corporate powers, (ii) have been duly
authorized by all necessary corporate action, (iii) require no action by or in
respect of, or filing with any governmental body, agency or official (except
filings required by the Security Agreement), (iv) do not contravene any
provision of applicable law or regulation or of the articles of incorporation or
by-laws of the Borrower, (v) do not constitute a breach of or default under any
agreement, judgment, injunction, order, decree or other instrument binding upon
the Borrower or any of its Subsidiaries, except for breaches and defaults which,
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect, or (vi) result in the creation or imposition of any Lien on any asset of
the Borrower or any of its Subsidiaries, except the Liens created by the
Security Agreement.
SECTION 4.03. BINDING EFFECT. (i) This Agreement constitutes a valid
and binding agreement of the Borrower, (ii) the Security Agreement, when
executed and delivered in accordance with this Agreement, will constitute a
valid and binding agreement of the Borrower and (iii) the Notes, when executed
and delivered in accordance with this Agreement, will constitute valid and
binding obligations of the Borrower, in each case enforceable against the
Borrower in accordance with its terms.
60
SECTION 4.04. PRIORITY OF SECURITY INTERESTS. The Security
Agreement, when executed and delivered in accordance with this Agreement, will
vest in the Collateral Agent, for the benefit of the holders of the Secured
Obligations, a valid and binding first priority Lien on the Collateral.
SECTION 4.05. FINANCIAL INFORMATION.
(a) The consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of May 31, 1994 and the related consolidated
statements of operations, cash flows and changes in stockholders' equity for the
Fiscal Year then ended, reported on by KPMG Peat Marwick LLP and set forth in
the Prospectus, fairly present, in conformity with GAAP, the consolidated
financial position of the Borrower and its Consolidated Subsidiaries as of such
date and their consolidated results of operations and cash flows for such Fiscal
Year.
(b) The unaudited condensed consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of November 30, 1994 and the
related unaudited condensed consolidated statements of operations and cash flows
for the six months then ended, set forth in the Borrower's Latest Form 10-Q, a
copy of which has been delivered to each of the Lenders, fairly present, on a
basis consistent with the financial statements referred to in subsection (a) of
this Section, the consolidated financial position of the Borrower and its
Consolidated Subsidiaries as of such date and their consolidated results of
operations and cash flows for such six-month period (subject to normal year-end
adjustments).
(c) The consolidated balance sheet of AM Holdings and its
Consolidated Subsidiaries as of August 31, 1994 and the related consolidated
statements of income, cash flows and shareholders' equity for its fiscal year
then ended, reported on by Price Waterhouse LLP and set forth in the Prospectus,
fairly present, in conformity with generally accepted accounting principles, the
consolidated financial position of AM Holdings and its Consolidated Subsidiaries
as of such date and their consolidated results of operations and cash flows for
such fiscal year.
(d) The unaudited consolidated balance sheet of AM Holdings and its
Consolidated Subsidiaries as of November 30, 1994 and the related unaudited
consolidated statements of income and cash flows for the three months then
ended, set forth in AM Holdings's Latest Form 10-Q, a copy of which has been
delivered to each of the Lenders, fairly present, in conformity with generally
accepted accounting principles
61
applied on a basis consistent with the financial statements referred to in
subsection (c) of this Section, the consolidated financial position of AM
Holdings and its Consolidated Subsidiaries as of such date and their
consolidated results of operations and cash flows for such three-month period
(subject to normal year-end adjustments).
(e) The unaudited consolidated balance sheet of each Designated
International Subsidiary and its Consolidated Subsidiaries as of November 30,
1994 and the related unaudited consolidated statements of income and cash flows
for the six months then ended, a copy of which has been delivered to each of the
Lenders, fairly present, in conformity with generally accepted accounting
principles applied on a basis consistent with the financial statements referred
to in subsection (a) of this Section, the consolidated financial position of
such Designated International Subsidiary and its Consolidated Subsidiaries as of
such date and their consolidated results of operations and cash flows for such
six-month period (subject to normal year-end adjustments).
(f) The pro forma condensed combined balance sheet of the Combined
Companies as of November 30, 1994 and the related condensed combined statements
of operations set forth in the Prospectus under the heading "Pro Forma Financial
Information" fairly present their combined financial position and combined
results of operations at the dates and for the periods specified therein, on the
basis of the assumptions and adjustments described in the Notes to such pro
forma condensed combined financial statements and giving effect to the
transactions and events identified in the first paragraph under said heading as
of the dates specified therein.
(g) Except for the effect of the transactions described in the
Prospectus under the heading "The Merger and Financing", there has been no
material adverse change since November 30, 1994 in the business, operations,
properties, financial condition or prospects of the Combined Companies,
considered as a whole.
SECTION 4.06. LITIGATION. Except as described in Schedule 4.06
hereto, there are no actions, suits or proceedings pending against, or to the
knowledge of the Borrower threatened against, any of the Combined Companies or
any of their respective properties, before any court or arbitrator or any
governmental body, agency or official in which there is a reasonable possibility
of adverse decisions which in the aggregate could reasonably be expected to have
62
a Material Adverse Effect or which in any manner draw into question the validity
of any of the Financing Documents.
SECTION 4.07. COMPLIANCE WITH ERISA. Except as described in Schedule
4.07 hereto, each member of the ERISA Group has fulfilled its obligations under
the minimum funding standards of ERISA and the Internal Revenue Code with
respect to each Plan and is in compliance in all material respects with the
presently applicable provisions of ERISA and the Internal Revenue Code with
respect to each Plan. Except as disclosed in Schedule 4.07, no member of the
ERISA Group has (i) sought a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code in respect of any Plan, (ii) failed to
make any contribution or payment to any Plan or Multiemployer Plan or in respect
of any Benefit Arrangement, or made any amendment to any Plan or Benefit
Arrangement, which has resulted or could result in the imposition of a Lien or
the posting of a bond or other security under ERISA or the Internal Revenue Code
or (iii) incurred any liability under Title IV of ERISA other than a liability
to the PBGC for premiums under Section 4007 of ERISA.
SECTION 4.08. COMPLIANCE WITH LAWS. Except as described in Schedule
4.07 hereto, the Borrower and its Subsidiaries are in compliance in all material
respects with all applicable laws, rules and regulations (including without
limitation any health care laws, rules or regulations), other than such laws,
rules or regulations (i) the validity or applicability of which the Borrower or
such Subsidiary is contesting in good faith by appropriate proceedings or (ii)
failures to comply with which could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
SECTION 4.09. ENVIRONMENTAL MATTERS. The Borrower has reviewed the
effect of Environmental Laws on the business, operations and properties of the
Borrower and its Subsidiaries, and has in good faith attempted to identify and
evaluate the associated liabilities and costs (including, without limitation,
capital or operating expenditures required for clean-up or closure of properties
presently or previously owned, capital or operating expenditures required to
achieve or maintain compliance with environmental protection standards imposed
by law or as a condition of any license, permit or contract, any related
constraints on operating activities, including any periodic or permanent
shutdown of any facility or reduction in the level of or change in the nature of
operations conducted thereat, any costs or liabilities in connection with
off-site disposal of wastes or Hazardous Substances, and
63
actual or potential liabilities to third parties, including employees, and any
related costs and expenses); PROVIDED that, with respect to AM Holdings and its
Subsidiaries, on and at all times prior to the first anniversary of the Closing
Date such review has been and during such time will be limited to (i) a review
(without independent investigation) of information supplied by AM Holdings as to
the effect of Environmental Laws on it and its Subsidiaries and (ii) a review of
any other information relating to the effect of Environmental Laws on AMI and
its Subsidiaries of which the Borrower obtains actual knowledge after the
Closing Date. On the basis of the foregoing review, the Borrower has reasonably
concluded that such associated liabilities and costs, including the costs of
compliance with Environmental Laws, are unlikely to have a Material Adverse
Effect.
SECTION 4.10. TAXES. The Combined Companies have filed all United
States Federal income tax returns and all other material tax returns which are
required to be filed by them and have paid all taxes shown to be due on such
returns or pursuant to any assessment received by any of them (unless such
assessment is being contested in good faith by appropriate proceedings). The
charges, accruals and reserves on the books of the Combined Companies in respect
of taxes or other governmental charges are, in the opinion of the Borrower,
adequate.
SECTION 4.11. SUBSIDIARIES. (a) Each of the Borrower's Included
Subsidiaries and each corporation which will become a Included Subsidiary upon
consummation of the Merger is a corporation duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of incorporation, and
has all corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted.
(b) Schedule I to the Security Agreement sets forth a correct and
complete list, as of the close of business on the Closing Date, of (i) all
capital stock of First Tier Subsidiaries (other than Immaterial Subsidiaries)
beneficially owned by the Borrower, (ii) all Instruments owned by the Borrower
evidencing Debt owed to it by any of its Subsidiaries and (iii) all capital
stock of Westminster beneficially owned by NME Cayman.
(c) On the Closing Date neither the Borrower nor any of its
Subsidiaries owns any Equity Interest in any First Tier Subsidiary, Hillhaven or
Westminster, other than (i) the capital stock listed in Schedule I to the
Security
64
Agreement, (ii) 6,000,200 shares of common stock of Hillhaven held by NME
Properties Corp. and 2,877,947 shares of such common stock held by NME
Properties, Inc. (which is a Subsidiary of NME Properties Corp. that is wholly
owned and directly held by it) and (iii) 35,000 shares of Series C Preferred
Stock of Hillhaven and 63,402 shares of Series D Preferred Stock of Hillhaven,
all of which are held by NME Properties Corp.
SECTION 4.12. NOT AN INVESTMENT COMPANY. The Borrower is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 4.13. FULL DISCLOSURE. All information heretofore furnished
by the Borrower to the Administrative Agent, any Arranging Agent or any Lender
for purposes of or in connection with any Financing Document or any transaction
contemplated thereby is, and all such information hereafter furnished by the
Borrower to the Administrative Agent, any Arranging Agent or any Lender will,
taken as a whole, be true and accurate in all material respects on the date as
of which such information is stated or certified. The Borrower has disclosed to
the Lenders in writing any and all facts which have or may (to the extent the
Borrower can now reasonably foresee) have a Material Adverse Effect.
SECTION 4.14. CERTAIN DOCUMENTS. (a) The copies of the Merger
Agreement and the Company Disclosure Letter and Parent Disclosure Letter
referred to therein, in the form delivered to each Lender prior to the date of
this Agreement, are correct and complete copies thereof as in effect on the date
of this Agreement. Since the date of this Agreement, neither the Merger
Agreement nor either of said Disclosure Letters has been amended or modified in
any material respect and no material provision thereof has been waived without
the written consent of the Required Lenders.
(b) The copy of the Prospectus delivered to each Lender prior to the
date of this Agreement is a correct and complete copy of the Prospectus as filed
with the SEC and amended prior to the date of this Agreement.
SECTION 4.15. LEGALITY OF ACQUISITION; REPRESENTATIONS IN MERGER
AGREEMENT CORRECT. (a) On the Closing Date the Merger will be consummated in
compliance with all applicable laws and in accordance with the provisions of the
Merger Agreement. The consummation of the Merger will not (i) contravene any
provision of applicable law or regulation or of the charter or by-laws of any
party to the Merger Agreement, (ii) constitute a breach of or default under any
instrument or agreement binding upon any
65
such party or any of its Subsidiaries or of any judgment, injunction, order,
decree or other instrument binding upon any such party, except for breaches and
defaults which, in the aggregate, could not reasonably be expected to have a
Material Adverse Effect or (iii) will not result in the creation or imposition
of any Lien on any asset of any such party or any of its Subsidiaries, except
the Liens created by the Security Agreement.
(b) Each of the representations and warranties of each party
contained in the Merger Agreement is true and correct in all material respects
as of the date when made.
SECTION 4.16. NO STOCK PAYMENTS. Except for a dividend of $.10 per
share paid by AM Holdings with respect to its common stock as provided in the
Merger Agreement, neither the Borrower nor any Subsidiary has declared or made
any dividend, distribution or other payment since November 30, 1994 that would
have been prohibited by Section 5.12 if this Agreement had been in effect at all
times on and after November 30, 1994.
SECTION 4.17. HOSPITAL SALES. During the period from November 30,
1994 to and including the Closing Date, none of the Combined Companies have sold
or will sell any Hospital Assets, other than Hospital Assets owned by NME
Psychiatric and its Subsidiaries.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Lender has any Term Exposure
or Revolving Credit Exposure or any Swingline Loan remains outstanding or any
interest or fees accrued hereunder remain unpaid:
SECTION 5.01. INFORMATION. The Borrower will deliver to each Lender:
(a) as soon as available and in any event within 90 days after the
end of each Fiscal Year, an audited consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the end of such Fiscal
Year and the related audited consolidated statements of operations, cash
flows and changes in stockholders' equity for such Fiscal Year, setting
forth in each case in comparative form the figures for the previous Fiscal
Year, all reported on in a manner acceptable to the SEC by KPMG Peat
Marwick LLP or other independent public accountants of nationally
recognized standing;
66
(b) as soon as available and in any event within 45 days after the
end of each of the first three Fiscal Quarters of each Fiscal Year, a
condensed consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such Fiscal Quarter, the related condensed
consolidated statements of operations for such Fiscal Quarter and for the
portion of the Fiscal Year ended at the end of such Fiscal Quarter and the
related condensed consolidated statement of cash flows for the portion of
the Fiscal Year then ended, setting forth in the case of such condensed
consolidated statements of operations and cash flows in comparative form
the figures for the corresponding Fiscal Quarter and the corresponding
portion of the previous Fiscal Year, all certified (subject to normal
year-end adjustments) as to fairness of presentation and consistency with
GAAP by a Senior Officer of the Borrower;
(c) if financial statements of the Borrower and its Consolidated
Subsidiaries are delivered pursuant to clause (b) above for any Fiscal
Quarter ending at or before the consummation of the Merger, such financial
statements shall be accompanied by a condensed consolidated balance sheet
of AM Holdings and its Consolidated Subsidiaries as of the end of such
Fiscal Quarter, the related condensed consolidated statement of operations
for such Fiscal Quarter and the related condensed consolidated statement of
cash flows for the portion of AM Holdings' fiscal year then ended;
(d) concurrently with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of a
Senior Officer of the Borrower (i) setting forth in reasonable detail the
calculations required to establish whether the Borrower was in compliance
with the requirements of Sections 5.07 to 5.17, inclusive, on the date of
such financial statements and (ii) stating whether any Default exists on
the date of such certificate and, if any Default then exists, setting forth
the details thereof and the action which the Borrower is taking or proposes
to take with respect thereto;
(e) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement by the firm of
independent public accountants which reported on such statements that, in
making examination necessary for reporting on such financial statements,
they did not obtain knowledge of
67
any Default hereunder except as described in such statement;
(f) until the first date on which the Borrower receives an Investment
Grade Rating, as soon as available and in any event within 120 days after
the end of each Fiscal Year, (i) a consolidated balance sheet of NME
Hospitals and its Consolidated Subsidiaries as of the end of such Fiscal
Year and (ii) a consolidated balance sheet of AMI and its Consolidated
Subsidiaries as of the end of such Fiscal Year, in each case together with
the related consolidated statements of operations and cash flows for such
Fiscal Year, and setting forth in each case in comparative form the figures
for the previous Fiscal Year, such financial statements to be either (x)
reported on in a manner acceptable to the SEC by independent public
accountants of nationally recognized standing, if such a report is
available otherwise than by reason of this Agreement, or (y) certified as
to fairness of presentation and compliance with GAAP by a Senior Officer of
the Borrower;
(g) until the first date on which either (x) the Borrower receives an
Investment Grade Rating or (y) no AMI Post-1991 Debt Securities remain
outstanding, as soon as available and in any event within 60 days after the
end of each of the first three Fiscal Quarters of each Fiscal Year, a
condensed consolidated balance sheet of AMI and its Consolidated
Subsidiaries as of the end of such Fiscal Quarter, together with the
related condensed consolidated statements of operations for such Fiscal
Quarter and for the portion of the Fiscal Year ended at the end of such
Fiscal Quarter and the related condensed consolidated statement of cash
flows for the portion of the Fiscal Year then ended and setting forth in
the case of such condensed consolidated statements of operations and cash
flows in comparative form the figures for the corresponding Fiscal Quarter
and the corresponding portion of the previous Fiscal Year, all certified
(subject to normal year-end adjustments) as to fairness of presentation and
consistency with GAAP by a Senior Officer of the Borrower;
(h) within 45 days after the end of each Fiscal Quarter, a
certificate signed by a Senior Officer of the Borrower setting forth (i) by
date and amount all prepayments of the Term Loans required to have been
made during such Fiscal Quarter pursuant to subsections (c), (d), (e) and
(g) of Section 2.06, (ii) by date and amount, all Net Cash Proceeds of
Hospital Sales and
68
Excess Casualty Proceeds received during such Fiscal Quarter, (iii) by date
and amount, all Net Cash Proceeds of Hospital Sales and Excess Casualty
Proceeds applied to pay for Hospital Purchases during such Fiscal Quarter
or applied pursuant to subsection (b) or (f) of Section 2.06 to prepay Term
Loans during such Fiscal Quarter and (iv) a summary as of the end of such
Fiscal Quarter showing, by date and amount, all Net Cash Proceeds of
Hospital Sales and Excess Casualty Proceeds theretofore received which were
not theretofore invested in Hospital Purchases or applied pursuant to
subsection (b) or (f) of Section 2.06 to prepay Term Loans;
(i) within 45 days after the end of each Fiscal Quarter, a
certificate signed by a Senior Officer of the Borrower setting forth the
Pricing Level applicable during the Rate Period that begins 45 days after
the end of such Fiscal Quarter and in reasonable detail the calculations
required to establish that such Pricing Level will be applicable; PROVIDED
that (x) in the case of the last Fiscal Quarter of any Fiscal Year, such
certificate may set forth only the Borrower's estimate of the applicable
Pricing Level (it being understood that, if the Borrower in good faith
cannot determine with reasonable certainty which of two Pricing Levels
applies, the Borrower may, in view of the provisions of Section 2.17(b),
appropriately estimate that the lower of such Pricing Levels applies), and
(y) if such certificate sets forth only an estimated Pricing Level, the
Borrower shall, within 90 days after the end of such Fiscal Year, deliver a
further certificate signed by a Senior Officer of the Borrower setting
forth the calculations contemplated by this clause (i) and either
confirming that such estimated Pricing Level applies or, if not, setting
forth the Pricing Level that does apply during the relevant Rate Period and
requesting the Administrative Agent to determine the amounts of any
additional interest and/or additional fees payable by the Borrower pursuant
to Section 2.17(b);
(j) within five days after any officer of the Borrower obtains
knowledge of any Default, if such Default is then continuing, a certificate
of a Senior Officer of the Borrower setting forth the details thereof and
the action which the Borrower is taking or proposes to take with respect
thereto;
(k) promptly upon the mailing thereof to the shareholders of the
Borrower generally, copies of all
69
financial statements, reports and proxy statements so mailed;
(l) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements
on Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or
their equivalents) which the Borrower shall have filed with the SEC;
(m) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined
in Section 4043 of ERISA) with respect to any Plan which might constitute
grounds for a termination of such Plan under Title IV of ERISA, or knows
that the plan administrator of any Plan has given or is required to give
notice of any such reportable event, a copy of the notice of such
reportable event given or required to be given to the PBGC; (ii) receives
notice of complete or partial withdrawal liability under Title IV of ERISA
or notice that any Multiemployer Plan is in reorganization, is insolvent or
has been terminated, a copy of such notice; (iii) receives notice from the
PBGC under Title IV of ERISA of an intent to terminate, impose liability
(other than for premiums under Section 4007 of ERISA or premium-related
penalties) in respect of, or appoint a trustee to administer any Plan, a
copy of such notice; (iv) applies for a waiver of the minimum funding
standard under Section 412 of the Internal Revenue Code, a copy of such
application; (v) gives notice of intent to terminate any Plan under Section
4041(c) of ERISA, a copy of such notice and other information filed with
the PBGC; (vi) gives notice of withdrawal from any Plan pursuant to Section
4063 of ERISA, a copy of such notice; or (vii) fails to make any payment or
contribution to any Plan or Multiemployer Plan or in respect of any Benefit
Arrangement or makes any amendment to any Plan or Benefit Arrangement which
has resulted or could result in the imposition of a Lien or the posting of
a bond or other security, a certificate of a Senior Officer of the Borrower
setting forth details as to such occurrence and the action, if any, which
the Borrower or applicable member of the ERISA Group is required or
proposes to take;
(n) until the first date on which the Borrower receives an Investment
Grade Rating, as soon as available and approved by the Borrower's board of
directors, a copy of the Borrower's financial forecast for each Fiscal
Year; and
70
(o) from time to time such additional information regarding the
financial position or business of the Borrower and its Subsidiaries as the
Administrative Agent, at the request of any Lender, may reasonably request.
SECTION 5.02. PAYMENT OF OBLIGATIONS. The Borrower and each Included
Subsidiary will pay and discharge, at or before maturity, all their respective
material obligations and liabilities, including, without limitation, tax
liabilities, except where (i) the same may be contested in good faith by
appropriate proceedings or (ii) failure to pay and discharge the same, or cause
them to be paid and discharged, would not in the aggregate have a Material
Adverse Effect; PROVIDED that (x) the foregoing exceptions (i) and (ii) will not
apply to the Borrower's obligations and liabilities under the Financing
Documents, (y) the foregoing exception (i) will not apply to tax liabilities and
(z) the Borrower and its Included Subsidiaries shall maintain, in accordance
with GAAP, appropriate reserves for the accrual of all obligations and
liabilities to which the foregoing exceptions (i) and (ii) do apply.
SECTION 5.03. MAINTENANCE OF PROPERTY; INSURANCE. (a) The Borrower
and each Included Subsidiary will keep all property useful and necessary in its
business in good working order and condition, ordinary wear and tear excepted.
(b) The Borrower and each Included Subsidiary will maintain, with
financially sound and reputable insurance companies (which may be Affiliates of
the Borrower or part of the Borrower's self-insurance program) insurance on all
their properties in at least such amounts and against at least such risks as are
usually insured against in the same general area and by companies engaged in the
same or similar businesses and maintain professional liability and malpractice
insurance against claims usually insured against by medical personnel and
hospitals and other health facilities; and furnish to each Lender, upon written
request by any of the Agents, full information as to the insurance carried.
SECTION 5.04. CONDUCT OF BUSINESS, MAINTENANCE OF EXISTENCE AND
LIMITATION ON MERGERS AND SALES OF ASSETS. (a) The Borrower and its Included
Subsidiaries will continue to engage primarily in business of the same general
type as now conducted by the Borrower and its Included Subsidiaries.
71
(b) The Borrower and each Included Subsidiary will preserve, renew
and keep in full force and effect its corporate existence and take all
reasonable action to maintain its rights, privileges and franchises necessary or
desirable in the normal conduct of business, PROVIDED that the foregoing shall
not prohibit any merger or consolidation expressly permitted by this Section.
(c) Except as permitted by subsection (e) below, the Borrower will
not merge or consolidate with any other Person unless the Borrower is the
surviving corporation and, after giving effect to such merger or consolidation,
no Default shall have occurred and be continuing. The Borrower will not merge
or consolidate with any Subsidiary of NME Psychiatric or any Excluded
Subsidiary.
(d) No Included Subsidiary will merge or consolidate with any other
Person unless, after giving effect to such merger or consolidation, no Default
shall have occurred and be continuing and either (i) such merger or
consolidation is permitted by subsection (e) below or (ii) the Borrower elects,
by notice to the Administrative Agent, to treat such merger or consolidation as
an Asset Sale (i.e., a disposition of the net assets of such Included
Subsidiary) for purposes of this Agreement and such Asset Sale is permitted by
Section 5.16.
(e) Notwithstanding the foregoing provisions of this Section, (i) any
Included Subsidiary may reincorporate in another state or merge with or into the
Borrower or another Included Subsidiary and (ii) the Borrower may reincorporate
in another state or merge with or into an Included Subsidiary, PROVIDED that (x)
the corporation surviving any merger with the Borrower (if other than the
Borrower) is incorporated under the laws of a state of the United States and
assumes in writing all the obligations of the Borrower hereunder and said
surviving corporation delivers to each Lender an opinion of counsel for the
Borrower, in form and substance satisfactory to the Required Lenders, to the
effect that the assumption by such surviving corporation of such obligations is
effective and is fully binding upon and enforceable against such surviving
corporation and (y) AMI and its Subsidiaries may merge with each other, but, so
long as any Debt of AMI permitted by Section 5.10(d) or (e) is outstanding, AMI
and its Subsidiaries may not merge with any of the Combined Companies other than
AMI and its Subsidiaries.
(f) So long as any AMI Post-1991 Debt Securities remain outstanding,
the Combined Companies (other than AMI and its Subsidiaries) will not sell or
transfer assets
72
having an aggregate book value in excess of $1,000,000 to AMI or any of its
Subsidiaries.
(g) The Combined Companies will not sell, transfer or otherwise
dispose of any of their respective assets to (x) any Designated International
Subsidiary or any of its Subsidiaries or (y) NME Psychiatric or any of its
Subsidiaries; PROVIDED that (i) the Designated International Subsidiaries and
their respective Subsidiaries may sell, transfer or otherwise dispose of their
respective assets to each other and (ii) NME Psychiatric and its Subsidiaries
may sell, transfer or otherwise dispose of their respective assets to each
other.
SECTION 5.05. COMPLIANCE WITH LAWS. The Borrower and each Included
Subsidiary will comply with all material applicable laws, ordinances, rules,
regulations and requirements of governmental authorities (including without
limitation Environmental Laws, ERISA and the rules and regulations thereunder
and Public Law 92-603), and hold and maintain in full force and effect all
certifications, governmental approvals, licenses and permits necessary or desir-
able to enable the Borrower and its Included Subsidiaries to conduct their
respective businesses as now conducted, except where the failure to comply
therewith or hold and maintain such certifications, governmental approvals,
licenses or permits would not have a Material Adverse Effect.
SECTION 5.06. INSPECTION OF PROPERTY, BOOKS AND RECORDS. The
Borrower and each Included Subsidiary will keep proper books of record and
account in which full, true and correct entries shall be made of all dealings
and transactions in relation to its business and activities; and will permit
representatives of any Lender at such Lender's expense to visit and inspect any
of their respective properties, to examine and make abstracts (at such Lender's
expense, unless an Event of Default shall have occurred and be continuing, in
which case at the Borrower's expense) from any of their respective books and
records and to discuss their respective affairs, finances and accounts with
officers of the Borrower and with the accountants of the Borrower, all upon
reasonable notice and at such reasonable times and as often as may reasonably be
desired.
SECTION 5.07. FIXED CHARGE RATIO. At the end of each Fiscal Quarter
ending after the Closing Date, the ratio of (i) the sum of Consolidated EBITDA
plus Consolidated Rental Expense to (ii) the sum of Consolidated Interest
Expense plus Consolidated Rental Expense, all calculated for the period of four
consecutive Fiscal Quarters then ended,
73
will not be less than the ratio set forth below opposite the period in which
such period of four consecutive Fiscal Quarters ends:
74
Period Ratio
------ -----
Closing Date through November 30, 1995 2.0 to 1
December 1, 1995 through November 30, 1996 2.25 to 1
December 1, 1996 through November 30, 1997 2.35 to 1
December 1, 1997 through November 30, 1998 2.5 to 1
After November 30, 1998 3.0 to 1
SECTION 5.08. DEBT RATIO. At the close of business on any day on or
after the Closing Date, the ratio of (i) Total Debt at such time to (ii)
Consolidated EBITDA for the period of four consecutive Fiscal Quarters most
recently ended at or prior to such time will not be greater than the ratio set
forth below opposite the period in which such day is included:
Period Ratio
------ -----
Closing Date through November 30, 1995 3.9 to 1
December 1, 1995 through November 30, 1996 3.5 to 1
December 1, 1996 through November 30, 1997 3.0 to 1
December 1, 1997 through November 30, 1998 2.5 to 1
December 1, 1998 through November 30, 1999 2.25 to 1
After November 30, 1999 2.0 to 1
SECTION 5.09. ADJUSTED CONSOLIDATED NET WORTH. Adjusted Consolidated
Net Worth will at no time be less than the sum of (i) $1,700,000,000 plus (ii)
75% of the consolidated net income of the Combined Companies for each Fiscal
Quarter ended after November 30, 1994, if such consolidated net income for such
Fiscal Quarter is positive, plus (iii) 100% of the amount by which the
consolidated stockholders' equity of the Borrower and its Consolidated
Subsidiaries is increased after November 30, 1994 as a result of any issuance or
sale of Equity Interests by the Borrower (other than the issuance of common
stock of the Borrower as part of the consideration for the Acquisition).
SECTION 5.10. LIMITATIONS ON DEBT. After the Closing Date, neither
the Borrower nor any Included Subsidiary will incur, assume or otherwise be
liable in respect of any Debt, except:
(a) Debt outstanding under this Agreement;
(b) the Senior Notes and the Subordinated Notes;
(c) the Metrocrest Bonds and the obligations of the Borrower under
the Metrocrest Reimbursement Agreement;
75
(d) Debt outstanding at the close of business on the Closing Date
which the Borrower or AMI has become obligated to purchase, redeem or
otherwise retire within 60 days thereafter pursuant to the NME Tender
Offers, the AMI Tender Offers and the AMI Redemptions;
(e) Debt (other than the Debt covered by the foregoing clauses of
this Section) outstanding at the close of business on the Closing Date in
an aggregate principal or face amount not exceeding $680,000,000;
(f) unsecured Debt of the Borrower incurred to refinance Debt of the
Borrower or AMI described in clauses (a) and (e) above and secured or
unsecured Debt of the Borrower incurred to refinance Debt described in
clause (c) above; PROVIDED that any Debt incurred pursuant to this clause
(f) shall have terms and conditions satisfactory to the Required Lenders;
(g) NME Non-Recourse Debt which is incurred solely to finance Capital
Expenditures permitted by Section 5.11; PROVIDED that the aggregate
outstanding principal or face amount of (i) all NME Non-Recourse Debt
permitted by this clause (g) and (ii) all Debt permitted by clause (k)
below shall not exceed $25,000,000 at any time;
(h) International Non-Recourse Debt;
(i) Debt of any Person which becomes an Included Subsidiary after the
Closing Date; PROVIDED that (i) such Debt is outstanding when such Person
becomes such an Included Subsidiary and was not created in contemplation of
such event and (ii) the aggregate outstanding principal or face amount of
all such Debt permitted by this clause (i) shall not exceed $100,000,000 at
any time;
(j) Guarantees by the Borrower or any Included Subsidiary of Debt
relating to the assets disposed of in any Hospital Sale, Hospital Swap or
Asset Sale; PROVIDED that (i) such Debt was outstanding when such assets
were disposed of and was not created in contemplation of the disposition
thereof and (ii) the sum of (x) the aggregate outstanding principal amount
of all Debt which is Guaranteed by the Borrower or any of its Included
Subsidiaries pursuant to this clause (j) and (y) the aggregate amount of
all lease payments under operating leases which are Guaranteed by the
Borrower or any Included Subsidiary pursuant to Section 5.15(a) shall not
exceed $200,000,000 at any time;
76
(k) Debt consisting of obligations of the Borrower or any Included
Subsidiary as lessee which are capitalized in accordance with GAAP;
PROVIDED that the aggregate outstanding principal or face amount of (A) all
Debt permitted by this clause (k) and (B) all NME Non-Recourse Debt
permitted by clause (g) above shall not exceed $25,000,000 at any time;
(l) Debt of any Included Subsidiary not otherwise permitted by the
foregoing clauses of this Section, subject to Section 5.23; PROVIDED that
the aggregate outstanding principal or face amount of all Debt of Included
Subsidiaries permitted by this clause (l) shall not exceed $10,000,000 at
any time;
(m) Debt under the Advance Account Agreement not exceeding Singapore
dollars 18,500,000 and Debt under the Overdraft Facility Agreement not
exceeding $20,000,000 in aggregate outstanding principal amount; and
(n) unsecured Debt of the Borrower not otherwise permitted by the
foregoing clauses of this Section; PROVIDED that the aggregate principal or
face amount of all Debt of the Borrower permitted by this clause (n) shall
not exceed $10,000,000 at any time.
SECTION 5.11. CAPITAL EXPENDITURES. Consolidated Capital
Expenditures will not exceed $425,000,000 for any Fiscal Year ending after the
Closing Date.
SECTION 5.12. RESTRICTED PAYMENTS. Neither the Borrower nor any
Subsidiary will declare or make (i) any dividend or other distribution on any
shares of capital stock of the Borrower (except dividends payable solely in
shares of its capital stock) or (ii) any payment on account of the purchase,
redemption, retirement, acquisition, defeasance or prepayment of any Equity
Interests in the Borrower.
SECTION 5.13. INVESTMENTS. Neither the Borrower nor any Included
Subsidiary will make or acquire any Investment in any Person after the Closing
Date, except:
(a) Temporary Cash Investments;
(b) Investments in Wholly-Owned Included Subsidiaries, including any
Person which is a Wholly-Owned Included Subsidiary immediately after such
Investment is made;
77
(c) Investments not exceeding $10,000,000 in aggregate amount
resulting from a performance guarantee and related letter of credit issued
on or about December 3, 1994 to support an agreement to continue operating
a specific hospital in Spain for 10 years;
(d) Investments with respect to the operations of the Designated
International Subsidiaries and their respective Subsidiaries in Spain;
PROVIDED that the aggregate cost of all such Investments made after
November 30, 1994 (excluding Investments permitted by clause (c) above, but
including all other Guarantees valued at the amount guaranteed) shall not
exceed $10,000,000;
(e) Investments in South Miami Hospitals; PROVIDED that the aggregate
cost of all such Investments (including Guarantees valued at the amount
guaranteed) made after November 30, 1994 shall not exceed $100,000,000; and
(f) any Investment not expressly permitted by the foregoing clauses
of this Section; PROVIDED that (i) immediately after such Investment is
made or acquired, the aggregate cost of all such Investments made or
acquired by the Combined Companies after November 30, 1994 does not exceed
$250,000,000, (ii) immediately after such Investment is made or acquired,
the aggregate cost of all such Investments made or acquired by the Borrower
and the Included Subsidiaries after November 30, 1994 in Persons other than
the Combined Companies does not exceed $100,000,000 and (iii) no Investment
in an Excluded Subsidiary shall be made or acquired pursuant to this clause
(f).
SECTION 5.14. NEGATIVE PLEDGE. After the Closing Date, neither the
Borrower nor any Included Subsidiary will create, assume or suffer to exist any
Lien on any asset now owned or hereafter acquired by it, except:
(a) any Lien created pursuant to the Security Agreement;
(b) any Lien existing prior to the Closing Date securing Debt (other
than the Borrower's obligations under the Metrocrest Reimbursement
Agreement) that is permitted to remain outstanding after the Closing Date
under Section 5.10(e);
(c) any Lien on bonds issued by the Metrocrest Hospital Authority
(and related proceeds and other
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distributions) granted to secure the Borrower's obligations under the
Metrocrest Reimbursement Agreement and the Securities Pledge and Security
Agreement referred to therein;
(d) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by clause (b) above;
PROVIDED that (i) the principal amount of such Debt is not increased and
(ii) such Debt is not secured by any additional assets;
(e) if the letters of credit issued pursuant to the Metrocrest
Reimbursement Agreement are replaced by other letters of credit issued for
the same purpose, any Lien securing the Borrower's obligations under the
reimbursement agreement relating to such replacement letters of credit;
PROVIDED that (i) the aggregate amount of such letters of credit is not
increased and (ii) the Borrower's obligations under the related
reimbursement agreement are not secured or required to be secured by any
assets except the assets by which the Borrower's obligations under the
Metrocrest Reimbursement Agreement are secured or required to be secured;
(f) any Lien securing any NME Non-Recourse Debt permitted pursuant to
Section 5.10(g); PROVIDED that in each case such Lien attaches only to
assets that were acquired with the proceeds of such NME Non-Recourse Debt;
(g) any Lien on assets of a Person which becomes an Included
Subsidiary after the Closing Date; PROVIDED that such Lien secures only
Debt of such Person permitted to remain outstanding pursuant to Section
5.10(i);
(h) carriers', warehousemen's, mechanics', transporters,
materialmen's, repairmen's or other like Liens arising in the ordinary
course of business;
(i) any Lien imposed by any governmental authority for taxes,
assessments, governmental charges, duties or levies not yet due or which
are being contested in good faith and by appropriate proceedings; PROVIDED
that adequate reserves with respect thereto are maintained on the books of
the Borrower and its Consolidated Subsidiaries in accordance with GAAP;
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(j) Liens on cash and cash equivalents securing obligations of the
Borrower and its Subsidiaries with respect to workmen's compensation,
malpractice and other similar insurance policies; PROVIDED that the
aggregate amount of cash and cash equivalents subject to such Liens may not
exceed $16,000,000 at any time;
(k) Liens arising in the ordinary course of business (other than
Liens permitted by clause (h), (i) or (j) above) which (i) do not secure
Financial Obligations, (ii) do not secure any single obligation in an
outstanding amount exceeding $5,000,000 and (iii) do not secure obligations
in an aggregate outstanding amount exceeding $25,000,000;
(l) Liens on cash and cash equivalents securing Hedging Obligations,
PROVIDED that the aggregate amount of cash and cash equivalents subject to
such Liens may not exceed $50,000,000 at any time;
(m) any Lien on an asset leased by the Borrower or an Included
Subsidiary under a capital lease permitted pursuant to Section 5.10
securing its obligations as lessee under such capital lease; and
(n) Liens not otherwise permitted by the foregoing clauses of this
Section securing Debt (other than the Senior Notes or the Subordinated
Notes); PROVIDED that, immediately after any such Debt is incurred, the
aggregate outstanding principal or face amount of all Debt secured pursuant
to this clause (n) shall not exceed $2,000,000.
SECTION 5.15. LEASES. (a) OPERATING LEASES. After the Closing Date,
neither the Borrower nor any Included Subsidiary will incur, assume or otherwise
become liable (pursuant to a Guarantee or otherwise) for rental payments under
any operating lease if, immediately after giving effect thereto, the aggregate
amount of minimum rental payments for which the Borrower and its Included
Subsidiaries are liable under all operating leases entered into or Guaranteed by
the Borrower and its Included Subsidiaries after November 30, 1994 would exceed,
on a consolidated basis, $10,000,000 for any Fiscal Year.
(b) SALE-LEASEBACK TRANSACTIONS. After the Closing Date, neither the
Borrower nor any Included Subsidiary will engage in any Sale-Leaseback
Transaction other than a Medical Office Sale-Leaseback Transaction.
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SECTION 5.16. ASSET SALES. After the Closing Date, neither the
Borrower nor any Included Subsidiary will make any Asset Sale or Hospital Sale
unless:
(i) at least 80% of the aggregate amount of the consideration
received for such Asset Sale or Hospital Sale consists of cash (it being
understood that, for purposes of this Section, (x) any assumption of
liabilities of the Borrower or such Included Subsidiary by the transferee
of the relevant assets shall not constitute "consideration received" and
(y) any notes or other securities received from such transferee shall
constitute "cash" if and to the extent that they are sold or otherwise
converted to cash substantially concurrently with the closing of such Asset
Sale or Hospital Sale);
(ii) the portion of the consideration received for such Asset Sale or
Hospital Sale that does not consist of cash consists of promissory notes or
other debt securities;
(iii) immediately after giving effect to such Asset Sale or Hospital
Sale, the aggregate unpaid principal amount of all promissory notes and
other debt securities received by the Combined Companies as payment for all
Asset Sales and Hospital Sales after November 30, 1994 does not exceed
$250,000,000; PROVIDED that this clause (iii) shall not apply to (x) any
promissory notes or other debt securities converted to cash substantially
concurrently with the closing of the relevant Asset Sale or Hospital Sale
or (y) any other promissory notes or debt securities sold to a Person
(other than one of the Combined Companies) after the relevant Asset Sale or
Hospital Sale if, but only to the extent that, one of the Combined
Companies received cash as consideration for such sale of notes or debt
securities;
(iv) immediately after giving effect to such Asset Sale or Hospital
Sale, the aggregate book value (when sold) of all assets sold, transferred
or otherwise disposed of by the Combined Companies in all Asset Sales and
Hospital Sales after November 30, 1994 does not exceed 15% of Consolidated
Plant, Property and Equipment; and
(v) immediately after giving effect to such Asset Sale or Hospital
Sale, the sum of the amounts referred to in clause (iv) of this Section and
clause (i)(A) of
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Section 5.17 does not exceed 20% of Consolidated Plant, Property and
Equipment.
SECTION 5.17. HOSPITAL SWAPS. After the Closing Date, neither the
Borrower nor any Included Subsidiary shall consummate any Hospital Swap unless,
immediately after giving effect thereto:
(i) the sum of (A) the aggregate net book value of all assets
disposed of by the Combined Companies in Hospital Swaps after November 30,
1994 (determined as to each such Hospital Swap as of the closing thereof,
net of any liabilities of the Combined Companies assumed by the party to
which the relevant assets were transferred) and (B) the Net Cash Proceeds
of Hospital Sales made after the Closing Date that have been applied to pay
for Hospital Purchases or are still being held for application to pay for
Hospital Purchases does not exceed 15% of Consolidated Plant, Property and
Equipment and
(ii) the sum of the amounts referred to in clause (i)(A) of this
Section and clause (iv) of Section 5.16 does not exceed 20% of Consolidated
Plant, Property and Equipment.
SECTION 5.18. RESTRICTIONS ON OTHER AGREEMENTS. Neither the Borrower
nor any of its Included Subsidiaries will:
(a) enter into any agreement or arrangement which (i) would limit in
any way the ability of the Borrower or any Included Subsidiary to grant a
Lien on any of its assets, whether now owned or hereafter acquired, to
secure the obligations of the Borrower under the Financing Documents,
including without limitation any such agreement or arrangement which would
require any other obligation of the Borrower or any Included Subsidiary
(except the Borrower's obligations under the Metrocrest Reimbursement
Agreement or any reimbursement agreement that replaces it) to be equally
and ratably secured by such Lien;
(b) enter into any agreement or arrangement which would limit in any
way the ability of any Included Subsidiary to declare or pay any dividend;
or
(c) enter into any amendment or waiver of any provision of any
indenture, agreement or other instrument evidencing or pursuant to which
any Debt of the Borrower or any of its Subsidiaries is outstanding
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which would, if entered into, adversely affect either (i) the Borrower and
its Included Subsidiaries, taken as a whole, or (ii) the Lenders.
SECTION 5.19. NO CHANGE OF ACCOUNTING PRACTICES. The Borrower will
not, and will not permit any of its Subsidiaries to, adopt any material change
in its accounting principles or reporting practices, except (i) any such change
permitted or required by GAAP as in effect from time to time or (ii) any such
change required to conform the accounting principles and reporting practices
used by AM Holdings and its Subsidiaries to those used by the Borrower and its
Subsidiaries.
SECTION 5.20. NO SALES OF RECEIVABLES. Neither the Borrower nor any
Included Subsidiary will sell or otherwise transfer any of its accounts
receivable to any Person other than (i) the Borrower or (ii) a Wholly-Owned
Included Subsidiary (other than AMI and its Subsidiaries); PROVIDED that such
accounts receivable may be transferred to collection agencies for collection in
the ordinary course of business.
SECTION 5.21. USE OF PROCEEDS. (a) The proceeds of the Term Loans
will be used by the Borrower:
(i) on the Closing Date to pay in full the principal of all loans and
reimbursement obligations then outstanding under NME's Existing Credit
Agreement and all interest and fees accrued thereunder or to pay directly
obligations supported by any letter of credit outstanding NME's Existing
Credit Agreement;
(ii) on the Closing Date to make a loan to AMI in an amount sufficient
to pay in full the principal of all loans and reimbursement obligations
then outstanding under AMI's Existing Credit Agreement and all interest and
fees accrued thereunder;
(iii) from time to time on and after the Closing Date to pay all
amounts payable pursuant to the NME Tender Offers;
(iv) from time to time on and after the Closing Date to pay in full,
or make loans to AMI in amounts sufficient to pay in full, all amounts
payable pursuant to the AMI Tender Offers and the AMI Redemptions;
(v) from time to time on and after the Closing Date to prepay or
defease Debt permitted to be prepaid or defeased pursuant to Section
5.22(a); and
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(vi) to finance the Acquisition and pay transaction costs incurred in
connection therewith.
(b) The proceeds of the Revolving Credit Loans will be used by the
Borrower for purposes specified in subsection (a) of this Section and for
general corporate purposes.
(c) The Letters of Credit will be used to replace certain letters of
credit outstanding immediately prior to the Closing Date and to meet the needs
of the Borrower and its Included Subsidiaries for further letters of credit in
the ordinary course of business.
(d) None of the proceeds of the Loans will be used, directly or
indirectly, for the purpose, whether immediate, incidental or ultimate, of
buying or carrying any "margin stock" within the meaning of Regulation U in any
manner which would (i) violate any applicable law or regulation or (ii) require
any Form FRU-1 or any successor form to be executed.
SECTION 5.22. RESTRICTION ON PREPAYING OR EXTENDING OTHER DEBT. (a)
Neither the Borrower nor any Included Subsidiary will prepay, defease or
purchase any Debt of the Borrower or any Included Subsidiary; PROVIDED that the
foregoing prohibition shall not apply to:
(i) the NME Tender Offers, the AMI Tender Offers and the AMI
Redemptions;
(ii) Debt of the Borrower outstanding under this Agreement;
(iii) any prepayment or defeasance of the Borrower's 12 1/8% Notes due
April 1, 1995;
(iv) any prepayment of AMI's 8 1/4% Convertible Debentures due 2008;
or
(v) any prepayment, defeasance or purchase of any other Debt less than
12 months before the final maturity thereof.
(b) AMI will not extend the final maturity of any Debt of AMI
permitted to remain outstanding under Section 5.10(e) beyond the currently
scheduled maturity date thereof.
SECTION 5.23. LIMITATION ON ACTIVITIES. (a) Finco shall cease doing
business on or before the Closing
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Date and shall have no Debt outstanding after the close of business on the
Closing Date.
(b) So long as NME Properties Corp. or NME Properties, Inc. holds any
Designated Investment that has not been pledged with the Collateral Agent under
the Security Agreement (or any proceeds of any such Investment), neither NME
Properties Corp. nor NME Properties, Inc. will (i) engage in any business other
than holding Investments, (ii) incur, assume or otherwise be liable for any Debt
or (iii) transfer any such Designated Investment to the Borrower or any other
Affiliate of the Borrower; PROVIDED that (i) NME Properties Corp. may continue
to own and operate two convalescent centers and one nursing home owned by it at
November 30, 1994 and (ii) NME Properties Inc. may continue to own and operate
one nursing home owned by it at November 30, 1994.
SECTION 5.24. SENIOR STATUS. The obligations of the Borrower under
the Financing Documents will at all times constitute "senior debt" as defined in
any instrument or agreement evidencing or governing any subordinated debt of the
Borrower (including without limitation the Subordinated Notes) outstanding on or
after the Closing Date.
SECTION 5.25. LOANS TO AMI. Each loan made to AMI pursuant to clause
(ii) or (iv) of Section 5.21(a) will be evidenced by a promissory note of AMI
which will be promptly delivered to the Collateral Agent as part of the
Collateral under the Security Agreement. The Borrower will not forgive any
portion of any such loan or amend any material term thereof.
ARTICLE VI
DEFAULTS
SECTION 6.01. EVENTS OF DEFAULT. If one or more of the following
events ("Events of Default") shall have occurred:
(a) any principal of any Loan or any Reimbursement Obligation shall
not be paid when due;
(b) any interest on any Loan or Reimbursement Obligation, any fee or
any other amount payable under any Financing Document shall not be paid
within three Domestic Business Days after it becomes due;
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(c) the Borrower shall fail to observe or perform any covenant
contained in Section 5.04 or Sections 5.07 through 5.25, inclusive, hereof
or in Section 4(B) or 5 of the Security Agreement;
(d) the Borrower shall fail to observe or perform any covenant or
agreement contained in any Financing Document (other than those covered by
clause (a), (b) or (c) above) within 30 days after such failure occurs or,
if later, 10 days after written notice thereof has been given to the
Borrower by the Administrative Agent at the request of the Required
Lenders;
(e) any representation, warranty, certification or statement made by
the Borrower or any Subsidiary in any Financing Document or in any
certificate, financial statement or other document delivered pursuant
thereto shall prove to have been incorrect in any material respect when
made (or deemed made);
(f) the Borrower and/or one or more Included Subsidiaries shall fail
to make one or more payments in respect of Material Financial Obligations
when due or within any applicable grace period;
(g) any event or condition shall occur which results in the
acceleration of the maturity of Material Financial Obligations, or enables
(any applicable grace period having expired) the holder or holders of
Material Financial Obligations or any Person acting on their behalf to
accelerate the maturity thereof;
(h) any event or condition shall occur which, with the giving of
notice or lapse of time or both, would enable the holder or holders of
Material Financial Obligations or any Person acting on their behalf to
accelerate the maturity thereof, and (i) the Required Lenders shall have
determined, in their sole discretion, that such event or condition (unless
cured or waived) should be an Event of Default hereunder, (ii) the
Administrative Agent shall have given written notice of such determination
to the Borrower and (iii) the Borrower shall have failed to cause such
event or condition to be cured or waived within two Domestic Business Days
after receiving such notice;
(i) any default shall occur under the relevant document which (x)
results in the cancellation of Material Commitments or (y) enables (any
applicable grace period having expired) the Person or Persons that
86
made such Material Commitments or any Person acting on their behalf to
cancel such Material Commitments;
(j) any default shall occur under the relevant document which, with
the giving of notice or lapse of time or both, would enable the Person or
Persons that made any Material Commitments or any Person acting on their
behalf to cancel such Material Commitments and (i) the Required Lenders
shall have determined, in their sole discretion, that such event or
condition (unless cured or waived) should be an Event of Default hereunder,
(ii) the Administrative Agent shall have given written notice of such
determination to the Borrower and (iii) the Borrower shall have failed to
cause such event or condition to be cured or waived within two Domestic
Business Days after receiving such notice;
(k) the Borrower or any Included Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation, reorganization or
other relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, or shall consent to
any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against it,
or shall make a general assignment for the benefit of creditors, or shall
fail generally to pay its debts as they become due, or shall take any
corporate action to authorize any of the foregoing;
(l) an involuntary case or other proceeding shall be commenced
against the Borrower or any Included Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain undismissed and
unstayed for a period of 60 days; or an order for relief shall be entered
against the Borrower or any Included Subsidiary under the federal
bankruptcy laws as now or hereafter in effect;
87
(m) any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $25,000,000 which it shall have
become liable to pay under Title IV of ERISA; or notice of intent to
terminate a Material Plan shall be filed under Title IV of ERISA by any
member of the ERISA Group, any plan administrator or any combination of the
foregoing; or the PBGC shall institute proceedings under Title IV of ERISA
to terminate, to impose liability (other than for premiums under Section
4007 of ERISA or premium-related penalties) in respect of, or to cause a
trustee to be appointed to administer any Material Plan; or a condition
shall exist by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any Material Plan must be terminated; or there
shall occur a complete or partial withdrawal from, or a default, within the
meaning of Section 4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause one or more members of the ERISA
Group to incur a current payment obligation in excess of $25,000,000;
(n) a judgment or order for the payment of money in excess of
$25,000,000 (net of insurance to the extent that the insurer shall have
admitted coverage thereof) shall be rendered against the Borrower or any
Included Subsidiary and such judgment or order shall continue unsatisfied
and unstayed for a period of 30 days;
(o) any person or group of persons (within the meaning of Section 13
or 14 of the Exchange Act) shall have acquired beneficial ownership (within
the meaning of Rule 13d-3 promulgated by the SEC under the Exchange Act) of
20% or more of the outstanding shares of common stock of the Borrower; or
Continuing Directors shall no longer constitute a majority of the
Borrower's board of directors; or
(p) any Lien on any portion of the Collateral created by the Security
Agreement shall at any time and for any reason (except a release of such
Collateral pursuant to Section 16 of the Security Agreement) not constitute
a valid and perfected Lien on such portion of the Collateral subject to no
prior or equal Lien, or the Borrower shall so assert in writing;
then, and in every such event, while such event is continuing, the
Administrative Agent shall (i) if requested by Lenders having more than 50% in
aggregate amount of the Revolving Credit Commitments and the unused Term
Commitments (if then in effect), by notice to the Borrower terminate the
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Commitments and they shall thereupon terminate, (ii) if requested by Lenders
holding Notes evidencing more than 50% in aggregate outstanding principal amount
of the Loans, by notice to the Borrower declare the Notes (together with accrued
interest thereon) to be, and the Notes shall thereupon become, immediately due
and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower; PROVIDED that, if any Event of
Default specified in clause (k) or (l) above occurs with respect to the
Borrower, then without any notice to the Borrower or any other act by the
Administrative Agent or the Lenders, the Commitments shall thereupon terminate
and the Notes (together with accrued interest thereon) shall become immediately
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower.
SECTION 6.02. NOTICE OF DEFAULT. The Administrative Agent shall give
notice to the Borrower under clause (d), (h) or (j) of Section 6.01 promptly
upon being requested to do so by the Required Lenders and shall thereupon notify
all the Lenders thereof.
SECTION 6.03. CASH COVER. If any Event of Default shall have
occurred and be continuing, the Borrower shall, if requested by the
Administrative Agent at the request of the Required Revolving Credit Lenders,
pay to the Administrative Agent an amount in immediately available funds (which
funds shall be held as collateral pursuant to arrangements satisfactory to the
Administrative Agent) equal to the aggregate amount available for drawing under
all Letters of Credit then outstanding, PROVIDED that, if any Event of Default
specified in clause (k) or (l) of Section 6.01 occurs with respect to the
Borrower, the Borrower shall be obligated to pay such amount to the
Administrative Agent forthwith without any notice to the Borrower or any other
act by the Administrative Agent or the Lenders.
ARTICLE VII
THE AGENTS
SECTION 7.01. APPOINTMENT AND AUTHORIZATION. (a) Each Lender
irrevocably appoints and authorizes each Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement as are delegated to
it by the terms hereof, together with all such powers as are reasonably
incidental thereto.
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(b) Each of the Lenders, the Agents (other than the Collateral
Agent), the Metrocrest Banks and the Metrocrest Issuing Bank irrevocably
appoints and authorizes the Collateral Agent to execute and deliver the Security
Agreement and to take such action as agent on its behalf and to exercise such
powers under the Security Agreement as are delegated to it by the terms thereof,
together with all such powers as are reasonably incidental thereto.
SECTION 7.02. AGENTS AND AFFILIATES. Each of Morgan Guaranty Trust
Company of New York, Bank of America National Trust and Savings Association, The
Bank of New York and Bankers Trust Company shall have the same rights and powers
under the Financing Documents as any other Lender and may exercise or refrain
from exercising the same as though it were not an Agent, and each of Morgan
Guaranty Trust Company of New York, Bank of America National Trust and Savings
Association, The Bank of New York and Bankers Trust Company and their respective
Affiliates may accept deposits from, lend money to, and generally engage in any
kind of business with the Borrower or any of the Borrower's Affiliates as if it
were not an Agent under any of the Financing Documents.
SECTION 7.03. ACTION BY ANY ADMINISTRATIVE AGENT. The obligations of
the Administrative Agent hereunder are only those expressly set forth herein.
Without limiting the generality of the foregoing, the Administrative Agent shall
not be required to take any action with respect to any Default, except as
expressly provided in Article VI.
SECTION 7.04. CONSULTATION WITH EXPERTS. Any Agent may consult with
legal counsel (who may be counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
SECTION 7.05. LIABILITY OF THE AGENTS. Neither any Agent nor any of
its Affiliates nor any of their respective directors, officers, agents or
employees shall be liable for any action taken or not taken by it in connection
with this Agreement or the Notes (i) in the absence of its own gross negligence
or willful misconduct or (ii) with the consent or at the request of the Required
Lenders, PROVIDED that this clause (ii) shall not affect any rights the Borrower
may have against the Revolving Credit Lenders that made such request. Neither
any Agent nor any of its Affiliates nor any of their respective directors,
officers, agents or employees shall be responsible for or have any
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duty to ascertain, inquire into or verify (i) any statement, warranty or
representation made in connection with any Financing Document or any Extension
of Credit; (ii) the performance or observance of any of the covenants or
agreements of the Borrower in any Financing Document; (iii) the satisfaction of
any condition specified in Article III, except, in the case of the
Administrative Agent, receipt of items required to be delivered to it; or (iv)
the validity, effectiveness or genuineness of any Financing Document or any
other instrument or writing furnished in connection therewith. The
Administrative Agent shall not incur any liability by acting in reliance upon
any notice, consent, certificate, statement, or other writing (which may be a
bank wire, telex, facsimile transmission or similar writing) believed by it to
be genuine or to be signed by the proper party or parties.
SECTION 7.06. INDEMNIFICATION. Each Lender shall, ratably in
accordance with its Total Credit Exposure, indemnify each Agent (except the
Collateral Agent), the Swingline Bank, their respective Affiliates and their
respective directors, officers, agents and employees (to the extent not
reimbursed by the Borrower) against any cost, expense (including counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from the relevant indemnitee's gross negligence or willful misconduct)
that such indemnitees may suffer or incur in connection with the Financing
Documents or any action taken or omitted by the relevant indemnitee thereunder.
SECTION 7.07. CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon any Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon any Agent or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under the Financing Documents.
SECTION 7.08. SUCCESSOR ADMINISTRATIVE AGENT. The Administrative
Agent may resign at any time by giving notice thereof to the Lenders and the
Borrower. Upon any such resignation, the Required Lenders shall have the right
to appoint a successor Administrative Agent. If no successor Administrative
Agent shall have been so appointed by the Required Lenders, and shall have
accepted such appointment, within 30 days after the retiring Administrative
Agent gives notice of resignation, then the
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retiring Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which shall be a commercial bank organized or licensed
under the laws of the United States of America or of any State thereof and
having a combined capital and surplus of at least $50,000,000. Upon the
acceptance of its appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder. After any retiring Administrative
Agent's resignation hereunder as Administrative Agent, the provisions of this
Article shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Administrative Agent.
SECTION 7.09. AGENTS' FEES. The Borrower shall pay to each Agent for
its own account fees in the amounts and at the times previously agreed upon
between the Borrower and such Agent.
SECTION 7.10. ARRANGING AGENTS. The Arranging Agents, in their
capacities as such, shall have no duties or obligations of any kind under the
Financing Documents and shall not have a fiduciary relationship with any Lender.
SECTION 7.11. SECURITY AGREEMENT. Each party hereto, in its
capacity as a Secured Party under the Security Agreement, agrees to be bound by
the provisions of the Security Agreement applicable to it, including without
limitation the provisions of Sections 11 and 14 thereof.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR
UNFAIR. If on or prior to the first day of any Interest Period for any Euro-
Dollar Loan:
(a) the Administrative Agent is advised by the Euro-Dollar Reference
Banks that deposits in dollars (in the applicable amounts) are not being
offered to the Euro-Dollar Reference Banks in the relevant market for such
Interest Period, or
(b) Lenders having 50% or more of the aggregate principal amount of
the affected Loans advise the Administrative Agent that the Adjusted London
Interbank
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Offered Rate as determined by the Administrative Agent will not adequately
and fairly reflect the cost to such Lenders of funding their Euro-Dollar
Loans for such Interest Period,
the Administrative Agent shall forthwith give notice thereof to the Borrower and
the Lenders, whereupon until the Administrative Agent notifies the Borrower that
the circumstances giving rise to such suspension no longer exist, (i) the
obligations of the Lenders to make Euro-Dollar Loans shall be suspended and
(ii) each outstanding Euro-Dollar Loan shall be converted into a Base Rate Loan
on the last day of the then current Interest Period applicable thereto. Unless
the Borrower notifies the Administrative Agent at least two Domestic Business
Days before the date of any Euro-Dollar Borrowing for which a Notice of
Borrowing has previously been given that it elects not to borrow on such
date, such Borrowing shall instead be made as a Base Rate Borrowing.
SECTION 8.02. ILLEGALITY. If, on or after the date of this
Agreement, the adoption of any applicable law, rule or regulation, or any change
in any applicable law, rule or regulation, or any change in the interpretation
or administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Lender (or its Euro-Dollar Lending Office) with any request or
directive (whether or not having the force of law) made on or after the date of
this Agreement by any such authority, central bank or comparable agency shall
make it unlawful or impossible for any Lender (or its Euro-Dollar Lending
Office) to make, maintain or fund its Euro-Dollar Loans and such Lender shall so
notify the Administrative Agent, the Administrative Agent shall forthwith give
notice thereof to the other Lenders and the Borrower, whereupon until such
Lender notifies the Borrower and the Administrative Agent that the circumstances
giving rise to such suspension no longer exist, the obligation of such Lender to
make Euro-Dollar Loans, or to convert outstanding Base Rate Loans into Euro-
Dollar Loans, shall be suspended. Before giving any notice to the
Administrative Agent pursuant to this Section, such Lender shall designate a
different Euro-Dollar Lending Office if such designation will avoid the need
for giving such notice and will not, in the judgment of such Lender, be
otherwise disadvantageous to such Lender. If such notice is given, each
Euro-Dollar Loan of such Lender then outstanding shall be converted to a
Base Rate Loan either (a) on the last day of the then current Interest
Period applicable to such Euro-Dollar Loan if such Lender may lawfully
continue to maintain and fund such Loan
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to such day or (b) immediately if such Lender shall determine that it may not
lawfully continue to maintain and fund such Loan to such day.
SECTION 8.03. INCREASED COST AND REDUCED RETURN. (a) If, on or
after the date hereof, the adoption of any applicable law, rule or regulation,
or any change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or its Applicable Lending Office) with any
request or directive (whether or not having the force of law) made on or after
the date of this Agreement by any such authority, central bank or comparable
agency shall impose, modify or deem applicable any reserve (including, without
limitation, any such requirement imposed by the Board of Governors of the
Federal Reserve System, but excluding with respect to any Euro-Dollar Loan any
such requirement included in an applicable Euro-Dollar Reserve Percentage),
special deposit, insurance assessment or similar requirement against assets of,
deposits with or for the account of, or credit extended by, any Lender (or its
Applicable Lending Office) or shall impose on any Lender (or its Applicable
Lending Office) or on the London interbank market any other condition affecting
its Euro-Dollar Loans, its Notes, its obligation to make Euro-Dollar Loans, or
its obligation to participate in any Letter of Credit and the result of any of
the foregoing is to increase the cost to such Lender (or its Applicable Lending
Office) of making or maintaining any Euro-Dollar Loan, or participating in any
Letter of Credit or to reduce the amount of any sum received or receivable by
such Lender (or its Applicable Lending Office) under this Agreement or under its
Notes with respect thereto, by an amount deemed by such Lender to be material,
then, within 15 days after demand by such Lender (with a copy to the
Administrative Agent), the Borrower shall pay to such Lender such additional
amount or amounts as will (subject to subsection (e) of this Section) compensate
such Lender for such increased cost or reduction.
(b) If, on or after the date hereof, the adoption of any applicable
law, rule or regulation, or any change in any applicable law, rule or
regulation, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any LC Issuing Bank
(or its LC Office) with any request or directive (whether or not having the
force of law) made on or after the date of this Agreement by any such authority,
central bank or comparable agency shall impose,
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modify or deem applicable any reserve (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve System),
special deposit, insurance assessment or similar requirement against any Letter
of Credit issued by such LC Issuing Bank (or its LC Office) or shall impose on
any LC Issuing Bank (or its LC Office) any other condition affecting its
Letters of Credit or its obligation to issue Letters of Credit and the result of
any of the foregoing is to increase the cost to such LC Issuing Bank (or its LC
Office) of issuing any Letter of Credit or to reduce the amount of any sum
received or receivable by such LC Issuing Bank (or its LC Office) under this
Agreement with respect thereto, by an amount deemed by such LC Issuing Bank to
be material, then, within 15 days after demand by such LC Issuing Bank (with a
copy to the Administrative Agent), the Borrower shall pay to such LC Issuing
Bank such additional amount or amounts as will (subject to subsection (e) of
this Section) compensate such LC Issuing Bank for such increased cost or
reduction.
(c) If any Lender shall have determined that, after the date hereof,
the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change in any such law, rule or regulation, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) made on or after the date of this
Agreement by any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on capital of such Lender (or its
Parent) as a consequence of such Lender's obligations hereunder to a level below
that which such Lender (or its Parent) could have achieved but for such
adoption, change, request or directive (taking into consideration its policies
with respect to capital adequacy) by an amount deemed by such Lender to be
material, then from time to time, within 15 days after demand by such Lender
(with a copy to the Administrative Agent), the Borrower shall pay to such Lender
such additional amount or amounts as will (subject to subsection (e) of this
Section) compensate such Lender (or its Parent) for such reduction.
(d) Each Lender and LC Issuing Bank will promptly notify the Borrower
and the Administrative Agent of any event of which it has knowledge, occurring
after the date hereof, which will entitle such Lender or LC Issuing Bank to
compensation pursuant to this Section and will designate a different Applicable
Lending Office or LC Office if such designation will avoid the need for, or
reduce the amount
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of, such compensation and will not, in the judgment of such Lender or LC Issuing
Bank, be otherwise disadvantageous to it. A certificate of any Lender or LC
Issuing Bank claiming compensation under this Section and setting forth in
reasonable detail the additional amount or amounts to be paid to it hereunder
and the method of calculation thereof and shall be conclusive in the absence of
manifest error. In determining such amount, such Lender or LC Issuing Bank may
use any reasonable averaging and attribution methods.
(e) No Lender or LC Issuing Bank shall be entitled to claim
compensation pursuant to this Section for (i) Taxes or Other Taxes (as such
terms are defined in Section 8.04) or (ii) any increased cost or reduction
incurred or accrued more than 90 days before such Lender or LC Issuing Bank
first notifies the Borrower of the change in law or other circumstance on which
such claim is based.
SECTION 8.04. TAXES. (a) For purposes of this Section, the
following terms have the following meanings:
"Relevant Payee" means any Lender, any LC Issuing Bank or any Agent.
"Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings with respect to any payment by the
Borrower pursuant to any Financing Document, and all liabilities with respect
thereto, EXCLUDING (i) in the case of each Relevant Payee, taxes imposed on its
income, and franchise or similar taxes imposed on it, by a jurisdiction under
the laws of which it is organized or in which its principal executive office is
located or in which its Applicable Lending Office or LC Office is located and
(ii) in the case of each Lender, any United States withholding tax imposed on
such payments but only to the extent that such Lender is subject to United
States withholding tax at the time such Lender first becomes a party to this
Agreement.
"Other Taxes" means any present or future stamp or documentary taxes
and any other excise or property taxes, or similar charges or levies, which
arise from any payment made pursuant to any Financing Document, or from the
execution or delivery of, or otherwise with respect to, any Financing Document.
(b) Any and all payments by any Borrower to or for the account of any
Relevant Payee under any Financing Document shall be made without deduction for
any Taxes or Other Taxes; PROVIDED that, if the Borrower shall be required by
law to deduct any Taxes or Other Taxes from any
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such payment, (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 8.04) such Relevant Payee receives an amount
equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions, (iii) the Borrower shall pay
the full amount deducted to the relevant taxation authority or other authority
in accordance with applicable law and (iv) the Borrower shall furnish to the
Administrative Agent, at its address referred to in Section 9.01, the original
or a certified copy of a receipt evidencing payment thereof.
(c) The Borrower agrees to indemnify each Relevant Payee for the full
amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section 8.04) paid by such Relevant Payee and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto.
This indemnification shall be paid within 15 days after such Relevant Payee
makes demand therefor.
(d) Each Relevant Payee organized under the laws of a jurisdiction
outside the United States, on or prior to its execution and delivery of this
Agreement in the case of each Relevant Payee listed on the signature pages
hereof and on or prior to the date on which it becomes a Relevant Payee in the
case of each other Relevant Payee, and from time to time thereafter if requested
in writing by the Borrower (but only so long as such Relevant Payee remains
lawfully able to do so), shall provide the Borrower and the Administrative Agent
with Internal Revenue Service form 1001 or 4224, as appropriate, or any
successor form prescribed by the Internal Revenue Service, certifying that such
Relevant Payee is entitled to benefits under an income tax treaty to which the
United States is a party which exempts such Relevant Payee from United States
withholding tax or reduces the rate of withholding tax on payments of interest
for the account of such Relevant Payee or certifying that the income receivable
pursuant to the Financing Documents is effectively connected with the conduct of
a trade or business in the United States.
(e) For any period with respect to which a Relevant Payee has failed
to provide the Borrower and the Administrative Agent with the appropriate form
pursuant to Section 8.04(d) (unless such failure is due to a change in treaty,
law or regulation occurring after the date on which such form originally was
required to be provided), such Relevant Payee shall not be entitled to
indemnification
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under Section 8.04(b) or (c) with respect to Taxes imposed by the United States;
PROVIDED that if a Relevant Payee, which is otherwise exempt from or subject to
a reduced rate of withholding tax, becomes subject to Taxes because of its
failure to deliver a form required hereunder, the Borrower shall take such steps
as such Relevant Payee shall reasonably request to assist such Relevant Payee to
recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for
the account of any Relevant Payee pursuant to this Section 8.04, then such
Relevant Payee will change the jurisdiction of its Applicable Lending Office or
LC Office if, in the judgment of such Relevant Payee, such change (i) will
eliminate or reduce any such additional payment which may thereafter accrue and
(ii) is not otherwise disadvantageous to such Relevant Payee.
SECTION 8.05. BASE RATE LOANS SUBSTITUTED FOR AFFECTED EURO-DOLLAR
LOANS. If (i) the obligation of any Lender to make Euro-Dollar Loans has been
suspended pursuant to Section 8.02 or (ii) any Lender has demanded compensation
under Section 8.03 or 8.04 with respect to its Euro-Dollar Loans and the
Borrower shall, by at least five Euro-Dollar Business Days' prior notice to such
Lender through the Administrative Agent, have elected that the provisions of
this Section shall apply to such Lender, then, unless and until such Lender
notifies the Borrower that the circumstances giving rise to such suspension or
demand for compensation no longer exist:
(a) all Loans which would otherwise be made by such Lender as (or
continued as or converted into) Euro-Dollar Loans shall instead be made as
(or converted into) Base Rate Loans (on which interest and principal shall
be payable contemporaneously with the related Euro-Dollar Loans of the
other Lenders), and
(b) after each of its Euro-Dollar Loans has been repaid (or converted
to a Base Rate Loan), all payments of principal which would otherwise be
applied to repay such Euro-Dollar Loans shall be applied to repay its Base
Rate Loans instead.
If such Lender notifies the Borrower that the circumstances giving rise to such
notice no longer apply, the principal amount of each such Base Rate Loan shall
be converted into a Euro-Dollar Loan on the first day of the next succeeding
Interest Period applicable to the related Euro-Dollar Loans of the other
Lenders.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.01. NOTICES. All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
telex, facsimile transmission or similar writing) and shall be given to such
party:
(w) in the case of the Borrower, the Administrative Agent or any LC
Issuing Bank identified as such on the signature pages hereof, at its
address, facsimile number or telex number set forth on the signature pages
hereof,
(x) in the case of any other LC Issuing Bank, at its address,
facsimile number or telex number set forth in the Borrower's notice to the
Administrative Agent designating the relevant Lender as an LC Issuing Bank
or, if not set forth in such notice, set forth in such Lender's
Administrative Questionnaire,
(y) in the case of any Lender, at its address, facsimile number or
telex number set forth in its Administrative Questionnaire or
(z) in the case of any party, such other address, facsimile number or
telex number as such party may hereafter specify for the purpose by notice
to the Administrative Agent and the Borrower.
Each such notice, request or other communication shall be effective (i) if given
by telex, when such telex is transmitted to the telex number referred to in this
Section and the appropriate answerback is received, (ii) if given by facsimile
transmission, when transmitted to the facsimile number referred to in this
Section and confirmation of receipt is received, (iii) if given by mail, 72
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iv) if given by any other means,
when delivered at the address referred to in this Section; PROVIDED that notices
to the Administrative Agent under Article II or Article VIII and notices to any
LC Issuing Bank under Article II shall not be effective until received.
SECTION 9.02. NO WAIVERS. No failure or delay by the Administrative
Agent or any Lender in exercising any right, power or privilege under any
Financing Document shall operate as a waiver thereof nor shall any single or
partial
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exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
SECTION 9.03. EXPENSES; INDEMNIFICATION. (a) The Borrower shall pay
(i) all out-of-pocket expenses of the Administrative Agent, including fees and
disbursements of special counsel for the Administrative Agent, in connection
with the preparation and administration of the Financing Documents, any waiver
or consent thereunder or any amendment thereof or any Default or alleged Default
thereunder, (ii) all out-of-pocket expenses of each Arranging Agent (but not any
fees and disbursements of its counsel) in connection with the preparation and
administration of the Financing Documents, any waiver or consent thereunder or
any amendment thereof or any Default or alleged Default thereunder and (iii) if
an Event of Default occurs, all out-of-pocket expenses incurred by each Agent
and each Lender, including (without duplication) the fees and disbursements of
outside counsel and the allocated cost of inside counsel, in connection with
such Event of Default and any collection, bankruptcy, insolvency or other
enforcement proceedings resulting therefrom.
(b) The Borrower shall indemnify each Agent, the Swingline Bank and
each Lender, their respective Affiliates and the respective directors,
directors, officers, agents and employees of the foregoing (each an
"Indemnitee") and hold each Indemnitee harmless from and against any and all
liabilities, losses, damages, costs and expenses of any kind, including, without
limitation, the reasonable fees and disbursements of counsel, which may be
incurred by such Indemnitee in connection with any investigative, administrative
or judicial proceeding (whether or not such Indemnitee shall be designated a
party thereto) brought or threatened relating to or arising out of any Financing
Document or any actual or proposed use by the Borrower or any of its Affiliates
of any proceeds of the Loans or any Letter of Credit; PROVIDED that no
Indemnitee shall have the right to be indemnified hereunder for such
Indemnitee's own gross negligence or willful misconduct as determined by a court
of competent jurisdiction.
SECTION 9.04. SHARING OF SET-OFFS. (a) Each Lender agrees that if
it shall, by exercising any right of set-off or counterclaim or otherwise,
receive payment of a proportion of the aggregate amount of principal and
interest due with respect to the Loans of any Tranche held by it which is
greater than the proportion received by any other
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Lender in respect of the aggregate amount of principal and interest due with
respect to the Loans of such Tranche held by such other Lender, the Lender
receiving such proportionately greater payment shall purchase such
participations in the Loans of such Tranche held by the other Lenders, and such
other adjustments shall be made, as may be required so that all such payments of
principal and interest with respect to the Loans of such Tranche held by the
Lenders shall be shared by such Lenders pro rata.
(b) Each Revolving Credit Lender agrees that if it shall, by
exercising any right of set-off or counterclaim or otherwise, receive payment of
a proportion of the Letter of Credit Liabilities held by it or for its account
which is greater than the proportion received in respect of the Letter of Credit
Liabilities held by or for the account of any other Revolving Credit Lender, the
Revolving Credit Lender receiving such proportionately greater payment shall
purchase such participations in the Letter of Credit Liabilities held by or for
the account of the other Revolving Credit Lenders, and such other adjustments
shall be made, as may be required so that all such payments of the Letter of
Credit Liabilities held by or for the account of the Revolving Credit Lenders
shall be shared by them pro rata.
(c) Nothing in this Section shall impair the right of any Lender to
exercise any right of set-off or counterclaim it may have and to apply the
amount subject to such exercise to the payment of indebtedness of the Borrower
other than its indebtedness hereunder.
(d) The Borrower agrees, to the fullest extent it may effectively do
so under applicable law, that any holder of a participation in a Note or Letter
of Credit Liability, whether or not acquired pursuant to the foregoing
arrangements, may exercise rights of set-off or counterclaim and other rights
with respect to such participation as fully as if such holder of a participation
were a direct creditor of the Borrower in the amount of such participation.
SECTION 9.05. AMENDMENTS AND WAIVERS. Any provision of this
Agreement or the Notes may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by the Borrower and the Required Lenders
(and, if the rights or duties of any Agent or LC Issuing Bank are affected
thereby, by such Agent or LC Issuing Bank); PROVIDED that no such amendment or
waiver shall:
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(i) unless signed by all the Term Lenders, increase or decrease any
Term Commitment (except for a ratable decrease in all the Term
Commitments), postpone the date fixed for the termination of any Term
Commitment, reduce the principal of or rate of interest on any Term Loan or
postpone the final maturity date of any Term Loan or any date fixed for any
payment of interest on any Term Loan;
(ii) unless signed by the Super-Majority Term Lenders, postpone any
date (other than the final maturity date) specified in Section 2.06(a) for
any payment of the principal of any Term Loan;
(iii) unless signed by all the Revolving Credit Lenders, increase or
decrease any Revolving Credit Commitment (except for a ratable decrease in
all the Revolving Credit Commitments), postpone the date fixed for the
termination of any Revolving Credit Commitment, reduce the principal of or
rate of interest on any Revolving Credit Loan or postpone the final
maturity date of any Revolving Credit Loan or any date fixed for any
payment of interest on any Revolving Credit Loan, reduce the principal of
or rate of interest on any Reimbursement Obligation, or postpone the date
fixed for any scheduled payment of any Reimbursement Obligation;
(iv) unless signed by the Swingline Bank, increase the Swingline
Commitment, postpone the date fixed for the termination of the Swingline
Commitment or otherwise affect any of its rights or obligations hereunder;
(v) unless signed by all the Lenders entitled to receive such fees,
reduce or postpone the date fixed for any scheduled payment of any fees
hereunder;
(vi) unless signed by all the Lenders participating in the Letter of
Credit Liabilities, change the date fixed for the expiration of any Letter
of Credit;
(vii) unless signed by all the Lenders, waive any condition set forth
in clause (ii), (ix) or (x) of Section 3.01; or
(viii) unless signed by all the Lenders, change any provision of this
Section or any other provision of this Agreement specifying which Lenders
may take any
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action that the Lenders or any of them are entitled to take hereunder.
SECTION 9.06. SUCCESSORS AND ASSIGNS. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns, except that the Borrower
may not assign or otherwise transfer any of its rights under the Financing
Documents without the prior written consent of all the Lenders, the LC Issuing
Banks and the Swingline Bank.
(b) Any Lender may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in any of its
Commitments or any or all of its Loans or any or all of the Reimbursement
Obligations held by it or for its account. If any Lender grants such a
participating interest to a Participant, whether or not upon notice to the
Borrower and the Administrative Agent, such Lender shall remain responsible for
the performance of its obligations hereunder, and the Borrower and the
Administrative Agent shall continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations under the Financing
Documents. Any agreement pursuant to which any Lender may grant such a
participating interest shall provide that such Lender shall retain the sole
right and responsibility to enforce the obligations of the Borrower under the
Financing Documents including, without limitation, the right to approve any
amendment, modification or waiver of any provision thereof; PROVIDED that such
participation agreement may provide that such Lender will not agree to any
modification, amendment or waiver of this Agreement described in clause (i),
(ii), (iii) or (v) of Section 9.05 without the consent of the Participant. An
assignment or other transfer which is not permitted by subsection (c) or (d)
below shall be given effect for purposes of this Agreement only to the extent of
a participating interest granted in accordance with this subsection (b).
(c) Any Lender may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a pro rata part of all, of its rights
and obligations under the Financing Documents with respect to either:
(i) its outstanding Term Loans and unused Term Commitment (if then in
effect) or
(ii) its Revolving Credit Commitment and Outstanding Revolving Credit
Amounts,
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and such Assignee shall assume such rights and obligations, pursuant to an
Assignment and Assumption Agreement in substantially the form of Exhibit H
hereto signed by such Assignee and such transferor Lender, with (and subject to)
the subscribed consent of the Borrower (which shall not be unreasonably
withheld), the Administrative Agent and, if such assignment is pursuant to (ii)
above, the LC Issuing Banks; PROVIDED that:
(A) if such Assignee is an Affiliate of such transferor Lender or was
a Lender immediately prior to such assignment, no such consent shall be
required;
(B) no Lender shall assign all or any part of its Revolving Credit
Commitment and Outstanding Revolving Credit Amounts to any institution that
is not a bank; and
(C) if such transferor Lender either (i) assigns a pro rata part (but
not all) of its Term Loans and unused Term Commitment (if then in effect)
to an Assignee that was not a Term Lender immediately prior to such
assignment or (ii) assigns a pro rata part (but not all) of its Revolving
Credit Commitment and Outstanding Revolving Credit Amounts to an Assignee
that was not a Revolving Credit Lender immediately prior to such
assignment, then the sum of (x) the aggregate outstanding principal amount
of Term Loans (if any) and unused Term Commitment (if any) assigned to such
Assignee and (y) the portion of the transferor Lender's Revolving Credit
Commitment (if any) assigned to such Assignee shall be at least
$10,000,000.
Upon execution and delivery of such Assignment and Assumption Agreement and
payment by such Assignee to such transferor Lender of an amount equal to the
purchase price agreed between such transferor Lender and such Assignee, such
Assignee shall be a Lender party to this Agreement and shall have all the rights
and obligations of a Lender to the extent set forth in such Assignment and
Assumption Agreement, and the transferor Lender shall be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any assignment
pursuant to this subsection (c), the transferor Lender, the Administrative Agent
and the Borrower shall make appropriate arrangements so that, if required, new
Notes are issued to the Assignee. In connection with any such assignment,
either the transferor Lender or the Assignee shall pay to the Administrative
Agent an administrative fee for processing such assignment in the amount of
$2,500. If the Assignee is
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not incorporated under the laws of the United States of America or a state
thereof, it shall deliver to the Borrower and the Administrative Agent
certification as to exemption from deduction or withholding of any United States
federal income taxes in accordance with Section 8.04(d).
(d) Any Lender may at any time assign all or any portion of its
rights under the Financing Documents to a Federal Reserve Bank. No such
assignment shall release the transferor Lender from its obligations thereunder.
(e) No Assignee, Participant or other transferee of any Lender's
rights shall be entitled to receive any greater payment under or by reason by
Section 8.03 or 8.04 than such Lender would have been entitled to receive with
respect to the rights transferred, unless such transfer is made with the
Borrower's prior written consent or by reason of the provisions of Section 8.02,
8.03 or 8.04 requiring such Lender to designate a different Applicable Lending
Office under certain circumstances or, in the case of an Assignee, at a time
when the circumstances giving rise to such greater payment did not exist.
Subject to the foregoing limitation, any Lender claiming compensation or
indemnification pursuant to Section 8.03 or 8.04 may include in its claim
similar compensation or indemnification for any Participant having a
participating interest in such Lender's rights.
SECTION 9.07. NO RELIANCE ON MARGIN STOCK AS COLLATERAL. Each of the
Lenders represents to the Administrative Agent and each of the other Lenders
that it in good faith is not relying upon any "margin stock" (as defined in
Regulation U) as collateral in the extension or maintenance of the credit
provided for in this Agreement.
SECTION 9.08. CONFIDENTIALITY. Each Agent, Lender and LC Issuing
Bank (each, a "Lending Party") agrees to keep any information delivered or made
available by the Borrower to it confidential from anyone other than persons
employed or retained by such Lending Party who are, or are expected to be,
engaged in evaluating, approving, structuring or administering the credit
facility provided herein; PROVIDED that nothing herein shall prevent any Lending
Party from disclosing such information (a) to any other Lending Party, (b) to
any other Person if reasonably incidental to the administration of the credit
facility provided herein, (c) upon the order of any court or administrative
agency, (d) upon the request or demand of any regulatory agency or authority,
(e) which had been publicly disclosed other than as a result of a disclosure by
any Lending Party prohibited by this Agreement, (f) in
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connection with any litigation to which such Lending Party or any of its
Affiliates may be a party, (g) to the extent necessary in connection with the
exercise of any remedy hereunder, (h) to such Lending Party's legal counsel and
independent auditors, (i) to any Affiliate of such Lending Party, solely in
connection with this Agreement or any other transaction or proposed transaction
between such Lending Party and/or its Affiliates and the Borrower and/or its
Affiliates, and (j) subject to provisions substantially similar to those
contained in this Section, to any actual or proposed Participant or Assignee.
SECTION 9.09. WAIVER OF JURY TRIAL. THE BORROWER, EACH AGENT, EACH
LC ISSUING BANK, THE SWINGLINE BANK AND EACH LENDER HEREBY IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THE FINANCING DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
SECTION 9.10. GOVERNING LAW; SUBMISSION TO JURISDICTION. EACH OF THE
FINANCING DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK. THE BORROWER HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES
OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THE FINANCING DOCUMENTS
OR THE TRANSACTIONS CONTEMPLATED THEREBY. THE BORROWER IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.
SECTION 9.11. COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. This Agreement constitutes the entire agreement and
understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof. This Agreement shall become effective upon
receipt by the Administrative Agent of (i) counterparts hereof signed by the
Borrower, the Lenders, the LC Issuing Bank identified as such on the signature
pages hereof, the Swingline Bank and the Agents (other than the Collateral
Agent) or (ii) in the case of any such party as to which an executed counterpart
shall not have been received, receipt by the Administrative Agent in form
satisfactory to it of
106
telegraphic, telex, facsimile or other written confirmation from such party that
a counterpart hereof has been executed by such party.
107
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
NATIONAL MEDICAL ENTERPRISES, INC.
By /s/ Terence P. McMullen
-------------------------------
Title: Senior Vice President
National Medical Enterprises, Inc.
2700 Colorado Avenue
Santa Monica, California 90404
Attention: Maris Andersons
Telephone: (310) 998-8381
Facsimile: (310) 998-6700
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as an Arranging
Agent and a Lender
By /s/ Robert M. Osieski
-------------------------------
Title: Vice President
108
THE BANK OF NEW YORK, as an
Arranging Agent and a Lender
By /s/ Craig Rethmeyer
-------------------------------
Title: Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as an
Arranging Agent and a Lender
By /s/ Wyatt R. Ritchie
-------------------------------
Title: Vice President
BANKERS TRUST COMPANY, as an
Arranging Agent and a Lender
By /s/ Robert R. Telesca
-------------------------------
Title: Assistant Vice President
THE BANK OF CALIFORNIA, N.A.
By /s/ Albert W. Kelley
-------------------------------
Title: Vice President
THE MITSUBISHI BANK, LTD.
By /s/ Hiroaki Fuchida
-------------------------------
Title: Vice President, Manager
BANK OF MONTREAL
By /s/ Irene M. Geller
-------------------------------
Title: Director
109
THE BANK OF NOVA SCOTIA
By /s/ Chris P. Johnson
-------------------------------
Title: Representative
THE BANK OF TOKYO TRUST COMPANY
By /s/ M. Sheridan Sunier
-------------------------------
Title: Vice President
BANQUE PARIBAS
By /s/ Sean T. Conlon
-------------------------------
Title: Vice President
By /s/ Alan E. McLintock
-------------------------------
Title: Regional General Manager
THE CHASE MANHATTAN BANK N.A.
By /s/ Michael K. Bayley
-------------------------------
Title: Vice President
CHEMICAL BANK
By /s/ Neil R. Boylan
-------------------------------
Title: Vice President
CITICORP USA, INC.
By /s/ Barbara A. Cohen
-------------------------------
Title: Vice President
110
CREDIT SUISSE
By /s/ David J. Worthington
-------------------------------
Title: Member of Senior
Management
By /s/ Peter Koelln
-------------------------------
Title: Associate
DEUTSCHE BANK AG, LOS ANGELES
AND/OR CAYMAN ISLANDS
By /s/ Michael U. Hotze
-------------------------------
Title: Managing Director
By /s/ I. Scott Jessup
-------------------------------
Title: Vice President
DRESDNER BANK AG, LOS ANGELES
AGENCY AND GRAND CAYMAN BRANCH
By /s/ Kenneth I. Bowman
-------------------------------
Title: Vice President
By /s/ Sidney S. Jordan
-------------------------------
Title: Vice President
FIRST INTERSTATE BANK OF CALIFORNIA
By /s/ William J. Baird
-------------------------------
Title: Vice President
111
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA
By /s/ John W. Ransom
-------------------------------
Title: Vice President
THE FUJI BANK, LIMITED
By /s/ Nobuhiro Umemura
-------------------------------
Title: Joint Genaral Manager
THE INDUSTRIAL BANK OF JAPAN,
LIMITED
By /s/ Toshi Iyoda
-------------------------------
Title: Senior Vice President
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., LOS ANGELES AGENCY
By /s/ Genichi Imai
-------------------------------
Title: Joint General Manager
MELLON BANK, N.A.
By /s/ Richard Lopatt
-------------------------------
Title: Vice President
NATIONSBANK OF TEXAS, N.A.
By /s/ Brad W. DeSpain
-------------------------------
Title: Vice President
112
PNC BANK, NATIONAL ASSOCIATION
By /s/ Anthony L. Trunzo
-------------------------------
Title: Vice President
THE SANWA BANK LIMITED, DALLAS
AGENCY
By /s/ R. Blake Wright
-------------------------------
Title: Assistant Vice President
SHAWMUT BANK CONNECTICUT, N.A.
By /s/ Manfred O. Eigenbrod
-------------------------------
Title: Managing Director
SOCIETE GENERALE
By /s/ J. Staley Stewart
-------------------------------
Title: Vice President
THE SUMITOMO BANK, LTD.
By /s/ Hiroshi Amano
-------------------------------
Title: General Manager
113
SWISS BANK CORPORATION, SAN
FRANCISCO BRANCH
By /s/ David L. Parrot
-------------------------------
Title: Associate, Director,
Merchant Banking
By /s/ Hans-Ueli Surber
-------------------------------
Title: Executive Director,
Merchant Banking
TORONTO DOMINION (TEXAS), INC.
By /s/ Lisa Allison
-------------------------------
Title: Vice President
WACHOVIA BANK OF GEORGIA, N.A.
By /s/ David L. Gaines
-------------------------------
Title: Senior Vice President
WELLS FARGO BANK, N.A.
By /s/ David A. Neumann
-------------------------------
Title: Vice President
ABN AMRO BANK N.V.
By /s/ Paul K. Stimpfl
-------------------------------
Title: Vice President
By /s/ David J. Stassel
-------------------------------
Title: Vice President
114
THE DAI-ICHI KANGYO BANK, LTD., LOS
ANGELES AGENCY
By /s/ Tomohiro Nozaki
-------------------------------
Title: Senior Vice President and
Joint General Manager
RABOBANK NEDERLAND
By /s/ W. Pieter C. Kodde
-------------------------------
Title: Vice President
By /s/ Michel de Konkoly Thege
-------------------------------
Title: Deputy General Manager
THE SAKURA BANK LTD., LOS
ANGELES AGENCY
By /s/ Ofusa Sato
-------------------------------
Title: Senior Vice President &
Assistant General Manager
AMSOUTH BANK OF ALABAMA
By /s/ William P. Barnes
-------------------------------
Title: Vice President
THE NIPPON CREDIT BANK, LTD.,
LOS ANGELES AGENCY
By /s/ Bernardo E. Correa-Henschke
-------------------------------
Title: Vice President & Manager
115
THE SUMITOMO TRUST AND BANKING CO.,
LTD., NEW YORK BRANCH
By /s/ Suraj P. Bhatia
-------------------------------
Title: Senior Vice President
Manager, Corporate
Finance II Dept.
ARAB BANK PLC, GRAND CAYMAN BRANCH
By /s/ Peter R. Boyadjian
-------------------------------
Title: Senior Vice President
BANQUE NATIONALE DE PARIS
By /s/ Deborah Y. Gohh
-------------------------------
Title: Vice President
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE
By /s/ Adam Brough
-------------------------------
Title: Vice President
By /s/ Eric Mallaroni
-------------------------------
Title: Head of Acquisition
Finance
116
CREDITANSTALT BANKVEREIN
By /s/ Dennis O'Dowd
-------------------------------
Title: Co-Chief Executive
Officer
By /s/ Martin Mittag
-------------------------------
Title: Deputy Chief Executive
Officer
THE TOKAI BANK, LTD., LOS ANGELES
AGENCY
By /s/ Masahiko Saito
-------------------------------
Title: Asst. General Manager
BANCA COMMERCIALE ITALIANA - LOS
ANGELES FOREIGN BRANCH
By /s/ Iacopo Navone
-------------------------------
Title: Vice President & Manager
By /s/ J. Wityak
-------------------------------
Title: Vice President
BANK OF IRELAND GRAND CAYMAN
By /s/ Roger M. Burns
-------------------------------
Title: Vice President
117
BANQUE FRANCAIS DU COMMERCE
EXTERIEUR
By /s/ Paul Lane
-------------------------------
Title: Vice President
By /s/ Daniel Touffu
-------------------------------
Title: First VP and Regional
Manager
HIBERNIA NATIONAL BANK
By /s/ Troy J. Villafarra
-------------------------------
Title: Assistant Vice President
KREDIETBANK N.V.
By /s/ Diane Grimmig
-------------------------------
Title: Vice President
By /s/ Robert Snauffer
-------------------------------
Title: Vice President
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By /s/ Masaaki Yamagishi
-------------------------------
Title: Chief Manager
NATIONAL CITY BANK
By /s/ Charles Denny
-------------------------------
Title: Senior Vice President
118
THE ROYAL BANK OF SCOTLAND PLC
By /s/ David Dougan
-------------------------------
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as LC Issuing Bank
By /s/ Robert M. Osieski
-------------------------------
Title: Vice President
60 Wall Street
New York, New York 10260-0060
Attention: Robert Osieski
Telex number: 177615
Facsimile number: 212-548-5014
119
CHEMICAL BANK, as LC Issuing Bank
By /s/ Neil R. Boylan
-------------------------------
Title: Vice President
270 Park Avenue
10th Floor
New York, NY 10017
Attention: Ruth Samuelian
NATIONSBANK OF TEXAS, N.A., as LC
Issuing Bank
By /s/ Brad W. DeSpain
-------------------------------
Title: Vice President
901 Main Street, 14th Floor
Dallas, Texas
Attention: Kay Hibbs
Facsimile number: 214-508-0944
with a copy to:
444 South Flower Street, Suite 1500
Los Angeles, California 90071
Attention: Brad DeSpain
Facsimile number: 213-624-5815
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Swingline Bank
By /s/ Robert M. Osieski
-------------------------------
Title: Vice President
60 Wall Street
New York, New York 10260-0060
Attention: Robert Osieski
Telex number: 177615
Facsimile number: 212-648-5014
120
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Administrative
Agent
By /s/ Robert M. Osieski
-------------------------------
Title: Vice President
60 Wall Street
New York, New York 10260-0060
Attention: Robert Osieski
Telex number: 177615
Facsimile number: 212-648-5014
121
COMMITMENT SCHEDULE
Revolving
Term Credit
Lender Commitment Commitment Total
------ ---------- ---------- -----
Morgan Guaranty Trust Company
of New York $53,100,000.00 $14,900,000.00 $68,000,000.00
Bank of America National Trust
and Savings Association $53,100,000.00 $14,900,000.00 $68,000,000.00
The Bank of New York $53,100,000.00 $14,900,000.00 $68,000,000.00
Bankers Trust Company $53,100,000.00 $14,900,000.00 $68,000,000.00
The Bank of California, N.A./
The Mitsubishi Bank $42,800,000.00 $12,200,000.00 $55,000,000.00
Bank of Montreal $42,800,000.00 $12,200,000.00 $55,000,000.00
The Bank of Nova Scotia $42,800,000.00 $12,200,000.00 $55,000,000.00
The Bank of Tokyo Trust Company $42,800,000.00 $12,200,000.00 $55,000,000.00
Banque Paribas $42,800,000.00 $12,200,000.00 $55,000,000.00
The Chase Manhattan Bank N.A $42,800,000.00 $12,200,000.00 $55,000,000.00
Chemical Bank $42,800,000.00 $12,200,000.00 $55,000,000.00
Citicorp USA, Inc. $42,800,000.00 $12,200,000.00 $55,000,000.00
Credit Suisse $42,800,000.00 $12,200,000.00 $55,000,000.00
Deutsche Bank AG $42,800,000.00 $12,200,000.00 $55,000,000.00
Dresdner Bank Los Angeles
and Grand Cayman Branch $42,800,000.00 $12,200,000.00 $55,000,000.00
First Interstate Bank
of California $42,800,000.00 $12,200,000.00 $55,000,000.00
Revolving
Term Credit
Lender Commitment Commitment Total
------ ---------- ---------- -----
First Union National Bank
of North Carolina $42,800,000.00 $12,200,000.00 $55,000,000.00
The Fuji Bank, Limited $42,800,000.00 $12,200,000.00 $55,000,000.00
The Industrial Bank of
Japan, Limited Los
Angeles Agency $42,800,000.00 $12,200,000.00 $55,000,000.00
The Long-Term Credit Bank of
Japan, Ltd., Los Angeles
Agency $42,800,000.00 $12,200,000.00 $55,000,000.00
Mellon Bank, N.A. $42,800,000.00 $12,200,000.00 $55,000,000.00
NationsBank of Texas, N.A. $42,800,000.00 $12,200,000.00 $55,000,000.00
PNC Bank, National
Association $42,800,000.00 $12,200,000.00 $55,000,000.00
The Sanwa Bank Limited,
Dallas Agency $42,800,000.00 $12,200,000.00 $55,000,000.00
Shawmut Bank Connecticut, N.A. $42,800,000.00 $12,200,000.00 $55,000,000.00
Societe Generale $42,800,000.00 $12,200,000.00 $55,000,000.00
The Sumitomo Bank, Ltd. $42,800,000.00 $12,200,000.00 $55,000,000.00
Swiss Bank Corporation,
San Francisco Branch $42,800,000.00 $12,200,000.00 $55,000,000.00
Toronto Dominion (Texas),
Inc. $42,800,000.00 $12,200,000.00 $55,000,000.00
Wachovia Bank of Georgia, N.A. $42,800,000.00 $12,200,000.00 $55,000,000.00
Wells Fargo Bank, N.A. $42,800,000.00 $12,200,000.00 $55,000,000.00
ABN Amro Bank N.V. $37,000,000.00 $10,000,000.00 $47,000,000.00
2
Revolving
Term Credit
Lender Commitment Commitment Total
------ ---------- ---------- -----
The Dai-Ichi Kangyo Bank, Ltd.,
Los Angeles Agency $37,000,000.00 $10,000,000.00 $47,000,000.00
Rabobank Nederland $37,000,000.00 $10,000,000.00 $47,000,000.00
The Sakura Bank, Ltd.,
Los Angeles Agency $37,000,000.00 $10,000,000.00 $47,000,000.00
AmSouth Bank of Alabama $32,000,000.00 $8,000,000.00 $40,000,000.00
The Nippon Credit Bank, Ltd.,
Los Angeles Agency $32,000,000.00 $8,000,000.00 $40,000,000.00
The Sumitomo Trust and
Banking Co., Ltd. $24,000,000.00 $6,000,000.00 $30,000,000.00
Arab Bank PLC $20,000,000.00 $5,000,000.00 $25,000,000.00
Banque Nationale de Paris $20,000,000.00 $5,000,000.00 $25,000,000.00
Compagnie Financiere de CIC
et de L'Union Europeenne $20,000,000.00 $5,000,000.00 $25,000,000.00
Creditanstalt Bankverein $20,000,000.00 $5,000,000.00 $25,000,000.00
The Tokai Bank, Ltd.,
Los Angeles Agency $20,000,000.00 $5,000,000.00 $25,000,000.00
Banca Commerciale Italiana -
Los Angeles Foreign Branch $12,000,000.00 $3,000,000.00 $15,000,000.00
Bank of Ireland Grand Cayman $12,000,000.00 $3,000,000.00 $15,000,000.00
Banque Francais du Commerce
Exterieur $12,000,000.00 $3,000,000.00 $15,000,000.00
Hibernia National Bank $12,000,000.00 $3,000,000.00 $15,000,000.00
Kredietbank NV $12,000,000.00 $3,000,000.00 $15,000,000.00
The Mitsubishi Trust and
Banking Corporation $12,000,000.00 $3,000,000.00 $15,000,000.00
3
National City Bank $12,000,000.00 $3,000,000.00 $15,000,000.00
The Royal Bank of Scotland PLC $12,000,000.00 $3,000,000.00 $15,000,000.00
-------------------------------------------------------
TOTAL $1,800,000,000.00 $500,000,000.00 $2,300,000,000.00
PRICING SCHEDULE
The "Base Rate Margin", "Euro-Dollar Margin", "Commitment Fee Rate" and
"LC Fee Rate" for any day are the respective rates per annum set forth below in
the applicable row under the column corresponding to the Pricing Level that
applies on such day:
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Pricing Level Level Level Level Level
Level I II III IV V
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Base Rate 0% 0% 0% 0.25% 0.50%
Margin
- ----------------------------------------------------------------------
Euro-Dollar 0.50% 0.75% 1.00% 1.25% 1.50%
Margin
- ----------------------------------------------------------------------
Commitment 0.1875% 0.25% 0.3125% 0.375% 0.50%
Fee Rate
- ----------------------------------------------------------------------
LC Fee Rate 0.50% 0.75% 1.00% 1.25% 1.50%
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
For purposes of this Pricing Schedule, the following terms have the
following meanings:
"Consolidated Debt Ratio" means, at the end of any Fiscal Quarter, the
ratio of (i) Total Debt at the end of such Fiscal Quarter to (ii) Consolidated
EBITDA for the period of four consecutive Fiscal Quarters then ended.
"Consolidated Interest Coverage Ratio" means, at the end of any Fiscal
Quarter, the ratio of (i) Consolidated EBITDA to (ii) Consolidated Interest
Expense, in each case for the period of four consecutive Fiscal Quarters then
ended.
"Level I Pricing" applies during any Rate Period if, at the end of the
Preceding Fiscal Quarter, (i) the Consolidated Interest Coverage Ratio was equal
to or greater than 4.5 to 1 and (ii) the Consolidated Debt Ratio was equal to or
less than 2.0 to 1.
"Level II Pricing" applies during any Rate Period if no higher Pricing
Level applies and, at the end of the Preceding Fiscal Quarter, either (i) the
Consolidated Interest Coverage Ratio was less than 4.5 to 1 or (ii) the
Consolidated Debt Ratio was greater than 2.0 to 1.
"Level III Pricing" applies during any Rate Period if no higher
Pricing Level applies and, at the end of the Preceding Fiscal Quarter, either
(i) the Consolidated Interest Coverage Ratio was less than 4.0 to 1 or (ii) the
Consolidated Debt Ratio was greater than 2.5 to 1.
"Level IV Pricing" applies during any Rate Period if no higher Pricing
Level applies and, at the end of the Preceding Fiscal Quarter, either (i) the
Consolidated Interest Coverage Ratio was less than 3.5 to 1 or (ii) the
Consolidated Debt Ratio was greater than 3.0 to 1.
"Level V Pricing" applies during any Rate Period if, at the end of the
Preceding Fiscal Quarter, either (i) the Consolidated Interest Coverage Ratio
was less than 3.0 to 1 or (ii) the Consolidated Debt Ratio was greater than 3.5
to 1.
"Preceding Fiscal Quarter" means, with respect to any Rate Period, the
most recent Fiscal Quarter ended before such Rate Period begins.
"Pricing Level" refers to the determination of which of Level I
Pricing, Level II Pricing, Level III Pricing, Level IV Pricing or Level V
Pricing applies on any day. Pricing Levels are referred to in ascending order
(e.g., Level III Pricing is a higher Pricing Level than Level II Pricing.)
"Rate Period" means any period from and including the 46th day of a
Fiscal Quarter to and including the 45th day of the immediately succeeding
Fiscal Quarter.
2
SCHEDULE 4.06
Pending Litigation
The Borrower hereby incorporates by reference the disclosure
concerning the legal proceedings referred to in its annual report on Form 10-K
for its fiscal year ended May 31, 1994, its quarterly report on Form 10-Q for
its fiscal quarter ended August 31, 1994 and its quarterly report on Form 10-Q
for its fiscal quarter ended November 30, 1994.
With respect to AM Holdings and its Subsidiaries, the Borrower hereby
incorporates by reference the disclosure concerning the legal proceedings
referred to in AM Holding's annual report on Form 10-K for its fiscal year ended
August 31, 1994 and its quarterly report on Form 10-Q for its fiscal quarter
ended November 30, 1994.
SCHEDULE 4.07
Erisa Exceptions
The Borrower has determined the following on the basis of the Company
Disclosure Letter (as defined in the Merger Agreement), dated October 10, 1994,
furnished by AM Holdings pursuant to the Merger Agreement:
EXISTING CONDITIONS WHICH COULD RESULT IN TITLE IV ERISA EXPOSURE
The American Medical International, Inc. Pension Plan (the "Pension Plan")
was audited by the Department of labor in 1993 and 1994. As a result of
the audit, AM Holdings is being required to make an approximately $6
million contribution to the Pension Plan in order to remedy underfunding
for 1991 and 1992 plan years caused by inaccurate data used by the Pension
Plan actuary. This additional contribution has necessitated the
recalculation of PBGC premiums for the 1991 through 1993 plan years and
resulted in approximately $847,516 of additional PBGC premiums due. The
PBGC probably will impose a penalty of 5 percent per month for the premium
due plus interest. AM Holdings estimates that the total PBGC penalties and
interest will approximate $1.5 million (an accrual for which has been made
in AM Holdings' financial statements).
CIRCUMSTANCES IN WHICH PRESENT VALUE OF ACCRUED BENEFITS EXCEEDS CURRENT
VALUE OF PLAN ASSETS
As of September 1, 1993, the present value of accrued benefits under the
Pension Plan, based upon the actuarial assumptions used for financial
reporting purposes in the most recent actuarial report prepared by such
plan's actuary exceeded the then current value of plan assets by
$30,601,762. Since this actuarial valuation was prepared, AM Holdings has
made, as of October 10, 1994, $23,684,000 in contributions to the Pension
Plan.
EXCEPTIONS TO QUALIFICATION UNDER SECTION 4.01(a); EXCEPTIONS TO EXEMPTION
UNDER SECTION 501(a); CONDITIONS AFFECTING QUALIFICATION OR EXEMPTION
On April 8, 1994, AM Holdings filed a Voluntary Compliance Resolution
Request ("VCR Request") with the National Office of the Internal Revenue
Service with respect to both the Pension Plan and the AMI Tax Deferred
Savings Plan (the "Savings Plan") in order to correct certain operational
defects in the administration of the plans. Pursuant to the VCR Request,
AM Holdings may be required to make certain corrections outlined in the VCR
Request to remedy these operational defects in order to preserve the
qualified status of the plans. In addition, AM Holdings is in the process
of submitting the Pension Plan, Savings Plan and the Saint Francis Pension
Plan to the Internal Revenue Service for a ruling regarding their continued
qualification under Section 401(a) of the Code as amended by the Tax Reform
Act of 1986 and subsequent legislation. The plans must be filed with the
Internal Revenue Service by March 31, 1995.
PROHIBITED TRANSACTION EXPOSURE
AM Holdings has contracted with certain affiliated entities and physicians
to provide medical services under AM Holdings' medical plans. Technically,
these arrangements may constitute prohibited transactions under ERISA and
the Code for which a statutory or administrative exemption is not
available. AM Holdings is in the process of determining whether to file an
application for a prohibited transaction exemption with the Department of
Labor regarding these service provider arrangements. AM Holdings has had
informal conferences with the Department of Labor, during which the
Department advised AM Holdings that the Department is aware of several
similar service provider arrangements with other hospital corporations,
that none of these entities have filed prohibited transaction exemption
applications with the Department and the Department has not enforced, and
does not intend to enforce, the prohibited transaction rules with respect
to such arrangements.
2
EXHIBIT A-1
TERM NOTE
New York, New York
, 199
For value received, NATIONAL MEDICAL ENTERPRISES, INC., a Nevada
corporation (the "Borrower"), promises to pay to the order of
(the "Term Lender"), for the account of its Applicable Lending Office, the
unpaid principal amount of each Term Loan made by the Term Lender to the
Borrower pursuant to the Credit Agreement referred to below on the maturity date
provided for in the Credit Agreement. The Borrower promises to pay interest on
the unpaid principal amount of each such Term Loan on the dates and at the rate
or rates provided for in the Credit Agreement. All such payments of principal
and interest shall be made in lawful money of the United States in Federal or
other immediately available funds at the office of Morgan Guaranty Trust Company
of New York, 60 Wall Street, New York, New York.
All Term Loans made by the Term Lender, the respective date, amount
and Type thereof and all payments of the principal with respect thereto shall be
recorded by the Term Lender and, if the Term Lender so elects in connection with
any transfer or enforcement hereof, appropriate notations to evidence the
foregoing information with respect to each such Term Loan then outstanding may
be endorsed by the Term Lender on the schedule attached hereto, or on a
continuation of such schedule attached to and made a part hereof; PROVIDED that
the failure of the Term Lender to make any such recordation or endorsement shall
not affect the obligations of the Borrower hereunder or under any other
Financing Document.
This note is one of the Term Notes referred to in the Credit Agreement
dated as of February 28, 1995 among the
Borrower, the lenders party thereto, Morgan Guaranty Trust Company of New York,
Bank of America National Trust and Savings Association, The Bank of New York and
Bankers Trust Company, as Arranging Agents, and Morgan Guaranty Trust Company of
New York, as Administrative Agent (as the same may be amended from time to time,
the "Credit Agreement"). Terms defined in the Credit Agreement are used herein
with the same meanings. Reference is made to the Credit Agreement for
provisions for the prepayment hereof and the acceleration of the maturity
hereof.
NATIONAL MEDICAL
ENTERPRISES, INC.
By________________________
Title:
2
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
- ------------------------------------------------------------------
Amount of
Amount of Principal Notation
Date Loan Repaid Made By
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
3
EXHIBIT A-2
REVOLVING CREDIT NOTE
New York, New York
, 199
For value received, NATIONAL MEDICAL ENTERPRISES, INC., a Nevada
corporation (the "Borrower"), promises to pay to the order of
(the "Revolving Credit Lender"), for the account of its Applicable Lending
Office, the unpaid principal amount of each Revolving Credit Loan made by the
Revolving Credit Lender to the Borrower pursuant to the Credit Agreement
referred to below on the maturity date provided for in the Credit Agreement.
The Borrower promises to pay interest on the unpaid principal amount of each
such Revolving Credit Loan on the dates and at the rate or rates provided for in
the Credit Agreement. All such payments of principal and interest shall be made
in lawful money of the United States in Federal or other immediately available
funds at the office of Morgan Guaranty Trust Company of New York, 60 Wall
Street, New York, New York.
All Revolving Credit Loans made by the Revolving Credit Lender, the
respective date, amount and Type thereof and all payments of the principal with
respect thereto shall be recorded by the Revolving Credit Lender and, if the
Revolving Credit Lender so elects in connection with any transfer or enforcement
hereof, appropriate notations to evidence the foregoing information with respect
to each such Revolving Credit Loan then outstanding may be endorsed by the
Revolving Credit Lender on the schedule attached hereto, or on a continuation of
such schedule attached to and made a part hereof; PROVIDED that the failure of
the Revolving Credit Lender to make any such recordation or endorsement shall
not affect the obligations of the Borrower hereunder or under any other
Financing Document.
This note is one of the Revolving Credit Notes referred to in the
Credit Agreement dated as of February 28, 1995 among the Borrower, the lenders
party thereto, Morgan Guaranty Trust Company of New York, Bank of America
National
Trust and Savings Association, The Bank of New York and Bankers Trust Company,
as Arranging Agents, and Morgan Guaranty Trust Company of New York, as
Administrative Agent (as the same may be amended from time to time, the "Credit
Agreement"). Terms defined in the Credit Agreement are used herein with the
same meanings. Reference is made to the Credit Agreement for provisions for the
prepayment hereof and the acceleration of the maturity hereof.
NATIONAL MEDICAL
ENTERPRISES, INC.
By
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Title:
2
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
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Amount of
Amount of Principal Notation
Date Loan Repaid Made By
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3
EXHIBIT A-3
SWINGLINE NOTE
New York, New York
, 199
For value received, NATIONAL MEDICAL ENTERPRISES, INC., a Nevada
corporation (the "Borrower"), promises to pay to the order of MORGAN GUARANTY
TRUST COMPANY OF NEW YORK (the "Swingline Bank"), for the account of its
Domestic Lending Office, the unpaid principal amount of each Swingline Loan made
by the Swingline Bank to the Borrower pursuant to the Credit Agreement referred
to below on the maturity date provided for in the Credit Agreement. The
Borrower promises to pay interest on the unpaid principal amount of each such
Swingline Loan on the dates and at the rate or rates provided for in the Credit
Agreement. All such payments of principal and interest shall be made in lawful
money of the United States in Federal or other immediately available funds at
the office of Morgan Guaranty Trust Company of New York, 60 Wall Street, New
York, New York.
All Swingline Loans made by the Swingline Bank and all repayments of
the principal thereof shall be recorded by the Swingline Bank and, if the
Swingline Bank so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to each
such Swingline Loan then outstanding may be endorsed by the Swingline Bank on
the schedule attached hereto, or on a continuation of such schedule attached to
and made a part hereof; PROVIDED that the failure of the Swingline Bank to make
any such recordation or endorsement shall not affect the obligations of the
Borrower hereunder or under any other Financing Document.
This note is the Swingline Note referred to in the Credit Agreement
dated as of February 28, 1995 among the Borrower, the lenders party thereto,
Morgan Guaranty Trust Company of New York, Bank of America National Trust and
Savings Association, The Bank of New York and Bankers Trust Company, as
Arranging Agents, and Morgan Guaranty Trust
Company of New York, as Administrative Agent (as the same may be amended from
time to time, the "Credit Agreement"). Terms defined in the Credit Agreement
are used herein with the same meanings. Reference is made to the Credit
Agreement for provisions for the prepayment hereof and the acceleration of the
maturity hereof.
NATIONAL MEDICAL
ENTERPRISES, INC.
By
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Title:
2
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
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Amount of
Amount of Principal Notation
Date Loan Repaid Made By
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3
EXHIBIT B
SECURITY AGREEMENT
dated as of
_______________, 1995
among
National Medical Enterprises, Inc.
and
N.M.E. International (Cayman) Limited
as Grantors
and
Morgan Guaranty Trust Company of New York
as Collateral Agent
SECURITY AGREEMENT
AGREEMENT dated as of _________ __, 1995 among NATIONAL MEDICAL
ENTERPRISES, INC. and N.M.E. INTERNATIONAL (CAYMAN) LIMITED, as Grantors, and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Collateral Agent (the "Collateral
Agent").
WHEREAS, terms used in these recitals have the meanings assigned to
them in Section 1 hereof;
WHEREAS, the Borrower, the lenders party thereto, Morgan Guaranty
Trust Company of New York, Bank of America National Trust and Savings
Association, The Bank of New York and Bankers Trust Company, as Arranging
Agents, and Morgan Guaranty Trust Company of New York, as Administrative Agent
are parties to a Credit Agreement dated as of February 28, 1995 (as the same may
be amended from time to time, the "Credit Agreement");
WHEREAS, in order to induce the Lenders to enter into the Credit
Agreement, the Grantors are willing to grant a continuing security interest in
and to the Collateral to secure the obligations of the Borrower under the Credit
Agreement and the Notes issued pursuant thereto;
WHEREAS, the Metrocrest Issuing Bank has issued two letters of credit
for the account of the Borrower to support bonds issued by the Metrocrest
Hospital Authority to finance facilities leased to and operated by NME
Hospitals, and each Metrocrest Bank is participating in such letters of credit
and the related reimbursement obligations under the Metrocrest Reimbursement
Agreement;
WHEREAS, the Borrower, certain Subsidiaries and Bank of America
National Trust and Savings Association are parties to the Advance Account
Agreement and the Overdraft Facility Agreement;
WHEREAS, the Borrower's obligations under the Metrocrest Reimbursement
Agreement, the Advance Account Agreement and the Overdraft Facility Agreement
are to be secured in substantially the same manner as the Borrower's obligations
under the Credit Agreement and the Notes;
WHEREAS, the Borrower may from time to time enter into agreements or
arrangements to protect itself and/or one or more of its Subsidiaries against
fluctuations in interest rates or currency exchange rates and may elect to
secure its obligations under such agreements or arrangements under this
Agreement; and
WHEREAS, with the consent of the Super-Majority Secured Parties, the
Borrower may elect to secure one or more additional obligations of the Borrower
under this Agreement;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
Terms defined in the Credit Agreement and not otherwise defined herein
have, as used herein, the respective meanings provided for therein. The
following additional terms, as used herein, have the following
respective meanings:
"Borrower's Collateral" means the collateral described in Section
3(A).
"Cash Distributions" means dividends, interest and other payments and
distributions made in cash upon or with respect to the Collateral.
"Collateral" means the Borrower's Collateral and NMEC's Collateral.
"Contingent Secured Obligation" means, at any time, any Secured
Obligation (or portion thereof) that is contingent in nature at such time,
including (without limiting the generality of the foregoing):
(i) any obligation to reimburse a bank for drawings not yet made
under a letter of credit issued by such bank,
(ii) any obligation to provide collateral to or for the benefit of a
bank to secure reimbursement obligations arising from drawings not yet made
under a letter of credit issued by such bank,
(iii) any obligation to provide collateral to or for the benefit of the
relevant counterparty with
2
respect to a Hedging Obligation to secure payments not yet due and payable
under such Hedging Obligation, and
(iv) any other Secured Obligation which is contingent in nature at the
time of determination.
"Credit Agreement" has the meaning set forth in the second WHEREAS
clause at the beginning of this Agreement.
"Enforcement Notice" means a notice delivered to the Collateral Agent
by the Required Lenders or the Required Secured Parties (i) stating that an
Event of Default has occurred and is continuing and (ii) directing the
Collateral Agent to exercise one or more rights or remedies under this
Agreement.
"First Tier Domestic Subsidiary" means a First Tier Subsidiary
incorporated or organized under the laws of the United States or any State
thereof, other than an Immaterial Subsidiary.
"First Tier International Subsidiary" means a First Tier Subsidiary
which is not incorporated or organized under the laws of the United States or
any State thereof, other than an Immaterial Subsidiary.
"Grantors" means the Borrower and NME Cayman.
"Instruments" means "instruments" and "chattel paper" (as each such
term is defined in the UCC).
"Metrocrest Letter of Credit" means a letter of credit issued under
the Metrocrest Reimbursement Agreement.
"Metrocrest Letter of Credit Liabilities" means, at any time, the sum,
without duplication, of (i) the aggregate amount that is then (or may thereafter
become) available for drawing under the Metrocrest Letters of Credit and (ii)
the aggregate unpaid amount of all Metrocrest Reimbursement Obligations then
outstanding.
"Metrocrest Reimbursement Obligations" means, at any time, all
obligations of the Borrower to reimburse the Metrocrest Issuing Bank for a
drawing under the Metrocrest Letters of Credit, including any portion of any
such obligation to which a Metrocrest Bank has become subrogated pursuant to the
Metrocrest Reimbursement Agreement.
"NME Cayman" means NME International (Cayman) Limited, a Cayman
Islands company and its successors.
3
"NME Cayman's Collateral" means the collateral described in Section
3(B).
"Non-Contingent Secured Obligation" means at any time any Secured
Obligation (or portion thereof) that is not a Contingent Secured Obligation at
such time.
"Opinion of Counsel" means a written opinion of legal counsel (who may
be counsel to the Borrower or other counsel, in either case approved by the
Administrative Agent or the Required Secured Parties in a writing delivered to
the Collateral Agent) addressed and delivered to the Collateral Agent.
"Pledged Instruments" means at any time all Instruments included or
required to be included in the Collateral at such time.
"Pledged Stock" means at any time all shares of capital stock included
or required to be included in the Collateral at such time.
"Post-Petition Interest" means any interest which accrues after the
commencement of any case, proceeding or other action relating to the bankruptcy,
insolvency or reorganization of the Borrower or would accrue but for the
operation of applicable bankruptcy or insolvency laws, whether or not allowed or
allowable as a claim in such proceeding.
"Required Secured Parties" means, at any time, Term Lenders, Revolving
Credit Lenders and/or Metrocrest Banks having more than 50% of the aggregate
amount of the Secured Exposures at such time.
"Secured Exposure" means at any time:
(a) with respect to each Term Lender, its Term Exposure at such time,
(b) with respect to each Revolving Credit Lender, its Revolving Credit
Exposure at such time, and
(c) with respect to each Metrocrest Bank, its participating share of
the aggregate amount of the Metrocrest Letter of Credit Liabilities at such
time.
"Secured Obligations" means:
(i) all principal of all Loans and Reimbursement Obligations
outstanding from time to time under the
4
Credit Agreement, all interest (including Post-Petition Interest) on such
Loans and Reimbursement Obligations and all other amounts now or hereafter
payable by the Borrower pursuant to the Credit Agreement;
(ii) all Metrocrest Reimbursement Obligations (up to $91,350,000 in
aggregate principal amount) outstanding from time to time under the
Metrocrest Reimbursement Agreement, all interest (including Post-Petition
Interest) on such Metrocrest Reimbursement Obligations and all other
amounts now or hereafter payable by the Borrower pursuant to the Metrocrest
Reimbursement Agreement;
(iii) (A) (x) the principal amount (up to Singapore dollars 18,500,000)
of all obligations of the Borrower (including, without limitation, its
obligations as guarantor of the obligations of its Subsidiaries)
outstanding from time to time under the Advance Account Agreement and (y)
the principal amount (up to $20,000,000) of all obligations of the Borrower
(including, without limitation, its obligations as guarantor of the
obligations of its Subsidiaries) outstanding from time to time under the
Overdraft Facility Agreement, (B) all interest (including Post-Petition
Interest) on such obligations and (C) all other amounts now or hereafter
payable by the Borrower pursuant to the Advance Account Agreement and the
Overdraft Facility Agreement; and
(iv) all other obligations of the Borrower which, after the date
hereof, are designated by the Borrower as "Secured Obligations" pursuant to
Section 19.
"Secured Parties" means the holders from time to time of the Secured
Obligations.
"Secured Parties Requesting Notice" means, at any time, each Secured
Party which has, at least five Business Days prior thereto, delivered to the
Collateral Agent a written notice (i) stating that it holds one or more Secured
Obligations and wishes to receive copies of the notices referred to in Section
14(H) and (ii) setting forth its address or facsimile number to which copies of
such notices should be sent.
"Security Interests" means the security interests in the Collateral
granted by the Grantors hereunder.
"Super-Majority Secured Parties" means, at any time, Term Lenders,
Revolving Credit Lenders and/or
5
Metrocrest Banks having more than 75% of the aggregate amount of the Secured
Exposures at such time.
"UCC" means the Uniform Commercial Code as in effect on the date
hereof in the State of New York; PROVIDED that if, by reason of mandatory
provisions of law, the perfection or the effect of perfection or non-perfection
of any Security Interest in any Collateral is governed by the Uniform Commercial
Code as in effect in a jurisdiction other than New York, "UCC" means the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of perfection or
non-perfection.
Unless otherwise defined herein, or unless the context otherwise
requires, all terms used herein which are defined in the New York Uniform
Commercial Code as in effect on the date hereof have the meanings therein
stated.
SECTION 2. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants (and NME Cayman represents and
warrants with respect to itself and the Collateral specified herein as being
owned by it) that:
(A) Schedule I hereto sets forth a correct and complete list, as of
the close of business on the Closing Date, of (i) all capital stock of First
Tier Subsidiaries (other than Immaterial Subsidiaries) beneficially owned by the
Borrower, (ii) all Instruments owned by the Borrower evidencing Debt owed to it
by any of its Subsidiaries and (iii) all capital stock of Westminster
beneficially owned by NME Cayman.
(B) Each Grantor owns all of the Collateral listed in Schedule I hereto
as being owned by it, free and clear of any Lien other than the Security
Interests. Each Grantor will own all Collateral hereafter acquired by it, free
and clear of any Lien other than the Security Interests. No Grantor is or will
become a party to or otherwise bound by any agreement, other than the Credit
Agreement and this Agreement, which restricts in any manner the rights of any
present or future holder of any of the Collateral with respect thereto.
(C) All shares of capital stock included in the Collateral have been
duly authorized and validly issued, are fully paid and non-assessable, and are
subject to no option to purchase or similar right of any Person.
6
(D) No Grantor has performed any acts which might prevent the
Collateral Agent from enforcing any of the provisions of this Agreement or which
would limit the Collateral Agent in any such enforcement. Except for financing
statements or other similar or equivalent documents with respect to the Security
Interests, no financing statement, security agreement or similar or equivalent
document or instrument covering all or any part of the Collateral is on file or
of record in any jurisdiction in which such filing or recording would be
effective to perfect a Lien on such Collateral. No Collateral is in the
possession of any Person (other than the relevant Grantor) asserting any claim
thereto or security interest therein, except that the Collateral Agent or its
designee may have possession of the Collateral as contemplated hereby.
(E) The Security Interests constitute valid security interests under
the UCC securing the Secured Obligations.
(F) Upon the delivery of the Pledged Instruments and the stock
certificates representing the Pledged Stock to the Collateral Agent in
accordance with Section 4, the Collateral Agent will have valid and perfected
security interests in such Collateral subject to no prior Lien.
(G) When appropriately completed UCC financing statements shall have
been filed as specified in Schedule II hereto, the Security Interests will
constitute perfected security interests in the Collateral to the extent that a
security interest therein may be perfected by filing pursuant to the UCC, prior
to all other Liens and rights of others therein. Except for the filing of such
UCC financing statements, no registration, recordation or filing with any
governmental body, agency or official is required in connection with the
execution or delivery of this Agreement or necessary for the validity or
enforceability hereof or for the perfection or enforcement of the Security
Interests.
(H) The chief executive office of each Grantor is located at the
address of such Grantor set forth on the signature pages of this Agreement.
Under the Uniform Commercial Code as in effect in the State in which such office
is located, no local filing is required to perfect a security interest in
collateral consisting of general intangibles.
7
SECTION 3. THE SECURITY INTERESTS
In order to secure the full and punctual payment of the Secured
Obligations in accordance with the terms thereof, and to secure the performance
of the obligations of the Borrower hereunder:
(A) The Borrower grants to the Collateral Agent for the benefit
of the Secured Parties a continuing security interest in all of the
following assets of the Borrower:
(1) all capital stock of its First Tier Domestic
Subsidiaries now or hereafter beneficially owned by the
Borrower, all other Equity Interests (if any) in First Tier
Domestic Subsidiaries hereafter acquired by the Borrower,
all rights and privileges of the Borrower with respect to
such capital stock and other Equity Interests, and all
dividends, distributions and other payments with respect
thereto;
(2) all capital stock of its First Tier International
Subsidiaries now or hereafter beneficially owned by the Borrower,
all other Equity Interests (if any) in First Tier International
Subsidiaries hereafter acquired by the Borrower, all rights and
privileges of the Borrower with respect to such capital stock and
other Equity Interests, and all dividends, distributions and
other payments with respect thereto; PROVIDED that, if the
Borrower beneficially owns more than 66% of any class of such
capital stock or more than 66% of any class or type of such other
Equity Interests, the portion thereof in excess of 66% (together
with the rights, privileges, dividends, distributions and other
payments relating thereto) shall be excluded from such security
interest and shall not constitute part of the Collateral;
(3) all Debt now or hereafter owed to the Borrower by any
of its Subsidiaries, whether or not evidenced by Instruments; and
(4) all proceeds of the collateral described in the foregoing
clauses (1), (2) and (3).
8
(B) NME Cayman grants to the Collateral Agent for the benefit of
the Secured Parties a continuing security interest in all capital
stock of Westminster now or hereafter beneficially owned by NME
Cayman, all rights and privileges of NME Cayman with respect thereto,
all dividends, distributions and other payments with respect thereto
and all proceeds of the foregoing collateral.
The Security Interests are granted as security only and shall not subject the
Collateral Agent or any other Secured Party to, or transfer or in any way affect
or modify, any obligation or liability of any Grantor with respect to any of the
Collateral or any transaction in connection therewith.
SECTION 4. DELIVERY OF CERTAIN COLLATERAL
(A) On the Closing Date, (i) each Grantor is delivering to the
Collateral Agent as Collateral hereunder, subject to the PROVISO in Section
3(A)(2), stock certificates representing all the capital stock beneficially
owned by such Grantor and listed in Schedule I hereto and (ii) the Borrower is
delivering to the Collateral Agent as Collateral hereunder all Instruments
listed in Schedule I hereto evidencing Debt owed to the Borrower by its
Subsidiaries on the Closing Date.
(B) After the Closing Date, if at any time any First Tier Subsidiary
theretofore classified as an Immaterial Subsidiary no longer constitutes an
Immaterial Subsidiary, the Borrower will forthwith deliver to the Collateral
Agent as additional Collateral hereunder, subject to the PROVISO in Section
3(A)(2), stock certificates representing all the capital stock of such First
Tier Subsidiary beneficially owned by the Borrower.
(C) After the Closing Date, if any Grantor receives any stock
certificate representing capital stock in which a security interest is granted
pursuant to Section 3, or any Instrument in which a security interest is granted
pursuant to Section 3, and such stock certificate or Instrument has not
previously been delivered to the Collateral Agent hereunder, such Grantor will
immediately deliver such stock certificate or Instrument to the Collateral Agent
as additional Collateral hereunder, subject to the PROVISO in Section 3(A)(2).
(D) All certificates representing Pledged Stock delivered by any
Grantor to the Collateral Agent hereunder
9
shall be delivered in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment in blank, all
in form and substance satisfactory to the Collateral Agent. All Instruments
delivered by the Borrower to the Collateral Agent hereunder shall be indorsed to
the order of the Collateral Agent, or shall be accompanied by duly executed
instruments of assignment, all in form and substance satisfactory to the
Collateral Agent.
SECTION 5. FURTHER ASSURANCES
The Borrower covenants (and NME Cayman covenants with respect to
itself) that:
(A) No Grantor will change its name, identity or corporate structure
in any manner unless the Borrower shall have given the Collateral Agent prior
notice thereof and delivered an Opinion of Counsel with respect thereto in
accordance with Section 5(D).
(B) No Grantor will change the location of its chief executive office
or chief place of business from that set forth on the signature pages hereof,
unless the Borrower shall have given the Collateral Agent prior notice thereof
and delivered an Opinion of Counsel with respect thereto in accordance with
Section 5(D). No Grantor shall in any event change the location of any
Collateral owned by it if such change would cause the Security Interests in such
Collateral to lapse or cease to be perfected.
(C) Each Grantor will, from time to time, at its expense, execute,
deliver, file and record any statement, assignment, instrument, document,
agreement or other paper and take any other action (including, without
limitation, any filings of financing or continuation statements under the UCC)
that from time to time may be necessary or desirable, or that the Collateral
Agent may request, in order to create, preserve, perfect, confirm or validate
the Security Interests or to enable the Collateral Agent and the other Secured
Parties to obtain the full benefits of this Agreement, or to enable the
Collateral Agent to exercise and enforce any of its rights, powers and remedies
hereunder with respect to any of the Collateral. To the extent permitted by
applicable law, each Grantor authorizes the Collateral Agent to execute and file
such financing statements or continuation statements without such Grantor's
signature appearing thereon. Each Grantor agrees that a carbon, photographic,
photostatic or other reproduction of this Agreement or of a financing statement
is sufficient as a financing statement. The Borrower shall pay the costs of,
10
or incidental to, any recording or filing of any such financing or continuation
statements.
(D) At least 30 days before any Grantor takes any action contemplated
by subsection (A) or (B) of this Section, the Borrower shall, at its cost and
expense, cause to be delivered to the Collateral Agent an Opinion of Counsel, in
form and substance satisfactory to the Collateral Agent, to the effect that all
financing statements and amendments or supplements thereto, continuation
statements and other documents required to be recorded or filed in order to
perfect and protect the Security Interests against all creditors of and
purchasers from such Grantor (except any continuation statements specified in
such Opinion of Counsel that are to be filed more than six months after the date
thereof) have been filed in each filing office necessary for such purpose and
that all filing fees and taxes, if any, payable in connection with such filings
have been paid in full.
(E) From time to time the Borrower shall, at its cost and expense,
cause to be delivered to the Secured Parties an Opinion of Counsel satisfactory
to the Collateral Agent as to such matters relating to the transactions
contemplated hereby as the Required Lenders or the Required Secured Parties may
reasonably request.
SECTION 6. RECORD OWNERSHIP OF PLEDGED STOCK
If directed to do so by the Required Lenders or the Required Secured
Parties at any time or from time to time, the Collateral Agent shall cause the
Pledged Stock (or any portion thereof specified in such directions) to be
transferred of record into the name of the Collateral Agent or its nominee.
Promptly upon receiving any such directions, the Collateral Agent will notify
the relevant Grantor thereof and thereafter the relevant Grantor will promptly
give to the Collateral Agent copies of any notices or other communications
received by it with respect to Pledged Stock registered in the name of the
relevant Grantor, and the Collateral Agent will promptly give to the relevant
Grantor copies of any notices and communications received by the Collateral
Agent with respect to Pledged Stock registered in the name of the Collateral
Agent or its nominee. So long as no Enforcement Notice is in effect, the
Collateral Agent shall pay over to the relevant Grantor all Cash Distributions
received by the Collateral Agent upon or with respect to any Pledged Stock held
of record in the name of the Collateral Agent or its nominee.
11
SECTION 7. RIGHT TO RECEIVE DISTRIBUTIONS ON COLLATERAL
Subject to Section 16, the Collateral Agent shall have the right to
receive and to retain as Collateral hereunder all dividends, interest and other
payments and distributions made upon or with respect to the Collateral and the
Grantor shall take all such action as the Collateral Agent may deem necessary or
appropriate to give effect to such right; PROVIDED that, unless an Enforcement
Notice is in effect, this sentence shall not apply to Cash Distributions. All
such dividends, interest and other payments and distributions which are received
by the Grantors (except Cash Distributions received when no Enforcement Notice
is in effect) shall be received in trust for the benefit of the Secured Parties
and shall be segregated from other assets of the Grantors and shall, promptly
upon the relevant Grantor's receipt thereof, be delivered or paid over to the
Collateral Agent in the same form as received (with any necessary endorsements
or executed assignments in blank), together with a statement identifying the
source of such Collateral and stating that it is being delivered to the
Collateral Agent to be held as Collateral under this Agreement. If an
Enforcement Notice is withdrawn pursuant to Section 17 (and no other Enforcement
Notice is then in effect), the Collateral Agent's right to retain Cash
Distributions under this Section 7 shall cease and the Collateral Agent shall
pay over to the relevant Grantor any Cash Distributions retained by it during
the continuance of such Enforcement Notice.
SECTION 8. RIGHT TO VOTE PLEDGED STOCK.
Unless an Enforcement Notice directing the Collateral Agent to vote the
Pledged Stock is in effect, each Grantor shall have the right, from time to
time, to vote and to give consents, ratifications and waivers with respect to
the Pledged Stock owned by it, and the Collateral Agent shall, upon receiving a
written request from such Grantor, deliver to such Grantor or as specified in
such request such proxies, powers of attorney, consents, ratifications and
waivers in respect of any of such Pledged Stock which is registered in the name
of the Collateral Agent or its nominee as shall be specified in such request and
be in form and substance satisfactory to the Collateral Agent.
If an Enforcement Notice is in effect, the Collateral Agent shall have
the right to the extent permitted by law, and each Grantor shall take all such
action as may be necessary or appropriate to give effect to such right, to vote
and to give consents, ratifications and
12
waivers, and take any other action with respect to any or all of the Pledged
Stock with the same force and effect as if the Collateral Agent were the
absolute and sole owner thereof.
SECTION 9. GENERAL AUTHORITY
Each Grantor hereby irrevocably appoints the Collateral Agent its true
and lawful attorney, with full power of substitution, in the name of such
Grantor, any Secured Party or otherwise, for the sole use and benefit of the
Collateral Agent and the Secured Parties, but at the expense of such Grantor, to
the extent permitted by law to exercise, at any time and from time to time while
an Enforcement Notice directing it to do so is in effect, all or any of the
following powers with respect to all or any of the Collateral:
(i) to demand, sue for, collect, receive and give acquittance for any
and all monies due or to become due upon or by virtue thereof,
(ii) to settle, compromise, compound, prosecute or defend any action
or proceeding with respect thereto,
(iii) to sell, transfer, assign or otherwise deal in or with the same
or the proceeds or avails thereof, as fully and effectually as if the
Collateral Agent were the absolute owner thereof, and
(iv) to extend the time of payment of any or all thereof and to make
any allowance and other adjustments with reference thereto;
PROVIDED that the Collateral Agent shall give each Grantor not less than ten
days' prior written notice of the time and place of any sale or other intended
disposition of any of the Collateral owned by such Grantor, except any such
Collateral which threatens to decline speedily in value or is of a type
customarily sold on a recognized market. The Collateral Agent and each Grantor
agree that such notice constitutes "reasonable notification" within the meaning
of Section 9-504(3) of the UCC.
SECTION 10. REMEDIES UPON ENFORCEMENT NOTICE
(A) Upon being instructed to do so by the Required Lenders or the
Required Secured Parties in an Enforcement Notice or in written instructions
given at any time while an Enforcement Notice is in effect, the Collateral Agent
may exercise on behalf of the Secured
13
Parties all the rights of a secured party under the UCC (whether or not in
effect in the jurisdiction where such rights are exercised) and, in addition,
the Collateral Agent may, without being required to give any notice, except as
herein provided or as may be required by mandatory provisions of law, (i) apply
the cash, if any, then held by it as Collateral as specified in Section 13 and
(ii) if there shall be no such cash or if such cash shall be insufficient to pay
all the Secured Obligations in full, sell the Collateral or any part thereof at
public or private sale or at any broker's board or on any securities exchange,
for cash, upon credit or for future delivery, and at such price or prices as the
Required Lenders (if the Required Lenders gave the relevant Enforcement Notice)
or the Required Secured Parties (if the Required Secured Parties gave the
relevant Enforcement Notice) shall have advised the Collateral Agent are
satisfactory. Any Secured Party may be the purchaser of any or all of the
Collateral so sold at any public sale (or, if the Collateral is of a type
customarily sold in a recognized market or is of a type which is the subject of
widely distributed standard price quotations, at any private sale). The
Collateral Agent is authorized, in connection with any such sale, if it deems it
advisable so to do, (i) to restrict the prospective bidders on or purchasers of
any of the securities included in the Collateral to a limited number of
sophisticated investors who will represent and agree that they are purchasing
for their own account for investment and not with a view to the distribution or
sale of any of such securities, (ii) to cause to be placed on any security
included in the Collateral a legend to the effect that such security has not
been registered under the Securities Act of 1933 and may not be disposed of in
violation of the provisions of said Act, and (iii) to impose such other
limitations or conditions in connection with any such sale as the Collateral
Agent deems necessary or advisable in order to comply with said Act or any other
law. Each Grantor agrees that it will execute and deliver such documents and
take such other action as the Collateral Agent deems necessary or advisable in
order that any such sale may be made in compliance with law. Upon any such sale
the Collateral Agent shall have the right to deliver, assign and transfer to the
purchaser thereof the Collateral so sold. Each purchaser at any such sale shall
hold the Collateral so sold absolutely and free from any claim or right of
whatsoever kind, including any equity or right of redemption of the relevant
Grantor which may be waived, and the relevant Grantor, to the extent permitted
by law, hereby specifically waives all rights of redemption, stay or appraisal
which it has or may have under any law now existing or hereafter adopted.
Notice of any such sale shall be given to the relevant Grantor as required by
14
Section 9 and shall (1) in case of a public sale, state the time and place fixed
for such sale, (2) in case of sale at a broker's board or on a securities
exchange, state the board or exchange at which such sale is to be made and the
day on which the Collateral, or the portion thereof so being sold, will first be
offered for sale at such board or exchange, and (3) in the case of a private
sale, state the day after which such sale may be consummated. Any such public
sale shall be held at such time or times within ordinary business hours and at
such place or places as the Collateral Agent may fix in the notice of such sale.
At any such sale the Collateral may be sold in one lot as an entirety or in
separate parcels, as the Collateral Agent may determine. The Collateral Agent
shall not be obligated to make any such sale pursuant to any such notice. The
Collateral Agent may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by announcement
at the time and place fixed for the sale, and such sale may be made at any time
or place to which the same may be so adjourned. In case of any sale of all or
any part of the Collateral on credit or for future delivery, the Collateral so
sold may be retained by the Collateral Agent until the selling price is paid by
the purchaser thereof, but the Collateral Agent shall not incur any liability in
case of the failure of such purchaser to take up and pay for the Collateral so
sold and, in case of any such failure, such Collateral may again be sold upon
like notice. Upon being instructed to do so by the Required Lenders or the
Required Secured Parties in an Enforcement Notice or in written instructions
given at any time while an Enforcement Notice is in effect, the Collateral
Agent, instead of exercising the power of sale herein conferred upon it, may
proceed by a suit or suits at law or in equity to foreclose the Security
Interests and sell the Collateral, or any portion thereof, under a judgment or
decree of a court or courts of competent jurisdiction.
(B) If the Collateral Agent shall determine to exercise its right to
sell all or any of the Collateral and if in the Opinion of Counsel it is
necessary, or if in the opinion of the Collateral Agent it is advisable, to have
the securities included in the Collateral, or the portion thereof to be sold,
registered under the provisions of the Securities Act of 1933, the Borrower
agrees, at its own expense, (i) to execute and deliver, and, to the extent the
Borrower may legally do so, to use its best efforts to cause each corporation
whose securities are to be sold and the directors and officers of such
corporation to execute and deliver, all such instruments and documents, and to
do or cause to be done all other such acts and things, as may be necessary or,
in the opinion of the Collateral Agent,
15
advisable to register such securities under the provisions of the Securities Act
of 1933 and to use its best efforts to cause the registration statement relating
thereto to become effective and to remain effective for such period as
prospectuses are required by law to be furnished, and to make or cause to be
made all amendments and supplements thereto and to the related prospectus which,
in the opinion of the Collateral Agent, are necessary or advisable, all in
conformity with the requirements of the Securities Act of 1933 and the rules and
regulations of the SEC thereunder, (ii) to use its best efforts to cause the
corporation whose securities are to be sold to agree to make available (and to
make available) to its security holders as soon as practicable, an earning
statement (which need not be audited) covering a period of at least 12 months,
beginning with the first month after the effective date of any such registration
statement, which earning statement will satisfy the provisions of Section 11(a)
of the Securities Act of 1933, (iii) to use its best efforts, and to use its
best efforts to cause the corporation whose securities are to be sold to use its
best efforts, to qualify such securities under state Blue Sky or securities laws
and to obtain the approval of any governmental authorities for the sale of such
securities, as requested by the Collateral Agent and (iv) at the request of the
Collateral Agent, to indemnify and hold harmless, and, to the extent that the
Borrower may legally do so, to use its best efforts to cause the corporation
whose securities are to be sold to indemnify and hold harmless, the Collateral
Agent, the Secured Parties and any underwriters (and any person controlling any
of the foregoing) from and against any loss, liability, claim, damage and
expense (and reasonable counsel fees incurred in connection therewith) under the
Securities Act of 1933 or otherwise insofar as such loss, liability, claim,
damage or expense arises out of or is based upon any untrue statement or alleged
untrue statement of a material fact contained in such registration statement or
prospectus or in any preliminary prospectus or any amendment or supplement
thereto, or arises out of or is based upon any omission or alleged omission to
state therein a material fact required to be stated or necessary to make the
statements therein not misleading, such indemnification to remain operative
regardless of any investigation made by or on behalf of the Collateral Agent,
the Secured Parties or any underwriters (or any person controlling any of the
foregoing), PROVIDED that neither the Borrower nor such corporation shall be
liable in any case to the extent that any such loss, liability, claim, damage or
expense arises out of or is based on an untrue statement or alleged untrue
statement or an omission or an alleged omission made in reliance upon and in
conformity with written information furnished to such
16
corporation by the Collateral Agent, any Secured Party or any underwriter
expressly for use in such registration statement or prospectus.
SECTION 11. FEES AND EXPENSES; INDEMNIFICATION
The Borrower agrees that it will forthwith upon demand pay to the
Collateral Agent:
(i) the amount of any taxes which the Collateral Agent may have been
required to pay by reason of the Security Interests or to free any of the
Collateral from any Lien thereon,
(ii) the amount of any and all out-of-pocket expenses, including
transfer taxes and reasonable fees and disbursements of counsel and of any
other experts, which the Collateral Agent may incur in connection with (w)
the administration or enforcement of this Agreement, including such
expenses as are incurred to preserve the value of the Collateral and the
validity, perfection, rank and value of any Security Interest, (x) the
collection, sale or other disposition of any of the Collateral, (y) the
exercise by the Collateral Agent of any of the rights or powers conferred
upon it hereunder or (z) any Enforcement Notice,
(iii) the amount of any fees that the Borrower shall have agreed in
writing to pay to the Collateral Agent and that shall have become due and
payable in accordance with such written agreement, and
(iv) the amount required to indemnify the Collateral Agent for, or
hold it harmless and defend it against, any loss, liability or expense
(including the reasonable fees and expenses of its counsel and any experts
or co-agents appointed hereunder) incurred or suffered by the Collateral
Agent in connection with this Agreement, except to the extent that such
loss, liability or expense arises from the Collateral Agent's gross
negligence or willful misconduct or a breach of any duty that the
Collateral Agent has under this Agreement (after giving effect to Sections
12 and 14 hereof).
Any such amount not paid to the Collateral Agent on demand shall bear interest
for each day until paid at a rate per annum equal to the sum of 2% plus the rate
of interest applicable to Base Rate Loans for such day under the Credit
Agreement.
17
SECTION 12. LIMITATION ON DUTY OF COLLATERAL AGENT
IN RESPECT OF COLLATERAL
Beyond the exercise of reasonable care in the custody and preservation
thereof, the Collateral Agent shall have no duty as to any Collateral in its
possession or control or in the possession or control of any agent or bailee or
any income thereon or as to the preservation of rights against prior parties or
any other rights pertaining thereto. The Collateral Agent shall be deemed to
have exercised reasonable care in the custody and preservation of the Collateral
in its possession if the Collateral is accorded treatment substantially equal to
that which it accords its own property, and shall not be liable or responsible
for any loss or damage to any of the Collateral, or for any diminution in the
value thereof, by reason of the act or omission of any agent or bailee selected
by the Collateral Agent in good faith or by reason of any act or omission by the
Collateral Agent pursuant to instructions from the Required Lenders or the
Required Secured Parties (including, without limitation, any voting instruction
pursuant to Section 8), except to the extent that such liability arises from the
Collateral Agent's gross negligence or willful misconduct.
SECTION 13. APPLICATION OF PROCEEDS
(A) Upon being instructed to do so by the Required Lenders or the
Required Secured Parties in an Enforcement Notice or in written instructions
given at any time while an Enforcement Notice is in effect, the Collateral Agent
shall apply the proceeds of any sale of, or other realization upon, all or any
part of the Collateral and any cash held as part of the Collateral in the
following order of priorities:
FIRST, to pay (i) the expenses of such sale or other realization,
including reasonable compensation to agents of and counsel for the
Collateral Agent, and all expenses, liabilities and advances incurred or
made by the Collateral Agent in connection therewith, and (ii) any other
amounts then due and payable to the Collateral Agent pursuant to Section 11
hereof, to the Administrative Agent pursuant to Section 9.03 of the Credit
Agreement or to the Metrocrest Issuing Bank pursuant to Section 12.03 of
the Metrocrest Reimbursement Agreement;
SECOND, to pay the unpaid principal of the Secured Obligations ratably
(or provide for the payment thereof pursuant to subsection (B) of this
Section), until
18
payment in full of the principal of all Secured Obligations shall have been made
(or so provided for);
THIRD, to pay all interest (including Post-Petition Interest) on the
Secured Obligations and all letter of credit fees and commitment fees
payable under the Credit Agreement and the Metrocrest Reimbursement
Agreement ratably, until payment in full of all such interest and fees
shall have been made;
FOURTH, to pay all other Secured Obligations ratably (or provide for
the payment thereof pursuant to subsection (B) of this Section), until
payment in full of all such other Secured Obligations shall have been made
(or so provided for); and
FINALLY, to pay to the relevant Grantor or its successors or assigns,
or as a court of competent jurisdiction may direct, any surplus then
remaining from the proceeds of the Collateral owned by it.
The Collateral Agent may make distributions hereunder in cash or in kind or, on
a ratable basis, in any combination thereof.
(B) If at any time any monies collected or received by the Collateral
Agent would, but for the provisions of this subsection (B), be payable pursuant
to subsection (A) of this Section in respect of a Contingent Secured Obligation,
the Collateral Agent shall not apply such monies to pay such Contingent Secured
Obligation but instead shall hold such monies or invest such monies in Temporary
Cash Investments at the direction of the Borrower. The Collateral Agent shall
hold all such monies and all such Temporary Cash Investments and the net
proceeds thereof in trust until such time as all or part of such Contingent
Secured Obligation becomes a Non-Contingent Secured Obligation, whereupon the
Collateral Agent at the request of the relevant Secured Party shall apply the
amount so held in trust to pay such Non-Contingent Secured Obligation; PROVIDED
that, if the other Secured Obligations theretofore paid pursuant to the same
clause of subsection (A) (i.e., clause SECOND or FOURTH) were not paid in full,
the Collateral Agent shall apply the amount so held in trust to pay the same
percentage of such Non-Contingent Secured Obligation as the percentage of such
other Secured Obligations theretofore paid pursuant to the same clause of
subsection (A). If (i) the holder of such Contingent Secured Obligation shall
advise the Collateral Agent that no portion thereof remains in the category of a
Contingent Secured Obligation and (ii) the Collateral Agent still holds
19
any amount held in trust pursuant to this subsection (B) in respect of such
Contingent Secured Obligation (after paying all amounts payable pursuant to the
preceding sentence with respect to any portions thereof that became
Non-Contingent Secured Obligations), such remaining amount shall be applied by
the Collateral Agent in the order of priorities set forth in subsection (A) of
this Section.
(C) In making the payments and allocations required by this Section,
the Collateral Agent may rely upon information supplied to it pursuant to
Section 14(F). All distributions made by the Collateral Agent pursuant to this
Section shall be final (except in the event of manifest error) and the
Collateral Agent shall have no duty to inquire as to the application by the
Secured Parties of any amount distributed to them.
SECTION 14. CONCERNING THE COLLATERAL AGENT
(A) The Collateral Agent is authorized to take all such action as is
provided or permitted to be taken by it as Collateral Agent hereunder and all
other action reasonably incidental thereto. As to any matters not expressly
provided for herein or in an Enforcement Notice or in written requests,
directions or instructions given as expressly provided in Section 6, 8, 9, 10(A)
or 13(A), including, without limitation, the timing and methods of realization
upon the Collateral, the Collateral Agent shall act or refrain from acting in
accordance with written instructions from the Required Lenders or the Required
Secured Parties or, in the absence of such instructions, in accordance with its
discretion (subject to Section 14(C)); PROVIDED that the Collateral Agent shall
not be obligated to comply with any such instructions that are inconsistent with
the provisions of this Agreement.
(B) The Collateral Agent shall not be responsible for the existence,
genuineness or value of any of the Collateral or for the validity, perfection,
priority or enforceability of the Security Interests in any of the Collateral,
whether impaired by operation of law or by reason of any action or omission to
act on its part hereunder. The Collateral Agent shall have no duty to ascertain
or inquire as to the performance or observance of any of the terms of this
Agreement, the Credit Agreement, the Metrocrest Reimbursement Agreement or any
other agreement relating to the Secured Obligations.
(C) The obligations of the Collateral Agent hereunder are only those
expressly set forth herein. In any case in which the Collateral Agent is
authorized to exercise
20
any power or discretion, the Collateral Agent may refrain from such exercise
unless directed in writing by the Required Lenders or the Required Secured
Parties to act in the manner specified in such direction. Without limiting the
generality of the foregoing, the Collateral Agent shall not be required to take
any action with respect to any Enforcement Notice, except as expressly provided
in Sections 9, 10 and 13.
(D) The Collateral Agent may consult with legal counsel (who may be
counsel for the Borrower), independent public accountants and other experts
selected by it in connection with any matter arising under this Agreement and
shall not be liable for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or experts.
(E) Neither the Collateral Agent nor any of its directors, officers,
agents, or employees shall be liable for any action taken or not taken by it in
connection herewith (i) with the consent or at the request of the Required
Lenders or Required Secured Parties, (ii) in accordance with a notice or written
instructions received from the Required Lenders or Required Secured Parties
pursuant to a provision hereof that permits such a notice or written
instructions to be given by the Required Lenders or Required Secured Parties or
(iii) in the absence of its own gross negligence or willful misconduct. However,
nothing in this subsection (E) shall affect any rights either Grantor may have
against such Required Lenders or Required Secured Parties for giving any such
consent, request, notice or instruction. Neither the Collateral Agent nor any of
its directors, officers, agents or employees shall be responsible for or have
any duty to ascertain, inquire into or verify (i) any statement, warranty or
representation made in connection with this Agreement; (ii) the performance or
observance of any of the covenants or agreements of the Grantors; or (iii) the
validity, effectiveness or genuineness of this Agreement, or any other
instrument or writing furnished in connection herewith. The Collateral Agent
shall not incur any liability by acting in reliance upon any notice, consent,
certificate, statement, or other writing (which may be a bank wire, telex,
facsimile or similar writing) believed by it to be genuine or to be signed by
the proper party or parties.
(F) For all purposes of this Agreement, including without limitation
determining from time to time (a) the amounts of the Secured Obligations, (b)
whether a Secured Obligation is a Contingent Secured Obligation or not or (c)
whether any notice, direction or instruction has been given
21
by the Required Lenders, the Required Secured Parties or any other Secured Party
or Secured Parties entitled to give the same under any provision hereof, the
Collateral Agent shall be entitled to rely upon information from the following
sources (and may refrain from acting on the basis of such information until two
Business Days after it receives all such information required to enable it to
take such action):
(i) the Administrative Agent for information as to the Lenders and
their respective Secured Obligations (including whether any action has been
taken or instruction given by the Required Lenders);
(ii) the Metrocrest Issuing Bank for information as to the Metrocrest
Banks and their respective Metrocrest Reimbursement Obligations;
(iii) the holder, trustee, agent or similar representative designated
in the relevant certificate delivered to the Collateral Agent pursuant to
Section 19(B) for information as to the holders of the obligations
designated as additional Secured Obligations in such certificate and their
respective Secured Obligations;
(iv) any Secured Party for information as to itself and its Secured
Obligation, to the extent that the Collateral Agent has not received such
information from the sources referred to in clauses (i) through (iii)
above; and
(v) the Borrower for information as to any Secured Party and its
Secured Obligation, to the extent that the Collateral Agent has not
received such information from the sources referred to in clauses (i)
through (iv) above.
The Collateral Agent shall have no liability to the Borrower or any Secured
Party for actions taken in reliance on such information, except to the extent
that such liability arises from the Collateral Agent's gross negligence or
willful misconduct.
(G) The Collateral Agent may resign at any time (effective upon
acceptance by a successor Collateral Agent of its appointment hereunder) by
giving written notice thereof to the Administrative Agent, the Metrocrest
Issuing Bank, each of the Secured Parties Requesting Notice and the Borrower.
Upon any such resignation, the Required Secured Parties shall have the right to
appoint a successor Collateral Agent. If no successor Collateral Agent shall
22
have been so appointed by the Required Secured Parties, and shall have accepted
such appointment, within 30 days after the retiring Collateral Agent gives
notice of resignation, the retiring Collateral Agent may, on behalf of the
Secured Parties, appoint a successor Collateral Agent, which shall be a
commercial bank organized or licensed under the laws of the United States of
America or of any State thereof and having a combined capital and surplus of at
least $50,000,000. Upon the acceptance of its appointment as Collateral Agent
hereunder by a successor Collateral Agent, such successor Collateral Agent shall
thereupon succeed to and become vested with all the rights and duties of the
retiring Collateral Agent, and the retiring Collateral Agent shall be discharged
from its duties and obligations hereunder. After any retiring Collateral
Agent's resignation hereunder as Collateral Agent, the provisions of this
Section and Section 11 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Collateral Agent.
(H) Within two Business Days after it receives or sends any notice
referred to in this subsection (H), the Collateral Agent shall send to the
Administrative Agent, the Metrocrest Issuing Bank and each of the Secured
Parties Requesting Notice, copies of (i) any Enforcement Notice received by the
Collateral Agent, (ii) any notice withdrawing an Enforcement Notice received by
the Collateral Agent pursuant to Section 18, (iii) any certificate designating
additional obligations as Secured Obligations received by the Collateral Agent
pursuant to Section 19(A) and (iv) any other notice given by the Collateral
Agent to the Borrower, or received by it from the Borrower, pursuant to Section
9, 10(A), 13 or 16. The Collateral Agent shall also send to the Borrower copies
of any Enforcement Notice or any notice withdrawing an Enforcement Notice
received by the Collateral Agent.
(I) If the Collateral Agent receives inconsistent instructions from
the Required Lenders and the Required Secured Parties at any time pursuant to
any provisions hereof, the Collateral Agent shall comply (to the extent
otherwise obligated to do so under the provisions of this Agreement) with the
instructions given by the Required Secured Parties. The Collateral Agent may
refuse to act on any notice, direction or instruction from the Required Lenders,
the Required Secured Parties or any Secured Party or any agent, trustee or
similar representative thereof which, in the Collateral Agent's opinion, (i) is
contrary to law or the provisions of this Agreement, (ii) is unduly prejudicial
to Secured Parties not joining in such notice, direction or instruction or (iii)
may expose the Collateral
23
Agent to liability (unless the Collateral Agent shall have been adequately
indemnified for such liability by the Secured Parties giving such notice,
direction or instruction).
SECTION 15. APPOINTMENT OF CO-COLLATERAL AGENTS
At any time or times, in order to comply with any legal requirement in
any jurisdiction, the Collateral Agent may appoint another bank or trust company
or one or more other persons, either to act as co-agent or co-agents, jointly
with the Collateral Agent, or to act as separate agent or agents on behalf of
the Secured Parties with such power and authority as may be necessary for the
effectual operation of the provisions hereof and may be specified in the
instrument of appointment (which may, in the discretion of the Collateral Agent,
include provisions for the protection of such co-agent or separate agent similar
to the provisions of Section 14).
SECTION 16. Termination of Security Interests;
RELEASE OF COLLATERAL
(A) When (i) all the Commitments shall have expired or been
terminated, (ii) all letters of credit issued under the Credit Agreement and the
Metrocrest Reimbursement Agreement shall have expired or been cancelled or been
secured with cash collateral in an amount and on terms satisfactory to the
relevant LC Issuing Bank or the Metrocrest Issuing Bank, as the case may be, and
(iii) all outstanding Secured Obligations shall have been paid in full, the
Security Interests shall terminate and all rights to each item of Collateral
shall revert to the Grantor which owns such item of Collateral.
(B) The Collateral Agent shall release any item of NME Cayman's
Collateral or any shares of Pledged Stock of a Designated International
Subsidiary upon receipt of a certificate of a Senior Officer of the Borrower
certifying that (x) such Collateral is being sold or otherwise disposed of by
the relevant Grantor and (y) an amount equal to the Net Cash Proceeds from such
sale or other disposition will be applied to prepay outstanding Loans as and
when required by Sections 2.06(c) and 2.07(b) of the Credit Agreement.
(C) The Collateral Agent shall release any item of NME Cayman's
Collateral or any shares of Pledged Stock of a Designated International
Subsidiary upon:
(i) receipt by the Collateral Agent of a certificate of a Senior
Officer of the Borrower
24
certifying that (x) such Collateral is being exchanged for specified
securities, cash and/or other assets in a transaction permitted by the
Credit Agreement and (y) an amount equal to the Net Cash Proceeds (if any)
from such transaction will be applied to prepay outstanding Loans as and
when required by Sections 2.06(c) and 2.07(b) of the Credit Agreement;
(ii) receipt by the Collateral Agent of all Instruments and stock
certificates (if any) received by the relevant Grantor in such exchange and
required to be delivered to the Collateral Agent pursuant to Section 4
hereof; and
(iii) an Opinion of Counsel, in form and substance satisfactory to the
Collateral Agent, to the effect that all actions required to perfect the
Security Interests in the proceeds of such Collateral (other than cash
proceeds) against all creditors of and purchasers from the relevant Grantor
(except any continuation statements specified in such Opinion of Counsel
that are to be filed more than six months after the date thereof) have been
taken or no such actions are required.
(D) At any time and from time to time prior to such termination of
the Security Interests, the Collateral Agent (i) may release any of the
Collateral (but not all or substantially all of the Collateral) with the prior
written consent of the Super-Majority Secured Parties or (ii) release all or
substantially all of the Collateral with the prior written consent of all the
Term Lenders, Revolving Credit Lenders and Metrocrest Banks.
(E) Upon any such termination of the Security Interests or release of
Collateral, the Collateral Agent will, at the expense of the relevant Grantor,
execute and deliver to such Grantor such documents as such Grantor shall
reasonably request to evidence the termination of the Security Interests or the
release of such Collateral, as the case may be.
SECTION 17. NOTICES
All notices, requests and other communications to any party hereunder
shall be in writing (including facsimile transmission or similar writing) and
shall be given to such party:
25
(v) in the case of either Grantor or the Collateral Agent, at its
address or facsimile number set forth on the signature pages hereof,
(w) in the case of any Lender, to the Administrative Agent to be
forwarded to such Lender at its address or facsimile number specified in
Section 9.01 of the Credit Agreement,
(x) in the case of any Metrocrest Bank, at its address or facsimile
number specified in the Metrocrest Reimbursement Agreement,
(y) in the case of any Secured Party Requesting Notice, at such
address or facsimile number as such party may hereafter specify for the
purpose by notice to the Collateral Agent, or
(z) in the case of any party, such other address or facsimile number
as such party may hereafter specify for the purpose by notice to the
Collateral Agent and the Grantors.
Each such notice, request or other communication shall be effective (i) if given
by telex, when such telex is transmitted to the telex number referred to in this
Section and the appropriate answerback is received, (ii) if given by facsimile
transmission, when transmitted to the facsimile number referred to in this
Section and confirmation of receipt is received, (iii) if given by mail, 72
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iv) if given by any other means,
when delivered at the address referred to in this Section.
SECTION 18. WITHDRAWAL OF ENFORCEMENT NOTICE
An Enforcement Notice, once given, shall remain in effect unless and
until (i) the Required Lenders (if such Enforcement Notice was given by the
Required Lenders) or the Required Secured Parties (if such Enforcement Notice
was given by the Required Secured Parties) notify the Collateral Agent that they
wish to withdraw such Enforcement Notice, (ii) no monies have been applied to
pay any Secured Obligations pursuant to Section 13 (except pursuant to clause
FIRST thereof) as a result of such Enforcement Notice and (iii) the Collateral
Agent determines that the withdrawal of such Enforcement Notice will not result
in any liability or unreimbursed loss to the Collateral Agent by reason of
actions taken by it in reliance thereon. If the Required Lenders or Required
Secured Parties that gave an
26
Enforcement Notice determine, in their sole discretion, that the Event of
Default on which it was based is no longer continuing or has been waived in
accordance with the provisions of the Credit Agreement, they will notify the
Collateral Agent pursuant to this Section that they wish to withdraw such
Enforcement Notice.
SECTION 19. ADDITIONAL SECURED OBLIGATIONS
(A) The Borrower may from time to time designate any of its Hedging
Obligations owed to any Lender (or any affiliate of a Lender) as an additional
Secured Obligation for purposes hereof by delivering to the Collateral Agent a
certificate signed by a Senior Officer of the Borrower which (i) identifies the
Hedging Obligation so designated, (ii) states that it is designated as a Secured
Obligation for purposes hereof and (iii) specifies the name and address of the
relevant counterparty for such Hedging Obligation.
(B) If at any time the Metrocrest Letters of Credit are cancelled and
replaced by other letters of credit as permitted by Section 5.14(e) of the
Credit Agreement, the Borrower may designate its obligations under the related
reimbursement agreement as additional Secured Obligations for purposes hereof by
delivering to the Collateral Agent a certificate signed by a Senior Officer of
the Borrower which (i) identifies such reimbursement agreement, (ii) states that
the Borrower's obligations thereunder are designated as Secured Obligations for
purposes hereof and (iii) specifies the name and address of the issuing bank to
which such reimbursement obligations are payable.
(C) With the prior written consent of the Super-Majority Secured
Parties, the Borrower may from time to time designate any of its obligations
(other than Hedging Obligations) as an additional Secured Obligation for
purposes hereof by delivering to the Collateral Agent a certificate signed by a
Senior Officer of the Borrower which (i) identifies the obligation so
designated, (ii) states that it is designated as a Secured Obligation for
purposes hereof and (iii) specifies the name and address of the holder of such
obligation or of a trustee, agent or similar representative designated to supply
information with respect to such additional Secured Obligation to the Collateral
Agent as contemplated by Section 14(F) hereof.
SECTION 20. WAIVERS, NON-EXCLUSIVE REMEDIES
No failure on the part of the Collateral Agent to exercise, and no
delay in exercising and no course of dealing with respect to, any right under
this Agreement
27
shall operate as a waiver thereof; nor shall any single or partial exercise by
the Collateral Agent of any right under the Credit Agreement or this Agreement
preclude any other or further exercise thereof or the exercise of any other
right. The rights in this Agreement and the Credit Agreement are cumulative and
are not exclusive of any other remedies provided by law.
SECTION 21. SUCCESSORS AND ASSIGNS
This Agreement is for the benefit of the Collateral Agent and the
Secured Parties and their respective successors and assigns, and in the event of
an assignment of all or any of the Secured Obligations, the rights hereunder, to
the extent applicable to the indebtedness so assigned, shall be transferred with
such indebtedness. This Agreement shall be binding on the Grantors and their
respective successors and assigns.
SECTION 22. CHANGES IN WRITING
Neither this Agreement nor any provision hereof may be changed,
waived, discharged or terminated (any of the foregoing being herein called a
"change") orally, but only in a writing signed by the Grantors and the
Collateral Agent with the consent of the Required Secured Parties; PROVIDED that
(i) no Secured Obligation shall be deleted from the definition of "Secured
Obligations" without the prior written consent of the holder thereof, (ii) no
change in Section 13 or any other provision hereof relating to the ratable
payment of the Secured Obligations shall be made if such change would cause any
holder of a Secured Obligation to receive less than a ratable share of the
payments to be made to the holders of Secured Obligations under the relevant
clause of Section 13(A) without the prior written consent of such holder, (iii)
no change in Section 16 or any other provision hereof shall permit a release of
assets from the Security Interests otherwise than as provided in Section 16
without the prior written consent of the Super-Majority Secured Parties or
permit any release of all or substantially all of the Collateral without the
prior written consent of all the Term Lenders, Revolving Credit Lenders and
Metrocrest Banks and (iv) no change shall be made in this Section without the
prior written consent of all the Secured Parties adversely affected by such
change.
SECTION 23. Limitation on Rights and Remedies Relating to
CALIFORNIA INSURANCE SUBSIDIARY
Notwithstanding any other provision of this Agreement to the contrary,
the Collateral Agent shall not
28
exercise any right or remedy otherwise provided in Section 6, 7, 8, 9 or 10, or
otherwise provided to the Collateral Agent herein or by law, with respect to the
capital stock of Assured Investors Life Insurance Company, a California
corporation, and the Security Interests in such capital stock shall not be
enforced and such capital stock shall not be sold, and the Collateral Agent will
not seek to exercise any right to vote such capital stock or otherwise exercise
control of Assured Investors Life Insurance Company, without obtaining the prior
written approval of the exercise of such right or remedy or the taking of any
such action from the California Department of Insurance in accordance with
applicable law.
SECTION 24. NEW YORK LAW
This Agreement shall be construed in accordance with and governed by
the laws of the State of New York, except as otherwise required by mandatory
provisions of law and except to the extent that remedies provided by the laws of
any jurisdiction other than New York are governed by the laws of such
jurisdiction.
SECTION 25. SEVERABILITY
If any provision hereof is invalid or unenforceable in any
jurisdiction, then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in favor of the Collateral Agent and the Secured
Parties in order to carry out the intentions of the parties hereto as nearly as
may be possible; and (ii) the invalidity or unenforceability of any provision
hereof in any jurisdiction shall not affect the validity or enforceability of
such provision in any other jurisdiction.
29
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
NATIONAL MEDICAL
ENTERPRISES, INC.
By
-----------------------
Title:
[address for notices]
N.M.E. INTERNATIONAL
(CAYMAN) LIMITED
By
-----------------------
Title:
[address for notices]
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Collateral
Agent
By ______________________
Title:
[address for notices]
30
SCHEDULE I
CAPITAL STOCK OF FIRST TIER SUBSIDIARIES
Number Equity
Class of of Percentage
Subsidiary Stock Shares Ownership
- ---------- --------- ------ ---------
American Medical Holdings,
Inc. (the corporation
surviving the Merger) Common* 1,000(1) 100%
Cornerstone - West, Inc. Common 1,000 100%
H.F.I.C. Management
Company, Inc. Common 1,000 100%
International-NME, Inc. Common 100 100%
National Medical Enterprises Corp. Common 100 100%
NME (Australia) Pty. Limited Common 100%
NME Headquarters, Inc. Common 1,000 100%
NME Hospitals, Inc. Common 1,000 100%
NME PIP Funding I, Inc. Common 1,000 100%
NME Properties Corp. Common 1,000 100%
NME Psychiatric
Properties, Inc. Common 1,000 100%
NME Rehabilitation
Properties, Inc. Common 1,000 100%
NME Specialty
Hospitals, Inc. Common 1,000 100%
Northshore Hospital
Management Corporation (LA) Common 1,000 100%
RHSC Hospitals, Inc. Common 1,000 100%
<FN>
_________________________
* These shares are the shares of common stock of AMH Acquisition Co.
outstanding immediately prior to the Merger, which will be converted in the
Merger into shares of the surviving corporation. They are, and after the
Merger will continue to be, referred to on the face of the relevant stock
certificates as shares of AMH Acquisition Co.
Number Equity
Class of of Percentage
Subsidiary Stock Shares Ownership
- ---------- --------- ------ ---------
Syndicated Office Systems Common 100 100%
Wilshire Rental Corp. Common 100 100%
Women's Medical Center
of America, Inc. Common 5,000 100%
INSTRUMENTS EVIDENCING DEBT OF SUBSIDIARIES
Maker Instrument
- ----- ----------
American Medical Promissory Note in the
International, Inc. principal amount of
$____________ dated
[Closing Date]
NME CAYMAN COLLATERAL
Westminster Health Care Holdings PLC 42%
2
EXHIBIT C
SENIOR
OFFICER'S
CLOSING CERTIFICATE
I, [name], [title] of National Medical Enterprises, Inc., a Nevada
corporation (the "Borrower"), in connection with (i) the closing held today (the
"Closing") under the $2,300,000,000 Credit Agreement dated as of February 28,
1995 (the "Credit Agreement") among the Borrower, the lenders party thereto,
Morgan Guaranty Trust Company of New York, Bank of America National Trust and
Savings Association, The Bank of New York and Bankers Trust Company, as
Arranging Agents, and Morgan Guaranty Trust Company of New York, as
Administrative Agent and (ii) the borrowing of Term Loans (the "First
Borrowing") today by the Borrower thereunder, DO HEREBY CERTIFY that:
1. The representations and warranties made by the Borrower in the
Financing Documents are true on and as of the date hereof.
2. Immediately before and after the First Borrowing, no Default has
occurred and is continuing.
3. (A) There are no letters of credit outstanding under NME's
Existing Credit Agreement and (B) the Borrower has irrevocably instructed the
Administrative Agent to make available to Morgan Guaranty Trust Company of New
York, as Agent under NME's Existing Credit Agreement, substantially concurrently
with the Closing, a portion of the proceeds of the First Borrowing sufficient to
pay in full the principal of all loans and reimbursement obligations outstanding
under NME's Existing Credit Agreement on the date hereof and all interest and
fees accrued thereunder.
4. (A) The Borrower has given Chemical Bank as Agent under AMI's
Existing Credit Agreement (the "Existing Agent") irrevocable notice of
termination of the commitments of the lenders thereunder, (B) no letters of
credit (except the Existing Letters of Credit) are outstanding under AMI's
Existing Credit Agreement, (C) the issuing banks of all Existing Letters of
Credit have agreed that such participations will been cancelled concurrently
with the Closing, (D) the Borrower has irrevocably instructed the Administrative
Agent to make available to the Existing Agent for the account of AMI,
substantially concurrently with the Closing, a portion of the proceeds of the
First Borrowing in an amount sufficient to pay in full the principal of all
loans and reimbursement obligations outstanding on the date
hereof under AMI's Existing Credit Agreement and all interest and fees accrued
thereunder and (E) AMI has irrevocably instructed the Existing Agent to apply
such proceeds, substantially concurrently with the Closing, to pay such amounts
in full.
5. The Borrower has irrevocably instructed the Administrative Agent
to make available to ___________, the exchange agent for the NME Tender Offers,
a portion of the proceeds of the First Borrowing equal to the aggregate amount
payable by the Borrower on the date hereof pursuant to the NME Tender Offers.
6. The Borrower has irrevocably instructed the Administrative Agent
to make available to ___________, the exchange agent for the AMI Tender Offers
and the relevant trustees a portion of the proceeds of the First Borrowing equal
to the amount payable on the date hereof pursuant to the AMI Tender Offers and
the AMI Redemptions, respectively,
7. The Borrower has received net cash proceeds of $____________ from
the issuance and sale of $300,000,000 aggregate principal amount of Senior Notes
and $700,000,000 aggregate principal amount of Subordinated Notes.
8. In addition to the funds available under the Credit Agreement and
the net cash proceeds of the issuance and sale of Senior Notes and Subordinated
Notes, the Borrower has at least $____________ of cash available to finance the
Acquisition. [The Borrower has invested $________ in South Miami Hospitals.]
9. The total consideration paid by the Borrower and its Subsidiaries
as a result of the Acquisition to the former holders of common stock of AM
Holdings and options to purchase such common stock does not exceed
$_______________ in cash and _______________ shares of common stock of the
Borrower (except to the extent that any stockholders of AM Holdings who elect
appraisal rights may receive more than $[19] [19.25] per share of common stock
of AM Holdings).
10. As of the date hereof, after giving effect to the consummation
of the Acquisition and the Merger, and all other transactions contemplated by
the Financing Documents, (i) the aggregate fair market value of the assets of
the Borrower will exceed its liabilities (including contingent, subordinated,
unmatured and unliquidated liabilities), (ii) the Borrower will have sufficient
cash flow to enable it to pay its debts as they mature and (iii) the Borrower
will not have unreasonably small capital for the business in which the Borrower
and its Subsidiaries are engaged.
2
Terms used herein and not defined herein have the meanings assigned to them in
the Credit Agreement.
__________________
Name:
Title:
[Closing Date]
3
EXHIBIT D-1
[LETTERHEAD OF GIBSON, DUNN & CRUTCHER]
March 1, 1995
To: The Lenders Party to the Credit Agreement referred to herein, and
Bank of America NT&SA Bankers Trust Company Morgan Guaranty Trust
Company of New York and The Bank of New York, as Arranging Agents,
and Morgan Guaranty Trust Company of New York, as Administrative
Agent and Collateral Agent
Re: Credit Agreement dated as of February 28, 1995 among
National Medical Enterprises, Inc., the Lenders,
the Arranging Agents and the Administrative Agent
---------------------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to National Medical Enterprises,
Inc., a Nevada corporation ("NME"), and N.M.I. International (Cayman) Limited,
a Cayman Islands company ("NME (Cayman)" and, together with NME, the
"Corporations"), in connection with the Credit Agreement dated as of
February 28, 1995 (the "Credit Agreement") among NME, the Lenders party
thereto, Bank of America NT & SA, Bankers Trust Company, Morgan Guaranty
Trust Company of New York and The Bank of New York, as Arranging Agents,
and Morgan Guaranty Trust Company of New York, as Administrative Agent.
Terms defined in the Credit Agreement and not otherwise defined herein
are used herein as therein defined.
This opinion is delivered pursuant to Section 3.01(xiv) of the Credit
Agreement.
In rendering this opinion, we have examined originals or copies
certified or otherwise identified to our satisfaction as being true copies of
the following documents and instruments:
(a) the Credit Agreement, including the Exhibits and Schedules
thereto;
(b) the Notes;
(c) the Security Agreement;
(d) the Financing Statement on Form UCC-1 naming NME, as debtor, and
the Collateral Agent, as agent for the Secured Parties, as secured party,
covering the Collateral, which we have been advised was filed in the office of
the Secretary of State of California on February __, 1995;
(e) a certificate of even date herewith of the corporate secretary of
each Corporation as to resolutions, incumbency of certain officers of such
Corporation and the form of articles or certificate of incorporation and by-laws
of such Corporation in effect on the date hereof;
(f) certificates of even date herewith executed by officers of each
Corporation setting forth or certifying certain factual matters; and
(g) a certificate of recent date of the Secretary of State of Nevada
as to the legal existence of NME in good standing under the laws of Nevada.
The documents referred to in Items (a) through (c) are sometimes
referred to herein collectively as the "Financing Documents".
We have, with your permission, assumed, without independent
investigation or inquiry with respect to any such matter, that:
(a) NME is a validly existing corporation in good standing under the
laws of the State of Nevada. NME (Cayman) is a validly existing company in good
standing under the laws of the Cayman Islands. Each Corporation has requisite
corporate power and authority to own and operate its properties, to conduct its
business in the manner in which it presently is conducted, and to execute,
deliver and perform its obligations under each of the Financing Documents to
which it is party.
(b) Each of the Financing Documents to which either Corporation is
party has been duly authorized by all necessary corporate action on the part of
such Corporation. Each of the Financing Documents to which either Corporation
is party has been duly executed and delivered on behalf of such Corporation.
(c) Each Lender, the Administrative Agent and the Collateral Agent
each has all requisite power and authority to execute, deliver and perform its
obligations under each of the Financing Documents to which it is a party; the
execution and
2
delivery of such Financing Documents and performance of such obligations have
been duly authorized by all necessary action on the part of such Lender, the
Administrative Agent and the Collateral Agent; and each of such Financing
Documents is the legal, valid and binding obligation of such Lender, the
Administrative Agent or the Collateral Agent, enforceable against it in
accordance with its terms.
(d) The execution and delivery of the Financing Documents by each
Lender, the Administrative Agent and the Collateral Agent and performance by
each of them of their respective obligations thereunder comply with all laws and
regulations that are applicable to such Lender, the Administrative Agent or the
Collateral Agent or the transactions contemplated by the Financing Documents
because of the nature of their respective businesses (PROVIDED that the
assumption stated in this subparagraph (d) does not relate to any matter as to
which we expressly state our opinion herein).
(e) The signatures on all documents examined by us are genuine, and
all individuals executing such documents were thereunto duly authorized.
(f) The documents submitted to us as originals are authentic and the
documents submitted to us as certified or reproduction copies conform to the
originals.
With respect to questions of fact material to the opinions expressed
below, we have, with your consent, relied upon certificates of public officials
and officers of each Corporation, in each case without having independently
verified the accuracy or completeness thereof.
With respect to any opinion herein in regard to the existence or
absence of facts that is stated to be to our actual knowledge, such statement
means that, during the course of our representation of the Corporations, no
information has come to the attention of the lawyers in our Firm participating
in such representation that has given them actual knowledge of facts contrary to
the existence or absence of the facts indicated. No inference as to our
knowledge of the existence or absence of such facts should be drawn from our
representation of the Corporations.
Based upon the foregoing, and subject to the qualifications,
exceptions, limitations and assumptions hereinafter set forth, we are of the
opinion that:
1. Each of the Financing Documents to which either Corporation is
party constitutes the legal, valid and binding
3
obligation of such Corporation, enforceable against such Corporation in
accordance with its terms.
2. No consent, approval or authorization of, and no registration,
declaration or filing with any administrative, governmental or other public
authority is required under the laws of the United States of America or the
State of New York which, in our experience, are generally applicable to
transactions of the type contemplated by the Financing Documents, or under the
Nevada General Corporation Law, to be obtained or made in connection with the
execution, delivery and performance by either Corporation, or for the validity
or enforceability against such Corporation, of any of the Financing Documents to
which it is party.
3. Neither the execution and delivery by either Corporation of the
Financing Documents to which it is party, the performance by such Corporation of
its obligations thereunder nor the consummation of the transactions contemplated
thereby constitutes or will constitute a violation of any laws of the United
States of America or the State of New York which, in our experience, are
generally applicable to transactions of the type contemplated by the Financing
Documents, or under the Nevada General Corporation Law or the California
Corporations Code, or, to our actual knowledge, of any order of any court or
governmental authority that is applicable to such Corporation.
4. Neither of the Corporations is an "investment company" or a Person
directly or indirectly "controlled" by or "acting on behalf of" an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
Neither of the Corporations is a "holding company", or an "affiliate" of a
"holding company" or a "subsidiary company" of a "holding company", as such
terms are defined in the Public Utility Holding Company Act of 1935, as amended.
5. Neither the making of the Loans on the Closing Date pursuant to,
nor the application of the proceeds of the Loans in accordance with, the Credit
Agreement will violate Regulation G, U or X promulgated by the Board of
Governors of the Federal Reserve System.
6. Upon delivery to the Collateral Agent of stock certificates
representing the Pledged Stock (as defined in the Security Agreement) listed in
Schedule I to the Security Agreement, the security interest in such Pledged
Stock granted by NME or NME (Cayman), as the case may be, in the Security
Agreement to the Collateral Agent, for the benefit of the Secured Parties (as
defined in the Security Agreement), to secure the Secured Obligations (as
defined in the Security Agreement), will constitute a valid security interest
therein under New York law,
4
and will be perfected under, and prior in right to all other security interests
therein created under and the priority of which is governed by, Articles 8 and 9
of the Uniform Commercial Code as in effect in New York (the "New York UCC").
7. Upon delivery to the Collateral Agent of the Instrument (as
defined in the Security Agreement) listed in Schedule I to the Security
Agreement (the "Pledged Instrument"), the security interest in such Instrument
granted by NME in the Security Agreement to the Collateral Agent, for the
benefit of the Secured Parties, to secure the Secured Obligations, will
constitute a valid security interest therein under New York law, and will be
perfected under, and prior in right to all other security interests therein
created under and the priority of which is governed by, Article 9 of the New
York UCC.
8. The Security Agreement is effective to create in favor of the
Collateral Agent, on behalf of the Secured Parties, valid security interests in
the interest of NME in the Borrower Collateral (as defined in the Security
Agreement) and in the interest of NME Corp. in the NMEC Collateral (as defined
in the Security Agreement), in each case to the extent that a security interest
can be created therein under the New York UCC. A security interest can be
created in the Collateral under the New York UCC to the extent that the
Collateral is comprised of "general intangibles" within the meaning of the New
York UCC. The occurrence of the Closing Date and the filing and proper indexing
of the Financing Statement in the office of the Secretary of State of California
resulted in the perfection of such security interest in Collateral comprised of
"general intangibles".
Each of the opinions set forth above is subject to the following
exceptions, qualifications, limitations and assumptions:
(a) Our opinions are subject to the effect of bankruptcy, insolvency,
reorganization, moratorium, arrangement or other similar laws affecting
enforcement of creditors' rights generally, including, without limitation, the
effect of statutory or other laws regarding fraudulent conveyances or transfers,
preferential transfers, and of laws affecting distributions by corporations to
stockholders.
(b) Our opinions are subject to the application of general principles
of equity, whether considered in a case or proceeding at law or in equity,
including, without limitation, concepts or materiality, reasonableness, good
faith and fair dealing.
5
(c) Our opinions are subject to the qualifications that
indemnification provisions in any of the Financing Documents may be
unenforceable to the extent that such indemnification may be held to be in
violation of or against public policy.
(d) Our opinions set forth in Paragraph 1 hereof are subject to the
following qualifications: (A) the Collateral Agent may not be entitled to vote
the Pledged Stock or to receive dividends or other distributions directly from
the issuer thereof prior to becoming the record holder of the Pledged Stock; (B)
none of the Pledged Stock may be sold or further transferred by the Collateral
Agent without registration under the Securities Act of 1933, except pursuant to
an exemption from registration contained in such Act, and qualification or
exemption from qualification under any applicable state securities or blue sky
laws; and (C) we express no opinion on any provision relating to indemnification
or contribution relating to any claims made under the federal securities laws or
state securities or Blue Sky laws.
(e) We call to your attention that, subject to Section 8-321(2) of
the New York UCC, the Collateral Agent's security interest in any additional
shares issued in respect of the Pledged Stock listed on Schedule I to the
Security Agreement or payments or other distributions in respect of such Pledged
Stock or the Pledged Instrument will be perfected (and, in the case of such
additional shares, will be enforceable) only upon delivery thereof to the
Collateral Agent.
(f) We have assumed, for purposes of our opinions expressed in
Paragraphs 6 and 7 hereof, (i) with respect to the Pledged Stock, (A) that the
Pledge Stock was delivered to the Collateral Agent endorsed by, or together with
stock powers executed by, the pledgor to the Collateral Agent or in blank and
(B) that the Collateral Agent, on behalf of the Secured Parties, has taken its
security interest in the Pledged Stock for value and in good faith, without the
Collateral Agent or any Secured Party having, at the time of delivery thereof to
the Collateral Agent, notice or actual knowledge of any adverse claim thereto
by, or any interest therein of, any Person other than the pledgor, and therefore
is a bona fide purchaser of the Pledged Stock, and (ii) with respect to the
Pledged Instrument, (x) that the Pledged Instrument was delivered to the
Collateral Agent endorsed by, or together with an allonge endorsement executed
by, NME to the Collateral Agent and (y) the Collateral Agent is a holder in due
course of the Pledged Instrument within the meaning of Section 3-302 of the New
York UCC.
(g) We have assumed that the Collateral Agent obtained possession of
the Pledged Stock and the Pledged Instrument in the State of New York.
6
(h) We have assumed that no agreement exists that postpones
attachment of, or modifies, releases or terminates, the Collateral Agent's
security interests in any Collateral or that would expand, modify or otherwise
affect the respective rights and obligations of the parties to the Financing
Documents.
(i) Our opinions are subject to the effect of Section 9-311 of the
New York UCC which provides that a pledgor's rights in collateral may be
voluntarily or involuntarily transferred notwithstanding a provision in a
security agreement prohibiting any transfer or making the transfer constitute a
default.
Furthermore, the opinions herein expressed are subject to the
qualification that we express no opinion as to:
(a) We express no opinion as to the effectiveness of any waiver of
rights of, or duties owing to, any Corporation as a matter of law (including,
without limitation, Section 9-501(3) of the New York UCC) or that relates to
unknown future rights or is broadly or vaguely stated or does not describe the
right or duty purportedly waived or to which such consent relates with
reasonable specificity.
(b) The legality, validity, binding effect or enforceability of any
provision of any Financing Document that purports (i) to permit the Collateral
Agent or any other Person to sell or otherwise dispose of any Collateral subject
thereto, except in compliance with applicable law, or (ii) to impose on the
Collateral Agent standards for the care of Collateral in the Collateral Agent's
possession other than as provided in Section 9-207 of the New York UCC. We call
to your attention that Section 9-504(3) of the New York UCC includes
requirements for notice in connection with a private sale or other disposition
of Collateral as well as a public sale, unless the Collateral is perishable or
threatens to decline speedily in value or is of a type customarily sold in a
recognized market.
(c) Perfection or priority of any security interest in any Collateral
other than as expressly set forth in Paragraphs 6, 7 and 8.
We call to your attention that (i) Article 9 of the Uniform Commercial
Code generally requires the filing of continuation statements within the period
of six (6) months prior to the expiration of five (5) years from the date of the
original filing of a financing statement, and each five-year anniversary
thereof, in order to maintain the effectiveness of such financing statement; and
(ii) perfection of security interests generally will be terminated under the
Uniform Commercial Code (A) as to any collateral acquired by a debtor more than
four (4) months after the debtor changes its name, identity or corporate
7
structure so as to make the filed financing statements seriously misleading,
unless financing statements indicating the new name, identity, or corporate
structure of the debtor are properly filed before the expiration of such four
(4) month period, and (B) as to any collateral consisting of, among other
things, "general intangibles", as defined in the Uniform Commercial Code, four
(4) months after a debtor changes the jurisdiction of its chief executive office
(which, for purposes of our opinion expressed in Paragraph 8, we have assumed to
be located in California) (or, if earlier, when perfection would have ceased as
set forth in clause (i) above) unless such security interests are perfected in
such new jurisdiction before that termination or, under certain circumstances,
after the debtor changes the place where its records are maintained to a
different jurisdiction.
(d) NME's or NME (Cayman)'s rights in or title to any of the Pledged
Stock, the Pledged Instrument or any other Collateral. We express no opinion
herein as to the enforceability of the Pledged Instrument against the maker
thereof or any other Person.
(e) The creation, validity, enforceability or perfection of any
security interest in any item of Collateral consisting of proceeds of
Collateral, or proceeds acquired with cash proceeds, except to the extent set
forth in Section 9-306 of the New York UCC.
This opinion is limited to the effect of (i) the laws of the United
States of America and the State of New York, (ii) for purposes only of our
opinion expressed in Paragraph 3 herein, the California Corporations Code, and
(iii) to the limited extent set forth below, the General Corporation Law of the
State of Nevada. Although we are not admitted to practice in the State of
Nevada, we are generally familiar with the General Corporation Law of the State
of Nevada and have made such inquiries as we consider necessary to render our
opinions expressed in Paragraphs 2 and 3 hereof. This opinion relates to the
present state of the laws referred to herein and, in rendering this opinion, we
assume no obligation to revise or supplement this opinion should the present
laws, or the interpretation thereof, be changed.
8
This opinion is rendered to the Administrative Agent, the Arranging
Agents and the Lenders and the Collateral Agent as of the date hereof in
connection with the Credit Agreement, and may not be relied upon by any other
person or by them in any other context.
Very truly yours,
GIBSON, DUNN & CRUTCHER
9
EXHIBIT D-2
[LETTERHEAD OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM]
March 1, 1995
To: The Lenders Party to the Credit Agreement referred to herein, and Bank of
America NT&SA Bankers Trust Company Morgan Guaranty Trust Company of New
York and The Bank of New York, as Arranging Agents, and Morgan Guaranty
Trust Company of New York, as Administrative Agent and Collateral Agent
Re: Credit Agreement dated as of February 28, 1995 among National
Medical Enterprises, Inc., the Lenders, the Arranging Agents and
THE ADMINISTRATIVE AGENT
----------------------------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to National Medical Enterprises,
Inc., a Nevada corporation (the "Borrower"), and AMH Acquisition Co., a Delaware
corporation and a wholly-owned subsidiary of the Borrower ("AMH Acquisition"),
in connection with the Merger Agreement dated as of October 10, 1994 among the
Borrower, American Medical Holdings, Inc. and AMH Acquisition.
Reference is made to the Credit Agreement dated as of February 28,
1995 (the "Credit Agreement") among the Borrower, the Lenders party thereto,
Bank of America NT & SA, Bankers Trust Company, Morgan Guaranty Trust Company of
New York and The Bank of New York, as Arranging Agents, and Morgan Guaranty
Trust Company of New York, as Administrative Agent. Terms defined in the Credit
Agreement and not otherwise defined herein are used herein as therein defined.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for purposes of this opinion.
With respect to any opinion herein in regard to the existence or
absence of facts that is stated to be to our actual knowledge, such statement
means that, during the course of our representation of the Corporations, no
information has come to the attention of the lawyers in our Firm participating
in such representation that has given them actual knowledge of facts contrary to
the existence or absence of the facts indicated. No inference as to our
knowledge of the existence or absence of such facts should be drawn from our
representation of the Corporations.
Based upon the foregoing, and subject to the qualifications,
exceptions, limitations and assumptions hereinafter set forth, we are of the
opinion that:
1. The execution, delivery and performance by the Borrower of the
Merger Agreement and the consummation of the Acquisition are within the
Borrower's corporate powers, have been duly authorized by all necessary
corporate action, require no action by or in respect of, or filing with, any
governmental body, agency or official and do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the articles
of incorporation or by-laws of the Borrower.
2. The execution, delivery and performance by AMH Acquisition of the
Merger Agreement and the consummation by AMH Acquisition of the Merger are
within AMH Acquisition's corporate powers, have been duly authorized by all
necessary corporate action, require no action by or in respect of, or filing
with, any governmental body, agency or official (other than the filing of the
certificate of merger referred to in Paragraph 4 below) and do not contravene,
or constitute a default under, any provision of applicable law or regulation or
of the certificate of incorporation or by-laws of AMH Acquisition or, to the
best of our knowledge, of any agreement, judgment, injunction, order, decree or
other instrument binding upon AMH Acquisition.
3. The Merger Agreement constitutes a valid and binding agreement of
each of the Borrower and AMH Acquisition, in each case enforceable against it in
accordance with its terms.
4. No consents or approvals of, or filings and registrations with, or
any other actions in respect of, any governmental agencies, authorities or
instrumentalities are
2
required on the part of the Borrower or AMH Acquisition in order to effect the
Merger under applicable law, including the Delaware General Corporation Law (the
"DGCL"), other than the filing by AMH Acquisition of a certificate of merger in
conformance with the requirements of and pursuant to Section 251 of the DGCL.
AMH Acquisition has duly executed, acknowledged and filed with the Secretary of
State of Delaware in accordance with the requirements of Section 103 of the DGCL
a certificate of merger that conforms to the requirements of Section 251 of the
DGCL and the Merger has become effective in accordance with the DGCL.
Each of the opinions set forth above is subject to the following
exceptions, qualifications, limitations and assumptions:
(a) Our opinions are subject to the effect of bankruptcy, insolvency,
reorganization, moratorium, arrangement or other similar laws affecting
enforcement of creditors' rights generally, including, without limitation, the
effect of statutory or other laws regarding fraudulent conveyances or transfers,
preferential transfers, and of laws affecting distributions by corporations to
stockholders.
(b) Our opinions are subject to the applications of general
principles of equity, whether considered in a case or proceeding at law or in
equity, including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing.
(c) Our opinions are subject to the qualification that
indemnification provisions in the Merger Agreement Documents may be
unenforceable to the extent that such indemnification may be held to be in
violation of or against public policy.
This opinion is limited to the effect of the present state of the laws
of (i) the United States of America and the State of New York, and (ii) to the
limited extent set forth below, the General Corporation Laws of the States of
Nevada and Delaware. Although we are not admitted to practice in the States of
Nevada or Delaware, we are generally familiar with the General Corporation Laws
of the States of Nevada and Delaware and have made such inquiries as we consider
necessary to render our opinions expressed in Paragraph 1 hereof. In rendering
this opinion, we assume no obligation to revise or supplement this opinion
should the present laws, or the interpretation thereof, be changed.
This opinion is rendered to the Administrative Agent, the Arranging
Agents and the Lenders and the Collateral Agent as of the date hereof in
connection with the Credit Agreement, and may not be relied upon by any other
person or by them in any other
3
context, and may not be furnished to any other person or entity without our
prior written consent, PROVIDED that each Lender may provide this opinion (i) to
bank examiners and other regulatory authorities should they so request or in
connection with their normal examination, (ii) to the independent auditors and
attorneys of such Lender, (iii) pursuant to order or legal process of any court
or governmental agency, and (iv) in connection with any legal action to which
the Lender is a party arising out of the transactions contemplated by the Credit
Agreement.
Very truly yours,
SKADDEN, ARPS, SLATE, MEAGHER
& FLOM
4
EXHIBIT D-3
[LETTERHEAD OF MAPLES & CALDER]
March 1, 1995
To: The Lenders Party to the Credit Agreement referred to herein, and Bank of
America NT&SA Bankers Trust Company Morgan Guaranty Trust Company of New
York and The Bank of New York, as Arranging Agents, and Morgan Guaranty
Trust Company of New York, as Administrative Agent and Collateral Agent
Re: Credit Agreement dated as of February 28, 1995 among National
Medical Enterprises, Inc., the Lenders, the Arranging Agents and
the Administrative Agent
Ladies and Gentlemen:
We have acted as special counsel to N.M.E. International (Cayman)
Limited, a Cayman Islands company ("NME (Cayman)"). Reference is made to the
Credit Agreement dated as of February 28, 1995 (the "Credit Agreement") among
the Borrower, the Lenders party thereto, Bank of America NT & SA, Bankers Trust
Company, Morgan Guaranty Trust Company of New York and The Bank of New York, as
Arranging Agents, and Morgan Guaranty Trust Company of New York, as
Administrative Agent. Terms defined in the Credit Agreement and not otherwise
defined herein are used herein as therein defined.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for purposes of this opinion.
Based upon the foregoing, we are of the opinion that:
(1) NME International (Cayman) Limited is a validly existing company
in good standing under the law of the Cayman Islands, with requisite corporate
power and legal right (i) to own and operate its properties and conduct its
business as now conducted and (ii) to execute and deliver, and perform its
obligations under, the Security Agreement dates as of February 28, 1995 (the
"Security Agreement") among NME, NME (Cayman) and Morgan Guaranty Trust Company
of New York, as Collateral Agent [pursuant to which NME (Cayman) will pledge the
Westminster stock to NME's Banks], including, without limitation, to pledge the
Westminster stock owned by it to secure the Secured Obligations (as defined in
the Security Agreement);
(2) The execution and delivery of the Security Agreement by NME
(Cayman), and performance of its obligations thereunder (including, without
limitation, the pledge of the Westminster stock owned by it to secure the
Secured Obligations), has been duly authorized by all necessary corporate action
on the part of NME (Cayman) and, upon execution of the Security Agreement by [1
or 2] officers of NME (Cayman) then incumbent, the Security Agreement will have
been duly executed by NME (Cayman);
(3) No consents, approvals or authorizations by, or filings or
recordings with, any governmental authority in the Cayman Islands is necessary
to be obtained or made in connection with the execution and delivery by NME
(Cayman) of the Security Agreement, or performance of its obligations
thereunder, including, without limitation, the pledge by NME (Cayman) of
Westminster stock owned by it to secure the Secured Obligations;
(4) The execution and delivery by NME (Cayman) of the Security
Agreement, and performance of its obligations thereunder (including, without
limitation, the pledge by NME (Cayman) of Westminster stock owned by it to
secure the Secured Obligations), does not violate any law, rule or regulation of
the Cayman Islands or any Cayman Islands governmental or judicial order or
decree of which you are aware to which NME (Cayman) is subject.
2
EXHIBIT E
[LETTERHEAD OF NATIONAL MEDICAL ENTERPRISES, INC.]
March __, 1995
To: The Lenders Party to the Credit Agreement referred to herein, and Bank of
America NT&SA Bankers Trust Company Morgan Guaranty Trust Company of New
York and The Bank of New York, as Arranging Agents, and Morgan Guaranty
Trust Company of New York, as Administrative Agent and Collateral Agent
Ladies and Gentlemen:
I am the General Counsel of National Medical Enterprises, Inc., a
Nevada corporation (the "Borrower"), and have acted as such in connection with
the Credit Agreement dated as of February 28, 1995 (the "Credit Agreement")
among the Borrower, the Lenders party thereto, Bank of America National Trust &
Savings Association, Bankers Trust Company, Morgan Guaranty Trust Company of New
York and The Bank of New York, as Arranging Agents, and Morgan Guaranty Trust
Company of New York, as Administrative Agent.
This opinion is delivered to you pursuant to Section 3.01(xv) of the
Credit Agreement. Terms used herein which are defined in the Credit Agreement
shall have the respective meanings set forth in the Credit Agreement, unless
otherwise defined herein.
In connection with this opinion, I have examined executed copies of
each of the Credit Agreement (including all of the Schedules and Exhibits
thereto), the Notes and the Security Agreement (together, the Loan Documents)
and such corporate documents and records of the Borrower and its Subsidiaries
and certificates of public officials and officers of the Borrower and its
Subsidiaries, and such other documents, as I have deemed necessary or
appropriate for the purposes of this opinion. In
stating my opinion, I have assumed the genuineness of all signatures, and the
authority of persons signing the Loan Documents on behalf of parties thereto
other than the Borrower and N.M.E. International (Cayman) Limited, a Cayman
Islands company and a wholly-owned Subsidiary of International-NME, Inc., which
is a wholly-owned Subsidiary of the Borrower ("NME (Cayman)"), the authenticity
of all documents submitted to me as originals and the conformity to authentic
original documents of all documents submitted to me as certified, conformed or
photostatic copies. This opinion is limited to the laws of California, New York
and the United States of America, and to the general corporate laws of the State
of Nevada with respect to the Borrower.
Based upon the foregoing, I am of the opinion that:
1. CORPORATE EXISTENCE; COMPLIANCE WITH LAW. The Borrower (a) is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and (b) has the corporate power, authority
and legal right to own or operate its properties or to lease the properties it
operates and to conduct the business in which it is currently engaged. Except
as could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect, (x) the Borrower is duly qualified as a foreign corporation, and
in good standing under the laws of each jurisdiction where its ownership, lease
or operation of properties or the conduct of its business requires such
qualification, and (y) each of the Borrower and its Subsidiaries is in
compliance with all laws, regulations, decrees and orders applicable to the
Borrower or any of its Subsidiaries (including, without limitation, laws,
regulations, decrees and orders relating to environmental, occupational and
health standards and controls and in respect to antitrust, monopoly, restraint
of trade or unfair competition). The Borrower and its Subsidiaries have
obtained all certifications, licenses, accreditations and approvals that are
necessary to conduct their respective businesses. None of the Borrower or any
of its Subsidiaries has received or, to the best of my knowledge, expects to
receive, any order or notice of any violation or claim of violation of any law,
regulation, decree, rule, judgment or order of any governmental authority or
agency relating to the ownership or operation of any hospital or other facility
owned or operated by it, as to which the cost of compliance or the consequences
of noncompliance, individually or in the aggregate, would have a Material
Adverse Effect or which would impair the ability of the Borrower or NME (Cayman)
to discharge any of its obligations under any of the Loan Documents to which it
is party.
2. CORPORATE POWER; AUTHORIZATION. The Borrower has the corporate
power, authority and legal right to make delivery and perform the Loan Documents
to which it is party and to borrow
2
and to incur reimbursement obligations with respect to letters of credit issued
thereunder, and has taken all necessary corporate action to authorize the
borrowings and pledge of collateral security, as the case may be, on the terms
and conditions of the Loan Documents to which it is party and to authorize the
execution, delivery and performance of the Loan Documents to which it is party.
No consent of any other Person, and no authorization of, notice to, or other act
by or in respect of the Borrower or NME (Cayman) by any governmental authority,
agency or instrumentality is required in connection with the borrowings or
reimbursement obligations, or pledge, as the case may be, thereunder or with the
execution, delivery, performance, validity or enforceability of the Loan
Documents. Each of the Borrower and NME (Cayman) has duly executed and
delivered each Loan Document to which it is party.
3. NO LEGAL BAR. The execution, delivery and performance by each of
the Borrower and NME (Cayman) of the Loan Documents to which it is party, the
borrowings, or pledge, as the case may be, thereunder and the use of the
proceeds of such borrowings and the use of letters of credit issued thereunder
will not violate (except to the extent that such violation, if any, would not
have a Material Adverse Effect) any provision of any existing law or regulation
applicable to the Borrower or any of its Subsidiaries or of any award, order or
decree applicable to the Borrower or any of its Subsidiaries known to me (after
due inquiry) of any court, arbitrator or governmental authority, or of the
articles of incorporation or By-Laws of the Borrower or, to the best of my
knowledge (after due inquiry), of any security issued by the Borrower or of any
material mortgage, indenture, lease, contract or other agreement or undertaking
to which the Borrower or NME (Cayman) is a party or by which the Borrower or NME
(Cayman) or any of their respective properties oar assets may be bound, and will
not result in or require the creation or imposition of any Lien prohibited by
the Credit Agreement on any of their respective properties or revenues pursuant
to the provisions of any such mortgage, indenture, contract, lease or other
agreement or other undertaking.
4. NO MATERIAL LITIGATION. To the best of my knowledge, after due
inquiry, there are no pending or threatened actions, suits, proceedings or
investigations against the Borrower's or any other of its Subsidiaries in any
court or by or before any arbitrator or governmental authority in which there is
a reasonable possibility of an adverse determination that could reasonably be
expected to have a Material Adverse Effect or that call into question the
validity of the Loan Documents. For purposes of the preceding sentence, I have
assumed that, in medical malpractice actions now pending or threatened against
the Borrower and its Subsidiaries, damages would be assessed consistent with the
Borrower's past experience. The past
3
experience of the Borrower has been that damages assessed in such suits have
been adequately covered by insurance. In rendering the opinions set forth in
this paragraph 4, I have not conducted a search of any federal or state court
docket. My inquiry has been limited to consultation with counsel representing
the Borrower and its Subsidiaries in litigation matters.
5. CAPITAL STOCK. The Pledged Stock (as defined in the Security
Agreement) included in the Borrower Collateral (as defined in the Security
Agreement) constitutes all of the issued and outstanding shares of capital stock
of the issuer thereof, and has been duly authorized and validly issued and is
fully-paid and nonassessable and, to the best of my knowledge, is not subject to
options or rights to purchase of any Person. The Borrower owns the Pledged
Stock included in the Borrower Collateral and NME (Cayman) owns the Pledged
Stock included in the NME Cayman Collateral (as defined in the Security
Agreement), in each case free and clear, to the best of my knowledge, of any
adverse claim thereto.
This opinion may be relied upon only by the Administrative Agent, the
Arranging Agents, the Lenders and the Collateral Agent and their successors and
assigns in connection with the transactions contemplated by the Credit
Agreement, and no other Person shall be entitled to rely on this opinion without
my express written consent.
This opinion is rendered to the Administrative Agent, the Arranging
Agents, the Lenders and the Collateral Agent as of the date hereof in connection
with the Credit Agreement, and may not be relied upon by any other person or by
them in any other context.
Scott M. Brown
General Counsel
4
EXHIBIT F
OPINION OF
COUNSEL FOR AM HOLDINGS
To the Lenders, the LC Issuing Banks,
the Administrative Agent and
the Collateral Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Administrative Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
I have acted as counsel for American Medical Holdings, Inc., a
Delaware corporation ("AM Holdings") and its subsidiaries, including American
Medical International, Inc., a Delaware corporation ("AMI"), and am rendering
this opinion in connection with the $2,300,000,000 Credit Agreement (the "Credit
Agreement") dated as of February 28, 1995 among National Medical Enterprises,
Inc., the lenders party thereto (including certain lenders in their capacities
as LC Issuing Banks), Morgan Guaranty Trust Company of New York, Bank of America
National Trust and Savings Association, The Bank of New York and Bankers Trust
Company as Arranging Agents, and Morgan Guaranty Trust Company of New York as
Administrative Agent. Terms defined in the Credit Agreement are used herein as
therein defined. This opinion is being rendered to you at the request of my
clients pursuant to Section 3.01(xvi) of the Credit Agreement.
I have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments and have conducted such other
investigations of fact and law as I have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, I am of the opinion that:
1. Immediately prior to giving effect to the consummation of the
Merger, each of AM Holdings and AMI was a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware.
2. After giving effect to the consummation of the Merger, each of AM
Holdings and AMI is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, and has all corporate
powers and all material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted.
3. The execution, delivery and performance by AM Holdings of the
Merger Agreement and the consummation of the Merger are within AM Holdings's
corporate powers, have been duly authorized by all necessary corporate action,
require no action by or in respect of, or filing with, any governmental body,
agency or official (other than the filing of the certificate of merger with
respect to the Merger) and do not contravene, or constitute a default under, any
provision of applicable law or regulation or of the certificate of incorporation
or by-laws of AM Holdings or of any agreement, judgment, injunction, order,
decree or other instrument binding upon AM Holdings or any of its Subsidiaries
or result in the creation or imposition of any Lien on any asset of AM Holdings
or any of its Subsidiaries.
4. The Merger Agreement constitutes a valid and binding agreement of
AM Holdings enforceable in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and by general principles of equity.
5. No consents or approvals of, or filings and registrations with, or
any other actions in respect of, any governmental agencies, authorities or
instrumentalities are required on the part of AM Holdings in order to effect the
Merger under applicable law, including the Delaware General Corporation Law (the
"DGCL"), other than the filing by AM Acquisition Co. of a certificate of merger
in conformance with the requirements of and pursuant to Section 251 of the DGCL.
6. Except as described in Schedule 4.06 to the Credit Agreement,
immediately prior to the consummation of the Merger, there is no action, suit or
proceeding pending against, or to my knowledge threatened against, AM Holdings
or any of its Subsidiaries or any of their respective properties, before any
court or arbitrator or any governmental body, agency or official in which there
is a reasonable possibility of an adverse decision which could reasonably be
expected to have a Material Adverse Effect or which in any manner draws into
question the validity of any of the Financing Documents.
2
EXHIBIT G
OPINION OF
DAVIS POLK & WARDWELL
SPECIAL COUNSEL FOR THE ADMINISTRATIVE AGENT
To the Lenders, the LC Issuing Banks
and the Administrative Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Administrative Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
We have participated in the preparation of the $2,300,000,000 Credit
Agreement dated as of February 28, 1995 (the "Credit Agreement") among National
Medical Enterprises, Inc., a Nevada corporation, the lenders party thereto
(including certain lenders in their capacities as LC Issuing Banks), Morgan
Guaranty Trust Company of New York, Bank of America National Trust and Savings
Association, The Bank of New York and Bankers Trust Company, as Arranging
Agents, and Morgan Guaranty Trust Company of New York, as Administrative Agent,
and have acted as special counsel for the Administrative Agent for the purpose
of rendering this opinion pursuant to Section 3.01(xvii) of the Credit
Agreement. Terms defined in the Credit Agreement are used herein as therein
defined.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. The Credit Agreement constitutes a valid and binding agreement of
the Borrower and each Note constitutes a valid and binding obligation of the
Borrower, in each case enforceable in accordance with its terms, except as the
same may be limited by
1
bankruptcy, insolvency or similar laws affecting creditors' rights generally and
by general principles of equity.
2. The Security Agreement is in substantially acceptable legal form
under the laws of the State of New York.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York and the federal laws of
the United States of America. Insofar as the foregoing opinions involve matters
governed by the laws of any other jurisdiction, we have relied, with your
permission and without independent investigation, upon the opinions of Gibson,
Dunn & Crutcher, Maples & Calder and Scott Brown, Esq., respectively, each dated
the date hereof, a copy of each of which has been delivered to you, and we have
assumed, without independent investigation, the correctness of the matters set
forth in each such opinion, our opinion being subject to the qualifications and
limitations set forth in each such opinion with respect thereto. In addition,
we express no opinion as to the effect (if any) of any law of any jurisdiction
(except the State of New York) in which any Lender is located which limits the
rate of interest that such Lender may charge or collect.
This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
relied upon by any other Person without our prior written consent.
Very truly yours,
2
EXHIBIT H
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 19__ among [ASSIGNOR] (the
"Assignor"), [ASSIGNEE] (the "Assignee"), NATIONAL MEDICAL ENTERPRISES, INC.
(the "Borrower") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Administrative Agent (the "Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement relates to the
Credit Agreement dated as of February 28, 1995 among National Medical
Enterprises, Inc., the Lenders party thereto, Morgan Guaranty Trust Company of
New York Bank of America National Trust and Savings Association, The Bank of New
York and Bankers Trust Company, as Arranging Agents, and Morgan Guaranty Trust
Company of New York, as Administrative Agent (as amended from time to time, the
"Credit Agreement");
[WHEREAS, Term Loans made to the Borrower by the Assignor under the
Credit Agreement in the aggregate principal amount of $__________ are
outstanding at the date hereof];
[WHEREAS, as provided under the Credit Agreement, the Assignor has an
unused Term Commitment to make additional Term Loans to the Borrower in an
aggregate principal amount not to exceed $__________;]
[WHEREAS, as provided under the Credit Agreement, the Assignor has a
Revolving Credit Commitment in the amount of $_______________, under which the
Assignor has Outstanding Revolving Credit Amounts in the aggregate amount of
$___________ at the date hereof];
[WHEREAS, the Assignor proposes to assign to the Assignee all of the
rights of the Assignor under the Credit Agreement in respect of a pro-rata
portion of each of its Term Loans [and its unused Term Commitment] in an amount
equal to $__________ (the "Term Assigned Amount"), and the Assignee proposes to
accept such assignment of such rights and assume the corresponding obligations
from the Assignor;]
[WHEREAS, the Assignor proposes to assign to the Assignee all of the
rights of the Assignor under the Credit Agreement in respect of a portion of its
Revolving Credit Commitment in an amount equal to $__________ (the "Revolving
Credit Assigned Amount"), together with a corresponding portion of each of its
Outstanding Revolving Credit Amounts, and the Assignee proposes to accept such
assignment of such rights and assume the corresponding obligations from the
Assignor;]
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. All capitalized terms not otherwise defined
herein have the respective meanings set forth in the Credit Agreement.
SECTION 2. ASSIGNMENT. [The Assignor hereby assigns and sells to the
Assignee all of the rights of the Assignor under the Credit Agreement with
respect to its Term Loans [and unused Term Commitment] to the extent of the Term
Assigned Amount, and the Assignee hereby accepts such assignment from the
Assignor and assumes all of the obligations of the Assignor under the Credit
Agreement to the extent of the Term Assigned Amount, including the purchase from
the Assignor of a pro-rata portion of the principal amount of each of the Term
Loans of the Assignor outstanding at the date hereof.] [The Assignor hereby
assigns and sells to the Assignee all of the rights of the Assignor under the
Credit Agreement with respect to its Revolving Credit Commitment to the extent
of the Revolving Credit Assigned Amount, and the Assignee hereby accepts such
assignment from the Assignor and assumes all of the obligations of the Assignor
under the Credit Agreement to the extent of the Revolving Credit Assigned
Amount, including the purchase from the Assignor of a pro-rata portion of the
principal amount of each Outstanding Revolving Credit Amount of the Assignor
outstanding at the date hereof.] Upon the execution and delivery hereof by the
Assignor, the Assignee[, the Borrower, the LC Issuing Banks and the Agent] and
the payment of the amounts specified in Section 3 required to be paid on the
date hereof [(i) the Assignee shall, as of the date hereof, succeed to the
rights and be obligated to perform the obligations of a Term Lender under the
Credit Agreement with outstanding Term Loans [and an unused Term Commitment] in
an aggregate amount equal to the Term Assigned Amount, [(ii) the unused Term
Commitment of the Assignor shall, as of the date hereof, be correspondingly
reduced and the Assignor released from its obligations under the Credit
Agreement to the extent such obligations have been assumed by the Assignee],
[(iii) the Assignee shall, as of the date hereof, succeed to the rights and be
obligated to perform the obligations of a Revolving Credit Lender under the
Credit Agreement with a Revolving Credit
2
Commitment in an amount equal to the Revolving Credit Assigned Amount, (iv) the
Revolving Commitment of the Assignor shall, as of the date hereof, be reduced by
a like amount and the Assignor released from its obligations under the Credit
Agreement to the extent such obligations have been assumed by the Assignee].
The assignment provided for herein shall be without recourse to the Assignor.
SECTION 3. PAYMENTS. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the
date hereof in Federal funds the amount heretofore agreed between them.*** It
is understood that commitment fees accrued to the date hereof are for the
account of the Assignor and such fees accruing from and including the date
hereof are for the account of the Assignee. Each of the Assignor and the
Assignee hereby agrees that if it receives any amount under the Credit Agreement
which is for the account of the other party hereto, it shall receive the same
for the account of such other party to the extent of such other party's interest
therein and shall promptly pay the same to such other party.
[SECTION 4. CONSENT OF THE BORROWER [,THE LC ISSUING BANKS] AND THE
ADMINISTRATIVE AGENT. This Agreement is conditioned upon the consent of the
Borrower [,the LC Issuing Banks] and the Administrative Agent pursuant to
Section 9.06(c) of the Credit Agreement. Pursuant to Section 9.06(c) the
Borrower agrees to execute and deliver one or more Notes payable to the order of
the Assignee to evidence the assignment and assumption provided for herein.]
SECTION 5. NON-RELIANCE ON ASSIGNOR. The Assignor makes no
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition or statements of the
Borrower, the existence or value of the Collateral or the validity and
enforceability of the obligations of the Borrower in respect of any Financing
Document. The Assignee acknowledges that it has, independently and without
reliance on the Assignor, and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement and will continue to be responsible for making its own independent
appraisal of the business, affairs and financial condition of the
_________________________
***Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee, net of any portion of
any upfront fee to be paid by the Assignor to the Assignee. It may be
preferable in an appropriate case to specify these amounts generically or by
formula rather than as a fixed sum.
3
Borrower.
SECTION 6. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 7. COUNTERPARTS. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
4
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
[ASSIGNOR]
By
-------------------------
Title:
[ASSIGNEE]
By
--------------------------
Title:
The undersigned consent to the foregoing assignment:
NATIONAL MEDICAL
ENTERPRISES, INC.
By
--------------------------
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as
Administrative Agent
By
--------------------------
Title:
[LC ISSUING BANKS]
By
--------------------------
Title:
5
EXHIBIT I
EXISTING LETTERS OF CREDIT
Date Letter
LC Date of of of Face
Issuer Issuance Expiration Credit Number Beneficiary Amount Description
------ -------- ---------- ------------- ----------- ------ -----------
CHEMICAL 08/23/93 04/01/95 T-216691 AHE of Irvine $7,500,000.00 Irvine REIT Lease
CHEMICAL 08/20/93 03/01/95 T-216706 AMSouth Bank 3,000,000.00 Brkwd MOB Construction
Collateral
CHEMICAL 08/26/93 03/01/95 T-216859 City PBG 123,200.00 PBG City Construction
Collateral
CHEMICAL 09/03/93 07/26/95 T-216692 Self-Insurance Plans 8,000,000.00 Work Comp - California
State of California (2,260,000.00) Reduction 4/21/94
-------------
5,740,000.00
CHEMICAL 09/14/93 01/29/95 T-216762 Workmen's Compensation 750,000.00 Work Comp - Alabama
Division - Alabama
CHEMICAL 08/18/93 02/12/95 T-216650 National Union Fire 14,000,000.00 1988-1993 Zero Balance
Ins. Co. of Pittsburg, (500,000.00) 1/18 Reduction
-------------
PA 13,500,000.00 Indemnity Work Comp and
94 yr projection
CHEMICAL 05/19/94 05/19/95 T-229881 Memphis Light, Gas & 653,330.00 St. Francis Utility
Water Deposit
NATIONSBANK 10/07/94 09/30/95 142637 St of FL W/C 500,000.00