EXIHIBIT 10.19
CONFORMED COPY
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HARBORSIDE HEALTHCARE CORPORATION
____________________________________
CREDIT AGREEMENT
dated as of August 11, 1998
____________________________________
$250,000,000
Credit Facility
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CHASE SECURITIES INC.,
as Arranger,
MORGAN STANLEY SENIOR FUNDING, INC.
and
BT ALEX. BROWN INCORPORATED,
as Co-Arrangers,
BANKERS TRUST COMPANY,
as Documentation Agent,
MORGAN STANLEY SENIOR FUNDING, INC.,
as Syndication Agent,
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
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TABLE OF CONTENTS
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PAGE
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SECTION 1. DEFINITIONS............................................................... 2
1.1 Defined Terms............................................................. 2
1.2 Other Definitional Provisions............................................. 28
SECTION 2. AMOUNT AND TERMS OF REVOLVING
CREDIT COMMITMENTS...................................................... 29
2.1 Revolving Credit Commitments.............................................. 29
2.2 Commitment Fee............................................................ 30
2.3 Proceeds of Revolving Credit Loans........................................ 30
2.4 Swing Line Commitment..................................................... 30
2.5 Issuance of Letters of Credit............................................. 32
2.6 Participating Interests................................................... 32
2.7 Procedure for Opening Letters of Credit................................... 33
2.8 Payments in Respect of Letters of Credit.................................. 33
2.9 Letter of Credit Fees..................................................... 34
2.10 Letter of Credit Reserves................................................. 34
2.11 Further Assurances........................................................ 35
2.12 Obligations Absolute...................................................... 35
2.13 Assignments............................................................... 36
2.14 Participations............................................................ 36
2.15 Conversion to Term Loans.................................................. 36
SECTION 3. GENERAL PROVISIONS APPLICABLE TO LOANS.................................... 37
3.1 Procedure for Borrowing................................................... 37
3.2 Conversion and Continuation Options....................................... 38
3.3 Changes of Commitment Amounts............................................. 38
3.4 Optional and Mandatory Prepayments; Repayments of Term Loans.............. 39
3.5 Interest Rates and Payment Dates.......................................... 42
3.6 Computation of Interest and Fees.......................................... 42
3.7 Certain Fees.............................................................. 43
3.8 Inability to Determine Interest Rate...................................... 43
3.9 Pro Rata Treatment and Payments........................................... 43
3.10 Illegality................................................................ 46
3.11 Requirements of Law....................................................... 47
3.12 Indemnity................................................................. 49
3.13 Repayment of Loans; Evidence of Debt...................................... 50
3.14 Replacement of Lenders.................................................... 51
3.15 Appointment of the Company and Reliance on Representation of the Company.. 51
SECTION 4. REPRESENTATIONS AND WARRANTIES............................................ 51
4.1 Financial Condition....................................................... 52
PAGE
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4.2 No Change................................................................. 53
4.3 Corporate Existence; Compliance with Law.................................. 53
4.4 Corporate Power; Authorization............................................ 54
4.5 Enforceable Obligations................................................... 54
4.6 No Legal Bar.............................................................. 55
4.7 No Material Litigation.................................................... 55
4.8 Investment Company Act.................................................... 55
4.9 Federal Regulation........................................................ 55
4.10 No Default................................................................ 56
4.11 Taxes..................................................................... 56
4.12 Subsidiaries.............................................................. 56
4.13 Ownership of Property; Liens.............................................. 56
4.14 ERISA..................................................................... 57
4.15 Security Documents........................................................ 58
4.16 Copyrights, Patents, Permits, Trademarks and Licenses..................... 58
4.17 Environmental Matters..................................................... 59
4.18 Accuracy and Completeness of Information.................................. 60
4.19 AcquisitionCo............................................................. 60
4.20 Health Care Permits....................................................... 60
4.21 Year 2000................................................................. 61
SECTION 5. CONDITIONS PRECEDENT...................................................... 61
5.1 Conditions to Initial Revolving Credit Loans and Letters of Credit........ 61
5.2 Conditions to All Loans and Letters of Credit............................. 66
SECTION 6. AFFIRMATIVE COVENANTS..................................................... 67
6.1 Financial Statements...................................................... 67
6.2 Certificates; Other Information........................................... 69
6.3 Payment of Obligations.................................................... 70
6.4 Conduct of Business and Maintenance of Existence.......................... 71
6.5 Maintenance of Property; Insurance........................................ 71
6.6 Inspection of Property; Books and Records; Discussions.................... 71
6.7 Notices................................................................... 72
6.8 Environmental Laws........................................................ 73
6.9 Additional Collateral..................................................... 74
6.10 Health Care Permits and Approvals......................................... 76
6.11 Operating Leases.......................................................... 77
6.12 Mortgages................................................................. 77
SECTION 7. NEGATIVE COVENANTS........................................................ 77
7.1 Indebtedness.............................................................. 78
7.2 Limitation on Liens....................................................... 82
7.3 Limitation on Contingent Obligations...................................... 83
PAGE
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7.4 Prohibition of Fundamental Changes........................................ 85
7.5 Prohibition on Disposition of Assets...................................... 85
7.6 Limitation on Investments, Loans and Advances............................. 87
7.7 Capital Expenditures...................................................... 91
7.8 Interest Rate Agreements.................................................. 92
7.9 Debt to EBITDA............................................................ 92
7.10 Coverage Ratio............................................................ 93
7.11 Limitation on Dividends................................................... 94
7.12 Transactions with Affiliates.............................................. 95
7.13 Prepayments and Amendments of Subordinated Debt........................... 96
7.14 Limitation on Changes in Fiscal Year...................................... 96
7.15 Limitation on Lines of Business........................................... 96
7.16 Health Care Permits and Approvals......................................... 96
7.17 Preferred Stock........................................................... 97
SECTION 8. EVENTS OF DEFAULT......................................................... 97
SECTION 9. MISCELLANEOUS............................................................. 100
9.1 Amendments and Waivers.................................................... 100
9.2 Notices................................................................... 101
9.3 No Waiver; Cumulative Remedies............................................ 102
9.4 Survival of Representations and Warranties................................ 103
9.5 Payment of Expenses and Taxes............................................. 103
9.6 Successors and Assigns; Participations and Assignments.................... 104
9.7 Set-off................................................................... 108
9.8 Counterparts.............................................................. 109
9.9 Governing Law; No Third Party Rights...................................... 109
9.10 Submission to Jurisdiction; Waivers....................................... 109
9.11 Releases.................................................................. 110
9.12 Interest.................................................................. 110
9.13 Special Indemnification................................................... 111
9.14 Permitted Payments and Transactions....................................... 111
9.15 Harborside of Rhode Island................................................ 112
SCHEDULES
Schedule I Borrowers
Schedule II Lenders, Addresses and Commitments
Schedule III Pricing and Commitment Fee Grid
Schedule 2.5 Existing Letters of Credit
Schedule 4.11 Taxes
Schedule 4.12 Subsidiaries
Schedule 4.13 Fee and Leased Properties
Schedule 4.15(a) UCC Filing Offices
Schedule 4.16 Trademarks and Copyrights
Schedule 7.1(a) Existing Indebtedness
Schedule 7.2(i) Existing Liens
Schedule 7.3(e) Existing Contingent Obligations
EXHIBITS
EXHIBIT A Form of Revolving Credit Note
EXHIBIT B Form of Term Loan Note
EXHIBIT C Form of Swing Line Note
EXHIBIT D Form of Assignment and Acceptance
EXHIBIT E Form of Collateral Agreement
EXHIBIT F Form of Agency and Intercreditor Agreement
EXHIBIT G Form of L/C Participation Certificate
EXHIBIT H Form of Swing Line Loan Participation Certificate
EXHIBIT I Form of Subsection 3.11(d)(2) Certificate
EXHIBIT J-1 Form of Opinion of Gibson, Dunn & Crutcher LLP
EXHIBIT J-2 Form of Opinion of In-house or Massachusetts Counsel to the Company
EXHIBIT K-1 Form of Company Closing Certificate
EXHIBIT K-2 Form of Subsidiaries Closing Certificate
EXHIBIT L Form of Mortgage
EXHIBIT M-1 Form of Lease Intercreditor Agreement
EXHIBIT M-2 Form of Loan Intercreditor Agreement
EXHIBIT N Form of Trust Guarantee
CREDIT AGREEMENT, dated as of August 11, 1998, among HARBORSIDE
HEALTHCARE CORPORATION, a Delaware corporation (the "Company"), and the other
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entities listed on Schedule I hereto, as joint and several borrowers hereunder
(together with the Company and any other Subsidiary of the Company that may
become a party hereto as provided herein, the "Borrowers" and, individually, a
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"Borrower"), the several lenders from time to time parties hereto (the
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"Lenders"), CHASE SECURITIES INC., as arranger (the "Arranger"), MORGAN STANLEY
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SENIOR FUNDING, INC. and BT ALEX. BROWN INCORPORATED, as co-arrangers
(collectively, in such capacity, the "Co-Arrangers"), MORGAN STANLEY SENIOR
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FUNDING, INC., as syndication agent (in such capacity, the "Syndication Agent"),
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BANKERS TRUST COMPANY, as documentation agent (in such capacity, the
"Documentation Agent"), and THE CHASE MANHATTAN BANK, a New York banking
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corporation, as administrative agent for the Lenders (in such capacity, the
"Administrative Agent").
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W I T N E S S E T H :
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WHEREAS, HH Acquisition Corp., a Delaware corporation
("AcquisitionCo"), and the Company have entered into an Agreement and Plan of
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Merger, dated as April 15, 1998 (together with all schedules and exhibits
attached thereto and any and all amendments, supplements and modifications
thereto and as the same may be hereafter amended, supplemented or otherwise
modified from time to time in accordance with this Agreement, the "Merger
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Agreement"), pursuant to which AcquisitionCo will be merged with and into the
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Company (the "Merger"), the Company being the surviving corporation of the
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Merger;
WHEREAS, upon the Merger, the Investors will own approximately 90% of
the common stock of the Company and certain existing shareholders and management
(the "Existing Shareholders") will own the remaining portion of such common
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stock;
WHEREAS, the Company intends to finance the Merger (including the
refinancing of certain existing indebtedness) and related premiums, fees and
expenses from the following sources: (a) approximately $175,000,000 in common
equity (consisting of a cash investment of at least approximately 90% of the
common equity from the Investors, with the balance represented by common stock
retained by the Existing Shareholders); (b) approximately $40,000,000 in
exchangeable preferred stock or junior subordinated unsecured loans, with any
amount of exchangeable preferred stock over $40,000,000 reducing the common
equity ownership referenced in clause (a) above by a like amount; (c)
approximately $100,000,000 in gross cash proceeds from an issuance by the
Company of either subordinated unsecured loans or senior subordinated discount
notes; (d) approximately $15,000,000 of drawings under $250,000,000 of senior
secured credit facilities consisting of the credit facilities provided for
herein and/or the Synthetic Lease Facility (as defined below);
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WHEREAS, the Borrowers are and will be operated as separate entities
but are and will be operated on an integrated basis in connection with their
respective financial resources; the Borrowers conduct their operations on a
combined basis with shared management, purchasing, planning, financial controls
and other functions; and the access of all Borrowers to the credit facilities
provided for herein benefits all Borrowers in connection with their various
businesses; and
WHEREAS, the Company and the other Borrowers, jointly and severally,
have requested the Lenders to make loans and other extensions of credit
available to the Borrowers: (a) to enable the Company to finance a portion of
the Merger, (b) to refinance certain of the existing indebtedness of the Company
and its subsidiaries, (c) for working capital purposes of the Company and its
subsidiaries; (d) to finance certain acquisitions and capital expenditures and
(e) for general corporate purposes;
NOW, THEREFORE, the Borrowers, the Administrative Agent, the Arranger,
the Co-Arrangers, the Syndication Agent, the Documentation Agent and the Lenders
agree as follows:
1. DEFINITIONS
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1.1 Defined Terms. As used in this Agreement, the terms defined in
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the caption hereto shall have the meanings set forth therein, and the following
terms have the following meanings:
"Acquired Business": any Person or assets acquired by the Company or
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any Subsidiary in an acquisition permitted by subsection 7.6(g).
"AcquisitionCo": as defined in the Recitals hereto.
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"Acquisition Consideration": with respect to any acquisition, the
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aggregate consideration therefor paid by the Company or any Subsidiary
(excluding fees and expenses incurred in connection therewith), including,
without limitation, the cash purchase price payment, upfront cash payments
to obtain purchase options or favorable lease rates, Indebtedness arising
in connection with such acquisition as permitted by subsection 7.1(f) and
the fair market value of Capital Stock of the Company issued in connection
with such acquisition.
"Added Amount": at any time, an amount equal to 10% of the sum of (a)
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aggregate Acquisition Consideration given subsequent to the date hereof in
connection with acquisitions of Encumbered Subsidiaries permitted by
subsection 7.6(g)(iv) plus (b) the aggregate appraised value (as set forth
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in the appraisals furnished pursuant to subsection 6.11) of the properties
that are the subject of operating leases entered into subsequent to the
date hereof under which any Encumbered Subsidiary is the lessee.
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"Additional Mortgage": as defined in subsection 6.9(c).
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"Administrative Agent": as defined in the Preamble hereto.
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"Adjustment Date": as defined in the definition of Applicable Margin.
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"Affiliate": as to any Person (a) any other Person (other than a
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Subsidiary) which, directly or indirectly, is in control of, is controlled
by, or is under common control with such Person, or (b) any other Person
who is a director or officer (i) of such Person, (ii) of any Subsidiary of
such Person or (iii) of any Person described in clause (a) above. For
purposes of this definition, control of a Person shall mean the power,
direct or indirect, (x) to vote 25% or more of the securities having
ordinary voting power for the election of directors of such Person, whether
by ownership of securities, contract, proxy or otherwise, or (y) to direct
or cause the direction of the management and policies of such Person,
whether by ownership of securities, contract, proxy or otherwise.
"Agency and Intercreditor Agreement": the Agency and Intercreditor
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Agreement, substantially in the form of Exhibit F, to be executed and
delivered by the Borrowers, the Trust, the Lenders, the Synthetic Investors
and the Administrative Agent, as the same may be amended, supplemented or
otherwise modified from time to time.
"Agreement": this Credit Agreement, as amended, supplemented or
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modified from time to time.
"Alternate Base Rate": for any day, a rate per annum (rounded
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upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a)
the Prime Rate in effect on such day, (b) the Base CD Rate in effect on
such day plus 1% and (c) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean the rate
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of interest per annum publicly announced from time to time by the
Administrative Agent as its prime rate in effect at its principal office in
New York City (the Prime Rate not being intended to be the lowest rate of
interest charged by the Administrative Agent in connection with extensions
of credit to debtors); "Base CD Rate" shall mean the sum of (a) the product
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of (i) the Three-Month Secondary CD Rate and (ii) a fraction, the numerator
of which is one and the denominator of which is one minus the C/D Reserve
Percentage and (b) the C/D Assessment Rate; "Three-Month Secondary CD Rate"
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shall mean, for any day, the secondary market rate for three-month
certificates of deposit reported as being in effect on such day (or, if
such day shall not be a Business Day, the next preceding Business Day) by
the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of
the Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day), or, if such rate shall not be so
reported on such day or such next preceding Business Day, the average of
the secondary market quotations for three-month certificates of deposit of
major money center banks in
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New York City received at approximately 10:00 A.M., New York City time, on
such day (or, if such day shall not be a Business Day, on the next
preceding Business Day) by the Administrative Agent from three New York
City negotiable certificate of deposit dealers of recognized standing
selected by it; and "Federal Funds Effective Rate" shall mean, for any day,
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the weighted average of the rates on overnight federal funds transactions
with members of the Federal Reserve System arranged by federal funds
brokers, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations for the day of such
transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it. Any change in the Alternate
Base Rate due to a change in the Prime Rate, the Base CD Rate or the
Federal Funds Effective Rate shall be effective as of the opening of
business on the effective day of such change in the Prime Rate, the Base CD
Rate or the Federal Funds Effective Rate, respectively.
"Alternate Base Rate Loans": Loans at such time as they are made
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and/or being maintained at a rate of interest based upon the Alternate Base
Rate.
"Ancillary Businesses": any businesses ancillary to the operation of
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a Health Care Facility such as the rehabilitative therapy, home healthcare
and pharmaceutical businesses associated therewith.
"Applicable Margin": for Term Loans, Revolving Credit Loans and Swing
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Line Loans of the Types set forth below, the rate per annum set forth under
the relevant column heading opposite such Loans below:
Alternate
Base Rate Eurodollar
Loans Loans
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Term Loans: 1.25% 2.25%
Revolving Credit Loans: 1.25% 2.25%
Swing Line Loans: 1.25% Not applicable;
provided that the Applicable Margin with respect to the Loans will be
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adjusted on each Adjustment Date (as defined below) occurring after the
completion of four fiscal quarters of the Company after the Closing Date to
the applicable rate per annum set forth in the pricing grid attached hereto
as Schedule III based on the Leverage Ratio as determined from the relevant
financial statements delivered pursuant to subsection 6.1. Changes in the
Applicable Margin resulting from changes in the Leverage Ratio shall become
effective on each date (an "Adjustment Date") on which such financial
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statements are delivered to the Lenders (but in any event not later than
the 45th day after the end of each of the first three quarterly periods of
each fiscal year or the 90th day after the end of each fiscal year as the
case may be) and shall remain in effect until the next change to be
5
effected pursuant to this definition; provided that (a) the Applicable
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Margin shall be initially the rate per annum set forth under the relevant
column heading above; (b) if for any reason the financial statements
required by subsection 6.1 are not timely delivered to the Lenders, (i)
during the period from the date upon which such financial statements were
required to be delivered until the date upon which they actually are
delivered, the Applicable Margin shall be the Applicable Margin in effect
immediately prior to the date such financial statements were due, and (ii)
if such financial statements, when actually delivered, would have required
an increase in the Applicable Margin over the Applicable Margin in effect
immediately prior to the date such financial statements were due, the
Company shall promptly following the delivery of such financial statements
pay to the Lenders and the Administrative Agent any additional amounts of
interest or fees which would have been payable on any previous Interest
Payment Date had such higher Applicable Margin been in effect from the date
such financial statements were required to be delivered; (c) any change in
the Applicable Margin as a result of a change in the Leverage Ratio shall
apply to all Loans for each day during the period commencing on the
effective date of such change and ending on the date immediately preceding
the effective date of the next such change in the Applicable Margin; and
(d) if an Event of Default exists on any Adjustment Date or other date upon
which the Applicable Margin would otherwise be adjusted hereunder, the
Applicable Margin shall in no event be reduced on such Adjustment Date or
other date from the Applicable Margin in effect immediately prior to such
Adjustment Date or other date.
"Arranger": as defined in the Preamble hereto.
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"Asset Sale": any sale, sale-leaseback, or other disposition by the
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Company or any Subsidiary restricted by subsection 7.5 of any of its
property or assets, including the stock of any Subsidiary, except sales and
dispositions permitted by subsections 7.5(a), (b), (c), (f), (g), (i) and
(k).
"Assignee": as defined in subsection 9.6(c).
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"Assignment and Acceptance": an assignment and acceptance
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substantially in the form of Exhibit D.
"Authorized Officer": each of Steven L. Guillard, William H. Stephan
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and each additional or substitute officer as the Company notifies the
Administrative Agent in writing.
"Available Revolving Credit Commitment": as to any Lender, at a
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particular time, an amount equal to (a) the amount of such Lender's
Revolving Credit Commitment at such time less (b) the sum of (i) the
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aggregate unpaid principal amount at such time of all Revolving Credit
Loans made by such Lender pursuant to subsection 2.1, (ii) such Lender's
Revolving Credit Percentage of the aggregate unpaid principal amount at
such time of all Swing Line Loans, provided that for purposes of
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calculating the Revolving
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Credit Commitments pursuant to subsection 2.2 the amount referred to in
this clause (ii) shall be zero, (iii) such Lender's L/C Participating
Interest in the aggregate amount available to be drawn at such time under
all outstanding Letters of Credit issued by the Issuing Lender, (iv) such
Lender's Revolving Credit Percentage of the aggregate outstanding amount of
L/C Obligations and (v) such Lender's Revolving Credit Percentage of the
then aggregate principal amount of the Synthetic Lease Obligations;
collectively, as to all the Lenders, the "Available Revolving Credit
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Commitments".
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"Bankruptcy Code": Title I of the Bankruptcy Reform Act of 1978, as
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amended and codified at Title 11 of the United States Code.
"Board": the Board of Governors of the Federal Reserve System of the
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United States, together with any successor.
"Borrower" and "Borrowers": as defined in the Preamble hereto.
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"Borrowing Date": any Business Day specified in a notice pursuant to
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(a) subsection 2.4 or 3.1 as a date on which the Company requests the Swing
Line Lender or the Lenders to make Loans hereunder or (b) subsection 2.5 as
a date on which the Company requests the Issuing Lender to issue a Letter
of Credit hereunder.
"Bridge Commitment Letter": the Commitment Letter and term sheet
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thereto dated as of April 30, 1998 by and between Investcorp Investment
Equity Limited, on its behalf and on behalf of certain of its affiliates
and other investors and Morgan Stanley Bridge Fund L.L.C., Chase
Securities, Inc. and Bankers Trust Corporation.
"Bridge Junior Subordinated Debt": the junior subordinated unsecured
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bridge loans or exchange or rollover notes of the Company outstanding from
time to time pursuant to the Bridge Loan Agreement or the Indenture
contemplated thereby.
"Bridge Loan Agreement": the Bridge Loan Agreement that may be
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entered into pursuant to the Bridge Commitment Letter among Morgan Stanley
Bridge Fund L.L.C., Chase Securities, Inc., Bankers Trust Corporation and
an affiliate of AcquisitionCo, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with its terms and the
terms of this Agreement.
"Bridge Senior Subordinated Debt": the senior subordinated unsecured
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bridge loans or exchange or rollover notes of the Company outstanding from
time to time pursuant to the Bridge Loan Agreement or the Indenture
contemplated thereby.
"Business Day": (a) for all purposes other than as covered by clause
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(b) below, a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to
close and (b) with respect to all notices and determinations in connection
with, and payments of principal and interest on, Eurodollar
7
Loans, any day which is a Business Day described in clause (a) and which is
also a day for trading by and between banks in Dollar deposits in the
interbank eurodollar market in London.
"Capital Expenditures": for any period, all amounts which would, in
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accordance with GAAP, be set forth as capital expenditures (exclusive of
any amount attributable to capitalized interest) on the consolidated
statement of cash flows or other similar statement of the Company and its
Subsidiaries for such period but shall exclude (a) any expenditures made
with the proceeds of condemnation or eminent domain proceedings affecting
real property or with insurance proceeds, provided that any Capital
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Expenditures financed with the proceeds of any Indebtedness permitted
hereunder (other than Indebtedness incurred hereunder) shall be deemed to
be a Capital Expenditure only in the period in which, and by the amount
which, any principal of such Indebtedness is repaid, (b) any expenditures
constituting a reinvestment contemplated by subsection 7.5(e), 7.5(h)(i) or
7.5(j), (c) expenditures made in connection with acquisitions permitted by
subsection 7.6(g) (other than subsection 7.6(g)(ii)(B)) and (d) with
respect to any acquired Person or assets operating or including, as the
case may be, a Health Care Facility, any capital expenditures with respect
thereto that have been identified by the acquiring Person at the time of
the acquisition of such Person or assets so long as the aggregate amount of
such capital expenditures does not exceed an amount equal to the greater of
(i) 10% of the Acquisition Consideration for such acquired Person or assets
and (ii) $3,000,000.
"Capital Stock": any and all shares, interests, participations or
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other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants, rights or options to purchase any of
the foregoing.
"Cash Equivalents": (a) securities issued or directly and fully
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guaranteed or insured by the United States or any agency or instrumentality
thereof having maturities of not more than six months from the date of
acquisition, (b) certificates of deposit and eurodollar time deposits with
maturities of one year or less from the date of acquisition, bankers'
acceptances with maturities not exceeding one year and overnight bank
deposits, in each case with any Lender or with any domestic (in the case of
any investments, acquisitions or holdings by the Company or its Domestic
Subsidiaries) commercial bank or trust company having capital and surplus
in excess of $300,000,000, (c) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in
clauses (a) and (b) entered into with any financial institution meeting the
qualifications specified in clause (b) above, (d) commercial paper having
the highest rating obtainable from S&P or Moody's and in each case maturing
within one year after date of acquisition, (e) investment funds investing
95% of their assets in securities of the type described in clauses (a)-(d)
above, (f) readily marketable direct obligations issued by any state of the
United States or any political subdivision thereof having one of the two
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highest rating categories obtainable from either S&P or Moody's and (g)
indebtedness with a rating of "A" or higher from S&P or "A2" or higher from
Moody's.
"C/D Assessment Rate": for any day the net annual assessment rate
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(rounded upwards, if necessary, to the next 1/100 of 1%) determined by the
Administrative Agent to be payable on such day to the Federal Deposit
Insurance Corporation or any successor ("FDIC") for FDIC's insuring time
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deposits made in Dollars at offices of the Administrative Agent in the
United States.
"C/D Reserve Percentage": for any day, that percentage (expressed as
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a decimal) which is in effect on such day, as prescribed by the Board for
determining maximum reserve requirement for a Depositary Institution (as
defined in Regulation D of the Board) in respect of new non-personal time
deposits in Dollars having a maturity of 30 days or more.
"Change in Law": with respect to any Lender, the adoption of, or
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change in, any law, rule, regulation, policy, guideline or directive
(whether or not having the force of law) or any change in the
interpretation or application thereof by any Governmental Authority having
jurisdiction over such Lender, in each case after the Closing Date.
"Change of Control": the occurrence of any of the following events:
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(a) at any time prior to an IPO by the Company, Investcorp or any of its
Affiliates (provided that for purposes of this definition only the
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reference to 25% in the definition of Affiliate shall be deemed to be 51%)
or Subsidiaries, any Person that is a member of the senior management of
the Company, or any entity the majority of the equity ownership interests
of which is owned by such senior management of the Company, shall cease to
own, directly or indirectly, in the aggregate, at least 51% of the issued
and outstanding voting stock of the Company, free and clear of all Liens or
(b) at any time after an IPO by the Company, any Person (other than
Investcorp, any of its Affiliates or Subsidiaries, any Person that is a
member of the senior management of the Company, any entity the majority of
the equity ownership interests of which is owned by such senior management
of the Company or any Person acting in the capacity of an underwriter),
whether singly or in concert with one or more Persons, shall, directly or
indirectly, have acquired, or acquire the power (i) to vote or direct the
voting of 30% or more, on a fully diluted basis, of the outstanding common
stock of the Company or (ii) to elect or designate for election a majority
of the Board of Directors of the Company by voting power, contract or
otherwise.
"Chase": The Chase Manhattan Bank, a New York banking corporation,
-----
and its successors.
"Closing Date": the date (which shall be on or prior to September 30,
------------
1998) on which the Lenders make their initial Loans or the Issuing Lender
issues the initial Letter of Credit.
9
"Co-Arrangers": as defined in the Preamble hereto.
------------
"Code": the Internal Revenue Code of 1986, as amended from time to
----
time.
"Collateral": all assets of the Credit Parties, now owned or
----------
hereafter acquired, upon which a Lien is purported to be created by any
Security Document.
"Collateral Agreement": the Collateral Agreement, substantially in
--------------------
the form of Exhibit E, to be made by the Company and the Subsidiaries from
time to time parties thereto in favor of the Administrative Agent, for the
benefit of the Lenders, as the same may be amended, supplemented or
otherwise modified from time to time.
"Commercial L/C": a commercial documentary Letter of Credit under
--------------
which the Issuing Lender agrees to make payments in Dollars for the account
of the Company, on behalf of the Company or a Subsidiary, in respect of
obligations of the Company or such Subsidiary in connection with the
purchase of goods or services in the ordinary course of business.
"Commitment": as to any Lender at any time, such Lender's Swing Line
----------
Commitment and Revolving Credit Commitment; collectively, as to all the
Lenders, the "Commitments".
-----------
"Commonly Controlled Entity": an entity, whether or not incorporated,
--------------------------
which is under common control with the Company within the meaning of
Section 4001 of ERISA or is part of a group which includes the Company and
which is treated as a single employer under Section 414(b) or (c) of the
Code.
"Company": as defined in the Preamble hereto.
-------
"Confidential Information Memorandum": the Confidential Information
-----------------------------------
Memorandum dated May 1998 titled Harborside Healthcare Corporation
$250,000,000 Senior Secured Credit Facility.
"Consolidated Current Assets": at a particular date, all amounts
---------------------------
which would, in conformity with GAAP, be included under current assets on a
consolidated balance sheet of the Company and its Subsidiaries as at such
date.
"Consolidated Current Liabilities": at a particular date, all amounts
--------------------------------
which would, in conformity with GAAP, be included under current liabilities
on a consolidated balance sheet of the Company and its Subsidiaries as at
such date, excluding the current portion of long-term debt and the entire
outstanding principal amount of the Revolving Credit Loans.
10
"Consolidated EBITDA": for any period, the Consolidated Net Income of
-------------------
the Company and its Subsidiaries for such period, plus, without duplication
and to the extent reflected as a charge in the statement of such
Consolidated Net Income for such period, the sum of (a) total income tax
expense (including any tax benefit or expense related to the dividend on
any preferred stock), (b) interest expense, amortization or writeoff of
debt discount, debt issuance, warrant and other equity (including any
preferred stock) issuance costs and commissions, discounts, redemption
premium and other fees and charges associated with the Loans, letters of
credit permitted hereunder, Financing Leases (including commitment fees and
other periodic bank charges), Standby L/Cs, the Subordinated Debt or with
the acquisition or repayment of any debt securities of the Company
permitted hereunder, and net costs associated with Interest Rate Agreements
to which the Company is a party in respect of the Loans, (c) costs of
surety bonds, (d) depreciation and amortization expense, (e) amortization
of intangibles (including, but not limited to, goodwill and costs of
interest-rate caps, leasehold interests and the cost of non-competition
agreements) and organization costs, (f) non-cash amortization of Financing
Leases, (g) franchise taxes, (h) management fees paid as contemplated by
subsection 9.14(a) and charges relating to management fees prepaid in
connection with the Merger, (i) all cash dividend payments and non-cash
dividend expenses on any series of preferred stock, (j) any fees and
expenses incurred in connection with any merger, acquisition, joint venture
or financing permitted hereunder, the Merger and, in each case, the related
financing thereof (excluding general business development expenses), (k)
any other write-downs, write-offs, minority interests and other non-cash
charges or expenses, (l) any non-cash restructuring or non-recurring charge
or reserve, (m) expenses and charges related to any equity offering, (n)
expenses consisting of internal software development costs that are
expensed during the period but could have been capitalized in accordance
with GAAP, (o) securitization expenses, (p) nonrecurring litigation or
claim settlement charges or expenses relating to activities or matters
outside of the ordinary course of business of the Company and its
Subsidiaries and (q) synthetic lease rent expense less any amortization of
principal included in such expense; provided that in determining such
--------
Consolidated EBITDA for such period (i) the cumulative effect of a change
in accounting principles (effected either through cumulative effect
adjustment or a retroactive application) shall be excluded, (ii) the impact
of foreign currency and hedging shall be excluded and (iii) the aggregate
amount of cash expenditures during such period relating to matters for
which non-cash restructuring or non-recurring charges or reserves shall
have been made or created shall be deducted.
"Consolidated Indebtedness": at a particular date, all Indebtedness
-------------------------
(including Synthetic Lease Obligations and any other obligations in respect
of synthetic leases but excluding any other Indebtedness described in
clauses (b) or (c) of the definition of Indebtedness), of the Company and
its Subsidiaries determined on a consolidated basis in accordance with GAAP
at such date.
"Consolidated Net Income": with respect to any Person and any period,
-----------------------
the net income (or loss) of such Person for such period, determined in
accordance with GAAP
11
and before any reduction in respect of Preferred Stock dividends,
excluding, however, (i) any extraordinary or non-recurring gains or losses
or charges and gains or losses or charges from the sale of assets outside
the ordinary course of business, together with any related provision for
taxes on such gain or loss or charges, (ii) deferred financing costs
written off in connection with the early extinguishment of Indebtedness;
provided, however, that Consolidated Net Income shall be deemed to include
-------- -------
any increases during such period to shareholder's equity of such Person
attributable to tax benefits from net operating losses and the exercise of
stock options that are not otherwise included in Consolidated Net Income
for such period; and further provided that (a) the net income (but not
------- --------
loss) of any Person that is not a Subsidiary or that is accounted for by
the equity method of accounting shall be included only to the extent of the
amount of dividends or distributions paid in cash to the Company or a
wholly owned Subsidiary and (b) the net income of any Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or
similar distributions by that Subsidiary of that net income is prohibited
or not permitted at the date of determination.
"Consolidated Senior Indebtedness": at a particular date, all
--------------------------------
Consolidated Indebtedness other than Subordinated Debt.
"Contingent Obligation": as to any Person, any obligation of such
---------------------
Person guaranteeing or in effect guaranteeing any Indebtedness ("primary
-------
obligations") of any other Person (the "primary obligor") in any manner,
----------- ---------------
whether directly or indirectly, including, without limitation, any
obligation of such Person, whether or not contingent (a) to purchase any
such primary obligation or any property constituting direct or indirect
security therefor, (b) to advance or supply funds (i) for the purchase or
payment of any such primary obligation or (ii) to maintain working capital
or equity capital of the primary obligor or otherwise to maintain the net
worth or solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of
any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation or (d) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof; provided that the term Contingent Obligation shall not include
--------
endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determinable amount (based on
the maximum reasonably anticipated net liability in respect thereof as
determined by the Company in good faith) of the primary obligation or
portion thereof in respect of which such Contingent Obligation is made or,
if not stated or determinable, the maximum reasonably anticipated net
liability in respect thereof (assuming such Person is required to perform
thereunder) as determined by the Company in good faith.
"Contractual Obligation": as to any Person, any provision of any
----------------------
security issued by such Person or of any agreement, instrument or
undertaking to which such Person is a party or by which it or any of the
property owned by it is bound.
12
"Coverage Ratio": on the last day of any fiscal quarter of the
--------------
Company ending on or after December 31, 1998, the ratio of (a) the sum of
Consolidated EBITDA plus rental expense, in each case for the period of
----
four fiscal quarters ending on such day to (b) the sum of cash interest
expense (excluding (i) fees payable on account of letters of credit, (ii)
to the extent included in interest expense in accordance with GAAP, net
costs associated with Interest Rate Agreements to which the Company is
party in respect of the Loans and other periodic bank charges and
amortization of debt discount (including discount of liabilities and
reserves established under APB 16), (iii) costs of debt issuance and
interest expense on customer deposits and (iv) costs of debt issuance and
interest expense on any Bridge Junior Subordinated Debt) net of interest
income, in each case, for or during such period on a consolidated basis for
the Company and its Subsidiaries plus rental expense for such period on a
----
consolidated basis for the Company and its Subsidiaries; provided, however,
-------- -------
that on (A) the last day of the 1998 fourth fiscal quarter of the Company
such ratio shall measure the period of two fiscal quarters ending on such
day and (B) on the last day of the 1999 first fiscal quarter of the Company
such ratio shall measure the period of three fiscal quarters ending on such
day. For clarification, cash interest expense does not include the
accretion of interest expense.
"Credit Documents": the collective reference to this Agreement, the
----------------
Notes, the Mortgages, the Collateral Agreement, the Trust Guarantee, the
Intercreditor Agreement and the Agency and Intercreditor Agreement.
"Credit Parties": the collective reference to the Company, the other
--------------
Borrowers and each other Subsidiary which may from time to time be party to
a Credit Document.
"Default": any of the events specified in Section 8, whether or not
-------
any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"Documentation Agent": as defined in the Preamble hereto.
-------------------
"Dollars" and "$": dollars in lawful currency of the United States.
------- -
"Domestic Subsidiary": any Subsidiary other than a Foreign
-------------------
Subsidiary.
"Encumbered Subsidiary": at any time, any Domestic Subsidiary (a) as
---------------------
to which the Administrative Agent does not have a first priority Lien, for
the benefit of the Lenders, on all or substantially all of the accounts
receivable and real property owned in fee of such Subsidiary or (b) which
is not a Borrower hereunder or a guarantor of the obligations hereunder and
under the Synthetic Lease Facility, provided that the limitation set forth
--------
in subsection 9.15 shall not cause any Domestic Subsidiary to be deemed an
Encumbered Subsidiary.
"Environmental Laws": any and all foreign, Federal, state, local or
------------------
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees or requirements of
13
any Governmental Authority or Requirements of Law (including, without
limitation, common law) regulating or imposing liability or standards of
conduct concerning environmental or public health protection matters,
including, without limitation, Hazardous Materials, as now or may at any
time hereafter be in effect.
"Environmental Permits": any and all permits, licenses,
---------------------
registrations, notifications, exemptions and any other authorizations
required under any Environmental Law.
"ERISA": the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
---------------------------------
Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on such
day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board or other Governmental
Authority having jurisdiction with respect thereto) dealing with reserve
requirements prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of such Board) maintained by a
member bank of such System.
"Eurodollar Base Rate": with respect to each day during each Interest
--------------------
Period pertaining to a Eurodollar Loan, the rate per annum determined on
the basis of the rate for deposits in Dollars for a period equal to such
Interest Period commencing on the first day of such Interest Period
appearing on Page 3750 of the Dow Jones Markets screen as of 11:00 A.M.,
London time, two Business Days prior to the beginning of such Interest
Period. In the event that such rate does not appear on Page 3750 of the
Dow Jones Markets screen (or otherwise on such screen), the "Eurodollar
----------
Base Rate" for purposes of this definition shall be determined by reference
---------
to such other comparable publicly available service for displaying
eurodollar rates as may be selected by the Administrative Agent or, in the
absence of such availability, by reference to the rate at which the
Administrative Agent is offered Dollar deposits at or about 11:00 A.M.,
London time, two Business Days prior to the beginning of such Interest
Period in the interbank eurodollar market where its eurodollar and foreign
currency and exchange operations are then being conducted for delivery on
the first day of such Interest Period for the number of days comprised
therein.
"Eurodollar Lending Office": as to any Lender the office of such
-------------------------
Lender which shall be making or maintaining Eurodollar Loans.
"Eurodollar Loans": Loans for which the applicable rate of interest
----------------
is based upon a Eurodollar Rate.
14
"Eurodollar Rate": with respect to each day during each Interest
---------------
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):
Eurodollar Base Rate
__________________________________________
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in Section 8, provided
---------------- --------
that any requirement for the giving of notice, the lapse of time, or both,
has been satisfied.
"Excess Cash Flow": at the end of any fiscal year of the Company
----------------
ending on or after December 31, 1999, the excess of (a) Consolidated EBITDA
for the period from January 1, 1999 to the end of such fiscal year plus any
extraordinary or non-recurring gains for such period over (b) the sum,
without duplication, of (i) the aggregate amount actually paid by the
Company and its Subsidiaries in cash since January 1, 1999 on account of
capital expenditures or acquisitions permitted hereunder (other than
capital expenditures made with the proceeds of eminent domain or
condemnation proceedings to the extent such proceeds are not included in
the determination of Consolidated EBITDA for such period), (ii) the
aggregate amount of payments of principal in respect of any Indebtedness
since January 1, 1999 (other than any such payments of principal pursuant
to subsections 3.4(b)(i), (ii), (iii) and (iv) or any such payment of
principal in respect of any revolving credit facility to the extent that
there is not an equivalent reduction in such facility), (iii) increases in
working capital (calculated as Consolidated Current Assets at the end of
such period minus Consolidated Current Liabilities as at the end of such
-----
period) of the Company and its Subsidiaries since January 1, 1999
(excluding any increase in cash or Cash Equivalents above an increase
deemed in good faith by the Company to be necessary or desirable for the
operation of the business of the Company and its Subsidiaries), (iv) cash
interest expense (including fees paid in connection with Letters of Credit,
surety bonds, commitment fees and other periodic bank charges) of the
Company since January 1, 1999, (v) any dividends actually paid in cash by
the Company since January 1, 1999 as permitted by subsection 7.11, (vi) the
amount of taxes actually paid in cash by the Company and its Subsidiaries
since January 1, 1999 either during such period or within a normal payment
period thereof, (vii) the amount of cash actually paid to repurchase
Capital Stock of the Company pursuant to subsection 7.11 since January 1,
1999, (viii) any fees and expenses incurred in connection with any merger,
acquisition, joint venture or financing permitted hereunder, the Merger
and, in each case, the related financing thereof and charges relating to
management fees prepaid in connection with the Merger, (ix) to the extent
used in computing Consolidated Net Income of the Company and its
Subsidiaries, (A) the net income of any Person acquired in a pooling of
interests transaction for any period prior to the date of acquisition and
(B) any increases during such period to shareholder's equity of such Person
attributable to tax benefits from net operating losses and the exercise of
stock options that are not otherwise included in Consolidated Net Income
for such period, (x) to the extent added to
15
Consolidated Net Income of the Company and its Subsidiaries in calculating
Consolidated EBITDA for such period, the net cost of Interest Rate
Agreements, franchise taxes and management fees, (xi) the net income of any
Subsidiary to the extent that such amount is accounted for under the equity
method and to the extent cash dividends are not paid or the declaration or
payment of dividends is not permitted without prior governmental approval
(which has not been obtained), (xii) the amount (without duplication) of
cash actually paid by the Company in connection with clauses (b), (h), (k),
(m), (n), (o) and (p) in the definition of Consolidated EBITDA, (xiii) any
non-cash restructuring or non-recurring charge or reserve (net of cash
payments during such period with respect to such charge or reserve), (xiv)
any extraordinary or non-recurring losses for such period and (xv) any cash
synthetic lease rent expense (less any amortization of principal included
in such expense) since January 1, 1999, provided that such excess, if any,
--------
shall be reduced by the amount of any payments previously made pursuant to
subsection 3.4(b)(iv).
"Exchange Debentures": to the extent permitted to be issued
-------------------
hereunder, the exchange debentures which shall have material terms and
conditions as described in the Offering Memorandum (or any refinancing
thereof permitted hereunder).
"Existing Credit Agreement": the Credit Agreement dated as of April
-------------------------
14, 1997, as amended to date, among the Company, the other borrowers
specified therein, the lenders parties thereto and Chase, as administrative
agent.
"Existing Shareholders": as defined in the Recitals hereto.
---------------------
"Fee Property": as defined in subsection 4.13.
------------
"Financing Lease": (a) any lease of property, real or personal, the
---------------
obligations under which are capitalized on a consolidated balance sheet of
the Company and its consolidated Subsidiaries and (b) any other such lease
to the extent that the then present value of any rental commitment
thereunder should, in accordance with GAAP, be capitalized on a balance
sheet of the lessee.
"Foreign Subsidiary": any Subsidiary which is not organized under the
------------------
laws of the United States or any state thereof or the District of Columbia.
"Form S-4": the Registration Statement on Form S-4 dated May 1, 1998
--------
and as amended, filed by the Company with the Securities and Exchange
Commission in connection with the Merger.
"GAAP": generally accepted accounting principles in the United States
----
in effect from time to time.
16
"Governmental Authority": any nation or government, any state or
----------------------
other political subdivision thereof or any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Hazardous Materials": any hazardous materials, hazardous wastes,
-------------------
hazardous pesticides or hazardous or toxic substances, and any other
material that may give rise to liability under any Environmental Law,
including, without limitation, asbestos, petroleum, any other petroleum
products (including gasoline, crude oil or any fraction thereof),
polychlorinated biphenyls and urea-formaldehyde insulation.
"Health Care Business": the business of operating a Health Care
--------------------
Facility or any Ancillary Businesses.
"Health Care Facility": any skilled nursing, assisted living,
--------------------
retirement or congregate care facility.
"Health Care Permit": every accreditation, authorization, certificate
------------------
of need, license or permit that is required by any applicable Governmental
Authority to own, lease, operate or manage a Health Care Facility or
Ancillary Business of the Company or any of its Subsidiaries.
"Indebtedness": of a Person, at a particular date, (a) all
------------
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services, (b) the undrawn face amount of all letters
of credit issued for the account of such Person and, without duplication,
all drafts drawn thereunder and unpaid reimbursement obligations with
respect thereto, (c) all liabilities (other than Lease Obligations and
liabilities in connection with reserves established in accordance with
GAAP) secured by any Lien on any property owned by such Person, even though
such Person has not assumed or become liable for the payment thereof, (d)
Financing Leases and (e) all indebtedness of such Person arising under
acceptance facilities, but excluding (i) trade and other accounts payable
and accrued expenses payable in the ordinary course of business which are
not overdue for a period of more than 120 days or, if overdue for more than
120 days, as to which a dispute exists and adequate reserves in conformity
with GAAP have been established on the books of such Person and (ii)
letters of credit supporting the purchase of goods in the ordinary course
of business and expiring no more than six months from the date of issuance;
provided that (x) obligations in respect of Interest Rate Agreements and
--------
(y) obligations relating to Bowie Center L.P. in an aggregate principal
amount not to exceed $7,000,000 at any time shall not be included in this
definition and that interest expense in respect of the obligations
described in clause (y) shall be excluded from all calculations of
financial tests under this Agreement; and provided, further, that
-------- -------
Indebtedness shall at all times be reduced by amounts outstanding under the
Promissory Note.
17
"Insolvency": with respect to any Multiemployer Plan, the condition
----------
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
---------
"Intercreditor Agreement": the collective reference to the Lease
-----------------------
Intercreditor Agreement and the Loan Intercreditor Agreement.
"Interest Payment Date": (a) as to Alternate Base Rate Loans, the
---------------------
last day of each March, June, September and December, commencing on the
first such day to occur after any Alternate Base Rate Loans are made or any
Eurodollar Loans are converted to Alternate Base Rate Loans, and the
Termination Date, (b) as to any Eurodollar Loan in respect of which the
Company, as agent for the Borrowers, has selected an Interest Period of
one, two or three months, the last day of such Interest Period, (c) as to
any Eurodollar Loan in respect of which the Company, as agent for the
Borrowers, has selected a longer Interest Period than the periods described
in clause (b), the last day of each three calendar month interval during
such Interest Period and, in addition, the last day of such Interest Period
and (d) as to any Loan (other than any Revolving Credit Loan that is an
Alternate Base Rate Loan and any Swing Line Loan), the date of any
repayment or prepayment made in respect thereof.
"Interest Period": with respect to any Eurodollar Loan:
---------------
(a) initially, the period commencing on, as the case may be, the
Borrowing Date or conversion date with respect to such Eurodollar Loan
and ending one, two, three or six months thereafter (or, if and when
available to all the relevant Lenders, nine or twelve months
thereafter) as selected by the Company, as agent for the Borrowers, in
its notice of borrowing as provided in subsection 3.1 or its notice of
conversion as provided in subsection 3.2; and
(b) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar Loan and
ending one, two, three or six months thereafter (or, if and when
available to all the relevant Lenders, nine or twelve months
thereafter) as selected by the Company, as agent for the Borrowers, by
irrevocable notice to the Administrative Agent not less than three
Business Days prior to the last day of the then current Interest
Period with respect to such Eurodollar Loan;
provided that the foregoing provisions relating to Interest Periods are
--------
subject to the following:
(i) if any Interest Period would otherwise end on a day which is
not a Business Day, that Interest Period shall be extended to the next
succeeding Business Day, unless the result of such extension would be
to carry such Interest
18
Period into another calendar month, in which event such Interest
Period shall end on the immediately preceding Business Day;
(ii) any Interest Period that would otherwise extend beyond the
Termination Date shall end on the Termination Date, or if the
Termination Date shall not be a Business Day, on the next preceding
Business Day;
(iii) if the Company shall fail to give notice as provided above
in clause (b), it shall be deemed to have selected a conversion of a
Eurodollar Loan into an Alternate Base Rate Loan (which conversion
shall occur automatically and without need for compliance with the
conditions for conversion set forth in subsection 3.2);
(iv) any Interest Period that begins on the last day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; and
(v) the Company shall select Interest Periods so as not to
require a prepayment (to the extent practicable) or a scheduled
payment of a Eurodollar Loan during an Interest Period for such
Eurodollar Loan.
"Interest Rate Agreement": any interest rate swap agreement, interest
-----------------------
rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement.
"Investcorp": Investcorp S.A., a Luxembourg corporation.
----------
"Investment Grade Securities": (a) securities issued or directly and
---------------------------
fully guaranteed or insured by the United States government or any agency
or instrumentality thereof (other than Cash Equivalents), (b) debt
securities or debt instruments with a rating of BBB- or higher by S&P or
Baa3 by Moody's or the equivalent of such rating by such rating
organization, or if no rating of S&P's or Moody's then exists, the
equivalent of such rating by any other nationally recognized securities
rating agency, but excluding any debt securities or instruments
constituting loans or advances among the Company and its Subsidiaries and
(c) investments in any fund that invests exclusively in investments of the
type described in clauses (a) and (b) which fund may also hold immaterial
amounts of cash pending investment and/or distribution.
"Investor Contributions": as defined in the Participation Agreement,
----------------------
dated as of the date hereof, among the Company, the Trust, the Synthetic
Investors, the Lenders and the Administrative Agent.
"Investors": Investcorp S.A., certain of its affiliated entities and
---------
other initial investors arranged by Investcorp S.A.
19
"IPO": any sale by the Company through a public offering of its
---
common (or other voting) stock pursuant to an effective registration
statement (other than a registration statement on Form S-4, S-8 or any
successor or similar form) filed under the Securities Act of 1933, as
amended.
"Issuing Lenders": Chase and any of its Affiliates, including Chase
---------------
Manhattan Bank Delaware, as issuer of the Letters of Credit; with respect
to any Letter of Credit, the term "Issuing Lender" shall mean the Issuing
Lender with respect to such Letter of Credit.
"L/C Application": as defined in subsection 2.5(a).
---------------
"L/C Obligations": the obligations of the Company to reimburse the
---------------
Issuing Lender for any payments made by the Issuing Lender under any Letter
of Credit that have not been reimbursed by the Company pursuant to
subsection 2.8(a).
"L/C Participating Interest": an undivided participating interest in
--------------------------
the face amount of each issued and outstanding Letter of Credit and the L/C
Application relating thereto.
"L/C Participation Certificate": a certificate in substantially the
-----------------------------
form of Exhibit G.
"Leased Property": as defined in subsection 4.13.
---------------
"Lease Intercreditor Agreement": the Accounts Receivable
-----------------------------
Intercreditor Agreement (Leased Facilities), substantially in the form of
Exhibit M-1, to be executed and delivered by Meditrust Company LLC, the
Administrative Agent, the Trust and the Synthetic Investors, as the same
may be amended, supplemented or otherwise modified from time to time.
"Lease Obligations": as of the date of any determination thereof, the
-----------------
rental commitments, if any, of the Company and its Subsidiaries determined
on a consolidated basis under leases for real and/or personal property (net
of rental commitments from sub-leases thereof), excluding however,
obligations under Financing Leases.
"Lenders": as defined in the Preamble hereto.
-------
"Letters of Credit": the collective reference to the Commercial L/Cs
-----------------
and the Standby L/Cs; individually, a "Letter of Credit".
----------------
"Leverage Ratio": as defined in subsection 7.9; provided that for
-------------- --------
purposes of calculating the Leverage Ratio on any date, the unencumbered
(other than Liens
20
permitted pursuant to subsection 7.2(f)) cash and Cash Equivalent balances
of the Company and its Subsidiaries on such date, and any Bridge Junior
Subordinated Debt outstanding on such date, shall be deducted from the
amount of Consolidated Indebtedness on such date.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, encumbrance, lien (statutory or other), or preference,
priority or other security agreement or preferential arrangement of any
kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the
filing of any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction in respect of any of the foregoing,
except for the filing of financing statements in connection with Lease
Obligations incurred by the Company or its Subsidiaries to the extent that
such financing statements relate to the property subject to such Lease
Obligations).
"Loan Intercreditor Agreement": the Accounts Receivable Intercreditor
----------------------------
Agreement (Mortgaged Facilities), substantially in the form of Exhibit M-2,
to be executed and delivered by Meditrust Mortgage Investments, Inc., the
Administrative Agent, the Trust and the Synthetic Investors, as the same
may be amended, supplemented or otherwise modified from time to time.
"Loans": the collective reference to the Swing Line Loans, the Term
-----
Loans and the Revolving Credit Loans; individually, a "Loan".
----
"Meditrust": any one or more of the following entities: Meditrust
---------
Mortgage Investments, Inc., Meditrust Company LLC (as successor by merger
to Meditrust of Florida, Inc., Meditrust of Ohio, Inc., Meditrust of New
Hampshire, Inc., Meditrust of Bedford, Inc., Meditrust of New Jersey, Inc.,
Meditrust Tri-States, Inc.) and any of their affiliates.
"Meditrust Entities": the collective reference to HHCI Limited
------------------
Partnership, Harborside Toledo Limited Partnership, Harborside of New
Hampshire Limited Partnership, Harborside Toledo Corp., Countryside Care
Center Corp., Bay Tree Nursing Center Corp., West Bay Nursing Center Corp.
and Sunset Point Nursing Center Corp.
"Merger": as defined in the Recitals hereto.
------
"Merger Agreement": as defined in the Recitals hereto.
----------------
"Moody's": Moody's Investors Service, Inc.
-------
21
"Mortgaged Properties": (a) the Real Property designated as
--------------------
"Mortgaged Property" on Schedule 4.13 and (b) any fee Real Property covered
by a Mortgage delivered pursuant to subsection 6.9(c).
"Mortgages": as defined in subsection 6.12.
---------
"Multiemployer Plan": a Plan which is a multiemployer plan as defined
------------------
in Section 4001(a)(3) of ERISA.
"Net Proceeds": the aggregate cash proceeds received by the Company
------------
or any Subsidiary in respect of:
(a) (i) any issuance or borrowing of any debt securities or
loans by the Company or any Subsidiary other than debt or loans
permitted to be incurred or borrowed pursuant to subsection 7.1 or
(ii) any issuance of Capital Stock (excluding any such issuance to any
Investor or any Affiliate thereof);
(b) any Asset Sale, excluding (i) any net proceeds received upon
any condemnation or exercise of rights of eminent domain to the extent
the same shall be deemed not to constitute Net Proceeds pursuant to
the proviso to subsection 7.5(d) and (ii) any proceeds of insurance
received upon any casualty or loss;
(c) any substantially like-kind exchanges of property to the
extent provided in subsection 7.5(e); and
(d) any promissory notes delivered to the Company or such
Subsidiary in respect of an Asset Sale;
in each case net of (without duplication) (A) the amount required to repay
any Indebtedness (other than the Loans) secured by a Lien on any assets of
the Company or a Subsidiary that are collateral for any such debt
securities or loans that are sold or otherwise disposed of in connection
with such Asset Sale, (B) liabilities associated with the assets that are
the subject of any such Asset Sale that are not assumed by the purchaser in
connection with such Asset Sale, (C) the reasonable expenses (including
legal fees and brokers' and underwriters' commissions, lenders' fees or
credit enhancement fees, in any case, paid to third parties or, to the
extent permitted hereby, Affiliates) incurred in effecting such issuance or
sale and (D) any taxes reasonably attributable to such sale and reasonably
estimated by the Company or such Subsidiary to be actually payable.
"Non-Funding Lender": as defined in subsection 3.9(c).
------------------
"Notes": the collective reference to the Swing Line Note, the
-----
Revolving Credit Notes and the Term Loan Notes; each of the Notes, a
"Note".
----
22
"Offering Memorandum": the offering memorandum dated July 29, 1998
-------------------
with respect to the Senior Subordinated Discount Notes and the Preferred
Stock.
"Participants": as defined in subsection 9.6(b).
------------
"Participating Lender": any Lender (other than the Issuing Lender)
--------------------
with respect to its L/C Participating Interest in each Letter of Credit.
"Payment Sharing Notice": a written notice from the Company or any
----------------------
Lender informing the Administrative Agent that an Event of Default has
occurred and is continuing and directing the Administrative Agent to
allocate payments thereafter received from or on behalf of any Borrower in
accordance with the provisions of subsection 3.9.
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
----
to Subtitle A of Title IV of ERISA or any successor.
"Permanent Junior Subordinated Debt": (a) unsecured notes or
----------------------------------
debentures of the Company, subordinated to the prior payment of the Loans,
the other obligations under the Credit Documents, the Synthetic Lease
Obligations and related Interest Rate Agreements, provided that (i) such
--------
notes or debentures have terms which are as favorable to the Lenders as the
terms relating to the Exchange Debentures set forth in the Offering
Memorandum and the conditions contained in clauses (a)(ii)(C) and (D) of
this definition are met or (ii) (A) unless otherwise agreed to by the
Required Lenders, no part of the principal amount of any such notes or
debentures shall have a scheduled maturity date earlier than the date that
is one year after the Scheduled Termination Date, (B) unless otherwise
agreed to by the Required Lenders, (I) the subordination provisions of
which are as favorable to the Lenders as such provisions set forth in the
Offering Memorandum relating to the Exchange Debentures, (II) the terms and
conditions thereof (including, without limitation, subordination, covenant
and event of default provisions thereof but excluding any call protection
provisions) taken as a whole shall be at least as favorable to the Company
and the Lenders as such terms and conditions set forth with respect to the
Bridge Junior Subordinated Debt in the Bridge Commitment Letter (or in the
Bridge Loan Agreement if entered into by the parties thereto), and (III) no
cash interest shall be payable thereon for a period of five years
commencing on the Closing Date and, thereafter, the non-default cash
interest rate thereon shall not exceed 16% per annum and the total non-
default interest rate shall not exceed 18% per annum, (C) no covenant
contained in this Agreement or any of the other Credit Documents would be
violated on the proposed issuance date after giving effect to (I) the
issuance of such notes or debentures, (II) the payment of all issuance
costs, commissions, discounts, redemption premiums and other fees and
charges associated therewith, (III) the use of proceeds thereof and (IV)
the redemption, repayment, retirement and repurchase of all Indebtedness of
the Company and its Subsidiaries to be redeemed, repaid or repurchased
23
in connection therewith and (D) substantially final drafts of the
documentation governing any such notes or debentures, showing the terms
thereof, shall have been furnished to the Arranger and the Co-Arrangers at
least 5 days prior to the date of issuance of such notes or debentures and
(b) unsecured notes or debentures of the Company, subordinated to the prior
payment of the Loans, the other obligations under the Credit Documents, the
Synthetic Lease Obligations and related Interest Rate Agreements, that may
be issued by the Company to refinance previously issued Bridge Junior
Subordinated Debt or Permanent Junior Subordinated Debt, provided that (i)
--------
unless otherwise agreed to by the Required Lenders, (A) no part of the
principal amount of any such notes or debentures shall have a scheduled
amortization date earlier than the date that is one year after the
Scheduled Termination Date and (B) the interest rate and subordination
provisions shall be at least as favorable to the Company and the Lenders as
such provisions of such refinanced Bridge Junior Subordinated Debt or
Permanent Junior Subordinated Debt, as the case may be, and the other terms
and conditions thereof (including, without limitation, the covenant and
event of default provisions thereof but excluding any call protection
provisions and provisions relating to accretion or accrual of interest
without cash payments thereof) taken as a whole shall be at least as
favorable to the Company and the Lenders as such refinanced Bridge Junior
Subordinated Debt or Permanent Junior Subordinated Debt, as the case may
be, and (ii) the conditions contained in clause (a)(ii)(C) and (D) of this
definition shall be met.
"Permanent Senior Subordinated Debt": (a) unsecured notes or
----------------------------------
debentures of the Company, subordinated to the prior payment of the Loans,
the other obligations under the Credit Documents, the Synthetic Lease
Obligations and related Interest Rate Agreements, provided that either (i)
--------
such notes or debentures (excluding, in the case of Cash Pay Permanent
Senior Subordinated Debt (as defined below), provisions relating to
accretion or accrual of interest without cash payments thereof) have terms
which are as favorable to the Lenders as the terms with respect to the
Senior Subordinated Discount Notes set forth in the Offering Memorandum and
the conditions contained in clauses (a)(ii)(C) and (D) of this definition
are met or (ii) (A) unless otherwise agreed to by the Required Lenders, no
part of the principal amount of any such notes or debentures shall have a
scheduled maturity date earlier than the date that is one year after the
Scheduled Termination Date, (B) unless otherwise agreed to by the Required
Lenders, (I) the subordination provisions of which are as favorable to the
Lenders as such provisions with respect to the Senior Subordinated Discount
Notes set forth in the Offering Memorandum, (II) the terms and conditions
thereof (including, without limitation, subordination, covenant and event
of default provisions thereof but excluding any call protection provisions)
taken as a whole shall be at least as favorable to the Company and the
Lenders as such terms and conditions with respect to the Bridge Senior
Subordinated Debt set forth in the Bridge Commitment Letter (or in the
Bridge Loan Agreement if entered into by the parties thereto), and (III) no
cash interest shall be payable thereon for a period of five years
commencing on the Closing Date (except in the case of Permanent Senior
Subordinated Debt issued to refinance Bridge Senior Subordinated Debt (any
such cash pay Permanent Senior Subordinated Debt being referred to as "Cash
----
Pay Permanent Senior Subordinated Debt")) and, thereafter, the non-default
--------------------------------------
cash interest rate thereon shall not exceed 16%
24
per annum and the total non-default interest rate shall not exceed 18% per
annum, (C) no covenant contained in this Agreement or any of the other
Credit Documents would be violated on the proposed issuance date after
giving effect to (I) the issuance of such notes or debentures, (II) the
payment of all issuance costs, commissions, discounts, redemption premiums
and other fees and charges associated therewith, (III) the use of
proceeds thereof and (IV) the redemption, repayment, retirement and
repurchase of all Indebtedness of the Company and its Subsidiaries to be
redeemed, repaid or repurchased in connection therewith and (D)
substantially final drafts of the documentation governing any such notes or
debentures, showing the terms thereof, shall have been furnished to the
Arranger and the Co-Arrangers at least 5 days prior to the date of issuance
of such notes or debentures; and (b) unsecured notes or debentures of the
Company, subordinated to the prior payment of the Loans, the other
obligations under the Credit Documents, the Synthetic Lease Obligations and
related Interest Rate Agreements, that may be issued by the Company to
refinance previously issued Bridge Senior Subordinated Debt or Permanent
Senior Subordinated Debt, provided that (i) unless otherwise agreed to by
--------
the Required Lenders, (A) no part of the principal amount of any such notes
or debentures shall have a scheduled amortization date earlier than the
date that is one year after the Scheduled Termination Date and (B) the
interest rate and subordination provisions shall be at least as favorable
to the Company and the Lenders as such provisions of such refinanced Bridge
Senior Subordinated Debt or Permanent Senior Subordinated Debt, as the case
may be, and the other terms and conditions thereof (including, without
limitation, the covenant and event of default provisions thereof but
excluding any call protection provisions and provisions relating to
accretion or accrual of interest without cash payments thereof) taken as a
whole shall be at least as favorable to the Company and the Lenders as such
refinanced Bridge Senior Subordinated Debt or Permanent Senior Subordinated
Debt, as the case may be, and (ii) the conditions contained in clauses
(a)(ii)(C) and (D) of this definition shall be met.
"Permitted Liens": Liens permitted to exist under subsection 7.2.
---------------
"Person": an individual, partnership, corporation, business trust,
------
joint stock company, limited liability company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of
whatever nature.
"Plan": at a particular time, any employee benefit plan which is
----
covered by ERISA and in respect of which the Company or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Preferred Stock": the Company's exchangeable preferred stock,
---------------
provided that (a) such preferred stock shall not have a scheduled
--------
redemption date earlier than the date that is one year after the Scheduled
Termination Date, (b) the terms of such preferred stock are substantially
as set forth with respect to preferred stock in the Offering Memorandum and
(c) substantially final drafts of the documentation governing any such
preferred
25
stock, showing the terms thereof, shall have been furnished to
the Arranger and the Co-Arrangers at least 5 days prior to the date of
issuance of such preferred stock.
"Promissory Note": the promissory note in the original principal
---------------
amount of $7,487,000, dated December 12, 1997, made by Harold J. Moffie and
certain other entities listed therein for the benefit of the Company.
"Purchase Option Acquisition": as defined in subsection 7.6.
---------------------------
"Real Property": each Fee Property and Leased Property listed on
-------------
Schedule 4.13.
"Refunded Swing Line Loans": as defined in subsection 2.4(b).
-------------------------
"Register": as defined in subsection 9.6(d).
--------
"Reorganization": with respect to any Multiemployer Plan, the
--------------
condition that such Plan is in reorganization as such term is used in
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(c) of
----------------
ERISA, other than those events as to which the thirty day notice is waived
under subpart B of PBGC Reg. (S) 4042.
"Required Lenders": at a particular time, the holders of at least 51%
----------------
of the sum of (a) the aggregate unpaid principal amount of the Term Loans,
if any, (b) the aggregate unpaid principal amount of the Term Synthetic
Lease Obligations, if any, and (c) the Revolving Credit Commitments or, if
the Revolving Credit Commitments are terminated, the aggregate unpaid
principal amount of the Revolving Credit Loans, and participations in Swing
Line Loans and the aggregate amount available to be drawn at such time
under all outstanding Letters of Credit and L/C Obligations. The Term
Loans, the Term Synthetic Lease Obligations and the Revolving Credit
Commitments (or, if the Revolving Credit Commitments are terminated, the
aggregate unpaid principal amount of the Revolving Credit Loans, and
participations in Swing Line Loans and the aggregate amount available to be
drawn at such time under all outstanding Letters of Credit and L/C
Obligations) of any Non-Funding Lender shall be disregarded in determining
Required Lenders at any time.
"Requirement of Law": as to any Person, the Articles or Certificate
------------------
of Incorporation and By-Laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation, order or
determination of an arbitrator or a court or other Governmental Authority,
in each case, applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
26
"Responsible Officer": with respect to any Person, the president,
-------------------
chief executive officer, the chief operating officer, the chief financial
officer, treasurer, controller or any vice president of such Person.
"Revolving Credit Commitment": as to any Lender, its obligations to
---------------------------
make Revolving Credit Loans to the Company pursuant to subsection 2.1 and
participate in Swing Line Loans and Letters of Credit, in an aggregate
principal and/or face amount not to exceed the amount set forth under such
Lender's name in Schedule II opposite the caption "Revolving Credit
Commitment" or in Schedule 1 to the Assignment and Acceptance by which such
Lender acquired its Revolving Credit Commitment, as the same may be reduced
from time to time pursuant to subsection 2.15, 3.3 or 3.4(b) or adjusted
pursuant to subsection 9.6(c); collectively, as to all the Lenders, the
"Revolving Credit Commitments".
----------------------------
"Revolving Credit Commitment Period": the period from and including
----------------------------------
the Closing Date to but not including the Termination Date.
"Revolving Credit Lender": any Lender with a Revolving Credit
-----------------------
Commitment or which is the holder of Revolving Credit Loans.
"Revolving Credit Loan" and "Revolving Credit Loans": as defined in
--------------------- ----------------------
subsection 2.1(a).
"Revolving Credit Note": as defined in subsection 3.13(e).
---------------------
"Revolving Credit Percentage": as to any Revolving Credit Lender at
---------------------------
any time, the percentage which such Lender's Revolving Credit Commitment
then constitutes of the total Revolving Credit Commitments (or, at any time
after the Revolving Credit Commitments shall have expired or terminated,
the percentage which the aggregate principal amount of such Lender's
Revolving Credit Loans then outstanding constitutes of the aggregate
principal amount of the Revolving Credit Loans then outstanding).
"Revolving Synthetic Lease Obligations": at any time, Synthetic Lease
-------------------------------------
Obligations that have not been converted to term obligations pursuant to
the provisions of the relevant documentation with respect to the Synthetic
Lease Facility and in accordance with subsection 2.15.
"Scheduled Termination Date": August 11, 2004.
--------------------------
"Security Documents": the collective reference to the Collateral
------------------
Agreement, the Mortgages and all other security documents hereafter
delivered to the Administrative Agent granting a Lien on any property of
any Person to secure the obligations and liabilities of any Credit Party
under any Credit Document.
"Senior Subordinated Discount Notes": the senior subordinated
----------------------------------
discount notes (or any refinancing thereof permitted hereunder) which: (a)
shall be issued under the Indenture, dated as of July 31, 1998 and as
supplemented by Supplemental Indenture dated as of August 11, 1998, between
the Company and United States Trust Company of New York, as Trustee, (b)
shall not be mandatorily redeemable or mandatorily purchasable (except upon
the occurrence of a change of control and assets sales (as defined therein)
at a purchase price not in excess of the principal amount thereof plus
redemption premium, if any, plus accrued and unpaid interest plus
liquidated damages, if any) and shall not have any scheduled amortization
or maturity prior to the date that is one year after the Scheduled
Termination Date, and (c) shall have material terms and conditions as
described in the Offering Memorandum.
"Single Employer Plan": any Plan which is covered by Title IV of
--------------------
ERISA, but which is not a Multiemployer Plan.
"S&P": Standard and Poor's Ratings Services, a division of McGraw-
---
Hill Companies, Inc.
"Standby L/C": an irrevocable letter of credit under which the
-----------
Issuing Lender agrees to make payments in Dollars for the account of the
Company, on behalf of the Company or any Subsidiary in respect of
obligations of the Company or such Subsidiary incurred pursuant to
contracts made or performances undertaken or to be undertaken or like
matters relating to contracts to which the Company or such Subsidiary is or
proposes to become a party in the ordinary course of the Company's or such
Subsidiary's business, including, without limiting the foregoing, for
insurance purposes or in respect of advance payments or as bid or
performance bonds or for any other purpose for which a standby letter of
credit might customarily be issued.
"Subordinated Debt": collectively, any Bridge Senior Subordinated
-----------------
Debt, Bridge Junior Subordinated Debt, Senior Subordinated Discount Notes,
Exchange Debentures, Permanent Junior Subordinated Debt and Permanent
Senior Subordinated Debt.
"Subsection 3.11(d)(2) Certificate": as defined in subsection
---------------------------------
3.11(d).
"Subsidiary": as to any Person, a corporation, partnership, limited
----------
liability company or other entity of which shares of stock of each class or
other interests having ordinary voting power (other than stock or other
interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the time
owned, or the management of which is otherwise controlled, by such Person
or by one or more Subsidiaries of such Person or by such Person and one or
more Subsidiaries of such Person. A Subsidiary shall be deemed wholly
owned by a Person who owns directly or indirectly all of the voting shares
of stock or other interests of such Subsidiary having voting power under
ordinary circumstances to vote for directors or other managers of
28
such corporation, partnership or other entity, except for directors'
qualifying shares. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Company. Notwithstanding anything to the
contrary in this definition, "Subsidiary" shall not include Bowie Center
L.P.
"Supermajority Lenders": at a particular time, the holders of at least
---------------------
66-2/3% of the sum of (a) the aggregate unpaid principal amount of the Term
Loans, if any, and (b) the Revolving Credit Commitments or, if the
Revolving Credit Commitments are terminated, the aggregate unpaid principal
amount of the Revolving Credit Loans, and participations in Swing Line
Loans and the aggregate amount available to be drawn at such time under all
outstanding Letters of Credit and L/C Obligations. The Term Loans and the
Revolving Credit Commitments (or, if the Revolving Credit Commitments are
terminated, the aggregate unpaid principal amount of the Revolving Credit
Loans, and participations in Swing Line Loans and the aggregate amount
available to be drawn at such time under all outstanding Letters of Credit
and L/C Obligations) of any Non-Funding Lender shall be disregarded in
determining Supermajority Lenders at any time.
"Swing Line Commitment": the Swing Line Lender's obligation to make
---------------------
Swing Line Loans pursuant to subsection 2.4.
"Swing Line Lender": Chase in its capacity as the lender of the Swing
-----------------
Line Loans.
"Swing Line Loan Participation Certificate": a certificate in
-----------------------------------------
substantially the form of Exhibit H.
"Swing Line Loans": as defined in subsection 2.4(a).
----------------
"Swing Line Note": as defined in subsection 3.13(e).
---------------
"Syndication Agent": as defined in the Preamble hereto.
-----------------
"Synthetic Investors": as defined in the Agency and Intercreditor
-------------------
Agreement.
"Synthetic Lease Facility": the synthetic lease facility provided for
------------------------
in (a) the Participation Agreement, dated as of the date hereof, among the
Company, the Trust, the Synthetic Investors, the Lenders and the
Administrative Agent, (b) the Lease, dated as of the date hereof, between
Harborside of Dayton Limited Partnership, as lessee, and the Trust, as the
lessor, and (c) the Credit Agreement, dated as of the date hereof, among
the Trust, as borrower, the Lenders, the Arranger, the Co-Arrangers, the
Syndication Agent, the Documentation Agent and the Administrative Agent.
29
"Synthetic Lease Obligations": the collective reference to (a)
---------------------------
outstanding obligations under the Synthetic Lease Facility and (b)
unreturned Investor Contributions.
"Termination Date": the earlier of (a) the Scheduled Termination Date
----------------
and (b) such earlier date as the Revolving Credit Commitments shall
terminate hereunder.
"Term Loan Lender": any Lender which is the holder of a Term Loan.
----------------
"Term Loan Note": as defined in subsection 3.13(e).
--------------
"Term Loans": as defined in subsection 2.15.
-----------
"Term Synthetic Lease Obligations": as defined in subsection 2.15.
---------------------------------
"Transferee": as defined in subsection 9.6(f).
----------
"Trust": HHC 1998-1 Trust, a Delaware business trust.
-----
"Trust Guarantee": the Guarantee, substantially in the form of
---------------
Exhibit N, to be made by the Trust in favor of the Administrative Agent for
the benefit of the Lenders, as the same may be amended, supplemented or
otherwise modified from time to time.
"Type": as to any Loan, its nature as an Alternate Base Rate Loan or
----
Eurodollar Loan.
"Uniform Customs": the Uniform Customs and Practice for Documentary
---------------
Credits (1993 Revision), International Chamber of Commerce Publication No.
500, and any amendments thereof.
"United States": the United States of America.
-------------
"1997 Form 10-K": the annual report on Form 10-K of the Company filed
--------------
with the Securities and Exchange Commission on March 31, 1998.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
-----------------------------
therein, all terms defined in this Agreement shall have the defined meanings
when used in the Notes, any other Credit Document or any certificate or other
document made or delivered pursuant hereto.
(a) As used herein and in the Notes, any other Credit Document and
any certificate or other document made or delivered pursuant hereto, accounting
terms relating to the Company and its Subsidiaries not defined in subsection 1.1
and accounting terms partly defined in subsection 1.1 to the extent not defined,
shall have the respective meanings given to them under GAAP. To the extent
there are any changes in GAAP from the date of this Agreement, the financial
covenants set forth herein at the option of the Company will either (i) continue
to be
30
determined in accordance with GAAP in effect on the Closing Date, as applicable,
or (ii) be adjusted or reset to reflect such changes in GAAP, such adjustments
or resets to be mutually agreed to by the Company, as agent for the Borrowers,
and the Administrative Agent.
(b) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section, subsection,
schedule and exhibit references are to this Agreement unless otherwise
specified.
(c) The meanings given to terms defined herein shall be equally
applicable to the singular and plural forms of such terms.
2. AMOUNT AND TERMS OF REVOLVING
CREDIT COMMITMENTS
------------------------
2.1 Revolving Credit Commitments. (a) Subject to the terms and
----------------------------
conditions hereof, each Lender severally agrees to the extent of its Revolving
Credit Commitment to extend credit to the Borrowers from time to time on any
Borrowing Date during the Revolving Credit Commitment Period (i) by purchasing
an L/C Participating Interest in each Letter of Credit issued by the Issuing
Lender and (ii) by making loans in Dollars (individually, such a Loan is a
"Revolving Credit Loan", and collectively such Loans are the "Revolving Credit
- ---------------------- ----------------
Loans"; for purposes of clarity, Revolving Credit Loans do not include any
- -----
Synthetic Lease Obligations) to the Borrowers from time to time; provided,
--------
however, that in no event shall any Revolving Credit Loans be made, or Letter of
- -------
Credit be issued, if the aggregate amount of the Revolving Credit Loans to be
made or Letter of Credit to be issued would, after giving effect to the use of
proceeds, if any, thereof, exceed the aggregate Available Revolving Credit
Commitments, and no Letter of Credit shall be issued if after giving effect
thereto the sum of the undrawn amount of all outstanding Letters of Credit and
the amount of all L/C Obligations would exceed $25,000,000. During the
Revolving Credit Commitment Period, the Borrowers may use the Revolving Credit
Commitments by borrowing, prepaying the Revolving Credit Loans in whole or in
part, and reborrowing, all in accordance with the terms and conditions hereof,
and/or by having the Issuing Lender issue Letters of Credit, having such Letters
of Credit expire undrawn upon or if drawn upon, reimbursing the Issuing Lender
for such drawing, and having the Issuing Lender issue new Letters of Credit.
(a) Each borrowing of Revolving Credit Loans pursuant to the
Revolving Credit Commitments shall be in an aggregate principal amount of the
lesser of (i) $1,000,000 or a whole multiple of $100,000 in excess thereof in
the case of Alternate Base Rate Loans, and $2,000,000 or a whole multiple of
$1,000,000 in excess thereof, in the case of Eurodollar Loans and (ii) the
Available Revolving Credit Commitments, except that any borrowing of Revolving
Credit Loans to be used solely to pay a like amount of Swing Line Loans may be
in the aggregate principal amount of such Swing Line Loans.
31
2.2 Commitment Fee. The Company agrees to pay to the Administrative
--------------
Agent for the account of each Lender (other than any Non-Funding Lender) a
commitment fee from and including the Closing Date to and including the
Termination Date computed at the applicable rate (on each Adjustment Date
pursuant to the guidelines set forth in the definition of Applicable Margin) per
annum set forth on Schedule III on the average daily amount of the Available
Revolving Credit Commitment of such Lender during the period for which payment
is made (whether or not the Company shall have satisfied the applicable
conditions to borrow or for the issuance of a Letter of Credit set forth in
Section 5); provided that (a) from the Closing Date until the first Adjustment
--------
Date occurring after the completion of four fiscal quarters of the Company after
the Closing Date, the rate at which the commitment fee shall be calculated (the
"Commitment Fee Rate") shall be 0.50% per annum and (b) if a Default or an Event
-------------------
of Default shall have occurred and be continuing on any Adjustment Date or other
date upon which the Commitment Fee Rate would otherwise be adjusted hereunder,
the Commitment Fee Rate shall in no event be reduced on such Adjustment Date or
other date from the Commitment Fee Rate in effect immediately prior to such
Adjustment Date or other date. Such commitment fee shall be payable quarterly in
arrears on the last day of each March, June, September and December and on the
Termination Date, commencing on the later of (a) the first such date to occur on
or following the Closing Date (or, if earlier, the Termination Date) and (b)
September 30, 1998.
2.3 Proceeds of Revolving Credit Loans. The Borrowers shall use the
----------------------------------
proceeds of Revolving Credit Loans (a) to finance a portion of the cash
consideration payable in the Merger and other payments pursuant to the Merger
Agreement and to pay fees, expenses and financing costs in connection therewith,
(b) to refinance certain of the existing Indebtedness of the Company and its
Subsidiaries, (c) for working capital purposes of the Company and its
Subsidiaries, (d) to finance acquisitions permitted by subsection 7.6(g) or
other provisions of this Agreement, (e) to finance capital expenditures
permitted hereunder and (f) for general corporate purposes.
2.4 Swing Line Commitment. (a) Subject to the terms and conditions
---------------------
hereof, the Swing Line Lender agrees, so long as the Administrative Agent has
not received notice that an Event of Default has occurred and is continuing, to
make swing line loans (individually, a "Swing Line Loan"; collectively, the
---------------
"Swing Line Loans") to the Company from time to time during the Revolving Credit
- -----------------
Commitment Period in an aggregate principal amount at any one time outstanding
not to exceed $10,000,000, provided that no Swing Line Loan may be made if the
--------
aggregate principal amount of the Swing Line Loans to be made would exceed the
aggregate Available Revolving Credit Commitments at such time. Amounts borrowed
by the Company under this subsection 2.4 may be repaid and, through but
excluding the Termination Date, reborrowed. All Swing Line Loans shall be made
as Alternate Base Rate Loans and shall not be entitled to be converted into
Eurodollar Loans. The Company shall give the Swing Line Lender irrevocable
notice (which notice must be received by the Swing Line Lender prior to 3:00
p.m., New York City time) on the requested Borrowing Date specifying the amount
of each requested Swing Line Loan, which shall be in an aggregate minimum amount
of $250,000 or a whole multiple of $100,000 in excess thereof. The proceeds of
each Swing Line Loan will be made available by the Swing Line Lender to the
Company by crediting the account of the Company at
32
the office of the Swing Line Lender with such proceeds. The proceeds of Swing
Line Loans may be used solely for the purposes referred to in subsection 2.3.
(a) The Swing Line Lender at any time in its sole and absolute
discretion may, and on the fifteenth day (or if such day is not a Business Day,
the next Business Day) and last Business Day of each month shall, on behalf of
the Company (which hereby irrevocably directs the Swing Line Lender to act on
its behalf) request each Revolving Credit Lender, including the Swing Line
Lender, to make a Revolving Credit Loan in an amount equal to such Lender's
Revolving Credit Percentage of the amount of the Swing Line Loans (the "Refunded
--------
Swing Line Loans") outstanding on the date such notice is given. Unless any of
- ----------------
the events described in paragraph (f) of Section 8 shall have occurred (in which
event the procedures of paragraph (c) of this subsection 2.4 shall apply) each
such Lender shall make the proceeds of its Revolving Credit Loan available to
the Swing Line Lender for the account of the Swing Line Lender at the office of
the Swing Line Lender specified in subsection 9.2 (or such other location as the
Swing Line Lender may direct) prior to 12:00 noon (New York City time) in funds
immediately available on the Business Day next succeeding the date such notice
is given. The proceeds of such Revolving Credit Loans shall be immediately
applied to repay the Refunded Swing Line Loans.
(b) If prior to the making of a Revolving Credit Loan pursuant to
paragraph (b) of this subsection 2.4 one of the events described in paragraph
(f) of Section 8 shall have occurred, each Revolving Credit Lender will, on the
date such Loan was to have been made, purchase an undivided participating
interest in the Refunded Swing Line Loan in an amount equal to its Revolving
Credit Percentage of such Refunded Swing Line Loan. Each such Lender will
immediately transfer to the Swing Line Lender in immediately available funds,
the amount of its participation and upon receipt thereof the Swing Line Lender
will deliver to such Lender a Swing Line Loan Participation Certificate dated
the date of receipt of such funds and in such amount.
(c) Whenever, at any time after the Swing Line Lender has received
from any Revolving Credit Lender such Lender's participating interest in a
Refunded Swing Line Loan, the Swing Line Lender receives any payment on account
thereof, the Swing Line Lender will distribute to such Lender its participating
interest in such amount (appropriately adjusted, in the case of interest
payments, to reflect the period of time during which such Lender's participating
interest was outstanding and funded) in like funds as received; provided that in
--------
the event that such payment received by the Swing Line Lender is required to be
returned, such Lender will return to the Swing Line Lender any portion thereof
previously distributed by the Swing Line Lender to it in like funds as such
payment is required to be returned by the Swing Line Lender.
(d) The obligation of each Revolving Credit Lender to purchase
participating interests pursuant to subsection 2.4(c) shall be absolute and
unconditional and shall not be affected by any circumstance, including, without
limitation, (i) any set-off, counterclaim, recoupment, defense or other right
which such Lender may have against the Swing Line Lender, any Borrower or any
other Person for any reason whatsoever, (ii) the occurrence or continuance of an
Event of Default, (iii) any adverse change in the condition (financial or
otherwise) of any Borrower, (iv) any breach of this Agreement by any Borrower or
any other Lender or (v) any
33
other circumstance, happening or event whatsoever, whether or not similar to any
of the foregoing.
2.5 Issuance of Letters of Credit. (a) The Company, as agent for
-----------------------------
the Borrowers, may from time to time request the Issuing Lender to issue a
Standby L/C or a Commercial L/C by delivering to the Administrative Agent at its
address specified in subsection 9.2 a letter of credit application in the
Issuing Lender's then customary form (the "L/C Application") completed to the
---------------
satisfaction of the Issuing Lender, together with the proposed form of such
Letter of Credit (which shall comply with the applicable requirements of
paragraph (b) below) and such other certificates, documents and other papers and
information as the Issuing Lender may reasonably request; provided that if the
--------
Issuing Lender informs the Company that it is for any reason unable to open such
Letter of Credit, the Company, as agent for the Borrowers, may request any
Lender to open such Letter of Credit upon the same terms offered to the Issuing
Lender and each reference to the Issuing Lender for purposes of subsections 2.5
through 2.14, 5.1 and 5.2 shall be deemed to be a reference to such issuing
Lender. The letters of credit identified on Schedule 2.5 shall at all times on
and after the Closing Date be deemed to be a "Letter of Credit" or "Letters of
Credit" for all purposes of this Agreement and the other Loan Documents.
(a) Each Standby L/C and Commercial L/C issued hereunder shall, among
other things, (i) be for the account of the Company, (ii) be in such form
requested by the Company as shall be acceptable to the Issuing Lender in its
sole discretion and (iii) have an expiry date occurring (A) in the case of any
Standby L/C, not later than 365 days (or such later date as may be agreed to by
the Issuing Lender) after the date of issuance of such Standby L/C and (B) in
the case of any Commercial L/C, not later than 120 days (or such later date as
may be agreed to by the Issuing Lender) after the date of issuance of such
Commercial L/C. Each Letter of Credit issued hereunder may be automatically
renewed on its expiry date for an additional period equal to the initial term,
but in no case shall any Letter of Credit have an expiry date, or permit payment
of any draft drawn thereunder on any date, occurring later than the Termination
Date. Except as otherwise provided for in any Letter of Credit, each Letter of
Credit shall be subject to the Uniform Customs and, to the extent not
inconsistent therewith, the laws of the State of New York.
2.6 Participating Interests. Effective in the case of each Standby
-----------------------
L/C and Commercial L/C (if applicable) as of the date of the opening thereof,
the Issuing Lender agrees to allot and does allot, to itself and each other
Revolving Credit Lender, and each such Lender severally and irrevocably agrees
to take and does take in such Letter of Credit and the related L/C Application
(if applicable), an L/C Participating Interest in a percentage equal to such
Lender's Revolving Credit Percentage.
2.7 Procedure for Opening Letters of Credit. Upon receipt of any
---------------------------------------
L/C Application from the Company, the Issuing Lender will process such L/C
Application, and the other certificates, documents and other papers delivered to
the Issuing Lender in connection therewith, in accordance with its customary
procedures and, subject to the terms and conditions hereof, shall promptly open
such Letter of Credit by issuing the original of such Letter of Credit
34
to the beneficiary thereof and by furnishing a copy thereof to the Company and,
after the end of the calendar month in which such Letter of Credit was opened,
to the other Lenders, provided that no such Letter of Credit shall be issued if
--------
subsection 2.1 would be violated thereby. The Issuing Lender shall promptly
furnish to the Administrative Agent, which shall in turn promptly furnish to the
Lenders, notice of the issuance of each Letter of Credit (including the amount
thereof). To the extent that any provision of any L/C Application related to any
Letter of Credit is inconsistent with the provisions of this Section 2, the
provisions of this Section 2 shall apply.
2.8 Payments in Respect of Letters of Credit. (a) The Company
----------------------------------------
agrees forthwith upon demand by the Issuing Lender and otherwise in accordance
with the terms of the L/C Application relating thereto, (i) to reimburse the
Issuing Lender for any payment made by the Issuing Lender under any Letter of
Credit issued for the account of the Company and (ii) to pay interest on any
unreimbursed portion of any such payment from the date of such payment until
reimbursement in full thereof at a rate per annum equal to (A) on or prior to
the date which is one Business Day after the day on which the Issuing Lender
demands reimbursement from the Company for such payment, the Alternate Base Rate
plus the Applicable Margin for the Revolving Credit Loans and (B) thereafter,
the Alternate Base Rate plus the Applicable Margin for the Revolving Credit
Loans plus 2%.
(a) In the event that the Issuing Lender makes a payment under any
Letter of Credit and is not reimbursed in full therefor forthwith upon demand of
the Issuing Lender, and otherwise in accordance with the terms of the L/C
Application relating to such Letter of Credit, the Issuing Lender will promptly
notify each other Revolving Credit Lender. Forthwith upon its receipt of any
such notice, each such other Lender will transfer to the Issuing Lender, in
immediately available funds, an amount equal to such other Lender's pro rata
--- ----
share (based on its Revolving Credit Percentage) of the L/C Obligation arising
from such unreimbursed payment. Promptly upon its receipt from such other
Lender of such amount, the Issuing Lender will complete, execute and deliver to
such other Lender an L/C Participation Certificate dated the date of such
receipt and in such amount.
(b) Whenever, at any time after the Issuing Lender has made a payment
under any Letter of Credit and has received from any other Revolving Credit
Lender such other Lender's pro rata share of the L/C Obligation arising
--- ----
therefrom, the Issuing Lender receives any reimbursement on account of such L/C
Obligation or any payment of interest on account thereof, the Issuing Lender
will distribute to such other Lender its pro rata share thereof in like funds as
--- ----
received; provided that in the event that the receipt by the Issuing Lender of
--------
such reimbursement or such payment of interest (as the case may be) is required
to be returned, such other Lender will return to the Issuing Lender any portion
thereof previously distributed by the Issuing Lender to it in like funds as such
reimbursement or payment is required to be returned by the Issuing Lender.
2.9 Letter of Credit Fees. (a) In lieu of any letter of credit
---------------------
commissions and fees provided for in any L/C Application relating to Standby or
Commercial L/Cs (other than standard issuance, amendment and negotiation fees),
the Company agrees to pay the Administrative Agent, for the account of the
Issuing Lender and the Participating Lenders, with
35
respect to each Standby or Commercial L/C issued for the account of the Company,
a Standby or Commercial L/C fee, as the case may be, at a per annum rate equal
to the Applicable Margin for Revolving Credit Loans which are Eurodollar Loans
(of which the Issuing Lender shall retain for its own account, as the issuing
bank and not on account of its L/C Participating Interest therein, 1/4 of 1% per
annum) on the daily average amount available to be drawn under each Standby L/C
in the case of a Standby L/C and on the maximum face amount of each Commercial
L/C in the case of a Commercial L/C, in either case, payable, in arrears, on the
last day of each March, June, September and December and on the Termination
Date. Notwithstanding the foregoing, the Company agrees to pay standard
administrative, issuance, amendment, payment and negotiation fees to the Issuing
Lender.
(a) For purposes of any payment of fees required pursuant to this
subsection 2.9, the Administrative Agent agrees to provide to the Company a
statement of any such fees to be so paid; provided that the failure by the
--------
Administrative Agent to provide the Company with any such invoice shall not
relieve the Company of its obligation to pay such fees.
2.10 Letter of Credit Reserves. (a) If any Change in Law shall
-------------------------
either (i) impose, modify, deem or make applicable any reserve, special deposit,
assessment or similar requirement against letters of credit issued by the
Issuing Lender or (ii) impose on the Issuing Lender any other condition
regarding this Agreement (with respect to Letters of Credit) or any Letter of
Credit, and the result of any event referred to in clause (i) or (ii) above
shall be to increase the cost of the Issuing Lender of issuing or maintaining
any Letter of Credit (which increase in cost shall be the result of the Issuing
Lender's reasonable allocation of the aggregate of such cost increases resulting
from such events), then, upon demand by the Issuing Lender, the Company shall
immediately pay to the Issuing Lender, from time to time as specified by the
Issuing Lender, additional amounts which shall be sufficient to compensate the
Issuing Lender for such increased cost, together with interest on each such
amount from the date demanded until payment in full thereof at a rate per annum
equal to the rate applicable to Alternate Base Rate Loans pursuant to subsection
3.5(b). The Company shall not be required to make any payments to the Issuing
Lender for any additional amounts pursuant to this subsection 2.10(a) unless the
Issuing Lender has given written notice to the Company of its intent to request
such payments prior to or within 60 days after the date on which the Issuing
Lender incurred such amounts. A certificate, setting forth in reasonable detail
the calculation of the amounts involved, submitted by the Issuing Lender to the
Company concurrently with any such demand by the Issuing Lender, shall be
conclusive, absent manifest error, as to the amount thereof.
(b) In the event that any Change in Law with respect to the Issuing
Lender shall, in the opinion of the Issuing Lender, require that any obligation
under any Letter of Credit be treated as an asset or otherwise be included for
purposes of calculating the appropriate amount of capital to be maintained by
the Issuing Lender or any corporation controlling the Issuing Lender, and such
Change in Law shall have the effect of reducing the rate of return on the
Issuing Lender's or such corporation's capital, as the case may be, as a
consequence of the Issuing Lender's obligations under such Letter of Credit to a
level below that which the Issuing Lender or such corporation, as the case may
be, could have achieved but for such Change in Law (taking
36
into account the Issuing Lender's or such corporation's policies, as the case
may be, with respect to capital adequacy) by an amount deemed by the Issuing
Lender to be material, then from time to time following notice by the Issuing
Lender to the Company of such Change in Law, within 15 days after demand by the
Issuing Lender, the Company shall pay to the Issuing Lender such additional
amount or amounts as will compensate the Issuing Lender or such corporation, as
the case may be, for such reduction. The Issuing Lender agrees that, upon the
occurrence of any event giving rise to the operation of paragraph (a) or (b) of
this subsection 2.10 with respect to the Issuing Lender, it will, if requested
by the Company and to the extent permitted by law or by the relevant
Governmental Authority, endeavor in good faith to avoid or minimize the increase
in costs or reduction in payments resulting from such event; provided that such
--------
avoidance or minimization can be made in such a manner that the Issuing Lender,
in its sole determination, suffers no economic, legal or regulatory
disadvantage. The Company shall not be required to make any payments to the
Issuing Lender for any additional amounts pursuant to this subsection 2.10(b)
unless the Issuing Lender has given written notice to the Company of its intent
to request such payments prior to or within 60 days after the date on which the
Issuing Lender incurred such amounts. A certificate, in reasonable detail
setting forth the calculation of the amounts involved, submitted by the Issuing
Lender to the Company concurrently with any such demand by the Issuing Lender,
shall be conclusive, absent manifest error, as to the amount thereof.
(c) The Company and each Participating Lender agree that the
provisions of the foregoing paragraphs (a) and (b) shall apply equally to each
Participating Lender in respect of its L/C Participating Interest in such Letter
of Credit, as if the references in such paragraphs and provisions referred to,
where applicable, such Participating Lender or, in the case of paragraph (b),
any corporation controlling such Participating Lender.
2.11 Further Assurances. The Company hereby agrees, from time to
------------------
time, to do and perform any and all acts and to execute any and all further
instruments reasonably requested by the Issuing Lender more fully to effect the
purposes of this Agreement and the issuance of Letters of Credit hereunder.
2.12 Obligations Absolute. The payment obligations of the Company
--------------------
under this Agreement with respect to the Letters of Credit shall be
unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances, including, without limitation,
the following circumstances:
(a) the existence of any claim, set-off, defense or other
right which the Company or any of its Subsidiaries may have at any time
against any beneficiary, or any transferee, of any Letter of Credit (or any
Persons for whom any such beneficiary or any such transferee may be
acting), the Issuing Lender, the Administrative Agent or any Lender, or any
other Person, whether in connection with this Agreement, any Credit
Document, the transactions contemplated herein, or any unrelated
transaction;
37
(b) any statement or any other document presented under any
Letter of Credit proving to be forged, fraudulent or invalid or any
statement therein being untrue or inaccurate in any respect;
(c) payment by the Issuing Lender under any Letter of Credit
against presentation of a draft or certificate or other document which does
not comply with the terms of such Letter of Credit or is insufficient in
any respect, except where such payment constitutes gross negligence or
willful misconduct on the part of the Issuing Lender; or
(d) any other circumstances or happening whatsoever, whether
or not similar to any of the foregoing, except for any such circumstances
or happening constituting gross negligence or willful misconduct on the
part of the Issuing Lender.
2.13 Assignments. No Participating Lender's participation in any
-----------
Letter of Credit or any of its rights or duties hereunder shall be subdivided,
assigned or transferred (other than in connection with a transfer of part or all
of such Participating Lender's Revolving Credit Commitment in accordance with
subsection 9.6(c)) without the prior written consent of the Issuing Lender,
which consent will not be unreasonably withheld. Such consent may be given or
withheld without the consent or agreement of any other Participating Lender.
Notwithstanding the foregoing, a Participating Lender may subparticipate its L/C
Participating Interest without obtaining the prior written consent of the
Issuing Lender.
2.14 Participations. The obligation of each Revolving Credit Lender
--------------
to purchase participating interests pursuant to subsection 2.6 shall be absolute
and unconditional and shall not be affected by any circumstance, including,
without limitation, (a) any set-off, counterclaim, recoupment, defense or other
right which such Lender may have against the Issuing Lender, any Borrower or any
other Person for any reason whatsoever, (b) the occurrence or continuance of an
Event of Default, (c) any adverse change in the condition (financial or
otherwise) of any Borrower, (d) any breach of this Agreement by any Borrower or
any other Lender or (e) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing.
2.15 Conversion to Term Loans. If, on any anniversary of the Closing
------------------------
Date, the sum of (a) the then outstanding Revolving Credit Loans and Swing Line
Loans and (b) the then outstanding Revolving Synthetic Lease Obligations exceeds
$75,000,000 (the "Excess Amount"), then the following actions shall be taken (if
-------------
applicable) in the following order:
(i) the Revolving Credit Commitments shall be automatically reduced
by an amount equal to the Excess Amount,
(ii) any amount of outstanding Revolving Synthetic Lease Obligations
up to the Excess Amount shall be converted to term loans (the "Term
----
Synthetic Lease Obligations") in accordance with the terms of the Synthetic
---------------------------
Lease Facility and
38
(iii) Revolving Credit Loans in an amount equal to (A) the Excess
Amount minus (B) the amount of the Revolving Synthetic Lease Obligations
-----
converted to Term Synthetic Lease Obligations on such date shall be
automatically converted to term loans (any such Revolving Credit Loans so
converted being herein called the "Term Loans").
----------
3. GENERAL PROVISIONS APPLICABLE TO LOANS
--------------------------------------
3.1 Procedure for Borrowing. (a) The Borrowers may borrow under the
-----------------------
Commitments during the Revolving Credit Commitment Period on any Business Day,
provided that, with respect to any borrowing, the Company, as agent for the
- --------
Borrowers, shall give the Administrative Agent irrevocable notice (which notice
must be received by the Administrative Agent prior to 10:00 a.m. (or, with
respect to Swing Line Loans, 3:00 p.m.), New York City time, (i) three Business
Days prior to the requested Borrowing Date if all or any part of the Loans are
to be Eurodollar Loans and (ii) one Business Day prior to the requested
Borrowing Date (or, in the case of Swing Line Loans and, if the Closing Date
occurs on the date this Agreement is executed and delivered, Loans made on the
Closing Date, on the requested Borrowing Date) if the borrowing is to be solely
of Alternate Base Rate Loans) and specifying (A) the amount of the borrowing,
(B) whether such Loans are initially to be Eurodollar Loans or Alternate Base
Rate Loans or a combination thereof, (C) if the borrowing is to be entirely or
partly Eurodollar Loans, the length of the Interest Period for such Eurodollar
Loans, (D) whether the Loan is a Swing Line Loan or a Revolving Credit Loan, (E)
the requested Borrowing Date and (F) the Borrower with respect to such
borrowing. Upon receipt of such notice the Administrative Agent shall promptly
notify each Lender. Not later than 12:00 noon, New York City time, on the
Borrowing Date specified in such notice, each Lender shall make available to the
Administrative Agent at the office of the Administrative Agent specified in
subsection 9.2 (or at such other location as the Administrative Agent may
direct) an amount in immediately available funds equal to the amount of the Loan
to be made by such Lender (except that proceeds of Swing Line Loans will be made
available to the Company in accordance with subsection 2.4(a)). Loan proceeds
received by the Administrative Agent hereunder shall promptly be made available
to the Company, by the Administrative Agent's crediting the account of the
Company, at the office of the Administrative Agent specified in subsection 9.2,
with the aggregate amount actually received by the Administrative Agent from the
Lenders and in like funds as received by the Administrative Agent.
(a) Any borrowing of Eurodollar Loans hereunder shall be in such
amounts and be made pursuant to such elections so that, after giving effect
thereto, (i) the aggregate principal amount of all Eurodollar Loans having the
same Interest Period shall not be less than $2,000,000 or a whole multiple of
$1,000,000 in excess thereof and (ii) no more than 16 Interest Periods shall be
in effect at any one time.
3.2 Conversion and Continuation Options. (a) Subject to subsection
-----------------------------------
3.12, the Company, as agent for the Borrowers, may elect from time to time to
convert Eurodollar Loans into Alternate Base Rate Loans by giving the
Administrative Agent irrevocable notice of such
39
election, to be received by the Administrative Agent prior to 12:00 noon, New
York City time, at least three Business Days prior to the proposed conversion
date. The Company, as agent for the Borrowers, may elect from time to time to
convert all or a portion of the Alternate Base Rate Loans (other than Swing Line
Loans) then outstanding to Eurodollar Loans by giving the Administrative Agent
irrevocable notice of such election, to be received by the Administrative Agent
prior to 12:00 noon, New York City time, at least three Business Days prior to
the proposed conversion date, specifying the Interest Period selected therefor,
and, if no Default or Event of Default has occurred and is continuing, such
conversion shall be made on the requested conversion date or, if such requested
conversion date is not a Business Day, on the next succeeding Business Day. Upon
receipt of any notice pursuant to this subsection 3.2, the Administrative Agent
shall promptly notify each Lender thereof. All or any part of the outstanding
Loans (other than Swing Line Loans) may be converted as provided herein,
provided that partial conversions of Alternate Base Loans shall be in the
- --------
aggregate principal amount of $1,000,000 or a whole multiple of $100,000 in
excess thereof and the aggregate principal amount of the resulting Eurodollar
Loans outstanding in respect of any one Interest Period shall be at least
$2,000,000 or a whole multiple of $1,000,000 in excess thereof; and provided,
--------
further, that no Alternate Base Rate Loan may be converted into a Eurodollar
- -------
Loan (i) when any Event of Default has occurred and is continuing and the
Administrative Agent has or the Required Lenders have, by written notice to the
Company, determined that such a continuation is not appropriate or (ii) after
the date that is one month prior to the Termination Date.
(a) Any Eurodollar Loans may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the Company, as
agent for the Borrowers, giving notice to the Administrative Agent, in
accordance with the applicable provisions of the term "Interest Period" set
forth in subsection 1.1, of the length of the next Interest Period to be
applicable to such Loans, provided that no Eurodollar Loan may be continued as
--------
such (i) when any Event of Default has occurred and is continuing and the
Administrative Agent has or the Required Lenders have, by written notice to the
Company, determined that such a continuation is not appropriate, (ii) if, after
giving effect thereto, subsection 3.1(b) would be contravened or (iii) after the
date that is one month prior to the Termination Date.
3.3 Changes of Commitment Amounts. (a) The Company, as agent for
-----------------------------
the Borrowers, shall have the right, upon not less than three Business Days'
notice to the Administrative Agent, to terminate or from time to time to
permanently reduce the Revolving Credit Commitments, subject to the provisions
of this subsection 3.3. To the extent, if any, that the sum of the amount of
the Revolving Credit Loans, Swing Line Loans, L/C Obligations then outstanding,
amounts then available to be drawn under outstanding Letters of Credit and
Revolving Synthetic Lease Obligations then outstanding exceeds the amount of the
Revolving Credit Commitments as then reduced, the Company, as agent for the
Borrowers, shall be required to apply an amount equal to such excess amount (i)
to prepay, in the order set forth in this subsection 3.3(a), the obligations
hereunder and/or, at its option, (ii) to cash collateralize the Revolving
Synthetic Lease Obligations and/or repurchase properties subject to the
Synthetic Lease Facility. If the Company elects to have such amount applied as
set forth in clause (i) of this subsection 3.3(a), such amount shall be applied,
first, to payment of the Swing Line Loans
- -----
40
then outstanding, second, to payment of the Revolving Credit Loans then
------
outstanding, third, to payment of any L/C Obligations then outstanding, and
-----
fourth, to cash collateralize any outstanding Letters of Credit on terms
- ------
reasonably satisfactory to the Administrative Agent. Any such termination of the
Revolving Credit Commitments shall be accompanied by prepayment in full of the
Revolving Credit Loans, Swing Line Loans and L/C Obligations then outstanding,
by cash collateralization of any outstanding Letters of Credit on terms
reasonably satisfactory to the Administrative Agent and by payment in full of
the Synthetic Lease Obligations. Upon termination of the Revolving Credit
Commitments, any Letter of Credit then outstanding that has been so cash
collateralized shall no longer be considered a "Letter of Credit" as defined in
subsection 1.1, and any L/C Participating Interests heretofore granted by the
Issuing Lender to the Lenders in such Letter of Credit shall be deemed
terminated (subject to automatic reinstatement in the event that such cash
collateral is returned and the Issuing Lender is not fully reimbursed for any
such L/C Obligations) but the Letter of Credit fees payable under subsection 2.9
shall continue to accrue to the Issuing Lender and the Participating Lenders
(or, in the event of any such automatic reinstatement, as provided in subsection
2.9) with respect to such Letter of Credit until the expiry thereof (provided
--------
that in lieu of paying a Standby or Commercial L/C fee, as the case may be, at a
rate per annum equal to the Applicable Margin for Revolving Credit Loans which
are Eurodollar Loans, the Company shall pay to the Administrative Agent an
amount equal to .25% per annum).
(a) In the case of termination of the Revolving Credit Commitments,
interest accrued on the amount of any prepayment relating thereto and any unpaid
commitment fee accrued hereunder shall be paid on the date of such termination.
Any such partial reduction of the Revolving Credit Commitments shall be in an
amount of $2,000,000 or a whole multiple of $1,000,000 in excess thereof and
shall, in each case, reduce permanently the amount of the Revolving Credit
Commitments then in effect.
3.4 Optional and Mandatory Prepayments; Repayments of Term Loans.
------------------------------------------------------------
(a) Subject to subsection 3.12, the Company, as agent for the Borrowers, may at
any time and from time to time prepay Loans, in whole or in part, without
premium or penalty, by irrevocable notice to the Administrative Agent by 10:00
a.m., New York City time, on the same Business Day (or, in the case of Swing
Line Loans, by irrevocable notice to the Administrative Agent by 12:00 noon, New
York City time, on the same Business Day) in the case of Alternate Base Rate
Loans, and three Business Days' irrevocable notice to the Administrative Agent
in the case of Eurodollar Loans, specifying the date and amount of prepayment,
the applicable Borrower of the Loans being prepaid and whether the prepayment is
of Revolving Credit Loans or Term Loans. Upon receipt of such notice the
Administrative Agent shall promptly notify each Lender thereof. If such notice
is given, the Borrowers specified in such prepayment notice shall make such
prepayment, and the payment amount specified in such notice shall be due and
payable, on the date specified therein. Partial prepayments (i) of Term Loans
shall be in an aggregate principal amount equal to the lesser of (A) (I)
$2,000,000, or a whole multiple of $1,000,000 in excess thereof with respect to
Eurodollar Loans or (II) $1,000,000, or a whole multiple of $100,000 in excess
thereof with respect to Alternate Base Rate Loans and (B) the aggregate unpaid
principal amount of the Term Loans, and (ii) of Revolving Credit Loans shall be
in an aggregate principal
41
amount equal to the lesser of (A) (I) $2,000,000, or a whole multiple of
$1,000,000 in excess thereof with respect to Eurodollar Loans or (II) $1,000,000
or a whole multiple of $100,000 in excess thereof with respect to Alternate Base
Rate Loans and (B) the aggregate unpaid principal amount of the Revolving Credit
Loans, as the case may be.
(a) (i) If, subsequent to the Closing Date, the Company or any of
its Subsidiaries shall issue any Capital Stock, 50% of the Net Proceeds thereof
(excluding (A) amounts provided by the Investors or their Affiliates or by
management employees of such issuer and (B) Net Proceeds in an aggregate amount
not to exceed $35,000,000 of any issuance of preferred stock) shall be promptly
applied toward the prepayment of the Term Loans, the reduction of the Revolving
Credit Commitments, the cash collateralization of the Synthetic Lease
Obligations and the repurchase of properties subject to the Synthetic Lease
Facility, in each case as set forth in clause (v) of this subsection 3.4(b);
provided that Net Proceeds of such issuance shall be deemed to be Net Proceeds
- --------
of such issuance for purposes of this subsection 3.4(b)(i) only after deducting
therefrom the redemption of the Subordinated Debt under any "equity clawback"
provisions, the redemption of the Bridge Junior Subordinated Debt with the
proceeds of preferred stock, the redemption of the Preferred Stock in its
entirety (but only with the proceeds of common stock or other preferred stock),
the redemption of preferred stock with the proceeds of other preferred stock,
and the payment of any premium or penalties or accrued interest with respect
thereto.
(i) If, subsequent to the Closing Date, the Company or any of
its Subsidiaries shall incur any Indebtedness (other than Indebtedness permitted
pursuant to subsection 7.1), 100% of the Net Proceeds thereof shall be promptly
applied toward the prepayment of the Term Loans, the reduction of the Revolving
Credit Commitments, the cash collateralization of the Synthetic Lease
Obligations and the repurchase of properties subject to the Synthetic Lease
Facility, in each case as set forth in clause (v) of this subsection 3.4(b).
(ii) If, subsequent to the Closing Date, the Company or any of
its Subsidiaries shall receive Net Proceeds from any Asset Sale, 100% of the Net
Proceeds thereof shall be promptly applied toward the prepayment of the Term
Loans, the reduction of Revolving Credit Commitments, the cash collateralization
of the Synthetic Lease Obligations and the repurchase of properties subject to
the Synthetic Lease Facility, in each case as set forth in clause (v) of this
subsection 3.4(b); provided that such Net Proceeds need not be so applied until
--------
the earlier of the date that the aggregate amount of Net Proceeds received by
the Company or any of its Subsidiaries from any Asset Sales exceeds $2,000,000
(and has not yet been applied as set forth in clause (v) of this subsection
3.4(b)) and the date which is six months after the last application of Net
Proceeds pursuant to this subsection 3.4(b)(iii).
(iii) If for any fiscal year commencing with its fiscal year
ending December 31, 1999, there shall be Excess Cash Flow for such fiscal year,
50% of such Excess Cash Flow shall be applied toward the prepayment of the Term
Loans, the reduction of the Revolving Credit Commitments, the cash
collateralization of the Synthetic Lease Obligations and the repurchase of
properties subject to the Synthetic Lease Facility, in each case as set forth
42
in clause (v) of this subsection 3.4(b). Each such prepayment shall be made not
later than 120 days after the end of such fiscal year.
(iv) Amounts to be applied by any Borrower pursuant to
subsections 3.4(b)(i), (ii), (iii) or (iv) shall be applied (A) to prepay the
Term Loans and reduce the Revolving Credit Commitments and/or, at the option of
the Company, (B) to cash collateralize the Synthetic Lease Obligations and/or
repurchase properties subject to the Synthetic Lease Facility. If the Company
elects to have such amounts applied as set forth in clause (A) of this
subsection 3.4(b)(v), such amounts shall be applied, first, to the prepayment of
-----
the Term Loans and, second, to reduce permanently the Revolving Credit
------
Commitments. Any such reduction of the Revolving Credit Commitments shall be
accompanied by prepayment of, first, the Swing Line Loans, second, the Revolving
----- ------
Credit Loans and, third, the L/C Obligations to the extent, if any, that the sum
-----
of the aggregate outstanding principal amount of Revolving Credit Loans, the
aggregate outstanding principal amount of all Swing Line Loans, the aggregate
amount available to be drawn under all outstanding Letters of Credit, the
aggregate outstanding amount of all L/C Obligations and the aggregate then
outstanding amount of Revolving Synthetic Lease Obligations, in each case of all
Lenders, exceeds the amount of the aggregate Revolving Credit Commitments as so
reduced, provided that if the aggregate principal amount of Revolving Credit
--------
Loans, Swing Line Loans, L/C Obligations and Revolving Synthetic Lease
Obligations then outstanding is less than the amount of such excess (because
Letters of Credit constitute a portion thereof), the Company shall, to the
extent of the balance of such excess, replace outstanding Letters of Credit
and/or deposit an amount in cash in a cash collateral account established for
the benefit of the Lenders.
(v) The Company, as agent for the Borrowers, shall give the
Administrative Agent (which shall promptly notify each Lender) at least one
Business Day's notice of each prepayment or mandatory reduction pursuant to this
subsection 3.4(b) setting forth the date, amount and applicable Borrower thereof
and the amount, if any, that has been applied to cash collateralize the
Synthetic Lease Obligations or repurchase any properties subject to the
Synthetic Lease Facility. Except as otherwise may be agreed by the Company, as
agent for the Borrowers, and the Required Lenders, and subject to subsection
3.4(b)(v), any prepayment of Loans pursuant to this subsection 3.4 shall be
applied, first, to any Alternate Base Rate Loans then outstanding and the
-----
balance of such prepayment, if any, to the Eurodollar Loans then outstanding;
provided that prepayments of Eurodollar Loans, if not on the last day of the
- --------
Interest Period with respect thereto, shall, at the option of the Company, as
agent for the Borrowers, be prepaid subject to the provisions of subsection 3.12
or the amount of such prepayment (after application to any Alternate Base Rate
Loans) shall be deposited with the Administrative Agent as cash collateral for
the Loans on terms reasonably satisfactory to the Administrative Agent and
thereafter shall be applied in the order of the Interest Periods next ending
most closely to the date such prepayment is required to be made and on the last
day of each such Interest Period. After such application, unless an Event of
Default shall have occurred and be continuing, any remaining interest earned on
such cash collateral shall be paid to the Company, as agent for the Borrowers.
43
(b) Amounts repaid on account of the Term Loans pursuant to this
subsection 3.4 or otherwise may not be reborrowed. Accrued interest on the
amount of any prepayments shall be paid on the Interest Payment Date next
succeeding the date of any partial prepayment and on the date of such prepayment
in the case of a prepayment in full of the Term Loans.
3.5 Interest Rates and Payment Dates. (a) Eurodollar Loans shall
--------------------------------
bear interest for each day during each Interest Period applicable thereto,
commencing on (and including) the first day of such Interest Period to, but
excluding, the last day of such Interest Period, on the unpaid principal amount
thereof at a rate per annum equal to the Eurodollar Rate determined for such
Interest Period plus the Applicable Margin from time to time in effect.
(a) Alternate Base Rate Loans shall bear interest for the period from
and including the date such Loans are made to, but excluding, the maturity date
thereof, or to, but excluding, the conversion date if such Loans are earlier
converted into Eurodollar Loans on the unpaid principal amount thereof at a rate
per annum equal to the Alternate Base Rate plus the Applicable Margin from time
to time in effect.
(b) If all or a portion of (i) the principal amount of any of the
Loans or (ii) any interest payable thereon shall not be paid when due (whether
at the stated maturity, by acceleration or otherwise) such Loan, if a Eurodollar
Loan, shall be converted into an Alternate Base Rate Loan at the end of the
then-current Interest Period for said Eurodollar Loan (which conversion shall
occur automatically and without need for compliance with the conditions for
conversion set forth in subsection 3.2), and any such overdue amount shall,
without limiting the rights of the Lenders under Section 8, bear interest (which
shall be payable on demand) at a rate per annum which is 2% plus the Alternate
Base Rate plus the Applicable Margin (or, in the case of a Eurodollar Loan, the
Eurodollar Rate for the Interest Period plus the Applicable Margin from time to
time in effect plus 2%, if higher) from the date of such non-payment until paid
in full (as well after as before judgment).
(c) Except as otherwise expressly provided for in this subsection
3.5, interest shall be payable in arrears on each Interest Payment Date.
3.6 Computation of Interest and Fees. (a) Interest in respect of
--------------------------------
Alternate Base Rate Loans, at any time that the Alternate Base Rate is
determined by reference to the Prime Rate, and all fees hereunder shall be
calculated on the basis of a 365 (or 366 as the case may be) day year for the
actual days elapsed. Interest in respect of Eurodollar Loans and in respect of
Alternate Base Rate Loans at any time that the Alternate Base Rate is determined
by reference to the Base CD Rate or the Federal Funds Effective Rate shall be
calculated on the basis of a 360 day year for the actual days elapsed. The
Administrative Agent shall as soon as practicable notify the Company and the
Lenders of each determination of a Eurodollar Rate. Any change in the interest
rate on a Loan resulting from a change in the Alternate Base Rate or the
Eurocurrency Reserve Requirements shall become effective as of the opening of
business on the day on which such change in the Alternate Base Rate is announced
or such change in the Eurocurrency Reserve Requirements becomes effective, as
the case may be. The Administrative
44
Agent shall as soon as practicable notify the Company and the Lenders of the
effective date and the amount of each such change.
(a) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrowers and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Company, as agent for the
Borrowers, or any Lender, deliver to the Company or such Lender a statement
showing the quotations used by the Administrative Agent in determining the
Eurodollar Rate.
3.7 Certain Fees. The Borrowers agree to pay to the Administrative
------------
Agent, for its own account, a non-refundable agent's fee in an amount previously
agreed to with the Administrative Agent, payable in advance on the Closing Date
and on the first day of each fiscal year of the Company thereafter.
3.8 Inability to Determine Interest Rate. In the event that the
------------------------------------
Administrative Agent shall have determined (which determination shall be
conclusive and binding upon the Borrowers) that (a) by reason of circumstances
affecting the interbank eurodollar market, adequate and reasonable means do not
exist for ascertaining the Eurodollar Rate for any Interest Period with respect
to (i) proposed Loans that the Company, as agent for the Borrowers, has
requested be made as Eurodollar Loans, (ii) any Eurodollar Loans that will
result from the requested conversion of all or part of the Alternate Base Rate
Loans into Eurodollar Loans or (iii) the continuation of any Eurodollar Loan as
such for an additional Interest Period, or (b) dollar deposits in the relevant
amount and for the relevant period with respect to any such Eurodollar Loan are
not generally available to the Lenders in their respective Eurodollar Lending
Offices' interbank eurodollar markets, the Administrative Agent shall forthwith
give telecopy notice of such determination, confirmed in writing, to the Company
and the Lenders at least one day prior to, as the case may be, the requested
Borrowing Date, the conversion date or the last day of such Interest Period. If
such notice is given (i) any requested Eurodollar Loans shall be made as
Alternate Base Rate Loans, (ii) any Alternate Base Rate Loans that were to have
been converted to Eurodollar Loans shall be continued as Alternate Base Rate
Loans and (iii) any outstanding Eurodollar Loans shall be converted on the last
day of the then current Interest Period applicable thereto into Alternate Base
Rate Loans. Until such notice has been withdrawn by the Administrative Agent,
no further Eurodollar Loans shall be made and no Alternate Base Rate Loans shall
be converted to Eurodollar Loans.
3.9 Pro Rata Treatment and Payments. (a) Except to the extent
-------------------------------
otherwise provided herein, each borrowing of Loans by the Borrowers from the
Lenders, each conversion of Revolving Credit Loans to Term Loans and any
reduction of the Revolving Credit Commitments of the Lenders hereunder shall be
made pro rata according to the relevant Revolving Credit Percentages of the
--- ----
Lenders with respect to the Loans borrowed or converted or the Revolving Credit
Commitments to be reduced.
45
(a) Whenever any payment received by the Administrative Agent under
this Agreement or any Note or any other Credit Document is insufficient to pay
in full all amounts then due and payable to the Administrative Agent and the
Lenders under this Agreement:
(i) If the Administrative Agent has not received a Payment
Sharing Notice (or, if the Administrative Agent has received a Payment
Sharing Notice but the Event of Default specified in such Payment Sharing
Notice has been cured or waived in accordance with the provisions of this
Agreement), such payment shall be distributed by the Administrative Agent
and applied by the Administrative Agent and the Lenders in the following
order: first, to the payment of fees and expenses due and payable to the
-----
Administrative Agent under and in connection with this Agreement and the
other Credit Documents; second, to the payment of all expenses due and
------
payable under subsection 9.5, ratably among the Lenders in accordance with
the aggregate amount of such payments owed to each such Lender; third, to
-----
the payment of fees due and payable under subsections 2.2 and 2.9, ratably
among the Lenders in accordance with the Revolving Credit Percentage of
each Lender of the Revolving Credit Commitment for which such payment is
owed and, in the case of the Issuing Lender, the amount retained by the
Issuing Lender for its own account pursuant to subsection 2.9; fourth, to
------
the payment of interest then due and payable on the Loans and the L/C
Obligations ratably in accordance with the aggregate amount of interest
owed to each such Lender; and fifth, to the payment of the principal amount
-----
of the Loans and the L/C Obligations which is then due and payable ratably
among the Lenders in accordance with the aggregate principal amount owed to
each such Lender; or
(ii) If the Administrative Agent has received a Payment Sharing
Notice which remains in effect, all payments received by the Administrative
Agent under this Agreement or any Note shall be distributed by the
Administrative Agent and applied by the Administrative Agent and the
Lenders in the following order: first, to the payment of all amounts
-----
described in clauses "first" through "third" of the foregoing clause (i) in
----- -----
the order set forth therein; second, to the payment of the interest accrued
------
on all Loans and L/C Obligations, regardless of whether any such amount is
then due and payable, ratably among the Lenders in accordance with the
aggregate accrued interest plus the aggregate principal amount of all Loans
and L/C Obligations then due and payable and owed to such Lender; and
third, to the payment of the principal amount of all Loans and L/C
-----
Obligations, regardless of whether any such amount is then due and payable,
ratably among the Lenders in accordance with the aggregate principal amount
owed to such Lender.
(b) If any Lender (a "Non-Funding Lender") has (x) failed to make a
------------------
Revolving Credit Loan required to be made by it hereunder, and the
Administrative Agent has determined that such Lender is not likely to make such
Revolving Credit Loan or (y) given notice to the Company or the Administrative
Agent that it will not make, or that it has disaffirmed or repudiated any
obligation to make, any Revolving Credit Loan, in each case by reason of the
provisions of the Financial Institutions Reform, Recovery and Enforcement Act of
1989, as
46
amended, or otherwise, (i) any payment made on account of the principal of the
Revolving Credit Loans outstanding shall be made as follows:
(A) in the case of any such payment made on any date when and to the
extent that in the determination of the Administrative Agent the Borrowers
would be able under the terms and conditions hereof to reborrow the amount
of such payment under the Commitments and to satisfy any applicable
conditions precedent set forth in Section 5 to such reborrowing, such
payment shall be made on account of the outstanding Revolving Credit Loans
held by the Lenders other than the Non-Funding Lender pro rata according to
--- ----
the respective outstanding principal amounts of the Revolving Credit Loans
of such Lenders; and
(B) otherwise, such payment shall be made on account of the
outstanding Revolving Credit Loans held by the Lenders pro rata according
--- ----
to the respective outstanding principal amounts of such Revolving Credit
Loans; and
(ii) any payment made on account of interest on the Revolving Credit Loans shall
be made pro rata according to the respective amounts of accrued and unpaid
--- ----
interest due and payable on the Revolving Credit Loans with respect to which
such payment is being made. Each Borrower agrees to give the Administrative
Agent such assistance in making any determination pursuant to subparagraph
(i)(A) of this paragraph as the Administrative Agent may reasonably request.
Any such determination by the Administrative Agent shall be conclusive and
binding on the Lenders.
(c) All payments (including prepayments) to be made by any Borrower
on account of principal, interest and fees shall be made without set-off or
counterclaim and shall be made to the Administrative Agent, for the account of
the Lenders at the Administrative Agent's office located at 270 Park Avenue, New
York, New York 10017, in lawful money of the United States and in immediately
available funds. The Administrative Agent shall promptly distribute such
payments in accordance with the provisions of subsection 3.9(b) upon receipt in
like funds as received. If any payment hereunder (other than payments on
Eurodollar Loans) would become due and payable on a day other than a Business
Day, such payment shall become due and payable on the next succeeding Business
Day and, with respect to payments of principal, interest thereon shall be
payable at the then applicable rate during such extension. If any payment on a
Eurodollar Loan becomes due and payable on a day other than a Business Day, the
maturity thereof shall be extended to the next succeeding Business Day (and with
respect to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension), unless the result of such extension
would be to extend such payment into another calendar month in which event such
payment shall be made on the immediately preceding Business Day.
(d) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount which would constitute its Revolving Credit Percentage of such borrowing
available to the Administrative Agent, the
47
Administrative Agent may assume that such Lender is making such amount available
to the Administrative Agent in accordance with subsection 3.1 and the
Administrative Agent may, in reliance upon such assumption, make available to
the Company, as agent for the Borrowers, a corresponding amount. If such amount
is not made available to the Administrative Agent by the required time on the
Borrowing Date therefor, such Lender shall pay to the Administrative Agent, on
demand, such amount with interest thereon at a rate equal to the daily average
Federal Funds Effective Rate for the period until such Lender makes such amount
immediately available to the Administrative Agent. A certificate of the
Administrative Agent submitted to any Lender with respect to any amounts owing
under this subsection 3.9(e) shall be conclusive absent manifest error. If such
Lender's Revolving Credit Percentage of such borrowing is not in fact made
available to the Administrative Agent by such Lender within three Business Days
of such Borrowing Date, the Administrative Agent shall also be entitled to
recover such amount with interest thereon at the rate per annum applicable to
Alternate Base Rate Loans hereunder (in lieu of any otherwise applicable
interest), on demand, from the Borrowers, without prejudice to any rights which
any such Borrower or the Administrative Agent may have against such Lender
hereunder. Nothing contained in this subsection 3.9 shall relieve any Lender
which has failed to make available its ratable portion of any borrowing
hereunder from its obligation to do so in accordance with the terms hereof.
(e) The failure of any Lender to make the Loan to be made by it on
any Borrowing Date shall not relieve any other Lender of its obligation, if any,
hereunder to make its Loan on such Borrowing Date, but no Lender shall be
responsible for the failure of any other Lender to make the Loan to be made by
such other Lender on such Borrowing Date.
(f) All payments and optional prepayments (other than prepayments as
set forth in subsection 3.11 with respect to increased costs) of Eurodollar
Loans hereunder shall be in such amounts and be made pursuant to such elections
so that, after giving effect thereto, the aggregate principal amount of all
Eurodollar Loans with the same Interest Period shall not be less than $2,000,000
or a whole multiple of $1,000,000 in excess thereof.
3.10 Illegality. Notwithstanding any other provision herein, if
----------
any Change in Law occurring after the date that any lender becomes a Lender
party to this Agreement, shall make it unlawful for such Lender to make or
maintain Eurodollar Loans as contemplated by this Agreement, the commitment of
such Lender hereunder to make Eurodollar Loans or to convert all or a portion of
Alternate Base Rate Loans into Eurodollar Loans shall forthwith be suspended
until such time, if any, as such illegality shall no longer exist, and such
Lender's Loans then outstanding as Eurodollar Loans, if any, shall be converted
automatically to Alternate Base Rate Loans for the duration of the respective
Interest Periods (or, if permitted by applicable law, at the end of such
Interest Periods) and all payments of principal which would otherwise be applied
to such Eurodollar Loans shall be applied instead to such Lender's Alternate
Base Rate Loans. The Borrowers hereby agree to pay any Lender, promptly upon
its demand, any amounts payable pursuant to subsection 3.12 in connection with
any conversion in accordance with this subsection 3.10 (such Lender's notice of
such costs, as certified in reasonable detail as to such amounts to the Company
through the Administrative Agent, to be conclusive absent manifest error).
48
3.11 Requirements of Law. (a) In the event that any Change in Law
-------------------
or compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority
occurring after the date that any lender becomes a Lender party to this
Agreement:
(i) does or shall subject any such Lender or its Eurodollar
Lending Office to any tax of any kind whatsoever with respect to this
Agreement, any Note or any Eurodollar Loans made by it, or change the basis
of taxation of payments to such Lender or its Eurodollar Lending Office of
principal, the commitment fee, interest or any other amount payable
hereunder (except for (x) net income and franchise taxes imposed on the net
income of such Lender or its Eurodollar Lending Office by the jurisdiction
under the laws of which such Lender is organized or any political
subdivision or taxing authority thereof or therein, or by any jurisdiction
in which such Lender's Eurodollar Lending Office is located or any
political subdivision or taxing authority thereof or therein, including
changes in the rate of tax on the overall net income of such Lender or such
Eurodollar Lending Office, and (y) taxes resulting from the substitution of
any such system by another system of taxation, provided that the taxes
--------
payable by Lenders subject to such other system of taxation are not
generally charged to borrowers from such Lenders having loans or advances
bearing interest at a rate similar to the Eurodollar Rate);
(ii) does or shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement against
assets held by, or deposits or other liabilities in or for the account of,
advances or loans by, or other credit extended by, or any other acquisition
of funds by, any office of such Lender which are not otherwise included in
the determination of the Eurodollar Rate; or
(iii) does or shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender or
its Eurodollar Lending Office of making, converting, renewing or maintaining
advances or extensions of credit or to reduce any amount receivable hereunder,
in each case, in respect of its Eurodollar Loans, then, in any such case, the
Borrowers shall promptly pay such Lender, upon its demand, any additional
amounts necessary to compensate such Lender for such additional cost or reduced
amount receivable which such Lender deems to be material as determined by such
Lender with respect to such Eurodollar Loans, together with interest on each
such amount from the date demanded until payment in full thereof at a rate per
annum equal to the Alternate Base Rate plus 1%.
(b) In the event that any Change in Law occurring after the date that
any lender becomes a Lender party to this Agreement with respect to any such
Lender shall, in the opinion of such Lender, require that any Commitment of such
Lender be treated as an asset or otherwise be included for purposes of
calculating the appropriate amount of capital to be maintained by
49
such Lender or any corporation controlling such Lender, and such Change in Law
shall have the effect of reducing the rate of return on such Lender's or such
corporation's capital, as the case may be, as a consequence of such Lender's
obligations hereunder to a level below that which such Lender or such
corporation, as the case may be, could have achieved but for such Change in Law
(taking into account such Lender's or such corporation's policies, as the case
may be, with respect to capital adequacy) by an amount deemed by such Lender to
be material, then from time to time following notice by such Lender to the
Borrowers of such Change in Law as provided in paragraph (c) of this subsection
3.11, within 15 days after demand by such Lender, the Borrowers shall pay to
such Lender such additional amount or amounts as will compensate such Lender or
such corporation on an after-tax basis, as the case may be, for such reduction.
(c) The Borrowers shall not be required to make any payments to any
Lender for any additional amounts pursuant to this subsection 3.11 unless such
Lender has given written notice to the Company, through the Administrative
Agent, of its intent to request such payments prior to or within 60 days after
the date on which such Lender incurred such amounts. If any Lender has notified
the Company through the Administrative Agent of any increased costs pursuant to
paragraph (a) of this subsection 3.11, the Borrowers at any time thereafter may,
upon at least three Business Days' notice to the Administrative Agent (which
shall promptly notify the Lenders thereof), and subject to subsection 3.12,
prepay (or convert into Alternate Base Rate Loans) all (but not a part) of the
Eurodollar Loans then outstanding. Each Lender agrees that, upon the occurrence
of any event giving rise to the operation of paragraph (a) of this subsection
3.11 with respect to such Lender, it will, if requested by the Company, as agent
for the Borrowers, and to the extent permitted by law or by the relevant
Governmental Authority, endeavor in good faith to avoid or minimize the increase
in costs or reduction in payments resulting from such event (including, without
limitation, endeavoring to change its Eurodollar Lending Office); provided, that
--------
such avoidance or minimization can be made in such a manner that such Lender, in
its sole determination, suffers no economic, legal or regulatory disadvantage.
If any Lender requests compensation from any Borrower under this subsection
3.11, the Company, as agent for the Borrowers, may, by notice to such Lender
(with a copy to the Administrative Agent), suspend the obligation of such Lender
thereafter to make or continue Loans of the Type with respect to which such
compensation is requested, or to convert Loans of any other Type into Loans of
such Type, until the Requirement of Law giving rise to such request ceases to be
in effect, provided that such suspension shall not affect the right of such
--------
Lender to receive the compensation so requested.
(d) Each Lender (and in case of an Assignee on the date it becomes a
Lender) that is not a United States Person (as defined in Section 7701(a)(30) of
the Code) for federal income tax purposes either (1) in the case of a Lender
that is a "bank" within the meaning of Section 881(c)(3)(A) of the Code, (i)
represents to each Borrower (for the benefit of the Borrowers and the
Administrative Agent) that under applicable law and treaties no taxes are
required to be withheld by any Borrower or the Administrative Agent with respect
to any payments to be made to such Lender in respect of the Loans or the L/C
Participating Interests, (ii) agrees to furnish to the Company, with a copy to
the Administrative Agent, either U.S. Internal Revenue Service Form 4224 or U.S.
Internal Revenue Service Form 1001 (wherein such Lender claims
50
entitlement to complete exemption from U.S. federal withholding tax on all
interest payments hereunder) and (iii) agrees (for the benefit of the Borrowers
and the Administrative Agent), to the extent it may lawfully do so at such
times, to provide the Company, with a copy to the Administrative Agent, a new
Form 4224 or Form 1001 upon the expiration or obsolescence of any previously
delivered form and comparable statements in accordance with applicable U.S. laws
and regulations and amendments duly executed and completed by such Lender, and
to comply from time to time with all applicable U.S. laws and regulations with
regard to such withholding tax exemption or (2) in the case of a Lender that is
not a "bank" within the meaning of Section 881(c)(3)(A) of the Code, (i)
represents to each Borrower (for the benefit of the Borrowers and the
Administrative Agent) that it is not a bank within the meaning of Section
881(c)(3)(A) of the Code, (ii) agrees to furnish to the Company, with a copy to
the Administrative Agent, (A) a certificate substantially in the form of Exhibit
I hereto (any such certificate, a "Subsection 3.11(d)(2) Certificate") and (B)
---------------------------------
two accurate and complete original signed copies of Internal Revenue Service
Form W-8, certifying to such Lender's legal entitlement at the Closing Date to
an exemption from U.S. withholding tax under the provisions of Section 881(c) of
the Code with respect to all payments to be made under this Agreement, and (iii)
agrees, to the extent legally entitled to do so, upon reasonable request by the
Company, to provide to the Company (for the benefit of the Borrowers and the
Administrative Agent) such other forms as may be required in order to establish
the legal entitlement of such Lender to an exemption from withholding with
respect to payments under this Agreement. Notwithstanding any provision of this
subsection 3.11 or 3.9(d) to the contrary, the Borrowers shall have no
obligation to pay any amount to or for the account of any Lender (or the
Eurodollar Lending Office of any Lender) on account of any taxes pursuant to
this subsection 3.11, to the extent that such amount results from (i) the
failure of any Lender to comply with its obligations pursuant to this subsection
3.11, (ii) any representation or warranty made or deemed to be made by any
Lender pursuant to this subsection 3.11(d) proving to have been incorrect, false
or misleading in any material respect when so made or deemed to be made or (iii)
any Change in Law or compliance by any Lender with any request or directive
(whether or not having the force of law) from any central bank or other
Governmental Authority, the effect of which would be to subject to any taxes any
payment made pursuant to this Agreement to any Lender making the representation
and covenants set forth in subsection 3.11(d)(2), which payment would not be
subject to such taxes were such Lender eligible to make and comply with, and
actually made and complied with, the representation and covenants set forth in
subsection 3.11(d)(1) hereinabove.
(e) A certificate in reasonable detail as to any amounts submitted by
such Lender, through the Administrative Agent, to the Company, shall be
conclusive in the absence of manifest error. The covenants contained in this
subsection 3.11 shall survive the termination of this Agreement and repayment of
the Loans.
3.12 Indemnity. The Borrowers agree to indemnify each Lender and to
---------
hold such Lender harmless from any loss or expense (but without duplication of
any amounts payable as default interest) which such Lender may sustain or incur
as a consequence of (a) default by any Borrower in payment of the principal
amount of or interest on any Eurodollar Loans of such Lender, including, but not
limited to, any such loss or expense arising from interest or fees
51
payable by such Lender to lenders of funds obtained by it in order to make or
maintain its Eurodollar Loans hereunder, (b) default by any Borrower in making a
borrowing after the Company, as agent for the Borrowers, has given a notice in
accordance with subsection 3.1 or in making a conversion of Alternate Base Rate
Loans to Eurodollar Loans or in continuing Eurodollar Loans as such, in either
case, after the Company, as agent for the Borrowers, has given notice in
accordance with subsection 3.2, (c) default by any Borrower in making any
prepayment after the Company, as agent for the Borrower, has given a notice in
accordance with subsection 3.4 or (d) a payment or prepayment of a Eurodollar
Loan or conversion (including without limitation, as a result of subsection 3.4
and/or a conversion pursuant to subsection 3.10) of any Eurodollar Loan into an
Alternate Base Rate Loan, in either case on a day which is not the last day of
an Interest Period with respect thereto, including, but not limited to, any such
loss or expense arising from interest or fees payable by such Lender to lenders
of funds obtained by it in order to maintain its Eurodollar Loans hereunder (but
excluding loss of profit). This covenant shall survive termination of this
Agreement and repayment of the Loans.
3.13 Repayment of Loans; Evidence of Debt. (a) The Borrowers hereby
------------------------------------
unconditionally promise to pay to the Administrative Agent for the account of
each Lender (i) the then unpaid principal amount of each Revolving Credit Loan
of such Lender on the Termination Date, (ii) the then unpaid principal amount of
the Term Loans of such Lender on the Termination Date and (iii) the then unpaid
principal amount of the Swing Line Loans of the Swing Line Lender on the
Termination Date. The Borrowers hereby further agree to pay interest on the
unpaid principal amount of the Loans from time to time outstanding from the date
hereof until payment in full thereof at the rates per annum and on the dates set
forth in subsection 3.5.
(a) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing indebtedness of the Borrowers to such Lender
resulting from each Loan of such Lender from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.
(b) The Administrative Agent shall maintain the Register pursuant to
subsection 9.6(d), and a subaccount therein for each Lender, in which shall be
recorded (i) the amount of each Revolving Credit Loan and Term Loan made
hereunder, the Type thereof and each Interest Period applicable thereto, (ii)
the applicable Borrower, (iii) the amount of any principal or interest due and
payable or to become due and payable from the Borrowers to each Lender hereunder
and (iv) both the amount of any sum received by the Administrative Agent
hereunder from the Borrowers and each Lender's share thereof.
(c) The entries made in the Register and the accounts of each Lender
maintained pursuant to subsection 3.13(b) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
----- -----
obligations of the Borrowers therein recorded; provided that the failure of any
--------
Lender or the Administrative Agent to maintain the Register or any such account,
or any error therein, shall not in any manner affect the obligation of any
Borrower to repay (with applicable interest) the Loans made to such Borrower by
such Lender or to repay any other obligations in accordance with the terms of
this Agreement.
52
(d) Each Borrower agrees that, upon the request to the Administrative
Agent by any Lender, such Borrower will execute and deliver to such Lender (i) a
promissory note of such Borrower evidencing the Revolving Credit Loans of such
Lender, substantially in the form of Exhibit A with appropriate insertions as to
date and principal amount (a "Revolving Credit Note"), and/or (ii) a promissory
---------------------
note of such Borrower evidencing the Term Loan of such Lender, substantially in
the form of Exhibit B with appropriate insertions as to date and principal
amount (a "Term Loan Note"), and/or (iii) in the case of the Swing Line Lender,
--------------
a promissory note of the Company evidencing the Swing Line Loans of the Swing
Line Lender, substantially in the form of Exhibit C with appropriate insertions
as to date and principal amount (the "Swing Line Note").
---------------
3.14 Replacement of Lenders. In the event any Lender or the Issuing
----------------------
Lender is a Non-Funding Lender, exercises its rights pursuant to subsection 3.10
or requests payments pursuant to subsections 2.10 or 3.11, the Company, as agent
for the Borrowers, may require, at the Borrowers' expense (including payment of
any processing fees under subsection 9.6(e)) and subject to subsection 3.12,
such Lender or the Issuing Lender to assign, at par plus accrued interest and
fees, without recourse (in accordance with subsection 9.6) all of its interests,
rights and obligations hereunder (including all of its Commitments and the Loans
and other amounts at the time owing to it hereunder and its Notes and its
interest in the Letters of Credit) to a bank, financial institution or other
entity specified by the Company, provided that (i) such assignment shall not
--------
conflict with or violate any law, rule or regulation or order of any court or
other Governmental Authority, (ii) the Company shall have received the written
consent of the Administrative Agent, which consent shall not unreasonably be
withheld, to such assignment, (iii) the Borrowers shall have paid to the
assigning Lender or the Issuing Lender all monies other than principal, interest
and fees accrued and owing hereunder to it (including pursuant to subsections
2.10, 3.10, 3.11 and 3.12) and (iv) in the case of a required assignment by the
Issuing Lender, the Letters of Credit shall be canceled and returned to the
Issuing Lender.
3.15 Appointment of the Company and Reliance on Representation of
------------------------------------------------------------
the Company. Each Borrower hereby appoints the Company as its agent for all
- -----------
purposes hereunder, and each Borrower agrees that the Administrative Agent and
the Lenders may rely on any representations, warranty, certificate, notice,
document or telephone request which purports to be executed or made, and which
the Administrative Agent or the Lenders in good faith believe to have been
executed or made, by the Company or any of its Authorized Officers, and each
Borrower further agrees to indemnify and hold the Administrative Agent and the
Lenders harmless for any action, including the making of the borrowings
hereunder, and any loss or expense, taken or incurred by any of them as a result
of their good faith reliance upon any such representations, warranty,
certificate, notice, document or telephone request. All obligations of the
Borrowers under this Agreement or any notes, instruments or agreements entered
in connection herewith, shall be joint and several obligations of each of the
Borrowers.
4. REPRESENTATIONS AND WARRANTIES
------------------------------
53
To induce the Lenders to enter into this Agreement and to make the
Loans and to induce the Issuing Lender to issue, and the Participating Lenders
to participate in, the Letters of Credit, each Borrower hereby represents and
warrants to each Lender and the Administrative Agent as of the Closing Date and
as of the making of any extension of credit hereunder:
4.1 Financial Condition. (a) The consolidated audited balance
-------------------
sheets of the Company and its consolidated Subsidiaries as at December 31, 1995,
December 31, 1996 and December 31, 1997 the related consolidated statements of
operations and of cash flows for the fiscal years ended on each such dates,
audited by Coopers & Lybrand LLP, copies of which have heretofore been furnished
to each Lender, present fairly in accordance with GAAP the consolidated
financial condition of the Company and its consolidated Subsidiaries as at such
dates, and the consolidated results of their operations and their consolidated
cash flows for the fiscal year then ended. All such financial statements have
been prepared in accordance with GAAP applied consistently throughout the
periods involved (except as approved by such accountants and as disclosed
therein). Neither the Company nor any of its consolidated Subsidiaries had, at
the date of each balance sheet referred to above, any material Contingent
Obligation, contingent liability or liability for taxes, or any long-term lease
or unusual forward or long-term commitment, including, without limitation, any
material interest rate or foreign currency swap or exchange transaction, which
is not reflected in the foregoing statements or in the notes thereto or
expressly permitted to be incurred hereunder.
(b) The unaudited consolidated balance sheet of the Company and its
consolidated Subsidiaries as at March 31, 1998 and the related consolidated
statements of operations and of cash flows for the three-month period then
ended, certified by a Responsible Officer of the Company, copies of which have
heretofore been furnished to each Lender, present fairly in accordance with GAAP
the financial position of the Company and its consolidated Subsidiaries as at
such date and the consolidated results of their operations and their
consolidated cash flows for the three-month period then ended (subject to normal
year-end adjustments). Such financial statements, including the related
schedules and notes thereto, have been prepared in accordance with GAAP (except
as approved by such Responsible Officer and disclosed therein). The Company and
its consolidated Subsidiaries did not have at the date of such balance sheet,
any material Contingent Obligation, contingent liability or liability for taxes,
or any long-term lease or unusual forward or long-term commitment, including,
without limitation, any interest rate or foreign currency exchange transaction,
which is not reflected in such balance sheet or in the notes thereto or in the
notes to the Company's audited financial statements. During the period from
December 31, 1997 to the Closing Date, no dividends or other distributions have
been declared, paid or made upon the Capital Stock of the Company or any of its
consolidated Subsidiaries nor has any of the Capital Stock of the Company or any
of its consolidated Subsidiaries been redeemed, retired, purchased or otherwise
acquired for value by the Company or any of its consolidated Subsidiaries,
respectively, in each case, except as contemplated in connection with the
Merger.
54
(c) The unaudited consolidated pro forma balance sheet of the Company
--- -----
and its consolidated Subsidiaries, as of March 31, 1998, certified by a
Responsible Officer of the Company (the "Pro Forma Balance Sheet"), copies of
-----------------------
which have been furnished to each Lender, is the unaudited balance sheet of the
Company and its consolidated Subsidiaries adjusted to give effect (as if such
events had occurred on the date set forth therein) to (i) the Merger and each of
the transactions contemplated by the Merger Agreement and (ii) the incurrence of
the Loans and the issuance of the Letters of Credit to be incurred or issued, as
the case may be, on the Closing Date, and all Indebtedness that the Company and
its consolidated Subsidiaries expect to incur, and the payment of all amounts
the Company and its consolidated Subsidiaries expect to pay, in connection with
the Merger. The Pro Forma Balance Sheet, together with the notes thereto, was
prepared based on good faith assumptions in accordance with GAAP and is based on
the best information available to the Company as of the date of delivery thereof
and reflects on a pro forma basis the financial position of the Company and its
--- -----
consolidated Subsidiaries as of March 31, 1998, as adjusted, as described above,
assuming that the events specified in the preceding sentence had actually
occurred as of March 31, 1998.
4.2 No Change. Since December 31, 1997, (a) there has been no
---------
change, and (as of the Closing Date only) no development or event which has had
or could reasonably be expected to have a material adverse effect on (i) the
business, assets, condition (financial or otherwise) or results of operations of
the Company and its Subsidiaries taken as a whole, (ii) the ability of the
Company and its Subsidiaries to perform their obligations under the Credit
Documents and with respect to the other financings contemplated hereby or (iii)
the rights and remedies of the Lenders under the Credit Documents and (b) no
dividends or other distributions have been declared, paid or made upon the
Capital Stock of the Company nor has any of the Capital Stock of the Company
been redeemed, retired, repurchased or otherwise acquired for value by the
Company or any of its Subsidiaries, except as permitted by subsection 7.11 and,
in each case, except as contemplated in connection with the Merger.
4.3 Corporate Existence; Compliance with Law. Each of the Company
----------------------------------------
and its Subsidiaries (a) is a corporation duly organized and validly existing
under the laws of the jurisdiction of its incorporation, (b) has full corporate
power and authority and possesses all governmental franchises, licenses,
permits, authorizations and approvals necessary to enable it to use its
corporate name and to own, lease or otherwise hold its properties and assets and
to carry on its business as presently conducted other than such franchises,
licenses, permits, authorizations and approvals the lack of which, individually
or in the aggregate, would not have a material adverse effect on the business,
assets, condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries, taken as a whole, (c) is duly qualified and in
good standing to do business in each jurisdiction in which the nature of its
business or the ownership, leasing or holding of its properties makes such
qualification necessary, except such jurisdictions where the failure so to
qualify would not have a material adverse effect on the business, assets,
condition (financial or otherwise) or results of operations of the Company and
its Subsidiaries, taken as a whole, and (d) is in compliance with all applicable
statutes, laws, ordinances, rules, orders, permits and regulations of any
governmental authority or instrumentality, domestic or foreign (including,
without limitation, those related to Hazardous
55
Materials and substances), except where noncompliance would not have a material
adverse effect on the business, assets, condition (financial or otherwise) or
results of operations of the Company and its Subsidiaries, taken as a whole.
Neither the Company nor any of its Subsidiaries has received prior to the date
hereof any written communication from a Governmental Authority that alleges that
the Company or any of its Subsidiaries is not in compliance, in all material
respects, with all material federal, state, local or foreign laws, ordinances,
rules and regulations, which alleged non-compliance has not been remedied.
4.4 Corporate Power; Authorization. Each of the Company and its
------------------------------
Subsidiaries has the corporate power and authority to make, deliver and perform
each of the Credit Documents to which it is a party, each Borrower has the
corporate power and authority and legal right to borrow hereunder, and the
Company has the corporate power and authority to have Letters of Credit issued
for its account hereunder. Each of the Company and its Subsidiaries has taken
all necessary corporate action to authorize the execution, delivery and
performance of each of the Credit Documents to which it is or will be a party,
each Borrower has taken all necessary corporate action to authorize the
borrowings hereunder, and the Company has taken all necessary corporate action
to authorize the issuance of Letters of Credit for its account hereunder. No
consent or authorization of, or filing with, any Person (including, without
limitation, any Governmental Authority) is required in connection with the
execution, delivery or performance by the Company or any of its Subsidiaries, or
for the validity or enforceability against the Company or any of its
Subsidiaries, of any Credit Document except for consents, authorizations and
filings which have been obtained or made and are in full force and effect and
except (a) such consents, authorizations and filings, the failure to obtain or
perform (i) which would not have a material adverse effect on the business,
assets, condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries taken as a whole and (ii) which would not adversely
affect the validity or enforceability of any of the Credit Documents or the
rights or remedies of the Administrative Agent or the Lenders thereunder, and
(b) such filings as are necessary to perfect the Liens of the Lenders created
pursuant to this Agreement and the Security Documents.
4.5 Enforceable Obligations. This Agreement and the Merger
-----------------------
Agreement have been, and each of the other Credit Documents and any other
agreement to be entered into by any Credit Party pursuant to the Merger
Agreement will be, duly executed and delivered on behalf of such Credit Party
that is party thereto. The Merger Agreement has been duly executed and delivered
on behalf of the Company and AcquisitionCo. This Agreement and the Merger
Agreement each constitutes, and each of the other Credit Documents and any other
agreement to be entered into by any Credit Party pursuant to the Merger
Agreement will constitute upon execution and delivery, the legal, valid and
binding obligation of such Credit Party, enforceable against such Credit Party
in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws
affecting creditors' rights generally and by general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law). The Merger Agreement constitutes the legal, valid and binding obligation
of (a) the Company enforceable against the Company in accordance with its terms
and (b) AcquisitionCo enforceable against AcquisitionCo in accordance with its
terms,
56
except, in each case, as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting creditors' rights
generally and by general principles of equity (regardless of whether enforcement
is sought in a proceeding in equity or at law).
4.6 No Legal Bar. The execution, delivery and performance of each
------------
Credit Document, the incurrence or issuance of and use of the proceeds of the
Loans, the Subordinated Debt, the Preferred Stock and drawings under the Letters
of Credit, and the transactions contemplated by the Merger Agreement, the Credit
Documents and the documentation for the Subordinated Debt and the Preferred
Stock, (a) will not violate any Requirement of Law or any Contractual Obligation
applicable to or binding upon AcquisitionCo, the Company or any Subsidiary or
any of their respective properties or assets, in any manner which, individually
or in the aggregate, (i) would have a material adverse effect on the ability of
AcquisitionCo, the Company or any such Subsidiary to perform its obligations
under the Credit Documents, the Merger Agreement, and any other agreement to be
entered into pursuant to the Merger Agreement or in connection with the
Subordinated Debt or the Preferred Stock, to which it is a party, (ii) would
give rise to any liability on the part of the Administrative Agent or any Lender
or (iii) would have a material adverse effect on the business, assets, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries, taken as a whole, and (b) will not result in the creation or
imposition of any Lien on any of its properties or assets pursuant to any
Requirement of Law applicable to it, as the case may be, or any of its
Contractual Obligations, except for the Liens arising under the Security
Documents (some of which may be the subject of the Intercreditor Agreement or
the Agency and Intercreditor Agreement).
4.7 No Material Litigation. No litigation by, investigation known
----------------------
to the Company by, or proceeding of, any Governmental Authority is pending
against the Company or any of its Subsidiaries (including after giving effect to
the Merger) that could reasonably be expected to affect (a) the validity,
binding effect or enforceability of the Merger Agreement or any Credit Document,
(b) the Loans made hereunder or the use of proceeds thereof, of the Subordinated
Debt, of the Preferred Stock or of any drawings under a Letter of Credit or (c)
the other transactions contemplated hereby or by the Merger Agreement. No
lawsuits, claims, proceedings or investigations are pending or, to the best
knowledge of the Company, threatened as of the Closing Date against or affecting
the Company or a Subsidiary or any of their respective properties, assets,
operations or businesses (including after giving effect to the Merger), in which
there is a probability of an adverse determination, and is reasonably likely, if
adversely decided, to have a material adverse effect on the business, assets,
condition (financial or otherwise) or results of operations of the Company and
its Subsidiaries, taken as a whole.
4.8 Investment Company Act. Neither the Company nor any Subsidiary
----------------------
is an "investment company" or a company "controlled" by an "investment company"
(as each of the quoted terms is defined or used in the Investment Company Act of
1940, as amended).
4.9 Federal Regulation. No part of the proceeds of any of the
------------------
Loans or Subordinated Debt or any drawing under a Letter of Credit will be used
for any purpose which violates the provisions of Regulation T, U or X of the
Board. Neither the Company nor any of its
57
Subsidiaries is engaged or will engage, principally or as one of its important
activities, in the business of extending credit for the purpose of "purchasing"
or "carrying" any "margin stock" within the respective meanings of each of the
quoted terms under said Regulation U. Following application of the proceeds of
each Loan, not more than 25% of the value of the assets (either of the Company
only or the Company and its Subsidiaries on a consolidated basis) subject to the
provisions of subsection 7.2, or subject to any restriction contained in any
agreement or instrument between the Company and any Lender or any affiliate of
any Lender relating to Indebtedness within the scope of Section 8(d), will be
"margin stock".
4.10 No Default. The Company and each of its Subsidiaries have
----------
performed all material obligations required to be performed by them under their
respective Contractual Obligations (including after giving effect to the Merger)
and they are not (with or without the lapse of time or the giving of notice, or
both) in breach or default in any respect thereunder, except to the extent that
such breach or default would not have a material adverse effect on the business,
assets, condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries, taken as a whole. Neither the Company nor any of
its Subsidiaries (including after giving effect to the Merger) is in default
under any material judgment, order or decree of any Governmental Authority,
domestic or foreign, applicable to it or any of its respective properties,
assets, operations or business, except to the extent that any such breaches or
defaults would not, in the aggregate, have a material adverse effect on the
business, assets, condition (financial or otherwise) or results of operations of
the Company and its Subsidiaries, taken as a whole.
4.11 Taxes. Except as set forth on Schedule 4.11, each of the
-----
Company and its Subsidiaries (including after giving effect to the Merger) has
filed or caused to be filed all material tax returns which, to the knowledge of
the Company, are required to be filed and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than any the amount of which is
currently being contested in good faith by appropriate proceedings and with
respect to which reserves (or other sufficient provisions) in conformity with
GAAP have been provided on the books of the Company or its Subsidiaries
(including after giving effect to the Merger), as the case may be); and no tax
Lien has been filed, and, to the knowledge of the Company, no written claim is
being asserted, with respect to any such tax, fee or other charges.
4.12 Subsidiaries. After giving effect to the consummation of the
------------
Merger, the Subsidiaries and their respective jurisdictions of incorporation
shall be as set forth on Schedule 4.12.
4.13 Ownership of Property; Liens. As of the Closing Date and as of
----------------------------
the making of any extension of credit hereunder (subject to transfers and
dispositions of property permitted under subsection 7.5), each of the Company
and its Subsidiaries has good and valid title to all of its material assets
(other than real property or interests in real property) in each case free and
clear of all mortgages, liens, security interests or encumbrances of any nature
58
whatsoever except Permitted Liens. With respect to real property or interests in
real property, as of the Closing Date, each of the Company and its Subsidiaries
has (a) fee title to all of the real property listed on Schedule 4.13 under the
heading "Fee Properties" (each, a "Fee Property"), and (b) good and valid title
------------
to the leasehold estates in all of the real property leased by it and listed on
Schedule 4.13 under the heading "Leased Properties" (each, a "Leased Property"),
---------------
in each case, free and clear of all mortgages, liens, security interests,
easements, covenants, rights-of-way and other similar restrictions of any nature
whatsoever, except (i) Permitted Liens and (ii) as to Leased Property, the terms
and provisions of the respective lease therefor, including, without limitation,
the matters set forth on Schedule 4.13, and any matters affecting the fee title
and any estate superior to the leasehold estate related thereto. The Fee
Properties and the Leased Properties constitute, as of the Closing Date, all of
the real property owned in fee or leased by the Company and its Subsidiaries.
4.14 ERISA. Neither a Reportable Event nor an "accumulated funding
-----
deficiency" (within the meaning of Section 412 of the Code or Section
302 of ERISA) has occurred during the five-year period prior to the date on
which this representation is made or deemed made with respect to any Plan that
would result in a material liability to the Company or any of its Subsidiaries,
and each Plan has complied with the applicable provisions of ERISA and the Code
except to the extent that any non-compliance would not result in a material
liability to the Company. Neither the Company nor any Commonly Controlled
Entity has: been involved in any transaction that would cause the Company or any
of its Subsidiaries to be subject to material liability with respect to a Plan
to which the Company or any Commonly Controlled Entity contributed or was
obligated to contribute during the six-year period ending on the date this
representation is made or deemed made; or incurred any material liability under
Title IV of ERISA which would become or remain a material liability of the
Company or any of its Subsidiaries after the Closing Date. No termination of a
Single Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan
has arisen, during such five-year period that would result in a material
liability to the Company or any of its Subsidiaries. The present value of all
accrued benefits under each Single Employer Plan (based on those assumptions
used to fund such Plans) did not, as of the last annual valuation date prior to
the date on which this representation is made or deemed made, exceed the value
of the assets of such Plan allocable to such accrued benefits that would result
in a material liability to the Company or any of its Subsidiaries. Neither the
Company nor any Commonly Controlled Entity has had a complete or partial
withdrawal from any Multiemployer Plan, and neither the Company nor any Commonly
Controlled Entity would become subject to any liability under ERISA if the
Company or any such Commonly Controlled Entity were to withdraw completely from
all Multiemployer Plans as of the valuation date most closely preceding the date
on which this representation is made or deemed made, in either case that would
result in a material liability to the Company or any of its Subsidiaries. To the
knowledge of the Company, no such Multiemployer Plan is in Reorganization or
Insolvent. The present value (determined using actuarial and other assumptions
which are reasonable in respect of the benefits provided and the employees
participating) of the liability of the Company and each Commonly Controlled
Entity for post retirement benefits to be provided to their current and former
employees under Plans which are welfare benefit plans (as defined in Section
3(1) of ERISA) does not, in the aggregate, exceed the assets under all such
Plans allocable to such
59
benefits by an amount that would result in a material liability to the Company
or any of its Subsidiaries, except as disclosed in the Company's audited
financial statements for the fiscal year ended December 31, 1997 provided to the
Lenders prior to the Closing Date. For purposes of this subsection 4.14, a
material liability shall exceed $7,500,000.
4.15 Security Documents. (a) Upon execution and delivery thereof
------------------
by the parties thereto, the Collateral Agreement will be effective to create in
favor of the Administrative Agent, for the benefit of the Lenders, a legal,
valid and enforceable security interest in the Collateral described therein.
When stock certificates representing or constituting the pledged stock described
in the Collateral Agreement are delivered to the Administrative Agent, such
security interest shall constitute a perfected first lien on, and security
interest in, all right, title and interest of the grantors party thereto in the
pledged stock described therein to the extent that such liens and security
interests are in accordance with the provisions of the Intercreditor Agreement
and the Agency and Intercreditor Agreement. In the case of the other Collateral
described in the Collateral Agreement, when Uniform Commercial Code financing
statements have been filed in each of the jurisdictions listed on Schedule
4.15(a), or arrangements have been made for such filing in such jurisdictions,
and upon such filing, and upon the taking of possession by the Administrative
Agent of any such Collateral the security interests in which may be perfected
only by possession, such security interests will, subject to the existence of
Permitted Liens and the provisions of the Intercreditor Agreement, constitute
perfected first priority liens on, and security interests in, all right, title
and interest of the grantors' party thereto in such other Collateral, to the
extent that such liens and security interests are in accordance with the
provisions of the Intercreditor Agreement and the Agency and Intercreditor
Agreement and except to the extent that a security interest cannot be perfected
therein by the filing of a financing statement or the taking of possession under
the Uniform Commercial Code of the relevant jurisdiction.
(a) Upon execution and delivery thereof by the applicable Credit
Party, each Mortgage will be effective to create in favor of the Administrative
Agent, for the benefit of the Lenders, a legal, valid and enforceable security
interest in the collateral described therein, and upon recording the Mortgages
in the jurisdictions listed on Schedule 4.13 (or, in the case of a Mortgage
delivered pursuant to subsection 6.9(c), the jurisdiction in which the property
covered by such Mortgage is located), such security interests will, subject to
the existence of Permitted Liens and the provisions of the Intercreditor
Agreement, constitute first (or, in the case of the Mortgages granted by
Meditrust Entities, second) priority liens on, and perfected security interests
in, all rights, title and interest of the debtor party thereto in the collateral
described therein to the extent that such liens and security interests are in
accordance with the provisions of the Intercreditor Agreement and the Agency and
Intercreditor Agreement.
4.16 Copyrights, Patents, Permits, Trademarks and Licenses.
-----------------------------------------------------
Schedule 4.16 sets forth a true and complete list as of the Closing Date of all
material trademarks (registered or unregistered), trade names, service marks,
patents, pending patent applications and copyrights and applications therefor
owned, used or filed by or licensed to the Company and its Subsidiaries (after
giving effect to the Merger) and, with respect to registered trademarks (if
any), contains a
60
list of all jurisdictions in which such trademarks are registered or applied for
and all registration and application numbers. Except as set forth on Schedule
4.16, the Company or a Subsidiary (after giving effect to the Merger) owns or
has the right to use, trademarks (registered or unregistered), trade names,
service marks, patents, pending patent applications and copyrights and
applications therefor referred to in such Schedule. Except as set forth on
Schedule 4.16, to the best knowledge of the Company, no claims are pending by
any Person with respect to the ownership, validity, enforceability or the
Company's or any Subsidiary's use of any such trademarks (registered or
unregistered), trade names, service marks, patents, pending patent applications
and copyrights, or applications therefor, challenging or questioning the
validity or effectiveness of any of the foregoing, in any jurisdiction, domestic
or foreign, except to the extent such claims could not reasonably be expected to
have a material adverse effect on the Company and its Subsidiaries, taken as a
whole.
4.17 Environmental Matters. Except insofar as any exceptions to the
---------------------
following, individually or in the aggregate, could not reasonably be expected to
result in a material adverse effect on the business, assets, conditions
(financial or otherwise) or operations of the Company and its Subsidiaries,
taken as a whole:
(a) to the best knowledge of the Company, the properties owned,
leased, or otherwise operated by the Company or any of its Subsidiaries do
not contain, and have not previously contained, in, on or under, including,
without limitation, the soil and groundwater thereunder, any Hazardous
Materials in amounts or concentrations that constitute or constituted a
violation of, or could reasonably give rise to liability under,
Environmental Laws;
(b) to the best knowledge of the Company, the properties owned or
leased, or otherwise operated by the Company or any of its Subsidiaries and
all operations and facilities at such properties are in compliance with all
Environmental Laws, and there is no contamination or violation of any
Environmental Law which could interfere with the continued operation of, or
impair the fair saleable value of, such property;
(c) neither the Company nor any of its Subsidiaries has received or
is aware of any written complaint, notice of violation, alleged violation,
or notice of investigation or of potential liability under Environmental
Laws with regard to the Company or its Subsidiaries, nor does the Company
or any of its Subsidiaries have knowledge that any such action is being
contemplated, considered or threatened;
(d) to the best knowledge of the Company, Hazardous Materials have
not been generated, treated, stored or disposed of at, on or under any
properties presently or formerly owned, leased, or otherwise operated by
the Company or any of its Subsidiaries, nor have any Hazardous Materials
been transported from any such property, or come to be located at any other
property, in violation of or in a manner that could reasonably give rise to
liability under any Environmental Laws; and
61
(e) there are no governmental administrative actions or judicial
proceedings pending or, to the best knowledge of the Company and its
Subsidiaries, threatened under any Environmental Law to which the Company
or any of its Subsidiaries is a party, nor are there any consent decrees or
other decrees, consent orders, administrative orders or other orders, or
other administrative or judicial requirements, other than permits
authorizing operations by the Company or any of its Subsidiaries,
outstanding under any Environmental Law.
4.18 Accuracy and Completeness of Information. The factual
----------------------------------------
statements contained in the financial statements referred to in subsection 4.1,
the Form S-4, the 1997 Form 10-K, the Credit Documents (including the schedules
thereto), the Merger Agreement and any other certificates or documents furnished
or to be furnished by any Credit Party or any of their representatives or
advisors to the Administrative Agent or the Lenders from time to time in
connection with this Agreement, taken as a whole, do not and will not, to the
best knowledge of the Company, as of the date when made, contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements contained therein not misleading in light of the
circumstances in which the same were made, all except as otherwise qualified
herein or therein, such knowledge qualification being given only with respect to
factual statements made by Persons other than the Company or any of its
Subsidiaries.
4.19 AcquisitionCo. To the best knowledge of the Company,
-------------
AcquisitionCo is a Delaware corporation organized on behalf of the Investors to
effect the Merger and has not carried on any activities, incurred any
liabilities, assumed any obligations or acquired any assets prior to the Closing
Date other than those incident to its formation and the transactions
contemplated by the Merger Agreement or by the Credit Documents.
4.20 Health Care Permits. (a) Except as, in the aggregate, would
-------------------
not reasonably be expected to have a material adverse effect on the business,
assets, condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries, taken as a whole: (i) each of the Company and its
Subsidiaries now has (after giving effect to the Merger), and has no reason to
believe it will not be able to maintain in effect, all Health Care Permits
necessary for the lawful conduct of its business or operations wherever now
conducted and as planned to be conducted, including without limitation, the
ownership and operation of its Health Care Facilities and Ancillary Businesses
pursuant to all Requirements of Law, (ii) all such Health Care Permits are in
full force and effect and have not been amended or otherwise modified,
rescinded, revoked or assigned, (iii) the Company and each of its Subsidiaries
is substantially complying with the requirements of each such Health Care
Permit, and no event has occurred, and no condition exists, which, with the
giving of notice, the passage of time, or both, would constitute a violation
thereof, (iv) neither the Company nor any of its Subsidiaries, has received any
written notice of any violation of any Requirement of Law, (v) to the knowledge
of the Company, no condition exists or event has occurred which in itself or
with the giving of notice or the lapse of time, or both, would result in the
suspension, revocation, impairment, forfeiture or non-renewal of any such Health
Care Permit, (vi) there is no claim filed with any Governmental Authority of
which the Company or any of its Subsidiaries has been notified in writing
62
challenging the validity of any such Health Care Permit and (vii) the
continuation, validity and effectiveness of all such Health Care Permits will
not be adversely affected by the Merger or the execution and performance of any
of the Credit Documents.
(b) All Health Care Facilities and Ancillary Businesses owned,
leased, managed or operated by the Company or any of its Subsidiaries are
entitled to participate in, and receive payment under, the appropriate Medicare,
Medicaid and related reimbursement programs, and any similar state or local
government-sponsored program, to the extent that the Company or any of its
Subsidiaries has decided to participate in any such program with respect to such
Health Care Facility or Ancillary Business, as the case may be, and to receive
reimbursement from private and commercial payers and health maintenance
organizations to the extent applicable thereto. There are no proceedings
pending or, to the knowledge of the Company, any proceedings threatened or
investigations pending or threatened, by any Governmental Authority with respect
to the Company's or any of its Subsidiaries' participation in the Medicare,
Medicaid or related reimbursement programs and which would reasonably be
expected to have a material adverse effect on the business, assets, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries, taken as a whole.
4.21 Year 2000. Any reprogramming required to permit the proper
---------
functioning, in and following the year 2000, of (a) the Borrowers' computer
systems and (b) equipment containing embedded microchips (including systems and
equipment supplied by others or with which the Borrowers' systems interface) and
the testing of all such systems and equipment, as so reprogrammed, will be
completed in all material respects by September 30, 1999. The cost to the
Borrowers of such reprogramming and testing and of the reasonably foreseeable
consequences of year 2000 to the Borrowers (including, without limitation,
reprogramming errors and the failure of others' systems or equipment) would not
reasonably be expected to result in a Default or Event of Default or a material
adverse effect on the business, assets, condition (financial or otherwise) or
results of operations of the Company and its Subsidiaries, taken as a whole.
Except for such of the reprogramming referred to in the preceding sentence as
may be necessary, the computer and management information systems of the
Borrowers are and, with ordinary course upgrading and maintenance, will continue
for the term of this Agreement to be, sufficient to permit the Borrowers to
conduct their respective businesses without resulting in a material adverse
effect on the business, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries, taken as a whole.
5. CONDITIONS PRECEDENT
--------------------
5.1 Conditions to Initial Revolving Credit Loans and Letters of
-----------------------------------------------------------
Credit. The obligation of each Lender to make its Revolving Credit Loans, and
- ------
the obligation of the Issuing Lender to issue any Letter of Credit, on the
Closing Date are subject to the satisfaction, or waiver by such Lender,
immediately prior to or concurrently with the making of such Revolving Credit
Loans or the issuance of such Letters of Credit, as the case may be, of the
following conditions:
63
(a) Agreement; Notes; Merger Agreement. The Administrative Agent
----------------------------------
shall have received (i) a counterpart of this Agreement for each Lender
duly executed and delivered by a duly authorized officer of each Borrower
and (ii) for the account of each Revolving Credit Lender requesting the
same pursuant to subsection 3.13, a Revolving Credit Note of the Borrowers
conforming to the requirements hereof and executed by a duly authorized
officer of each Borrower. The Administrative Agent shall have received a
copy of the Merger Agreement.
(b) Merger. (i) The Merger shall be consummated simultaneously
------
pursuant to the Merger Agreement with all fees, costs and expenses incurred
in connection therewith not to exceed approximately $45,000,000, all of the
conditions precedent set forth in Article 6 of the Merger Agreement shall
have been satisfied or waived by AcquisitionCo and no material provision of
the Merger Agreement shall have been amended, supplemented, waived or
otherwise modified without the prior written consent of the Administrative
Agent, which consent shall not be unreasonably withheld.
(ii) No more than approximately $362,000,000 exclusive of fees
and expenses (which amount includes (A) the value attributable to common
stock of the Company retained by the Existing Shareholders, (B) the
aggregate amount expended in connection with the exercise of purchase
options with respect to the properties, or the equity interests in the
Persons that are the owners of such properties, that are the subject of the
documentation relating to the Company's existing synthetic lease facility
and (C) the assumption, repayment, maintenance and/or amendment of certain
existing Indebtedness) shall be expended to repurchase shares of the
Company's common stock from existing holders thereof and refinance existing
Indebtedness.
(c) Capitalization; Capital Structure (i) (A) The Company shall
---------------------------------
have been capitalized by the Investors (directly or indirectly through
AcquisitionCo) with at least approximately $157,000,000 in cash from the
issuance of its common stock as described in the Form S-4 (or otherwise
having material terms satisfactory to the Arranger and representing at
least 90% of the voting Capital Stock of the Company) and (B) the value of
the common stock of the Company held by Existing Shareholders (valued at a
price per share equal to the price at which the Investors purchased their
common stock), when added to the amount referred to in clause (A) above,
shall equal at least $175,000,000; provided, however, that the common
-------- -------
equity ownership amounts referred to in clauses (A) and (B) above shall
each be reduced by an amount approximately equal to the excess of (x) the
gross cash proceeds from the issuance by the Company on the Closing Date of
Preferred Stock over (y) $40,000,000.
(i) The Company shall have received at least approximately
$100,000,000 in gross cash proceeds from the issuance by the Company of (A)
Bridge Senior Subordinated Debt pursuant to a Bridge Loan Agreement
executed and delivered by the parties thereto in form and substance
satisfactory to the Lenders, which Bridge Loan Agreement shall be in full
force and effect and none of the provisions thereof shall
64
have been amended, waived, supplemented or otherwise modified without the
prior written consent of the Administrative Agent, (B) Senior Subordinated
Discount Notes or (C) Permanent Senior Subordinated Debt.
(ii) The Company shall have received approximately $40,000,000
(or at least such amount, in the case of the issuance of Preferred Stock)
in gross cash proceeds from the issuance by the Company of (A) Bridge
Junior Subordinated Debt pursuant to a Bridge Loan Agreement executed and
delivered by the parties thereto in form and substance satisfactory to the
Lenders, which Bridge Loan Agreement shall be in full force and effect and
none of the provisions thereof shall have been amended, waived,
supplemented or otherwise modified without the prior written consent of the
Administrative Agent or (B) Preferred Stock; provided, however, that in the
-------- -------
event that the gross cash proceeds received by the Company in accordance
with subsection 5.1(c)(ii) are more than $100,000,000 but less than or
equal to $105,000,000, the gross cash proceeds required to be received by
the Company pursuant to this subsection 5.1(c)(iii) shall be reduced by an
amount equal to the amount by which such gross cash proceeds received in
accordance with subsection 5.1(c)(ii) exceed $100,000,000; provided
--------
further, that in the event that the gross cash proceeds received by the
-------
Company in accordance with subsection 5.1(c)(i)(A) are more than
$157,000,000, the gross cash proceeds required to be received by the
Company pursuant to this subsection 5.1(c)(iii) from the issuance of
Preferred Stock shall be reduced by an amount equal to the amount by which
such gross cash proceeds received in accordance with subsection
5.1(c)(i)(A) exceed $157,000,000.
(iv) The terms, conditions and documentation of all equity
securities of the Company or any of its Subsidiaries to be outstanding at
or after the Closing Date, the certificate of incorporation, by-laws, other
governing documents and the corporate and capital structure of the Company
and its Subsidiaries (excluding the identity and amount of equity
contribution of any Investor), in each case after giving effect to the
consummation of the Merger, shall be in form and substance satisfactory to
the Administrative Agent.
The execution and delivery of this Agreement by the Lenders and the
Administrative Agent shall be deemed to evidence the satisfaction of the
Lenders and the Administrative Agent with such of the matters referenced
and in clauses (i) through (iv) of this paragraph (c) as shall have been
disclosed and made available to the Administrative Agent prior to the date
hereof.
(d) Financial Statements. (i) The Lenders shall have received
--------------------
audited consolidated financial statements of the Company for the 1995, 1996
and 1997 fiscal years, which financial statements shall have been prepared
in accordance with GAAP; (ii) the Lenders shall have received unaudited
interim consolidated financial statements of the Company for the quarterly
period ended March 31, 1998, and such financial statements shall not
reflect any material adverse change in the consolidated financial condition
of the Company as reflected in the financial statements or projections
previously delivered to
65
the Lenders; and (iii) the Lenders shall have received a satisfactory pro
---
forma balance sheet on a consolidated basis of the Company and its
-----
Subsidiaries as of March 31, 1998 reflecting and giving effect to the
Merger and the other transactions contemplated hereby.
(e) Fees. The Administrative Agent, the Arranger and the Lenders
----
shall have received all fees required to be paid, and all expenses and
other consideration for which invoices have been presented, on or before
the Closing Date.
(f) Lien Searches; Lien Perfection. (i) The Administrative Agent
------------------------------
shall have received the results of a search of Uniform Commercial Code, tax
and judgment filings made with respect to each of the Company and its
Subsidiaries in the jurisdictions set forth on Schedule 4.15(a), together
with copies of financing statements disclosed by such searches, and such
searches shall disclose no Liens on any assets encumbered by any Security
Document, except for Liens permitted hereunder or, if unpermitted Liens are
disclosed, the Administrative Agent shall have received satisfactory
evidence of the release of such Liens and (ii) the Administrative Agent
shall have received duly executed financing statements on Form UCC-1,
necessary or, in the opinion of the Administrative Agent, desirable to
perfect the Liens created by the Security Documents.
(g) Environmental. The Lenders shall be reasonably satisfied, based
-------------
upon the results of the environmental diligence conducted by the
Administrative Agent and its advisors in cooperation with the Company, with
respect to environmental hazards, conditions or liabilities to which the
Company or any of its Subsidiaries may be subject (the execution and
delivery of this Agreement by the Lenders and the Administrative Agent
being deemed to evidence the satisfaction of the Administrative Agent with
such due diligence as shall have been disclosed and made available to the
Administrative Agent prior to the date hereof).
(h) Employee Benefit Matters. The Lenders shall be reasonably
------------------------
satisfied with all employee benefit matters involving the Company or any of
its Subsidiaries.
(i) Collateral Agreement. The Administrative Agent shall have
--------------------
received the Collateral Agreement executed and delivered by a duly
authorized officer of each of the parties thereto, together with stock
certificates representing 100% of all issued and outstanding shares of
Capital Stock of each of the Domestic Subsidiaries listed on Part A of
Schedule V thereto, and undated stock powers for each certificate, executed
in blank and delivered by a duly authorized officer of the applicable
pledgor and the acknowledgment and consent of the issuer thereunder in the
form annexed thereto.
(j) Legal Opinion. The Administrative Agent shall have received,
-------------
dated the Closing Date and addressed to the Administrative Agent and the
Lenders, an opinion of (i) Gibson, Dunn & Crutcher LLP, counsel to the
Credit Parties, in substantially the form of Exhibit J-1, with such changes
thereto as may be approved by the Administrative Agent and its counsel and
(ii) in-house counsel to the Company or special Massachusetts
66
counsel, in substantially the form of Exhibit J-2, with such changes
thereto as may be approved by the Administrative Agent and its counsel.
(k) Closing Certificate. The Administrative Agent shall have
-------------------
received a Closing Certificate of each Credit Party dated the Closing Date,
in substantially the form of Exhibits K-1 and K-2, respectively, with
appropriate insertions and attachments, in form and substance satisfactory
to the Administrative Agent and its counsel, executed by the President or
any Vice President and the Secretary or any Assistant Secretary of the
Company and its Subsidiaries, respectively.
(l) Solvency Certificate. The Administrative Agent shall have
--------------------
received a certificate of the chief financial officer of the Company, in
form and substance reasonably satisfactory to the Administrative Agent,
which shall document the solvency of the Company and its Subsidiaries after
giving effect to the consummation of the Merger and the other transactions
and related financings contemplated hereby.
(m) Insurance. The Administrative Agent shall have received (i) a
---------
schedule describing all insurance maintained by the Company and its
Subsidiaries pursuant to subsection 6.5, Section 5(h) of the Collateral
Agreement and Section 5 of the Mortgages and (ii) binders (or other
customary evidence as to the obtaining and maintenance by the Company of
such insurance) for each policy set forth on such schedule insuring against
casualty and other usual and customary risks.
(n) Other Agreements. The Administrative Agent shall have received
----------------
each additional legal opinion, document or instrument reasonably requested
by the Required Lenders.
(o) Litigation. On the Closing Date, there shall be no actions,
----------
suits, injunctions, restraining orders or proceedings pending or threatened
against any Credit Party (i) with respect to this Agreement or any other
Credit Document or the transactions contemplated hereby or thereby
(including the Merger) which would be reasonably expected to have a
material adverse effect on the rights or remedies of the Lenders under the
Credit Documents or on the ability of any Credit Party to perform its
respective obligations to the Lenders hereunder or under any other Credit
Document or (ii) which the Administrative Agent or the Required Lenders
shall determine could reasonably be expected to have a material adverse
effect on the rights or remedies of the Lenders hereunder or under any
other Credit Document or on the ability of any Credit Party to perform its
respective obligations to the Lenders hereunder or under any other Credit
Document.
(p) Consents, Approvals and Filings. Except for the financing
-------------------------------
statements contemplated by the Collateral Agreement and the Mortgages, on
the Closing Date, all necessary governmental and other third party filings,
authorizations, consents, approvals or waivers required in connection with
the execution, delivery and performance by the
67
Credit Parties, and the validity and enforceability against the Credit
Parties, of the Credit Documents to which any of them is a party, or
otherwise in connection with the transactions contemplated by the Credit
Documents and the Merger Agreement, shall have been obtained or made and
remain in full force and effect (except where the failure to do so would
not reasonably be expected to have a material adverse effect on (i) the
business, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries, taken as a whole, or (ii)
(A) the validity or enforceability of this Agreement, any of the Notes or
the other Credit Documents or (B) the rights or remedies of the
Administrative Agent or the Lenders hereunder or thereunder), and all
applicable waiting periods shall have expired without any action being
taken by any competent authority which restrains or prevents such
transactions or imposes materially adverse conditions upon the consummation
of such transactions.
(q) Contractual Restrictions. The Company and its Subsidiaries shall
------------------------
not be subject to any contractual or other restrictions that would be
violated by the Merger or the other transactions contemplated hereby,
including the granting of security interests and guarantees under the
Credit Documents and the documentation with respect to the Synthetic Lease
Facility, except to the extent that any such violation would not reasonably
be expected to have a material adverse effect on (i) the business, assets,
condition (financial or otherwise) or results of operations of the Company
and its Subsidiaries, taken as a whole, (ii) (A) the validity or
enforceability of this Agreement, any of the Notes or the other Credit
Documents or (B) the rights or remedies of the Administrative Agent or the
Lenders hereunder or thereunder, or (iii) the ability of the Borrowers to
satisfy their obligations hereunder or thereunder.
(r) Existing Credit Agreement. (i) On the Closing Date, the
-------------------------
commitments under the Existing Credit Agreement shall have been terminated,
all loans thereunder shall have been repaid in full, together with interest
thereon, all letters of credit issued thereunder shall have been terminated
or incorporated hereunder as, or supported hereunder by, Letters of Credit,
and all other amounts owing pursuant to the Existing Credit Agreement shall
have been repaid in full, and the Administrative Agent shall have received
evidence in form, scope and substance reasonably satisfactory to it that
the matters set forth in this subsection have been satisfied at such time.
(i) On the Closing Date, the creditors under the Existing Credit
Agreement shall have terminated and released, or assigned to the
Administrative Agent for the benefit of the Lenders, all Liens on the
capital stock of and assets owned by the Company and its Subsidiaries, and
the Administrative Agent shall have received all such releases as may have
been requested by the Administrative Agent, which releases shall be in form
and substance reasonably satisfactory to the Administrative Agent.
(s) Intercreditor Agreement. The Administrative Agent shall have
-----------------------
received the Intercreditor Agreement executed and delivered by a duly
authorized officer of each of the parties thereto.
68
(t) Agency and Intercreditor Agreement. The Administrative Agent
----------------------------------
shall have received the Agency and Intercreditor Agreement executed and
delivered by a duly authorized officer of each of the parties thereto.
(u) Trust Guarantee. The Administrative Agent shall have received
---------------
the Trust Guarantee executed and delivered by a duly authorized officer of
the Trust.
5.2 Conditions to All Loans and Letters of Credit. The obligation
---------------------------------------------
of each Lender to make any Loan (other than any Revolving Credit Loan the
proceeds of which are to be used to repay Refunded Swing Line Loans) and the
obligation of the Issuing Lender to issue any Letter of Credit are subject to
the satisfaction of the following conditions precedent on the relevant Borrowing
Date:
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties made in or pursuant to Section 4 or which are contained in any
other Credit Document shall be true and correct in all material respects on
and as of the date of such Loan or of the issuance of such Letter of Credit
as if made on and as of such date (unless stated to relate to a specific
earlier date, in which case, such representations and warranties shall be
true and correct in all material respects as of such earlier date).
(b) No Default or Event of Default. No Default or Event of Default
------------------------------
shall have occurred and be continuing on such Borrowing Date or after
giving effect to such Loan to be made or such Letter of Credit to be issued
on such Borrowing Date.
Each borrowing by the Company hereunder and the issuance of each Letter of
Credit by the Issuing Lender hereunder shall constitute a representation and
warranty by the Company as of the date of such borrowing or issuance that the
conditions in clauses (a) and (b) and of this subsection 5.2 have been
satisfied.
6. AFFIRMATIVE COVENANTS
---------------------
The Company hereby agrees that, so long as the Commitments remain in
effect, any Loan, Note or L/C Obligation remains outstanding and unpaid, any
amount (unless cash in an amount equal to such amount has been deposited to a
cash collateral account established by the Administrative Agent) remains
available to be drawn under any Letter of Credit or any other amount is owing to
any Lender or the Administrative Agent hereunder or under any of the other
Credit Documents, it shall, and, in the case of the agreements contained in
subsections 6.3 through 6.6, and 6.8 through 6.10, the Company shall cause each
of its Subsidiaries to:
69
6.1 Financial Statements. Furnish to the Administrative Agent (with
--------------------
sufficient copies for each Lender which the Administrative Agent shall promptly
furnish to each Lender):
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Company, a copy of the consolidated balance
sheet of the Company and its consolidated Subsidiaries as at the end of
such fiscal year and the related consolidated statements of stockholders'
equity and cash flows and the consolidated statements of income of the
Company and its Subsidiaries for such fiscal year, setting forth in each
case in comparative form the figures for the previous year and, in the case
of the consolidated balance sheet referred to above, reported on, without a
"going concern" or like qualification or exception, or qualification
arising out of the scope of the audit, or qualification which would affect
the computation of financial covenants, by independent certified public
accountants of nationally recognized standing; provided that delivery
--------
within the time period specified above of copies of the Annual Report on
Form 10-K of the Company filed with the Securities and Exchange Commission
(together with the adjustments to such consolidated financial statements
necessary to provide consolidating information for each of its Subsidiaries
in the same manner, to the same extent and on the same basis as
historically provided to Meditrust) shall be deemed to satisfy the
requirements of this subsection 6.1(a) so long as such Form 10-K as so
adjusted shall contain the information referred to in this subsection
6.1(a);
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year of the Company, the unaudited consolidated balance sheet of the
Company and its Subsidiaries as at the end of each such quarter and the
related unaudited consolidated statements of income and cash flows of the
Company and its Subsidiaries for such quarterly period and the portion of
the fiscal year of the Company through such date, setting forth in each
case in comparative form the figures for the corresponding quarter in, and
year to date portion of, the previous year, and the figures for such
periods in the budget prepared by the Company and furnished to the
Administrative Agent, certified by the chief financial officer, controller
or treasurer of the Company as being fairly stated in all material
respects; provided that delivery within the time period specified above of
--------
copies of the Quarterly Report on Form 10-Q of the Company filed with the
Securities and Exchange Commission (together with the adjustments to such
consolidated financial statements necessary to provide consolidating
information for each of its Subsidiaries in the same manner, to the same
extent and on the same basis as historically provided to Meditrust) shall
be deemed to satisfy the requirements of this subsection 6.1(b) so long as
such Form 10-K as so adjusted shall contain the information referred to in
this subsection 6.1(b);
(c) as soon as available, but in any event not later than 45 days
after the beginning of each fiscal year of the Company to which such budget
relates, a preliminary consolidated operating budget for the Company and
its Subsidiaries taken as a whole; and as soon as available, any material
revision to or any final revision of any such preliminary annual operating
budget or any such consolidated operating budget; and
70
(d) concurrently with the delivery of financial statements pursuant
to subsection 6.1(a) or (b), a certificate of the chief financial officer
or treasurer of the Company setting forth, in reasonable detail, the
computations of Capital Expenditures as of the last day of the fiscal
period covered by such financial statements, the Leverage Ratio as of such
last day, and the Coverage Ratio as of such last day;
all such financial statements to be complete and correct in all material
respects (subject, in the case of interim statements, to normal year-end audit
adjustments) and to be prepared in reasonable detail and (except in the case of
the statements referred to in paragraphs (c) and (d) of this subsection 6.1) in
accordance with GAAP.
6.2 Certificates; Other Information. Furnish to the
-------------------------------
Administrative Agent (with sufficient copies for each Lender which the
Administrative Agent shall promptly deliver to each Lender):
(a) concurrently with the delivery of the consolidated financial
statements referred to in subsection 6.1(a), a letter from the independent
certified public accountants reporting on such financial statements stating
that in making the examination necessary to express their opinion on such
financial statements no knowledge was obtained of any Default or Event of
Default under subsections 3.4(b), 7.1, 7.3, and 7.5 through 7.11, except as
specified in such letter;
(b) within 15 days of the delivery of the financial statements
referred to in subsections 6.1(a) and (b) (except that the certificate as
to the statements referred to in clause (iii) below shall be delivered
concurrently with such financial statements), a certificate of the chief
financial officer or treasurer of the Company stating that, to the best of
such officer's knowledge, during such period (i) no Subsidiary has been
formed or acquired (or, if any such Subsidiary has been formed or acquired,
the Company has complied with the requirements of subsection 6.9 with
respect thereto), (ii) neither the Company nor any of its Subsidiaries has
changed its name, its principal place of business, its chief executive
office or the location of any material amount of tangible Collateral
without complying with the requirements of this Agreement and the Security
Documents with respect thereto, (iii) each of the Company and its
Subsidiaries has observed or performed all of its respective covenants and
other agreements, and satisfied every material condition, contained in this
Agreement, the Notes and the other Credit Documents to be observed,
performed or satisfied by it, and that such officer has obtained no
knowledge of any Default or Event of Default except as specified in such
certificate, (iv) showing in detail as of the end of the related fiscal
period the figures and calculations supporting such statement in respect of
clauses (c), (e), (f), (h), (i), (j), (k), (l), (m), (n) and (o) of
subsection 7.1, clauses (b), (c), (d), (f) and (i) of subsection 7.3 and
subsections 7.5 through 7.11 and any other calculations reasonably
requested by the Administrative Agent with respect to the quantitative
aspects of the other covenants contained herein, (v) if not specified in
the financial statements delivered pursuant to subsection 6.1,
71
specifying the aggregate amount of interest paid or accrued by the Company
and its Subsidiaries, and the aggregate amount of depreciation, depletion
and amortization charged on the books of the Company and its Subsidiaries,
during such accounting period, and (vi) (A) identify any owned Real
Property of the Company or a Subsidiary acquired during such accounting
period that, together with any improvements thereon, has a value of at
least $2,500,000 and (B) in the event that the aggregate value of all Real
Properties (other than Real Properties for which the granting of an
Additional Mortgage would be prohibited under the circumstances set forth
in clause (i) or (ii) of the proviso to subsection 6.9(c)) for which
Additional Mortgages are not granted hereunder is $10,000,000, identify any
owned Real Property of the Company or a Subsidiary acquired during such
accounting period;
(c) promptly upon receipt thereof, copies of all final reports
submitted to the Company or to any of its Subsidiaries by independent
certified public accountants in connection with each annual, interim or
special audit of the books of the Company or any of its Subsidiaries made
by such accountants, and, upon the request of any Lender (through the
Administrative Agent), any final comment letter submitted by such
accountants to management in connection with their annual audit;
(d) promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent or made available to
the public generally by the Company or any of its Subsidiaries, if any, and
all regular and periodic reports and all final registration statements and
final prospectuses, if any, filed by the Company or any of its Subsidiaries
with any securities exchange or with the Securities and Exchange Commission
or any Governmental Authority succeeding to any of its functions;
(e) concurrently with the delivery of the financial statements
referred to in subsections 6.1(a) and (b), a management summary describing
and analyzing the performance of the Company and its Subsidiaries during
the periods covered by such financial statements;
(f) within 45 days after the end of each fiscal quarter, a summary of
all Asset Sales during such fiscal quarter including the amount of all Net
Proceeds from such Asset Sales not previously applied to prepayments of the
Loans and reductions of the Commitments pursuant to the proviso to
subsection 3.4(b)(iii);
(g) contemporaneously with the delivery to Meditrust by any Borrower,
copies of all compliance certificates and similar periodic reports and any
and all notices of default which any Borrower delivers or is required to
deliver to Meditrust; and
(h) promptly, such additional financial and other information as any
Lender may from time to time reasonably request (through the Administrative
Agent).
72
6.3 Payment of Obligations. Pay, discharge or otherwise satisfy
----------------------
at or before maturity or before they become delinquent, as the case may be, all
its taxes and other obligations and liabilities of whatever nature, except (a)
when the amount or validity thereof is currently being contested in good faith
by appropriate proceedings and reserves in conformity with GAAP with respect
thereto have been provided on the books of the Company or any of its
Subsidiaries, as the case may be, (b) for delinquent obligations which do not
have a material adverse effect on the business, assets, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries, taken
as a whole, and (c) for trade and other accounts payable in the ordinary course
of business which are not overdue for a period of more than 120 days or, if
overdue for more than 120 days, as to which a dispute exists and adequate
reserves in conformity with GAAP have been established on the books of the
Company or any of its Subsidiaries, as the case may be.
6.4 Conduct of Business and Maintenance of Existence. Continue
------------------------------------------------
to engage in businesses of the same general type as now conducted by it (after
giving effect to the Merger), and preserve, renew and keep in full force and
effect its corporate existence and take all reasonable action to maintain all
material rights, material privileges, franchises, copyrights, patents,
trademarks and trade names necessary or desirable in the normal conduct of its
business except for rights, privileges, franchises, copyrights, patents,
trademarks and tradenames the loss of which would not in the aggregate have a
material adverse effect on the business, assets, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries, taken
as a whole, and except as otherwise permitted by subsections 7.4 and 7.5; and
comply with all applicable Requirements of Law except to the extent that the
failure to comply therewith would not, in the aggregate, have a material adverse
effect on the business, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries, taken as a whole.
6.5 Maintenance of Property; Insurance. (a) Keep all property
----------------------------------
useful and necessary in its business in good working order and condition
(ordinary wear and tear excepted); and
(a) Maintain with financially sound and reputable insurance companies
insurance on all its property in at least such amounts and with only such
deductibles as are usually maintained by, and against at least such risks (but
including, in any event, public liability insurance) as are usually insured
against in the same general area by, companies engaged in the same or a similar
business, and furnish to each Lender, (i) annually, a schedule disclosing (in a
manner substantially similar to that used in the schedule provided pursuant to
subsection 5.1(m)) all insurance against products liability risk maintained by
the Company and its Subsidiaries pursuant to this subsection 6.5(b) or otherwise
and (ii) upon written request of any Lender, full information as to the
insurance carried; provided that the Company may implement programs of self
--------
insurance in the ordinary course of business and in accordance with industry
standards for a company of similar size so long as reserves are maintained in
accordance with GAAP for the liabilities associated therewith.
73
6.6 Inspection of Property; Books and Records; Discussions. Keep
------------------------------------------------------
proper books of record and account in which full, true and correct entries are
made of all dealings and transactions in relation to its business and activities
which permit financial statements to be prepared in conformity with GAAP and all
Requirements of Law; and permit representatives of any Lender upon reasonable
notice (made through the Administrative Agent and no more frequently than
quarterly unless a Default or Event of Default shall have occurred and be
continuing) to visit and inspect any of its properties and examine and make
abstracts from any of its books and records, and to discuss the business,
operations, assets and financial and other condition of the Company and its
Subsidiaries with officers and employees thereof and with their independent
certified public accountants with prior reasonable notice to, and coordination
with, the chief financial officer or the treasurer of the Company.
6.7 Notices. Promptly give notice to the Administrative Agent (to
-------
be distributed by the Administrative Agent to the Lenders):
(a) of the occurrence of any Default or Event of Default;
(b) of any (i) default or event of default under any instrument or
other agreement, guarantee or collateral document of the Company or any of
its Subsidiaries which default or event of default has not been waived and
would have a material adverse effect on the business, assets, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries, taken as a whole, or any other default or event of default
under any such instrument, agreement, guarantee or other collateral
document which, if the amount referred to in the proviso to clause (e) of
Section 8 were $2,000,000, would have constituted a Default or Event of
Default under this Agreement, or (ii) litigation, investigation or
proceeding which may exist at any time between the Company or any of its
Subsidiaries and any Governmental Authority, or receipt of any notice of
any environmental claim or assessment against the Company or any of its
Subsidiaries by any Governmental Authority, which in any such case would
have a material adverse effect on the business, assets, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries, taken as a whole;
(c) of any litigation or proceeding against the Company or any of its
Subsidiaries (i) in which more than $5,000,000 of the amount claimed is not
covered by insurance or (ii) in which injunctive or similar relief is
sought which if obtained would have a material adverse effect on the
business, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries, taken as a whole;
(d) of the following events, as soon as practicable after, and in any
event within 30 days after, the Company knows or has reason to know
thereof: (i) the occurrence of any Reportable Event with respect to any
Plan which Reportable Event could reasonably result in material liability
to the Company and its Subsidiaries, taken as a whole, or (ii) the
institution of proceedings or the taking of any other action by the PBGC,
the Company or any Commonly Controlled Entity to terminate, withdraw or
partially
74
withdraw from any Plan and, with respect to a Multiemployer Plan, the
Reorganization or Insolvency of such Plan, in each of the foregoing cases
which could reasonably result in material liability to the Company and its
Subsidiaries, taken as a whole, and in addition to such notice, deliver to
the Administrative Agent and each Lender whichever of the following may be
applicable: (A) a certificate of a Responsible Officer of the Company
setting forth details as to such Reportable Event and the action that the
Company or such Commonly Controlled Entity proposes to take with respect
thereto, together with a copy of any notice of such Reportable Event that
may be required to be filed with the PBGC, or (B) any notice delivered by
the PBGC evidencing its intent to institute such proceedings or any notice
to the PBGC that such Plan is to be terminated, as the case may be;
(e) concurrently with the delivery of the information delivered
pursuant to subsection 6.2(f) and each prepayment required pursuant to
subsection 3.4(b)(iii), of any Asset Sale or substantially like-kind
exchange of real property by the Company or any of its Subsidiaries; and
(f) of the following events, as soon as practicable and in any event
within five Business Days (i) after obtaining knowledge thereof, the
occurrence of any event that would (with the giving of notice, the passage
of time, or both) be a violation of any Health Care Permit that is
necessary for the lawful conduct of the business or operations of the
Company or any of its Subsidiaries (other than violations which the Company
does not reasonably expect to be able to cure within a reasonable period of
time and which could not reasonably be expected to have a material adverse
effect on the business, assets, condition (financial or otherwise) or
results of operations of the Company and its Subsidiaries, taken as a
whole), including, without limitation, the ownership and operation of its
Health Care Facilities and Ancillary Businesses, (ii) after receipt
thereof, any notice of any violation of any Requirements of Law which would
(with the giving of notice, the passage of time, or both) cause any of the
Health Care Permits referred to in clause (i) to be modified, rescinded or
revoked and which the Company does not reasonably expect to be able to cure
within a reasonable period of time, (iii) after receipt thereof, any
notice, summons, citation or other proceeding imposing a revocation,
suspension or a materially adverse modification of any Medicare provider
agreement, Medicaid provider agreement, Medicare certification or Medicaid
certification applicable to any of the Health Care Businesses of the
Company or any of its Subsidiaries in any manner which would reasonably be
expected to have a material adverse effect on the business, assets,
condition (financial or otherwise) or results of operations of the Company
and its Subsidiaries, taken as a whole, or (iv) after obtaining knowledge
thereof, any revocation or involuntary termination of any Medicare provider
agreement, Medicaid provider agreement, Medicare certification or Medicaid
certification applicable to any of the Health Care Businesses of the
Company or any of its Subsidiaries that could reasonably be expected to
have a material adverse effect on the business, assets, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries, taken as a whole.
75
Each notice pursuant to this subsection 6.7 shall be accompanied by a statement
of a Responsible Officer of the Company setting forth details of the occurrence
referred to therein and (in the cases of clauses (a) through (d)) stating what
action the Company proposes to take with respect thereto.
6.8 Environmental Laws. (a) (i) Comply with all Environmental Laws
------------------
applicable to it, and obtain, comply with and maintain any and all Environmental
Permits necessary for its operations as conducted and as planned and (ii) take
reasonable efforts to ensure that all of its tenants, subtenants, contractors,
subcontractors, and invitees comply with all Environmental Laws, and obtain,
comply with and maintain any and all Environmental Permits, applicable to any of
them insofar as any failure of the Company, its Subsidiaries or any of the
foregoing so to comply, obtain or maintain could result in a material adverse
effect on the business, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries, taken as a whole. Noncompliance
by the Company or any of its Subsidiaries with any applicable Environmental Law
or Environmental Permit shall be deemed not to constitute a breach of this
subsection 6.8(a), provided that, upon learning of any such noncompliance, the
--------
Company and its Subsidiaries shall promptly undertake reasonable efforts to
achieve compliance or to contest by appropriate proceedings any alleged
noncompliance and, provided, further, that, in any case, such noncompliance, and
-------- -------
any other noncompliance with Environmental Law and any contesting of allegations
of noncompliance with Environmental Laws, individually or in the aggregate,
could not reasonably be expected to give rise to a material adverse effect on
the business, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries, taken as a whole.
(b) Comply in a timely manner with all orders and lawful directives
regarding Environmental Laws issued to the Company or any of its Subsidiaries by
any Governmental Authority, other than such orders and lawful directives as to
which an appeal or other challenge has been timely and properly taken in good
faith and the pendency of any and all such appeals and other challenges could
not reasonably be expected to give rise to a material adverse effect on the
business, assets, condition (financial or otherwise) or results of operations of
the Company and its Subsidiaries, taken as a whole.
(c) Maintain, update as appropriate, and implement in all material
respects an environmental program reasonably designed to (i) ensure that the
Company, its Subsidiaries, any of their respective operations (including,
without limitation, disposal), and any properties owned, leased or operated by
any of them, attain and remain in substantial compliance with all applicable
Environmental Laws, (ii) reasonably and prudently manage any liabilities or
potential liabilities that the Company, any of the other Credit Parties, any of
their respective operations (including, without limitation, disposal), and any
properties owned or leased by any of them, may have under all applicable
Environmental Laws, and (iii) ensure that the Company and its Subsidiaries
undertake reasonable efforts to identify, and reasonably evaluate, issues of
compliance with and liability under Environmental Laws prior to acquiring,
directly or indirectly, any ownership or leasehold interest in real property, or
other interest in any real property that could give rise to
76
Company or any of its Subsidiaries being subjected to liability under any
Environmental Law as a result of such acquisition.
6.9 Additional Collateral. (a) Subject to the limitations set
---------------------
forth in subsection 6.9(b) and subsection 6.9(c) and except with respect to any
joint venture investments permitted by subsection 7.6(h), with respect to any
assets acquired after the Closing Date by the Company or any of its Subsidiaries
(other than (x) any assets described in paragraph (b), (c) or (d) of this
subsection and (y) immaterial assets) as to which the Administrative Agent, for
the benefit of the Lenders, does not have a perfected Lien, promptly (and in any
event within 30 days after the acquisition thereof): (i) execute and deliver to
the Administrative Agent such amendments or supplements to the relevant Security
Documents or such other documents as the Administrative Agent shall deem
necessary or advisable to grant to the Administrative Agent, for the benefit of
the Lenders, a Lien on such assets, and (ii) take all actions necessary or
advisable to cause such Lien to be duly perfected to the extent required by such
Security Document in accordance with all applicable Requirements of Law,
including, without limitation, the filing of financing statements in such
jurisdictions as may be reasonably requested by the Administrative Agent.
(a) With respect to any Person that is or becomes a Domestic
Subsidiary, promptly upon the request of the Administrative Agent (i) execute
and deliver to the Administrative Agent, for the benefit of the Lenders, a new
pledge agreement or such amendments to the Collateral Agreement as the
Administrative Agent reasonably shall deem necessary or advisable to grant to
the Administrative Agent, for the benefit of the Lenders, a Lien on the Capital
Stock of such Subsidiary which is owned by the Company or any of its
Subsidiaries, (ii) deliver to the Administrative Agent the certificates
representing such Capital Stock, together with undated stock powers executed and
delivered in blank by a duly authorized officer of the Company or such Domestic
Subsidiary, as the case may be, and (iii) cause such new Domestic Subsidiaries
(A) to become a party to this Agreement as a Borrower (or to become a guarantor
of the obligations hereunder and under the Synthetic Lease Facility), to become
a party to the Collateral Agreement and to become a party to the Agency and
Intercreditor Agreement or, in each case, to become a party to such comparable
documentation which is in form and substance reasonably satisfactory to the
Administrative Agent and (B) to take all actions necessary or advisable to cause
the Lien created by the Collateral Agreement or such comparable documentation,
as the case may be, to be duly perfected to the extent required by such
agreement or document in accordance with all applicable Requirements of Law,
including, without limitation, the filing of financing statements in such
jurisdictions as may be reasonably requested by the Administrative Agent,
provided, that the Company and its Subsidiaries shall not be required to comply
- --------
with the requirements of this subsection 6.9(b) with respect to a Domestic
Subsidiary if (x) such compliance is prohibited by such Domestic Subsidiary's
Contractual Obligations with third parties in connection with lease arrangements
or Indebtedness for borrowed money and (y) the aggregate Acquisition
Consideration for all Domestic Subsidiaries acquired subsequent to the date
hereof which are not Borrowers hereunder or guarantors of the obligations
hereunder and under the Synthetic Lease Facility shall not exceed $30,000,000.
77
(b) Upon the request of the Administrative Agent, the Company will,
and will cause its Domestic Subsidiaries to, promptly grant to the
Administrative Agent, within 60 days of such request, security interests and
mortgages (an "Additional Mortgage") in such owned Real Property of the Company
-------------------
and its Domestic Subsidiaries as are acquired after the Closing Date by the
Company or such Domestic Subsidiary as additional security for the obligations
of the Credit Parties under any Credit Document, provided that an Additional
--------
Mortgage covering any such owned Real Property will not be required if (i) such
Real Property is already mortgaged to a third party to the extent permitted by
subsection 7.2, (ii) with respect to a Domestic Subsidiary, such Additional
Mortgage is not permitted by such Domestic Subsidiary's Contractual Obligations
with third parties in connection with lease arrangements or Indebtedness for
borrowed money or (iii) (A) the value of such Real Property, together with any
improvements thereon, is less than $2,500,000 and (B) the aggregate value of all
Real Properties (other than Real Properties for which the granting of an
Additional Mortgage would be prohibited under the circumstances set forth in
clause (i) or (ii) of this proviso) for which Additional Mortgages are not
granted hereunder shall not exceed $10,000,000. Each such Additional Mortgage
shall be granted pursuant to documentation substantially similar to the form of
Mortgage attached hereto as Exhibit L and shall constitute valid and enforceable
perfected Liens subject only to Permitted Liens and such other Liens reasonably
acceptable to the Administrative Agent. The Additional Mortgages or instruments
related thereto shall be duly recorded or filed in such manner and in such
places as are required by law to establish, perfect, preserve and protect the
Liens in favor of the Administrative Agent, for the benefit of the Lenders,
required to be granted pursuant to the Additional Mortgages and all taxes, fees
and other charges payable in connection therewith shall be paid in full. If
requested by the Administrative Agent or the Required Lenders, the Company shall
provide a lender's title policy with respect to each such Additional Mortgage
conforming to the requirements of subsection 6.12.
(c) With respect to any new Foreign Subsidiary created or acquired
after the Closing Date by the Company or any of its Subsidiaries, promptly (i)
execute and deliver to the Administrative Agent such amendments to the
Collateral Agreement, or such other Security Document, as the Administrative
Agent deems necessary or advisable to grant to the Administrative Agent, for the
benefit of the Lenders, a perfected first priority security interest in the
Capital Stock of such new Subsidiary that is owned by the Company or any of its
Subsidiaries (provided that in no event shall more than 65% of the total
outstanding voting Capital Stock of any such new Subsidiary be required to be so
pledged), (ii) deliver to the Administrative Agent the certificates representing
such Capital Stock, together with undated stock powers, in blank, executed and
delivered by a duly authorized officer of the Company or such Subsidiary, as the
case may be, and take such other action as may be necessary or, in the opinion
of the Administrative Agent, desirable to perfect the Administrative Agent's
security interest therein, and (iii) if reasonably requested by the
Administrative Agent (taking into account the cost involved in relation to the
value of the collateral security to be afforded thereby), deliver to the
Administrative Agent legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent, provided that the Company and its
--------
Subsidiaries shall not be required to comply with the requirements of this
subsection 6.9(c) with respect to a Foreign Subsidiary if
78
such compliance is prohibited by such Foreign Subsidiary's Contractual
Obligations with third parties in connection with lease arrangements or
Indebtedness for borrowed money.
6.10 Health Care Permits and Approvals. Take all action
---------------------------------
reasonably necessary (a) to maintain in full force and effect all Health Care
Permits reasonably necessary for the lawful conduct of its business or
operations where now conducted and as planned to be conducted, including the
ownership and operation of its Health Care Facilities and Ancillary Businesses
pursuant to all Requirements of Law and (b) to ensure that each Health Care
Facility and Ancillary Business owned, leased, managed or operated by the
Company or any of its Subsidiaries are entitled to participate in, and receive
payment under, the appropriate Medicare, Medicaid and related reimbursement
programs, and any similar state or local government-sponsored program, to the
extent the Company or any of its Subsidiaries has decided to participate in any
such program with respect to such Health Care Facility or Ancillary Business, as
the case may be, and to receive reimbursement from private and commercial payers
and health maintenance organizations to the extent applicable thereto, except,
in each case, where a failure to do so could not reasonably be expected to have
a material adverse effect on the business, assets, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries, taken
as a whole.
6.11 Operating Leases. Furnish to the Administrative Agent, at the
----------------
time of the acquisition of any Encumbered Subsidiary the principal asset of
which is the subject of an operating lease under which such Encumbered
Subsidiary is the lessee, or of the acquisition by any Encumbered Subsidiary of
any assets the principal one of which is the subject of an operating lease under
which such Encumbered Subsidiary is the lessee, an appraisal prepared by an
appraiser of recognized standing in the area in which such leased property is
located of the fair market value of such property.
6.12 Mortgages. Furnish to the Administrative Agent, within 60 days
---------
after the Closing Date, (a) fully executed counterparts of deeds of trust,
mortgages and similar documents in each case in form and substance reasonably
satisfactory to the Administrative Agent and substantially in the form of
Exhibit L (each a "Mortgage" and collectively, the "Mortgages") covering all the
-------- ---------
Mortgaged Properties, and arrangements reasonably satisfactory to the
Administrative Agent shall be in place by the 60th day after the Closing Date to
provide that counterparts of such Mortgages shall be promptly recorded upon
execution in all places to the extent necessary or desirable, in the reasonable
judgment of the Administrative Agent, effectively to create a valid and
enforceable first (or, in the case of the Mortgages granted by the Meditrust
Entities, second) priority Lien, subject only to Permitted Liens, on each
Mortgaged Property in favor of the Administrative Agent (or such other trustee
as may be required or desired under local law) for the benefit of the Lenders,
(b) a lender's title insurance policy, paid for by the Company, issued by a
nationally recognized title insurance company, together with such endorsements,
coinsurance and reinsurance as may be reasonably requested by the Administrative
Agent, in form and substance reasonably acceptable to the Administrative Agent,
insuring each Mortgage as a first (or, in the case of the Mortgages granted by
the Meditrust Entities, second) lien on the relevant Mortgaged Property and
subject only to Permitted Liens
79
and Liens expressly agreed to by the Administrative Agent and (c) such other
documents (including without limitation, ALTA/ASCM surveys of each Mortgaged
Property made in accordance with ALTA/ASCM standards, including Table A, Items
Nos. 1-4 and 6-13 as updated by inspection) as are reasonably required by the
Administrative Agent.
7. NEGATIVE COVENANTS
------------------
The Company hereby agrees that it shall not, and the Company shall not
permit any of its Subsidiaries to, directly or indirectly so long as the
Commitments remain in effect or any Loan, Note or L/C Obligation remains
outstanding and unpaid, any amount (unless cash in an amount equal to such
amount has been deposited to a cash collateral account established by the
Administrative Agent) remains available to be drawn under any Letter of Credit
or any other amount is owing to any Lender or the Administrative Agent hereunder
or under any other Credit Document (it being understood that each of the
permitted exceptions to each of the covenants in this Section 7 is in addition
to, and not overlapping with, any other of such permitted exceptions except to
the extent expressly provided):
7.1 Indebtedness. Create, incur, assume or suffer to exist any
------------
Indebtedness, except:
(a) the Indebtedness outstanding on the Closing Date and reflected on
Schedule 7.1(a), including the refinancing of any such Indebtedness on terms and
conditions that, in the good faith judgment of the Company, taken as a whole are
no less favorable to the Company and its Subsidiaries or the Lenders;
(b) Indebtedness of any Credit Party pursuant to (i) any Credit
Document and (ii) the Synthetic Lease Facility;
(c) Indebtedness (i) of the Company to any Domestic Subsidiary, (ii)
of any Domestic Subsidiary to the Company or any other Domestic Subsidiary and
(iii) of any Foreign Subsidiary to the Company or any other Subsidiary in an
aggregate principal amount at any one time outstanding for all Foreign
Subsidiaries not to exceed the sum of $15,000,000 plus the sum of any amounts
----
dividended or distributed to the Company or any Domestic Subsidiary (other than
an Encumbered Subsidiary) subsequent to the date hereof by any Foreign
Subsidiary, less the sum of (A) the aggregate amount of any Contingent
----
Obligations of the Borrowers in respect of then outstanding obligations of
Foreign Subsidiaries pursuant to subsection 7.3(c)(ii) and (B) the aggregate
amount of any investments made in Foreign Subsidiaries subsequent to the date
hereof pursuant to subsection 7.6(b)(iii), provided that such Indebtedness
--------
referred to in this clause (c) is evidenced, if requested by the Administrative
Agent, by a promissory note or promissory notes which has or have been pledged
to the Administrative Agent on terms and conditions satisfactory to the
Administrative Agent and provided, further, that at no time shall (x) the sum,
-------- -------
calculated for each Encumbered Subsidiary and then aggregated for all Encumbered
Subsidiaries, of the excess, if any, of (1) the aggregate amount of all loans,
advances and
80
investments (other than any investments in connection with acquisitions of
Encumbered Subsidiaries permitted by subsection 7.6(g)(iv)) by the Company or
any Subsidiary (other than an Encumbered Subsidiary) to or in such Encumbered
Subsidiary subsequent to the date hereof as permitted by this subsection and
subsection 7.6(b)(ii)(B) over (2) the aggregate amount of loan repayments and
dividends and distributions from such Encumbered Subsidiary to the Company or
any Subsidiary (other than an Encumbered Subsidiary) subsequent to the date
hereof exceed (y) the sum of $25,000,000 plus the then Added Amount;
----
(d) Indebtedness of the Company in respect of:
(i) (A) up to $105,000,000 principal amount of Bridge
Senior Subordinated Debt issued on the Closing Date, and additional
principal amount of Bridge Senior Subordinated Debt issued in lieu of
cash interest on the outstanding Bridge Senior Subordinated Debt and
otherwise as contemplated by the Bridge Loan Agreement upon exchange
of Bridge Senior Subordinated Debt into exchange notes or (B) Senior
Subordinated Discount Notes issued on the Closing Date for gross cash
proceeds to the Company of up to $105,000,000;
(ii) Permanent Senior Subordinated Debt in an
aggregate principal amount not to exceed the accreted value of such
Senior Subordinated Discount Notes (or any refinancing thereof
permitted hereunder) at the time of such refinancing and 10% of such
value, the proceeds (net of any fees and expenses in connection
therewith) of which shall be applied to prepay, redeem, retire or
repurchase either (A) the outstanding principal amount of the Bridge
Senior Subordinated Debt, (B) the accreted value of the Senior
Subordinated Discount Notes at the time of such refinancing or (C)
other Permanent Senior Subordinated Debt;
(iii) up to $40,000,000 principal amount of Bridge Junior
Subordinated Debt issued on the Closing Date, and additional principal
amount of Bridge Junior Subordinated Debt issued in lieu of cash
interest on the outstanding Bridge Junior Subordinated Debt and
otherwise as contemplated by the Bridge Loan Agreement upon exchange
of Bridge Junior Subordinated Debt into exchange notes; provided,
--------
however, that in the event that the aggregate principal amount of
-------
Bridge Senior Subordinated Debt or Senior Subordinated Discount Notes,
as the case may be, issued as permitted by subsection 7.1(d)(i) is
more than $100,000,000 but less than or equal to $105,000,000, the
principal amount of Indebtedness permitted by this subsection
7.1(d)(iii) shall be reduced by an amount equal to the amount by which
such Bridge Senior Subordinated Debt or Senior Subordinated Discount
Notes, as the case may be, exceeds $100,000,000; and
(iv) Permanent Junior Subordinated Debt in an aggregate
principal amount not to exceed the principal amount of the Bridge
Junior Subordinated Debt or, if the issuance thereof to refinance
Preferred Stock shall be consented to
81
by the Required Lenders, the Exchange Debentures (or, in either case,
any refinancing thereof permitted hereunder) at the time of such
refinancing and 10% of such value, the proceeds (net of any fees and
expenses in connection therewith) of which shall be applied to prepay,
redeem, retire or repurchase either (A) the outstanding principal
amount of Bridge Junior Subordinated Debt, (B) the outstanding amount
of Preferred Stock, (C) the outstanding principal amount of Exchange
Debentures, if any, or (D) other Permanent Junior Subordinated Debt.
(e) (i) Indebtedness of the Company and its Subsidiaries for (A)
industrial revenue bonds or other similar governmental and municipal bonds and
(B) the deferred purchase price of newly acquired equipment of the Company and
its Subsidiaries (pursuant to purchase money mortgages or otherwise and whether
owed to the seller or a third party) used in the ordinary course of business
(provided such financing is entered into within 180 days of the acquisition of
--------
such property) of the Company and its Subsidiaries in an amount (based on the
remaining balance of the obligations therefor on the books of the Company and
its Subsidiaries) which shall not exceed $10,000,000 in the aggregate at any one
time outstanding for Indebtedness described in this clause (i), and (ii)
Indebtedness of the Company and its Subsidiaries in respect of Financing Leases
to the extent subsections 7.7 and 7.10 would not be contravened;
(f) (i) Indebtedness assumed in connection with acquisitions
permitted by subsection 7.6(g) (so long as such Indebtedness was not incurred in
anticipation of such acquisitions), (ii) Indebtedness of newly acquired
Subsidiaries acquired in such acquisitions (so long as such Indebtedness was not
incurred in anticipation of such acquisition), (iii) Indebtedness owed to the
seller in any acquisition permitted by subsection 7.6(g) constituting part of
the purchase price thereof and (iv) Indebtedness of the Company or any
Subsidiary incurred to finance any acquisition permitted by subsection 7.6(g),
all of which Indebtedness permitted by this subsection 7.1(f) (including
refinancings thereof as permitted by subsection 7.1(m)), when added to the
aggregate principal amount of Indebtedness permitted by subsection 7.1(h) or
7.1(n) the Net Proceeds of which shall have been applied to refinance preferred
stock the proceeds of which were originally used to finance the acquisition of
an Encumbered Subsidiary permitted by subsection 7.6(g), shall not exceed in the
aggregate at any one time outstanding an amount equal to the excess, if any, of
(x) $175,000,000 over (y) the excess, if any, of (1) the aggregate Acquisition
Consideration given subsequent to the date hereof in connection with
acquisitions permitted by subsection 7.6(g)(iv) (excluding (A) Capital Stock of
the Company issued in connection with such acquisitions, (B) the Net Proceeds of
issuances of Capital Stock to the extent such Net Proceeds are contemporaneously
applied toward such acquisitions, (C) any Indebtedness constituting a portion of
such Acquisition Consideration and (D) the Net Proceeds of any bond issuance as
permitted by subsection 7.1(e) to the extent such Net Proceeds are
contemporaneously applied toward such acquisition) over (2) an amount equal to
the aggregate Acquisition Consideration (or in the event of one or more partial
sales of assets or Capital Stock as set forth in clause (aa) below, the proceeds
thereof not to exceed, individually or in the aggregate, the total Acquisition
Consideration therefor) given subsequent to the date hereof in connection with
acquisitions permitted by subsection 7.6(g)(iv) (excluding Capital Stock, Net
Proceeds of issuances thereof, any Indebtedness constituting a portion of such
Acquisition Consideration and Net Proceeds of certain bond issuances as
aforesaid) with respect to which either (aa) all or a portion of the assets or
Capital Stock so acquired shall have been subsequently sold or (bb) in any case
where the Subsidiary that is the subject of such acquisition or that is the
holder of the assets so acquired is, immediately after giving effect to such
acquisition, an Encumbered Subsidiary, such Encumbered Subsidiary shall have
ceased to be an Encumbered Subsidiary; provided that the aggregate principal
--------
amount of outstanding Indebtedness permitted by this clause (iv) at any time
outstanding shall be increased by an amount equal to the aggregate amount which
the Company would then be permitted to borrow under subsection 7.1(e)(i) and
invest under subsection 7.6(h);
(g) Indebtedness in connection with workmen's compensation
obligations and general liability exposure of the Company and its Subsidiaries;
(h) unsecured subordinated indebtedness of the Company and its
Subsidiaries, provided that (i) such Indebtedness shall not exceed $10,000,000
--------
in aggregate principal amount at any one time outstanding plus any additional
principal amount of such Indebtedness issued in lieu of cash interest on such
outstanding Indebtedness or any refinancing thereof, (ii) no part of the
principal amount of such Indebtedness shall have a maturity date earlier than
the one-year anniversary of the Termination Date and (iii) the non-default
interest rate thereon shall not exceed 12% per annum;
(i) additional Indebtedness of the Company and its Subsidiaries in an
aggregate principal amount at any one time outstanding not in excess of
$15,000,000.
(j) Indebtedness in respect of letters of credit (other than Letters
of Credit issued hereunder) in an aggregate principal amount equal to $5,000,000
at any one time outstanding;
(k) Indebtedness of Foreign Subsidiaries owing to Persons other than
the Company or any other Subsidiary in an aggregate principal amount at any one
time outstanding not in excess of $15,000,000;
(l) Indebtedness of a Domestic Subsidiary in an aggregate principal
amount at any one time outstanding not in excess of $18,000,000 assumed in
connection with the exercise of purchase options with respect to the properties,
or the equity interests in the Persons that are the owners of such properties,
that are the subject of the currently existing Financing Leases to which
Harborside of Cleveland, L.P. is a party;
(m) refinancings on market terms and conditions of Indebtedness
permitted pursuant to subsection 7.1(f), provided that either (i) the Available
--------
Revolving Credit Commitment at the time of any such refinancing is less than the
amount being refinanced or (ii) such refinancing is of Indebtedness of an
Encumbered Subsidiary that occurs at the final maturity of such Indebtedness and
the payment of such Indebtedness in full at such final maturity would
83
not (as a result of Contractual Obligations with third parties in connection
with lease arrangements or other Indebtedness for borrowed money) result in such
Encumbered Subsidiary ceasing to be an Encumbered Subsidiary;
(n) Indebtedness the aggregate gross proceeds received by the Company
in connection with the issuance of which do not exceed $25,000,000 on terms and
conditions (other than those relating to the rate of interest payable thereon,
provided that such rate may not exceed the then prevailing market rate for
similar issues by comparable issuers) substantially similar to those described
in the Offering Memorandum as being applicable to the Senior Subordinated
Discount Notes; and
(o) additional secured Indebtedness of the Company and its
Subsidiaries in an aggregate principal amount of any one time outstanding not in
excess of $10,000,000.
For the purposes of this subsection 7.1, Indebtedness incurred in
connection with the payment by the Company or any Subsidiary of expenses,
operating costs and maintenance capital expenditures of any Domestic Subsidiary
in the ordinary course of the business of such Domestic Subsidiary shall not be
considered to be a loan of, or advance by, the Company or any Subsidiary to such
Domestic Subsidiary and shall be permitted under this Agreement.
7.2 Limitation on Liens. Create, incur, assume or suffer to exist
-------------------
any Lien upon any of its property, assets, income or profits, whether now owned
or hereafter acquired, except:
(a) Liens for taxes, assessments or other governmental charges not
yet delinquent or which are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on the
books of the Company or such Subsidiary, as the case may be, in accordance with
GAAP;
(b) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business in
respect of obligations which are not yet due or which are bonded or which are
being contested in good faith and by appropriate proceedings if adequate
reserves with respect thereto are maintained on the books of the Company or such
Subsidiary, as the case may be, in accordance with GAAP;
(c) pledges or deposits in connection with workmen's compensation,
unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, tenders, trade or
government contracts (other than for borrowed money), leases, licenses,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business;
84
(e) easements (including, without limitation, reciprocal easement
agreements), rights-of-way, building, zoning and similar restrictions, utility
agreements, covenants, reservations, restrictions, encroachments, changes, and
other similar encumbrances or title defects incurred, or leases or subleases
granted to others, in the ordinary course of business, which do not in the
aggregate materially detract from the aggregate value of the properties of the
Company and its Subsidiaries, taken as a whole, or in the aggregate materially
interfere with or adversely affect in any material respect the ordinary conduct
of the business of the Company and its Subsidiaries on the properties subject
thereto, taken as a whole;
(f) Liens in favor of the Administrative Agent and the Lenders
pursuant to the Credit Documents, including Liens pursuant to the Credit
Documents in respect of Interest Rate Agreements, and bankers' liens arising by
operation of law;
(g) Liens on property of the Company or any Subsidiary created solely
for the purpose of securing Indebtedness permitted by subsection 7.1(e)
representing or incurred to finance, refinance or refund the purchase price of
property or the cost of making improvements thereto, provided that (i) no such
--------
Lien shall extend to or cover property of the Company or such Subsidiary other
than the respective property so acquired or improved and (ii) the principal
amount of Indebtedness secured by any such Lien shall not exceed the fair market
value of such property at the time of the creation of such Indebtedness;
(h) Liens on property of the Company or any Subsidiary acquired with
the proceeds of any Indebtedness permitted by subsection 7.1(f), or on the
Capital Stock of any such acquired Subsidiary, to secure such Indebtedness,
provided that (i) no such Lien shall extend to or cover other property of the
- --------
Company or such Subsidiary and (ii) the principal amount of Indebtedness secured
by any such Lien shall not exceed the original purchase price of such property;
(i) Liens existing on the Closing Date after giving effect to the
consummation of the Merger and described in subsection 4.13 or Schedule 7.2(i)
(including the extension of any Liens listed on such Schedule relating to any
Indebtedness permitted under subsection 7.1(a) in connection with any
refinancing of such Indebtedness permitted by such subsection and any Liens
securing Indebtedness to be repaid on the Closing Date to the extent the Company
has made arrangements to terminate such Liens in a manner satisfactory to the
Administrative Agent), provided that no such Lien shall extend to or cover other
--------
property of the Company or the respective Subsidiary other than the respective
property so encumbered and the principal amount of Indebtedness secured by any
such Lien shall at no time exceed the original principal amount of the
Indebtedness so secured;
(j) Liens on documents of title and the property covered thereby
securing Indebtedness in respect of the Commercial L/Cs;
(k) (i) mortgages, liens, security interests, restrictions,
encumbrances or any other matter of record that have been placed by any
developer, landlord or other third party on property
85
over which the Company or any Subsidiary has easement rights or on any Leased
Property and subordination or similar agreements relating thereto and (ii) any
condemnation or eminent domain proceedings affecting any real property;
(l) Liens in connection with workmen's compensation obligations and
general liability exposure of the Company and its Subsidiaries;
(m) Liens on goods (and proceeds thereof) securing reimbursement
obligations in respect of commercial letters of credit issued in accordance with
the terms of this Agreement;
(n) Liens on the Capital Stock or assets of any Foreign Subsidiary
securing Indebtedness of such Foreign Subsidiary permitted by subsection 7.1(k);
(o) Liens on the Capital Stock or personal property of any Subsidiary
securing operating leases of such Subsidiary; and
(p) Liens on property of the Company or any Subsidiary created solely
for the purpose of securing Indebtedness permitted by subsection 7.1(o).
7.3 Limitation on Contingent Obligations. Create, incur, assume or
------------------------------------
suffer to exist any Contingent Obligation except:
(a) pursuant to this Agreement, the Collateral Agreement or the
Synthetic Lease Facility;
(b) guarantees by the Company incurred in the ordinary course of
business for an aggregate amount not to exceed $5,000,000 at any one time
outstanding;
(c) guarantees by the Company or any Domestic Subsidiary of (i)
obligations of the Company or of Domestic Subsidiaries (other than Encumbered
Subsidiaries) and (ii) obligations of Foreign Subsidiaries in an aggregate
principal amount at any one time outstanding not to exceed $15,000,000 plus the
----
sum of any amounts dividended or distributed to the Company or any Domestic
Subsidiary (other than an Encumbered Subsidiary) subsequent to the date hereof
by Foreign Subsidiaries, less the sum of (A) the aggregate amount of any
----
Indebtedness of Foreign Subsidiaries pursuant to subsection 7.1(c)(iii) and (B)
the aggregate amount of any investments made in Foreign Subsidiaries subsequent
to the date hereof pursuant to subsection 7.6(b)(iii);
(d) guarantees by the Company or any Subsidiary of Indebtedness of
Encumbered Subsidiaries in an aggregate principal amount not to exceed at any
one time outstanding $35,000,000;
86
(e) Contingent Obligations existing on the Closing Date and described
in Schedule 7.3(e) and Contingent Obligations relating to any Indebtedness
permitted under subsection 7.1(a);
(f) guarantees of obligations to third parties in connection with
travel and entertainment advances and relocation and other loans to employees of
the Company or any of its Subsidiaries, in an amount which, together with all
loans and advances made pursuant to subsection 7.6(f), shall not exceed
$5,000,000 at any one time outstanding;
(g) Contingent Obligations in connection with workmen's compensation
obligations and general liability exposure of the Company and its Subsidiaries;
(h) subordinated guarantees in respect of the Subordinated Debt
issued by Subsidiaries, provided that such subordinated guarantees are
--------
subordinated to the Borrowers' obligations under this Agreement on substantially
the same basis as the Subordinated Debt is subordinated to the Loans; and
(i) guarantees by the Company or any Domestic Subsidiary of
Indebtedness of joint ventures in or to which the Company or any of its
Subsidiaries has made investments or loans or advances as permitted by
subsection 7.6(h) in an aggregate principal amount (when added to the aggregate
then outstanding amount of such investments, loans and advances) not to exceed
at any one time outstanding $10,000,000 plus the sum of (i) any amounts
----
dividended or distributed to the Company or any Domestic Subsidiary (other than
an Encumbered Subsidiary) subsequent to the date hereof by such joint ventures
and (ii) the proceeds of any sale permitted by subsection 7.5(j) to the extent
that such proceeds are not otherwise reinvested.
7.4 Prohibition of Fundamental Changes. Enter into any merger or
----------------------------------
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or engage in any type of business other
than of the same general type now conducted by it, except (a) for the Merger,
(b) for the transactions otherwise permitted pursuant to subsection 7.5(b), (c)
Subsidiaries with a net book value not greater than $100,000 may be dissolved
and (d) any Subsidiary may otherwise be dissolved, provided that upon
dissolution, the assets of such Subsidiary are transferred to the Company or a
wholly owned Domestic Subsidiary of the Company on the terms and subject to the
conditions set forth in subsection 7.5(b).
7.5 Prohibition on Disposition of Assets. Convey, sell, lease,
------------------------------------
assign, transfer or otherwise dispose of (including through a transaction of
merger or consolidation of any Subsidiary of the Company) any of its property,
business or assets (including, without limitation, receivables and other
payments and Health Care Businesses), whether now owned or hereafter acquired,
except:
(a) the sale or other disposition of inventory in the ordinary course
of business;
87
(b) the Company or any Subsidiary of the Company may sell, lease,
transfer or otherwise dispose of any or all of its assets (upon voluntary
liquidation or otherwise) to, and any Subsidiary of the Company may merge with
and into, the Company or a wholly owned Domestic Subsidiary of the Company, and
the Company or any Subsidiary of the Company may sell or otherwise dispose of,
or part with control of any or all of, the Capital Stock of any Subsidiary to a
wholly owned Domestic Subsidiary of the Company or the Company, provided that no
--------
such transaction may be effected if it would result in the transfer of any
assets of, or any Capital Stock of, the Company or a Subsidiary (other than an
Encumbered Subsidiary) to, or the merger with and into, an Encumbered Subsidiary
unless such Encumbered Subsidiary (directly or through a series of mergers and
transfers) promptly transfers the assets transferred to it by such Subsidiary,
or, as the case may be, any Capital Stock thereof, to the Company or a Domestic
Subsidiary (other than an Encumbered Subsidiary);
(c) the lease in the ordinary course of business of Fee Properties
and other real property owned in fee;
(d) any condemnation or eminent domain proceeding affecting any real
property, provided that the parties hereto agree that the net proceeds received
--------
in connection with such proceeding shall be deemed not to constitute "Net
Proceeds" if such net proceeds are reinvested in new or existing properties or
used for capital expenditures within 18 months;
(e) any substantially like-kind exchange of real property, provided
--------
that only any cash received by the Company or any Subsidiary of the Company in
connection with such an exchange (net of all costs and expenses incurred in
connection with such transaction or with the commencement of operation of real
property received in such exchange) and not reinvested in real property or used
for capital expenditures within 360 days (or, in the event there is a definitive
agreement in existence committing such net proceeds to such reinvestment or
capital expenditure within 360 days of receipt of the same, such 360-day period
will be extended for a period not to exceed 180 days with respect to the amount
of net proceeds so committed until required to be paid in accordance with such
agreement (or, if earlier, until termination of such agreement)) of receipt of
the same shall be deemed to be Net Proceeds and shall be applied as provided for
in subsection 3.4(b)(iii) and provided, further, that the aggregate outstanding
-------- -------
amount of net proceeds held by the Company at any time for reinvestment in
respect of any real property exchanged pursuant to this paragraph (e) and real
property sold pursuant to subsection 7.5(h) shall not exceed $40,000,000;
(f) the sale or other disposition of any property that, in the
reasonable judgment of the Company has become uneconomic, obsolete or worn out,
and which is sold or disposed of in the ordinary course of business;
(g) the sale or other disposition of any property, the aggregate
amount of the net proceeds received in respect of which shall not exceed
$10,000,000 during the term of this Agreement;
88
(h) the sale or other disposition of any interest in real property,
provided that (i) the net proceeds of any such sale shall constitute Net
- --------
Proceeds only to the extent such net proceeds are not reinvested in real
property or used for capital expenditures within 360 days (or, in the event
there is a definitive agreement in existence committing such net proceeds to
such reinvestment or capital expenditure within 360 days from the date of such
sale, such 360-day period will be extended for a period not to exceed 180 days
with respect to the amount of net proceeds so committed until required to be
paid in accordance with such agreement (or, if earlier, until termination of
such agreement)) from the date of such sale, (ii) if the real property so sold
constituted Collateral under the Security Documents then any real property
purchased with the net proceeds thereof shall be mortgaged for the benefit of
the Lenders if required by subsection 6.9(c) and in accordance therewith and
(iii) the aggregate outstanding amount of net proceeds held by the Company at
any time for reinvestment in respect of any real property sold pursuant to this
paragraph (h) and real property exchanged pursuant to subsection 7.5(e) shall
not exceed $40,000,000;
(i) the sale of all or any part of the Company's or any Subsidiary's
ownership of Bowie Center L.P. and the pharmacy joint venture with Neighborcare;
(j) the sale of all or any part of any joint venture interest
permitted by subsection 7.6(h), provided that the net proceeds of any such sale
--------
shall constitute Net Proceeds only to the extent such net proceeds are not
reinvested in joint ventures (as permitted by subsection 7.6(h)) or used for
capital expenditures or for acquisitions permitted by subsection 7.6(g) within
360 days (or, in the event there is a definitive agreement in existence
committing such net proceeds to such reinvestment, capital expenditure or
acquisition within 360 days from the date of such sale, such 360-day period will
be extended for a period not to exceed 180 days with respect to the amount of
net proceeds so committed until required to be paid in accordance with such
agreement (or, if earlier, until termination of such agreement)) from the date
of such sale; and
(k) the sublease in the ordinary course of business of any assets or
properties, provided that the Company and its Subsidiaries may not sublease all
--------
or substantially all of the assets of more than seven Health Care Facilities to
Persons that are not Affiliates of the Company.
7.6 Limitation on Investments, Loans and Advances. Make any
---------------------------------------------
advance, loan, extension of credit or capital contribution to, or purchase any
stock, bonds, notes, debentures or other securities of, or make any other
investment in (including, without limitation, any acquisition of all or any
substantial portion of the assets, and any acquisition of a business or a
product line, of other companies, other than the acquisition of inventory in the
ordinary course of business and it being understood that this covenant is not
intended to limit the ability of the Company or any Subsidiary to enter into any
lease of real or personal property but that this covenant is intended to cover
the acquisition of a business, the principal asset or assets of which is or are
the subject of an operating lease under which the Company or any Subsidiary is
the lessee and it being further understood that this covenant is intended to
cover the acquisition by the Company or any Subsidiary of any real property and
related personal property that is the
89
subject of such an operating lease pursuant to the exercise by the Company or
such Subsidiary of a purchase option provided for in such lease (a "Purchase
--------
Option Acquisition")), any Person (except to the extent permitted by subsection
- ------------------
7.7), except:
(a) the Company may make loans or advances to any Domestic Subsidiary
(other than an Encumbered Subsidiary), and any Subsidiary may make loans or
advances to the Company or any Domestic Subsidiary (other than an Encumbered
Subsidiary), to the extent in each case the Indebtedness created thereby is
permitted by subsection 7.1(c);
(b) (i) any Subsidiary may make investments in the Company (by way of
capital contribution or otherwise), (ii) the Company and any Subsidiary may make
investments in, or create, any wholly owned Domestic Subsidiary (by way of
capital contribution or otherwise) or make investments permitted by subsection
7.5(b), provided that, in any such case, (A) the requirements of subsection 6.9
--------
are satisfied and (B) at no time shall (x) the sum, calculated for each
Encumbered Subsidiary and then aggregated for all Encumbered Subsidiaries, of
the excess, if any, of (1) the aggregate amount of all loans, advances and
investments (other than any investments in connection with acquisitions of
Encumbered Subsidiaries permitted by subsection 7.6(g)(iv)) by the Company or
any Subsidiary (other than an Encumbered Subsidiary) to or in such Encumbered
Subsidiary subsequent to the date hereof as permitted by this subsection and
subsection 7.1(c) over (2) the aggregate amount of loan repayments and dividends
and distributions from such Encumbered Subsidiary to the Company or any
Subsidiary (other than an Encumbered Subsidiary) subsequent to the date hereof
exceed (y) the sum of $25,000,000 plus the then Added Amount, and (iii) the
----
Company and any Subsidiary may make investments in, or create, any Foreign
Subsidiary (by way of capital contribution or otherwise), provided that (A) the
--------
requirements of subsection 6.9 are satisfied and (B) the aggregate amount of all
investments in such Foreign Subsidiaries shall not exceed at any one time
outstanding the sum of $15,000,000 plus any amounts dividended or distributed by
----
such Foreign Subsidiaries subsequent to the date hereof to the Company or any
Domestic Subsidiary (other than an Encumbered Subsidiary), less the sum of (x)
----
the aggregate amount of any Indebtedness of Foreign Subsidiaries pursuant to
subsection 7.1(c)(iii) and (y) the aggregate amount of any Contingent
Obligations of the Borrowers in respect of then outstanding obligations of
Foreign Subsidiaries pursuant to subsection 7.3(c)(ii);
(c) the Company and its Subsidiaries may invest in, acquire and hold
Cash Equivalents and Investment Grade Securities;
(d) the Company or any of its Subsidiaries may make payroll advances
in the ordinary course of business;
(e) the Company or any of its Subsidiaries may acquire and hold
receivables owing to it, if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary trade terms,
provided that nothing in this clause (e) shall prevent the Company or any
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Subsidiary from offering such concessionary trade terms, or from receiving such
investments, in connection with the bankruptcy or reorganization of their
respective
90
suppliers or customers or the settlement of disputes with such customers or
suppliers arising in the ordinary course of business, as management deems
reasonable in the circumstances;
(f) the Company or any of its Subsidiaries may make travel and
entertainment advances and relocation and other loans to officers and employees
of the Company or any such Subsidiary, provided that the aggregate principal
--------
amount of all such loans and advances outstanding at any one time, together with
the guarantees of such loans and advances made pursuant to subsection 7.3(f),
shall not exceed $5,000,000 at any one time outstanding; and
(g) the Company and its Subsidiaries may make Purchase Option
Acquisitions and may make expenditures to acquire all or a portion of the
Capital Stock or assets of any Person engaged primarily in one or more
businesses in which the Company and its Subsidiaries are engaged or directly
related thereto or in the ownership or operation of Health Care Facilities or
Ancillary Businesses generally (it being understood that this paragraph (g)
shall be applicable to any like-kind exchange of property effected pursuant to
subsection 7.5(e) to the extent that the fair market value of the property
received by the Company or any Subsidiary in such exchange exceeds the fair
market value of the property transferred by the Company or any Subsidiary in
connection therewith), provided that, after giving pro forma effect to any such
-------- --- -----
acquisition permitted by this paragraph (g) and the financing thereof and any
Indebtedness incurred or assumed in connection therewith:
(i) the provisions of subsection 6.9 are satisfied,
(ii) either (A) the ratio of Consolidated Senior Indebtedness as of
the day of such acquisition to Consolidated EBITDA for the period of four
fiscal quarters ending as at the last day of the most recently ended fiscal
quarter is less than or equal to 4.25 to 1.00, provided that for purposes
--------
of calculating such ratio, the unencumbered (other than Liens permitted
pursuant to subsection 7.2(f)) cash and Cash Equivalent balances of the
Company and its Subsidiaries as of the day of such acquisition shall be
deducted from the amount of Consolidated Senior Indebtedness on such date
and provided, further, that for purposes of calculating Consolidated EBITDA
-------- -------
for any period, the Consolidated EBITDA of any Acquired Business acquired
during such period (as the Consolidated EBITDA of such Acquired Business
may be adjusted (w) for those items that occur by reason of such
acquisition that would be substantially in conformity with the calculation
of Consolidated EBITDA in accordance with Regulation S-X, (x) in accordance
with the adjustment to EBITDA for the fiscal year ending December 31, 1997
described in the Confidential Information Memorandum in an aggregate
approximate amount of $1,300,000, (y) to reflect a full year of occupancy
for newly constructed beds and (z) for any cost reduction resulting from
the termination of any contracts of the Acquired Business which are in
existence at the time of the acquisition of such Acquired Business and any
additional costs incurred in connection with the services that were
terminated) shall be included on a pro forma basis for such period
--- -----
(assuming the consummation of such acquisition and the incurrence,
assumption or guarantee of any Indebtedness in connection therewith
occurred on the first day of such period), (B) the amount of expenditures
in connection
with each such acquisition does not exceed $2,500,000 and the Company
elects (by prior written notice to the Administrative Agent) to treat such
expenditures as Capital Expenditures for purposes of this Agreement,
including but not limited to subsection 7.7, or (C) such acquisition
constitutes an acquisition of a business, the principal asset or assets of
which is or are the subject of an operating lease under which the Company
or any Subsidiary is the lessee and the Trust is not the lessor, and with
respect to which no amounts are expended by the Company or any Subsidiary
in connection therewith other than (w) regularly scheduled lease payments,
(x) customary closing costs and expenses, (y) customary security deposits
and (z) payments to acquire temporary working capital of such business so
long as the Company or such Subsidiary reasonably expects to receive at
least an equivalent amount of cash from such business within 90 days of
such expenditure,
(iii) no Default or Event of Default has occurred and is continuing
or would result therefrom,
(iv) the excess, if any, of (1) the aggregate Acquisition
Consideration given subsequent to the date hereof in connection with all
acquisitions of or by Encumbered Subsidiaries as permitted by this
subsection 7.6(g) (excluding (A) Capital Stock of the Company issued in
connection with such acquisitions, (B) the Net Proceeds of issuances of
Capital Stock to the extent such Net Proceeds are contemporaneously applied
toward such acquisitions, (C) any Indebtedness constituting a portion of
such Acquisition Consideration and (D) the Net Proceeds of any bond
issuance as permitted by subsection 7.1(e) to the extent such Net Proceeds
are contemporaneously applied toward such acquisition) over (2) an amount
equal to the aggregate Acquisition Consideration (or in the event of one or
more partial sales of assets or Capital Stock as set forth in clause (aa)
below, the proceeds thereof not to exceed, individually or in the
aggregate, the total Acquisition Consideration therefor) given subsequent
to the date hereof in connection with acquisitions permitted by this
subsection 7.6(g)(iv) (excluding Capital Stock, Net Proceeds of issuances
thereof, any Indebtedness constituting a portion of such Acquisition
Consideration and Net Proceeds of certain bond issuances as aforesaid) with
respect to which either (aa) all or a portion of the assets or Capital
Stock so acquired shall have been subsequently sold or (bb) in any case
where the Subsidiary that is the subject of such acquisition or that is the
holder of the assets so acquired is, immediately after giving effect to
such acquisition, an Encumbered Subsidiary, such Encumbered Subsidiary
shall have ceased to be an Encumbered Subsidiary, shall not exceed an
amount equal to the excess, if any, of (x) $175,000,000 over (y) the sum of
(I) the aggregate then outstanding principal amount of Indebtedness
permitted by subsection 7.1(f) (including refinancings thereof permitted by
subsection 7.1(m)) plus (II) the aggregate principal amount of Indebtedness
----
permitted by subsection 7.1(h) or 7.1(n) the Net Proceeds of which shall
have been applied to refinance preferred stock the proceeds of which were
originally used to finance the acquisition of an Encumbered Subsidiary
permitted by this subsection 7.6(g)); provided that the aggregate amount
--------
that the Company or any Subsidiary may at any time expend to acquire
Encumbered Subsidiaries
92
shall be increased by an amount equal to the aggregate amount which the
Company would then be permitted to borrow under subsection 7.1(e)(i) and
invest under subsection 7.6(h) and
(v) in any case where such acquisition (other than an acquisition of
the Capital Stock of a Person and other than a Purchase Option Acquisition)
is made by a Subsidiary (other than an Encumbered Subsidiary) that conducts
a Health Care Business, such Subsidiary shall not, as a result of or in
connection with such acquisition, have become a party to any Contractual
Obligations with third parties in connection with lease arrangements or
Indebtedness for borrowed money that prohibit the transfer, assignment or
grant of a security interest in any asset that, but for such prohibition,
would constitute Collateral;
(h) the Company or any of its Subsidiaries may make investments in,
or loans or advances to, joint ventures or other Persons (other than
Subsidiaries) engaged primarily in one or more businesses in which the Company
and its Subsidiaries are engaged or directly related thereto or in the ownership
or operation of Health Care Facilities or Ancillary Businesses generally, in an
aggregate principal amount (when added to the aggregate then outstanding
principal amount of Indebtedness supported by Contingent Obligations as
permitted by subsection 7.3(i)) at any one time outstanding not to exceed
$10,000,000 plus the sum of (i) any amounts dividended or distributed to the
----
Company or any Domestic Subsidiary (other than an Encumbered Subsidiary)
subsequent to the date hereof by such joint venture or other Person and (ii) the
proceeds of any sales permitted by subsection 7.5(j) to the extent that such
proceeds are not otherwise reinvested; provided that at the time of and after
--------
giving effect thereto no Default or Event of Default shall have occurred and be
continuing or would result therefrom;
(i) the Company or any of its Subsidiaries may make investments in
connection with the exercise of purchase options with respect to the properties,
or the equity interests in the Persons that are the owners of such properties,
that are the subject of the currently existing Financing Leases to which
Harborside of Cleveland, L.P. is a party in an aggregate amount not to exceed
$57,125,000 less the aggregate principal amount of Indebtedness assumed in
----
connection therewith as permitted by subsection 7.1(l);
(j) the Company or any of its Subsidiaries (other than an Encumbered
Subsidiary) may make Purchase Option Acquisitions of the properties that are the
subject of the Synthetic Lease Facility, provided that the Company or such
--------
Subsidiary promptly, and in any event within 60 days after such Purchase Option
Acquisition by the Company or such Subsidiary, grants to the Administrative
Agent for the benefit of the Lenders an Additional Mortgage covering the real
property that is the subject thereof and otherwise complies with the
requirements of subsection 6.9 with respect to such Purchase Option Acquisition;
and
(k) the Company or any of its Subsidiaries may make loans to, and
hold investments in promissory notes issued by, purchasers, sellers or lessors
of assets in transactions
permitted by subsection 7.5 or 7.6 in an aggregate principal amount not to
exceed $10,000,000 at any one time outstanding and may hold the Promissory Note.
For the purposes of this subsection 7.6, the payment by the Company or
any Subsidiary of expenses, operating costs or maintenance capital expenditures
of any Domestic Subsidiary incurred in the ordinary course of its business shall
not be considered to be a loan to, advance by or other investment of the Company
or any Subsidiary in, such Domestic Subsidiary and shall be permitted under this
Agreement.
7.7 Capital Expenditures. Make or commit to make any Capital
--------------------
Expenditures, except that the Company and its Subsidiaries may make or commit to
make Capital Expenditures not exceeding the amount set forth below (the "Base
----
Amount") for each of the fiscal years or periods of the Company (or other
- ------
period) set forth below:
--------------------------------------------------------------
Fiscal Year
or Period Base Amount
--------- -----------
--------------------------------------------------------------
Closing Date to December 31, 1999 $ 23,000,000
--------------------------------------------------------------
2000 $ 16,000,000
--------------------------------------------------------------
2001 $ 17,000,000
--------------------------------------------------------------
2002 $ 18,000,000
--------------------------------------------------------------
2003 $ 19,000,000
--------------------------------------------------------------
January 1, 2004 to $10,000,000;
Scheduled Termination Date
--------------------------------------------------------------
94
provided that (a) for any period set forth above, the Base Amount set forth
- --------
above may be increased by a maximum of 50% of the Base Amount for any such
period by carrying over to any such period any portion of the Base Amount (as
increased) not spent in the immediately preceding period, (b) for each period
set forth above after the fiscal year in which any Person or assets of such
Person (an "Acquired Person") is acquired as permitted herein, the Base
---------------
Amount set forth above shall be increased by an amount equal to the product of
$1,000 times the number of beds of each such Acquired Person at the time of
acquisition thereof ("Acquired Capital Expenditures"), (c) with respect to the
-----------------------------
fiscal year in which such Person becomes an Acquired Person, the Base Amount
shall be increased by the product of (i) the Acquired Capital Expenditures of
such Acquired Person times (ii) a fraction, the numerator of which is the number
of days remaining in the fiscal year of the Company in which such Acquired
Person was acquired and the denominator of which is 365, (d) for each period set
forth above after the fiscal year in which the Company or any Subsidiary adds
new beds ("Acquired Beds") to any then existing Health Care Facility, the Base
-------------
Amount set forth above shall be increased by an amount equal to the product of
$1,000 times the number of such Acquired Beds ("Acquired Bed Expenditures") and
-------------------------
(e) with respect to the fiscal year in which the Company or any Subsidiary adds
Acquired Beds to any then existing Health Care Facility, the Base Amount shall
be increased by the product of (i) the Acquired Bed Expenditures for such
Acquired Beds times (ii) a fraction, the numerator of which is the number of
days remaining in the fiscal year of the Company in which the Acquired Beds were
acquired and the denominator of which is 365; and provided, further, that,
-------- -------
notwithstanding anything to the contrary herein, additional Capital Expenditures
may be made with net proceeds received in property sales or dispositions
permitted under subsection 7.5(g). Notwithstanding anything to the contrary in
this subsection 7.7, no expenditure to acquire real or personal property
pursuant to a Purchase Option Acquisition shall be deemed to constitute a
Capital Expenditure for purposes of this subsection.
7.8 Interest Rate Agreements. Enter into, create, incur, assume or
------------------------
suffer to exist any Interest Rate Agreements or obligations in respect thereof
except in the ordinary course of business for non-speculative purposes.
7.9 Debt to EBITDA. At the last day of any fiscal quarter set forth
--------------
below, permit the ratio (the "Leverage Ratio") of Consolidated Indebtedness as
--------------
of such day to Consolidated EBITDA for the period of four fiscal quarters ending
on such day to be greater than the ratio set forth below for such fiscal
quarter:
Fiscal Year Fiscal Quarter Ratio
----------- -------------- -----
1998 Fourth 6.85 to 1.00
1999 First 6.85 to 1.00
Second 6.85 to 1.00
Third 6.85 to 1.00
Fourth 6.85 to 1.00
95
2000 First 6.85 to 1.00
Second 6.85 to 1.00
Third 6.85 to 1.00
Fourth 6.50 to 1.00
2001 First 6.50 to 1.00
Second 6.50 to 1.00
Third 6.50 to 1.00
Fourth 6.25 to 1.00
2002 First 6.25 to 1.00
Second 6.25 to 1.00
Third 6.25 to 1.00
Fourth 6.00 to 1.00
Thereafter 6.00 to 1.00;
provided that for purposes of calculating Consolidated EBITDA for any period,
- --------
the Consolidated EBITDA of any Acquired Business acquired during such period (as
the Consolidated EBITDA of such Acquired Business may be adjusted (w) for those
items that occur by reason of such acquisition that would be substantially in
conformity with the calculation of Consolidated EBITDA in accordance with
Regulation S-X, (x) in accordance with the adjustment to EBITDA for the fiscal
year ending December 31, 1997 described in the Confidential Information
Memorandum in an aggregate approximate amount of $1,300,000, (y) to reflect a
full year of occupancy of newly constructed beds and (z) for any cost reduction
resulting from the termination of any contracts of the Acquired Business which
are in existence at the time of the acquisition of such Acquired Business and
any additional costs incurred in connection with the services that were
terminated) shall be included on a pro forma basis for such period (assuming the
--- -----
consummation of such acquisition and the incurrence, assumption or guarantee of
any Indebtedness in connection therewith occurred on the first day of such
period).
7.10 Coverage Ratio. At the last day of any fiscal quarter set forth
--------------
below, permit the Coverage Ratio to be less than the ratio set forth below for
such fiscal quarter:
Fiscal Year Fiscal Quarter Coverage Ratio
----------- -------------- --------------
1998 Fourth 1.50 to 1.00
1999 First 1.50 to 1.00
Second 1.50 to 1.00
Third 1.50 to 1.00
Fourth 1.50 to 1.00
2000 First 1.50 to 1.00
Interest
Coverage
Fiscal Year Fiscal Quarter Ratio
----------- -------------- -----
Second 1.50 to 1.00
Third 1.50 to 1.00
Fourth 1.50 to 1.00
2001 First 1.50 to 1.00
Second 1.50 to 1.00
Third 1.50 to 1.00
Fourth 1.50 to 1.00
2002 First 1.50 to 1.00
Second 1.50 to 1.00
Third 1.50 to 1.00
Fourth 1.50 to 1.00
2003 First 1.50 to 1.00
Second 1.50 to 1.00
Third 1.50 to 1.00
Fourth 1.40 to 1.00
2004 First 1.35 to 1.00
Second 1.30 to 1.00
Thereafter 1.30 to 1.00;
provided that for purposes of calculating Consolidated EBITDA for any period,
- --------
the Consolidated EBITDA of any Acquired Business acquired during such period in
an acquisition permitted by subsection 7.6(g) (as the Consolidated EBITDA of
such Acquired Business may be adjusted (w) for those items that occur by reason
of such acquisition that would be substantially in conformity with the
calculation of Consolidated EBITDA in accordance with Regulation S-X, (x) in
accordance with the adjustment to EBITDA for the fiscal year ending December 31,
1997 described in the Confidential Information Memorandum in an aggregate
approximate amount of $1,300,000, (y) to reflect a full year of occupancy for
newly constructed beds and (z) for any cost reduction resulting from the
termination of any contracts of the Acquired Business which are in existence at
the time of the acquisition of such Acquired Business and any additional costs
incurred in connection with the services that were terminated) shall be included
on a pro forma basis for such period (assuming the consummation of such
--- -----
acquisition and the incurrence, assumption or guarantee of any Indebtedness in
connection therewith occurred on the first day of such period); provided
--------
further, that for purposes of calculating interest expense for any period, pro
- ------- ---
forma effect shall be given to any incurrence, assumption or guarantee of
- -----
Indebtedness of any Person acquired by the Company or its Subsidiaries during
such period (assuming the consummation of such acquisition and the incurrence,
assumption or guarantee of any Indebtedness in connection therewith occurred on
the first day of such period and assuming that,
97
with respect to any Indebtedness that bears a floating rate of interest, the
rate in effect on the last day of such period had been the applicable rate for
the entire period).
7.11 Limitation on Dividends. Declare any dividends on any shares of
-----------------------
any class of Capital Stock, or make any payment on account of, or set apart
assets for a sinking or other analogous fund for, the purchase, redemption,
defeasance, retirement or other acquisition of any shares of any class of
Capital Stock, or any warrants or options to purchase such Capital Stock,
whether now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or property or in
obligations of the Company or any of its Subsidiaries; except that:
(a) (i) Subsidiaries may pay dividends or distributions to the
Company or to Domestic Subsidiaries (other than Encumbered Subsidiaries) which
are directly or indirectly wholly owned by the Company, (ii) Subsidiaries may
pay dividends or distributions to Encumbered Subsidiaries that (directly or
through a series of dividends or distributions) promptly pay such dividends or
distributions to the Company or a Domestic Subsidiary (other than an Encumbered
Subsidiary) and (iii) Encumbered Subsidiaries may pay dividends or distributions
to other Encumbered Subsidiaries;
(b) the Company may pay or make dividends or distributions to any
holder of its Capital Stock in the form of additional shares of Capital Stock of
the same class and type;
(c) the Company may repurchase Capital Stock of the Company owned by
former, present or future employees of the Company or its Subsidiaries or their
assigns, estates and heirs, provided that the aggregate amount expended by the
--------
Company pursuant to this clause (c) shall not in the aggregate exceed (i)
$5,000,000 in any fiscal year or (ii) $10,000,000 during the term of this
Agreement, plus any amounts contributed to the Company as a result of resales of
such repurchased shares of Capital Stock;
(d) the Company may after the fifth anniversary of the date of the
issuance thereof make scheduled payments or dividends on the Preferred Stock
when due at a rate per annum no greater than the rate per annum applicable to
such Preferred Stock on the original date of issuance thereof, to the extent
required to be paid in cash, provided that no Default or Event of Default shall
--------
have occurred and be continuing or would result therefrom;
(e) the Company may redeem Preferred Stock with the proceeds of
issuances of common stock and preferred stock as referred to in subsection
3.4(b)(i); and
(f) the Company may redeem preferred stock with the proceeds of
issuances of other preferred stock as referred to in subsection 3.4(b)(i) and/or
with the proceeds of Indebtedness issued as permitted by subsection 7.1(h) or
7.1(n).
7.12 Transactions with Affiliates. Enter into any transaction,
----------------------------
including, without limitation, any purchase, sale, lease or exchange of property
or the rendering of any
98
service, with any Affiliate except for transactions which are otherwise
permitted under this Agreement and which are in the ordinary course of the
Company's or a Subsidiary's business and which are upon fair and reasonable
terms no less favorable to the Company or such Subsidiary than it would obtain
in a hypothetical comparable arm's length transaction with a Person not an
Affiliate, provided that nothing in this subsection 7.12 shall prohibit the
--------
Company or its Subsidiaries from engaging in the following transactions: (a) the
performance of the Company's or any Subsidiary's obligations under any
employment contract, collective bargaining agreement, employee benefit plan,
related trust agreement or any other similar arrangement heretofore or hereafter
entered into in the ordinary course of business, (b) the payment of compensation
to employees, officers, directors or consultants in the ordinary course of
business or (c) the maintenance of benefit programs or arrangements for
employees, officers or directors, including, without limitation, vacation plans,
health and life insurance plans, deferred compensation plans, and retirement or
savings plans and similar plans, in each case, in the ordinary course of
business.
7.13 Prepayments and Amendments of Subordinated Debt. (a)
-----------------------------------------------
Optionally prepay, retire, redeem, purchase, defease or exchange any
Subordinated Debt (other than (i) any redemption of the Bridge Senior
Subordinated Debt or the Senior Subordinated Discount Notes with proceeds of
Permanent Senior Subordinated Debt as permitted by subsection 7.1(d), (ii) any
refinancing of the Permanent Junior Subordinated Debt or Permanent Senior
Subordinated Debt contemplated in the definition thereof, (iii) any redemption
of the Bridge Junior Subordinated Debt with the proceeds of the issuance of
Preferred Stock to the extent permitted by subsection 3.4(b)(i), or (iv) any
other redemption of Subordinated Debt with the proceeds of the issuance of
Capital Stock to the extent permitted by subsection 3.4(b)(i)), (b) pay any
interest on Subordinated Debt in cash if such interest may be paid by the
issuance of additional Subordinated Debt or (c) waive, amend, supplement,
modify, terminate or release the provisions of any Subordinated Debt, to the
extent that any such waiver, amendment, supplement, modification, termination or
release would be materially adverse to the Lenders.
7.14 Limitation on Changes in Fiscal Year. Permit the fiscal year of
------------------------------------
the Company to end on a day other than December 31 in any calendar year.
7.15 Limitation on Lines of Business. Enter into any business,
-------------------------------
either directly or through any Subsidiary, except for those businesses in which
the Company or any Subsidiary is engaged on the date of this Agreement (or which
are directly related thereto or those related generally to the ownership or
operation of Health Care Facilities or Ancillary Businesses).
7.16 Health Care Permits and Approvals. Engage in any activity that
---------------------------------
(a) constitutes or, with the giving of notice, the passage of time, or both,
would result in a material violation of, any Health Care Permit necessary for
the lawful conduct of its business or operations or (b) constitutes or, with the
giving of notice, the passage of time, or both, would result in the loss by any
Health Care Facility or Ancillary Business owned, leased, managed or operated by
the Company or any of its Subsidiaries of the right to participate in, and
receive payment under, the appropriate Medicare, Medicaid and related
reimbursement programs, and
99
any similar state or local government-sponsored program, to the extent that such
Credit Party has decided to participate in any such program with respect to such
Health Care Facility or Ancillary Business, as the case may be, and to receive
reimbursement from private and commercial payers and health maintenance
organizations to the extent applicable thereto, in each case described in
clauses (a) or (b) above, except where such violation or the loss of such Health
Care Permit or rights to participate in or receive payments under such programs
could not reasonably be expected to have a material adverse effect on the
business, assets, condition (financial or otherwise) or results of operations of
the Company and its Subsidiaries, taken as a whole.
7.17 Preferred Stock. Convert any shares of Preferred Stock into, or
---------------
exchange any shares of Preferred Stock for, any Indebtedness.
8. EVENTS OF DEFAULT
-----------------
Upon the occurrence and during the continuance of any of the
following events:
(a) Any Borrower shall fail to (i) pay any principal of any Loan or
Note when due in accordance with the terms hereof or thereof or to reimburse the
Issuing Lender in accordance with subsection 2.8 or (ii) pay any interest on any
Loan or Note or any other amount payable hereunder within five days after any
such interest or other amount becomes due in accordance with the terms thereof
or hereof; or
(b) Any representation or warranty made or deemed made by any Credit
Party in any Credit Document shall prove to have been incorrect in any material
respect on or as of the date made or deemed made; or
(c) The Company or any other Borrower shall default in the
observance or performance of any agreement contained in subsection 6.7(a) or 6.9
or Section 7 of this Agreement or the Company or any Subsidiary shall default in
the observance or performance of any agreement contained in Section 5(a), 5(i),
5(j), 5(k), 5(l), 5(p), 5(s)(i) or 5(s)(ii) of the Collateral Agreement or
Section 5, 6 or 7 of any Mortgage; or
(d) Any Credit Party shall default in the observance or performance
of any other agreement contained in any Credit Document and such default shall
continue unremedied for a period of 30 days; or
(c) The Company or any of its Subsidiaries shall (i) default in any
payment of principal of or interest on or other amounts in respect of any
Indebtedness (other than the Loans, the L/C Obligations and any inter-company
debt) or Interest Rate Agreement or in the payment of any Contingent Obligation,
beyond the period of grace, if any, provided in the instrument or agreement
under which such Indebtedness, Interest Rate Agreement or Contingent Obligation
was created; or (ii) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness, Interest Rate
Agreement or Contingent Obligation or
100
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the holder or
holders of such Indebtedness or beneficiary or beneficiaries of such Contingent
Obligation (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the giving of notice if required,
such Indebtedness to become due prior to its stated maturity, any applicable
grace period having expired, or such Contingent Obligation to become payable,
any applicable grace period having expired; in each case, provided that the
--------
aggregate principal amount of all such Indebtedness, Interest Rate Agreements
and Contingent Obligations under which a default exists or which would then
become due or payable equals or exceeds $7,500,000; or
(f) (i) The Company or any of its Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it as bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its assets, or the Company or any
of its Subsidiaries shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against the Company or any of its
Subsidiaries any case, proceeding or other action of a nature referred to in
clause (i) above which (A) results in the entry of an order for relief or any
such adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced against the
Company or any of its Subsidiaries any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets which results in the entry of
an order for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 days from the entry thereof; or (iv)
the Company or any of its Subsidiaries shall take any action in furtherance of,
or indicating its consent to, approval of, or acquiescence in, any of the acts
set forth in clause (i), (ii), or (iii) above; or (v) the Company or any of its
Subsidiaries shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan,
(ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan or any Lien in favor
of the PBGC or a Plan shall arise on the assets of the Company or any Commonly
Controlled Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a trustee is,
in the reasonable opinion of the Required Lenders, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any Single
Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the Company
or any Commonly Controlled Entity shall, or in the reasonable opinion of the
Required
101
Lenders is likely to, incur any liability in connection with a withdrawal from,
or the Insolvency or Reorganization of, a Multiemployer Plan or (vi) any other
event or condition shall occur or exist with respect to a Plan, and such event
or condition, together with all other such events or conditions, relating to a
Plan, if any, would be reasonably likely to subject the Company or any of its
Subsidiaries to any tax, penalty or other liabilities in the aggregate resulting
in a material adverse effect on the business, assets, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries, taken
as a whole; or
(h) One or more judgments or decrees shall be entered against the
Company or any of its Subsidiaries involving in the aggregate a liability (not
paid or fully covered by insurance) of $7,500,000 or more and all such judgments
or decrees shall not have been vacated, discharged, stayed or bonded pending
appeal within the time required by the terms of such judgment; or
(i) Any Credit Document shall cease, for any reason, to be in full
force and effect or any Credit Party or any of its Subsidiaries shall so assert
in writing, or any Security Document shall cease to be effective to grant a
perfected Lien on the collateral described therein with the priority purported
to be created thereby (other than as a result of any action or inaction on the
part of the Administrative Agent or the Lenders), subject to such exceptions as
may be permitted therein or herein, and such condition shall continue unremedied
for 30 days after notice thereof to the Company by the Administrative Agent or
any Lender; or
(j) There shall have occurred a Change of Control; or
(k) The subordination provisions of any document governing any
Subordinated Debt shall cease, for any reason, to be valid or any Credit Party
or any of its Subsidiaries shall so assert in writing; or
(l) There shall have occurred and be continuing an Event of Default
under and as defined in the documentation for the Synthetic Lease Facility;
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then, and in any such event, (a) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to any Borrower,
automatically (i) the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the Notes shall immediately become due and payable, and (ii) all
obligations of the Company in respect of the Letters of Credit, although
contingent and unmatured, shall become immediately due and payable and the
Issuing Lender's obligations to issue the Letters of Credit shall immediately
terminate and (b) if such event is any other Event of Default, so long as any
such Event of Default shall be continuing, either or both of the following
actions may be taken: (i) with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to the Company, declare the Commitments
and the Issuing Lender's obligations to issue the Letters of Credit to be
terminated forthwith, whereupon the Commitments and such obligations shall
immediately terminate; and (ii) with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice of default to the Company, (A) declare all
or a portion of the Loans hereunder (with accrued interest thereon) and all
other amounts owing under this Agreement and the Notes to be due and payable
forthwith, whereupon the same shall immediately become due and payable, and (B)
declare all or a portion of the obligations of the Company in respect of the
Letters of Credit, although contingent and unmatured, to be due and payable
forthwith, whereupon the same shall immediately become due and payable and/or
demand that the Company discharge any or all of the obligations supported by the
Letters of Credit by paying or prepaying any amount due or to become due in
respect of such obligations. All payments under this Section 8 on account of
undrawn Letters of Credit shall be made by the Company directly to a cash
collateral account established by the Administrative Agent for such purpose for
application to the Company's reimbursement obligations under subsection 2.8 as
drafts are presented under the Letters of Credit, with the balance, if any, to
be applied to the Borrowers' obligations under this Agreement and the Notes as
the Administrative Agent shall determine with the approval of the Required
Lenders. Except as expressly provided above in this Section 8, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
9. MISCELLANEOUS
-------------
9.1 Amendments and Waivers. Except as otherwise expressly set forth
----------------------
in this Agreement, no Credit Document nor any terms thereof may be amended,
supplemented, waived or modified except in accordance with the provisions of
this subsection 9.1. With the written consent of the Required Lenders, the
Administrative Agent and the respective Credit Parties or their Subsidiaries
may, from time to time, enter into written amendments, supplements or
modifications hereto for the purpose of adding any provisions to any Credit
Document to which they are parties or changing in any manner the rights of the
Lenders or of any such Credit Party or its Subsidiaries thereunder or waiving,
on such terms and conditions as the Administrative Agent may specify in such
instrument, any of the requirements of any such Credit Document or any Default
or Event of Default and its consequences; provided that:
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(a) no such waiver and no such amendment, supplement or modification
shall release collateral not required or permitted by any Credit Document
to be released and which, in the aggregate with all other collateral
released pursuant to this clause (a) (other than collateral released
pursuant to the proviso to this clause (a)) during the calendar year in
which such proposed release would be effected and the immediately preceding
calendar year, has fair market value on the proposed date of release in
excess of 20% of the fair market value of all collateral (including any
guarantee of the obligations hereunder) on such date without the written
consent of the Supermajority Lenders; provided that, notwithstanding the
--------
foregoing, this clause (a) shall not be applicable to and no consent shall
be required for (i) releases of collateral in connection with any Asset
Sales permitted by subsection 7.5, (ii) releases of collateral in
accordance with subsection 9.11 or (iii) upon the reincorporation of the
Company or any Subsidiary in a new jurisdiction or the creation of a new
Subsidiary of the Company, any release of collateral in connection with the
transfer of such released collateral to such reincorporated entity or new
Subsidiary in compliance with subsection 7.4, provided that the
--------
Administrative Agent, in its sole discretion, determines that such release
and transfer, together with any grant and perfection of a new Lien therein
in favor of the Administrative Agent, will cause no material impairment of
the value of the collateral taken as a whole, after giving effect to such
release and transfer;
(b) no such waiver and no such amendment, supplement or modification
shall extend the final maturity date of any Note or reduce the rate or
extend the time of payment of interest thereon, or change the method of
calculating interest thereon, or reduce or extend the time of payment of
any fee payable to the Lenders hereunder, or reduce the principal amount
thereof, or change the amount of any Lender's Commitment or Revolving
Credit Percentage, or amend, modify or waive any provision of subsection
3.9(b) or this subsection 9.1 or reduce the percentage specified in the
definition of Required Lenders or reduce the percentage specified in the
definition of Supermajority Lenders or consent to the assignment or
transfer by any Credit Party of any of its rights and obligations under any
Credit Document, in each case, without the prior written consent of each
Lender, and each holder of Term Synthetic Lease Obligations, directly
affected thereby;
(c) no such waiver and no such amendment, supplement or modification
affecting the then Administrative Agent or Issuing Lender shall amend,
modify or waive any provision of Section 5 of the Agency and Intercreditor
Agreement without the written consent of such Administrative Agent and
Issuing Lender; and
(d) no such waiver, and no such amendment, supplement or modification
shall amend, modify or waive the order of application of prepayments
specified in subsection 3.4(b)(v) without the written consent of the
holders of at least 51% of each of (i) the aggregate unpaid principal
amount of the Term Loans, if any, (ii) the Term Synthetic Lease
Obligations, if any, and (iii) the Revolving Credit Commitments or, if the
Revolving Credit Commitments are terminated, the aggregate unpaid principal
amount of
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the Revolving Credit Loans (the Term Loans, the Term Synthetic Lease
Obligations and the Revolving Credit Commitments (or, if the Revolving
Credit Commitments are terminated, the aggregate unpaid principal amount of
the Revolving Credit Loans, and participations in Swing Line Loans and the
aggregate amount available to be drawn at such time under all outstanding
Letters of Credit and L/C Obligations) of any Non-Funding Lender to be
disregarded in determining such percentage at any time);
any such waiver and any such amendment, supplement or modification described in
this subsection 9.1 shall apply equally to each of the Lenders and shall be
binding upon each Credit Party and its Subsidiaries, the Lenders, the
Administrative Agent, the Documentation Agent, the Syndication Agent and the
Issuing Lender and all future holders of the Notes and the Loans. Any extension
of a Letter of Credit by the Issuing Lender shall be treated hereunder as a new
Letter of Credit. In the case of any waiver, the Credit Parties, the Lenders,
the Administrative Agent and Issuing Lender shall be restored to their former
position and rights hereunder and under the outstanding Notes, and any Default
or Event of Default waived shall be deemed to be cured and not continuing; but
no such waiver shall extend to any subsequent or other Default or Event of
Default, or impair any right consequent thereon.
9.2 Notices. All notices, requests and demands to or upon the
-------
respective parties hereto to be effective shall be in writing (including by
telecopy) and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or three Business Days
after being deposited in the mail, postage prepaid, or, in the case of telecopy
notice, when sent, confirmation of receipt received, addressed as follows in the
case of the Company, the other Borrowers and the Administrative Agent, and as
set forth in Schedule II in the case of any Lender, or to such other address as
may be hereafter notified by the respective parties hereto and any future
holders of the Notes:
The Company
and the other
Borrowers: Harborside Healthcare Corporation
470 Atlantic Avenue
Boston, Massachusetts 02210
Attention: William H. Stephan
Telecopy: (617) 556-1565
With a copy to: Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, New York 10166
Attention: Janet Vance, Esq.
Telecopy: (212) 351-4035
105
The Administrative Agent
and Swing Line Lender: The Chase Manhattan Bank
c/o The Loan and Agency Services Group
One Chase Manhattan Plaza, 8th floor
New York, New York 10081
Attention: Janet M. Belden
Telecopy: (212) 552-5658
With a copy to: Chase New England Corporation
85 Wells Avenue, Suite 200
Newton, Massachusetts 02159
Attention: Roger A. Stone
Telecopy: (617) 928-3057
provided that any notice, request or demand to or upon the Administrative Agent
- --------
or the Lenders pursuant to subsections 2.4, 2.5, 3.1, 3.2, 3.3 and 3.4 shall not
be effective until received and, provided, further, that the failure to provide
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the copies of notices to the Company and the other Borrowers provided for in
this subsection 9.2 shall not result in any liability to the Administrative
Agent.
9.3 No Waiver; Cumulative Remedies. No failure to exercise and no
------------------------------
delay in exercising, on the part of the Administrative Agent or any Lender, any
right, remedy, power or privilege hereunder, shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
9.4 Survival of Representations and Warranties. All representations
------------------------------------------
and warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement, the Letters of Credit and the Notes.
9.5 Payment of Expenses and Taxes. Each Borrower agrees (a) to pay
-----------------------------
or reimburse the Administrative Agent, the Arranger, the Co-Arrangers, the
Syndication Agent and the Documentation Agent for all their reasonable out-of-
pocket costs and expenses incurred in connection with the development,
negotiation, preparation and execution of the Credit Documents and any other
documents prepared in connection herewith, and the consummation of the
transactions contemplated hereby and thereby, including, without limitation, the
reasonable fees and disbursements of one counsel to the Administrative Agent,
the Arranger, the Co-Arrangers, the Syndication Agent and the Documentation
Agent, (b) to pay or reimburse all of the reasonable expenses, including without
limitation, reasonable fees and expenses of counsel, incurred by the
Administrative Agent in connection with the administration of the facilities
provided for herein or in connection with any amendments, waivers, work-outs or
106
restructurings in respect thereof, (c) to pay or reimburse the Administrative
Agent, the Arranger, each Co-Arranger, the Syndication Agent, the Documentation
Agent, the Issuing Lender and each Lender for all their costs and expenses
incurred in connection with, and to pay, indemnify, and hold the Administrative
Agent, the Arranger, each Co-Arranger, the Syndication Agent, the Documentation
Agent, the Issuing Bank and each Lender harmless from and against any and all
other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever arising
out of or in connection with, the enforcement or preservation of any rights
under any Credit Document and any such other documents, including, without
limitation, reasonable fees and disbursements of counsel to the Administrative
Agent, the Arranger, each Co-Arranger, the Syndication Agent, the Documentation
Agent and each Lender incurred in connection with the foregoing and in
connection with advising the Administrative Agent with respect to its rights and
responsibilities under this Agreement and the documentation relating thereto,
(d) to pay, indemnify, and to hold the Administrative Agent, the Arranger, each
Co-Arranger, the Syndication Agent, the Documentation Agent and each Lender
harmless from any and all recording and filing fees and any and all liabilities
with respect to, or resulting from any delay in paying, stamp, excise and other
similar taxes (other than withholding taxes), if any, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
any Credit Document and any such other documents, and (e) to pay, indemnify, and
hold the Administrative Agent, the Arranger, each Co-Arranger, the Syndication
Agent, the Documentation Agent, the Issuing Bank and each Lender and their
respective affiliates, officers, directors and trustees harmless from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever (including, without limitation, reasonable fees and
disbursements of counsel) which may be incurred by or asserted against the
Administrative Agent, the Arranger, each Co-Arranger, the Syndication Agent, the
Documentation Agent, the Issuing Bank or the Lenders or such affiliates,
officers, directors or trustees (x) arising out of or in connection with any
investigation, litigation or proceeding related to this Agreement, the other
Credit Documents, the proceeds of the Loans, the Preferred Stock or the
Subordinated Debt and the transactions contemplated by or in respect of such use
of proceeds, or any of the other transactions contemplated hereby, whether or
not the Administrative Agent, the Arranger, each Co-Arranger, the Syndication
Agent, the Documentation Agent, the Issuing Bank or any of the Lenders or such
affiliates, officers, directors or trustees is a party thereto, including,
without limitation, any of the foregoing relating to the violation of,
noncompliance with or liability under, any Environmental Law applicable to the
Company, any of its Subsidiaries or any of the facilities and properties owned,
leased or operated by the Company or any of its Subsidiaries, or (y) without
limiting the generality of the foregoing, by reason of or in connection with the
execution and delivery or transfer of, or payment or failure to make payments
under, Letters of Credit (it being agreed that nothing in this subsection
9.5(d)(y) is intended to limit the Company's obligations pursuant to subsection
2.8) (all the foregoing, collectively, the "indemnified liabilities"), provided
----------------------- --------
that no Borrower shall have any obligation hereunder with respect to indemnified
liabilities of the Administrative Agent, the Arranger, any Co-Arranger, the
Syndication Agent, the Documentation Agent, the Issuing Bank or any Lender or
any of their
107
respective affiliates, officers, directors and trustees arising from (i) the
gross negligence or willful misconduct of the person seeking indemnification or
(ii) legal proceedings commenced against the Administrative Agent, the Arranger,
any such Co-Arranger, the Syndication Agent, the Documentation Agent, the
Issuing Bank or any such Lender by any security holder or creditor thereof
arising out of and based upon rights afforded any such security holder or
creditor solely in its capacity as such or (iii) legal proceedings commenced
against the Administrative Agent, the Arranger, any such Co-Arranger, the
Syndication Agent, the Documentation Agent, the Issuing Bank or any such Lender
by any Transferee. Without limiting the foregoing, and to the extent permitted
by applicable law, the Company agrees not to assert, and hereby waives (and
shall cause the Subsidiaries not to assert and to waive) all rights for
contribution or any other rights of recovery with respect to all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever, under or related to
Environmental Laws, that any of them might have by statute or otherwise against
the Administrative Agent, the Arranger, any Co-Arranger, the Syndication Agent,
the Documentation Agent, the Issuing Lender or any Lender. The agreements in
this subsection 9.5 shall survive repayment of the Loans and all other amounts
payable hereunder.
9.6 Successors and Assigns; Participations and Assignments. (a) This
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Agreement shall be binding upon and inure to the benefit of the Borrowers, the
Lenders, the Administrative Agent, the Arranger, the Co-Arrangers, the
Syndication Agent, the Documentation Agent, all future holders of the Notes and
the Loans, and their respective successors and assigns, except that no Borrower
may assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of each Lender.
(a) Any Lender may, in the ordinary course of its commercial banking
or lending business and in accordance with applicable law, at any time sell to
one or more banks or other entities ("Participants") participating interests in
------------
any Loan owing to such Lender, any participating interest in the Letters of
Credit of such Lender, any Note held by such Lender, any Commitment of such
Lender or any other interest of such Lender hereunder. In the event of any such
sale by a Lender of participating interests to a Participant, such Lender's
obligations under this Agreement to the other parties to this Agreement shall
remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Note for
all purposes under this Agreement and the Company and the Administrative Agent
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement and the other Credit
Documents. Each Borrower agrees that if amounts outstanding under this
Agreement and the Notes are due and unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement and any Note to the
same extent as if the amount of its participating interest were owing directly
to it as a Lender under this Agreement or any Note; provided that such right of
--------
setoff shall be subject to the obligation of such Participant to share with the
Lenders, and the Lenders agree to share with such Participant, as provided in
the Agency and Intercreditor Agreement. Each Borrower also agrees that each
Participant shall be entitled to the benefits of subsections 2.10, 3.11 and 3.12
with respect to its
108
participation in the Letters of Credit and in the Commitments and the Loans
outstanding from time to time as if it were a Lender; and provided, further,
-------- -------
that no Participant shall be entitled to receive any greater amount pursuant to
any such subsection than the transferor Lender would have been entitled to
receive in respect of the amount of the participation transferred by such
transferor Lender to such Participant had no such transfer occurred. Each Lender
agrees that the participation agreement pursuant to which any Participant
acquires its participating interest (or any other document) may afford voting
rights to such Participant, or any right to instruct such Lender with respect to
voting hereunder, only with respect to matters requiring the consent of (i) all
of the Lenders hereunder, (ii) such Lender (with respect to matters specified in
subsection 9.1(b) only), if it is affected thereby or (iii) all of the Lenders
holding the relevant Loans or Revolving Credit Commitments subject to such
participation.
(b) Subject to paragraph (g) of this subsection 9.6, any Lender may,
in the ordinary course of its commercial banking, lending or investment business
and in accordance with applicable law, (i) at any time and from time to time
assign all or any part of its rights and obligations under this Agreement and
the Notes to any Lender or any Affiliate thereof, provided that, in the event of
--------
a sale of less than all of such rights and obligations, such assigning Lender
after any such sale to any other Lender or any Affiliate of such Lender shall
retain Commitments and/or Loans and/or L/C Participating Interests aggregating
at least $5,000,000 (or such lesser amount as the Administrative Agent may
determine) and (ii) with the consent of the Company, as agent for the Borrowers,
and the Administrative Agent (which in each case shall not be unreasonably
withheld or delayed) at any time and from time to time assign to one or more
additional banks, mutual funds or financial institutions or entities (each, an
"Assignee"), all or any part of its rights and obligations under this Agreement
--------
and the Notes, pursuant to an Assignment and Acceptance, executed by such
Assignee, such transferor Lender (and, in the case of an Assignee that is not
then a Lender or an Affiliate thereof, by the Company, as agent for the
Borrowers, and the Administrative Agent), and delivered to the Administrative
Agent for its acceptance and recording in the Register (as defined below);
provided that (A) each such sale pursuant to clause (ii) of this subsection
- --------
9.6(c) shall be in a principal amount of $5,000,000 or more unless the Assigning
Lender is transferring all of its rights and obligations and (B) in the event of
a sale of less than all of such rights and obligations, such Lender after any
such sale shall retain Commitments and/or Loans and/or L/C Participating
Interests aggregating at least $5,000,000 (or such lesser amount as the
Administrative Agent and the Company may determine). Each assignment of
Commitments, Revolving Credit Loans and L/C Participating Interests to an
Assignee pursuant to this subsection 9.6(c) shall automatically include an
assignment to such Assignee of an equal percentage of all the assigning Lender's
rights and obligations in respect of the Revolving Synthetic Lease Obligations
and commitments to make revolving credit loans under the Synthetic Lease
Facility. Upon such execution, delivery, acceptance and recording, from and
after the effective date determined pursuant to such Assignment and Acceptance,
(x) the Assignee thereunder shall be a party hereto and to the Agency and
Intercreditor Agreement and, to the extent provided in such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder with a
Commitment as set forth therein, and (y) the assigning Lender thereunder shall,
to the extent of the interest transferred, as reflected in such Assignment and
Acceptance, be released from its obligations
109
under this Agreement and the Agency and Intercreditor Agreement (and, in the
case of an Assignment and Acceptance covering all or the remaining portion of a
transferor Lender's rights and obligations under this Agreement, such transferor
Lender shall cease to be a party hereto and to the Agency and Intercreditor
Agreement but shall continue to be entitled to the benefits of the
indemnification provisions set forth in subsection 9.5).
(c) The Administrative Agent, which for purposes of this subsection
9.6(d) only shall be deemed to be the agent of the Borrowers, shall maintain at
the address of the Administrative Agent referred to in subsection 9.2 a copy of
each Assignment and Acceptance delivered to it and a register (the "Register")
--------
for the recordation of the names and addresses of the Lenders and the
Commitments of, and principal amounts of the Loans owing to, each Lender from
time to time. The entries in the Register shall be conclusive, in the absence
of manifest error, and the Borrowers, the Administrative Agent and the Lenders
shall treat each Person whose name is recorded in the Register as the owner of a
Loan or other obligation hereunder as the owner thereof for all purposes of this
Agreement and the other Credit Documents, notwithstanding any notice to the
contrary. Any assignment of any Loan or other obligation hereunder shall be
effective only upon appropriate entries with respect thereto being made in the
Register. The Register shall be available for inspection by the Company or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof, by the Company, as agent for the
Borrowers, and the Administrative Agent), together with payment to the
Administrative Agent of a registration and processing fee of $4,000 if the
Assignee is not a Lender prior to the execution of such supplement and $1,000
otherwise (which fee need not be paid in the case of any assignment by a Lender
to an affiliate of such Lender), the Administrative Agent shall (i) promptly
accept such Assignment and Acceptance and (ii) on the effective date determined
pursuant thereto record the information contained therein in the Register and
give notice of such acceptance and recordation to the Lenders and the Company.
On or prior to such effective date, the applicable Borrower at its own expense,
shall execute and deliver to the Administrative Agent (in exchange for any or
all of the Term Loan Notes or Revolving Credit Notes of the assigning Lender, if
any) new Term Loan Notes or Revolving Credit Notes, as the case may be, to the
order of such Assignee (if requested) in an amount equal to the Revolving Credit
Commitment or the Term Loans, as the case may be, assumed by it pursuant to such
Assignment and Acceptance and, if the assigning Lender has retained a Commitment
or any Term Loans hereunder, new Term Loan Notes or Revolving Credit Notes, as
the case may be, to the order of the assigning Lender in an amount equal to the
Commitment or such Term Loans, as the case may be, retained by it hereunder (if
requested). Such new Notes shall be dated the Closing Date and shall otherwise
be in the form of the Notes replaced thereby.
(e) The Administrative Agent, the Arranger, the Co-Arrangers, the
Syndication Agent, the Documentation Agent and the Lenders agree that they will
use reasonable efforts to protect the confidentiality of any confidential
information concerning the Company and its
110
Subsidiaries and Affiliates. Notwithstanding the foregoing, each Borrower
authorizes each Lender to disclose to any Participant or Assignee (each, a
"Transferee") and any prospective Transferee any and all information in such
----------
Lender's possession concerning the Company and its Subsidiaries and Affiliates
which has been delivered to such Lender by or on behalf of the Company pursuant
to this Agreement or which has been delivered to such Lender by or on behalf of
any Borrower in connection with such Lender's credit evaluation of the Company
and its Subsidiaries prior to becoming a party to this Agreement; provided that
--------
each Lender shall cause its respective prospective Transferees to agree in
writing to protect the confidentiality of any confidential information
concerning the Company and its Subsidiaries and Affiliates.
(f) If, pursuant to this subsection 9.6, any interest in this
Agreement or any Note is transferred to any Transferee which is organized under
the laws of any jurisdiction other than the United States or any State thereof,
the transferor Lender shall cause such Transferee, concurrently with the
effectiveness of such transfer either (1) in the case of a Transferee that is a
"bank" within the meaning of Section 881(c)(3)(A) of the Code, (i) to represent
to the transferor Lender (for the benefit of the transferor Lender, the
Administrative Agent and the Company) that under applicable law and treaties no
taxes will be required to be withheld by the Administrative Agent, any Borrower
or the transferor Lender with respect to any payments to be made to such
Transferee in respect of the Loans or L/C Participating Interests, (ii) to
furnish to the transferor Lender (and, in the case of any Transferee registered
in the Register, the Administrative Agent and the Company) either U.S. Internal
Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001 (wherein
such Transferee claims entitlement to complete exemption from U.S. federal
withholding tax on all interest payments hereunder) and (iii) to agree (for the
benefit of the transferor Lender, the Administrative Agent and the Borrowers) to
the extent permitted by then-current law to provide the transferor Lender (and,
in the case of any Transferee registered in the Register, the Administrative
Agent and the Company) a new Form 4224 or Form 1001 upon the expiration or
obsolescence of any previously delivered form and comparable statements in
accordance with applicable U.S. laws and regulations and amendments duly
executed and completed by such Transferee, and to comply from time to time with
all applicable U.S. laws and regulations with regard to such withholding tax
exemption or (2) in the case of any Transferee that is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Code, (i) to represent to the transferor
Lender (for the benefit of the transferor Lender, the Administrative Agent and
the Borrowers) that it is not a "bank" within the meaning of Section
881(c)(3)(A) of the Code, (ii) to furnish to the transferor Lender (and, in the
case of any Transferee registered in the Register, to the Company), with a copy
to the Administrative Agent, (A) a Subsection 3.11(d)(2) Certificate and (B) two
accurate and complete original signed copies of Internal Revenue Service Form W-
8, certifying to such Transferee's legal entitlement on the date of the
effectiveness of such transfer to an exemption from U.S. withholding tax under
the provisions of Section 881(c) of the Code with respect to all payments to be
made under this Agreement, and (iii) to agree (for the benefit of the transferor
Lender, the Administrative Agent and the Borrowers), to the extent legally
entitled to do so, upon reasonable request by the transferor Lender (or, in the
case of any Transferee registered in the Register, the Administrative Agent or
the Company), to provide to the transferor Lender, the Administrative Agent and
the Company such other forms as may be
111
required to establish the legal entitlement of such Transferee to an exemption
from withholding tax with respect to payments under this Agreement.
(g) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this subsection concerning assignments of Loans and Notes
relate only to absolute assignments and that such provisions do not prohibit
assignments creating security interests, including, without limitation, any
pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank
in accordance with applicable law.
9.7 Set-off. In addition to any rights and remedies of the Lenders
-------
provided by law, each Lender shall have the right, without prior notice to any
Borrower, any such notice being expressly waived by each Borrower to the extent
permitted by applicable law, upon the filing of a petition under any of the
provisions of the federal bankruptcy code or amendments thereto, by or against;
the making of an assignment for the benefit of creditors by; the application for
the appointment, or the appointment, of any receiver of, or of any substantial
portion of the property of; the issuance of any execution against any
substantial portion of the property of; the issuance of a subpoena or order, in
supplementary proceedings, against or with respect to any substantial portion of
the property of; or the issuance of a warrant of attachment against any
substantial portion of the property of; any Borrower to set off and apply
against any indebtedness, whether matured or unmatured, of any Borrower to such
Lender, any amount owing from such Lender to any Borrower, at or at any time
after, the happening of any of the above mentioned events, and as security for
such indebtedness, each Borrower hereby grants to each Lender a continuing
security interest in any and all deposits, accounts or moneys of such Borrower
then or thereafter maintained with such Lender, subject in each case to the
Agency and Intercreditor Agreement. The aforesaid right of set-off may be
exercised by such Lender against any Borrower or against any trustee in
bankruptcy, debtor in possession, assignee for the benefit of creditors,
receiver or execution, judgment or attachment creditor of any Borrower, or
against anyone else claiming through or against any Borrower or such trustee in
bankruptcy, debtor in possession, assignee for the benefit of creditors,
receiver, or execution, judgment or attachment creditor, notwithstanding the
fact that such right of set-off shall not have been exercised by such Lender
prior to the making, filing or issuance, or service upon such Lender of, or of
notice of, any such petition; assignment for the benefit of creditors;
appointment or application for the appointment of a receiver; or issuance of
execution, subpoena, order or warrant. Each Lender agrees promptly to notify the
Company and the Administrative Agent after any such set-off and application made
by such Lender, provided that the failure to give such notice shall not affect
--------
the validity of such set-off and application.
9.8 Counterparts. This Agreement may be executed by one or more of
------------
the parties to this Agreement on any number of separate counterparts and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Company and the Administrative Agent. This Agreement
shall become effective when the Administrative Agent shall have received copies
of this Agreement executed by the Borrowers, the Administrative Agent, the
Arranger, the Co-Arrangers, the Syndication Agent, the Documentation Agent and
the
112
Lenders, or, in the case of any Lender, shall have received telephonic
confirmation from such Lender stating that such Lender has executed counterparts
of this Agreement or the signature pages hereto and sent the same to the
Administrative Agent.
9.9 Governing Law; No Third Party Rights. THIS AGREEMENT AND THE
------------------------------------
NOTES AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE
NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW YORK. This Agreement is solely for the benefit of
the parties hereto and their respective successors and assigns, and, except as
set forth in subsection 9.6, no other Persons shall have any right, benefit,
priority or interest under, or because of the existence of, this Agreement.
9.10 Submission to Jurisdiction; Waivers. (a) Each party to this
-----------------------------------
Agreement hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal action
or proceeding relating to this Agreement or any of the other Credit
Documents, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the
State of New York, the courts of the United States for the Southern
District of New York, and appellate courts from any thereof;
(ii) consents that any such action or proceeding may be
brought in such courts, and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any such
court or that such action or proceeding was brought in an inconvenient
court and agrees not to plead or claim the same;
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such party at its address set forth in subsection 9.2 or at
such other address of which the Administrative Agent shall have been
notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction.
(B) EACH PARTY HERETO UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING REFERRED TO IN PARAGRAPH (A) ABOVE AND ANY
COUNTERCLAIM THEREIN.
9.11 Releases. The Administrative Agent and Lenders agree to
--------
cooperate with the Company and its Subsidiaries with respect to any sale or
other disposition permitted by subsection 7.5 and promptly take such action and
execute and deliver such instruments and documents necessary to release the
liens and security interests created by the Security Documents relating to any
of the assets or property affected by any such sale permitted by subsection 7.5,
113
including, without limitation, any Uniform Commercial Code amendment, release or
termination or partial release or termination statements. The Administrative
Agent is hereby irrevocably authorized by each of the Lenders to release any
Lien covering any property or assets of the Company or any of its Subsidiaries
that is the subject of a disposition which is permitted by this Agreement or
which has been consented to in accordance with subsection 9.1.
9.12 Interest. Each provision in this Agreement and each other credit
--------
Document is expressly limited so that in no event whatsoever shall the amount
paid, or otherwise agreed to be paid, by any Borrower for the use, forbearance
or detention of the money to be loaned under this Agreement or any other Credit
Document or otherwise (including any sums paid as required by any covenant or
obligation contained herein or in any other Credit Document which is for the
use, forbearance or detention of such money), exceed that amount of money which
would cause the effective rate of interest to exceed the highest lawful rate
permitted by applicable law (the "Highest Lawful Rate"), and all amounts owed
-------------------
under this Agreement and each other Credit Document shall be held to be subject
to reduction to the effect that such amounts so paid or agreed to be paid which
are for the use, forbearance or detention of money under this Agreement or such
other Credit Document shall in no event exceed that amount of money which would
cause the effective rate of interest to exceed the Highest Lawful Rate.
Notwithstanding any provision in this Agreement or any other Credit Document to
the contrary, if the maturity of the Loans or the obligations in respect of the
other Credit Documents are accelerated for any reason, or in the event of any
prepayment of all or any portion of the Loans or the obligations in respect of
the other Credit Documents by any Borrower or in any other event, earned
interest on the Loans and such other obligations of any Borrower may never
exceed the Highest Lawful Rate, and any unearned interest otherwise payable on
the Loans or the obligations in respect of the other Credit Documents that is in
excess of the Highest Lawful Rate shall be cancelled automatically as of the
date of such acceleration or prepayment or other such event and (if theretofore
paid) shall, at the option of the holder of the Loans or such other obligations,
be either refunded to such Borrower or credited on the principal of the Loans.
In determining whether or not the interest paid or payable, under any specific
contingency, exceeds the Highest Lawful Rate, the Borrowers and the Lenders
shall, to the maximum extent permitted by applicable law, amortize, prorate,
allocate and spread, in equal parts during the period of the actual term of this
Agreement, all interest at any time contracted for, charged, received or
reserved in connection with this Agreement.
9.13 Special Indemnification. Notwithstanding any provision in this
-----------------------
Agreement to the contrary, (a) each Lender, or Transferee of any Lender pursuant
to subsection 9.6(g) of this Agreement, shall indemnify each Borrower and the
Administrative Agent, and hold each of them harmless against any and all
payments, expenses or taxes which such Borrower or the Administrative Agent may
become subject to or obligated to pay if and to the extent that, (i) on the
Closing Date or the effective date of transfer, as the case may be, such Lender,
or such Transferee of a Lender pursuant to subsection 9.6(g) of this Agreement,
(A) makes the representation and covenants set forth in subsection 3.11(d)(2) of
this Agreement, or, in the case of a Transferee, pursuant to subsection
9.6(g)(2) of this Agreement and the Assignment and Acceptance, and (B) is not in
fact also qualified to make the representation and covenants set
114
forth in subsection 3.11(d)(1) of this Agreement or, in the case of a
Transferee, pursuant to subsection 9.6(g)(2) of this Agreement and the
Assignment and Acceptance, and (ii) as a result of any Change in Law or
compliance by such Lender, or Transferee, with any request or directive (whether
or not having the force of law) from any central bank or other Governmental
Authority the Company or the Administrative Agent is required to make any
additional payments on account of U.S. withholding taxes and amounts related
thereto with respect to any payments under this Agreement, any Note, or a
Eurodollar Loan, made prior to such Change in Law or request or directive, none
of which payments would have been required if such Lender, or Transferee, was
qualified on the Closing Date or the date of the transfer, as the case may be,
to make the representation and covenants set forth in subsection 3.11(d)(1) of
this Agreement or pursuant to subsection 9.6(g)(1) of this Agreement and the
Assignment and Acceptance, as the case may be, and (b) each Lender, or
Transferee, agrees that to the extent any amount payable by such Lender or
Transferee pursuant to this subsection 9.13 remains unpaid on any Interest
Payment Date or the date on which any prepayment is made, each Borrower shall
have the right to set-off against any payment due to such Lender or Transferee
on such date any amounts owing to such Borrower pursuant to this subsection
9.13.
9.14 Permitted Payments and Transactions. Notwithstanding any
-----------------------------------
provision to the contrary contained in this Agreement, the Company and its
Subsidiaries shall be permitted to pay fees and expenses pursuant to or in
respect of, the following agreements, and, in the case of clauses (a) and (d)
below, to engage in the following transactions: (a)(i) the Agreement for
Management and Advisory Services, between Investcorp International, Inc. ("III")
---
and AcquisitionCo dated as of August 11, 1998, (ii) the Loan Financing Advisory
Agreement between III and AcquisitionCo dated as of August 11, 1998, (iii) the
Equity Placement Fee Letter between Investcorp and AcquisitionCo dated August
11, 1998, (iv) the Standby Commitment Agreement between AcquisitionCo and
Invifin S.A. dated as of August 11, 1998 and (v) the Merger Agreement; (b)
agreements with any Person or Persons providing for the payment of customary
fees in connection with serving as a director of the Company or any Subsidiary
of the Company; (c) agreements providing for the payment of commercially
reasonable fees in connection with any permitted financing, refinancing, sale,
transfer, sale and leaseback or other permitted disposition of any assets of the
Company or its Subsidiaries; (d) the borrowing of any Indebtedness to the
extent, and upon the terms and conditions, the same is expressly permitted under
subsection 7.1; and (e) agreements providing for commercially reasonable fees in
connection with any permitted purchase or acquisition of stock or assets by the
Company or any of its Subsidiaries.
9.15 Harborside of Rhode Island. Notwithstanding any provision to the
--------------------------
contrary contained in this Agreement or any other Credit Document, to the extent
required by Department of Health of the State of Rhode Island or any successor
thereto, the obligations under the Credit Documents of Harborside Rhode Island
Limited Partnership, a Massachusetts limited partnership ("HRI"), and any other
---
Subsidiary substantially all the assets of which are located in the State of
Rhode Island shall not exceed, for each such Subsidiary, at any time an amount
equal to the product of 80% times the aggregate Acquisition Consideration paid
by the Company, HRI
115
or any other Subsidiary for Health Care Facilities owned or operated by such
Subsidiary and located in the State of Rhode Island.
116
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered in New York, New York by their proper and duly
authorized officers as of the day and year first above written.
HARBORSIDE HEALTHCARE CORPORATION
By: /s/ Stephen L. Guillard
------------------------
Title: President and Chief Executive Officer
BAY TREE NURSING CENTER CORP.
BELMONT NURSING CENTER CORP.
COUNTRYSIDE CARE CENTER CORP.
HARBORSIDE HEALTH I CORPORATION
HARBORSIDE TOLEDO CORP.
KHI CORP.
MARYLAND HARBORSIDE CORP.
NEW JERSEY HARBORSIDE CORP.
OAKHURST MANOR NURSING CENTER
CORP.
ORCHARD RIDGE NURSING CENTER CORP.
SAILORS, INC.
SUNSET POINT NURSING CENTER CORP.
WEST BAY NURSING CENTER CORP.
By: /s/ Stephen L. Guillard
------------------------
Title: President and Chief Executive Officer
117
HARBORSIDE ACQUISITION LIMITED
PARTNERSHIP IV
HARBORSIDE ACQUISITION LIMITED
PARTNERSHIP V
HARBORSIDE ACQUISITION LIMITED
PARTNERSHIP VI
HARBORSIDE ACQUISITION LIMITED
PARTNERSHIP VII
HARBORSIDE ACQUISITION LIMITED
PARTNERSHIP VIII
HARBORSIDE ACQUISITION LIMITED
PARTNERSHIP IX
HARBORSIDE ACQUISITION LIMITED
PARTNERSHIP X
HARBORSIDE ATLANTRIX LIMITED
PARTNERSHIP
HARBORSIDE CONNECTICUT LIMITED
PARTNERSHIP
HARBORSIDE HEALTHCARE BALTIMORE
LIMITED PARTNERSHIP
HARBORSIDE HEALTHCARE NETWORK
LIMITED PARTNERSHIP
HARBORSIDE MASSACHUSETTS LIMITED
PARTNERSHIP
HARBORSIDE NORTH TOLEDO LIMITED
PARTNERSHIP
HARBORSIDE OF CLEVELAND LIMITED
PARTNERSHIP
HARBORSIDE OF DAYTON LIMITED
PARTNERSHIP
HARBORSIDE OF FLORIDA LIMITED
PARTNERSHIP
HARBORSIDE OF OHIO LIMITED
PARTNERSHIP
HARBORSIDE REHABILITATION LIMITED
PARTNERSHIP
HARBORSIDE RHODE ISLAND LIMITED
PARTNERSHIP
RIVERSIDE RETIREMENT LIMITED
PARTNERSHIP
By: HARBORSIDE HEALTH I CORPORATION, as General
Partner
118
By: /s/ Stephen L. Guillard
-------------------------
Title: President and Chief Executive Officer
119
HARBORSIDE FUNDING LIMITED
PARTNERSHIP
By: HARBORSIDE HEALTHCARE LIMITED PARTNERSHIP, as
General Partner
By: KHI CORP., as General Partner
By: /s/ Stephen L. Guillard
-------------------------
Title: President and Chief Executive Officer
BRIDGEWATER ASSISTED LIVING LIMITED
PARTNERSHIP
By: NEW JERSEY HARBORSIDE CORP., as General
Partner
By: /s/ Stephen L. Guillard
-------------------------
Title: President and Chief Executive Officer
HARBORSIDE NEW HAMPSHIRE LIMITED
PARTNERSHIP
HARBORSIDE TOLEDO LIMITED
PARTNERSHIP
HHCI LIMITED PARTNERSHIP
By: HARBORSIDE TOLEDO CORP., as General Partner
By: /s/ Stephen L. Guillard
-------------------------
Title: President and Chief Executive Officer
120
HARBORSIDE HEALTHCARE ADVISORS
LIMITED PARTNERSHIP
HARBORSIDE HEALTHCARE LIMITED
PARTNERSHIP
HARBORSIDE HOMECARE LIMITED
PARTNERSHIP
By: KHI CORP., as General Partner
By: /s/ Stephen L. Guillard
-------------------------
Title: President and Chief Executive Officer
HARBORSIDE PROPERTIES TRUST I, a Massachusetts
business trust
By: /s/ William H. Stephan
------------------------
Name: William H. Stephan, in his capacity as
trustee and not individually
THE CHASE MANHATTAN BANK, as Administrative Agent,
the Issuing Lender, the Swing Line Lender and a
Lender
By: /s/ Robert Anastasio
----------------------
Title: Vice President
CHASE SECURITIES INC., as the Arranger
By: /s/ Robert Anastasio
------------------------
Title: Vice President
121
MORGAN STANLEY SENIOR FUNDING, INC., as a Co-
Arranger, the Syndication Agent and a Lender
By: /s/ Michael Hart
------------------
Title: Principal
BT ALEX. BROWN INCORPORATED, as
a Co-Arranger
By: /s/ Lorenz E. Zimmerman, Jr.
------------------------------
Title: Principal
BANKERS TRUST COMPANY, as
the Documentation Agent and a Lender
By: /s/ Mary Kay Coyle
--------------------
Title: Managing Director
ARAB BANKING CORPORATION (B.S.C.)
By: /s/ Louise Bilbro
-------------------
Title: Vice President
BANKBOSTON, N.A.
By: /s/ Gregory R.D. Clark
------------------------
Title: Managing Director
122
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY
By: /s/ Douglas J. Weir
---------------------
Title: Vice President
CITICORP U.S.A., INC.
By: /s/ R. Bruce Hall
-------------------
Title: Vice President
CREDITANSTALT CORPORATE FINANCE,
INC.
By: /s/ David E. Yewer
--------------------
Title: Vice President
By: /s/ Catherine K. MacDonald
----------------------------
Title: Vice President
DRESDNER BANK Ag, NEW YORK BRANCH
AND GRAND CAYMAN BRANCH
By: /s/ Andrew P. Nesi
--------------------
Title: Vice President
By: /s/ Felix K. Camacho
----------------------
Title: Assistant Treasurer
THE FIRST NATIONAL BANK OF MARYLAND
By: /s/ Michael B. Stueck
-----------------------
Title: Vice President
123
FIRST UNION NATIONAL BANK
By: /s/ Joseph H. Towell
----------------------
Title: Senior Vice President
FLEET NATIONAL BANK
By: /s/ Maryann S. Smith
----------------------
Title: Vice President
IMPERIAL BANK
By: /s/ Ray Vadalma
-----------------
Title: Senior Vice President
NATIONSBANK, N.A.
By: /s/ Kevin Wagley
------------------
Title: Vice President
PROVIDENT BANK OF MARYLAND
By: /s/ Jennifer D. Patton
------------------------
Title: Assistant Vice President
STAR BANK, NATIONAL ASSOCIATION
By: /s/ William J. Goodwin
------------------------
Title: Senior Vice President
124
THE CIT GROUP/BUSINESS CREDIT, INC.
By: /s/ David Kaplowitz
---------------------
Title: Vice President
Schedule I to the
Credit Agreement
----------------
BORROWERS
1
Schedule II to the
Credit Agreement
----------------
LENDERS, ADDRESSES AND COMMITMENTS
Revolving Credit
Commitment
----------
THE CHASE MANHATTAN BANK $ 20,000,000.00
85 Wells Avenue, Suite 200
Newton, MA 02159
Attn: Roger Stone
Telecopy: 617-928-3057
MORGAN STANLEY SENIOR FUNDING, INC. $ 20,000,000.00
1585 Broadway
New York, NY 10036
Attn: Michael A. Hart
Telecopy: 212-761-0587
BANKERS TRUST COMPANY $ 20,000,000.00
One Bankers Trust Plaza
130 Liberty Street
New York, NY 10006
Attn: Mary Kay Coyle
Telecopy: 212-250-1343
BANK OF TOKYO-MITSUBISHI TRUST COMPANY $ 15,750,000.00
1251 Avenue of the Americas, 12th Floor
New York, NY 10020
Attn: Doug Weir
Telecopy: 212-782-4935
CITICORP U.S.A., INC. $ 15,750,000.00
399 Park Avenue, 5th Floor
New York, NY 10043
Attn: Bruce Hall
Telecopy: 212-559-0292
FIRST UNION NATIONAL BANK $ 15,750,000.00
301 South College Street
Charlotte, NC 28288
Attn: J. Matt MacIver
Telecopy: 704-383-9144
2
Revolving Credit
Commitment
----------
NATIONSBANK, N.A. $ 15,750,000.00
One Nationsbank Plaza - 7th Floor
Nashville, TN 37239-2697
Attn: Kevin Wagley
Telecopy: 615-749-4640
ARAB BANKING CORPORATION (B.S.C.) $ 13,000,000.00
277 Park Avenue, 32nd Floor
New York, NY 10172-3299
Attn: Sandy Tilney
Telecopy: 212-583-0921
THE CIT GROUP/BUSINESS CREDIT, INC. $ 13,000,000.00
1211 Avenue of the Americas
New York, NY 10036
Attn: Victor Russo
Telecopy: 212-536-1297
BANKBOSTON, N.A. $ 13,000,000.00
100 Federal Street, 8th Floor
Boston, MA 02110
Attn: Gregory Clark
Telecopy: 617-434-4929
CREDITANSTALT CORPORATE FINANCE, INC. $ 13,000,000.00
2 Greenwich Plaza
Greenwich, CT 06830
Attn: David Yewer
Telecopy: 203-861-1475
DRESDNER BANK AG, NEW YORK BRANCH AND GRAND $ 13,000,000.00
CAYMAN BRANCH
75 Wall Street, 24th Floor
New York, NY 10005
Attn: Felix Camacho
Telecopy: 212-429-2129
THE FIRST NATIONAL BANK OF MARYLAND $ 13,000,000.00
25 South Charles Street
Baltimore, MD 21201
Attn: Bob Hauver
Telecopy: 410-244-4388
FLEET NATIONAL BANK $ 13,000,000.00
1 Federal Street, MAOF 0324
3
Revolving Credit
Commitment
----------
Boston, MA 02110
Attn: Paul R. Trefry
Telecopy: 617-346-4885
PROVIDENT BANK OF MARYLAND $ 13,000,000.00
114 East Lexington Street, 5th Floor
Baltimore, MD 21202
Attn: Tom Myers
Telecopy: 410-277-2793
STAR BANK, NATIONAL ASSOCIATION $ 13,000,000.00
425 Walnut Street, 8th Floor, Corporate Banking
Cincinnati, OH 45201-1038
Attn: Mark Whitson
Telecopy: 513-632-2068
IMPERIAL BANK $ 10,000,000.00
9920 South La Clenega Blvd., 14th Floor
Inglewood, CA 90301
Attn: Jamie Harney
Telecopy: 310-417-5997
TOTAL $250,000,000.00
Schedule III to the
Credit Agreement
----------------
PRICING AND COMMITMENT FEE GRID
Applicable Margin
Commitment
Fee
Eurodollar
Leverage Ratio ABR Loans Loans
- -----------------------------------------------------------------------------
Greater than or equal to 5.0 1.250% 2.250% 0.500%
- -----------------------------------------------------------------------------
Less than 5.0 to 1.0, but greater than 1.000% 2.000% 0.375%
or equal to 4.5 to 1.0
- -----------------------------------------------------------------------------
Less than 4.5 to 1.0, but greater than 0.750% 1.750% 0.375%
or equal to 4.0 to 1.0
- -----------------------------------------------------------------------------
Less than 4.0 to 1.0, but greater than 0.500% 1.500% 0.300%
or equal to 3.5 to 1.0
- -----------------------------------------------------------------------------
Less than 3.5 to 1.0, but greater than 0.250% 1.250% 0.250%
or equal to 3.0 to 1.0
Less than 3.0 to 1.0 0.000% 1.000% 0.250%
- -----------------------------------------------------------------------------