EXHIBIT 10.47
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CREDIT AGREEMENT
DATED AS OF APRIL 16, 1998,
AMONG
FOUNTAIN VIEW, INC.
THE BANKS PARTY HERETO,
AND
BANK OF MONTREAL,
as Agent
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TABLE OF CONTENTS
SECTION DESCRIPTION PAGE
SECTION 1. THE CREDIT FACILITIES............................................................. 1
Section 1.1. Revolving Credit Commitments................................................. 1
Section 1.2. Letters of Credit............................................................ 1
Section 1.3. Term Loan Commitments........................................................ 4
Section 1.4. Applicable Interest Rates.................................................... 4
Section 1.5. Minimum Borrowing Amounts.................................................... 6
Section 1.6. Manner of Borrowing Loans and Designating Applicable Interest Rates.......... 6
Section 1.7. Interest Periods............................................................. 8
Section 1.8. Maturity of Loans............................................................ 9
Section 1.9. Prepayments.................................................................. 9
Section 1.10. Default Rate................................................................. 12
Section 1.11. The Notes.................................................................... 12
Section 1.12. Funding Indemnity............................................................ 13
Section 1.13. Commitment Terminations...................................................... 14
SECTION 2. FEES AND SUBSTITUTION OF BANKS.................................................... 14
Section 2.1. Fees......................................................................... 14
Section 2.2. Substitution of Banks........................................................ 15
SECTION 3. PLACE AND APPLICATION OF PAYMENTS................................................. 16
SECTION 4. COLLATERAL AND GUARANTIES......................................................... 17
Section 4.1. Collateral................................................................... 17
Section 4.2. Guaranties................................................................... 18
Section 4.3. Further Assurances........................................................... 18
Section 4.4. Liens on Real Property....................................................... 18
SECTION 5. DEFINITIONS; INTERPRETATION....................................................... 19
Section 5.1. Definitions.................................................................. 19
Section 5.2. Interpretation............................................................... 32
Section 5.3. Change in Accounting Principles.............................................. 32
SECTION 6. REPRESENTATIONS AND WARRANTIES.................................................... 32
Section 6.1. Organization and Qualification............................................... 32
Section 6.2. Subsidiaries................................................................. 33
Section 6.3. Authority and Validity of Obligations........................................ 33
Section 6.4. Use of Proceeds; Margin Stock................................................ 34
Section 6.5. Financial Reports............................................................ 34
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Section 6.6. No Material Adverse Change................................................... 34
Section 6.7. Full Disclosure.............................................................. 35
Section 6.8. Trademarks, Franchises, and Licenses......................................... 35
Section 6.9. Governmental Authority and Licensing......................................... 35
Section 6.10. Good Title................................................................... 35
Section 6.11. Litigation and Other Controversies........................................... 35
Section 6.12. Taxes........................................................................ 35
Section 6.13. Approvals.................................................................... 36
Section 6.14. Affiliate Transactions....................................................... 36
Section 6.15. Investment Company; Public Utility Holding Company........................... 36
Section 6.16. ERISA........................................................................ 36
Section 6.17. Compliance with Laws......................................................... 36
Section 6.18. Other Agreements............................................................. 37
Section 6.19. Solvency..................................................................... 37
Section 6.20. Summit Acquisition........................................................... 37
Section 6.21. Year 2000 Compliance......................................................... 38
Section 6.22. No Default................................................................... 38
SECTION 7. CONDITIONS PRECEDENT.............................................................. 38
Section 7.1. Initial Credit Event......................................................... 38
Section 7.2. All Credit Events............................................................ 40
SECTION 8. COVENANTS......................................................................... 41
Section 8.1. Maintenance of Business...................................................... 41
Section 8.2. Maintenance of Properties.................................................... 41
Section 8.3. Taxes and Assessments........................................................ 41
Section 8.4. Insurance.................................................................... 41
Section 8.5. Financial Reports............................................................ 42
Section 8.6. Inspection................................................................... 43
Section 8.7 Indebtedness for Borrowed Money.............................................. 43
Section 8.8. Liens........................................................................ 44
Section 8.9. Investments, Acquisitions, Loans, Advances and Guaranties.................... 45
Section 8.10. Mergers, Consolidations and Sales............................................ 47
Section 8.11. Maintenance of Subsidiaries.................................................. 48
Section 8.12. Dividends and Certain Other Restricted Payments.............................. 48
Section 8.13. ERISA........................................................................ 48
Section 8.14. Compliance with Laws......................................................... 49
Section 8.15. Burdensome Contracts With Affiliates......................................... 49
Section 8.16. No Changes in Fiscal Year.................................................... 49
Section 8.17. Formation of Subsidiaries.................................................... 49
Section 8.18. Change in the Nature of Business............................................. 49
Section 8.19. Use of Loan Proceeds......................................................... 49
Section 8.20. No Restrictions on Subsidiary Distributions.................................. 49
Section 8.21. Alexandria................................................................... 49
Section 8.22. Subordinated Debt............................................................ 50
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Section 8.23. Leverage Ratio............................................................... 50
Section 8.24. Senior Leverage Ratio........................................................ 50
Section 8.25. Net Worth.................................................................... 51
Section 8.26. Fixed Charge Coverage Ratio.................................................. 51
Section 8.27. Capital Expenditures......................................................... 51
SECTION 9. EVENTS OF DEFAULT AND REMEDIES.................................................... 51
Section 9.1. Events of Default............................................................ 51
Section 9.2. Non-Bankruptcy Defaults...................................................... 53
Section 9.3. Bankruptcy Defaults.......................................................... 54
Section 9.4. Collateral for Undrawn Letters of Credit..................................... 54
Section 9.5. Notice of Default............................................................ 55
Section 9.6. Expenses..................................................................... 55
SECTION 10. CHANGE IN CIRCUMSTANCES........................................................... 55
Section 10.1. Change of Law................................................................ 55
Section 10.2. Unavailability of Deposits or Inability to Ascertain, or Inadequacy of, LIBOR 55
Section 10.3. Increased Cost and Reduced Return............................................ 56
Section 10.4. Lending Offices.............................................................. 57
Section 10.5. Discretion of Bank as to Manner of Funding................................... 57
SECTION 11. THE AGENT AND ISSUING BANK........................................................ 57
Section 11.1. Appointment and Authorization of Agent....................................... 57
Section 11.2. Agent and its Affiliates..................................................... 57
Section 11.3. Action by Agent.............................................................. 58
Section 11.4. Consultation with Experts.................................................... 58
Section 11.5. Liability of Agent; Credit Decision.......................................... 58
Section 11.6. Indemnity.................................................................... 59
Section 11.7. Resignation of Agent and Successor Agent..................................... 59
Section 11.8. Interest Rate Hedging Arrangements........................................... 60
Section 11.9. Issuing Bank................................................................. 60
SECTION 12. MISCELLANEOUS..................................................................... 60
Section 12.1. Withholding Taxes............................................................ 60
Section 12.2. No Waiver, Cumulative Remedies............................................... 61
Section 12.3. Non-Business Days............................................................ 61
Section 12.4. Documentary Taxes............................................................ 61
Section 12.5. Survival of Representations.................................................. 61
Section 12.6. Survival of Indemnities...................................................... 62
Section 12.7. Sharing of Set-Off........................................................... 62
Section 12.8. Notices...................................................................... 62
Section 12.9. Counterparts................................................................. 63
Section 12.10. Successors and Assigns....................................................... 63
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Section 12.11. Participants................................................................. 63
Section 12.12. Assignment of Commitments by Banks........................................... 64
Section 12.13. Amendments................................................................... 64
Section 12.14. Headings..................................................................... 65
Section 12.15. Costs and Expenses........................................................... 65
Section 12.16. Environmental Indemnification and Waiver..................................... 65
Section 12.17. Set-off...................................................................... 66
Section 12.18. Entire Agreement............................................................. 66
Section 12.19. Governing Law................................................................ 66
Section 12.20. Severability of Provisions................................................... 66
Section 12.21. Excess Interest.............................................................. 66
Section 12.22. Confidentiality.............................................................. 67
Section 12.23. Single Bank.................................................................. 67
Section 12.24. Submission to Jurisdiction; Waiver of Jury Trial............................. 67
Signature Page................................................................................... 68
Exhibit A - Notice of Payment Request
Exhibit B - Notice of Borrowing
Exhibit C - Notice of Continuation/Conversion
Exhibit D - Revolving Note
Exhibit E - Term Note
Exhibit F - Compliance Certificate
Exhibit G - Assignment and Acceptance
Schedule 6.2 - Subsidiaries
Schedule 6.9 - Governmental Authority and Licensing
Schedule 6.13 - Approvals
Schedule 8.4 - Insurance Matters
Schedule 8.7 - Permitted Existing Indebtedness
Schedule 8.8 - Existing Liens
Schedule 8.9. - Existing Note Receivables
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CREDIT AGREEMENT
To each of the Banks signatory hereto
Ladies and Gentlemen:
The undersigned, Fountain View, Inc., a Delaware corporation (the
"Borrower"), applies to you for your several commitments, subject to the terms
and conditions hereof and on the basis of the representations and warranties
hereinafter set forth, to extend credit to the Borrower, all as more fully
hereinafter set forth. Each of you is hereinafter referred to as a "Bank," all
of you are hereinafter referred to collectively as the "Banks," and Bank of
Montreal in its capacity as agent for the Banks hereunder is hereinafter
referred to as the "Agent."
Section 1. The Credit Facilities.
Section 1.1. Revolving Credit Commitments;. Subject to the terms and
conditions hereof, each Bank, by its acceptance hereof, severally agrees to make
a loan or loans (individually a "Revolving Loan" and collectively the "Revolving
Loans") to the Borrower from time to time on a revolving basis up to the amount
of such Bank's revolving credit commitment set forth on the applicable signature
page hereof or pursuant to Section 12.12 hereof (its "Revolving Credit
Commitment" and, cumulatively for all the Banks, the "Revolving Credit
Commitments"), subject to any reductions thereof pursuant to the terms hereof,
before the Revolving Credit Termination Date. The sum of the aggregate principal
amount of Revolving Loans and of L/C Obligations at any time outstanding shall
not exceed the Revolving Credit Commitments in effect at such time. Each
Borrowing of Revolving Loans shall be made ratably from the Banks in proportion
to their respective Revolver Percentages. As provided in Section 1.6(a) hereof,
the Borrower may elect that each Borrowing of Revolving Loans be either Base
Rate Loans or Eurodollar Loans. Revolving Loans may be repaid and the principal
amount thereof reborrowed before the Revolving Credit Termination Date, subject
to the terms and conditions hereof.
Section 1.2. Letters of Credit;. (a) General Terms. Subject to the terms
and conditions hereof, as part of the Revolving Credit, the Issuing Bank shall
issue standby and commercial letters of credit (each a "Letter of Credit") for
the Borrower's account in an aggregate undrawn face amount up to the amount of
the L/C Commitment, provided that the aggregate L/C Obligations at any time
outstanding shall not exceed the difference between the Revolving Credit
Commitments in effect at such time and the aggregate principal amount of
Revolving Loans then outstanding. Each Letter of Credit shall be issued by the
Issuing Bank, but each Bank shall be obligated to reimburse the Issuing Bank for
such Bank's Revolver Percentage of the amount of each drawing thereunder and,
accordingly, each Letter of Credit shall constitute usage of the Revolving
Credit Commitment of each Bank pro rata in accordance with its Revolver
Percentage.
(b) Applications. At any time before the Revolving Credit Termination
Date, the Issuing Bank shall, at the request of the Borrower, issue one or more
Letters of Credit, in a form satisfactory to the Issuing Bank, with expiration
dates no later than the earlier of 12 months from the date of issuance (or be
cancelable not later than 12 months from the date of issuance and each renewal)
or Revolving Credit Termination Date, in an aggregate face amount as set forth
above, upon the receipt of an application duly executed by the Borrower for the
relevant Letter of Credit in the form then customarily prescribed by the Issuing
Bank for the Letter of Credit requested (each an "Application"). Notwithstanding
anything contained in any Application to the contrary: (i) the Borrower shall
pay fees in connection with each Letter of Credit as set forth in Section 2.1
hereof, (ii) except as otherwise provided in Section 1.9 hereof, before the
occurrence of a Default or an Event of Default, the Issuing Bank will not call
for the funding by the Borrower of any amount under a Letter of Credit before
being presented with a drawing thereunder, and (iii) if the Issuing Bank is not
timely reimbursed for the amount of any drawing under a Letter of Credit on the
date such drawing is paid, the Borrower's obligation to reimburse the Issuing
Bank for the amount of such drawing shall bear interest (which the Borrower
hereby promises to pay) from and after the date such drawing is paid at a rate
per annum equal to the sum of 2% plus the Applicable Margin for Base Rate Loans
plus the Base Rate from time to time in effect. If the Issuing Bank issues any
Letter of Credit with an expiration date that is automatically extended unless
the Issuing Bank gives notice that the expiration date will not so extend beyond
its then scheduled expiration date, the Issuing Bank will give such notice of
non-renewal before the time necessary to prevent such automatic extension if
before such required notice date: (i) the expiration date of such Letter of
Credit if so extended would be after the Revolving Credit Termination Date, (ii)
the Revolving Credit Commitments have been terminated, or (iii) a Default or an
Event of Default exists and the Agent, at the direction of the Required Banks,
has given the Issuing Bank instructions not to so permit the extension of the
expiration date of such Letter of Credit. The Issuing Bank agrees to issue
amendments to the Letter(s) of Credit increasing the amount, or extending the
expiration date, thereof at the request of the Borrower subject to the
conditions of Section 7.2 hereof and the other terms of this Section 1.2 .
(c) The Reimbursement Obligations. Subject to Section 1.2(b) hereof, the
obligation of the Borrower to reimburse the Issuing Bank for all drawings under
a Letter of Credit (a "Reimbursement Obligation") shall be governed by the
Application related to such Letter of Credit, except that reimbursement shall be
made by no later than 12:00 Noon (Chicago time) on the date when each drawing is
paid in immediately available funds at the Issuing Bank's principal office in
Chicago, Illinois or such other office as the Issuing Bank may designate in
writing to the Borrower. If the Borrower does not make any such reimbursement
payment on the date due and the Participating Banks fund their participations
therein in the manner set forth in Section 1.2(d) below, then all payments
thereafter received by the Issuing Bank in discharge of any of the relevant
Reimbursement Obligations shall be distributed in accordance with Section 1.2(d)
below.
(d) The Participating Interests. Each Bank, by its acceptance hereof,
severally agrees to purchase from the Issuing Bank, and the Issuing Bank hereby
agrees to sell to each such Bank (a "Participating Bank"), an undivided
percentage participating interest (a "Participating Interest"), to the extent of
its Revolver Percentage, in each Letter of Credit
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issued by, and each Reimbursement Obligation owed to, the Issuing Bank. Upon any
failure by the Borrower to pay any Reimbursement Obligation at the time required
on the date the related drawing is paid, as set forth in Section 1.2(c) above,
or if the Issuing Bank is required at any time to return to the Borrower or to a
trustee, receiver, liquidator, custodian, or other Person any portion of any
payment of any Reimbursement Obligation, each Participating Bank shall, not
later than the Business Day it receives a certificate in the form of Exhibit A
hereto from the Issuing Bank to such effect, if such certificate is received
before 1:00 p.m. (Chicago time), or not later than 1:00 p.m. (Chicago time) the
following Business Day, if such certificate is received after such time, pay to
the Issuing Bank an amount equal to such Participating Bank's Revolver
Percentage of such unpaid or recaptured Reimbursement Obligation together with
interest on such amount accrued from the date the related payment was made by
the Issuing Bank to the date of such payment by such Participating Bank at a
rate per annum equal to: (i) from the date the related payment was made by the
Issuing Bank to the date 2 Business Days after payment by such Participating
Bank is due hereunder, the Federal Funds Rate for each such day and (ii) from
the date 2 Business Days after the date such payment is due from such
Participating Bank to the date such payment is made by such Participating Bank,
the Base Rate in effect for each such day. Each such Participating Bank shall
thereafter be entitled to receive its Revolver Percentage of each payment
received in respect of the relevant Reimbursement Obligation and of interest
paid thereon, with the Issuing Bank retaining its Revolver Percentage as a Bank
hereunder.
The several obligations of the Participating Banks to the Issuing Bank
under this Section 1.2 shall be absolute, irrevocable, and unconditional under
any and all circumstances whatsoever and shall not be subject to any set-off,
counterclaim or defense to payment which any Participating Bank may have or have
had against the Borrower, the Agent, the Issuing Bank, any other Bank, or any
other Person whatsoever. Without limiting the generality of the foregoing, such
obligations shall not be affected by any Default or Event of Default or by any
reduction or termination of any Commitment of any Bank, and each payment by a
Participating Bank under this Section 1.2 shall be made without any offset,
abatement, withholding, or reduction whatsoever. The Issuing Bank shall be
entitled to offset amounts received for the account of a Bank under this
Agreement against unpaid amounts due from such Bank to the Issuing Bank
hereunder (whether as fundings of participations, indemnities, or otherwise),
but shall not be entitled to offset against amounts owed to the Issuing Bank by
any Bank arising outside of this Agreement.
(e) Indemnification. The Participating Banks shall, to the extent of their
respective Revolver Percentages, indemnify the Issuing Bank (to the extent not
reimbursed by the Borrower) against any cost, expense (including reasonable
counsel fees and disbursements), claim, demand, action, loss, or liability
(except such as result from the Issuing Bank's gross negligence or willful
misconduct) that the Issuing Bank may suffer or incur in connection with any
Letter of Credit. The obligations of the Participating Banks under this Section
1.2(e) and all other parts of this Section 1.2 shall survive termination of this
Agreement and of all Applications, Letters of Credit, and all drafts and other
documents presented in connection with drawings thereunder.
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Section 1.3. Term Loan Commitments. Subject to the terms and conditions
hereof, each Bank, by its acceptance hereof, severally agrees to make a loan
(individually a "Term Loan" and collectively the "Term Loans") to the Borrower
in the amount of such Bank's Term Loan Commitment as set forth on the applicable
signature page hereof (its "Term Loan Commitment" and, cumulatively for all the
Banks, the "Term Loan Commitments"). The Term Loans shall be made, if at all, on
or before April 20, 1998, at which time the Term Loan Commitments shall expire.
The Term Loans shall be advanced in a single Borrowing and shall be made ratably
by the Banks in proportion to their respective Term Loan Percentages. As
provided in Section 1.6(a) hereof, the Borrower may elect that the Term Loans be
outstanding as Base Rate Loans or Eurodollar Loans. No amount repaid or prepaid
on any Term Loan may be borrowed again.
Section 1.4. Applicable Interest Rates. (a) Base Rate Loans. Each Base
Rate Loan made or maintained by a Bank shall bear interest during each Interest
Period it is outstanding (computed on the basis of a year of 365 or 366 days, as
the case may be, and the actual days elapsed, except that determinations made
under clause (ii) of the definition of Base Rate set forth below shall be
computed on the basis of a year of 360 days and actual days elapsed) on the
unpaid principal amount thereof from the date such Loan is advanced, continued
or created by conversion from a Eurodollar Loan until maturity (whether by
acceleration or otherwise) at a rate per annum equal to the sum of the
Applicable Margin plus the Base Rate from time to time in effect, payable on the
last day of its Interest Period and at maturity (whether by acceleration or
otherwise).
"Base Rate" means for any day the greater of: (i) the rate of interest
announced by the Agent from time to time as its prime commercial rate, or
equivalent, for U.S. Dollar loans to borrowers located in the United States with
any change in the Base Rate resulting from a change in said prime commercial
rate to be effective as of the date of the relevant change in said prime
commercial rate (it being acknowledged and agreed that such rate may not be the
Agent's best or lowest rate) and (ii) the sum of (x) the rate for that day set
forth opposite the caption "Federal Fund (Effective)" in the daily statistical
release designated as "Composite 3:30 P.M. Quotations for U.S. Government
Securities," or any successor publication, published by the Federal Reserve Bank
of New York or, if such publication shall be suspended or terminated, the rate
determined by the Agent (based on quotations received from two or more Federal
funds dealers of recognized standing) to be the prevailing rate per annum
(rounded upward, if necessary, to the nearest 1/100 of 1%) at approximately
10:00 a.m. (Chicago time) (or as soon thereafter as is practicable) on such day
for the purchase at face value of overnight Federal funds in an amount
approximately equal to the principal amount owed to the Agent for which such
rate is being determined, plus (y) 1/2 of 1%.
(b) Eurodollar Loans. Each Eurodollar Loan made or maintained by a Bank
shall bear interest during each Interest Period it is outstanding (computed on
the basis of a year of 360 days and actual days elapsed) on the unpaid principal
amount thereof from the date such Loan is advanced, continued, or created by
conversion from a Base Rate Loan until maturity (whether by acceleration or
otherwise) at a rate per annum equal to the sum of the Applicable Margin plus
the Adjusted LIBOR applicable for such Interest Period, payable on the last day
of the Interest Period and at maturity (whether by acceleration or otherwise),
and, if the
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applicable Interest Period is longer than three months, on each day occurring
every three months after the commencement of such Interest Period.
"Adjusted LIBOR" means, for any Borrowing of Eurodollar Loans, a rate per
annum determined in accordance with the following formula:
Adjusted LIBOR = LIBOR
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1 - Eurodollar Reserve Percentage
"LIBOR" means, for an Interest Period for a Borrowing of Eurodollar Loans,
(a) the LIBOR Index Rate for such Interest Period, if such rate is available,
and (b) if the LIBOR Index Rate cannot be determined, the arithmetic average of
the rates of interest per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) at which deposits in U.S. Dollars in immediately available funds
are offered to the Agent at 11:00 a.m. (London, England time) 2 Business Days
before the beginning of such Interest Period by 3 or more major banks in the
interbank eurodollar market selected by the Agent for delivery on the first day
of and for a period equal to such Interest Period and in an amount equal or
comparable to the principal amount of the Eurodollar Loan scheduled to be made
by the Agent as part of such Borrowing.
"LIBOR Index Rate" means, for any Interest Period, the rate per annum
(rounded upwards, if necessary, to the next higher one hundred-thousandth of a
percentage point) for deposits in U.S. Dollars for a period equal to such
Interest Period, which appears on the Telerate Page 3750 as of 11:00 a.m.
(London, England time) on the day 2 Business Days before the commencement of
such Interest Period.
"Telerate Page 3750" means the display designated as "Page 3750" on the Dow
Jones Telerate Service (or such other page as may replace Page 3750 on that
service or such other service as may be nominated by the British Bankers'
Association as the information vendor for the purpose of displaying British
Bankers' Association Interest Settlement Rates for U.S. Dollar deposits).
"Eurodollar Reserve Percentage" means, for any Borrowing of Eurodollar
Loans, the daily average for the applicable Interest Period of the maximum rate,
expressed as a decimal, at which reserves (including, without limitation, any
supplemental, marginal, and emergency reserves) are imposed during such Interest
Period by the Board of Governors of the Federal Reserve System (or any
successor) on "eurocurrency liabilities", as defined in such Board's Regulation
D (or in respect of any other category of liabilities that includes deposits by
reference to which the interest rate on Eurodollar Loans is determined or any
category of extensions of credit or other assets that include loans by non-
United States offices of any Bank to United States residents), subject to any
amendments of such reserve requirement by such Board or its successor, taking
into account any transitional adjustments thereto. For purposes of this
definition, the Eurodollar Loans shall be deemed to be "eurocurrency
liabilities" as defined in Regulation D without benefit or credit for any
prorations, exemptions or offsets under Regulation D.
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(d) Rate Determinations. The Agent shall determine each interest rate
applicable to the Loans and the Reimbursement Obligations hereunder, and its
determination thereof shall be conclusive and binding except in the case of
manifest error.
Section 1.5. Minimum Borrowing Amounts. Each Borrowing of Base Rate Loans
advanced under a Credit shall be in an amount not less than $500,000. Each
Borrowing of Eurodollar Loans advanced, continued, or converted under a Credit
shall be in an amount equal to $500,000 or such greater amount which is an
integral multiple of $500,000.
Section 1.6. Manner of Borrowing Loans and Designating Applicable Interest
Rates. (a) Notice to the Agent. The Borrower shall give notice to the Agent by
no later than 11:00 a.m. (Chicago time): (i) at least 3 Business Days before the
date on which the Borrower requests the Banks to advance a Borrowing of
Eurodollar Loans and (ii) on the date the Borrower requests the Banks to advance
a Borrowing of Base Rate Loans. The Loans included in each Borrowing shall bear
interest initially at the type of rate specified in such notice of a new
Borrowing. Thereafter, the Borrower may from time to time elect to change or
continue the type of interest rate borne by each Borrowing or, subject to
Section 1.5's minimum amount requirement for each outstanding Borrowing, a
portion thereof, as follows: (i) if such Borrowing is of Eurodollar Loans, on
the last day of the Interest Period applicable thereto, the Borrower may
continue part or all of such Borrowing as Eurodollar Loans or convert part or
all of such Borrowing into Base Rate Loans or (ii) if such Borrowing is of Base
Rate Loans, on any Business Day, the Borrower may convert all or part of such
Borrowing into Eurodollar Loans for an Interest Period or Interest Periods
specified by the Borrower. The Borrower shall give all such notices requesting
the advance, continuation, or conversion of a Borrowing to the Agent by
telephone or telecopy (which notice shall be irrevocable once given and, if by
telephone, shall be promptly confirmed in writing) substantially in the form
attached hereto as Exhibit B (Notice of Borrowing) or Exhibit C (Notice of
Continuation/Conversion), as applicable, or in such other form acceptable to the
Agent. Notices of the continuation of a Borrowing of Eurodollar Loans for an
additional Interest Period or of the conversion of part or all of a Borrowing of
Eurodollar Loans into Base Rate Loans or of Base Rate Loans into Eurodollar
Loans must be given by no later than 11:00 a.m. (Chicago time) at least 3
Business Days before the date of the requested continuation or conversion. All
such notices concerning the advance, continuation, or conversion of a Borrowing
shall specify the date of the requested advance, continuation, or conversion of
a Borrowing (which shall be a Business Day), the amount of the requested
Borrowing to be advanced, continued, or converted, the type of Loans to comprise
such new, continued, or converted Borrowing and, if such Borrowing is to be
comprised of Eurodollar Loans, the Interest Period applicable thereto. The
Borrower agrees that the Agent may rely on any such telephonic or telecopy
notice given by any person the Agent in good faith believes is an Authorized
Representative without the necessity of independent investigation, and in the
event any such notice by telephone conflicts with any written confirmation, such
telephonic notice shall govern if the Agent has acted in reliance thereon.
(b) Notice to the Banks. The Agent shall give prompt telephonic or
telecopy notice to each Bank of any notice from the Borrower received pursuant
to Section 1.6(a) above and, if such notice requests the Banks to make
Eurodollar Loans, the Agent shall give notice to the
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Borrower and each Bank by like means of the interest rate applicable thereto
promptly after the Agent has made such determination.
(c) Borrower's Failure to Notify; Automatic Continuations and Conversions.
Any outstanding Borrowing of Base Rate Loans shall automatically be continued
for an additional Interest Period on the last day of its then current Interest
Period unless the Borrower has notified the Agent within the period required by
Section 1.6(a) that the Borrower intends to convert such Borrowing, subject to
Section 7.2 hereof, into a Borrowing of Eurodollar Loans or such Borrowing is
prepaid in accordance with Section 1.9(a). If the Borrower fails to give notice
pursuant to Section 1.6(a) above of the continuation or conversion of any
outstanding principal amount of a Borrowing of Eurodollar Loans before the last
day of its then current Interest Period within the period required by Section
1.6(a) or, whether or not such notice has been given, one or more of the
conditions set forth in Section 7.2 for the continuation or conversion of a
Borrowing of Eurodollar Loans would not be satisfied and such Borrowing is not
prepaid in accordance with Section 1.9(a), such Borrowing shall automatically be
converted into a Borrowing of Base Rate Loans.
(d) Disbursement of Loans. Not later than 1:00 p.m. (Chicago time) on the
date of any requested advance of a new Borrowing, subject to Section 7 hereof,
each Bank shall make available its Loan comprising part of such Borrowing in
funds immediately available at the principal office of the Agent in Chicago,
Illinois. The Agent shall make the proceeds of each new Borrowing available to
the Borrower at the Agent's principal office in Chicago, Illinois (or by wire
transfer of funds pursuant to the Borrower's written instructions to the Agent).
(e) Agent Reliance on Bank Funding. Unless the Agent shall have been
notified by a Bank prior to (or, in the case of a Borrowing of Base Rate Loans,
by 1:00 p.m. (Chicago time) on) the date on which such Bank is scheduled to make
payment to the Agent of the proceeds of a Loan (which notice shall be effective
upon receipt) that such Bank does not intend to make such payment, the Agent may
assume that such Bank has made such payment when due and the Agent may in
reliance upon such assumption (but shall not be required to) make available to
the Borrower the proceeds of the Loan to be made by such Bank and, if any Bank
has not in fact made such payment to the Agent, such Bank shall, on demand, pay
to the Agent the amount made available to the Borrower attributable to such Bank
together with interest thereon in respect of each day during the period
commencing on the date such amount was made available to the Borrower and ending
on (but excluding) the date such Bank pays such amount to the Agent at a rate
per annum equal to (i) from the date the related advance was made by the Agent
to the date 2 Business Days after payment by such Bank is due hereunder, the
Federal Funds Rate for each such day and (ii) from the date 2 Business Days
after the date such payment is due from such Bank to the date such payment is
made by such Bank, the Base Rate in effect for each such day. If such amount is
not received from such Bank by the Agent immediately upon demand, the Borrower
will, on demand, repay to the Agent the proceeds of the Loan attributable to
such Bank with interest thereon at a rate per annum equal to the interest rate
applicable to the relevant Loan, but without such payment being considered a
payment or prepayment of a Loan under Section 1.12 hereof, so that the Borrower
will have no liability under such Section with respect to such payment.
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Section 1.7. Interest Periods. As provided in Section 1.6(a) hereof, at
the time of each request to advance, continue, or create by conversion a
Borrowing of Eurodollar Loans, the Borrower shall select an Interest Period
applicable to such Loans from among the available options. The term "Interest
Period" means the period commencing on the date a Borrowing of Loans is
advanced, continued, or created by conversion and ending: (a) in the case of
Base Rate Loans, on the last day of the calendar quarter in which such Borrowing
is advanced, continued, or created by conversion (or on the last day of the
following calendar quarter if such Loan is advanced, continued or created by
conversion on the last day of a calendar quarter) and (b) in the case of a
Eurodollar Loan, 1, 2, 3, 6, or 12 months thereafter; provided, however, that:
(a) any Interest Period for a Borrowing of Revolving Loans consisting
of Base Rate Loans that otherwise would end after the Revolving Credit
Termination Date shall end on the Revolving Credit Termination Date, and
any Interest Period for a Borrowing of Term Loans consisting of Base Rate
Loans that otherwise would end after the final maturity date of the Term
Loans shall end on the final maturity date of the Term Loans;
(b) no Interest Period with respect to any portion of the Term Loans
shall extend beyond the final maturity date of the Term Loans, and no
Interest Period with respect to any portion of the Revolving Loans shall
extend beyond the Revolving Credit Termination Date;
(c) no Interest Period with respect to any portion of the Term Loans
consisting of Eurodollar Loans shall extend beyond a date on which the
Borrower is required to make a scheduled payment of principal on the Term
Loans, unless the sum of (a) the aggregate principal amount of Term Loans
that are Base Rate Loans plus (b) the aggregate principal amount of Term
Loans that are Eurodollar Loans with Interest Periods expiring on or before
such date equals or exceeds the principal amount to be paid on the Term
Loans on such payment date;
(d) whenever the last day of any Interest Period would otherwise be a
day that is not a Business Day, the last day of such Interest Period shall
be extended to the next succeeding Business Day, provided that, if such
extension would cause the last day of an Interest Period for a Borrowing of
Eurodollar Loans to occur in the following calendar month, the last day of
such Interest Period shall be the immediately preceding Business Day; and
(e) for purposes of determining an Interest Period for a Borrowing of
Eurodollar Loans, a month means a period starting on one day in a calendar
month and ending on the numerically corresponding day in the next calendar
month; provided, however, that if there is no numerically corresponding day
in the month in which such an Interest Period is to end or if such an
Interest Period begins on the last Business Day of a calendar month, then
such Interest Period shall end on the last Business Day of the calendar
month in which such Interest Period is to end.
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Section 1.8. Maturity of Loans. (a) Revolving Loans. Each Revolving Loan
shall mature and become due and payable by the Borrower on the Revolving Credit
Termination Date.
(b) Scheduled Payments of Term Loans. The Borrower shall make principal
payments on the Term Loans in installments on the last day of each March, June,
September and December in each year, commencing with the calendar quarter ending
March 31, 1999, with the amount of each such installment to equal to the amount
set forth in Column B below opposite the relevant due date as set forth in
Column A below:
Column B
Column A Scheduled Principal Payment on
Payment Date Term Notes
06/30/99 $1,250,000.00
09/30/99 $1,250,000.00
12/31/99 $1,250,000.00
03/31/00 $1,250,000.00
06/30/00 $2,500,000.00
09/30/00 $2,500,000.00
12/31/00 $2,500,000.00
03/31/01 $2,500,000.00
06/30/01 $5,000,000.00
09/30/01 $5,000,000.00
12/31/01 $5,000,000.00
03/31/02 $5,000,000.00
06/30/02 $5,625,000.00
09/30/02 $5,625,000.00
12/31/02 $5,625,000.00
03/31/03 $5,625,000.00
06/30/03 $6,875,000.00
09/30/03 $6,875,000.00
12/31/03 $6,875,000.00
, with a final payment of both principal and interest not sooner paid on the
Term Loans due and payable on March 31, 2004, the final maturity thereof. Each
such principal payment shall be applied to the Banks holding the Term Notes pro
rata based upon their Term Loan Percentages.
Section 1.9. Prepayments. (a) Optional. The Borrower shall have the
privilege of prepaying without premium or penalty (except as set forth below
with respect to Section 1.12
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hereof) in whole or in part (but, if in part, then: (i) if such Borrowing is of
Base Rate Loans, in an amount not less than $500,000, (ii) if such Borrowing is
of Eurodollar Loans, in an amount not less than $500,000, and (iii) in each
case, in an amount such that the minimum amount required for a Borrowing
pursuant to Section 1.5 hereof remains outstanding) any Borrowing of Eurodollar
Loans at any time upon 3 Business Days prior notice to the Agent or, in the case
of a Borrowing of Base Rate Loans, notice delivered to the Agent by the Borrower
no later than 11:00 a.m. (Chicago time) on the date of prepayment, such
prepayment to be made by the payment of the principal amount to be prepaid and
accrued interest thereon to the date fixed for prepayment plus any amounts due
the Banks under Section 1.12 hereof. The Agent will promptly advise each Bank of
any such prepayment notice it receives from the Borrower. Any amount of
Revolving Loans paid or prepaid before the Revolving Credit Termination Date
may, subject to the terms and conditions of this Agreement, be borrowed, repaid
and borrowed again. No amount of the Term Loans paid or prepaid may be
reborrowed. The amount of each prepayment of the Term Loans shall be applied on
a ratable basis among all remaining payments on such Term Loans based on the
principal amounts thereof.
(b) Mandatory. (i) The Borrower shall, on each date the Revolving Credit
Commitments are reduced pursuant to Section 1.13 hereof, prepay the Revolving
Loans and, if necessary, prefund the L/C Obligations by the amount, if any,
necessary to reduce the sum of the aggregate principal amount of Revolving Loans
and of L/C Obligations then outstanding to the amount to which the Revolving
Credit Commitments have been so reduced.
(ii) If the Borrower or any Subsidiary shall at any time or from time to
time make or agree to make a Disposition or shall suffer an Event of Loss
resulting in Net Cash Proceeds in excess of $1,000,000 in any fiscal year of the
Borrower, then (x) the Borrower shall promptly notify the Agent of such proposed
Disposition or Event of Loss (including the amount of the estimated Net Cash
Proceeds to be received by the Borrower or such Subsidiary in respect thereof)
and (y) promptly upon, and in no event later than the Business Day after,
receipt by the Borrower or the Subsidiary of the Net Cash Proceeds of such
Disposition or Event of Loss, the Borrower shall prepay the Term Loans in an
aggregate amount equal to 100% of the amount of such Net Cash Proceeds; provided
that in the case of each Disposition and Event of Loss, if the Borrower states
in its notice of such event that the Borrower or the applicable Subsidiary
intends to reinvest, within 180 days of the applicable Disposition or receipt of
Net Cash Proceeds from an Event of Loss (such period to be extended to 360 days
in the aggregate if within 180 days of the applicable Disposition or receipt of
Net Cash Proceeds from an Event of Loss the Borrower or the relevant Subsidiary
has entered into a binding commitment letter with a non-Affiliated Person to
reinvest such proceeds in accordance with the terms hereof), the Net Cash
Proceeds thereof in assets similar to the assets which were subject to such
Disposition or Event of Loss, then so long as no Default or Event of Default
then exists, the Borrower shall not be required to make a mandatory prepayment
under this Section 1.9(b)(ii) in respect of such Net Cash Proceeds to the extent
such Net Cash Proceeds are actually reinvested in such similar assets within a
180 day period (or 360-day period, to the extent permitted above). Promptly
after the end of such 180-day period (or 360-day period, to the extent permitted
above), the Borrower shall notify the Agent whether the Borrower or such
Subsidiary has reinvested such Net Cash Proceeds in assets in an Eligible Line
of Business,
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and to the extent such Net Cash Proceeds have not been so reinvested, the
Borrower shall promptly prepay the Term Loans in the amount of such Net Cash
Proceeds not so reinvested. The amount of each such prepayment shall be applied
on a ratable basis among all remaining payments on such Term Loans based on the
principal amounts thereof. The Borrower acknowledges that its performance
hereunder shall not limit the rights and remedies of the Banks for any breach of
Section 8.10 hereof.
(iii) If after the date of this Agreement the Borrower or any Subsidiary
shall issue new equity securities (whether common or preferred stock or
otherwise), other than capital stock issued in connection with the exercise of
employee stock options and capital stock issued in connection with an
Acquisition permitted hereby to the extent the net proceeds thereof are paid to
or for the account of the seller of such Acquired Business, the Borrower shall
promptly notify the Agent of the estimated Net Cash Proceeds of such issuance to
be received by or for the account of the Borrower or such Subsidiary in respect
thereof. Promptly upon, and in no event later than the Business Day after,
receipt by the Borrower or such Subsidiary of Net Cash Proceeds of such
issuance, the Borrower shall prepay the Term Loans in an aggregate amount equal
to 100% of the amount of such Net Cash Proceeds. The amount of each such
prepayment shall be applied on a ratable basis among all remaining payments on
such Term Loans based on the principal amounts thereof.
(iv) If after the date of this Agreement the Borrower or any Subsidiary
shall issue any Indebtedness for Borrowed Money, other than Indebtedness for
Borrowed Money permitted by Section 8.7 hereof, the Borrower shall promptly
notify the Agent of the estimated Net Cash Proceeds of such issuance to be
received by or for the account of the Borrower or such Subsidiary in respect
thereof. Promptly upon, and in no event later than the Business Day after,
receipt by the Borrower or such Subsidiary of Net Cash Proceeds of such
issuance, the Borrower shall prepay the Term Loans in an aggregate amount equal
to 100% of the amount of such Net Cash Proceeds. The amount of each such
prepayment shall be applied on a ratable basis among all remaining payments on
such Term Loans based on the principal amounts thereof. The Borrower
acknowledges that its performance hereunder shall not limit the rights and
remedies of the Banks arising from any breach of Section 8.7 hereof.
(v) If after the date of this Agreement the Borrower or any Subsidiary
shall issue any Subordinated Debt, the Borrower shall promptly notify the Agent
of the estimated Net Cash Proceeds of such issuance to be received by or for the
account of the Borrower or such Subsidiary in respect thereof. Promptly upon,
and in no event later than the Business Day after, receipt by the Borrower or
such Subsidiary of Net Cash Proceeds of such issuance, the Borrower shall prepay
the Term Loans in an aggregate amount equal to 100% of the amount of such Net
Cash Proceeds. The amount of each such prepayment shall be applied on a ratable
basis among all remaining payments on such Term Loans based on the principal
amounts thereof.
(vi) On April 15th of each year, beginning April 15, 1999, the Borrower
shall prepay the Term Loans by an amount equal to 85% of Excess Cash Flow of
Borrower and its Subsidiaries for the most recently completed fiscal year of the
Borrower (herein, "Excess
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Cash Flow Net Proceeds"); provided, however, that (x) in the event the
outstanding principal balance of the Revolving Credit on the relevant April 15th
payment date exceeds $7,500,000 (including outstanding Letters of Credit) in the
aggregate, the Borrower may elect that all or any part of the Excess Cash Flow
Net Proceeds be applied as a reduction to the Revolving Credit pursuant to
Section 1.9(a) hereof, with the balance of Excess Cash Flow Net Proceeds not so
applied to be applied to the Term Loans in accordance with the terms set forth
above and (y) the Borrower shall not be required to make such prepayment with
respect to any fiscal year in which the Leverage Ratio (determined as of the
last day of such fiscal year) is less than or equal to 4.5 to 1.0. The amount of
each such prepayment shall be applied on a ratable basis among all remaining
payments on each such Term Loans based on the principal amounts thereof.
(vii) Unless the Borrower otherwise directs, prepayments of Loans under
this Section 1.9(b) shall be applied first to Borrowings of Base Rate Loans
until payment in full thereof with any balance applied to Borrowings of
Eurodollar Loans in the order in which their Interest Periods expire. Each
prepayment of Loans under this Section 1.9(b) shall be made by the payment of
the principal amount to be prepaid and accrued interest thereon to the date of
prepayment together with any amounts due the Banks under Section 1.12 hereof.
Each prefunding of L/C Obligations shall be made in accordance with Section 9.4
hereof.
Section 1.10. Default Rate. Notwithstanding anything to the contrary
contained in Section 1.4 hereof, while any Event of Default exists or after
acceleration, the Borrower shall pay interest (after as well as before entry of
judgment thereon to the extent permitted by law) on the principal amount of all
Loans (computed on the basis of a year of 360 days and actual days elapsed) at a
rate per annum equal t o:
(a) for any Base Rate Loan, the sum of 2% plus the Applicable
Margin plus the Base Rate from time to time in effect; and
(b) for any Eurodollar Loan, the sum of 2% plus the rate of
interest in effect thereon at the time of such default until the end of the
Interest Period applicable thereto and, thereafter, at a rate per annum equal to
the sum of 2% plus the Applicable Margin for Base Rate Loans plus the Base Rate
from time to time in effect;
provided, however, that in the absence of acceleration, any adjustments pursuant
to this Section 1.10 shall be made at the election of the Required Banks with
written notice to the Borrower. While any Event of Default exists or after
acceleration, interest shall be paid on demand of the Agent at the request or
with the consent of the Required Banks.
Section 1.11. The Notes. (a) The Revolving Loans made to the Borrower by
a Bank shall be evidenced by a single promissory note of the Borrower issued to
such Bank in the form of Exhibit D hereto. Each such promissory note is
hereinafter referred to as a "Revolving Note" and collectively such promissory
notes are referred to as the "Revolving Notes."
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(b) The Term Loans made to the Borrower by a Bank shall be evidenced by a
single promissory note of the Borrower issued to such Bank in the form of
Exhibit E hereto. Each such promissory note is hereinafter referred to as a
"Term Note" and collectively such promissory notes are referred to as the "Term
Notes."
(c) Each Bank shall record on its books and records or on a schedule to
its appropriate Note the amount of each Loan advanced, continued or converted by
it, all payments of principal and interest and the principal balance from time
to time outstanding thereon, the type of such Loan, and, for any Eurodollar
Loan, the Interest Period and the interest rate applicable thereto. The record
thereof, whether shown on such books and records of a Bank or on a schedule to
the relevant Note, shall be prima facie evidence as to all such matters;
provided, however, that the failure of any Bank to record any of the foregoing
or any error in any such record shall not limit or otherwise affect the
obligation of the Borrower to repay all Loans made to it hereunder together with
accrued interest thereon. At the request of any Bank and upon such Bank
tendering to the Borrower the appropriate Note to be replaced, the Borrower
shall furnish a new Note to such Bank to replace any outstanding Note, and at
such time the first notation appearing on a schedule on the reverse side of, or
attached to, such Note shall set forth the aggregate unpaid principal amount of
all Loans, if any, then outstanding thereon.
Section 1.12. Funding Indemnity. If any Bank shall incur any loss, cost
or expense (including, without limitation, any loss of profit, and any loss,
cost or expense incurred by reason of the liquidation or re-employment of
deposits or other funds acquired by such Bank to fund or maintain any Eurodollar
Loan or the relending or reinvesting of such deposits or amounts paid or prepaid
to such Bank) as a result of:
(a) any payment, prepayment or conversion of a Eurodollar Loan
on a date other than the last day of its Interest Period,
(b) any failure (because of a failure to meet the conditions
of Section 7 or otherwise) by the Borrower to borrow or continue a
Eurodollar Loan, or to convert a Base Rate Loan into a Eurodollar Loan,
on the date specified in a notice given pursuant to Section 1.6(a),
(c) any failure by the Borrower to make any payment of
principal on any Eurodollar Loan when due (whether by acceleration or
otherwise), or
(d) any acceleration of the maturity of a Eurodollar Loan as a
result of the occurrence of any Event of Default hereunder,
then, upon the demand of such Bank, the Borrower shall pay to such Bank such
amount as will reimburse such Bank for such loss, cost or expense. If any Bank
makes such a claim for compensation, it shall provide to the Borrower, with a
copy to the Agent, a certificate setting forth the amount of such loss, cost or
expense in reasonable detail (including an explanation of the basis for and the
computation of such loss, cost or expense) and the amounts shown on such
certificate shall be deemed prima facie correct.
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Section 1.13. Commitment Terminations. (a) Optional Revolving
Credit Terminations. The Borrower shall have the right at any time and from
time to time, upon 3 Business Days prior written notice to the Agent, to
terminate the Revolving Credit Commitments without premium or penalty and in
whole or in part, any partial termination to be (i) in an amount not less than
$1,000,000 and (ii) allocated ratably among the Banks in proportion to their
respective Revolver Percentages, provided that the Revolving Credit Commitments
may not be reduced to an amount less than the sum of the aggregate principal
amount of Revolving Loans and of L/C Obligations then outstanding. Any
termination of the Revolving Credit Commitments below $4,000,000 shall reduce
the L/C Commitment by a like amount. The Agent shall give prompt notice to each
Bank of any such termination of the Revolving Credit Commitments.
(b) Mandatory Revolving Credit Terminations. If at any time Net Cash
Proceeds or Excess Cash Flow Net Proceeds remain after the prepayment of the
Term Loans in full pursuant to Section 1.9(b) hereof, the Revolving Credit
Commitments shall ratably terminate by an amount equal to 100% of such excess
proceeds.
(c) Mandatory Termination Upon a Change of Control. After the
occurrence of a Change of Control, the Required Banks may, by written notice to
the Borrower at any time on or before the date occurring 90 days after the date
the Borrower notifies the Banks of such Change of Control, terminate the
remaining Commitments and all other obligations of the Banks hereunder on the
date stated in such notice (which shall in no event be sooner than 30 days after
the occurrence of such Change of Control). On the date the Commitments are so
terminated, all outstanding Obligations (including, without limitation, all
principal of and accrued interest on the Notes) shall forthwith be due and
payable without further demand, presentment, protest, or notice of any kind and
the Borrower shall immediately pay to the Banks the full amount then available
for drawing under each Letter of Credit, such amount to be held in the Account
referred to in Section 9.4 hereof (the Borrower agreeing to immediately make
such payment on the date the Commitments are so terminated and acknowledging and
agreeing that the Banks would not have an adequate remedy at law for the failure
by the Borrower to honor any such demand and that the Banks, and the Agent on
their behalf, shall have the right to require the Borrower to specifically
perform such undertaking whether or not any drawings or other demands for
payment have been made under any of the Letters of Credit).
(d) Any termination of the Commitments pursuant to this Section 1.13
may not be reinstated.
SECTION 2. FEES AND SUBSTITUTION OF BANKS.
Section 2.1. Fees. (a) Revolving Credit Commitment Fee. The
Borrower shall pay to the Agent for the ratable account of the Banks in
accordance with their Revolver Percentages a commitment fee at the rate per
annum equal to the Applicable Margin (computed on the basis of a year of 360
days and the actual number of days elapsed) on the average daily Unused
Revolving Credit Commitments. Such commitment fee shall be payable quarter-
annually in arrears on the last day of each March, June, September and December
in each year
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(commencing June 30, 1998) and on the Revolving Credit Termination Date, unless
the Revolving Credit Commitments are terminated in whole on an earlier date, in
which event the commitment fee for the period to the date of such termination in
whole shall be paid on the date of such termination.
(b) Letter of Credit Fees. Quarterly in arrears, on the last day of each
calendar quarter, commencing June 30, 1998, the Borrower shall pay to the
Issuing Bank for its own account a facing fee equal to .125% per annum (computed
on the basis of a year of 360 days and the actual number of days elapsed)
applied to the daily average face amount of standby Letters of Credit
outstanding during such quarter. Quarterly in arrears, on the last day of each
calendar quarter, commencing on June 30, 1998, the Borrower shall pay to the
Agent, for the ratable benefit of the Banks in accordance with their Revolver
Percentages, a letter of credit fee at a rate per annum equal to the Applicable
Margin (computed on the basis of a year of 360 days and the actual number of
days elapsed) in effect during each day of such quarter applied to the daily
average face amount of Letters of Credit outstanding during such quarter. In
addition, the Borrower shall pay to the Issuing Bank for its own account the
Issuing Bank's standard drawing, negotiation, amendment, and other
administrative fees for each Letter of Credit. Such standard fees referred to
in the preceding sentence may be established by the Agent from time to time.
(c) Agent Fees. The Borrower shall pay to the Agent, for its own use and
benefit, the fees set forth in that certain commitment letter dated February 6,
1998, by and among Heritage Partners Management Company, Inc., the Borrower, and
Bank of Montreal, or as otherwise agreed to by the Agent and the Borrower.
(d) Audit Fees. The Borrower shall pay to the Agent for its own use and
benefit charges for audits of the Collateral performed by the Agent or its
agents or representatives in such amounts as the Agent may from time to time
request (the Agent acknowledging and agreeing that such charges shall be
computed in the same manner as it at the time customarily uses for the
assessment of charges for similar collateral audits); provided, however, that in
the absence of any Default and Event of Default, the Borrower shall not be
required to pay the Agent for more than one such audit during any calendar year.
Section 2.2. Substitution of Banks. Upon the receipt by the Borrower of
(a) a claim from any Bank for compensation under Section 10.3 or 12.1 hereof or
(b) notice by any Bank to the Borrower of any illegality pursuant to Section
10.1 hereof, or in the event any Bank is in default in any material respect with
respect to its obligations under the Loan Documents (herein, a "Defaulting
Bank") (any such Bank referred to in clause (a) or (b) above, or any such
Defaulting Bank, being hereinafter referred to as an "Affected Bank"), the
Borrower may, in addition to any other rights the Borrower may have hereunder or
under applicable law, require, at its expense, any such Affected Bank to assign,
at par plus accrued interest and fees, without recourse, all of its interest,
rights and obligations hereunder (including all of its Commitments and the Loans
and participation interests in Letters of Credit and other amounts at any time
owing to it hereunder and the other Loan Documents) to a bank or other
institutional lender specified by the Borrower, provided that (i) such
assignment shall not conflict with or violate any law, rule, or regulation or
order of any court or other governmental
-15-
authority, (ii) the Borrower shall have received the written consent of the
Agent, which consent shall not be unreasonably withheld, to such assignment,
(iii) the Borrower shall have paid to the Affected Bank all monies (together
with amounts due such Affected Bank under Section 1.12 hereof as if the Loans
owing to it were prepaid rather than assigned) other than such principal and
accrued interest and fees, and (iv) the assignment is entered into in accordance
with the other requirements of Section 12.12 hereof.
SECTION 3. PLACE AND APPLICATION OF PAYMENTS.
All payments of principal of and interest on the Loans and the
Reimbursement Obligations, and of all other Obligations payable by the Borrower
under this Agreement and the other Loan Documents, shall be made by the Borrower
to the Agent by no later than 12:00 Noon (Chicago time) on the due date thereof
at the office of the Agent in Chicago, Illinois (or such other location in the
State of Illinois as the Agent may designate to the Borrower) for the benefit of
the Bank or Banks entitled thereto. Any payments received after such time shall
be deemed to have been received by the Agent on the next Business Day. All such
payments shall be made in U.S. Dollars, in immediately available funds at the
place of payment, in each case without set-off or counterclaim. The Agent will
promptly thereafter cause to be distributed like funds relating to the payment
of principal or interest on Loans and on Reimbursement Obligations in which the
Banks have purchased Participating Interests ratably to the Banks and like funds
relating to the payment of any other amount payable to any Bank to such Bank, in
each case to be applied in accordance with the terms of this Agreement.
Anything contained herein to the contrary notwithstanding, all payments and
collections received in respect of the Obligations and all proceeds of the
Collateral received, in each instance, by the Agent or any of the Banks after
the occurrence and during the continuation of an Event of Default shall be
remitted to the Agent and distributed as follows:
(a) first, to the payment of any outstanding costs and expenses
reasonably incurred by the Agent, and any security trustee therefor, in
monitoring, verifying, protecting, preserving or enforcing the Liens on the
Collateral or by the Agent, and any security trustee therefor, in
protecting, preserving or enforcing rights under the Loan Documents, and in
any event all costs and expenses of a character which the Borrower has
agreed to pay the Agent under Section 12.15 hereof (such funds to be
retained by the Agent for its own account unless it has previously been
reimbursed for such costs and expenses by the Banks, in which event such
amounts shall be remitted to the Banks to reimburse them for payments
theretofore made to the Agent);
(b) second, to the payment of any outstanding interest or other fees
or amounts due under the Notes and the other Loan Documents, in each case
other than for principal on the Loans or in reimbursement or
collateralization of L/C Obligations, pro rata as among the Agent and the
Banks in accord with the amount of such interest and other fees or amounts
owing each;
(c) third, to the payment of the principal of the Notes and any
unpaid Reimbursement Obligations and to the Agent to be held as collateral
security for any
-16-
other L/C Obligations (until the Agent is holding an amount of cash equal
to the then outstanding amount of all such L/C Obligations), the aggregate
amount paid to or held as collateral security for the Banks to be allocated
pro rata as among the Banks in accord with the aggregate unpaid principal
balances of their Loans and interests in the Letters of Credit;
(d) fourth, to the Agent and the Banks ratably in accordance with
the amounts of any other indebtedness, obligations or liabilities of the
Borrower and its Subsidiaries owing to each of them and secured by the
Collateral Documents (other than for Hedging Liability described in
subsection (e) below), unless and until all such indebtedness, obligations
and liabilities have been fully paid and satisfied;
(e) fifth, to the payment of the Hedging Liability (if any) pro rata
as among the Banks and their Affiliates to whom such Hedging Liability is
owed in accordance with the then respective unpaid amounts of such
liability; and
(f) sixth, to the Borrower or whoever else may be lawfully entitled
thereto.
SECTION 4. COLLATERAL AND GUARANTIES.
Section 4.1. Collateral. The Obligations shall be secured by valid,
perfected, and enforceable Liens on all right, title, and interest of the
Borrower and each Subsidiary in all capital stock or other equity interests held
by such Person in each of its Subsidiaries, whether now owned or hereafter
formed or acquired, and all proceeds thereof, and by valid, perfected (subject
to the proviso appearing at the end of this sentence) and enforceable Liens on
all right, title, and interest of the Borrower and each Subsidiary in all
accounts and account receivables, notes and note receivables, contract rights,
instruments, documents, chattel paper, general intangibles (including, without
limitation, patents, trademarks, tradenames, copyrights, and other intellectual
property rights), investment property, deposit accounts, inventory, machinery
and equipment, and real estate, whether now owned or hereafter acquired or
arising, and all proceeds thereof; provided, however, that: (a) Liens need be
granted on leasehold interests in nursing home properties leased by the Borrower
or any of its Subsidiaries on the date of this Agreement, other than the Snukal
Properties, to the extent the owner of the relevant Property fails to consent to
the leasehold mortgage requested by the Agent or refuses to consent thereto
without payment of a fee (other than a de minimus fee in the nature of a
processing fee and/or an agreement to pay all costs and expenses of the
consenting party), but only so long as the Borrower and the relevant
Subsidiaries have and continue at all times to use their commercially reasonable
efforts to obtain such consents and such efforts fail (the Borrower hereby
agreeing to provide the Agent on a monthly basis a status report as to
outstanding consents and the efforts made to date to obtain the same), (b) the
Lien of the Agent on Property subject to a Capital Lease or conditional sale
agreement or subject to a purchase money lien in each instance permitted hereby
shall be subject to the rights of the lessor or lender thereunder, (c) until an
Event of Default has occurred and is continuing and thereafter until otherwise
required by the Agent or the Required Banks, (i) Liens on deposit accounts
maintained by the Borrower or any Subsidiary with financial institutions other
than the Lenders need not be perfected provided the total value of such property
at any one time not so perfected does not exceed $500,000 in the aggregate, (ii)
a Lien on the note receivable owing to the Borrower by William Scott in the
principal amount not exceeding $2,600,000 need not be perfected, (iii) Liens on
note receivables need not be perfected provided the total value of such property
at any one time not so perfected does not exceed $500,000 in the aggregate, (iv)
Liens on vehicles which are subject to a certificate of title law need not be
perfected provided that the total value of such property at any one time not so
-17-
perfected does not exceed $500,000 in the aggregate, and (v) no Lien need be
granted upon the capital stock of Alexandria Convalescent Hospital, Inc., a
California corporation (herein, "Alexandria") or upon its equipment, so long as
the Borrower is in compliance with Section 8.21 hereof. The Borrower
acknowledges and agrees that the Liens on the Collateral shall be granted to the
Agent for the benefit of itself and the Banks and the Issuing Bank and shall be
valid and perfected first priority Liens subject, however, to the proviso
appearing at the end of the immediately preceding sentence, in each case
pursuant to one or more Collateral Documents from such Persons, each in form and
substance satisfactory to the Agent.
Section 4.2. Guaranties. The payment and performance of the
Obligations shall at all times be guaranteed by each direct and indirect
Subsidiary of the Borrower pursuant to one or more guaranty agreements in form
and substance acceptable to the Agent, as the same may be amended, modified or
supplemented from time to time (individually a "Guaranty" and collectively the
'Guaranties").
Section 4.3. Further Assurances. The Borrower agrees that it
shall, and shall cause each Subsidiary to, from time to time at the request of
the Agent or the Required Banks, execute and deliver such documents and do such
acts and things as the Agent or the Required Banks may reasonably request in
order to provide for or perfect or protect such Liens on the Collateral. In the
event the Borrower or any Subsidiary forms or acquires any other Subsidiary
after the date hereof, the Borrower shall within 10 Business Days of such
formation or acquisition cause such newly formed or acquired Subsidiary to
execute a Guaranty and such Collateral Documents as the Agent may then require,
and the Borrower shall also deliver to the Agent, or cause such Subsidiary to
deliver to the Agent, at the Borrower's cost and expense, such other
instruments, documents, certificates, and opinions reasonably required by the
Agent in connection therewith.
Section 4.4. Liens on Real Property. In the event that the
Borrower or any Subsidiary owns or hereafter acquires any real property
(including, without limitation, any leasehold interests), the Borrower shall, or
shall cause such Subsidiary to, execute and deliver to the Agent (or a security
trustee therefor) a mortgage or deed of trust acceptable in form and substance
to the Agent for the purpose of granting to the Agent for the benefit of the
Banks a Lien on such real property to secure the Obligations, shall pay all
taxes, costs and expenses incurred by the Agent in recording such mortgage or
deed of trust, and shall at its expense supply to the Agent a survey,
environmental report, hazard insurance policy, and a mortgagee's policy of title
insurance from a title insurer reasonably acceptable to the Agent insuring the
validity of such mortgage or deed of trust and its status as a first Lien
(subject to Liens permitted by this Agreement) on the real property encumbered
thereby and such other instrument, documents, certificates, and opinions
reasonably required by the Agent in connection therewith, provided that (i)
Liens on leasehold interests in real property need not be
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granted to the extent set forth in Section 4.1(a) above, and (ii) the Borrower
shall have sixty (60) days after the date of this Agreement to provide to the
Agent Liens on real property owned or leased by the Borrower and its
Subsidiaries on the date of this Agreement and to deliver the title policies,
surveys, environmental reports, hazard insurance policies and other items
referred to above with respect thereto.
SECTION 5. DEFINITIONS; INTERPRETATION.
Section 5.1. Definitions. The following terms when used herein shall
have the following meanings:
"Account" is defined in Section 9.4 hereof.
"Acquired Business" means the entity or assets acquired by the Borrower or
a Subsidiary in an Acquisition, whether before or after the date hereof.
"Acquisition EBITDA" means, with reference to any period and any Acquired
Business of a Target, the total net income (as determined in accordance with
GAAP) of such Target arising out of the Acquired Business plus the sum of all
amounts deducted in arriving at such net income amount in respect of (x)
interest expense for such period, (y) federal, state, and local income taxes for
such period, and (z) depreciation of fixed assets and amortization of intangible
assets for such period, and adjusted for non-recurring expenses and income
reasonably determined by the Borrower in good faith and established to the
reasonable satisfaction of the Agent.
"Acquisition " means any transaction or series of related transactions for
the purpose of or resulting, directly or indirectly, in (a) the acquisition of
all or substantially all of the assets of a Person, or of any business or
division of a Person, (b) the acquisition of in excess of 50% of the capital
stock, partnership interests, membership interests or equity of any Person, or
otherwise causing any Person to become a Subsidiary, or (c) a merger or
consolidation or any other combination with another Person (other than a Person
that is a Subsidiary) provided that the Borrower or the Subsidiary is the
surviving entity.
"Acquisition Corp." means the Borrower's Wholly-owned Subsidiary, FV-SCC
Acquisition Corp., a Delaware corporation.
"Adjusted EBITDAR" means, with reference to any period, EBITDAR for such
period calculated on a pro forma basis in good faith by the Borrower and
established to the reasonable satisfaction of the Agent, in accordance with the
balance sheets, income statements and other related financial statements
furnished to the Agent and the Banks prior to the date hereof (including,
without limitation, such financial statements reflecting the Briarcliff and
Summit acquisitions and the cost savings relating thereto as reflected on the
opening day covenant compliance certificate delivered by the Borrower on the
date of this Agreement) or, with respect to future periods, pursuant to Section
8.9(j) hereof, as if each Acquisition which occurred prior to the date of this
Agreement and each Acquisition occurring on or after the
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date of this Agreement and permitted by Section 8.9(j) hereof occurring during
such period had taken place on the first day of such period.
"Adjusted LIBOR" is defined in Section 1.4(b) hereof.
"Affiliate" means any Person directly or indirectly controlling or
controlled by, or under direct or indirect common control with, another Person.
A Person shall be deemed to control another Person for the purposes of this
definition if such Person possesses, directly or indirectly, the power to
direct, or cause the direction of, the management and policies of the other
Person, whether through the ownership of voting securities, common directors,
trustees or officers, by contract or otherwise; provided that, in any event for
purposes of this definition, any Person that owns, directly or indirectly, 5% or
more of the securities having the ordinary voting power for the election of
directors or governing body of a corporation or 5% or more of the partnership or
other ownership interest of any other Person (other than as a limited partner of
such other Person) will be deemed to control such corporation or other Person.
"Agent" means Bank of Montreal, and any successor pursuant to Section 11.7
hereof.
"Alexandria" is defined in Section 4.1 hereof.
"Applicable Margin" means, with respect to Loans, Reimbursement
Obligations, and the Revolving Credit Commitment fees and letter of credit fees
payable under Section 2.1 hereof, from the date of this Agreement through the
first Pricing Date the rate per annum specified below:
Applicable Margin for Base Rate Loans and
Reimbursement Obligations: 1.75%
Applicable Margin for Eurodollar Loans: 2.75%
Applicable Margin for Revolving Credit Commitment
fee: .50%
Applicable Margin for letter of credit fee: 2.75%
; provided that the Applicable Margin shall be subject to quarterly adjustments
on the first Pricing Date, and thereafter from one Pricing Date to the next, so
that the Applicable Margin means a rate per annum determined in accordance with
the following schedule:
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Applicable Margin Applicable Margin Applicable Margin
for Base Rate for Eurodollar for Revolving
Leverage Ratio Loans and Loans and Letter Credit Commitment
for Such Pricing Reimbursement of credit Fee Fee Shall Be:
Date Obligations shall Shall Be:
be:
Greater than or 1.75% 2.75% .50%
equal to 6.0 to 1.0
Less than 6.0 to 1.0, but
greater than or equal to 1.5% 2.5% .50%
5.5 to 1.0
Less than 5.5 to 1.25% 2.25% .50%
1.0, but greater
than or equal to
5.0 to 1.0
Less than 5.0 to 1.0% 2.00% .50%
1.0, but greater
than or equal to
4.5 to 1.0
Less than 4.5 to .75% 1.75% .50%
1.0
For purposes hereof, the term "Pricing Date" means, for any fiscal quarter of
the Borrower ending on or after March 31, 1998, the date on which the Agent is
in receipt of the Borrower's most recent financial statements for the fiscal
quarter then ended, pursuant to Section 8.5(a) or (b) hereof. The Applicable
Margin shall be established based on the Leverage Ratio for the most recently
completed fiscal quarter and the Applicable Margin established on a Pricing Date
shall remain in effect until the next Pricing Date. If the Borrower has not
delivered its financial statements by the date such financial statements (and,
in the case of the year-end financial statements, audit report) are required to
be delivered under Section 8.5(a) or (b) hereof, and such Default remains
uncured for a period of 10 Business Days, until such financial statements and
audit report are delivered, the Applicable Margin shall be the highest
Applicable Margin (i.e., the Leverage Ratio shall be deemed to be greater than
6.0 to 1.0). If the Borrower subsequently delivers such financial statements
before the next Pricing Date, the Applicable Margin established by such late
delivered financial statements shall take effect from the date of delivery until
the next Pricing Date. In all other circumstances, the Applicable Margin
established by such financial statements shall be in effect from the Pricing
Date that occurs immediately after the end of the Borrower's fiscal quarter
covered by such financial statements until the next Pricing Date. Each
determination of the Applicable Margin made by the Agent in accordance with the
foregoing shall be conclusive and binding on the Borrower and the Banks if
reasonably determined.
"Application" is defined in Section 1.2(b) hereof.
"Authorized Representative" means those persons shown on the list of
officers provided by the Borrower pursuant to Section 7.1(h) hereof or on any
update of any such list provided
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by the Borrower to the Agent, or any further or different officer of the
Borrower so named by any Authorized Representative of the Borrower in a written
notice to the Agent.
"Bank" is defined in the introductory paragraph of this Agreement and
includes each assignee bank pursuant to Section 12.12 hereof.
"Base Rate" is defined in Section 1.4(a) hereof.
"Base Rate Loan" means a Loan bearing interest at a rate specified in
Section 1.4(a) hereof.
"Borrower" is defined in the introductory paragraph of this Agreement.
"Borrowing" means the total of Loans of a single type advanced, continued
for an additional Interest Period, or converted from a different type into such
type by the Banks under a Credit on a single date and, in the case of Eurodollar
Loans, for a single Interest Period. Borrowings of Loans are made and
maintained ratably from each of the Banks under a Credit according to their
Percentages of such Credit. A Borrowing is "advanced" on the day Banks advance
funds comprising such Borrowing to the Borrower, is "continued" on the date a
new Interest Period for the same type of Loans commences for such Borrowing, and
is "converted" when such Borrowing is changed from one type of Loans to the
other, all as requested by the Borrower pursuant to Section 1.6(a).
"Business Day" means any day (other than a Saturday or Sunday) on which
banks are not authorized or required to close in Chicago, Illinois and, if the
applicable Business Day relates to the advance or continuation of, or conversion
into, or payment of a Eurodollar Loan, on which banks are dealing in U.S. Dollar
deposits in the interbank eurodollar market in London, England.
"Capital Expenditures" means, with respect to any Person for any period,
the aggregate amount of all expenditures (whether paid in cash or accrued as a
liability) by such Person during that period which, in accordance with GAAP, are
or should be included as "additions to property, plant or equipment" or similar
items reflected in the statement of cash flows of such Person.
"Capital Lease" means any lease of Property which in accordance with GAAP
is required to be capitalized on the balance sheet of the lessee.
"Capitalized Lease Obligation" means, for any Person, the amount of the
liability shown on the balance sheet of such Person in respect of a Capital
Lease determined in accordance with GAAP.
"Change of Control" means the occurrence of any of the following: (a) the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any "person" (as such term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than one or more
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Principals and their Related Parties, becomes the "beneficial owner" (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that
a person shall be deemed to have "beneficial ownership" of all securities that
such person has the right to acquire, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition), directly or indirectly, of more than 45% of the Voting Stock of the
Borrower (measured by voting power rather than number of shares), (b) the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any person (as defined above), other
than one or more Principals and their Related Parties, becomes the "beneficial
owner" (as defined above), directly or indirectly, of more than 35% of the
Voting Stock of the Borrower (measured by voting power rather than number of
shares) and the Principals and their Related Parties in the aggregate
"beneficially own" (as defined above) less than 35% of the Voting Stock of the
Borrower (measured by voting power rather than number of shares) or, in the
event the Borrower has consummated a public offering of its common stock, less
than 25% of the Voting Stock of the Borrower (measured by voting power rather
than number of shares), (c) the failure of individuals who are members of the
board of directors of the Borrower on the date of this Agreement (together with
any new or replacement directors whose initial nomination for election was
approved by a majority of the directors who were either directors on the date of
this Agreement or previously so approved) to constitute a majority of the board
of directors of the Borrower, or (d) any "Change of Control" (or words of like
import), as defined in any instrument, agreement or indenture relating to any
issue of Subordinated Debt, shall occur, the effect of which is to cause the
acceleration of any Subordinated Debt or to enable the holder of any
Subordinated Debt to cause the Borrower or any Subsidiary to repurchase, redeem,
repay, or otherwise retire any Subordinated Debt.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute thereto.
"Collateral" means all properties, rights, interests and privileges from
time to time subject to the Liens granted to the Agent, or any security trustee
therefor, by the Collateral Documents.
"Collateral Documents" means the Mortgages, the Security Agreement, the
Pledge Agreement, and all other mortgages, deeds of trust, security agreements,
pledge agreements, assignments, financing statements and other documents as
shall from time to time secure or relate to the Obligations or any part thereof.
"Commitments" means the Revolving Credit Commitments, the L/C Commitment,
and the Term Loan Commitments.
"Controlled Group" means 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 Subsidiary, are treated as a single
employer under Section 414 of the Code.
"Credit" means any of the Revolving Credit or the Term Credit.
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"Credit Event" means the advancing of any Loan, the continuation of or
conversion into a Eurodollar Loan, or the issuance of, or extension of the
expiration date or increase in the amount of, any Letter of Credit.
"Default" means any event or condition the occurrence of which would, with
the passage of time or the giving of notice, or both, constitute an Event of
Default.
"Disposition" means the sale, lease, conveyance, or other disposition of
Property, other than sales or other dispositions expressly permitted under
Section 8.10(a) or 8.10(b) hereof.
"EBITDAR" means, with reference to any period, Net Income for such period
plus the sum (without duplication) of all amounts deducted in arriving at such
Net Income amount in respect of (w) Interest Expense for such period, (x)
federal, state and local income taxes for such period, (y) depreciation of fixed
assets and amortization of intangible assets for such period, and (z) Rental
Expense for such period (plus, to the extent deducted in arriving at EBITDAR for
the relevant period, expenses incurred pursuant to the August 1997 Fountain
View, Inc. recapitalization and expenses incurred pursuant to the Summit Merger
and the financing associated with it).
"Eligible Line of Business" means any business engaged in as of the date of
this Agreement by the Borrower and its Subsidiaries relating to owning or
operating a skilled nursing care facility or post-acute care facility or a line
of business reasonably related thereto (including businesses related to therapy,
medical equipment and supplies, and pharmacy) in the healthcare industry.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute thereto.
"Eurodollar Loan" means a Loan bearing interest at the rate specified in
Section 1.4(b) hereof.
"Eurodollar Reserve Percentage" is defined in Section 1.4(b) hereof.
"Event of Default" means any event or condition identified as such in
Section 9.1 hereof.
"Event of Loss" means, with respect to any Property, any of the follows:
(a) any loss, destruction or damage of such Property or (b) any condemnation,
seizure, or taking, by exercise of the power of eminent domain or otherwise, of
such Property, or confiscation of such Property or the requisition of the use of
such Property.
"Excess Cash Flow" means, with respect to any period, the amount (if any)
by which (A) the difference (if any) of (i) Net Income for such period plus the
sum of all amounts deducted in arriving at such Net Income amount in respect of
all charges for (x) depreciation of fixed assets and amortization of intangible
assets for such period, (y) deferred taxes for such period, and (z) all other
non-cash items to Net Income for such period, minus (plus)
-24-
(ii) additions (reductions) to non-cash working capital of the Borrower and its
Subsidiaries for such period (i.e., the increase or decrease in consolidated
non-cash current assets of the Borrower and Subsidiaries minus the consolidated
current liabilities (excluding the current maturities of long-term debt) of the
Borrower and its Subsidiaries from the beginning to the end of such period)
exceeds (B) the sum of (i) the aggregate amount of payments required to be made
by the Borrower and its Subsidiaries during such period in respect of all
principal on all Indebtedness for Borrowed Money (whether at maturity, as a
result of mandatory sinking fund redemption, mandatory prepayment, acceleration
or otherwise), plus (ii) the aggregate amount of Capital Expenditures incurred
by the Borrower and its Subsidiaries during such period, plus (iii) cash paid by
the Borrower or any of its Subsidiaries as part of the Total Consideration for
an Acquisition permitted by this Agreement.
"Excess Cash Flow Net Proceeds" is defined in Section 1.9(b)(vi) hereof.
"Existing Credit Agreements" means, collectively, (i) that certain Credit
Agreement dated as of March 6, 1998 between the Borrower and Bank of Montreal,
individually and as agent, and the other lenders party thereto, (ii) that
certain Credit Agreement dated as of March 6, 1998, between FV-SCC Acquisition
Corp. and Bank of Montreal, individually and as agent, and the other lenders
party thereto, and (iii) that certain Third Amended and Restated Credit
Agreement dated as of December 15, 1995, between, by and among Summit Care
Corporation, Bank of Montreal, individually and as agent, and the other lenders
party thereto.
"Federal Funds Rate" means the fluctuating interest rate per annum
described in part (x) of clause (ii) of the definition of Base Rate appearing in
Section 1.4(a) hereof.
"Fixed Asset Maintenance Expenditures" means, for any period, Capital
Expenditures incurred during such period in order to repair, replace, or
otherwise maintain the Borrower's and each of its Subsidiary's operating
facilities, and all the equipment and real property relating thereto, in good
working order and condition.
"GAAP" means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable statute and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.
"Hedging Liability" means the liability of the Borrower to any of the Banks
in respect of any interest rate swaps, interest rate caps, interest rate
collars, or other interest rate hedging arrangements as the Borrower may from
time to time enter into with any one or more of the Banks party to this
Agreement or their Affiliates. Unless and until the amount of the Hedging
Liability is fixed and determined, the Hedging Liability shall be deemed to be
4% per annum of the notional amount of the hedge from the date of computation to
the date the hedge expires.
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"Hostile Acquisition" means the acquisition of the capital stock or other
equity interests of a Person through a tender offer or similar solicitation of
the owners of such capital stock or other equity interests which has not been
approved (prior to such acquisition) by resolutions of the Board of Directors of
such Person or by similar action if such Person is not a corporation, and as to
which such approval has not been withdrawn.
"Indebtedness for Borrowed Money" means for any Person (without
duplication) (i) all indebtedness created, assumed or incurred in any manner by
such Person representing money borrowed (including by the issuance of debt
securities), (ii) all indebtedness for the deferred purchase price of property
or services (other than trade accounts payable and wages arising in the ordinary
course of business), (iii) all indebtedness secured by any Lien upon Property of
such Person, whether or not such Person has assumed or become liable for the
payment of such indebtedness, (iv) all Capitalized Lease Obligations of such
Person and (v) all obligations of such Person on or with respect to letters of
credit, bankers' acceptances and other extensions of credit whether or not
representing obligations for borrowed money.
"Interest Expense" means, with reference to any period, the sum of all
interest charges (including imputed interest charges with respect to Capitalized
Lease Obligations and all amortization of debt discount and expense) of the
Borrower and its Subsidiaries for such period determined on a consolidated basis
in accordance with GAAP.
"Interest Period" is defined in Section 1.7 hereof.
"Issuing Bank" means Bank of Montreal.
"L/C Commitment" means $4,000,000, as reduced pursuant to the terms hereof.
"L/C Obligations" means the aggregate undrawn face amounts of all
outstanding Letters of Credit and all unpaid Reimbursement Obligations.
"Lending Office" is defined in Section 10.4 hereof.
"Letter of Credit" is defined in Section 1.2(a) hereof.
"Leverage Ratio" means, as of the last day of any fiscal quarter of the
Borrower, the ratio of (a) the sum of Total Funded Debt of the Borrower and its
Subsidiaries as of the last day of such fiscal quarter, plus the product of
Rental Expense of the Borrower and its Subsidiaries for the four fiscal quarters
then ended multiplied by 8, to (b) Adjusted EBITDAR of the Borrower and its
Subsidiaries for the four fiscal quarters then ended.
"LIBOR" is defined in Section 1.4(b) hereof.
"Lien" means any mortgage, lien, security interest, pledge, charge or
encumbrance of any kind in respect of any Property, including the interests of a
vendor or lessor under any conditional sale, Capital Lease or other title
retention arrangement.
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"Loan" means a Base Rate Loan or Eurodollar Loan, each of which is a "type"
of Loan hereunder, outstanding as a Revolving Loan or Term Loan, as applicable.
"Loan Documents" means this Agreement, the Notes, the Applications, the
Collateral Documents, the Guaranties, and each other instrument or document to
be delivered hereunder or thereunder or otherwise in connection therewith.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, condition
(financial or otherwise) or prospects of the Borrower, or the Borrower and its
Subsidiaries taken as a whole; (b) a material impairment of the ability of the
Borrower or any Subsidiary to perform its obligations under any Loan Document;
or (c) a material adverse effect upon the legality, validity, binding effect or
enforceability against the Borrower or any Subsidiary of any Loan Document.
"Moody's" means Moody's Investors Service, Inc.
"Mortgages" means all mortgages and deeds of trust from time to time
executed and delivered by the Borrower and its Subsidiaries pursuant to Section
4 of this Agreement granting the Agent, or any security trustee therefor, Liens
on real property as security for the Obligations or any part thereof.
"Net Cash Proceeds" means, as applicable, (a) with respect to any
Disposition by a Person, cash and cash equivalent proceeds received by or for
such Person's account, net of (i) reasonable direct costs relating to such
Disposition, (ii) sale, use, or other transactional taxes paid or payable by
such Person as a direct result of such Disposition, and (iii) amounts required
to be applied to repay principal of, premium, if any, and interest on any
Indebtedness for Borrowed Money secured by a Lien on the Property (or portion
thereof) sold or otherwise disposed of (other than the Obligations hereunder)
which is required to be and is repaid in connection with such Disposition; (b)
with respect to any Event of Loss of a Person, cash and cash equivalent
proceeds received by or for such Person's account (whether as a result of
payments made under any applicable insurance policy therefor or in connection
with condemnation proceedings or otherwise), net of reasonable direct costs
incurred in connection with the collection of such proceeds, awards or other
payments; and (c) with respect to any offering of equity securities of a Person
or the issuance of any Indebtedness for Borrowed Money by a Person, cash and
cash equivalent proceeds received by or for such Person's account, net of
reasonable legal, underwriting, and other fees and expenses incurred as a direct
result thereof.
"Net Income" means, with reference to any period, the net income (or net
loss) of the Borrower and its Subsidiaries for such period computed on a
consolidated basis in accordance with GAAP.
"Net Worth" means, at any time the same is to be determined, total
shareholder's equity (including capital stock, additional paid-in capital and
retained earnings after deducting treasury stock) which would appear on the
balance sheet of the Borrower and its Subsidiaries prepared on a consolidated
basis in accordance with GAAP.
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"Notes" means and includes the Revolving Notes and Term Notes.
"Obligations" means all fees payable hereunder, all obligations of the
Borrower to pay principal and interest on Loans and Reimbursement Obligations,
and all other payment obligations of the Borrower or any Subsidiary arising
under or in relation to any Loan Document, in each case whether now existing or
hereafter arising.
"Participating Bank" is defined in Section 1.2(d) hereof.
"Participating Interest" is defined in Section 1.2(d) hereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any Person
succeeding to any or all of its functions under ERISA.
"Percentage" means for any Bank its Revolver Percentage or Term Loan
Percentage, as applicable.
"Person" means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization or any other entity or
organization, including a government or agency or political subdivision thereof.
"Plan" means any employee pension benefit plan covered by Title IV of ERISA
or subject to the minimum funding standards under Section 412 of the Code that
either (i) is maintained by a member of the Controlled Group for employees of a
member of the Controlled Group or (ii) is maintained pursuant to a collective
bargaining agreement or any other arrangement under which more than one employer
makes contributions and to which a member of the Controlled Group is then making
or accruing an obligation to make contributions or has within the preceding five
plan years made contributions.
"Pledge Agreement" means that certain Pledge Agreement dated of even date
herewith among the Borrower, certain of its Subsidiaries, and the Agent, as the
same may be amended, modified or restated from time to time.
"Principals" means Heritage Partners Management Company, Inc. and Heritage
Fund II, L.P.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Reimbursement Obligation" is defined in Section 1.2(c) hereof.
"Related Party" with respect to any Principal means (a) any controlling
holder of equity interests, 80% (or more) owned subsidiary, or spouse or ex-
spouse or immediate family member (in the case of an individual) of such
Principal, or (b) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially holding an
80% or more controlling interest of which consist of such Principal
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and/or such other Persons referred to in the immediately preceding clause (a),
or (c) any investment fund, whether a limited partnership, limited liability
company or corporation or other entity managed or controlled by Heritage
Partners Management Company, Inc.
"Rental Expense" means, for any period, all rental expense of the Borrower
and its Subsidiaries with respect to any and all real and personal property
leases for such period as determined on a consolidated basis in accordance with
GAAP.
"Required Banks" means, at any time, Banks whose outstanding Loans and
interests in Letters of Credit and Unused Revolving Credit Commitments
constitute more than 50% of the sum of the total outstanding Loans, interests in
Letters of Credit and Unused Revolving Credit Commitments of the Banks.
"Revolving Credit" means the credit facility for making Revolving Loans and
issuing Letters of Credit described in Sections 1.1 and 1.2 hereof.
"Revolver Percentage" means, for each Bank, the percentage of the Revolving
Credit Commitments represented by such Bank's Revolving Credit Commitment or, if
the Revolving Credit Commitments have been terminated, the percentage held by
such Bank (including through participation interests in Reimbursement
Obligations) of the aggregate principal amount of all Revolving Loans and L/C
Obligations then outstanding.
"Revolving Credit Commitment" is defined in Section 1.1 hereof.
"Revolving Credit Termination Date" means April 16, 2004, or such earlier
date on which the Revolving Credit Commitments are terminated in whole pursuant
to Section 1.13, 9.2 or 9.3 hereof.
"Revolving Loan" is defined in Section 1.1 hereof and, as so defined,
includes a Base Rate Loan or a Eurodollar Loan, each of which is a "type" of
Revolving Loan hereunder.
"Revolving Note" is defined in Section 1.11(a) hereof.
"S&P" means Standard & Poor's Ratings Services Group, a division of The
McGraw-Hill Companies, Inc.
"Security Agreement" means that certain Security Agreement dated of even
date herewith among the Borrower, certain of its Subsidiaries, and the Agent, as
the same may be amended, modified or restated from time to time.
"Senior Leverage Ratio" means, as of the last day of any fiscal quarter of
the Borrower, the ratio of (a) the sum of Total Senior Funded Debt of the
Borrower and its Subsidiaries as of the last day of such fiscal quarter, plus
the product of Rental Expense of the Borrower and its Subsidiaries for the four
fiscal quarters then ended multiplied by 8, to (b) Adjusted EBITDAR of the
Borrower and its Subsidiaries for the four fiscal quarters then ended.
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"Snukal Properties" means the real property leased by the Borrower or any
of its Subsidiaries which is owned or controlled by Robert M. Snukal and Sheila
S. Snukal, or either of them (or any Person controlled by either of them).
"Subordinated Debt" means Indebtedness for Borrowed Money of the Borrower
or any Subsidiary owing to any Person on terms and conditions, and in such
amounts, acceptable to the Agent and the Required Banks in their sole discretion
and which is subordinated in right of payment to the prior payment in full of
the Obligations pursuant to written subordination provisions approved in writing
by the Agent and the Required Banks.
"Subordinated Note Indenture" means that certain Indenture dated April 16,
1998, among the Borrower, the Subsidiaries party thereto as guarantors, and
State Street Bank and Trust Company, relating to the Borrower's issuance of
$120,000,000 of Senior Subordinated Notes due 2008 thereunder.
"subsidiary" means, as to any particular parent corporation or
organization, any other corporation or organization more than 50% of the
outstanding Voting Stock of which is at the time directly or indirectly owned by
such parent corporation or organization or by any one or more other entities
which are themselves subsidiaries of such parent corporation or organization.
The term "Subsidiary" means a subsidiary of the Borrower or of any of its direct
or indirect Subsidiaries.
"Summit" means Summit Care Corporation, a California corporation.
"Summit Merger" means the merger of Acquisition Corp. with and into Summit
pursuant to the terms of the Summit Merger Agreement, with Summit surviving the
merger.
"Summit Merger Agreement" means that certain Agreement and Plan of Merger
dated as of February 6, 1998, by and among Summit, the Borrower, Acquisition
Corp., and Heritage Fund I, L.P., all exhibits, schedules, and attachments
thereto, and all instruments and documents to be executed and delivered in
connection therewith.
"Target" means the Persons whose assets or equity interests are the subject
of an Acquisition.
"Term Credit" means the credit facility for Term Loans described in Section
1.3 hereof.
"Term Loan Commitment" is defined in Section 1.3 hereof.
"Term Loan" is defined in Section 1.3 hereof and, as so defined, includes a
Base Rate Loan or a Eurodollar Loan, each of which is a "type" of Term Loan
hereunder.
"Term Note" is defined in Section 1.11(b) hereof.
"Term Loan Percentage" means, for each Bank, the percentage of the Term
Loan Commitments represented by such Bank's Term Loan Commitment or, if the Term
Loan
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Commitments have been terminated or have expired, the percentage held by such
Bank of the aggregate principal amount of all Term Loans then outstanding.
"Total Consideration" means the total amount (but without duplication) of
(a) cash paid in connection with any Acquisition, plus (b) indebtedness payable
to the seller in connection with such Acquisition, plus (c) the fair market
value of any equity securities, including any warrants or options therefor,
delivered in connection with any Acquisition, plus (d) the present value of
covenants not to compete entered into in connection with such Acquisition or
other future payments which are required to be made over a period of time and
are not contingent upon the Borrower or its Subsidiary meeting financial
performance objectives (discounted at the Base Rate), but only to the extent not
included in clause (a), (b), or (c) above, plus (e) the amount of indebtedness
assumed in connection with such Acquisition.
"Total Funded Debt" means, at any time the same is to be determined, the
aggregate of all Indebtedness for Borrowed Money of the Borrower and its
Subsidiaries at such time, including all Indebtedness for Borrowed Money of any
other Person which is directly or indirectly guaranteed by the Borrower or any
of its Subsidiaries or which the Borrower or any of its Subsidiaries has agreed
to purchase or otherwise acquire or in respect of which the Borrower or any of
its Subsidiaries has otherwise assured a creditor against loss.
"Total Senior Funded Debt" means, at any time the same is to be determined,
Total Funded Debt at such time minus the aggregate amount of Subordinated Debt
then outstanding.
"Unfunded Vested Liabilities" means, for any Plan at any time, the amount
(if any) by which the present value of all vested nonforfeitable accrued
benefits under such Plan exceeds the fair market value of all Plan assets
allocable to such benefits, 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 Controlled Group to the PBGC or the Plan
under Title IV of ERISA.
"U.S. Dollars" and "$" each means the lawful currency of the United States
of America.
"Unused Revolving Credit Commitments" means, at any time, the difference
between the Revolving Credit Commitments then in effect and the aggregate
outstanding principal amount of Revolving Loans and L/C Obligations.
"Voting Stock" of any Person means capital stock or other equity interests
of any class or classes (however designated) having ordinary power for the
election of directors or other similar governing body of such Person, other than
stock or other equity interests having such power only by reason of the
happening of a contingency.
"Welfare Plan" means a "welfare plan" as defined in Section 3(1) of ERISA.
"Wholly-owned Subsidiary" means a Subsidiary of which all of the issued and
outstanding shares of capital stock (other than directors' qualifying shares as
required by law)
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or other equity interests are owned by the Borrower and/or one or more Wholly-
owned Subsidiaries within the meaning of this definition.
Section 5.2. Interpretation. The foregoing definitions are equally
applicable to both the singular and plural forms of the terms defined. The words
"hereof", "herein", and "hereunder" and words of like import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. All references to time of day herein are references
to Chicago, Illinois time unless otherwise specifically provided. Where the
character or amount of any asset or liability or item of income or expense is
required to be determined or any consolidation or other accounting computation
is required to be made for the purposes of this Agreement, it shall be done in
accordance with GAAP except where such principles are inconsistent with the
specific provisions of this Agreement.
Section 5.3. Change in Accounting Principles. If, after the date of this
Agreement, there shall occur any change in GAAP from those used in the
preparation of the financial statements referred to in Section 6.5 hereof and
such change shall result in a change in the method of calculation of any
financial covenant, standard or term found in this Agreement, either the
Borrower or the Required Banks may by notice to the Banks and the Borrower,
respectively, require that the Banks and the Borrower negotiate in good faith to
amend such covenants, standards, and term so as equitably to reflect such change
in accounting principles, with the desired result being that the criteria for
evaluating the financial condition of the Borrower and its Subsidiaries shall be
the same as if such change had not been made. No delay by the Borrower or the
Required Banks in requiring such negotiation shall limit their right to so
require such a negotiation at any time after such a change in accounting
principles. Until any such covenant, standard, or term is amended in accordance
with this Section 5.3, financial covenants shall be computed and determined in
accordance with GAAP in effect prior to such change in accounting principles.
Without limiting the generality of the foregoing, the Borrower shall neither be
deemed to be in compliance with any financial covenant hereunder nor out of
compliance with any financial covenant hereunder if such state of compliance or
noncompliance, as the case may be, would not exist but for the occurrence of a
change in accounting principles after the date hereof.
Section 6. Representations and Warranties.
The Borrower represents and warrants to the Agent and the Banks as follows:
Section 6.1. Organization and Qualification. The Borrower is duly
organized, validly existing and in good standing as a corporation under the laws
of the state of its incorporation, has full and adequate corporate power to own
its Property and conduct its business as now conducted, and is duly licensed or
qualified and in good standing in each jurisdiction in which the nature of the
business conducted by it or the nature of the Property owned or leased by it
requires such licensing or qualifying, except where the failure to do so would
not have a Material Adverse Effect.
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Section 6.2. Subsidiaries. Each Subsidiary is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
incorporated or organized, as the case may be, has full and adequate power to
own its Property and conduct its business as now conducted, and is duly licensed
or qualified and in good standing in each jurisdiction in which the nature of
the business conducted by it or the nature of the Property owned or leased by it
requires such licensing or qualifying, except where the failure to do so would
not have a Material Adverse Effect. Schedule 6.2 hereto (as the same may be
deemed amended pursuant to Section 8.10(c) or 8.17 hereof) identifies each
Subsidiary, the jurisdiction of its incorporation or organization, as the case
may be, the percentage of issued and outstanding shares of each class of its
capital stock or other equity interests owned by the Borrower and the other
Subsidiaries and, if such percentage is not 100% (excluding directors'
qualifying shares as required by law), a description of each class of its
authorized capital stock and other equity interests and the number of shares of
each class issued and outstanding. All of the outstanding shares of capital
stock and other equity interests of each Subsidiary are validly issued and
outstanding and fully paid and nonassessable and all such shares and other
equity interests indicated on Schedule 6.2 (as the same may be deemed amended
pursuant to Section 8.10(c) or 8.17 hereof) as owned by the Borrower or a
Subsidiary are owned, beneficially and of record, by the Borrower or such
Subsidiary free and clear of all Liens other than the Liens granted in favor of
the Agent pursuant to the Collateral Documents. There are no outstanding
commitments or other obligations of any Subsidiary to issue, and no options,
warrants or other rights of any Person to acquire, any shares of any class of
capital stock or other equity interests of any Subsidiary.
Section 6.3. Authority and Validity of Obligations. The Borrower has full
right and authority to enter into this Agreement and the other Loan Documents
executed by it, to make the borrowings herein provided for, to issue its Notes
in evidence thereof, to grant to the Agent the Liens described in the Collateral
Documents executed by the Borrower, and to perform all of its obligations
hereunder and under the other Loan Documents executed by it. Each Subsidiary has
full right and authority to enter into the Loan Documents executed by it, to
guarantee the Obligations, to grant to the Agent the Liens described in the
Collateral Documents executed by such Person, and to perform all of its
obligations under the Loan Documents executed by it. The Loan Documents
delivered by the Borrower and by each Subsidiary have been duly authorized,
executed and delivered by such Person and constitute valid and binding
obligations of such Person enforceable in accordance with their terms except as
enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance
or similar laws affecting creditors' rights generally and general principles of
equity (regardless of whether the application of such principles is considered
in a proceeding in equity or at law); and this Agreement and the other Loan
Documents do not, nor does the performance or observance by the Borrower or any
Subsidiary of any of the matters and things herein or therein provided for, (a)
contravene or constitute a default under any provision of law or any judgment,
injunction, order or decree binding upon the Borrower or any Subsidiary or any
provision of the charter, articles of incorporation, by-laws or comparable
constituent documents of the Borrower or any Subsidiary, (b) contravene or
constitute a default under any covenant, indenture or agreement of or affecting
the Borrower or any Subsidiary or any of its Property, in each case where such
contravention or default is reasonably likely to have a Material Adverse Effect,
or (c) result in the creation or imposition of any Lien on any Property
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of the Borrower or any Subsidiary other than the Liens granted in favor of the
Agent pursuant to the Collateral Documents.
Section 6.4. Use of Proceeds; Margin Stock. The Borrower shall use the
proceeds of the Loans and other extensions of credit made available hereunder
for the purpose of retiring the indebtedness outstanding under the Existing
Credit Agreements and for its general working capital purposes and such other
legal and proper purposes as are consistent with all applicable laws. Neither
the Borrower nor any Subsidiary is engaged in the business of extending credit
for the purpose of purchasing or carrying margin stock (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System), and no
part of the proceeds of any Loan or any other extension of credit made hereunder
will be used to purchase or carry any such margin stock or to extend credit to
others for the purpose of purchasing or carrying any such margin stock. Margin
stock (as hereinabove defined) constitutes less than 25% of those assets of the
Borrower and its Subsidiaries which are subject to any limitation on sale,
pledge, or other restriction hereunder.
Section 6.5. Financial Reports. (a) The consolidated balance sheet of the
Borrower and its Subsidiaries (other than Summit Care Corporation and its
subsidiaries) as at December 31, 1997, and the related consolidated statements
of income, retained earnings and cash flows of the Borrower and its Subsidiaries
(other than Summit Care Corporation and its subsidiaries) for the fiscal year
then ended, and accompanying notes thereto, which financial statements are
accompanied by the audit report of its independent public accountants,
heretofore furnished to the Banks, fairly present in all material respects the
consolidated financial condition of the Borrower and its Subsidiaries (other
than Summit Care Corporation and its subsidiaries) as at said dates and the
consolidated results of their operations and cash flows for the periods then
ended in conformity with GAAP applied on a consistent basis.
(b) The consolidated balance sheet of Summit Care Corporation and its
subsidiaries as at December 31, 1997, and the related consolidated statements of
income, retained earnings and cash flows of Summit Care Corporation and its
subsidiaries for the fiscal year then ended, and accompanying notes thereto,
which financial statements are accompanied by the audit report of its
independent public accountants, heretofore furnished to the Banks, fairly
present in all material respects the consolidated financial condition of Summit
Care Corporation and its subsidiaries as at said dates and the consolidated
results of their operations and cash flows for the periods then ended in
conformity with GAAP applied on a consistent basis.
(c) Neither the Borrower nor any Subsidiary has contingent liabilities
which are material to it other than as indicated on the financial statements
referred to above or, with respect to future periods, on the financial
statements furnished pursuant to Section 8.5 hereof.
Section 6.6. No Material Adverse Change. Since December 31, 1997, there
has been no change in the condition (financial or otherwise) or business
prospects of the Borrower or any Subsidiary, except those occurring in the
ordinary course of business and those contemplated by the Summit Merger
Agreement, none of which individually or in the aggregate have been materially
adverse.
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Section 6.7. Full Disclosure. The statements and information furnished by
or on behalf of the Borrower to the Banks in connection with the negotiation of
this Agreement and the other Loan Documents and the commitments by the Banks to
provide all or part of the financing contemplated hereby do not contain any
untrue statements of a fact or omit a fact necessary to make the material
statements contained herein or therein, in the light of the circumstances under
which they were made, not misleading if the correct or complete facts would, if
they constituted a change from the facts as originally disclosed or stated, have
been reasonably likely to have a Material Adverse Effect; the Banks
acknowledging that, as to any projections and other forward-looking statements
regarding future expectations and the beliefs (the "Statements") furnished by
the Borrower to the Banks, the Borrower only represents that, at the time the
Statements were made by the Borrower to the Banks the Borrower did not know of
any material facts that would cause the Statements to be untrue.
Section 6.8. Trademarks, Franchises, and Licenses. The Borrower and each
of the Subsidiaries own, possess, or have the right to use all necessary
patents, licenses, franchises, trademarks, trade names, trade styles,
copyrights, trade secrets, know how and confidential commercial and proprietary
information to conduct their businesses as now conducted, without known conflict
with any patent, license, franchise, trademark, trade name, trade style,
copyright or other proprietary right of any other Person.
Section 6.9. Governmental Authority and Licensing. The Borrower and each
of the Subsidiaries have received all licenses, permits, and approvals of all
Federal, state, local, and foreign governmental authorities, if any, necessary
to conduct their business, in each case where the failure to obtain or maintain
the same is reasonably likely to have a Material Adverse Effect. Except as
disclosed in writing on Schedule 6.9 attached hereto, no investigation or
proceeding which, if adversely determined, is reasonably likely to result in
revocation or denial of any material license, permit, or approval, or of any
right to receive reimbursement or payments under Medicare or other governmental
third-party reimbursement or prospective payment program, is pending or, to the
knowledge of the Borrower, threatened.
Section 6.10. Good Title. The Borrower and each of the Subsidiaries have
good and defensible title (or valid leasehold interests) to their assets as
reflected on the most recent consolidated balance sheet of the Borrower and its
Subsidiaries furnished to the Banks (except for sales of assets in the ordinary
course of business), subject to no Liens other than such thereof as are
permitted by Section 8.8 hereof.
Section 6.11. Litigation and Other Controversies. There is no litigation
or governmental proceeding or labor controversy pending, nor to the knowledge of
the Borrower threatened, against the Borrower or any Subsidiary which if
adversely determined is reasonably likely to have a Material Adverse Effect.
Section 6.12. Taxes. All tax returns required to be filed by the Borrower
or any Subsidiary in any jurisdiction have, in fact, been filed, and all taxes,
assessments, fees and other governmental charges upon the Borrower or any
Subsidiary or upon any of its respective Property, income or franchises, which
are shown to be due and payable in such returns, have been paid, except such
taxes, assessments, fees and governmental charges, if any, as are being
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contested in good faith and by appropriate proceedings which prevent enforcement
of the matter under contest and as to which adequate reserves established in
accordance with GAAP have been provided. The Borrower does not know of any
proposed additional tax assessment against the Borrower or any Subsidiary for
which adequate provisions in accordance with GAAP have not been made on their
accounts. Adequate provisions in accordance with GAAP for taxes on the books of
the Borrower and each Subsidiary have been made for all open years, and for its
current fiscal period.
Section 6.13. Approvals. No authorization, consent, license, or exemption
from, or filing or registration with, any court or governmental department,
agency or instrumentality, nor any approval or consent of the stockholders of
the Borrower or any Subsidiary, or of any other Person, is or will be necessary
to the valid execution, delivery or performance by the Borrower or any
Subsidiary of this Agreement or any other Loan Document, except as disclosed on
Schedule 6.13 and for such approvals which have been obtained prior to the date
of this Agreement and remain in full force and effect.
Section 6.14. Affiliate Transactions. Neither the Borrower nor any
Subsidiary is a party to any contracts or agreements with any of its Affiliates
on terms and conditions which are less favorable to the Borrower or such
Subsidiary than would be usual and customary in similar contracts or agreements
between Persons not affiliated with each other.
Section 6.15. Investment Company; Public Utility Holding Company. Neither
the Borrower nor any Subsidiary is an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or a "public utility holding company" within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
Section 6.16. ERISA. The Borrower and each of its Subsidiaries, and each
member of its Controlled Group, have fulfilled their obligations under the
minimum funding standards of, and are in compliance in all material respects
with, ERISA and the Code to the extent applicable to any Plan maintained by any
one or more of them or for the benefit of their employees and have not incurred
any liability to the PBGC or a Plan under Title IV of ERISA other than a
liability to the PBGC for premiums under Section 4007 of ERISA. Neither the
Borrower nor any Subsidiary has any material contingent liabilities with respect
to any post-retirement benefits under a Welfare Plan, other than liability for
continuation coverage described in article 6 of Title I of ERISA.
Section 6.17. Compliance with Laws. The Borrower and each of its
Subsidiaries are in compliance with the requirements of all federal, state and
local laws, rules and regulations applicable to or pertaining to their
Properties or business operations (including, without limitation, the
Occupational Safety and Health Act of 1970, the Americans with Disabilities Act
of 1990, laws and regulations relating to the providing of health care services
and products, and laws and regulations establishing quality criteria and
standards for air, water, land and toxic or hazardous wastes and substances),
where any such non-compliance, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect. Neither the Borrower nor any
Subsidiary has received notice to the effect that its operations
-36-
are not in compliance with any of the requirements of applicable federal, state
or local environmental, health and safety statutes and regulations or are the
subject of any governmental investigation evaluating whether any remedial action
is needed to respond to a release of any toxic or hazardous waste or substance
into the environment, where any such non-compliance or remedial action,
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect.
Section 6.18. Other Agreements. Neither the Borrower nor any Subsidiary
is in default under the terms of any covenant, indenture or agreement of or
affecting such Persons or any of their Properties, which default if uncured is
reasonably likely to have a Material Adverse Effect.
Section 6.19. Solvency. The Borrower and its Subsidiaries are able to pay
their debts as they become due and have sufficient capital to carry on their
businesses and all businesses in which they are about to engage in; and the
amount that will be required to pay the Borrower's and each Subsidiary's
probable liabilities as they become absolute and mature is less than the sum of
the present fair sale value of its assets as a going concern.
Section 6.20. Summit Acquisition. The Borrower has heretofore delivered
to the Banks a true and correct copy of the Summit Merger Agreement and, except
to the extent consented to in writing by the Agent, the Summit Merger Agreement
has not been amended or modified in any respect and no condition to the
effectiveness thereof or the obligations of the Borrower or Acquisition Corp.
thereunder has been waived. The Borrower and Acquisition Corp. and, to the best
of the Borrower's knowledge, Summit have all necessary right, power, and
authority to consummate the transactions contemplated by the Summit Merger
Agreement and to perform all of their obligations thereunder. The Summit Merger
Agreement has been duly authorized, executed, and delivered by the Borrower and
Acquisition Corp. and, to the best of the Borrower's knowledge, Summit and the
Summit Merger Agreement constitutes the valid and binding obligation of the
Borrower and Acquisition Corp. and, to the best of the Borrower's knowledge,
Summit, enforceable against each of them in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance
or similar laws affecting creditors' rights generally and general principles of
equity (regardless of whether the application of such principles is considered
in a proceeding in equity or at law); and the Summit Merger Agreement does not,
nor does the observance or performance by the Borrower or Acquisition Corp. or,
to the best of the Borrower's knowledge, Summit of any of the matters and things
therein provided for, contravene or constitute a default under any provision of
law or any judgment, injunction, order, or decree binding upon such Person or
any provision of the charter, articles of incorporation, or by-laws of such
Person or any covenant, indenture, or agreement of or affecting such Person or
any of its Property, or result in the creation or imposition of any Lien on any
such Person's Property. No authorization, consent, license, or exemption from,
or filing or registration with, any court or governmental department, agency, or
instrumentality, nor any approval or consent of any other Person, is or will be
necessary to the valid execution, delivery, or performance by the Borrower or
Acquisition Corp. or, to the best of the Borrower's knowledge, Summit of the
Summit Merger Agreement or of any other instrument or document executed and
delivered in connection therewith, except for such thereof that have heretofore
been obtained and remain in
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full force and effect. Neither the Borrower nor Acquisition Corp. nor, to the
best of the Borrower's knowledge, Summit are in default in any of their
respective obligations under the Summit Merger Agreement. The fees and expenses
incurred or to be paid in connection with the Acquisition of Summit, the Summit
Merger, and the refinancing of the indebtedness of the Borrower and Summit
pursuant to this Agreement and the Subordinated Note Indenture, and the other
instruments and documents entered into in connection therewith, will not exceed
$35,000,000 (including make-whole premiums).
Section 6.21. Year 2000 Compliance. The Borrower and its Subsidiaries have
conducted and are continuing to conduct a review and assessment of its computer
applications, and have made and are continuing to make inquiry of their material
suppliers, vendors and customers, with respect to any defect in computer
software, data bases, hardware, controls and peripherals related to the
occurrence of the year 2000 or the use of any date after December 31, 1999, in
connection therewith. Based on the foregoing review, assessment and inquiry,
except with respect to matters brought to the Borrower's attention after the
date of this Agreement to the extent disclosed to the Agent and the Banks in
writing, the Borrower believes that no such defect could reasonably be expected
to have a Material Adverse Effect.
Section 6.22. No Default. No Default or Event of Default has occurred and
is continuing.
Section 7. Conditions Precedent.
The obligation of each Bank to advance, continue or convert any Loan (other
than the continuation of, or conversion into, a Base Rate Loan) or of the
Issuing Bank to issue, extend the expiration date (including by not giving
notice of non-renewal) of or increase the amount of any Letter of Credit under
this Agreement, shall be subject to the following conditions precedent:
Section 7.1. Initial Credit Event. Before or concurrently with the
initial Credit Event:
(a) the Agent shall have received for each Bank this Agreement duly
executed by the Borrower and the Banks;
(b) the Agent shall have received for each Bank such Bank's duly
executed Notes of the Borrower dated the date hereof and otherwise in
compliance with the provisions of Section 1.11 hereof;
(c) the Agent shall have received the Security Agreement and the
Pledge Agreement duly executed by the Borrower and each Subsidiary, and the
Guaranty duly executed by each Subsidiary, together with (i) original stock
certificates or other similar instruments or securities representing all of
the issued and outstanding shares of capital stock or other equity interest
of each Subsidiary as of the date of this Agreement (other than Alexandria
Convalescent Hospital, Inc.), (ii) stock powers for the Collateral
consisting of the stock or other equity interest of each Subsidiary (other
than Alexandria Convalescent Hospital, Inc.), each to be executed in blank
and undated, and (iii) UCC
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financing statements to be filed against the Borrower and each Subsidiary,
as debtor, in favor of the Agent, as secured party;
(d) the Agent shall have received evidence of insurance required to
be maintained under the Loan Documents, naming the Agent as loss payee;
(e) the Agent shall have received for each Bank copies of the
Borrower's and each Subsidiary's articles of incorporation and bylaws (or
comparable constituent documents) and any amendments thereto, certified in
each instance by its Secretary or Assistant Secretary;
(f) the Agent shall have received for each Bank copies of resolutions
of the Borrower's and of each Subsidiary's Board of Directors authorizing
the execution, delivery and performance of this Agreement and the other
Loan Documents to which it is a party and the consummation of the
transactions contemplated hereby and thereby, together with specimen
signatures of the persons authorized to execute such documents on the
Borrower's and such Subsidiary's behalf, all certified in each instance by
its Secretary or Assistant Secretary;
(g) the Agent shall have received for each Bank copies of the
certificates of good standing for the Borrower and for each Subsidiary
(dated no earlier than 30 days prior to the date hereof) from the office of
the secretary of the state of its incorporation and of each state in which
it is qualified to do business as a foreign corporation;
(h) the Agent shall have received for each Bank a list of the
Borrower's Authorized Representatives;
(i) the Agent shall have received for itself and for the Banks the
initial fees called for by Section 2.1 hereof;
(j) each Bank shall have received such evaluations and certifications
as it may reasonably require (including an officer's certificate as to the
solvency of the Borrower and its Subsidiaries after giving effect to the
transactions contemplated hereby and a compliance certificate in the form
attached hereto as Exhibit F containing compliance calculations of the
financial covenants as of the date of this Agreement after giving effect to
the Summit Merger) in order to satisfy itself as to the value of the
Collateral, the financial condition of the Borrower and its Subsidiaries,
and the lack of material contingent liabilities of the Borrower and its
Subsidiaries;
(k) the Agent shall have received pay-off and lien release letters
from secured creditors of the Borrower and its Subsidiaries setting forth,
among other things, the total amount of indebtedness outstanding and owing
to them (or outstanding letters of credit issued for the account of the
Borrower or any of its Subsidiaries) and containing an undertaking to cause
to be delivered to the Agent UCC termination statements and any other lien
release instrument necessary to release its Lien on all assets of the
Borrower
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and its Subsidiaries, which pay-off and lien release letters shall be in
form and substance acceptable to the Agent;
(l) the Agent shall have received evidence of the Summit Merger in
accordance with the terms of the Summit Merger Agreement (without giving
effect to any amendment, modification or waiver thereto not consented to in
writing by the Agent) and its effectiveness;
(m) the Borrower shall have issued Subordinated Debt in the principal
amount of not less than $120,000,000, on terms and conditions acceptable to
the Agent, and the Borrower shall have received the proceeds thereof;
(n) the Borrower shall have issued pay-in-kind preferred stock in the
amount of not less than $15,000,000, on terms and conditions acceptable to
the Agent, and the Borrower shall have received the proceeds thereof;
(o) the Agent shall have received for each Bank the favorable written
opinions of counsel to the Borrower and its Subsidiaries, in form and
substance reasonably satisfactory to the Agent.
Section 7.2. All Credit Events. As of the time of each Credit Event
hereunder:
(a) in the case of a Borrowing the Agent shall have received the
notice required by Section 1.6 hereof, in the case of the issuance of any
Letter of Credit the Agent shall have received a duly completed Application
for such Letter of Credit together with any fees called for by Section 2.1
hereof and, in the case of an extension or increase in the amount of a
Letter of Credit, a written request therefor in a form acceptable to the
Agent together with fees called for by Section 2.1 hereof;
(b) each of the representations and warranties set forth in Section 6
hereof shall be and remain true and correct as of such time, except to the
extent that any such representation or warranty relates solely to an
earlier time or that any change therein is not reasonably likely to have a
Material Adverse Effect;
(c) the Borrower shall be in compliance with all of the terms and
conditions hereof, and no Default or Event of Default shall have occurred
and be continuing hereunder or would occur as a result of such Credit
Event; and
(d) such Credit Event shall not violate any order, judgment or decree
of any court or other authority or any provision of law or regulation
applicable to any Bank (including, without limitation, Regulation U of the
Board of Governors of the Federal Reserve System).
Each request for a Borrowing hereunder and each request for the issuance
of, increase in the amount of, or extension of the expiration date of, a Letter
of Credit shall be deemed to be a
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representation and warranty by the Borrower on the date on such Credit Event as
to the facts specified in subsections (a) through (c), both inclusive, this
Section 7.2.
SECTION 8. COVENANTS.
The Borrower agrees that, so long as any Note or any L/C Obligation is
outstanding or any Commitment is available to or in use by the Borrower
hereunder, except to the extent compliance in any case or cases is waived in
writing by the Required Banks:
Section 8.1. Maintenance of Business. The Borrower shall, and shall
cause each Subsidiary to, preserve and maintain its existence, except as
otherwise provided in Section 8.10(c) hereof. The Borrower shall, and shall
cause each Subsidiary to, preserve and keep in force and effect all licenses,
permits, franchises, approvals, patents, trademarks, trade names, trade styles,
copyrights, and other proprietary rights necessary to the proper conduct of its
business where the failure to do so is reasonably likely to have a Material
Adverse Effect.
Section 8.2. Maintenance of Properties. The Borrower shall, and shall
cause each Subsidiary to, maintain, preserve and keep its property, plant and
equipment in good repair, working order and condition (ordinary wear and tear
excepted) and shall from time to time make all needful and proper repairs,
renewals, replacements, additions and betterments thereto so that at all times
the efficiency thereof shall be fully preserved and maintained, except to the
extent that, in the reasonable business judgment of such Person, any such
Property is no longer necessary for the proper conduct of the business of such
Person.
Section 8.3. Taxes and Assessments. The Borrower shall duly pay and
discharge, and shall cause each Subsidiary to duly pay and discharge, all taxes,
rates, assessments, fees and governmental charges upon or against it or its
Properties, in each case before the same become delinquent and before penalties
accrue thereon, unless and to the extent that the same are being contested in
good faith and by appropriate proceedings which prevent enforcement of the
matter under contest and adequate reserves are provided therefor.
Section 8.4. Insurance. The Borrower shall insure and keep insured, and
shall cause each Subsidiary to insure and keep insured, with insurance companies
with a general policyholder service rating of not less than A as rated in the
most current available Best's Insurance Report (except to the extent disclosed
on Schedule 8.4 hereof), all insurable Property owned by it which is of a
character usually insured by Persons similarly situated and operating like
Properties against loss or damage from such hazards and risks, and in such
amounts, as are insured by Persons similarly situated and operating like
Properties; and the Borrower shall insure, and shall cause each Subsidiary to
insure, such other hazards and risks (including professional liability,
employers' and public liability risks) with insurance companies with a general
policyholder service rating of not less than A as rated in the most current
available Best's Insurance Report as and to the extent usually insured by
Persons similarly situated and conducting similar businesses. The Borrower shall
in any event maintain, and cause each Subsidiary to maintain, insurance on the
Collateral to the extent required by the Collateral Documents. The Borrower
shall, upon the request of the Agent,
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furnish to the Agent and each Bank a certificate setting forth in summary form
the nature and extent of the insurance maintained pursuant to this Section.
Section 8.5. Financial Reports. The Borrower shall, and shall cause each
Subsidiary to, maintain a standard system of accounting in accordance with GAAP
and shall furnish to the Agent, each Bank and each of their duly authorized
representatives such information respecting the business and financial condition
of the Borrower and each Subsidiary as the Agent or such Bank may reasonably
request; and without any request, shall furnish to the Agent and the Banks:
(a) as soon as available, and in any event within 45 days after the
close of each fiscal quarter of each fiscal year of the Borrower, a copy of
the consolidated and consolidating balance sheet of the Borrower and its
Subsidiaries as of the last day of such period and the consolidated and
consolidating statements of income, retained earnings and cash flows of the
Borrower and its Subsidiaries for the fiscal quarter and for the fiscal
year-to-date period then ended, each in reasonable detail showing in
comparative form the figures for the corresponding date and period in the
previous fiscal year, prepared by the Borrower in accordance with GAAP and
certified to by the Borrower's chief financial officer, or another officer
of the Borrower reasonably acceptable to the Agent;
(b) as soon as available, and in any event within 90 days after the
close of each fiscal year of the Borrower, a copy of the consolidated and
consolidating balance sheet of the Borrower and its Subsidiaries as of the
last day of the period then ended and the consolidated and consolidating
statements of income, retained earnings and cash flows of the Borrower and
its Subsidiaries for the period then ended, and accompanying notes thereto,
each in reasonable detail showing in comparative form the figures for the
previous fiscal year, accompanied in the case of the Borrower's
consolidated financial statements by an unqualified opinion of a Big Six
accounting firm or another firm of independent public accountants of
recognized national standing, selected by the Borrower and reasonably
satisfactory to the Required Banks, to the effect that the consolidated
financial statements have been prepared in accordance with GAAP and present
fairly, in all material respects, in accordance with GAAP the consolidated
financial condition of the Borrower and its Subsidiaries as of the close of
such fiscal year and the results of their operations and cash flows for the
fiscal year then ended and that an examination of such accounts in
connection with such financial statements has been made in accordance with
generally accepted auditing standards and, accordingly, such examination
included such tests of the accounting records and such other auditing
procedures as were considered necessary in the circumstances;
(c) promptly after the sending or filing thereof, copies of each
financial statement, report, notice or proxy statement sent by the Borrower
or any Subsidiary to its stockholders, and copies of each regular, periodic
or special report, registration statement or prospectus (including all Form
10-K, Form 10-Q, and Form 8-K reports and proxy statements) filed by the
Borrower or any Subsidiary with any securities exchange or the Securities
and Exchange Commission or any successor agency;
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(d) promptly after receipt thereof, a copy of each audit made by any
regulatory agency of the books and records of the Borrower or any
Subsidiary or of any notice of material noncompliance with any applicable
law, regulation, or guideline relating to the Borrower or any Subsidiary or
any of their respective businesses;
(e) as soon as available, and in any event prior to the end of each
fiscal year of the Borrower, a copy of the Borrower's consolidated and
consolidating business plan for the following fiscal year, such business
plan to show the Borrower's projected consolidated and consolidating
revenues, expenses, and balance sheet on month-by-month basis, such
business plan to be in reasonable detail prepared by the Borrower and in
form reasonably satisfactory to the Agent which shall include a summary of
all assumptions made in preparing such business plan;
(g) notice of any Change of Control; and
(h) promptly after knowledge thereof shall have come to the attention
of any responsible officer of the Borrower, written notice of any
threatened or pending litigation or governmental proceeding or labor
controversy against the Borrower or any Subsidiary which, if adversely
determined, is reasonably likely to have a Material Adverse Effect or of
the occurrence of any Default or Event of Default hereunder.
Each of the financial statements furnished to the Banks pursuant to subsections
(a) and (b) of this Section 8.5 shall be accompanied by a written certificate in
the form attached hereto as Exhibit F signed by the chief financial officer of
the Borrower, or another officer of the Borrower reasonably acceptable to the
Agent, to the effect that to the best of such officer's knowledge and belief no
Default or Event of Default has occurred during the period covered by such
statements or, if any such Default or Event of Default has occurred during such
period, setting forth a description of such Default or Event of Default and
specifying the action, if any, taken by the Borrower or any Subsidiary to remedy
the same. Such certificate shall also set forth the calculations supporting
such statements in respect of Sections 8.23, 8.24, 8.25, 8.26 and 8.27 of this
Agreement.
Section 8.6. Inspection. The Borrower shall, and shall cause each
Subsidiary to, permit the Agent, each Bank and each of their duly authorized
representatives and agents to visit and inspect any of its Properties, corporate
books and financial records, to examine and make copies of its books of accounts
and other financial records, and to discuss its affairs, finances and accounts
with, and to be advised as to the same by, its officers, employees and
independent public accountants (and by this provision the Borrower hereby
authorizes such accountants to discuss with the Agent and such Banks the
finances and affairs of the Borrower and each Subsidiary) at such reasonable
times and intervals as the Agent or any such Bank may designate.
Section 8.7 Indebtedness for Borrowed Money. The Borrower shall not,
nor shall it permit any Subsidiary to, issue, incur, assume, create or have
outstanding any Indebtedness for Borrowed Money; provided, however, that the
foregoing shall not restrict nor operate to prevent:
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(a) the Obligations of the Borrower owing to the Agent and the Banks
hereunder;
(b) purchase money indebtedness and Capitalized Lease Obligations
(including purchase money indebtedness and Capitalized Lease Obligations
incurred in connection with the acquisition of real property) of the
Borrower and of its Subsidiaries in an aggregate amount not to exceed
$40,000,000 at any one time outstanding;
(c) obligations of the Borrower arising out of interest rate hedging
agreements entered into with financial institutions in the ordinary course
of business;
(d) guaranties expressly permitted by Section 8.9 hereof;
(e) indebtedness from time to time owing by the Borrower to any
Subsidiary or by any Subsidiary to the Borrower or any other Subsidiary;
(f) unsecured Subordinated Debt of the Borrower;
(g) indebtedness outstanding under the Existing Credit Agreements
which is paid and satisfied in full out of proceeds of the initial Credit
Event hereunder;
(h) other indebtedness existing on the date of this Agreement and
described on Schedule 8.7 attached hereto and made a part hereof, as
reduced from time to time by repayments thereof; and
(i) other indebtedness of the Borrower and its Subsidiaries not
otherwise permitted by this Section in an aggregate amount not to exceed
$1,000,000 at any one time outstanding.
Section 8.8. Liens. The Borrower shall not, nor shall it permit any other
Subsidiary to, create, incur or permit to exist any Lien of any kind on any
Property owned by any such Person; provided, however, that the foregoing shall
not apply to nor operate to prevent:
(a) Liens arising by statute in connection with worker's
compensation, unemployment insurance, old age benefits, social security
obligations, taxes, assessments, statutory obligations or other similar
charges, good faith cash deposits in connection with tenders, contracts or
leases to which the Borrower or any Subsidiary is a party or other cash
deposits required to be made in the ordinary course of business, provided
in each case that the obligation is not for borrowed money and that the
obligation secured is not overdue or, if overdue, is being contested in
good faith by appropriate proceedings which prevent enforcement of the
matter under contest and adequate reserves have been established therefor;
(b) mechanics', workmen's, materialmen's, landlords', carriers', or
other similar Liens arising in the ordinary course of business with respect
to obligations which
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are not due or which are being contested in good faith by appropriate
proceedings which prevent enforcement of the matter under contest;
(c) the pledge of assets for the purpose of securing an appeal, stay
or discharge in the course of any legal proceeding, provided that the
aggregate amount of liabilities of the Borrower and its Subsidiaries
secured by a pledge of assets permitted under this subsection, including
interest and penalties thereon, if any, shall not be in excess of
$2,000,000 at any one time outstanding;
(d) the Liens granted in favor of the Agent for the benefit of the
Agent and the Banks pursuant to the Collateral Documents;
(e) Liens on property of the Borrower or any Subsidiary created
solely for the purpose of securing indebtedness permitted by Section 8.7(b)
hereof, representing or incurred to finance, refinance or refund the
purchase price of Property, provided that no such Lien shall extend to or
cover other Property of the Borrower or such Subsidiary other than the
respective Property so acquired, and the principal amount of indebtedness
secured by any such Lien shall at no time exceed the original purchase
price of such Property;
(f) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not materially
detract from the value of the Property subject thereto or materially
interfere with the ordinary conduct of the business of the Borrower or any
Subsidiary;
(g) Liens described on Schedule 8.8 hereof securing the indebtedness
described therein;
(h) any interest or title of a lessor under any operating lease; and
(i) Liens on equipment not otherwise permitted by this Section
securing obligations in an aggregate amount not to exceed $500,000 at any
one time outstanding.
Section 8.9. Investments, Acquisitions, Loans, Advances and Guaranties.
The Borrower shall not, nor shall it permit any Subsidiary to, directly or
indirectly, make, retain or have outstanding any investments (whether through
purchase of stock or obligations or otherwise) in, or loans or advances (other
than for travel advances and other similar cash advances made to employees in
the ordinary course of business) to, any other Person, or acquire all or any
substantial part of the assets or business of any other Person or division
thereof, or be or become liable as endorser, guarantor, surety or otherwise for
any debt, obligation or undertaking of any other Person, or otherwise agree to
provide funds for payment of the obligations of another, or supply funds thereto
or invest therein or otherwise assure a creditor of another against loss, or
apply for or become liable to the issuer of a letter of credit which supports an
obligation of another, or subordinate any claim or demand it may have to
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the claim or demand of any other Person; provided, however, that the foregoing
shall not apply to nor operate to prevent:
(a) investments in direct obligations of the United States of America
or of any agency or instrumentality thereof whose obligations constitute
full faith and credit obligations of the United States of America, provided
that any such obligations shall mature within one year of the date of
issuance thereof;
(b) investments in commercial paper rated at least P-1 by Moody's and
at least A-1 by S&P maturing within one year of the date of issuance
thereof;
(c) investments in certificates of deposit issued by any Bank or by
any United States commercial bank having capital and surplus of not less
than $100,000,000 which have a maturity of one year or less;
(d) endorsement of items for deposit or collection of commercial
paper received in the ordinary course of business;
(e) the Borrower's investments from time to time in its Subsidiaries,
and investments made from time to time by a Subsidiary in one or more of
its Subsidiaries;
(f) guaranties issued by the Borrower or any Subsidiary guaranteeing
or otherwise supporting the repayment of indebtedness of the Borrower or
another Subsidiary otherwise permitted by Section 8.7 hereof;
(g) trade receivables from time to time owing to the Borrower or any
Subsidiary created or acquired in the ordinary course of its business;
(h) guaranties by the Borrower or any Subsidiary of the obligations
of any other Subsidiary, as lessee, under any real estate leases entered
into in the ordinary course of its business;
(i) intercompany advances made from time to time between the Borrower
and one or more Subsidiaries or between Subsidiaries;
(j) the Acquisition of Summit pursuant to the terms of the Summit
Merger Agreement, and other Acquisitions with respect to which all of the
following conditions have been satisfied: (i) the Acquired Business is in
an Eligible Line of Business, (ii) the Acquisition is not a Hostile
Acquisition, (iii) if the Total Consideration paid for the Target is more
than $5,000,000, the Acquisition EBITDA of the Target for the most recently
completed 12 month period must be greater than $1, (iv) the Total
Consideration for any single Acquisition does not exceed $25,000,000 and
the Total Consideration for all Acquisitions during any single fiscal year
of the Borrower does not exceed $25,000,000 in the aggregate, (v) prior to
consummating an Acquisition, the Borrower shall have notified the Agent and
the Banks in writing of the proposed Acquisition in reasonable detail
(including sources and uses of funds therefor) and
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furnished the Agent and the Banks historic and pro forma financial
information and compliance calculations reasonably satisfactory to the
Agent, and (vi) after giving effect to the Acquisition, no Default or Event
of Default shall exist, including with respect to the covenants contained
in Section 8 hereof on a pro forma basis;
(k) existing note receivable owing by William Scott in the principal
amount of not more than $2,600,000, and existing other note receivables
described on Schedule 8.9 hereof, in each case as reduced from time to time
by repayments of principal thereon; and
(l) other investments, loans, and advances in addition to those
otherwise permitted by this Section in an aggregate amount not to exceed
$4,000,000 at any one time outstanding.
In determining the amount of investments, acquisitions, loans, advances and
guaranties permitted under this Section, investments and acquisitions shall
always be taken at the original cost thereof (regardless of any subsequent
appreciation or depreciation therein), loans and advances shall be taken at the
principal amount thereof then remaining unpaid, and guaranties shall be taken at
the amount of the obligations guaranteed thereby.
Section 8.10. Mergers, Consolidations and Sales. The Borrower shall not,
nor shall it permit any Subsidiary to, be a party to any merger or
consolidation, or sell, transfer, lease or otherwise dispose of its Property,
including any disposition of Property as part of a sale and leaseback
transaction, or in any event sell or discount (with or without recourse) any of
its notes or accounts receivable; provided, however, that this Section shall not
apply to nor operate to prevent:
(a) the sale or lease of inventory in the ordinary course of
business;
(b) the sale, transfer, lease, or other disposition of Property of
the Borrower or any Subsidiary to one another in the ordinary course of its
business;
(c) a merger of any Subsidiary with and into the Borrower or any
other Subsidiary or a merger of a Target with and into a Subsidiary or the
Borrower pursuant to an Acquisition permitted by Section 8.9(j) hereof;
provided that, in the case of any merger involving the Borrower, the
Borrower is the corporation surviving the merger;
(d) the sale of delinquent notes or accounts receivable in the
ordinary course of business for purposes of collection only (and not for
the purpose of any bulk sale or securitization transaction);
(e) the sale, transfer, or other disposition of any tangible personal
property that, in the reasonable business judgment of the Borrower or its
Subsidiary, has become uneconomical, obsolete, or worn out, and which is
disposed of in the ordinary course of business; and
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(f) the sale, transfer, lease, or other disposition of Property of
the Borrower or any Subsidiary aggregating for the Borrower and its
Subsidiaries not more than $1,000,000 during any 12-month period;
In the event of any merger permitted by Section 8.10(c) above, the Borrower
shall give the Agent and the Banks prior written notice of any such event and,
immediately after giving effect to any such merger, Schedule 6.2 of this
Agreement shall be deemed amended excluding reference to any such Subsidiary
merged out of existence. So long as no Default or Event of Default has occurred
and is continuing or would arise as a result thereof, upon the written request
of the Borrower, the Agent shall release its Lien on any Property sold pursuant
to subsections (a), (d), (e), or (f) above.
Section 8.11. Maintenance of Subsidiaries. The Borrower shall not assign,
sell or transfer, nor shall it permit any Subsidiary to issue, assign, sell or
transfer, any shares of capital stock of a Subsidiary; provided, however, that
the foregoing shall not operate to prevent (i) the Lien on the capital stock of
each Subsidiary granted to the Agent pursuant to the Collateral Documents, (ii)
the issuance, sale and transfer to any person of any shares of capital stock of
a Subsidiary solely for the purpose of qualifying, and to the extent legally
necessary to qualify, such person as a director of such Subsidiary, and (iii)
any transaction permitted by Section 8.10(c) above.
Section 8.12. Dividends and Certain Other Restricted Payments. The
Borrower shall not, nor shall it permit any Subsidiary to, (i) declare or pay
any dividends on or make any other distributions in respect of any class or
series of its capital stock (other than dividends payable solely in its capital
stock) or (ii) directly or indirectly purchase, redeem or otherwise acquire or
retire any of its capital stock; provided, however, that the foregoing shall not
operate to prevent (a) the making of dividends or distributions by any Wholly-
Owned Subsidiary to its parent corporation or (b) the purchase by the Borrower
of its capital stock from former officers or employees, or their estates, who
have been terminated or have died with an aggregate purchase price of not more
than $200,000 during any calendar year so long as at the time of any such
purchase, and after giving effect thereto, no Default or Event of Default
exists.
Section 8.13. ERISA. The Borrower shall, and shall cause each
Subsidiary to, promptly pay and discharge all obligations and liabilities
arising under ERISA pertaining to a Plan of a character which if unpaid or
unperformed is reasonably likely to result in the imposition of a Lien against
any of its Properties. The Borrower shall, and shall cause each Subsidiary to,
promptly notify the Agent of (i) the occurrence of any reportable event (as
defined in ERISA) with respect to a Plan, (ii) receipt of any notice from the
PBGC of its intention to seek termination of any Plan or appointment of a
trustee therefor, (iii) its intention to terminate or withdraw from any Plan,
and (iv) the occurrence of any event with respect to any Plan which would result
in the incurrence by the Borrower or any Subsidiary of any material liability,
fine or penalty, or any material increase in the contingent liability of the
Borrower or any Subsidiary with respect to any post-retirement Welfare Plan
benefit.
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Section 8.14. Compliance with Laws. The Borrower shall, and shall cause
each Subsidiary to, comply in all respects with the requirements of all federal,
state and local laws, rules, regulations, ordinances and orders applicable to or
pertaining to its Properties or business operations, where any such non-
compliance, individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect or is reasonably likely to result in a Lien upon any of
their Property.
Section 8.15. Burdensome Contracts With Affiliates. The Borrower shall not,
nor shall it permit any Subsidiary to, enter into any contract, agreement or
business arrangement with any of its Affiliates on terms and conditions which
are less favorable to the Borrower or such Subsidiary than would be usual and
customary in similar contracts, agreements or business arrangements between
Persons not affiliated with each other.
Section 8.16. No Changes in Fiscal Year. The Borrower shall not change
its fiscal year from its present basis without the prior written consent of the
Required Banks.
Section 8.17. Formation of Subsidiaries. Promptly upon the formation or
Agent and the Banks written notice thereof and shall do such acquisition of any
Subsidiary, the Borrower shall provide the acts and things as are required of it
to comply with Section 4 hereof, and then and thereafter Schedule 6.2 of this
Agreement shall be deemed amended from and after such date to include reference
to any such Subsidiary.
Section 8.18. Change in the Nature of Business. The Borrower shall not,
nor shall it permit any Subsidiary to, engage in any business or activity if as
a result the general nature of the business of the Borrower or any Subsidiary
would be changed in any material respect from the general nature of the business
engaged in by it as of the date of this Agreement or as of the date such Person
becomes a Subsidiary hereunder.
Section 8.19. Use of Loan Proceeds. The Borrower shall use the credit
extended under this Agreement solely for the purposes set forth in, or otherwise
permitted by, Section 6.4 hereof.
Section 8.20. No Restrictions on Subsidiary Distributions. Except as
provided herein, the Borrower shall not, nor shall it permit any Subsidiary to,
directly or indirectly create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of the Borrower or any Subsidiary to: (a) guarantee the Obligations and grant
Liens on its assets to the Agent for the benefit of the Banks as required by
Section 4 hereof; (b) in the case of any Subsidiary, pay dividends or make any
other distribution on any of such Subsidiary's capital stock or other equity
interests owned by the Borrower or any Subsidiary; (c) pay any indebtedness owed
to the Borrower or any Subsidiary; (d) make loans or advances to the Borrower or
any Subsidiary; or (e) transfer any of its property or assets to the Borrower or
any Subsidiary.
Section 8.21. Alexandria. So long as Alexandria is a Subsidiary,
directly or indirectly, of the Borrower and the capital stock of Alexandria is
not subject to a first priority, perfected Lien in favor of the Agent pursuant
to the Collateral Documents, the Borrower shall not permit
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the total tangible assets of Alexandria to have a book value in excess of 2% of
the Borrower's consolidated total tangible assets or the gross revenues of
Alexandria to be in excess of 4% of the Borrowers consolidated total revenues.
Section 8.22. Subordinated Debt. The Borrower shall at all times ensure
that all Obligations now existing or hereafter arising constitute "Senior Debt",
or words of like import, under each indenture, instrument, or agreement
evidencing or otherwise setting forth the terms or conditions applicable to any
outstanding Subordinated Debt. Without limiting the foregoing, the Borrower
hereby irrevocably designates the Obligations, whether now existing or hereafter
arising, as Senior Debt under the terms of the Subordinated Note Indenture. The
Borrower shall not, nor shall it permit any Subsidiary to, amend or modify any
of the terms and conditions relating to any Subordinated Debt or make any
voluntary prepayment thereof or affect any voluntary redemption thereof or make
any payment on account of Subordinated Debt which is prohibited under the terms
of any instrument or agreement subordinating the same to the Obligations.
Section 8.23. Leverage Ratio. As of the last day of each fiscal quarter
of the Borrower ending on or about June 30th and December 31st of each year
occurring during the periods specified below, the Borrower shall not permit the
Leverage Ratio as of the last day of the relevant fiscal quarter to be greater
than or equal to:
RATIO SHALL NOT BE GREATER
FROM AND INCLUDING TO AND INCLUDING THAN OR EQUAL TO
the date hereof 12/31/98 6.5 to 1.0
01/01/99 06/30/99 6.25 to 1.0
07/01/99 12/31/99 6.0 to 1.0
01/01/2000 06/30/2000 5.5 to 1.0
07/01/2000 12/31/2000 5.0 to 1.0
01/01/2001 06/30/2001 4.75 to 1.0
07/01/2001 12/31/2001 4.5 to 1.0
01/01/2002 at all times thereafter 4.25 to 1.0
Section 8.24. Senior Leverage Ratio. As of the last day of each
fiscal quarter of the Borrower ending on or about June 30th and December 31st of
each year occurring during the periods specified below, the Borrower shall not
permit the Senior Leverage Ratio as of the last day of the relevant fiscal
quarter to be greater than or equal to:
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RATIO SHALL NOT BE GREATER
FROM AND INCLUDING TO AND INCLUDING THAN OR EQUAL TO
the date hereof 12/31/98 4.5 to 1.0
01/01/99 06/30/99 4.0 to 1.0
07/01/99 12/31/99 3.75 to 1.0
01/01/2000 at all times thereafter 3.5 to 1.0
Section 8.25. Net Worth. The Borrower shall, at all times, maintain Net
Worth of not less than the sum of (a) 87% of the Borrower's Net Worth on the
date of this Agreement (such amount to be reasonably determined by the Borrower
and established to the reasonable satisfaction of the Agent based on the
Borrower's closing date balance sheet to be furnished to the Agent within 30
days of the date hereof), plus (b) 75% of Net Income for each fiscal quarter of
the Borrower ending after the date of this Agreement for which such Net Income
is a positive amount (i.e., there shall be no reduction to the amount of Net
Worth required to be maintained hereunder for any such period in which Net
Income is less than zero), plus (c) 100% of the Net Cash Proceeds received by
the Borrower from any offering of equity securities of the Borrower after the
date of this Agreement, plus (d) 100% of the amount of any Indebtedness for
Borrowed Money converted into equity securities of the Borrower after the date
of this Agreement.
Section 8.26. Fixed Charge Coverage Ratio. As of the last day of each
fiscal quarter of the Borrower, the Borrower shall maintain a ratio of (a)
EBITDAR for the four fiscal quarters of the Borrower then ended less the sum of
(x) Fixed Asset Maintenance Expenditures incurred during such period and (y)
cash payments made during such period with respect to federal, state, and local
income taxes to (b) the aggregate amount of payments required to be made by the
Borrower and its Subsidiaries during the four fiscal quarters of the Borrower
then ended in respect of all principal on all Indebtedness for Borrowed Money
(whether at maturity, as a result of mandatory sinking fund redemption,
mandatory prepayment, acceleration or otherwise) plus Interest Expense and
Rental Expense for the same four fiscal quarter period then ended, of not less
than 1.15 to 1.0.
Section 8.27. Capital Expenditures. The Borrower shall not, nor shall it
permit any other Subsidiary to, incur Capital Expenditures (excluding from the
determination of Capital Expenditures hereunder Acquisitions permitted by
Section 8.9(j) of this Agreement) in an aggregate amount in excess of (a)
$10,000,000 during the 12-month period ending on June 30, 1999, and (b)
$15,000,000 during any 12-month period ending on June 30th of each year ending
thereafter.
Section 9. Events of Default and Remedies.
Section 9.1. Events of Default. Any one or more of the following shall
constitute an "Event of Default" hereunder:
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(a) default in the payment when due of all or any part of the
principal of or interest on any Note (whether at the stated maturity
thereof or at any other time provided for in this Agreement), or default in
the payment when due of any Reimbursement Obligation or of any fee or other
Obligation payable hereunder or under any other Loan Document;
(b) default in the observance or performance of any covenant set forth
in Section 8 hereof or of any provision in any Loan Document dealing with
the use, disposition or remittance of the proceeds of Collateral or
requiring the maintenance of insurance thereon;
(c) default in the observance or performance of any other provision
hereof or of any other Loan Document which is not remedied within 30 days
after the earlier of (i) the date on which such failure shall first become
known to any responsible officer of the Borrower or (ii) written notice
thereof is given to the Borrower by the Agent;
(d) any representation or warranty made herein or in any other Loan
Document or in any certificate furnished to the Agent or the Banks pursuant
hereto or thereto or in connection with any transaction contemplated hereby
or thereby proves untrue in any material respect as of the date of the
issuance or making or deemed making thereof;
(e) any event occurs or condition exists (other than those described
in subsections (a) through (d) above) which is specified as an event of
default under any of the other Loan Documents, or any of the Loan Documents
shall for any reason not be or shall cease to be in full force and effect
or is declared to be null and void, or any of the Collateral Documents
shall for any reason fail to create a valid and perfected first priority
Lien in favor of the Agent in any Collateral purported to be covered
thereby except as expressly permitted by the terms thereof, or any
Subsidiary takes any action for the purpose of terminating, repudiating or
rescinding any Loan Document executed by it or any of its obligations
thereunder;
(f) default shall occur under any Indebtedness for Borrowed Money
aggregating in excess of $2,000,000 issued, assumed or guaranteed by the
Borrower or any Subsidiary, or under any indenture, agreement or other
instrument under which the same may be issued, and such default shall
continue for a period of time sufficient to permit the acceleration of the
maturity of any such Indebtedness for Borrowed Money (whether or not such
maturity is in fact accelerated), or any such Indebtedness for Borrowed
Money shall not be paid when due (whether by demand, lapse of time,
acceleration or otherwise);
(g) any judgment or judgments, writ or writs or warrant or warrants of
attachment, or any similar process or processes in an aggregate amount in
excess of $2,000,000 in excess of any applicable insurance coverage shall
be entered or filed against the Borrower or any Subsidiary, or against any
of its Property, and which remains undischarged, unvacated, unbonded or
unstayed for a period of 30 days;
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(h) the Borrower or any Subsidiary, or any member of its Controlled
Group, shall fail to pay when due an amount or amounts aggregating in
excess of $2,000,000 which it shall have become liable to pay to the PBGC
or to a Plan under Title IV of ERISA; or notice of intent to terminate a
Plan or Plans having aggregate Unfunded Vested Liabilities in excess of
$2,000,000 (collectively, a "Material Plan") shall be filed under Title IV
of ERISA by the Borrower or any Subsidiary, or any other member of its
Controlled Group, any plan administrator or any combination of the
foregoing; or the PBGC shall institute proceedings under Title IV of ERISA
to terminate or to cause a trustee to be appointed to administer any
Material Plan or a proceeding shall be instituted by a fiduciary of any
Material Plan against the Borrower or any Subsidiary, or any member of its
Controlled Group, to enforce Section 515 or 4219(c)(5) of ERISA and such
proceeding shall not have been dismissed within 30 days thereafter; 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;
(i) the Borrower or any Subsidiary shall (i) have entered
involuntarily against it an order for relief under the United States
Bankruptcy Code, as amended, (ii) not pay, or admit in writing its
inability to pay, its debts generally as they become due, (iii) make an
assignment for the benefit of creditors, (iv) apply for, seek, consent to,
or acquiesce in, the appointment of a receiver, custodian, trustee,
examiner, liquidator or similar official for it or any substantial part of
its Property, (v) institute any proceeding seeking to have entered against
it an order for relief under the United States Bankruptcy Code, as amended,
to adjudicate it insolvent, or seeking dissolution, winding up,
liquidation, reorganization, arrangement, adjustment or composition of it
or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or fail to file an answer or other
pleading denying the material allegations of any such proceeding filed
against it, (vi) take any corporate action in furtherance of any matter
described in parts (i) through (v) above, or (vii) fail to contest in good
faith any appointment or proceeding described in Section 9.1(j) hereof;
(j) a custodian, receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Borrower or any Subsidiary or any
substantial part of any of its Property, or a proceeding described in
Section 9.1(i)(v) shall be instituted against the Borrower or any
Subsidiary, and such appointment continues undischarged or such proceeding
continues undismissed or unstayed for a period of 30 days.
Section 9.2. Non-Bankruptcy Defaults. When any Event of Default other than
those described in subsection (i) or (j) of Section 9.1 hereof has occurred and
is continuing, the Agent shall, by written notice to the Borrower: (a) if so
directed by the Required Banks, terminate the remaining Commitments and all
other obligations of the Banks hereunder on the date stated in such notice
(which may be the date thereof); (b) if so directed by the Required Banks,
declare the principal of and the accrued interest on all outstanding Notes to be
forthwith due and payable and thereupon all outstanding Notes, including both
principal and interest thereon, shall be and become immediately due and payable
together with all other amounts payable under the Loan Documents without further
demand, presentment, protest or notice of any kind; and (c) if so directed by
the Required Banks, demand that the Borrower
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immediately pay to the Agent the full amount then available for drawing under
each or any Letter of Credit, and the Borrower agrees to immediately make such
payment and acknowledges and agrees that the Banks would not have an adequate
remedy at law for failure by the Borrower to honor any such demand and that the
Agent, for the benefit of the Banks, shall have the right to require the
Borrower to specifically perform such undertaking whether or not any drawings or
other demands for payment have been made under any Letter of Credit. The Agent,
after giving notice to the Borrower pursuant to Section 9.1(c) or this Section
9.2, shall also promptly send a copy of such notice to the other Banks, but the
failure to do so shall not impair or annul the effect of such notice.
Section 9.3. Bankruptcy Defaults. When any Event of Default described in
subsections (i) or (j) of Section 9.1 hereof has occurred and is continuing,
then all outstanding Notes shall immediately become due and payable together
with all other amounts payable under the Loan Documents without presentment,
demand, protest or notice of any kind, the obligation of the Banks to extend
further credit pursuant to any of the terms hereof shall immediately terminate
and the Borrower shall immediately pay to the Agent the full amount then
available for drawing under all outstanding Letters of Credit, the Borrower
acknowledging and agreeing that the Banks would not have an adequate remedy at
law for failure by the Borrower to honor any such demand and that the Banks, and
the Agent on their behalf, shall have the right to require the Borrower to
specifically perform such undertaking whether or not any draws or other demands
for payment have been made under any of the Letters of Credit.
Section 9.4. Collateral for Undrawn Letters of Credit. (a) If the
prepayment of the amount available for drawing under any or all outstanding
Letters of Credit is required under Section 1.9(b) or under Section 9.2 or 9.3
above, the Borrower shall forthwith pay the amount required to be so prepaid, to
be held by the Agent as provided in subsection (b) below.
(b) All amounts prepaid pursuant to subsection (a) above shall be held by
the Agent in a separate collateral account (such account, and the credit
balances, properties and any investments from time to time held therein, and any
substitutions for such account, any certificate of deposit or other instrument
evidencing any of the foregoing and all proceeds of and earnings on any of the
foregoing being collectively called the "Account") as security for, and for
application by the Agent (to the extent available) to, the reimbursement of any
payment under any Letter of Credit then or thereafter made by the Agent, and to
the payment of the unpaid balance of any Loans and all other Obligations. The
Account shall be held in the name of and subject to the exclusive dominion and
control of the Agent for the benefit of the Agent and the Banks. If and when
requested by the Borrower, the Agent shall invest funds held in the Account from
time to time in direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America with a remaining maturity of one year or less, provided that the Agent
is irrevocably authorized to sell investments held in the Account when and as
required to make payments out of the Account for application to amounts due and
owing from the Borrower to the Agent or Banks; provided, however, that if (i)
the Borrower shall have made payment of all such obligations referred to in
subsection (a) above, (ii) all relevant preference or other disgorgement periods
relating to the receipt of such payments have passed, and (iii) no Letters of
Credit,
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Commitments, Loans or other Obligations remain outstanding hereunder, then the
Agent shall release to the Borrower any remaining amounts held in the Account.
Section 9.5. Notice of Default. The Agent shall give notice to the
Borrower under Section 9.1(c) hereof promptly upon being requested to do so by
any Bank and shall thereupon notify all the Banks thereof.
Section 9.6. Expenses. The Borrower agrees to pay to the Agent and each
Bank, and any other holder of any Note outstanding hereunder, all expenses
reasonably incurred or paid by the Agent and such Bank or any such holder,
including reasonable attorneys' fees and court costs, in connection with any
Default or Event of Default by the Borrower hereunder or in connection with the
enforcement of any of the Loan Documents.
Section 10. Change in Circumstances.
Section 10.1. Change of Law. Notwithstanding any other provisions of this
Agreement or any Note, if at any time any change in applicable law or regulation
or in the interpretation thereof makes it unlawful for any Bank to make or
continue to maintain any Eurodollar Loans or to perform its obligations as
contemplated hereby, such Bank shall promptly give notice thereof to the
Borrower and such Bank's obligations to make or maintain Eurodollar Loans under
this Agreement shall be suspended until it is no longer unlawful for such Bank
to make or maintain Eurodollar Loans. The Borrower shall prepay on demand the
outstanding principal amount of any such affected Eurodollar Loans, together
with all interest accrued thereon and all other amounts then due and payable to
such Bank under this Agreement; provided, however, subject to all of the terms
and conditions of this Agreement, the Borrower may then elect to borrow the
principal amount of the affected Eurodollar Loans from such Bank by means of
Base Rate Loans from such Bank, which Base Rate Loans shall not be made ratably
by the Banks but only from such affected Bank.
Section 10.2. Unavailability of Deposits or Inability to Ascertain, or
Inadequacy of, LIBOR. If on or prior to the first day of any Interest Period
for any Borrowing of Eurodollar Loans:
(a) the Agent determines that deposits in U.S. Dollars (in the
applicable amounts) are not being offered to it in the interbank eurodollar
market for such Interest Period, or that by reason of circumstances
affecting the interbank eurodollar market adequate and reasonable means do
not exist for ascertaining the applicable LIBOR, or
(b) the Required Banks advise the Agent that (i) LIBOR as determined
by the Agent will not adequately and fairly reflect the cost to such Banks
of funding their Eurodollar Loans for such Interest Period or (ii) that the
making or funding of Eurodollar Loans become impracticable,
then the Agent shall forthwith give notice thereof to the Borrower and the
Banks, whereupon until the Agent notifies the Borrower that the circumstances
giving rise to such suspension no longer exist, the obligations of the Banks to
make Eurodollar Loans shall be suspended.
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Section 10.3. 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 therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
Lending Office) with any request or directive (whether or not having the force
of law) of any such authority, central bank or comparable agency:
(i) shall subject any Bank (or its Lending Office) to any tax, duty
or other charge with respect to its Eurodollar Loans, its Notes, its
Letter(s) of Credit, or its participation in any thereof, any Reimbursement
Obligations owed to it or its obligation to make Eurodollar Loans, issue a
Letter of Credit, or to participate therein, or shall change the basis of
taxation of payments to any Bank (or its Lending Office) of the principal
of or interest on its Eurodollar Loans, Letter(s) of Credit, or
participations therein or any other amounts due under this Agreement or any
other Loan Document in respect of its Eurodollar Loans, Letter(s) of
Credit, any participation therein, any Reimbursement Obligations owed to
it, or its obligation to make Eurodollar Loans, or issue a Letter of
Credit, or acquire participations therein (except for changes in the rate
of tax on the overall net income of such Bank or its Lending Office imposed
by the jurisdiction in which such Bank's principal executive office or
Lending Office is located); or
(ii) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve
System, but excluding with respect to any Eurodollar Loans any such
requirement included in an applicable Eurodollar Reserve Percentage)
against assets of, deposits with or for the account of, or credit extended
by, any Bank (or its Lending Office) or shall impose on any Bank (or its
Lending Office) or on the interbank market any other condition affecting
its Eurodollar Loans, its Notes, its Letter(s) of Credit, or its
participation in any thereof, any Reimbursement Obligation owed to it, or
its obligation to make Eurodollar Loans, or to issue a Letter of Credit, or
to participate therein;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of making or maintaining any Eurodollar Loan, issuing or
maintaining a Letter of Credit, or participating therein, or to reduce the
amount of any sum received or receivable by such Bank (or its Lending Office)
under this Agreement or under any other Loan Document with respect thereto, by
an amount deemed by such Bank to be material, then, within 15 days after demand
by such Bank (with a copy to the Agent), the Borrower shall be obligated to pay
to such Bank such additional amount or amounts as will compensate such Bank for
such increased cost or reduction.
(b) If, after the date hereof, any Bank or the Agent shall have determined
that the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Bank (or its Lending Office) with any request or directive
-56-
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has had the effect of reducing the
rate of return on such Bank's capital as a consequence of its obligations
hereunder to a level below that which such Bank could have achieved but for such
adoption, change or compliance (taking into consideration such Bank's policies
with respect to capital adequacy) by an amount deemed by such Bank to be
material, then from time to time, within 15 days after demand by such Bank (with
a copy to the Agent), the Borrower shall pay to such Bank such additional amount
or amounts as will compensate such Bank for such reduction.
(c) A certificate of a Bank claiming compensation under this Section
9.3 and setting forth the additional amount or amounts to be paid to it
hereunder shall be prima facie correct. In determining such amount, such Bank
may use any reasonable averaging and attribution methods.
Section 10.4. Lending Offices. Each Bank may, at its option, elect to make
its Loans hereunder at the branch, office or affiliate specified on the
appropriate signature page hereof (each a "Lending Office") for each type of
Loan available hereunder or at such other of its branches, offices or affiliates
as it may from time to time elect and designate in a written notice to the
Borrower and the Agent.
Section 10.5. Discretion of Bank as to Manner of Funding. Notwithstanding
any other provision of this Agreement, each Bank shall be entitled to fund and
maintain its funding of all or any part of its Loans in any manner it sees fit,
it being understood, however, that for the purposes of this Agreement all
determinations hereunder with respect to Eurodollar Loans shall be made as if
each Bank had actually funded and maintained each Eurodollar Loan through the
purchase of deposits in the interbank eurodollar market having a maturity
corresponding to such Loan's Interest Period and bearing an interest rate equal
to LIBOR for such Interest Period.
Section 11. The Agent and Issuing Bank;.
Section 11.1. Appointment and Authorization of Agent. Each Bank hereby
appoints Bank of Montreal as the Agent under the Loan Documents and hereby
authorizes the Agent to take such action as Agent on its behalf and to exercise
such powers under the Loan Documents as are delegated to the Agent by the terms
thereof, together with such powers as are reasonably incidental thereto. The
Banks expressly agree that the Agent is not acting as a fiduciary of the Banks
in respect of the Loan Documents, the Borrower or otherwise, and nothing herein
or in any of the other Loan Documents shall result in any duties or obligations
on the Agent or any of the Banks except as expressly set forth herein.
Section 11.2. Agent and its Affiliates. The Agent shall have the same
rights and powers under this Agreement and the other Loan Documents as any other
Bank and may exercise or refrain from exercising such rights and power as though
it were not the Agent, and the Agent and its affiliates may accept deposits
from, lend money to, and generally engage in any kind of business with the
Borrower or any Affiliate of the Borrower as if it were not the Agent under the
Loan Documents. The term "Bank" as used herein and in all other Loan Documents,
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unless the context otherwise clearly requires, includes the Agent in its
individual capacity as a Bank. References in Section 1 hereof to the Agent's
Loans, or to the amount owing to the Agent for which an interest rate is being
determined, refer to the Agent in its individual capacity as a Bank.
Section 11.3. Action by Agent. If the Agent receives from the Borrower a
written notice of an Event of Default pursuant to Section 8.5 hereof, the Agent
shall promptly give each of the Banks written notice thereof. The obligations of
the Agent under the Loan Documents are only those expressly set forth therein.
Without limiting the generality of the foregoing, the Agent shall not be
required to take any action hereunder with respect to any Default or Event of
Default, except as expressly provided in Sections 9.2 and 9.5. Upon the
occurrence of an Event of Default, the Agent shall take such action to enforce
its Lien on the Collateral and to preserve and protect the Collateral as may be
directed by the Required Banks. Unless and until the Required Banks give such
direction, the Agent may (but shall not be obligated to) take or refrain from
taking such actions as it deems appropriate and in the best interest of all the
Banks. In no event, however, shall the Agent be required to take any action in
violation of applicable law or of any provision of any Loan Document, and the
Agent shall in all cases be fully justified in failing or refusing to act
hereunder or under any other Loan Document unless it first receives any further
assurances of its indemnification from the Banks that it may require, including
prepayment of any related expenses and any other protection it requires against
any and all costs, expense, and liability which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall be entitled to
assume that no Default or Event of Default exists unless notified in writing to
the contrary by a Bank or the Borrower. In all cases in which the Loan Documents
do not require the Agent to take specific action, the Agent shall be fully
justified in using its discretion in failing to take or in taking any action
thereunder. Any instructions of the Required Banks, or of any other group of
Banks called for under the specific provisions of the Loan Documents, shall be
binding upon all the Banks and the holders of the Obligations.
Section 11.4. Consultation with Experts. The Agent may consult with legal
counsel, 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 11.5. Liability of Agent; Credit Decision. Neither the Agent nor
any of its directors, officers, agents, or employees shall be liable for any
action taken or not taken by it in connection with the Loan Documents: (i) with
the consent or at the request of the Required Banks or (ii) in the absence of
its own gross negligence or willful misconduct. Neither the 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, any other Loan Document
or any Credit Event; (ii) the performance or observance of any of the covenants
or agreements of the Borrower or any Subsidiary contained herein or in any other
Loan Document; (iii) the satisfaction of any condition specified in Section 7
hereof, except receipt of items required to be delivered to the Agent; or (iv)
the validity, effectiveness, genuineness, enforceability, perfection, value,
worth or collectibility hereof or of any other Loan Document or of any other
documents or writing
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furnished in connection with any Loan Document or of any Collateral; and the
Agent makes no representation of any kind or character with respect to any such
matter mentioned in this sentence. The Agent may execute any of its duties under
any of the Loan Documents by or through employees, agents, and attorneys-in-fact
and shall not be answerable to the Banks, the Borrower, or any other Person for
the default or misconduct of any such agents or attorneys-in-fact selected with
reasonable care. The Agent shall not incur any liability by acting in reliance
upon any notice, consent, certificate, other document or statement (whether
written or oral) believed by it to be genuine or to be sent by the proper party
or parties. In particular and without limiting any of the foregoing, the Agent
shall have no responsibility for confirming the accuracy of any compliance
certificate or other document or instrument received by it under the Loan
Documents. The Agent may treat the payee of any Note as the holder thereof until
written notice of transfer shall have been filed with the Agent signed by such
payee in form satisfactory to the Agent. Each Bank acknowledges that it has
independently and without reliance on the Agent or any other Bank, and based
upon such information, investigations and inquiries as it deems appropriate,
made its own credit analysis and decision to extend credit to the Borrower in
the manner set forth in the Loan Documents. It shall be the responsibility of
each Bank to keep itself informed as to the creditworthiness of the Borrower and
its Subsidiaries, and the Agent shall have no liability to any Bank with respect
thereto.
Section 11.6. Indemnity. The Banks shall ratably, in accordance with their
respective Percentages, indemnify and hold the Agent, and its directors,
officers, employees, agents and representatives harmless from and against any
liabilities, losses, costs or expenses suffered or incurred by it under any Loan
Document or in connection with the transactions contemplated thereby, regardless
of when asserted or arising, except to the extent they are promptly reimbursed
for the same by the Borrower and except to the extent that any event giving rise
to a claim was caused by the gross negligence or willful misconduct of the party
seeking to be indemnified. The obligations of the Banks under this Section shall
survive termination of this Agreement.
Section 11.7. Resignation of Agent and Successor Agent. The Agent may
resign at any time by giving written notice thereof to the Banks and the
Borrower. Upon any such resignation of the Agent, the Required Banks shall have
the right to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Required Banks, and shall have accepted such appointment,
within 30 days after the retiring Agent's giving of notice of resignation then
the retiring Agent may, on behalf of the Banks, appoint a successor Agent, which
shall be any Bank hereunder or any commercial bank organized under the laws of
the United States of America or of any State thereof and having a combined
capital and surplus of at least $200,000,000. Upon the acceptance of its
appointment as the Agent hereunder, such successor Agent shall thereupon succeed
to and become vested with all the rights and duties of the retiring Agent under
the Loan Documents, and the retiring Agent shall be discharged from its duties
and obligations thereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Section 11 and all protective provisions of the
other Loan Documents shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent.
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Section 11.8. Interest Rate Hedging Arrangements. By virtue of a Bank's
execution of this Agreement or an Assignment Agreement, as the case may be, any
Affiliate of such Bank with whom the Borrower has entered into an agreement
creating Hedging Liability shall be deemed a Bank party hereto for purpose of
any reference in a Loan Document to the parties for whom the Agent is acting, it
being understood and agreed that the rights and benefits of such Affiliate under
the Loan Documents consist exclusively of such Affiliate's right to share in
payments and collections out of the Collateral and the guaranties as more fully
set forth in other provisions hereof.
Section 11.9. Issuing Bank. The Issuing Bank shall act on behalf of the
Banks with respect to any Letters of Credit issued by it and the documents
associated therewith. The Issuing Bank shall have all of the benefits and
immunities (i) provided to the Agent in this Section 11 with respect to any acts
taken or omissions suffered by the Issuing Bank in connection with Letters of
Credit issued by it or proposed to be issued by it and the Applications
pertaining to such Letters of Credit as fully as if the term "Agent", as used in
this Section 11, included Issuing Bank with respect to such acts or omissions
and (ii) as additionally provided in this Agreement with respect to such Issuing
Bank.
Section 12. Miscellaneous;.
Section 12.1. Withholding Taxes. (a) Payments Free of Withholding. Except
as otherwise required by law and subject to Section 12.1(b) hereof, each payment
by the Borrower under this Agreement or the other Loan Documents shall be made
without withholding for or on account of any present or future taxes (other than
overall net income taxes on the recipient) imposed by or within the jurisdiction
in which the Borrower is domiciled, any jurisdiction from which the Borrower
makes any payment, or (in each case) any political subdivision or taxing
authority thereof or therein. If any such withholding is so required, the
Borrower shall make the withholding, pay the amount withheld to the appropriate
governmental authority before penalties attach thereto or interest accrues
thereon and forthwith pay such additional amount as may be necessary to ensure
that the net amount actually received by each Bank and the Agent free and clear
of such taxes (including such taxes on such additional amount) is equal to the
amount which that Bank or the Agent (as the case may be) would have received had
such withholding not been made. If the Agent or any Bank pays any amount in
respect of any such taxes, penalties or interest, the Borrower shall reimburse
the Agent or such Bank for that payment on demand in the currency in which such
payment was made. If the Borrower pays any such taxes, penalties or interest, it
shall deliver official tax receipts evidencing that payment or certified copies
thereof to the Bank or Agent on whose account such withholding was made (with a
copy to the Agent if not the recipient of the original) on or before the
thirtieth day after payment.
(b) U.S. Withholding Tax Exemptions. Each Bank that is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) shall
submit to the Borrower and the Agent on or before the earlier of the date the
initial Credit Event is made hereunder and 30 days after the date hereof, two
duly completed and signed copies of either Form 1001 (relating to such Bank and
entitling it to a complete exemption from withholding under the Code on all
amounts to be received by such Bank, including fees, pursuant to the Loan
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Documents and the Loans) or Form 4224 (relating to all amounts to be received by
such Bank, including fees, pursuant to the Loan Documents and the Loans) of the
United States Internal Revenue Service. Thereafter and from time to time, each
Bank shall submit to the Borrower and the Agent such additional duly completed
and signed copies of one or the other of such Forms (or such successor forms as
shall be adopted from time to time by the relevant United States taxing
authorities) as may be (i) requested by the Borrower in a written notice,
directly or through the Agent, to such Bank and (ii) required under then-current
United States law or regulations to avoid or reduce United States withholding
taxes on payments in respect of all amounts to be received by such Bank,
including fees, pursuant to the Loan Documents or the Loans.
(c) Inability of Bank to Submit Forms. If any Bank determines, as a
result of any change in applicable law, regulation or treaty, or in any official
application or interpretation thereof, that it is unable to submit to the
Borrower or the Agent any form or certificate that such Bank is obligated to
submit pursuant to subsection (b) of this Section 12.1 or that such Bank is
required to withdraw or cancel any such form or certificate previously submitted
or any such form or certificate otherwise becomes ineffective or inaccurate,
such Bank shall promptly notify the Borrower and Agent of such fact and the Bank
shall to that extent not be obligated to provide any such form or certificate
and will be entitled to withdraw or cancel any affected form or certificate, as
applicable.
Section 12.2. No Waiver, Cumulative Remedies. No delay or failure on the
part of the Agent or any Bank or on the part of the holder or holders of any of
the Obligations in the exercise of any power or right under any Loan Document
shall operate as a waiver thereof or as an acquiescence in any default, nor
shall any single or partial exercise of any power or right preclude any other or
further exercise thereof or the exercise of any other power or right. The rights
and remedies hereunder of the Agent, the Banks and of the holder or holders of
any of the Obligations are cumulative to, and not exclusive of, any rights or
remedies which any of them would otherwise have.
Section 12.3. Non-Business Days. If any payment hereunder becomes due and
payable on a day which is not a Business Day, the due date of such payment shall
be extended to the next succeeding Business Day on which date such payment shall
be due and payable. In the case of any payment of principal falling due on a day
which is not a Business Day, interest on such principal amount shall continue to
accrue during such extension at the rate per annum then in effect, which accrued
amount shall be due and payable on the next scheduled date for the payment of
interest.
Section 12.4. Documentary Taxes. The Borrower agrees to pay on demand any
documentary, stamp or similar taxes payable in respect of this Agreement or any
other Loan Document, including interest and penalties, in the event any such
taxes are assessed, irrespective of when such assessment is made and whether or
not any credit is then in use or available hereunder.
Section 12.5. Survival of Representations. All representations and
warranties made herein or in any other Loan Document or in certificates given
pursuant hereto or thereto shall
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survive the execution and delivery of this Agreement and the other Loan
Documents, and shall continue in full force and effect with respect to the date
as of which they were made as long as any credit is in use or available
hereunder.
Section 12.6. Survival of Indemnities. All indemnities and other
provisions relative to reimbursement to the Banks of amounts sufficient to
protect the yield of the Banks with respect to the Loans and Letters of Credit,
including, but not limited to, Sections 1.12, 10.3 and 12.15 hereof, shall
survive the termination of this Agreement and the other Loan Documents and the
payment of the Obligations.
Section 12.7. Sharing of Set-Off. Each Bank agrees with each other Bank a
party hereto that if such Bank shall receive and retain any payment, whether by
set-off or application of deposit balances or otherwise, on any of the Loans or
Reimbursement Obligations in excess of its ratable share of payments on all such
Obligations then outstanding to the Banks, then such Bank shall purchase for
cash at face value, but without recourse, ratably from each of the other Banks
such amount of the Loans or Reimbursement Obligations, or participations
therein, held by each such other Banks (or interest therein) as shall be
necessary to cause such Bank to share such excess payment ratably with all the
other Banks; provided, however, that if any such purchase is made by any Bank,
and if such excess payment or part thereof is thereafter recovered from such
purchasing Bank, the related purchases from the other Banks shall be rescinded
ratably and the purchase price restored as to the portion of such excess payment
so recovered, but without interest. For purposes of this Section, amounts owed
to or recovered by the Issuing Bank in connection with Reimbursement Obligations
in which Banks have been required to fund their participation shall be treated
as amounts owed to or recovered by the Issuing Bank as a Bank hereunder.
Section 12.8. Notices. Except as otherwise specified herein, all notices
hereunder and under the other Loan Documents shall be in writing (including,
without limitation, notice by telecopy) and shall be given to the relevant party
at its address or telecopier number set forth below, or such other address or
telecopier number as such party may hereafter specify by notice to the Agent and
the Borrower given by courier, by United States certified or registered mail, by
telecopy or by other telecommunication device capable of creating a written
record of such notice and its receipt. Notices under the Loan Documents to the
Banks and the Agent shall be addressed to their respective addresses or
telecopier numbers set forth on the signature pages hereof, and to the Borrower
to:
Fountain View, Inc.
11900 West Olympic Blvd., Suite 680
Los Angeles, California 90064
Attention: Robert M. Snukal
Telephone: (310) 571-0351
Telecopy: (310) 571-0365
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with a copy to:
Heritage Partners Management Company, Inc.
30 Rowes Whart, Suite 300
Boston, Massachusetts 02440
Attention: Mark Jrolf
Telephone: (617) 428-0108
Telecopy: (617) 439-0689
Each such notice, request or other communication shall be effective (i) if given
by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section or on the signature pages hereof and a confirmation of
such telecopy has been received by the sender, (ii) if given by mail, 5 days
after such communication is deposited in the mail, certified or registered with
return receipt requested, addressed as aforesaid or (iii) if given by any other
means, when delivered at the addresses specified in this Section or on the
signature pages hereof; provided that any notice given pursuant to Section 1
hereof shall be effective only upon receipt.
Section 12.9. Counterparts. This Agreement may be executed in any number
of counterparts, and by the different parties hereto on separate counterpart
signature pages, and all such counterparts taken together shall be deemed to
constitute one and the same instrument.
Section 12.10. Successors and Assigns. This Agreement shall be binding
upon the Borrower and its successors and assigns, and shall inure to the benefit
of the Agent and each of the Banks and the benefit of their respective
successors and assigns, including any subsequent holder of any of the
Obligations. The Borrower may not assign any of its rights or obligations under
any Loan Document without the written consent of all of the Banks.
Section 12.11. Participants. Each Bank shall have the right at its own
cost to grant participations (to be evidenced by one or more agreements or
certificates of participation) in the Loans made and Reimbursement Obligations
and/or Commitments held by such Bank at any time and from time to time to one or
more other Persons; provided that no such participation shall relieve any Bank
of any of its obligations under this Agreement, and, provided, further that no
such participant shall have any rights under this Agreement except as provided
in this Section, and the Agent shall have no obligation or responsibility to
such participant. Any agreement pursuant to which such participation is granted
shall provide that the granting Bank shall retain the sole right and
responsibility to enforce the obligations of the Borrower under this Agreement
and the other Loan Documents including, without limitation, the right to approve
any amendment, modification or waiver of any provision of the Loan Documents,
except that such agreement may provide that such Bank will not agree to any
modification, amendment or waiver of the Loan Documents that would reduce the
amount of or postpone any fixed date for payment of any Obligation in which such
participant has an interest. Any party to which such a participation has been
granted shall have the benefits of Section 1.12 and Section 10.3 hereof. The
Borrower authorizes each Bank to disclose to any participant or prospective
participant under this Section any financial or other information pertaining to
the Borrower.
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Section 12.12. Assignment of Commitments by Banks. Each Bank shall have
the right at any time, with the prior consent of the Agent and, so long as no
Event of Default then exists, the Borrower (which consent of the Borrower shall
not be unreasonably withheld) to sell, assign, transfer or negotiate all or any
part of its Commitments (including the same percentage of its Notes, outstanding
Loans and Reimbursement Obligations owed to it) to one or more commercial banks
or other financial institutions or investors, provided that such assignment
shall be of a fixed percentage (and not by its terms of varying percentage) of
the assigning Bank's Commitments; provided, however, that in order to make any
such assignment (i) unless the assignee Bank is assigning all of its
Commitments, the assigning Bank shall retain at least $5,000,000 in outstanding
Loans, interests in Letters of Credit and unused Commitments, (ii) the assignee
bank shall have outstanding Loans, interests in Letters of Credit and unused
Commitments of at least $5,000,000, (iii) each such assignment shall be
evidenced by a written agreement (substantially in the form attached hereto as
Exhibit G or in such other form acceptable to the Agent) executed by such
assigning Bank, such assignee bank or banks, the Agent and, if required as
provided above, the Borrower, which agreement shall specify in each instance the
portion of the Obligations which are to be assigned to the assignee bank and the
portion of the Commitments of the assigning Bank to be assumed by the assignee
bank or banks, and (iv) the assigning Bank shall pay to the Agent a processing
fee of $3,500 and any out-of-pocket attorneys' fees and expenses incurred by the
Agent in connection with any such assignment agreement. Any such assignee shall
become a Bank for all purposes hereunder to the extent of the Commitments it
assumes and the assigning Bank shall be released from its obligations, and will
have released its rights, under the Loan Documents to the extent of such
assignment. The Borrower authorizes each Bank to disclose to any purchaser or
prospective purchaser of an interest in the Loans and Reimbursement Obligations
owed to it or its Commitments under this Section any financial or other
information pertaining to the Borrower.
Section 12.13. Amendments. Any provision of this Agreement or the other
Loan Documents may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by (a) the Borrower, (b) the Required Banks,
and (c) if the rights or duties of the Agent are affected thereby, the Agent;
provided that:
(i) no amendment or waiver pursuant to this Section 12.13 shall (A)
increase any Commitment of any Bank without the consent of such Bank or (B)
reduce the amount of or postpone the scheduled due date for payment of any
principal of or interest on any Loan or of any Reimbursement Obligation or of
any fee payable hereunder without the consent of the Bank to which such payment
is owing or which has committed to make such Loan or Letter of Credit (or
participate therein) hereunder; and
(ii) no amendment or waiver pursuant to this Section 12.13 shall,
unless signed by each Bank, change the definitions of Revolving Credit
Termination Date, or Required Banks, change the provisions of this Section
12.13, Section 7, Section 9, release any guarantor or all or any substantial
part of the Collateral (except as otherwise provided for in the Loan Documents),
or affect the number of Banks required to take any action hereunder or under any
other Loan Document.
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Section 12.14. Headings. Section headings used in this Agreement are for
reference only and shall not affect the construction of this Agreement.
Section 12.15. Costs and Expenses. The Borrower agrees to pay all costs
and expenses of the Agent in connection with the preparation, negotiation, and
administration of the Loan Documents, including, without limitation, the
reasonable fees and disbursements of counsel to the Agent, in connection with
the preparation and execution of the Loan Documents, and any amendment, waiver
or consent related thereto, whether or not the transactions contemplated herein
are consummated, together with any fees and charges suffered or incurred by the
Agent in connection with periodic environmental audits, fixed asset appraisals,
title insurance policies, collateral filing fees and lien searches. The Borrower
further agrees to indemnify the Agent, each Bank, and their respective
directors, officers and employees, against all losses, claims, damages,
penalties, judgments, liabilities and expenses (including, without limitation,
all reasonable expenses of litigation or preparation therefor, whether or not
the indemnified Person is a party thereto, or any settlement arrangement arising
from or relating to any such litigation) which any of them may pay or incur
arising out of or relating to any Loan Document or any of the transactions
contemplated thereby or the direct or indirect application or proposed
application of the proceeds of any Loan or Letter of Credit, other than those
which arise from the gross negligence or willful misconduct of, or material
breach of the Loan Documents by, the party claiming indemnification. The
Borrower, upon demand by the Agent or a Bank at any time, shall reimburse the
Agent or such Bank for any legal or other expenses incurred in connection with
investigating or defending against any of the foregoing (including any
settlement costs relating to the foregoing) except if the same is directly due
to the gross negligence or willful misconduct of the party to be indemnified.
The obligations of the Borrower under this Section shall survive the termination
of this Agreement.
Section 12.16. Environmental Indemnification and Waiver. The Borrower
unconditionally agrees to forever indemnify, defend and hold harmless, and
covenants not to sue for any claim for contribution against, the Agent, the
Issuing Bank and the Banks for any damages, costs, loss or expense, including
without limitation, response, remedial or removal costs, arising out of any of
the following: (i) any presence, release, threatened release or disposal of any
hazardous or toxic substance or petroleum by the Borrower or any Subsidiary or
otherwise occurring on or with respect to its property, (ii) the operation or
violation of any environmental law, whether federal, state, or local, and any
regulations promulgated thereunder, by the Borrower or any Subsidiary or
otherwise occurring on or with respect to its property, (iii) any claim for
personal injury or property damage in connection with the Borrower or any
Subsidiary or otherwise occurring on or with respect to its property, and (iv)
the inaccuracy or breach of any environmental representation, warranty or
covenant by the Borrower or any Subsidiary made herein or in any promissory
note, mortgage, deed of trust, security agreement or any other instrument or
document evidencing or securing any Obligations or setting forth terms and
conditions applicable thereto or otherwise relating thereto, except for damages
arising from the willful misconduct or gross negligence of, or material breach
of the Loan Documents by, the party claiming indemnification. This
indemnification shall survive the payment and satisfaction of all Obligations
and the termination of this Agreement, and shall remain in force beyond the
expiration of any applicable statute of limitations and payment or satisfaction
in full of any single claim under
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this indemnification. This indemnification shall be binding upon the successors
and assigns of the Borrower and shall inure to the benefit of Agent, the Issuing
Bank and the Banks and their directors, officers, employees, agents, and
collateral trustees, and their successors and assigns.
Section 12.17. Set-off. In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, upon the
occurrence of any Event of Default, each Bank and each subsequent holder of any
Obligation is hereby authorized by the Borrower at any time or from time to
time, without notice to the Borrower or to any other Person, any such notice
being hereby expressly waived, to set-off and to appropriate and to apply any
and all deposits (general or special, including, but not limited to,
indebtedness evidenced by certificates of deposit, whether matured or unmatured,
but not including trust accounts, and in whatever currency denominated) and any
other indebtedness at any time held or owing by that Bank or that subsequent
holder to or for the credit or the account of the Borrower, whether or not
matured, against and on account of the Obligations of the Borrower to that Bank
or that subsequent holder under the Loan Documents, including, but not limited
to, all claims of any nature or description arising out of or connected with the
Loan Documents, irrespective of whether or not (a) that Bank or that subsequent
holder shall have made any demand hereunder or (b) the principal of or the
interest on the Loans or Notes and other amounts due hereunder shall have become
due and payable pursuant to Section 9 and although said obligations and
liabilities, or any of them, may be contingent or unmatured.
Section 12.18. Entire Agreement. The Loan Documents constitute
the entire understanding of the parties thereto with respect to the subject
matter thereof and any prior agreements, whether written or oral, with respect
thereto are superseded hereby.
Section 12.19. Governing Law. This Agreement and the other Loan Documents,
and the rights and duties of the parties hereto, shall be construed and
determined in accordance with the internal laws of the State of Illinois.
Section 12.20. Severability of Provisions. Any provision of any Loan
Document which is unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 12.21. Excess Interest. Notwithstanding any provision to the
contrary contained herein or in any other Loan Document, no such provision shall
require the payment or permit the collection of any amount in excess of the
maximum amount of interest permitted by applicable law to be charged for the use
or detention, or the forbearance in the collection, of all or any portion of the
Loans or other obligations outstanding under this Agreement or any other Loan
Document ("Excess Interest"). If any Excess Interest is provided for, or is
adjudicated to be provided for, herein or in any other Loan Document, then in
such event (a) the provisions of this Section 12.21 shall govern and control;
(b) neither the Borrower nor any guarantor or endorser shall be obligated to pay
any Excess Interest; (c) any Excess Interest that the Agent or any Bank may have
received hereunder shall, at the option of the Agent, be (i) applied as a credit
against the then outstanding principal amount of Loans hereunder, accrued and
unpaid interest thereon (not to exceed the maximum amount permitted by
applicable law) and any
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other obligations, or all of the foregoing; (ii) refunded to the Borrower, or
(iii) any combination of the foregoing; (d) the interest rate payable hereunder
or under any other Loan Document shall be automatically subject to reduction to
the maximum lawful contract rate allowed under applicable usury laws, and this
Agreement and the other Loan Documents shall be deemed to have been, and shall
be, reformed and modified to reflect such reduction in the relevant interest
rate; and (e) neither the Borrower nor any guarantor or endorser shall have any
action against the Agent or any Bank for any damages whatsoever arising out of
the payment or collection of any Excess Interest.
Section 12.22. Confidentiality. Any information disclosed by the Borrower
or any of its Subsidiaries to the Agent or any Bank which was designated
proprietary or confidential at the time of its receipt by the Agent or such
Bank, and which it is not otherwise in the public domain, shall not be disclosed
by the Agent or such Bank to any other Person except (i) to its independent
accountants and legal counsel (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such
information and instructed to keep such information confidential), (ii) pursuant
to statutory and regulatory requirements, (iii) pursuant to any mandatory court
order, subpoena or other legal process, (iv) to the Agent or any other Bank, (v)
pursuant to any agreement heretofore or hereafter made between such Bank and the
Borrower which permits such disclosure, (vi) in connection with the exercise of
any remedy under the Loan Documents, or (vii) subject to an agreement containing
provisions substantially the same as those of this Section, to any participant
in or assignee of, or prospective participant in or assignee of, any Obligation
or Commitments.
Section 12.23. Single Bank. If and so long as Bank of Montreal is the only
Bank hereunder, Bank of Montreal shall have all rights, powers and privileges
afforded to the Agent, the Banks, and the Required Banks hereunder and under the
other Loan Documents.
Section 12.24. Submission to Jurisdiction; Waiver of Jury Trial. The
Borrower hereby submits to the nonexclusive jurisdiction of the United States
District Court for the Northern District of Illinois and of any Illinois State
court sitting in the Cook County, Illinois for purposes of all legal proceedings
arising out of or relating to this Agreement, the other Loan Documents or the
transactions contemplated hereby or 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. THE BORROWER, THE AGENT AND EACH BANK HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
THEREBY.
[SIGNATURE PAGES TO FOLLOW]
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Upon your acceptance hereof in the manner hereinafter set forth, this
Agreement shall constitute a contract between us for the uses and purposes
hereinabove set forth.
Dated as of this 16th day of April, 1998.
FOUNTAIN VIEW, INC.
By _______________________________
Name __________________________
Title _________________________
Accepted and agreed to as of the day and year last above written.
BANK OF MONTREAL, in its individual
capacity as a Bank and as Agent
Address and Amount of Commitments: By /s/ Mark F. Spencer
--------------------------------
Name MARK F. SPENCER
-------------------------
Address: Title MANAGING DIRECTOR
------------------------
601 South Figueroa Street, Suite 4900
Los Angeles, California 90017
Attention: Ronald Launsbach
Telecopy: (213) 239-0680
Telephone: (213) 239-0602
with notices of Borrowing requests to:
Attention: Jean Pazan
Telecopy: (312) 750-3456
Telephone: (312) 750-3450
Revolving Credit Commitment:
$30,000,000
Term Loan Commitment:
$85,000,000
Lending Offices:
115 South LaSalle Street
Chicago, Illinois 60603
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EXHIBIT A
NOTICE OF PAYMENT REQUEST
[Date]
[Name of Bank]
[Address]
Attention:
Reference is made to the Credit Agreement, dated as of April 16, 1998,
among Fountain View, Inc., the Banks party thereto, and Bank of Montreal, as
Agent (the "Credit Agreement"). Capitalized terms used herein and not defined
herein have the meanings assigned to them in the Credit Agreement. [The
Borrower has failed to pay its Reimbursement Obligation in the amount of
$_________. Your Bank's Percentage of the unpaid Reimbursement Obligation is
$_________] or [The undersigned has been required to return a payment by the
Borrower of a Reimbursement Obligation in the amount of $________. Your Bank's
Percentage of the returned Reimbursement Obligation is $_________.]
Very truly yours,
BANK OF MONTREAL, as Issuing Bank
By ________________________________
Its ____________________________
EXHIBIT B
NOTICE OF BORROWING
Date: ______________, ____
To: Bank of Montreal, as Agent for the Banks parties to the Credit Agreement
dated as of April 16, 1998 (as extended, renewed, amended or restated from
time to time, the "Credit Agreement") among Fountain View, Inc., certain
Banks which are signatories thereto and Bank of Montreal, as Agent
Ladies and Gentlemen:
The undersigned, Fountain View, Inc. (the "Borrower"), refers to the Credit
Agreement, the terms defined therein being used herein as therein defined, and
hereby gives you notice irrevocably, pursuant to Section 1.6 of the Credit
Agreement, of the Borrowing specified below:
1. The Business Day of the proposed Borrowing is ___________, ____.
2. The aggregate amount of the proposed Borrowing is $______________.
3. The Borrowing is being advanced under the [REVOLVING] [TERM]
Credit.
4. The Borrowing is to be comprised of $___________ of [BASE RATE]
[EURODOLLAR] Loans.
[5. THE DURATION OF THE INTEREST PERIOD FOR THE EURODOLLAR LOANS
INCLUDED IN THE BORROWING SHALL BE ____________ MONTHS.]
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the proposed Borrowing, before
and after giving effect thereto and to the application of the proceeds
therefrom:
(a) the representations and warranties of the Borrower contained in
Section 6 of the Credit Agreement are true and correct as though made on
and as of such date (except to the extent such representations and
warranties relate to an earlier date, in which case they are true and
correct as of such date); and
(b) no Default or Event of Default has occurred and is continuing or
would result from such proposed Borrowing.
FOUNTAIN VIEW, INC.
By ________________________________
Name ___________________________
Title __________________________
EXHIBIT C
NOTICE OF CONVERSION/CONTINUATION
Date: ____________, ____
To: Bank of Montreal, as Agent for the Banks parties to the Credit Agreement
dated as of April 16, 1998 (as extended, renewed, amended or restated from
time to time, the "Credit Agreement") among Fountain View, Inc., certain
Banks which are signatories thereto and Bank of Montreal, as Agent
Ladies and Gentlemen:
The undersigned, Fountain View, Inc. (the "Borrower"), refers to the Credit
Agreement, the terms defined therein being used herein as therein defined, and
hereby gives you notice irrevocably, pursuant to Section 16 of the Credit
Agreement, of the [CONVERSION] [CONTINUATION] of the Loans specified herein,
that:
1. The conversion/continuation Date is __________, ____.
2. The aggregate amount of the [REVOLVING] [TERM] Loans to be [CONVERTED]
[CONTINUED] is $______________.
3. The Loans are to be [CONVERTED INTO] [CONTINUED AS] [EURODOLLAR] [BASE
RATE] Loans.
4. [IF APPLICABLE:] The duration of the Interest Period for the
[REVOLVING] [TERM] Loans included in the [CONVERSION] [CONTINUATION] shall be
_________ months.
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the proposed conversion/continuation date,
before and after giving effect thereto and to the application of the proceeds
therefrom:
(a) the representations and warranties of the Borrower contained in
Section 6 of the Credit Agreement are true and correct as though made on and as
of such date (except to the extent such representations and warranties relate to
an earlier date, in which case they are true and correct as of such date);
provided, however, that this condition shall not apply to the conversion of an
outstanding Eurodollar Loan to a Base Rate Loan; and
(b) no Default or Event of Default has occurred and is continuing, or
would result from such proposed [CONVERSION] [CONTINUATION].
Fountain View, Inc.
By:________________________________
Name_____________________________
Title____________________________
EXHIBIT D
REVOLVING NOTE
U.S.$_______________ ________________, 19___
For Value Received, the undersigned, Fountain View, Inc., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of
______________________ (the "Bank") on the Revolving Credit Termination Date of
the hereinafter defined Credit Agreement, at the principal office of Bank of
Montreal, as Agent, in Chicago, Illinois, in immediately available funds, the
principal sum of ___________________ Dollars ($__________) or, if less, the
aggregate unpaid principal amount of all Revolving Loans made by the Bank to the
Borrower pursuant to the Credit Agreement, together with interest on the
principal amount of each Revolving Loan from time to time outstanding hereunder
at the rates, and payable in the manner and on the dates, specified in the
Credit Agreement.
The Bank shall record on its books or records or on a schedule attached to
this Note, which is a part hereof, each Revolving Loan made by it pursuant to
the Credit Agreement, together with all payments of principal and interest and
the principal balances from time to time outstanding hereon, whether the
Revolving Loan is a Base Rate Loan or a Eurodollar Loan, the interest rate and
Interest Period applicable thereto, provided that prior to the transfer of this
Note all such amounts shall be recorded on a schedule attached to this Note.
The record thereof, whether shown on such books or records or on a schedule to
this Note, shall be prima facie evidence of the same, provided, however, that
the failure of the Bank to record any of the foregoing or any error in any such
record shall not limit or otherwise affect the obligation of the Borrower to
repay all Revolving Loans made to it pursuant to the Credit Agreement together
with accrued interest thereon.
This Note is one of the Revolving Notes referred to in the Credit Agreement
dated as of April 16, 1998, among the Borrower, Bank of Montreal, as Agent, and
the Banks party thereto (the "Credit Agreement"), and this Note and the holder
hereof are entitled to all the benefits and security provided for thereby or
referred to therein, to which Credit Agreement reference is hereby made for a
statement thereof. All defined terms used in this Note, except terms otherwise
defined herein, shall have the same meaning as in the Credit Agreement. This
Note shall be governed by and construed in accordance with the internal laws of
the State of Illinois.
Voluntary prepayments may be made hereon, certain prepayments are required
to be made hereon, and this Note may be declared due prior to the expressed
maturity hereof (in each case without premium or penalty except as otherwise set
forth in the Credit Agreement), all in the events, on the terms and in the
manner as provided for in the Credit Agreement.
The Borrower hereby waives demand, presentment, protest or notice of any
kind hereunder.
Fountain View, Inc.
By______________________________
Name__________________________
Title_________________________
EXHIBIT E
TERM NOTE
U.S.$_______________ ________________, 19___
For Value Received, the undersigned, Fountain View, Inc., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of
______________________ (the "Bank") at the principal office of Bank of Montreal,
as Agent, in Chicago, Illinois, in immediately available funds, the principal
sum of ___________________ Dollars ($__________) or, if less, the aggregate
unpaid principal amount of the Term Loan made or maintained by the Bank to the
Borrower pursuant to the Credit Agreement, in consecutive quarter-annual
principal installments in the amounts called for by Section 1.8(b) of the Credit
Agreement, commencing on March 31, 1999, and continuing on the last day of each
June, September, December and March occurring thereafter, together with interest
on the principal amount of such Term Loan from time to time outstanding
hereunder at the rates, and payable in the manner and on the dates, specified in
the Credit Agreement, except that all principal and interest not sooner paid on
the Term Loan evidenced hereby shall be due and payable on December 31, 2003,
the final maturity date hereof.
The Bank shall record on its books or records or on a schedule attached to
this Note, which is a part hereof, the Term Loan made or maintained by it
pursuant to the Credit Agreement, together with all payments of principal and
interest and the principal balances from time to time outstanding hereon,
whether the Term Loan is a Base Rate Loan or a Eurodollar Loan, the interest
rate and Interest Period applicable thereto, provided that prior to the transfer
of this Note all such amounts shall be recorded on a schedule attached to this
Note. The record thereof, whether shown on such books or records or on a
schedule to this Note, shall be prima facie evidence of the same, provided,
however, that the failure of the Bank to record any of the foregoing or any
error in any such record shall not limit or otherwise affect the obligation of
the Borrower to repay the Term Loan made to it pursuant to the Credit Agreement
together with accrued interest thereon.
This Note is one of the Term Notes referred to in the Credit Agreement
dated as of April 16, 1998, among the Borrower, Bank of Montreal, as Agent, and
the Banks party thereto (the "Credit Agreement"), and this Note and the holder
hereof are entitled to all the benefits and security provided for thereby or
referred to therein, to which Credit Agreement reference is hereby made for a
statement thereof. All defined terms used in this Note, except terms otherwise
defined herein, shall have the same meaning as in the Credit Agreement. This
Note shall be governed by and construed in accordance with the internal laws of
the State of Illinois.
Voluntary prepayments may be made hereon, certain prepayments are required
to be made hereon, and this Note may be declared due prior to the expressed
maturity hereof (in each case without premium or penalty except as otherwise set
forth in the Credit Agreement), all in the events, on the terms and in the
manner as provided for in the Credit Agreement.
The Borrower hereby waives demand, presentment, protest or notice of any
kind hereunder.
Fountain View, Inc.
By___________________________
Name_______________________
Title______________________
EXHIBIT F
COMPLIANCE CERTIFICATE
FOR
FOUNTAIN VIEW, INC.
This Compliance Certificate is furnished to Bank of Montreal, as Agent (the
"Agent") pursuant to that certain Credit Agreement dated as of April 16, 1998,
among Fountain View, Inc. (the "Borrower"), Bank of Montreal, as Agent, and the
Banks party thereto (the "Credit Agreement"). Unless otherwise defined herein,
the terms used in this Compliance Certificate have the meanings ascribed thereto
in the Credit Agreement.
The Undersigned hereby certifies that:
1. I am the duly elected _____________________________________ of
the Borrower;
2. I have reviewed the terms of the Credit Agreement and I have
made, or have caused to be made under my supervision, a detailed review of
the transactions and conditions of the Borrower and its Subsidiaries during
the accounting period covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or the occurrence of
any event which constitutes a Default or Event of Default during or at the
end of the accounting period covered by the attached financial statements
or as of the date of this Certificate, except as set forth below; and
4. The Attachment hereto sets forth financial data and computations
evidencing the Borrower's compliance with certain covenants of the Credit
Agreement, all of which data and computations are, to the best of my
knowledge, true, complete and correct and have been made in accordance with
the relevant Sections of the Credit Agreement.
Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
The foregoing certifications, together with the computations set forth in
the Attachment hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this _________ day of
__________________ 19___.
Fountain View, Inc.
By_______________________________
_________________, ____________
(Name) (Title)
ATTACHMENT TO COMPLIANCE CERTIFICATE
FOR
FOUNTAIN VIEW, INC.
Compliance Calculations for Credit Agreement
Dated as of April 16, 1998
Calculations as of _____________, 19___
___________________________________________________________________________
A. Leverage Ratio (Section 8.23)
-----------------------------
1. Total Funded Debt $___________
2. Rental Expense for past 4 quarters $______
x 8
------- $___________
3. Sum of Lines A1 and A2 $___________
4. Net Income (adjusted, pro forma, for acquisition ___________
effect) for past 4 quarters
5. Interest Expense (adjusted, pro forma, for acquisition ___________
effect) for past 4 quarters
6. Taxes (adjusted, pro forma, for acquisition effect) ___________
for past 4 quarters
7. Depreciation, Amortization and Rental Expense
(adjusted, pro forma, for acquisition effect) for past 4 ___________
quarters
8. Sum of Lines A4, A5, A6 and A7 ("Adjusted EBITDAR") ___________
9. Ratio of Line A3 to A8 ____:1.0
10. Line A9 ratio must not be equal to or greater than ____:1.0
11. The Borrower is in compliance (circle yes or no) yes/no
B. Senior Leverage Ratio (Section 8.24)
------------------------------------
1. Total Senior Funded Debt $___________
2. Rental Expense for past 4 quarters $______
x 8
------- $___________
3. Sum of Lines B1 and B2 $___________
4. Adjusted EBITDAR (Line A8 above) $___________
5. Ratio of Line B3 to B4 ____:1.0
6. Line B5 ratio must not be equal to or greater than ____:1.0
7. The Borrower is in compliance (circle yes or no) yes/no
C. Net Worth (Section 8.25)
------------------------
1. Net Worth $___________
2. Line C1 shall not be less than $___________
3. The Borrower is in compliance (circle yes or no) yes/no
D. Fixed Charge Coverage Ratio (Section 8.26)
------------------------------------------
1. Net Income for past 4 quarters $___________
2. Interest Expense for past 4 quarters $___________
3. Taxes for past 4 quarters $___________
4. Depreciation, Amortization and Rental Expense for past $___________
4 quarters
5. Sum of lines D1, D2, D3 and D4 ("EBITDAR") $___________
6. Fixed asset maintenance expenditures for past 4 $___________
quarters
7. Cash payments for income taxes for past 4 quarters $___________
8. Sum of Lines D6 and D7 $___________
9. Line D5 minus Line D8 $___________
10. Principal payments for past 4 quarters $___________
11. Interest Expense for past 4 quarters $___________
12. Rental Expense for past 4 quarters $___________
13. Sum of Lines D10, D11 and D12 $___________
14. Ratio of Line D9 to Line D13 ____: 1.0
15. Line D14 ratio must not be less than 1.15: 1.0
16. The Borrower is in compliance (circle yes or no) yes/no
E. Capital Expenditures (Section 8.27)
-----------------------------------
1. Capital Expenditures (year-to-date) $___________
2. Line E1 not to exceed $___________
3. The Borrower is in compliance (circle yes or no) yes/no
EXHIBIT G
ASSIGNMENT AND ACCEPTANCE
Dated _____________, 19_____
Reference is made to the Credit Agreement dated as of April 16, 1998 (the
"CREDIT AGREEMENT") among Fountain View, Inc., a Delaware corporation, the Banks
(as defined in the Credit Agreement) and Bank of Montreal, as Agent for the
Banks (the "Agent"). Terms defined in the Credit Agreement are used herein with
the same meaning.
_____________________________________________________ (the "Assignor") and
_________________________ (the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, a _______%
interest in and to all of the Assignor's rights and obligations under the
Credit Agreement as of the Effective Date (as defined below), including,
without limitation, such percentage interest in the Assignor's Commitments
as in effect on the Effective Date and the Loans, if any, owing to the
Assignor on the Effective Date and the Assignor's Percentage of any
outstanding L/C Obligations.
2. The Assignor (i) represents and warrants that as of the date hereof
(A) its Revolving Credit Commitment is $_____________ and its Term Loan
Commitment is $______________, (B) the aggregate outstanding principal
amount of Loans made by it under the Credit Agreement that have not been
repaid is $____________ ($_____________ of Revolving Loans and
$_____________ of Term Loans ) and a description of the interest rates and
interest periods of such Loans is attached as Schedule 1 hereto, and (C)
the aggregate principal amount of Assignor's Percentage of outstanding L/C
Obligations is $____________; (ii) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it hereunder
and that such interest is free and clear of any adverse claim, lien, or
encumbrance of any kind; (iii) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement or any other instrument or document furnished
pursuant thereto; and (iv) makes no representation or warranty and assumes
no responsibility with respect to the financial condition of the Borrower
or any Subsidiary or performance or observance by the Borrower or any
Subsidiary of any of its obligations under the Credit Agreement or any
other instrument or document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 6.5 thereof and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter
into this Assignment and Acceptance;
(ii) agrees that it will, independently and without reliance upon the
Agent, the Assignor or any other Bank 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 action under the Credit
Agreement; (iii) appoints and authorizes the Agent to take such action as
Agent on its behalf and to exercise such powers under the Credit Agreement
and the other Loan Documents as are delegated to the Agent by the terms
thereof, together with such powers as are reasonably incidental thereto;
(iv) agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Bank; and (v) specifies as its lending office (and
address for notices) the offices set forth beneath its name on the
signature pages hereof.
4. As consideration for the assignment and sale contemplated in
Section 1 hereof, the Assignee shall pay to the Assignor on the Effective
Date in Federal funds an amount equal to $________________*. It is
understood that commitment and/or facility fees accrued to the Effective
Date with respect to the interest assigned hereby 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.
5. The effective date for this Assignment and Acceptance shall be
_____________, 19___(the "Effective Date"). Following the execution of this
Assignment and Acceptance, it will be delivered to the Agent for acceptance
and recording by the Agent and, if required, the Borrower.
6. Upon such acceptance and recording, as of the Effective Date, (i)
the Assignee shall be a party to the Credit Agreement and, to the extent
provided in this Assignment and Acceptance, have the rights and obligations
of a Bank thereunder and (ii) the Assignor shall, to the extent provided in
this Assignment and Acceptance, relinquish its rights and be released from
its obligations under the Credit Agreement.
7. Upon such acceptance and recording, from and after the Effective
Date, the Agent shall make all payments under the Credit Agreement in
respect of the interest assigned hereby (including, without limitation, all
payments of principal, interest and commitment fees with respect thereto)
to the Assignee. The Assignor and Assignee shall make all appropriate
adjustments in payments under the Credit Agreement for periods prior to the
Effective Date directly between themselves.
_________________
* 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.
8. In accordance with Section 12.12 of the Credit Agreement, the
Assignor and the Assignee request and direct that the Agent prepare and
cause the Borrower to execute and deliver to the Assignee the relevant
Notes payable to the Assignee in the amount of its Commitments and new
Notes to the Assignor in the amount of its Commitments after giving effect
to this assignment.
9. This Assignment and Acceptance shall be governed by, and construed
in accordance with, the laws of the State of Illinois.
[Assignor Bank]
By__________________________________
Name______________________________
Title_____________________________
[Assignee Bank]
By__________________________________
Name______________________________
Title_____________________________
Lending office (and address for notices):
Accepted and consented this
____ day of ___________, 19__
Fountain View, Inc.
By________________________________
Name______________________________
Title_____________________________
Accepted and consented to by the Agent this
_______ day of ___________, 19__
Bank of Montreal, as Agent
By________________________________
Name______________________________
Title_____________________________
SCHEDULE I
Principal Amount Type of Loan Interest Rate Maturity Date
SCHEDULE 6.2
NAME JURISDICTION OF PERCENTAGE OWNERSHIP
INCORPORATION
Fountain View Holdings, Inc. Delaware 100%
Locomotion Holdings, Inc. Delaware 100%
Locomotion Therapy, Inc. Delaware 100%
Fountain View Management, Inc. California 100%
Sycamore Park Convalescent California 100%
Hospital
AIB Corp. California 100%
Elmcrest Convalescent Hospital California 100%
Brier Oak Convalescent, Inc. California 100%
BIA Hotel Corp. California 100%
Rio Hondo Nursing Center California 100%
Fountainview Convalescent California 100%
Hospital
Alexandria Convalescent California 100%
Hospital, Inc.
I.'n O., Inc. California 100%
On-Track Therapy Center, Inc. California 100%
Summit Care Corporation California 100%
Summit Care-California, Inc. California 100%
Summit Care-Texas No. 2, Inc. Texas 100%
Summit Care-Texas No. 3, Inc. Texas 100%
Summit Care Pharmacy, Inc. California 100%
Summit Care Texas, L.P. Texas 100%
(Limited Partnership)
Summit Care Texas Equity, Inc. California 100%
Summit Care Management Texas, Texas 100%
Inc.
SNF Pharmacy, Inc. California 100%
Skilled Care Network California 100%
FV-SCC Acquisition Corp. Delaware 100%
SCHEDULE 6.9
GOVERNMENTAL AUTHORITY AND LICENSING
The Department of Health of California conducted a survey at the Alexandria
facility and reported certain deficiencies in such facility's dietary plan and
care planning. Fountain View, Inc. disagrees with such findings and has
appealed them.
SCHEDULE 6.13
APPROVALS
The grant of a security interest in Summit Care Pharmacy, Inc.'s membership
interest in APS-Summit Care Pharmacy, L.L.C., requires the consent of American
Pharmaceutical Services, Inc. ("APS"). APS has indicated that it will give such
consent; however, APS has not yet provided such written consent to Summit Care
Pharmacy, Inc.
SCHEDULE 8.4
INSURANCE MATTERS
Insurance carriers with a less than A rating in the most current available
Best's Insurance Report.
CARRIER RATING COVERAGE LIMITS
Frontier Pacific A-V Excess Employer's $1,000,000 per
Indemnity & occurrence (no
Employer's aggregate)
Occupational Disease subject to
on Texas employees $150,000 SIR
Meridian Non-rated Healthcare liability, Occurrence limit
1st excess layer is $400,000 in
above retention. excess of
Covers medical, $100,000
professional, general retention and
liability, products aggregate limit
liability and is $300,000 in
employment practices excess of
liability. $700,000
retention.
SCHEDULE 8.7
PERMITTED EXISTING INDEBTEDNESS
Deferred Compensation for Certain Individuals
Lump Sum Value * Present Value
Discount Rate N/A 9.0%
Currently paying:
L. Wertheim $ 985 $ 960
F. Hoogstad $ 15,527 $ 13,714
J. Salkind $ 52,021 $ 37,512
-------- --------
Subtotal $ 68,533 $ 52,186
Future payments:
C. Fukushima $123,239 $ 9,961
P. Meza $ 43,062 $ 15,839
F. Meza $ 90,738 $ 38,807
L. Smith $ 63,631 $ 5,937
R. Gundling $112,496 $ 14,924
-------- --------
Subtotal $433,166 $ 85,468
Total present value of deferred $501,699 $137,654
compensation at 4/98
__________
* Undiscounted amount of payment stream.
SCHEDULE 8.8 - PERMITTED EXISTING LIENS
---------------------------------------
REMAINING PRINCIPAL
DEBTOR SECURED PARTY AMOUNT OUTSTANDING FILE NUMBER FILING DATE COLLATERAL
------ ------------- ------------------ ----------- ----------- ----------
1. Summit Care Corporation Union Bank $1,039,999 94067151 04/04/94 Personal property located
(Calif. S/S) on or otherwise relating
to the use or operation
of the Burbank, CA
facility described
therein, and rights to
certain payments with
respect to or on account
of such property.
2. Summit Care-Texas No. Secretary of Housing and $3,727,750 94023767 02/09/94 Personal property located
3, Inc. Urban Development (Calif. S/S) on or otherwise relating
to the use or operation
of the Heritage Manor
Nursing Center,
Woodlands, Texas,
described therein and
rights to certain
payments with respect to
or on account of such
property.
3. Summit Care-Texas No. Secretary of Housing and See no. 2 above 94-00014921 01/24/94 Personal property located
3, Inc. Urban Development (TX S/S) on or otherwise relating
to the use or operation of
the Heritage Manor Nursing
Center, Woodlands, Texas,
described therein and
rights to certain payments
with respect to or on
account of such property.
4. Summit Care-Texas No. Woodlands Place Nursing $1,590,226 94-00014922 01/24/94 All of Debtor's right,
3, Inc. Center, Inc. (TX S/S) title and interest in
inventory, equipment,
consumer goods and
fixtures located on
Montgomery County, Texas
real property described
therin.
5. Summit Care-Texas No. Woodlands Place Nursing See no. 4 above 94-0021276 02/07/94 All of Debtor's right,
3, Inc. Center, Inc. (TX S/S) title and interest in
inventory, equipment,
consumer goods and
fixtures located on
Montgomery County, Texas
real property described
therein.
SCHEDULE 8.9
EXISTING NOTE RECEIVABLES
Maker Original Amount
F&B Healthcare $ 300,000.00
Frank D. Johnson $ 400,000.00
DMN Enterprizes $ 500,000.00
Garden Park Care Center, Inc. $ 600,000.00
Courtyard Health Care Center, LLC $ 500,000.00
Anaheim Healthcare Center, LLC $ 1,746,574.00
Garden Park Care Center, LLC $ 350,000.00
Anaheim Healthcare Center, LLC $ 1,506,035.00
Villa Rancho Bernardo Health Care, LLC $ 300,000.00
Gardena Flores, Inc./Diana Fortune $ 821,126.00
D.K. Fortune & Assoc., Inc./Diana Fortune $ 1,003,717.00
Jurupa Hills Enterprises, Inc. $ 244,572.07
St. Erne Hospital, Inc./Charles Zilafro $ 193,208.55
Cal-Ohio Associates $ 2,117,000.00
--------------
$10,582,232.62