Exhibit 99.1
REVOLVING CREDIT AND GUARANTY AGREEMENT
Among
THE MULTICARE COMPANIES, INC.
a Debtor and a Debtor-in-Possession under Chapter 11 of the Bankruptcy Code
as Borrower
and
THE SUBSIDIARIES OF THE BORROWER NAMED HEREIN,
each a Debtor and a Debtor-in-Possession under
Chapter 11 of the Bankruptcy Code
as Guarantors
and
THE BANKS PARTY HERETO
as Lenders,
and
MELLON BANK, N.A. as Administrative Agent and Arranger,
FIRST UNION NATIONAL BANK, as Syndication Agent,
GOLDMAN SACHS CREDIT PARTNERS, L.P., as Documentation Agent
and
THE CHASE MANHATTAN BANK, as Co-Agent
================================================================================
Dated as of June 22, 2000
================================================================================
REVOLVING CREDIT AND GUARANTY AGREEMENT
TABLE OF CONTENTS
Page No.
SECTION 1. DEFINITIONS.....................................................................................3
SECTION 1.01 Defined Terms......................................................................3
SECTION 1.02 Terms Generally...................................................................21
SECTION 2. AMOUNT AND TERMS OF CREDIT.....................................................................22
SECTION 2.01 Commitment of the Banks...........................................................22
SECTION 2.02 Borrowing Base....................................................................22
SECTION 2.03 Letters of Credit.................................................................22
SECTION 2.04 Issuance..........................................................................24
SECTION 2.05 Nature of Letter of Credit Obligations Absolute...................................24
SECTION 2.06 Making of Loans...................................................................25
SECTION 2.07 Repayment of Loans; Evidence of Debt..............................................26
SECTION 2.08 Interest on Loans.................................................................27
SECTION 2.09 Default Interest..................................................................27
SECTION 2.10 Optional Termination or Reduction of Commitment...................................27
SECTION 2.11 Alternate Rate of Interest. .....................................................27
SECTION 2.12 Refinancing of Loans. ...........................................................28
SECTION 2.13 Mandatory Prepayment; Commitment Termination;
Cash Collateral......................................................29
SECTION 2.14 Optional Prepayment of Loans; Reimbursement
of Banks.............................................................30
SECTION 2.15 Reserve Requirements; Change in Circumstances. ...................................31
SECTION 2.16 Change in Legality. .............................................................32
SECTION 2.17 Pro Rata Treatment, etc...........................................................33
SECTION 2.18 Taxes.............................................................................33
SECTION 2.19 Certain Fees......................................................................36
SECTION 2.20 Commitment Fee....................................................................36
SECTION 2.21 Letter of Credit Fees.............................................................36
SECTION 2.22 Nature of Fees....................................................................36
SECTION 2.23 Priority and Liens................................................................36
SECTION 2.24 Right of Set-Off..................................................................38
SECTION 2.25 Security Interest in Letter of Credit Account.....................................38
SECTION 2.26 Payment of Obligations............................................................39
SECTION 2.27 No Discharge; Survival of Claims..................................................39
SECTION 2.28 Use of Cash Collateral............................................................39
Page No.
SECTION 3. REPRESENTATIONS AND WARRANTIES.................................................................39
SECTION 3.01 Organization and Authority........................................................39
SECTION 3.02 Due Execution.....................................................................40
SECTION 3.03 Statements Made...................................................................40
SECTION 3.04 Financial Statements..............................................................40
SECTION 3.05 Ownership.........................................................................41
SECTION 3.06 Liens.............................................................................41
SECTION 3.07 Compliance with Law...............................................................41
SECTION 3.08 Insurance.........................................................................42
SECTION 3.09 The Orders........................................................................42
SECTION 3.10 Use of Proceeds...................................................................42
SECTION 3.11 Litigation........................................................................42
SECTION 3.12 Health Care Permits...............................................................42
SECTION 4. CONDITIONS OF LENDING..........................................................................43
SECTION 4.01 Conditions Precedent to Initial Loans and Initial
Letters of Credit....................................................43
SECTION 4.02 Conditions Precedent to Each Loan and Each Letter
of Credit............................................................47
Page No.
SECTION 5. AFFIRMATIVE COVENANTS..........................................................................48
SECTION 5.01 Financial Statements, Reports, etc................................................48
SECTION 5.02 Corporate Existence...............................................................51
SECTION 5.03 Insurance.........................................................................51
SECTION 5.04 Obligations and Taxes.............................................................51
SECTION 5.05 Notice of Event of Default, Investigations,
Violations, etc......................................................51
SECTION 5.06 Borrowing Base Certificate........................................................52
SECTION 5.07 Maintenance of Concentration Accounts.............................................52
SECTION 5.08 Books and Records, Inspection and Collateral
Review Rights........................................................52
SECTION 5.09 Conduct of Business and Maintenance of Existence,
etc..................................................................53
SECTION 5.10 Health Care Permits and Approvals.................................................53
SECTION 5.11 Financial Advisor.................................................................54
SECTION 5.12 Annual Operating Budget; Financial Forecast.......................................54
SECTION 6. NEGATIVE COVENANTS.............................................................................54
SECTION 6.01 Liens.............................................................................54
SECTION 6.02 Merger, etc. .....................................................................55
SECTION 6.03 Indebtedness......................................................................55
SECTION 6.04 Capital Expenditures..............................................................55
SECTION 6.05 EBITDA............................................................................56
SECTION 6.06 Guarantees and Other Liabilities..................................................56
SECTION 6.07 Chapter 11 Claims.................................................................57
SECTION 6.08 Dividends; Capital Stock..........................................................57
SECTION 6.09 Transactions with Affiliates......................................................57
SECTION 6.10 Investments, Loans and Advances...................................................57
SECTION 6.11 Disposition of Assets.............................................................57
SECTION 6.12 Nature of Business................................................................58
SECTION 6.13 Health Care Permits and Approvals.................................................58
SECTION 6.14 Census............................................................................58
SECTION 6.15 Assumption of Provider Agreements.................................................58
SECTION 6.16 Modification of the Multicare Management Agreement................................58
SECTION 7. EVENTS OF DEFAULT..............................................................................59
SECTION 7.01 Events of Default.................................................................59
SECTION 8. THE AGENT......................................................................................62
SECTION 8.01 Administration by Agent...........................................................62
SECTION 8.02 Advances and Payments.............................................................63
SECTION 8.03 Sharing of Setoffs................................................................63
SECTION 8.04 Agreement of Required Banks.......................................................64
SECTION 8.05 Liability of Agent................................................................64
SECTION 8.06 Reimbursement and Indemnification.................................................64
SECTION 8.07 Rights of Agent...................................................................65
SECTION 8.08 Independent Banks.................................................................65
SECTION 8.09 Notice of Transfer................................................................65
SECTION 8.10 Successor Agent...................................................................65
SECTION 9. GUARANTY.......................................................................................66
SECTION 9.01 Guaranty .........................................................................66
SECTION 9.02 No Impairment of Guaranty.........................................................67
SECTION 9.03 Subrogation ......................................................................67
Page No.
SECTION 10. MISCELLANEOUS..................................................................................67
SECTION 10.01 Notices..........................................................................67
SECTION 10.02 Survival of Agreement, Representations and
Warranties, etc......................................................68
SECTION 10.03 Successors and Assigns...........................................................68
SECTION 10.04 Confidentiality..................................................................70
SECTION 10.05 Expenses.........................................................................71
SECTION 10.06 Indemnity........................................................................71
SECTION 10.07 CHOICE OF LAW....................................................................71
SECTION 10.08 No Waiver........................................................................72
SECTION 10.09 Extension of Maturity............................................................72
SECTION 10.10 Amendments, etc..................................................................72
SECTION 10.11 Severability.....................................................................73
SECTION 10.12 Headings.........................................................................73
SECTION 10.13 Execution in Counterparts........................................................73
SECTION 10.14 Prior Agreements.................................................................73
SECTION 10.15 Further Assurances...............................................................74
SECTION 10.16 WAIVER OF JURY TRIAL.............................................................74
Page No.
ANNEX A - Commitment Amounts
EXHIBIT A-1 - Form of Interim Order
EXHIBIT A-2 - Form of Final Order
EXHIBIT B - Form of Security and Pledge Agreement
EXHIBIT C - Form of Opinion of Counsel
EXHIBIT D - Form of Assignment and Acceptance
EXHIBIT E - Form of Borrowing Base Certificate
SCHEDULE 3.05 - Subsidiaries
SCHEDULE 3.07 - Compliance with Law
SCHEDULE 3.06 - Liens
SCHEDULE 3.11 - Litigation
SCHEDULE 3.12 - Health Care Permits
SCHEDULE 6.11 - Disposition of Assets
vi
REVOLVING CREDIT AND GUARANTY AGREEMENT
Dated as of June 22, 2000
REVOLVING CREDIT AND GUARANTY AGREEMENT, dated as of June 22, 2000,
among THE MULTICARE COMPANIES, INC., a Delaware corporation (the "Borrower"), a
debtor and debtor-in-possession in a case pending under Chapter 11 of the
Bankruptcy Code, and each of the direct or indirect subsidiaries of the Borrower
signatory hereto (each a "Guarantor" and collectively, the "Guarantors"), each
of which Guarantors referred to in this paragraph is a debtor and
debtor-in-possession in a case pending under Chapter 11 of the Bankruptcy Code
(the cases of the Borrower and the Guarantors, each a "Case" and collectively,
the "Cases"), MELLON BANK, N.A., a national banking association ("Mellon") as
Arranger, FIRST UNION NATIONAL BANK, as Syndication Agent, GOLDMAN SACHS CREDIT
PARTNERS L.P., as Documentation Agent, THE CHASE MANHATTAN BANK, as Co-Agent,
each of the other financial institutions from time to time party hereto (each of
the foregoing financial institutions, together with Mellon, the "Banks") and
MELLON BANK, N.A., a national banking association, as administrative agent (in
such capacity, the "Agent") for the Banks.
INTRODUCTORY STATEMENT
On June 22, 2000, the Borrower and the Guarantors filed voluntary
petitions with the Bankruptcy Court initiating the Cases and have continued in
the possession of their assets and in the management of their business pursuant
to Sections 1107 and 1108 of the Bankruptcy Code.
The Borrower has applied to the Banks for a revolving credit and letter
of credit facility in an aggregate principal amount not to exceed $50,000,000,
all of the Borrower's obligations under which are to be guaranteed by the
Guarantors.
The proceeds of the Loans will be used for working capital and other
general corporate purposes of the Borrower and the Guarantors consistent with
the Budget hereinafter referred to (including periodic updates thereof.
To provide guarantees and security for the repayment of the Loans, the
reimbursement of any draft drawn under a Letter of Credit and the payment of the
other obligations of the Borrower and the Guarantors hereunder and under the
other Loan Documents (including, without limitation, the Obligations of the
Borrower under Section 6.03(vii)), the Borrower and the Guarantors will provide
to the Agent and the Banks the following (each as more fully described herein):
(1) a guaranty from each of the Guarantors of the due and punctual
payment and performance of the obligations of the Borrower hereunder;
(2) an allowed administrative expense claim in each of the Cases
pursuant to Section 364(c)(1) of the Bankruptcy Code having priority over all
administrative expenses of the kind specified in Sections 503(b) and 507(b) of
the Bankruptcy Code;
(3) perfected first priority Liens, pursuant to Section 364(c)(2) of
the Bankruptcy Code, upon all unencumbered property of the Borrower and the
Guarantors (including, without limitation, all Accounts arising on and after the
Filing Date (except as otherwise provided in the Orders, it being understood
that any such Accounts on which the Agent and the Banks do not have such
perfected first priority Liens shall be excluded from the Borrowing Base) but
excluding assets subject to Permitted Adequate Protection Liens and other
Permitted Liens and also excluding bankruptcy causes of action (it being
understood that, notwithstanding such exclusion, the proceeds of such causes of
action shall be available for the repayment of the Obligations)) and on all cash
and cash equivalents in the Letter of Credit Account, provided that following
the Termination Date, amounts in the Letter of Credit Account shall not be
subject to the Carve-Out hereinafter referred to;
(4) perfected Liens, pursuant to Section 364(c)(3) of the Bankruptcy
Code, upon all property of the Borrower and the Guarantors (other than the
property referred to in paragraph (e) below that is subject to the existing
Liens that presently secure the Borrower's and Guarantors' pre-petition
Indebtedness under the Existing Agreements) that is subject to valid and
perfected Liens in existence on the Filing Date (including without limitation
Accounts in existence as of the Filing Date that are subject to valid and
perfected Liens in favor of the Real Estate Financiers) or to valid liens in
existence on the Filing Date that are perfected subsequent to the Filing Date as
permitted by Section 546(b) or 362(b)(18) of the Bankruptcy Code or to Permitted
Liens, junior to such valid and perfected Liens; and
(5) perfected priming Liens, pursuant to Section 364(d)(1) of the
Bankruptcy Code, upon all property of the Borrower and the Guarantors that is
subject to (A) the existing Liens that presently secure the Borrower's and
Guarantors' pre-petition Indebtedness under or in connection with the Existing
Credit Agreement and all instruments and agreements referred to therein
(including, without limitation, under Existing Interest Rate Hedging Agreements)
(but subject to any Liens to which the Liens being primed hereby are subject on
the Filing Date) and (B) any Liens granted after the Filing Date to provide
adequate protection in respect of the Existing Agreements, which first priority
priming Liens in favor of the Agent and the Banks shall be senior in all
respects to all of such existing Liens under or in connection with the Existing
Agreements, and to any Liens granted after the Filing Date to provide adequate
protection in respect thereof.
All of the claims and the Liens granted hereunder in the Cases to the
Agent and the Banks shall be subject to the Carve-Out to the extent provided in
Section 2.23.
Accordingly, the parties hereto hereby agree as follows:
2
SECTION 2. DEFINITIONS
SECTION 2.1 Defined Terms.
As used in this Agreement, the following terms shall have the meanings
specified below:
"Account" means with respect to any Account Debtor, any right to
payment for goods sold or leased or for services rendered, whether or not earned
by performance.
"Account Debtor" shall mean, with respect to any Account, the obligor
with respect to such Account.
"Additional Credit" shall have the meaning given such term in Section
4.02(d) hereof.
"Adjusted LIBOR Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an Interest Rate per annum determined by the
Agent by dividing (the resulting quotient to be rounded upward to the nearest
1/100 of 1%) (A) the rate of interest (which shall be the same for each day in
such Interest Period) determined in good faith by the Agent (which determination
shall be conclusive) to be the average of the rates per annum for deposits in
Dollars offered to major money center banks in the London interbank market at
approximately 11:00 a.m., London time, two Business Days prior to the first day
of the applicable Interest Period for delivery on the first day of such Interest
Period in similar amounts and maturities as the proposed Eurodollar Borrowing by
(B) a number equal to 1.0 minus the Statutory Reserve.
"Affiliate" shall mean, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. For purposes of this definition, a Person (a
"Controlled Person") shall be deemed to be "controlled by" another Person (a
"Controlling Person") if the Controlling Person possesses, directly or
indirectly, power to direct or cause the direction of the management and
policies of the Controlled Person whether by contract or otherwise.
"Agent" shall have the meaning set forth in the Introduction.
"Agreement" shall mean this Revolving Credit and Guaranty Agreement, as
the same may from time to time be further amended, modified or supplemented.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Bank and an Eligible Assignee, and accepted by the Agent,
substantially in the form of Exhibit D.
"Bankruptcy Code" shall mean The Bankruptcy Reform Act of 1978, as
heretofore and hereafter amended, and codified as 11 U.S.C. Section 101 et seq.
"Bankruptcy Court" shall mean the United States Bankruptcy Court for
the District of Delaware or any other court having jurisdiction over the Cases
from time to time.
"Banks" shall have the meaning set forth in the Introduction.
3
"Board" shall mean the Board of Governors of the Federal Reserve System
of the United States.
"Borrower" shall have the meaning set forth in the Introduction.
"Borrowing" shall mean the incurrence of Loans of a single Type made
from all the Banks on a single date and having, in the case of Eurodollar Loans,
a single Interest Period (with any Prime Rate Loan made pursuant to Section 2.16
being considered a part of the related Borrowing of Eurodollar Loans).
"Borrowing Base" means, an amount equal to the sum, without duplication
of (i) 90% of Eldercare Centers Eligible Accounts Receivable, (ii) 90% of
Rehabilitation Services Eligible Accounts Receivable, (iii) 90% of Other
Divisions Eligible Accounts Receivable and (iv) the Real Property Component;
provided that in no event shall the contribution to the Borrowing Base for any
Division be less than zero. The Borrowing Base shall be computed as of the end
of each fiscal month; provided that the Borrowing Base in effect at any time
shall be determined by reference to the most recent Borrowing Base Certificate
delivered to the Agent, absent any error in such Borrowing Base Certificate.
Borrowing Base component definitions may be fixed and revised from time to time
solely by the Agent in the exercise of its reasonable judgment, with any changes
in such definitions to be effective 10 days after delivery of notice thereof to
the Borrower.
"Borrowing Base Certificate" shall have the meaning set forth in
Section 5.06.
"Budget" shall have the meaning set forth in Section 4.01(i).
"Business Day" shall mean any day except a Saturday, Sunday or other
day on which banks in the States of Pennsylvania or New York are required or
permitted to close (and, for a Letter of Credit, other than a day on which the
Fronting Bank issuing such Letter of Credit is closed); provided, however, that
when used in connection with a Eurodollar Loan, the term "Business Day" shall
also exclude any day on which banks are not open for dealings in Dollar deposits
on the London Interbank Market.
"Capital Expenditures" shall mean, for any period, the
aggregate of all expenditures (whether (1) paid in cash and not theretofore
accrued subsequent to the date of this Agreement or (2) not previously paid in
cash but accrued as liabilities during such period and including that portion of
Capitalized Leases which is capitalized on the consolidated balance sheet of the
Borrower and the Guarantors), net of cash amounts received by the Borrower and
the Guarantors from other Persons during such period in reimbursement of Capital
Expenditures made by the Borrower and the Guarantors, excluding interest
capitalized during construction, by the Borrower and the Guarantors during such
period that, in conformity with GAAP, are required to be included in or
reflected by the property, plant, equipment or similar fixed asset accounts
reflected in the consolidated balance sheet of the Borrower and the Guarantors
(including equipment which is purchased simultaneously with the trade-in of
existing equipment owned by the Borrower or any of the Guarantors to the extent
of the gross amount of such purchase price less the book value of the equipment
being traded in at such time), but excluding expenditures made in connection
4
with the replacement or restoration of assets, to the extent reimbursed or
financed from insurance proceeds paid on account of the loss of or the damage to
the assets being replaced or restored, or from awards of compensation arising
from the taking by condemnation or eminent domain of such assets being replaced.
"Capital Stock" shall mean any and all shares, interests,
participations or 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.
"Capitalized Lease" shall mean, as applied to any Person, any lease of
property by such Person as lessee which would be capitalized on a balance sheet
of such Person prepared in accordance with GAAP.
"Carve-Out" shall have the meaning set forth in Section 2.23.
"Cases" shall mean the Chapter 11 Cases of the Borrower and each of the
Guarantors pending in the Bankruptcy Court.
"Change of Control" shall mean (i) the acquisition of ownership,
directly or indirectly, beneficially or of record, by any Person or group
(within the meaning of the Securities Exchange Act of 1934 and the rules of the
Securities and Exchange Commission thereunder as in effect on the date hereof),
of shares representing more than 30% of the aggregate ordinary voting power
represented by the issued and outstanding capital stock of the Borrower; or (ii)
the occupation of a majority of the seats (other than vacant seats) on the Board
of Directors of the Borrower, after the Filing Date, by Persons who were neither
(A) nominated by the Board of Directors of the Borrower nor (B) appointed by
directors so nominated.
"Closing Date" shall mean the date on which this Agreement has been
executed and the conditions precedent to the making of the initial Loans set
forth in Section 4.01 have been satisfied or waived, which date shall occur
promptly upon entry of the Interim Order, but not later than 15 days following
the Filing Date.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.
"Collateral" shall mean the Collateral under the Security and Pledge
Agreement.
"Commitment" shall mean, with respect to each Bank, the commitment of
each Bank hereunder in the amount set forth opposite its name on Annex A hereto
or as may subsequently be set forth in the Register from time to time, as the
same may be reduced from time to time pursuant to this Agreement.
"Commitment Fee" shall have the meaning set forth in Section 2.20.
5
"Commitment Letter" shall mean that certain Commitment Letter dated
June 21, 2000 between Mellon and the Borrower.
"Commitment Percentage" shall mean at any time, with respect to each
Bank, the percentage obtained by dividing its Commitment at such time by the
Total Commitment at such time.
"Consummation Date" shall mean the date of the substantial consummation
(as defined in Section 1101 of the Bankruptcy Code and which for purposes of
this Agreement shall be no later than the effective date) of a Reorganization
Plan of the Borrower or any of the Guarantors other than a De Minimis Guarantor
that is confirmed pursuant to an order of the Bankruptcy Court.
"Contractual Allowance" shall mean, at the time of any determination
thereof, the amount that is recorded on the Borrower's consolidated balance
sheet in accordance with GAAP (on a basis consistent with the historical
practices of the Borrower as of the date hereof) as representing the difference
between the gross amount of the Accounts of the Borrower and the Guarantors and
the amounts actually billed to customers based on contractual pricing
arrangements in effect with such customers (it being understood that the
Contractual Allowance shall not include a reserve for bad debts or other
reserves relating to collectability).
"Contractual Obligation" shall mean, as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
Property is bound.
"De Minimis Guarantor" shall mean, at the time of any determination
thereof, one or more Guarantors having assets with a book value in the aggregate
of less than $4,000,000;
"Division" shall mean, as of any date, a functional entity of the
Borrower such as "Eldercare Centers", "Rehabilitation Services" and all "Other
Divisions" in the aggregate.
"Dollars" and "$" shall mean lawful money of the United States of
America.
"EBITDA" shall mean, for any period, all as determined in accordance
with GAAP, the consolidated net income (or net loss) of the Borrower and the
Guarantors for such period, plus (a) the sum of (i) depreciation expense, (ii)
amortization expense, (iii) other non-cash expenses, (iv) provision for LIFO
adjustment for inventory valuation, (v) net total Federal, state and local
income tax expense, (vi) gross interest expense for such period less gross
interest income for such period, (vii) extraordinary losses, (viii) any
non-recurring charge or restructuring charge, (ix) the cumulative effect of any
change in accounting principles and (x) "Chapter 11 expenses" (or
"administrative costs reflecting Chapter 11 expenses") as shown on the
Borrower's consolidated statement of income for such period less (b)
extraordinary gains plus or minus (c) the amount of cash received or expended,
as the case may be, in such period in respect of any amount which, under clauses
(iii) and (viii) above, was taken into account in determining EBITDA for such or
any prior period.
6
"ElderTrust" shall mean ElderTrust, a Maryland real estate investment
trust.
"Eligible Accounts Receivable" means, at the time of any determination
thereof, each Account that satisfies the following criteria at the time of
creation and continues to meet the same at the time of such determination: such
Account (i) arose from a completed, outright and lawful sale of goods or from
the completed performance of patient-related services by the Borrower, any
Guarantor or any Division in the ordinary course of business of the Borrower,
any Guarantor or Division and in a manner consistent with current and historical
business practices and (ii) is not ineligible for inclusion in the calculation
of the Eligible Accounts Receivable pursuant to any of clauses (a) through (p)
below or otherwise reasonably deemed by the Agent in good faith to be ineligible
for inclusion in the calculation of Eligible Account Receivable as described
below.
Without limiting the foregoing, to qualify as an Eligible Account
Receivable, an Account shall indicate as sole payee and as sole remittance party
the Borrower, any Guarantor or any Division. In determining the amount to be so
included, the face amount of an Account or Accounts shall be reduced by, without
duplication, to the extent not reflected in such face amount, (a) the amount of
all accrued and actual returns, contractual adjustments, discounts, claims,
credits or credits pending, charges, price adjustments, freight or other
allowances (including any amount that the Borrower or a Division, as applicable,
may be obligated to rebate to a customer pursuant to the terms of any agreement
or understanding (written or oral)), (b) the aggregate amount of all limits and
deductions provided for in this definition and elsewhere in this Agreement, (c)
the aggregate amount of all cash received in respect of such Account but not yet
applied by the Borrower or the applicable Division to reduce the amount of such
Account; and (d) the aggregate amount, without duplication, of reconciling items
which reduce otherwise Eligible Accounts Receivable to the amounts shown on the
Borrower's consolidated financial statements. Unless otherwise approved from
time to time in writing by the Agent, no Account shall be an Eligible Accounts
Receivable if, without duplication:
(1) such Account represents charges for which a bill, claim, or other
similar form used for billing purposes has not been generated as of the date of
any determination thereof (unless such bill, claim or other similar form for
such Account has been generated prior to the delivery of the Borrowing Base
Certificate as to Eligible Accounts Receivable on such date); or
(2) such Account arises out of a cost report settlement or other
similar transaction; or
(3) such Account arises out of a sale made by the Borrower or a
Division to an Affiliate of the Borrower or a Division or an Affiliate of any
subsidiary of the Borrower or Division; or
(4) such Account (i) is unpaid more than 120 days with respect to an
invoice date aging; (ii) has been written off the accounting records of the
Borrower or a Division or has been otherwise designated on such accounting
records as uncollectible; or
7
(5) the Account Debtor with respect to such Account (i) is a creditor
of the Borrower, Guarantor or the respective Division, (ii) has or has asserted
a right of set off against the Borrower, Guarantor or its respective Division
and (iii) has disputed its liability (whether by chargeback or otherwise) or
made any claim with respect to the Account which has not been resolved, in each
case, without duplication, only to the extent of the amount owed to each Account
Debtor by the Borrower, Guarantor or respective Division, provided that the
total amount deducted from Eligible Accounts Receivable with respect to such
Account Debtor shall not exceed the aggregate amount of all Accounts owed by
such Account Debtor to the Borrower, Guarantor or respective Division; or
(6) the Account Debtor is insolvent or the subject of any bankruptcy
case or insolvency proceeding of any kind; or
(7) the Account is not payable in Dollars or the Account Debtor is
either not incorporated under the laws of the United States of America, any
state thereof or the District of Columbia or is located outside or has its
principal place of business or substantially all of its assets outside the
United States; or
(8) the sale to the Account Debtor is on a bill-and-hold, guaranteed
sale, extended terms or consignment or other similar basis; or
(9) such Account does not comply in all material respects with the
requirements of any applicable laws and regulations, whether federal, state or
local (including Health Care Laws such as the rules and regulations of
Governmental Authorities, JCAHO and other organizations exercising similar
quasi-governmental or accreditation authority over hospitals or other
facilities, the federal Consumer Credit Protection Act, the federal Truth in
Lending Act and Regulation Z of the Board); or,
(10) such Account represents an amount due directly from a patient or
the estate of a patient or amounts classified as attorney for collection on the
Borrower's books and records and not from a third party reimbursement agency,
(11) such Account represents an amount for which the third-party
reimbursement agency is not obligated to pay because it has not yet been
determined whether the patient meets all eligibility requirements.
(12) such Account (i) is not solely and lawfully owned by the Borrower,
Guarantor or a Division or the Borrower, Guarantor or Division does not have
absolute title to such Account, (ii) is not subject to a valid and perfected
first priority Lien in favor of the Agent for the benefit of the Banks, or (iii)
does not otherwise conform in all material respects to the representations and
warranties contained in the Loan Documents relating to Accounts.
(13) Such Account is a Medicare or other federal governmental authority
account, other than amounts owed from the Veterans Administration.
8
(14) as to all or any part of such Account, a check, promissory note,
draft, trade acceptance or other instrument for the payment of money has been
received, presented for payment and returned uncollected for any reason.
(15) such account is an Account of single Account Debtor other than a
Medicaid Account Debtor which, in the aggregate, exceed 15% of the total amount
of all gross Accounts for the applicable Division to the extent of such excess;
or
(16) Such Account is not carried on an accounts receivable sub-ledger
and aged in the normal course of business, including, without limitation certain
Medicare Part B accounts (referred to in the Borrowing Base Certificate as
"Unaged Accounts");
Notwithstanding the foregoing, "Eligible Accounts Receivable" shall not
include any individual Account that: was generated through the provision of
goods or services at any Health Care Facility that (x) has lost its
accreditation from JCAHO or (y) has lost its ability to provide reimbursed
services for federally or state funded programs.
"Eligible Assignee" shall mean (i) a Bank; (ii) an Affiliate of a Bank;
(iii) a commercial bank organized under the laws of the United States, or any
State thereof, and having a combined capital and surplus of at least
$1,000,000,000.00; (iv) a savings and loan association or savings bank organized
under the laws of the United States, or any State thereof, and having a combined
capital and surplus of at least $1,000,000,000.00; (v) a commercial bank
organized under the laws of any other country that is a member of the
Organization for Economic Cooperation and Development or has concluded special
lending arrangements with the International Monetary Fund associated with its
General Arrangements to Borrow or under the laws of a political subdivision of
any such country, and having a combined capital and surplus of at least
$1,000,000,000.00, so long as such bank is acting through a branch or agency
located in the United States; (vi) a finance company, insurance company or other
financial institution or fund (whether a corporation, partnership, trust or
other entity) that is engaged in making, purchasing or otherwise investing in
commercial loans in the ordinary course of its business and that has combined
capital and surplus or total assets of at least $500,000,000.00; (vii) any other
financial institution satisfactory to the Borrower and the Agent; and (viii)
with respect to any Bank that is a fund, any other fund with assets in excess of
$100,000,000.00 that invests in bank loans and is managed by the same investment
advisor as such Bank; provided, however, that neither the Borrower nor any
Affiliate of the Borrower shall qualify as an Eligible Assignee under this
definition.
"Eligible Eldercare Center" shall mean a geriatric care or assisted
living facility that (x) is owned by the Borrower or a Guarantor subject to no
Liens securing Indebtedness other than the Liens securing the obligations of the
Borrower and the Guarantors under or in connection with this Agreement and the
Existing Agreements, (y) has had a positive EBITDA (calculated for such facility
on a stand alone basis) for the six fiscal months ended on the last day of the
most recent month for which financial statements have been delivered pursuant to
Section 5.01(c) and (z) has not received from the state in which such facility
is licensed a citation on Form HCFA 2567 showing a deficiency classification of
J, K or L or any termination notice that is effective within 30 days of receipt.
9
"Environmental Lien" shall mean a Lien in favor of any Governmental
Authority for (i) any liability under Federal or state environmental laws or
regulations, or (ii) damages arising from or costs incurred by such Governmental
Authority in response to a release or threatened release of a hazardous or toxic
waste, substance or constituent, into the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) which is a member of a group of which the Borrower is a member and
which is under common control within the meaning of Section 414(b) or (c) of the
Code, and for the purpose of Section 302 of ERISA and/or Section 412, 4971, 4977
and/or each "applicable section" under Section 414(t)(2) of the Code, within the
meaning of Section 414(b), (c), (m) or (o) of the Code.
"Eurocurrency Liabilities" shall have the meaning assigned thereto in
Regulation D issued by the Board as in effect from time to time.
"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
Loans.
"Eurodollar Loan" shall mean any Loan bearing interest at a rate
determined by reference to the Adjusted LIBOR Rate in accordance with the
provisions of Section 2.
"Event of Default" shall have the meaning given such term in Section 7.
"Existing Agreements" shall mean the Existing Credit Agreement, and the
Existing Interest Rate Hedging Agreements and all of the other agreements
granting security interests and Liens in property and assets of the Borrower and
the Guarantors to the Existing Lenders.
"Existing Co-Agents" shall mean Citicorp USA, Inc., First Union
National Bank and Bank of America, N.A. (as successor to NationsBank, N.A. and
Bank of America N.T. & S.A.), in their role as co-agents under the Existing
Credit Agreement.
"Existing Collateral" shall mean the collateral granted to the
Pre-Petition Agent, for its own behalf and on behalf of the Existing Lenders
pursuant to the Existing Agreements.
"Existing Credit Agreement" shall mean that certain Credit Agreement
dated as of October 9, 1997 as heretofore amended, amended and restated,
restated, supplemented or otherwise modified from time to time by and among The
Multicare Companies, Inc. and certain of its subsidiaries, as borrowers, the
financial institutions from time to time party thereto as lenders (together with
any successors or assigns), Mellon Bank, N.A., as issuer of letters of credit,
Mellon Bank, N.A., as administrative agent, Citicorp USA, Inc., as syndication
agent, First Union National Bank, as documentation agent and Bank of America,
N.A. (as successor to NationsBank, N.A. and Bank of America N.T. & S.A.), as
syndication agent.
10
"Existing Interest Rate Hedging Agreement" shall mean a "Qualifying
Interest Rate Protection Agreement" as such term is defined in the Existing
Credit Agreement.
"Existing Lenders" shall mean, collectively, those certain lenders to
the Borrower and the Guarantors (to the extent party thereto) under any of the
Existing Agreements and the Swap Party under the Existing Interest Rate Hedging
Agreements, together with any successors or assigns thereof.
"Existing Security Agreement" shall mean that certain Security
Agreement dated as of August 20, 1999 by and among the Borrower and Mellon as
administrative agent for its own behalf and on behalf of the secured parties
thereto.
"Federal Funds Rate" for any day shall mean the rate per annum
determined by the Agent (which determination shall be conclusive) to be the rate
per annum announced by the Federal Reserve Bank of New York on such day as being
the weighted average of the rates on overnight Federal funds transactions
arranged by federal funds brokers on the previous trading day, or, if such
Federal Reserve Bank does not announce such rate on any day, the rate for the
last day on which such rate was announced.
"Fees" shall collectively mean the Commitment Fees, Letter of Credit
Fees and other fees referred to in Sections 2.19, 2.20 and 2.21.
"Filing Date" shall mean June 22, 2000.
"Final Order" shall have the meaning given such term in Section
4.02(d).
"Financial Officer" shall mean the Chief Financial Officer, Controller
or Treasurer of the Borrower (or, in the case of a Guarantor, any Vice President
in charge of financial matters).
"Fronting Bank" shall mean Mellon or such other Bank (which other Bank
shall be reasonably satisfactory to the Borrower) as may agree with Mellon to
act in such capacity.
"GAAP" shall mean generally accepted accounting principles applied in
accordance with Section 1.02.
"Genesis" shall mean Genesis Health Ventures, Inc., a Pennsylvania
corporation, and its direct and indirect subsidiaries (excluding Multicare).
"Governmental Authority" shall mean any Federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality or any court, in each case whether of the United States or
foreign.
"Guarantor" shall have the meaning set forth in the Introduction.
11
"Health Care Facility" shall mean any ownership or leasehold interest
in a facility which provides any level of geriatric care, home care, medical
care (including, without limitation, sub-acute care), assisted living or
rehabilitative services, whether licensed as a skilled nursing facility,
intermediate care facility, personal care facility, out-patient clinic or
hospital (including, without limitation, any long-term acute care hospital) or
any products or services reasonably related thereto.
"Health Care Law" shall mean any and all applicable current and future
laws, rules, regulations, codes, ordinances, orders, decrees, judgments,
injunctions or binding agreements issued, promulgated or entered into by the
Food and Drug Administration, the Health Care Financing Administration, the
Department of Health and Human Services ("HHS"), the Office of Inspector General
of HHS, the Drug Enforcement Administration or any other Governmental Authority,
including any state and/or local professional licensing laws, certificate of
need laws and state reimbursement laws, in each case relating in any way to the
conduct of the business of the Borrower or any Subsidiary and the provision of
health care services generally.
"Health Care Permit" shall mean 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
of the Borrower or any of its Subsidiaries.
"Indebtedness" shall mean, at any time and with respect to any Person,
and without duplication (i) all indebtedness of such Person for borrowed money,
(ii) all indebtedness of such Person for the deferred purchase price of property
or services (other than property, including inventory, and services purchased,
and expense accruals and deferred compensation items arising, in the ordinary
course of business), (iii) all obligations of such Person evidenced by notes,
bonds, debentures or other similar instruments (other than performance, surety
and appeal bonds arising in the ordinary course of business), (iv) all
indebtedness of such Person created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such Person
(even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (v) all obligations of such Person under leases which have been or
should be, in accordance with GAAP, recorded as capital leases, to the extent
required to be so recorded, (vi) all reimbursement, payment or similar
obligations of such Person, contingent or otherwise, under acceptance, letter of
credit or similar facilities and all obligations of such Person in respect of
(x) currency swap agreements, currency future or option contracts and other
similar agreements designed to hedge against fluctuations in foreign interest
rates and (y) interest rate swap, cap or collar agreements and interest rate
future or option contracts; (vii) all Indebtedness referred to in clauses (i)
through (vi) above guaranteed directly or indirectly by such Person, or in
effect guaranteed directly or indirectly by such Person through an agreement (A)
to pay or purchase such Indebtedness or to advance or supply funds for the
payment or purchase of such Indebtedness, (B) to purchase, sell or lease (as
lessee or lessor) property, or to purchase or sell services, primarily for the
purpose of enabling the debtor to make payment of such Indebtedness or to assure
the holder of such Indebtedness against loss in respect of such Indebtedness,
(C) to supply funds to or in any other manner invest in the debtor (including
any agreement to pay for property or services irrespective of whether such
12
property is received or such services are rendered) or (D) otherwise to assure a
creditor against loss in respect of such Indebtedness, and (viii) all
Indebtedness referred to in clauses (i) through (vii) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property (including, without
limitation, accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness.
"Insufficiency" shall mean, with respect to any Plan, the amount, if
any, of its unfunded benefit liabilities within the meaning of Section
4001(a)(18) of ERISA.
"Interest Payment Date" shall mean (i) as to any Eurodollar Loan, the
last day of each consecutive 30 day period running from the commencement of the
applicable Interest Period and (ii) as to all Prime Rate Loans, the last
calendar day of each month and the date on which any Prime Rate Loans are
refinanced with Eurodollar Loans pursuant to Section 2.12.
"Interest Period" shall mean, as to any Borrowing of Eurodollar Loans,
(a) initially, the period commencing on the date of such Borrowing (including as
a result of a refinancing of Prime Rate Loans) and ending one, two or three
months thereafter as the Borrower may elect pursuant to Section 2.06(b), each
period commencing on the day after the last day of the preceding Interest Period
and ending one or three months thereafter, as the Borrower may elect pursuant to
Section 2.06(b) or 2.12, provided, however, if any such Interest Period would
otherwise end on a day which is not a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless the result of such
extension would be to carry such Interest Period into another calendar month in
which event such Interest Period shall end on the immediately preceding Business
Day and provided, further, if any such Interest Period begins on a day for which
there is no numerically corresponding day in the calendar month at the end of
such Interest Period (as may be the case with an Interest Period commencing at
the end of a calendar month) the Interest Period shall end on the last Business
Day of the relevant calendar month.
"Interim Order" shall have the meaning given such term in Section
4.02(d).
"Investments" shall have the meaning given such term in Section 6.10.
"JCAHO" shall mean the Joint Commission on Accreditation of Healthcare
Organizations, or any similar successor organization thereto.
"Letter of Credit" shall mean any irrevocable letter of credit issued
pursuant to Section 2.03, which letter of credit shall be (i) a standby letter
of credit, (ii) issued for purposes that are consistent with the ordinary course
of business of the Borrower or any Guarantor, or for such other purposes as are
reasonably acceptable to the Agent (including, without limitation, the
replacement at the request of the Borrower of any expiring standby letter of
credit issued under the Existing Credit Agreement), (iii) denominated in Dollars
and (iv) otherwise in such form as may be reasonably approved from time to time
by the Agent and the applicable Fronting Bank.
13
"Letter of Credit Account" shall mean the account established by the
Borrower under the sole and exclusive control of the Agent maintained at the
office of the Agent at One Mellon Bank Center, Pittsburgh, Pennsylvania, 15258
designated as the "The Multicare Companies, Inc. Letter of Credit Account" that
shall be used solely for the purposes set forth in Sections 2.03(b) and 2.13.
"Letter of Credit Fees" shall mean the fees payable in respect of
Letters of Credit pursuant to Section 2.21.
"Letter of Credit Outstandings" shall mean, at any time, the sum of (i)
the aggregate undrawn stated amount of all Letters of Credit then outstanding
plus (ii) all amounts theretofore drawn under Letters of Credit and not then
reimbursed.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind whatsoever (including any conditional sale or other
title retention agreement or any lease in the nature thereof).
"Loan" shall have the meaning given such term in Section 2.01.
"Loan Documents" shall mean this Agreement, the Letters of Credit, the
Security and Pledge Agreement and any other instrument or agreement executed and
delivered in connection herewith.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, assets, property, condition (financial or otherwise) or prospects
of the Borrower and the Guarantors taken as a whole or (b) the validity or
enforceability of this Agreement or any of the other Loan Documents or the
rights or remedies of the Agent or the Banks hereunder or thereunder; provided,
that a Material Adverse Effect shall not be deemed to have occurred solely on
account of the commencement of the Cases or on account of facts and
circumstances disclosed in writing to the Banks prior to the Filing Date.
"Maturity Date" shall mean December 21, 2001.
"Mellon" means Mellon Bank, N.A., a national banking association, and
any successor or assign thereof.
"Medicaid Account Debtor" shall mean any Account Debtor which is (i)
any state or the District of Columbia acting pursuant to a health plan adopted
pursuant to Title XIX of the Social Security Act or (ii) any agent, carrier,
administrator or intermediary for any of the foregoing.
"Multicare" shall mean Genesis ElderCare Corp. and The Multicare
Companies, Inc. and their respective subsidiaries.
14
"Multicare Management Agreement" shall mean that certain Management
Agreement dated as of October 9, 1997 by and between Genesis ElderCare Network
Services, Inc. and Multicare.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, which is maintained or contributed to by (or to
which there is an obligation to contribute of) the Borrower or an ERISA
Affiliate, and each such plan for the five-year period immediately following the
latest date on which the Borrower or an ERISA Affiliate maintained, contributed
to or had an obligation to contribute to such plan to which the Borrower or any
ERISA Affiliate is making or accruing an obligation to make contributions, or
has within any of the preceding five plan years made or accrued an obligation to
make contributions.
"Multiple Employer Plan" shall mean a Single Employer Plan, which (i)
is maintained for employees of the Borrower or an ERISA Affiliate and at least
one Person other than the Borrower and its ERISA Affiliates or (ii) was so
maintained and in respect of which the Borrower or an ERISA Affiliate could have
liability under Section 4064 or 4069 of ERISA in the event such Plan has been or
were to be terminated.
"Net Proceeds" shall mean, in respect of any sale of assets, the
proceeds of such sale after the payment of or reservation for (i) expenses that
are directly related to (or the need for which arises as a result of) the
transaction of sale, including, but not limited to, related severance costs,
taxes payable, brokerage commissions, professional expenses, escrow fees, title
insurance fees, and other similar costs that are directly related to the sale,
(ii) until such time as the disposition thereof has been determined, escrows or
reserves for purchase price adjustments and similar items (with any excess to
which the seller is entitled becoming part of "Net Proceeds") and (iii) the
amount secured by valid and perfected Liens, if any, that are senior to the
Liens on such assets held by the Agent on behalf of the Banks.
"Obligations" shall mean (a) the due and punctual payment of principal
of and interest on the Loans and the reimbursement of all amounts drawn under
Letters of Credit, and (b) the due and punctual payment of the Fees and all
other present and future, fixed or contingent, monetary obligations of the
Borrower and the Guarantors to the Banks and the Agent under the Loan Documents.
"Orders" shall mean the Interim Order and the Final Order.
"Original Required Banks" shall mean the Banks party to this Agreement
on the date hereof having Commitments representing in excess of 50% of the Total
Commitments.
"Other Taxes" shall have the meaning given such term in Section 2.18.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor agency or entity performing substantially the same functions.
"Permitted Adequate Protection Lien" shall mean (i) a Lien in favor of
any of the Real Estate Financiers in the post-petition Accounts or other rights
15
to payment relating to a particular Health Care Facility, as approved by the
Bankruptcy Court after notice to the Agent, for the purpose of providing such
holder of Indebtedness with "adequate protection" (as that term is used in
Bankruptcy Code sections 361 through 364) to the extent the ultimate
enforceability of which is dependent upon a determination that (x) such holder
as of the Filing Date held valid, enforceable and non-avoidable Liens in the
prepetition, Accounts, inventory or other rights to payment relating to such
Health Care Facility or inventory, and (y) such holder's interests in such
prepetition Accounts, inventory or other rights to payment are impaired or
diminished as a result of the use, sale or lease of such Accounts, inventory or
other rights to payment by the Borrower or Guarantors during the Cases; or (ii)
other Liens for adequate protection approved by Required Lenders and by the
Bankruptcy Court.
"Permitted Investments" shall mean:
(a) direct obligations of, or obligations the principal of and interest
on which are unconditionally guaranteed by, the United States of America (or by
any agency thereof to the extent such obligations are backed by the full faith
and credit of the United States of America), in each case maturing within twelve
months from the date of acquisition thereof;
(b) without limiting the provisions of paragraph (d) below, investments
in commercial paper maturing within six months from the date of acquisition
thereof and having, at such date of acquisition, a rating of at least "A-2" or
the equivalent thereof from Standard & Poor's or of at least "P-2" or the
equivalent thereof from Moody's Investors Service, Inc.;
(c) investments in certificates of deposit, banker's acceptances and
time deposits (including Eurodollar time deposits) maturing within six months
from the date of acquisition thereof issued or guaranteed by or placed with (i)
any domestic office of the Agent or the bank with whom the Borrower and the
Guarantors maintain their cash management system, provided, that if such bank is
not a Bank hereunder, such bank shall have entered into an agreement with the
Agent pursuant to which such bank shall have waived all rights of setoff and
confirmed that such bank does not have, nor shall it claim, a security interest
therein, except to the extent of chargebacks for returned items and for fees
charged for maintaining such cash management system, or (ii) any domestic office
of any other commercial bank of recognized standing organized under the laws of
the United States of America or any State thereof that has a combined capital
and surplus and undivided profits of not less than $250,000,000 and is the
principal banking Subsidiary of a bank holding company having a long-term
unsecured debt rating of at least "A" or the equivalent thereof from Standard &
Poor's or at least "A-2" or the equivalent thereof from Moody's Investors
Service, Inc.;
(d) investments in commercial paper maturing within six months from the
date of acquisition thereof and issued by (i) the holding company of the Agent
or (ii) the holding company of any other commercial bank of recognized standing
organized under the laws of the United States of America or any State thereof,
that has (A) a combined capital and surplus in excess of $250,000,000 and (B)
commercial paper rated at least "A-2" or the equivalent thereof from Standard &
Poor's or of at least "P-2" or the equivalent thereof from Moody's Investors
Service, Inc.;
16
(e) investments in repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clause (a) above
entered into with any office of a bank or trust company meeting the
qualifications specified in clause (c) above;
(f) investments in money market funds substantially all the assets of
which are comprised of securities of the types described in clauses (a) through
(e) above;
(g) to the extent owned on the Filing Date, investments in the capital
stock of any direct or indirect Subsidiary of the Borrower;
(h) investments in joint ventures held by Subsidiaries on the Filing
Date and additional investments in such joint ventures made after the Filing
Date by such Subsidiaries in an aggregate outstanding amount not in excess of
$2,000,000 subject to receipt by the Agent of a Schedule reasonably satisfactory
to the Agent reflecting such investment; and
(i) advances and loans by the Borrower and certain Guarantors to
managed properties outstanding on the Filing Date.
"Permitted Liens" shall mean (i) Liens imposed by law (other than
Environmental Liens) for unpaid pre-petition taxes and taxes, assessments or
charges of any Governmental Authority for claims not yet due or which are being
contested in good faith by appropriate proceedings or payment of which have been
stayed and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with GAAP; (ii) Liens of landlords
and Liens of carriers, warehousemen, mechanics, materialmen and other Liens
(other than Environmental Liens and) in existence on the Filing Date or
thereafter imposed by law and created in the ordinary course of business; (iii)
Liens (other than any Lien imposed under ERISA) incurred or deposits made in the
ordinary course of business (including, without limitation, surety bonds and
appeal bonds) in connection with workers' compensation, unemployment insurance
and other types of social security benefits or to secure the performance of
tenders, bids, leases, contracts (other than for the repayment of Indebtedness),
statutory obligations and other similar obligations or arising as a result of
progress payments under government contracts; (iv) easements (including, without
limitation, reciprocal easement agreements and utility agreements),
rights-of-way, covenants, consents, reservations, encroachments, variations and
zoning and other restrictions, charges or encumbrances (whether or not recorded)
and interest of ground lessors, which do not interfere materially with the
ordinary conduct of the business of the Borrower or any Guarantor, as the case
may be, and which do not materially detract from the value of the property to
which they attach or materially impair the use thereof to the Borrower or any
Guarantor, as the case may be; (v) purchase money Liens (including Capitalized
Leases) upon or in any property acquired or held in the ordinary course of
business to secure the purchase price of such property or to secure Indebtedness
permitted by Sections 6.03(iii) and 6.03(iv) solely for the purpose of financing
the acquisition of such property; (vi) Liens consisting of rights of patients in
respect of patient trust accounts held pursuant to the Omnibus Budget and
Reconciliation Act of 1987, 28 U.S.C., ss.483.10(C) and the regulations of the
Health Care Financing Administration; (vii) Liens on unearned premium refunds
and policy proceeds incurred in the ordinary course of business in connection
17
with the purchase of casualty, health, and other types of insurance; (viii)
Permitted Adequate Protection Liens; (ix) other Liens securing other obligations
of the Borrower and the Guarantors in an amount not to exceed $500,000 in the
aggregate and (x) extensions, renewals or replacements of any Lien referred to
in paragraphs (i) through (ix) above, provided that the principal amount of the
obligation secured thereby is not increased and that any such extension, renewal
or replacement is limited to the property originally encumbered thereby.
"Person" shall mean any natural person, corporation, division of a
corporation, partnership, trust, joint venture, association, company, estate,
unincorporated organization or government or any agency or political subdivision
thereof.
"Plan" shall mean a Single Employer Plan or a Multiemployer Plan.
"Prepayment Date" shall mean the first Business Day that is at least
forty-five (45) days after the entry of the Interim Order by the Bankruptcy
Court or such later date as is satisfactory to the Agent and the Original
Required Banks if the Final Order has not been entered by the Bankruptcy Court
prior to the expiration of such forty-five (45) day period.
"Pre-Petition Agent" shall mean Mellon Bank, N.A., as administrative
agent under the Existing Credit Agreement (together with any successor thereto).
"Pre-Petition Payment" shall mean a payment (by way of adequate
protection or otherwise) of principal or interest or otherwise on account of any
pre-petition Indebtedness or trade payables or other pre-petition claims against
the Borrower or any Guarantor.
"Prime Rate" shall mean the greater of (A) the interest rate per annum
announced from time to time by the Agent as its prime rate or (B) the Federal
Funds Rate plus .50%. The Prime Rate may be greater or less than other interest
rates charged by the Agent to other borrowers.
"Prime Rate Loan" shall mean any Loan bearing interest at a rate
determined by reference to the Prime Rate in accordance with the provisions of
Section 2.
"Property" shall mean any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible, including, without limitation, Capital Stock.
"Real Estate Financiers" shall mean collectively, German American
Capital Corporation (as successor in interest to ElderTrust), and other real
estate lenders who as of the Filing Date hold valid, enforceable and
non-avoidable Liens in the prepetition inventory, Accounts or other rights to
payment relating to a Health Care Facility, which liens are disclosed in
Schedule 3.06.
"Real Property Component" shall mean, as of the date of any
determination thereof, an amount that is equal to the lowest of (x) the product
of $25,000 multiplied by the number of beds contained in Eligible Eldercare
Centers, (y) $45,000,000 and (z) the sum of (i) the Total Commitment less (ii)
18
the product of Eligible Accounts Receivable multiplied by the applicable advance
rates set forth in the definition of the term "Borrowing Base" for different
categories of Eligible Accounts Receivable.
"Register" shall have the meaning set forth in Section 10.03(d).
"Reorganization Plan" shall mean a plan of reorganization in any of the
Cases (other than the Case of a De Minimis Guarantor).
"Required Banks" shall mean, at any time, Banks holding Loans
representing in excess of 50% of the aggregate principal amount of such Loans
outstanding or, if no such Loans are outstanding, Banks having Commitments
representing in excess of 50% of the Total Commitment.
"Requirement of Law" shall mean, as to any Person, the Certificate or
Articles of Incorporation and By-Laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation 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.
"Responsible Officer" shall mean, with respect to the Borrower or any
Guarantor, the chief executive officer, president, chief financial officer,
treasurer or vice president in charge of financial matters thereof, but in any
event, with respect to financial matters, the treasurer, controller or vice
president in charge of financial matters thereof.
"Security and Pledge Agreement" shall have the meaning set forth in
Section 4.01(c).
"Single Employer Plan" shall mean a single employer plan, as defined in
Section 4001(a)(15) of ERISA, which is maintained or contributed to by (or to
which there is an obligation to contribute of) the Borrower or an ERISA
Affiliate, and each such plan for the five-year period immediately following the
latest date on which the Borrower or an ERISA Affiliate maintained, contributed
to or had an obligation to contribute to such plan.
"Social Security Act" shall mean the Social Security Act as codified at
42 U.S.C.ss.1395 et. seq.
"Statutory Reserve" shall mean for any day, the percentage (expressed
as a decimal, rounded upward to the nearest 1/100 of 1%), as determined in good
faith by the Agent (which determination shall be conclusive), which is in effect
on such day as prescribed by the Board of Governors of the Federal Reserve
System representing the maximum reserve requirement (including supplemental,
marginal and emergency reserve requirements) with respect to Eurocurrency
funding (currently referred to as "Eurocurrency Liabilities") of a member bank
in such Federal Reserve System. The Adjusted LIBOR Rate shall be adjusted
automatically as of the effective date of each change in the Statutory Reserve.
19
"Subsidiary" shall mean, with respect to any Person (herein referred to
as the "parent"), any corporation, association or other business entity (whether
now existing or hereafter organized) of which at least a majority of the
securities or other ownership interests having ordinary voting power for the
election of directors is, at the time as of which any determination is being
made, owned or controlled by the parent or one or more subsidiaries of the
parent or by the parent and one or more subsidiaries of the parent (excluding
Genesis unless expressly set forth to the contrary).
"Super-majority Banks" shall have the meaning given such term in
Section 10.10(b).
"Superpriority Claim" shall mean a claim against the Borrower and any
Guarantor in any of the Cases which is an administrative expense claim having
priority over any or all administrative expenses of the kind specified in
Sections 503(b) or 507(b) of the Bankruptcy Code.
"Swap Party" shall have the meaning as set forth in the Existing
Security Agreement.
"Taxes" shall have the meaning given such term in Section 2.18.
"Termination Date" shall mean the earliest to occur of (i) the
Prepayment Date, (ii) the Maturity Date, (iii) the Consummation Date and (iv)
the acceleration of the Loans and the termination of the Total Commitment in
accordance with the terms hereof.
"Termination Event" shall mean (i) a "reportable event", as such term
is described in Section 4043 of ERISA and the regulations issued thereunder
(other than a "reportable event" other than those events as to which the 30-day
notice period is waived under subsection .22, .23, .25, .27 or .28 of PBGC
Regulation Section 4043 or an event described in Section 4068 of ERISA, or (ii)
the withdrawal of the Borrower or any ERISA Affiliate from a Multiple Employer
Plan during a plan year in which it was a "substantial employer", as such term
is defined in Section 4001(c) of ERISA, or the incurrence of liability by the
Borrower or any ERISA Affiliate under Section 4064 of ERISA upon the termination
of a Multiple Employer Plan, or (iii) providing notice of intent to terminate a
Plan pursuant to Section 4041(c) of ERISA or the treatment of a Plan amendment
as a termination under Section 4041 of ERISA, or (iv) the institution of
proceedings to terminate a Plan by the PBGC under Section 4042 of ERISA, or (v)
any other event or condition which would reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan, or the imposition of any liability under
Title IV of ERISA (but excluding for the payment of premiums to the PBGC (other
than the commencement of the Cases, or the failure to have made any contribution
accrued as of the Filing Date but not paid, or any other facts and circumstances
disclosed in writing to the Banks at least 10 days prior to the Filing Date)).
"Total Commitment" shall mean, at any time, the sum of the Commitments
at such time.
20
"Transferee" shall have the meaning given such term in Section 2.18.
"Type", when used in respect of any Loan or Borrowing, shall refer to
the rate of interest by reference to which interest on such Loan or on the Loans
comprising such Borrowing is determined. For purposes hereof, "Rate" shall mean
the Adjusted LIBOR Rate and the Prime Rate.
"Unused Total Commitment" shall mean, at any time, (i) the Total
Commitment less (ii) the sum of (x) the aggregate outstanding principal amount
of all Loans and (y) the aggregate Letter of Credit Outstandings.
"Withdrawal Liability" shall have the meaning given such term under
Part I of Subtitle E of Title IV of ERISA.
SECTION 2.2 Terms Generally. The definitions in Section 1.01 shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. All references herein to Sections, Exhibits and
Schedules shall be deemed references to Sections of, and Exhibits and Schedules
to, this Agreement unless the context shall otherwise require. Except as
otherwise expressly provided herein, all terms of an accounting or financial
nature shall be construed in accordance with GAAP, as in effect from time to
time; provided, however, that for purposes of determining compliance with any
covenant set forth in Section 6, such terms shall be construed in accordance
with GAAP as in effect on the date of this Agreement applied on a basis
consistent with the application used in the Borrower's audited financial
statements referred to in Section 3.04.
SECTION 3. AMOUNT AND TERMS OF CREDIT.
SECTION 3.1 Commitment of the Banks.
(1) Each Bank severally and not jointly with the other Banks agrees,
upon the terms and subject to the conditions herein set forth (including,
without limitation, the provisions of Section 2.28), to make revolving credit
loans (each a "Loan" and collectively, the "Loans") to the Borrower at any time
and from time to time during the period commencing on the date hereof and ending
on the Termination Date (or the earlier date of termination of the Total
Commitment) in an aggregate principal amount not to exceed, when added to such
Bank's Commitment Percentage of the then aggregate Letter of Credit
Outstandings, the Commitment of such Bank, which Loans may be repaid and
reborrowed in accordance with the provisions of this Agreement. At no time shall
the sum of the then outstanding aggregate principal amount of the Loans plus the
then aggregate Letter of Credit Outstandings exceed the lesser of (i) the Total
Commitment of $50,000,000, as the same may be reduced from time to time pursuant
to Section 2.10, and (ii) the Borrowing Base.
21
(2) Each Borrowing shall be made by the Banks pro rata in accordance
with their respective Commitments; provided, however, that the failure of any
Bank to make any Loan shall not in itself relieve the other Banks of their
obligations to lend.
SECTION 3.2 Borrowing Base. Notwithstanding any other provision of this
Agreement to the contrary, the aggregate principal amount of all outstanding
Loans plus the then aggregate Letter of Credit Outstandings shall not at any
time exceed the Borrowing Base and no Loan shall be made or Letter of Credit
issued in violation of the foregoing.
SECTION 3.3 Letters of Credit.
SECTION 1.1
(1) Upon the terms and subject to the conditions herein set forth, the
Borrower may request a Fronting Bank, at any time and from time to time after
the date hereof and prior to the Termination Date, to issue, and, subject to the
terms and conditions contained herein, such Fronting Bank shall issue, for the
account of the Borrower or a Guarantor one or more Letters of Credit, provided
that no Letter of Credit shall be issued if after giving effect to such issuance
(i) the aggregate Letter of Credit Outstandings shall exceed $20,000,000 or (ii)
the aggregate Letter of Credit Outstandings, when added to the aggregate
outstanding principal amount of the Loans, would exceed the Total Commitment
and, provided further that no Letter of Credit shall be issued if the Fronting
Bank shall have received notice from the Agent or the Required Banks that the
conditions to such issuance have not been met.
(2) No Letter of Credit shall expire later than the date that is the
earlier of 12 months after the issuance of such Letter of Credit and 180 days
after the Maturity Date, provided that if any Letter of Credit shall be
outstanding on the Termination Date, the Borrower shall, at or prior to the
Termination Date, except as the Agent and the applicable Fronting Bank may
otherwise agree in writing, (i) cause all Letters of Credit which expire after
the Termination Date to be returned to the Fronting Bank undrawn and marked
"canceled" or (ii) if the Borrower is unable to do so in whole or in part,
either (x) provide a "back-to-back" letter of credit to one or more Fronting
Banks in a form satisfactory to such Fronting Bank and the Agent (in their sole
discretion), issued by a bank satisfactory to such Fronting Bank and the Agent
(in their sole discretion), in an amount equal to 105% of the then undrawn
stated amount of all outstanding Letters of Credit issued by such Fronting Banks
and/or (y) deposit cash in the Letter of Credit Account in an amount equal to
105% of the then undrawn stated amount of all outstanding Letters of Credit as
collateral security for the Borrower's reimbursement obligations in connection
therewith, such cash to be remitted to the Borrower upon the expiration,
cancellation or other termination or satisfaction of such reimbursement
obligations.
(3) The Borrower shall pay to each Fronting Bank, in addition to such
other fees and charges as are specifically provided for in Section 2.21 hereof,
such fees and charges in connection with the issuance and processing of the
Letters of Credit issued by such Fronting Bank as are customarily imposed by
such Fronting Bank from time to time in connection with letter of credit
transactions.
22
(4) Drafts drawn under each Letter of Credit shall be reimbursed by the
Borrower in Dollars not later than the first Business Day following the date
such draw is honored and shall bear interest from the date such draw is honored
until the first Business Day following the date such draw is honored at a rate
per annum equal to the Prime Rate plus 2.50% and thereafter until reimbursed in
full at a rate per annum equal to the Prime Rate plus 4.50% (computed on the
basis of the actual number of days elapsed over a year of 360 days). The
Borrower shall effect such reimbursement (x) if such draw occurs prior to the
Termination Date (or the earlier date of termination of the Total Commitment),
in cash or through a Borrowing initiated by the Agent without the satisfaction
of the conditions precedent set forth in Section 4.02 or (y) if such draw occurs
on or after the Termination Date (or the earlier date of termination of the
Total Commitment), in cash. Each Bank agrees to make the Loans described in
clause (x) of the preceding sentence notwithstanding a failure to satisfy the
applicable lending conditions thereto or the provisions of Section 2.02 or 2.28.
If such draw occurs on or after the Termination Date, the Borrower shall
reimburse the Fronting Bank first from any cash deposit or cash proceeds of a
back-to-back letter of credit in accordance with Section 2.03(b), and then from
the Borrower's other assets.
(5) Immediately upon the issuance of any Letter of Credit by any
Fronting Bank, such Fronting Bank shall be deemed to have sold to each Bank
other than such Fronting Bank and each such other Bank shall be deemed
unconditionally and irrevocably to have purchased from such Fronting Bank,
without recourse or warranty, an undivided interest and participation, to the
extent of such Bank's Commitment Percentage, in such Letter of Credit, each
drawing thereunder and the obligations of the Borrower and the Guarantors under
this Agreement with respect thereto. Upon any change in the Commitments pursuant
to Section 10.03, it is hereby agreed that with respect to all Letter of Credit
Outstandings, there shall be an automatic adjustment to the participations
hereby created to reflect the new Commitment Percentages of the assigning and
assignee Banks. Any action taken or omitted by a Fronting Bank under or in
connection with a Letter of Credit, if taken or omitted in the absence of gross
negligence or willful misconduct, shall not create for such Fronting Bank any
resulting liability to any other Bank.
(6) In the event that a Fronting Bank makes any payment under any
Letter of Credit and the Borrower shall not have reimbursed such amount in full
to such Fronting Bank pursuant to this Section, the Fronting Bank shall promptly
notify the Agent, which shall promptly notify each Bank of such failure, and
each Bank shall promptly and unconditionally pay to the Agent for the account of
the Fronting Bank the amount of such Bank's Commitment Percentage of such
unreimbursed payment in Dollars and in same day funds. If the Fronting Bank so
notifies the Agent, and the Agent so notifies the Banks prior to 11:00 a.m. (New
York City time) on any Business Day, such Banks shall make available to the
Fronting Bank such Bank's Commitment Percentage of the amount of such payment on
such Business Day in same day funds. If and to the extent such Bank shall not
have so made its Commitment Percentage of the amount of such payment available
to the Fronting Bank, such Bank agrees to pay to such Fronting Bank, forthwith
on demand such amount, together with interest thereon, for each day from such
23
date until the date such amount is paid to the Agent for the account of such
Fronting Bank at the Federal Funds Rate. The failure of any Bank to make
available to the Fronting Bank its Commitment Percentage of any payment under
any Letter of Credit shall not relieve any other Bank of its obligation
hereunder to make available to the Fronting Bank its Commitment Percentage of
any payment under any Letter of Credit on the date required, as specified above,
but no Bank shall be responsible for the failure of any other Bank to make
available to such Fronting Bank such other Bank's Commitment Percentage of any
such payment. Whenever a Fronting Bank receives a payment of a reimbursement
obligation as to which it has received any payments from the Banks pursuant to
this paragraph, such Fronting Bank shall pay to each Bank which has paid its
Commitment Percentage thereof, in Dollars and in same day funds, an amount equal
to such Bank's Commitment Percentage thereof.
SECTION 3.4 Issuance. Whenever the Borrower desires a Fronting Bank to
issue a Letter of Credit, it shall give to such Fronting Bank and the Agent at
least two Business Days' prior written (including telegraphic, telex, facsimile
or cable communication) notice (or such shorter period as may be agreed upon by
the Agent, the Borrower and the Fronting Bank) specifying the date on which the
proposed Letter of Credit is to be issued (which shall be a Business Day), the
stated amount of the Letter of Credit so requested, the expiration date of such
Letter of Credit and the name and address of the beneficiary thereof.
SECTION 3.5 Nature of Letter of Credit Obligations. The obligations of the
Borrower to reimburse the Banks for drawings made under any Letter 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 (it being understood that any such payment by the Borrower shall be
without prejudice to, and shall not constitute a waiver of, any rights the
Borrower might have or might acquire as a result of the payment by the Fronting
Bank of any draft or the reimbursement by the Borrower thereof): (i) any lack of
validity or enforceability of any Letter of Credit; (ii) the existence of any
claim, setoff, defense or other right which the Borrower or any Guarantor may
have at any time against a beneficiary of any Letter of Credit or against any of
the Banks, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction; (iii) any draft, demand,
certificate or other document presented under any Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect; (iv) payment by a Fronting
Bank of any Letter of Credit against presentation of a demand, draft or
certificate or other document which does not comply with the terms of such
Letter of Credit; (v) any other circumstance or happening whatsoever, which is
similar to any of the foregoing; or (vi) the fact that any Event of Default
shall have occurred and be continuing.
SECTION 3.6 Making of Loans.
(1) Except as contemplated by Section 2.11, Loans shall be either Prime
Rate Loans or Eurodollar Loans, as the Borrower may request, subject to and in
24
accordance with this Section, provided, that all Loans made pursuant to the same
Borrowing shall, unless otherwise specifically provided herein, be Loans of the
same Type. Each Bank may fulfill its Commitment with respect to any Eurodollar
Loan or Prime Rate Loan by causing any lending office of such Bank to make such
Loan; provided that any such use of a lending office shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement. Each Bank shall, subject to its overall policy considerations,
use reasonable efforts (but shall not be obligated) to select a lending office
which will not result in the payment of increased costs by the Borrower pursuant
to Section 2.15. Subject to the other provisions of this Section and the
provisions of Section 2.12, Borrowings of Loans of more than one Type may be
incurred at the same time, provided that no more than five (5]) Borrowings of
Eurodollar Loans may be outstanding at any time.
(2) The Borrower shall give the Agent prior notice no later than 11:00
a.m., New York City time, of each Borrowing hereunder of at least three (3)
Business Days for Eurodollar Loans and one (1) Business Day for Prime Rate Loans
(except as provided in the last sentence of this Section 2.06(b)). Each such
notice shall be irrevocable and shall specify the amount of the proposed
Borrowing (which shall not be less than $5,000,000 in the case of Eurodollar
Loans and $1,000,000 in the case of Prime Rate Loans) and the date thereof
(which shall be a Business Day) and shall contain disbursement instructions.
Such notice, to be effective, must be received by the Agent not later than 11:00
a.m., New York City time, on the third Business Day in the case of Eurodollar
Loans and on the first Business Day in case of Prime Rate Loans preceding the
date on which such Borrowing is to be made except as provided in the last
sentence of this Section 2.06(b). Such notice shall specify whether the
Borrowing then being requested is to be a Borrowing of Prime Rate Loans or
Eurodollar Loans. If no election is made as to the Type of the Loan, such notice
shall be deemed a request for Borrowing of Prime Rate Loans. The Agent shall
promptly notify each Bank of its proportionate share of such Borrowing and the
date of such Borrowing. On the borrowing date specified in such notice, each
Bank shall make its share of the Borrowing available at the office of the Agent
at AIM 199-5220, Mellon Independence Center, 701 Market Street, Philadelphia,
Pennsylvania 19106, no later than 11:00 a.m., New York City time, in immediately
available funds. Upon receipt of the funds made available by the Banks to fund
any Borrowing hereunder, the Agent shall disburse such funds in the manner
specified in the notice of borrowing delivered by the Borrower and shall use
reasonable efforts to make the funds so received from the Banks available to the
Borrower no later than 2:00 p.m. New York City time (other than as provided in
the following sentence). With respect to Prime Rate Loans of $5,000,000 or less,
the Banks shall make such Borrowings available to the Borrower by 4:00 p.m., New
York City time, on the same Business Day that the Borrower gives notice to the
Agent of such Borrowing by 11:00 a.m., New York City time, provided that the
Agent has notified the Banks thereof by 2:00 p.m., New York City time, on such
day.
25
SECTION 3.7 Repayment of Loans; Evidence of Debt.
(1) The Borrower hereby unconditionally promises to pay to the Agent
for the account of each Bank the then unpaid principal amount of each Loan on
the Termination Date.
(2) Each Bank shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Bank
resulting from each Loan made by such Bank, including the amounts of principal
and interest payable and paid to such Bank from time to time hereunder.
(3) The Agent shall maintain accounts in which it shall record (i) the
amount of each Loan made hereunder, the Type thereof and the Interest Period
applicable thereto, (ii) the amount of any principal or interest due and payable
or to become due and payable from the Borrower to each Bank hereunder and (iii)
the amount of any sum received by the Agent hereunder for the account of the
Banks and each Bank's share thereof.
(4) The entries made in the accounts maintained pursuant to paragraph
(b) or (c) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein; provided that the failure of any
Bank or the Agent to maintain such accounts or any error therein shall not in
any manner affect the obligation of the Borrower to repay the Loans in
accordance with the terms of this Agreement.
(5) Any Bank may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall execute and deliver to such
Bank a promissory note payable to the order of such Bank (or, if requested by
such Bank, to such Bank and its registered assigns) in a form furnished by the
Agent and reasonably acceptable to the Borrower. Thereafter, the Loans evidenced
by such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 10.03) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).
SECTION 3.8 Interest on Loans.
(1) Subject to the provisions of Section 2.09, each Loan shall bear
interest (computed on the basis of the actual number of days elapsed over a year
of 360 days) at a rate per annum equal to the Prime Rate plus 2.50%.
(2) Subject to the provisions of Section 2.09, each Eurodollar Loan
shall bear interest (computed on the basis of the actual number of days elapsed
over a year of 360 days) at a rate per annum equal, during each Interest Period
applicable thereto, to the Adjusted LIBOR Rate for such Interest Period in
effect for such Borrowing plus 3.75%.
(3) Accrued interest on all Loans shall be payable in arrears on each
Interest Payment Date, at maturity (whether by acceleration or otherwise), after
such maturity on demand and (with respect to Eurodollar Loans) upon any
repayment or prepayment thereof (on the amount prepaid).
26
SECTION 3.9 Default Interest. If the Borrower or any Guarantor, as the case
may be, shall default in the payment of the principal of or interest on any Loan
or in the payment of any other amount becoming due hereunder (including, without
limitation, the reimbursement pursuant to Section 2.03(d) of any draft drawn
under a Letter of Credit), whether at stated maturity, by acceleration or
otherwise, the Borrower or such Guarantor, as the case may be, shall on demand
from time to time pay interest, to the extent permitted by law, on such
defaulted amount up to (but not including) the date of actual payment (after as
well as before judgment) at a rate per annum (computed on the basis of the
actual number of days elapsed over a year of 360 days) equal to (x) in the case
of Borrowings consisting of Eurodollar Loans, the Adjusted LIBOR Rate in effect
for such Borrowing plus 5.75% and (y) in the case of all other amounts, the
Prime Rate plus 4.50%.
SECTION 3.10 Optional Termination or Reduction of Commitment. Upon at least
two Business Days' prior written notice to the Agent, the Borrower may at any
time in whole permanently terminate, or from time to time in part permanently
reduce, the Unused Total Commitment. Each such reduction of the Unused Total
Commitment shall be in the principal amount of $5,000,000 or any integral
multiple of $1,000,000 in excess thereof. Simultaneously with each reduction or
termination of the Total Commitment, the Borrower shall pay to the Agent for the
account of each Bank the Commitment Fee accrued on the amount of the Commitment
of such Bank so terminated or reduced through the date thereof. Any reduction of
the Total Commitment pursuant to this Section shall be applied pro rata to
reduce the Commitment of each Bank.
SECTION 3.11 Alternate Rate of Interest. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Loan, the Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower absent manifest
error) that reasonable means do not exist for ascertaining the applicable
Adjusted LIBOR Rate, the Agent shall, as soon as practicable thereafter, give
written or telegraphic notice of such determination to the Borrower and the
Banks, and any request by the Borrower for a Borrowing of Eurodollar Loans
(including pursuant to a refinancing with Eurodollar Loans) pursuant to Section
2.06 or 2.12 shall be deemed a request for a Borrowing of Prime Rate Loans.
After such notice shall have been given and until the circumstances giving rise
to such notice no longer exist, each request for a Borrowing of Eurodollar Loans
shall be deemed to be a request for a Borrowing of Prime Rate Loans.
SECTION 3.12 Refinancing of Loans. The Borrower shall have the right, at
any time, on three Business Days' prior irrevocable notice to the Agent (which
notice, to be effective, must be received by the Agent not later than 1:00 p.m.,
New York City time, on the third Business Day preceding the date of any
refinancing), (x) to refinance (without the satisfaction of the conditions set
forth in Section 4 as a condition to such refinancing) any outstanding Borrowing
or Borrowings of Loans of one Type (or a portion thereof) with a Borrowing of
Loans of the other Type or (y) to continue an outstanding Borrowing of
Eurodollar Loans for an additional Interest Period, subject to the following:
27
(1) as a condition to the refinancing of Prime Rate Loans with
Eurodollar Loans and to the continuation of Eurodollar Loans for an additional
Interest Period, no Event of Default or event which upon notice or lapse of time
or both would constitute an Event of Default shall have occurred and be
continuing at the time of such refinancing;
(2) if less than a full Borrowing of Loans shall be refinanced, such
refinancing shall be made pro rata among the Banks in accordance with the
respective principal amounts of the Loans comprising such Borrowing held by the
Banks immediately prior to such refinancing;
(3) the aggregate principal amount of Loans being refinanced shall be
at least $1,000,000, provided that no partial refinancing of a Borrowing of
Eurodollar Loans shall result in the Eurodollar Loans remaining outstanding
pursuant to such Borrowing being less than $5,000,000 in aggregate principal
amount;
(4) each Bank shall effect each refinancing by applying the proceeds of
its new Eurodollar Loan or Prime Rate Loan, as the case may be, to its Loan
being refinanced;
(5) the Interest Period with respect to a Borrowing of Eurodollar Loans
effected by a refinancing or in respect to the Borrowing of Eurodollar Loans
being continued as Eurodollar Loans shall commence on the date of refinancing or
the expiration of the current Interest Period applicable to such continuing
Borrowing, as the case may be;
(6) a Borrowing of Eurodollar Loans may be refinanced only on the last
day of an Interest Period applicable thereto; and
(7) each request for a refinancing with a Borrowing of Eurodollar Loans
which fails to state an applicable Interest Period shall be deemed to be a
request for an Interest Period of one month.
In the event that the Borrower shall not give notice to refinance any Borrowing
of Eurodollar Loans, or to continue such Borrowing as Eurodollar Loans, or shall
not be entitled to refinance or continue such Borrowing as Eurodollar Loans, in
each case as provided above, such Borrowing shall automatically be refinanced
with a Borrowing of Prime Rate Loans at the expiration of the then-current
Interest Period. The Agent shall, after it receives notice from the Borrower,
promptly give each Bank notice of any refinancing, in whole or part, of any Loan
made by such Bank.
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SECTION 3.13 Mandatory Prepayment; Commitment Termination; Cash Collateral.
(1) If at any time the aggregate principal amount of the outstanding
Loans plus the aggregate Letter of Credit Outstandings exceeds the lesser of (x)
the Total Commitment and (y) the Borrowing Base, the Borrower will within three
Business Days (i) prepay the Loans in an amount necessary to cause the aggregate
principal amount of the outstanding Loans plus the aggregate Letter of Credit
Outstandings to be equal to or less than the Total Commitment and/or the
Borrowing Base, as the case may be, and (ii) if, after giving effect to the
prepayment in full of the Loans, the aggregate Letter of Credit Outstandings in
excess of the amount of cash held in the Letter of Credit Account exceeds the
Total Commitment and/or the Borrowing Base, as the case may be, deposit into the
Letter of Credit Account an amount equal to 105% of the amount by which the
aggregate Letter of Credit Outstandings in excess of the amount of cash held in
the Letter of Credit Account so exceeds the Total Commitment or Borrowing Base,
as the case may be.
(2) Upon the sale or other disposition of any assets described on
Schedule 6.11 or that are consented to by the Required Banks after the date
hereof, then, for so long as no Event of Default or event which upon notice or
lapse of time or both would constitute an Event of Default has occurred and is
continuing (or would result from the application described in clause (B) of this
sentence), (A) 25% of the Net Proceeds of such sale or other disposition shall
be applied first to reduce the aggregate amount of the outstanding Loans plus
the aggregate Letter of Credit Outstandings (without a corresponding reduction
in the Total Commitment) and second to cash collateralize Letters of Credit to
the extent set forth in Section 2.03(b) and (B) 75% of the Net Proceeds of such
sale or disposition shall be applied as set forth in the Existing Credit
Agreement and the Existing Security Agreement. If at the time of any such sale
or other disposition an Event of Default or event which upon notice or lapse of
time or both would constitute an Event of Default has occurred and is continuing
(or would result from the application described in clause (B) of the preceeding
sentence), 100% of the Net Proceeds of such sale or other disposition shall be
applied first to reduce the aggregate amount of the outstanding Loans plus the
aggregate Letter of Credit Outstandings (without a corresponding reduction in
the Total Commitment) and second to cash collateralize Letters of Credit to the
extent set forth in Section 2.03(b).
(3) Upon the Termination Date, the Total Commitment shall be terminated
in full and the Borrower shall pay the Loans in full and, except as the Agent
may otherwise agree in writing, if any Letter of Credit remains outstanding,
deposit into the Letter of Credit Account an amount equal to 105% of the amount
by which the sum of the aggregate Letter of Credit Outstandings exceeds the
amount of cash held in the Letter of Credit Account, such cash to be remitted to
the Borrower upon the expiration, cancellation, satisfaction or other
termination of such reimbursement obligations, or otherwise comply with Section
2.03(b).
29
SECTION 3.14 Optional Prepayment of Loans; Reimbursement of Banks.
(1) The Borrower shall have the right at any time and from time to time
to prepay any Loans, in whole or in part, (x) with respect to Eurodollar Loans,
upon at least three Business Days' prior written, telex or facsimile notice to
the Agent and (y) with respect to Prime Rate Loans on the same Business Day if
written, telex or facsimile notice is received by the Agent prior to 1:00 p.m.,
New York City time, and thereafter upon at least one Business Day's prior
written, telex or facsimile notice to the Agent; provided, however, that (i)
each such partial prepayment shall be in multiples of $1,000,000, (ii) no
prepayment of Eurodollar Loans shall be permitted pursuant to this Section
2.14(a) other than on the last day of an Interest Period applicable thereto
unless such prepayment is accompanied by the payment of the amounts described in
clause (i) of the first sentence of Section 2.14(b), and (iii) no partial
prepayment of a Borrowing of Eurodollar Loans shall result in the aggregate
principal amount of the Eurodollar Loans remaining outstanding pursuant to such
Borrowing being less than $5,000,000. Each notice of prepayment shall specify
the prepayment date, the principal amount of the Loans to be prepaid and in the
case of Eurodollar Loans, the Borrowing or Borrowings pursuant to which made,
shall be irrevocable and shall commit the Borrower to prepay such Loan by the
amount and on the date stated therein. The Agent shall, promptly after receiving
notice from the Borrower hereunder, notify each Bank of the principal amount of
the Loans held by such Bank which are to be prepaid, the prepayment date and the
manner of application of the prepayment.
(2) The Borrower shall reimburse each Bank on demand for any loss
incurred or to be incurred by it in the reemployment of the funds released (i)
resulting from any prepayment (for any reason whatsoever, including, without
limitation, refinancing with Prime Rate Loans) of any Eurodollar Loan required
or permitted under this Agreement, if such Loan is prepaid other than on the
last day of the Interest Period for such Loan (including, without limitation,
any such prepayment in connection with the syndication of the credit facility
evidenced by this Agreement) or (ii) in the event that after the Borrower
delivers a notice of borrowing under Section 2.06 in respect of Eurodollar
Loans, such Loans are not made on the first day of the Interest Period specified
in such notice of borrowing for any reason other than a breach by such Bank of
its obligations hereunder. Such loss shall be the amount as reasonably
determined by such Bank as the excess, if any, of (A) the amount of interest
which would have accrued to such Bank on the amount so paid or not borrowed at a
rate of interest equal to the Adjusted LIBOR Rate for such Loan, for the period
from the date of such payment or failure to borrow to the last day (x) in the
case of a payment or refinancing with Prime Rate Loans other than on the last
day of the Interest Period for such Loan, of the then current Interest Period
for such Loan, or (y) in the case of such failure to borrow, of the Interest
Period for such Loan which would have commenced on the date of such failure to
borrow, over (B) the amount of interest which would have accrued to such Bank on
such amount by placing such amount on deposit for a comparable period with
leading banks in the London interbank market. Each Bank shall deliver to the
Borrower from time to time one or more certificates setting forth the amount of
such loss as determined by such Bank.
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(3) In the event the Borrower fails to prepay any Loan on the date
specified in any prepayment notice delivered pursuant to Section 2.14(a), the
Borrower on demand by any Bank shall pay to the Agent for the account of such
Bank any amounts required to compensate such Bank for any loss incurred by such
Bank as a result of such failure to prepay, including, without limitation, any
loss, cost or expenses incurred by reason of the acquisition of deposits or
other funds by such Bank to fulfill deposit obligations incurred in anticipation
of such prepayment, but without duplication of any amounts paid under Section
2.14(b). Each Bank shall deliver to the Borrower from time to time one or more
certificates setting forth the amount of such loss as determined by such Bank.
(4) Any partial prepayment of the Loans by the Borrower pursuant to
Sections 2.13 or 2.14 shall be applied as specified by the Borrower or, in the
absence of such specification, as determined by the Agent, provided that in the
latter case no Eurodollar Loans shall be prepaid pursuant to Section 2.13 to the
extent that such Loan has an Interest Period ending after the required date of
prepayment unless and until all outstanding Prime Rate Loans and Eurodollar
Loans with Interest Periods ending on such date have been repaid in full.
SECTION 3.15 Reserve Requirements; Change in Circumstances.
(1) Notwithstanding any other provision herein, if after the date of
this Agreement any change in applicable law or regulation or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof (whether or not having the
force of law) shall change the basis of taxation of payments to any Bank of the
principal of or interest on any Eurodollar Loan made by such Bank or any fees or
other amounts payable hereunder (other than changes in respect of Taxes, Other
Taxes and taxes imposed on, or measured by, the net income or overall gross
receipts or franchise taxes of such Bank by the jurisdiction in which such Bank
has its principal office or in which the applicable lending office for such
Eurodollar Loan is located or by any political subdivision or taxing authority
therein, or by any other jurisdiction or by any political subdivision or taxing
authority therein other than a jurisdiction in which such Bank would not be
subject to tax but for the execution and performance of this Agreement), or
shall impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of or credit
extended by such Bank (except any such reserve requirement which is reflected in
the Adjusted LIBOR Rate) or shall impose on such Bank or the London interbank
market any other condition affecting this Agreement or the Eurodollar Loans made
by such Bank, and the result of any of the foregoing shall be to increase the
cost to such Bank of making or maintaining any Eurodollar Loan or to reduce the
amount of any sum received or receivable by such Bank hereunder (whether of
principal, interest or otherwise) by an amount deemed by such Bank to be
material, then the Borrower will pay to such Bank in accordance with paragraph
(c) below such additional amount or amounts as will compensate such Bank for
such additional costs incurred or reduction suffered.
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(2) If any Bank shall have determined that the adoption or
effectiveness after the date hereof of any law, rule, regulation or guideline
regarding capital adequacy, or any change in any of the foregoing or in the
interpretation or administration of any of the foregoing by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or any lending office of such
Bank) or any Bank's holding company with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on such Bank's capital or on the capital of such Bank's holding
company, if any, as a consequence of this Agreement, the Loans made by such Bank
pursuant hereto, such Bank's Commitment hereunder or the issuance of, or
participation in, any Letter of Credit by such Bank to a level below that which
such Bank or such Bank's holding company could have achieved but for such
adoption, change or compliance (taking into account Bank's policies and the
policies of such Bank's holding company with respect to capital adequacy) by an
amount deemed by such Bank to be material, then from time to time the Borrower
shall pay to such Bank such additional amount or amounts as will compensate such
Bank or such Bank's holding company for any such reduction suffered.
(3) A certificate of each Bank setting forth such amount or amounts as
shall be necessary to compensate such Bank or its holding company as specified
in paragraph (a) or (b) above, as the case may be, shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
each Bank the amount shown as due on any such certificate delivered to it within
10 days after its receipt of the same. Any Bank receiving any such payment shall
promptly make a refund thereof to the Borrower if the law, regulation, guideline
or change in circumstances giving rise to such payment is subsequently deemed or
held to be invalid or inapplicable.
(4) Failure on the part of any Bank to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction in
return on capital with respect to any period shall not constitute a waiver of
such Bank's right to demand compensation with respect to such period or any
other period. The protection of this Section shall be available to each Bank
regardless of any possible contention of the invalidity or inapplicability of
the law, rule, regulation, guideline or other change or condition which shall
have occurred or been imposed.
SECTION 3.16 Change in Legality.
(1) Notwithstanding anything to the contrary contained elsewhere in
this Agreement, if (x) any change after the date of this Agreement in any law or
regulation or in the interpretation thereof by any Governmental Authority
charged with the administration thereof shall make it unlawful for a Bank to
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make or maintain a Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to a Eurodollar Loan or (y) at any time any
Bank determines that the making or continuance of any of its Eurodollar Loans
has become impracticable as a result of a contingency occurring after the date
hereof which adversely affects the London interbank market then, by written
notice to the Borrower, such Bank may (i) declare that Eurodollar Loans will not
thereafter be made by such Bank hereunder, whereupon any request by the Borrower
for a Eurodollar Borrowing shall, as to such Bank only, be deemed a request for
a Prime Rate Loan unless such declaration shall be subsequently withdrawn; and
(ii) require that all outstanding Eurodollar Loans made by it be converted to
Prime Rate Loans, in which event all such Eurodollar Loans shall be
automatically converted to Prime Rate Loans as of the effective date of such
notice as provided in paragraph (b) below. In the event any Bank shall exercise
its rights under clause (i) or (ii) of this paragraph (a), all payments and
prepayments of principal which would otherwise have been applied to repay the
Eurodollar Loans that would have been made by such Bank or the converted
Eurodollar Loans of such Bank shall instead be applied to repay the Prime Rate
Loans made by such Bank in lieu of, or resulting from the conversion of, such
Eurodollar Loans.
(2) For purposes of this Section 2.16, a notice to the Borrower by any
Bank pursuant to paragraph (a) above shall be effective, if lawful, and if any
Eurodollar Loans shall then be outstanding, on the last day of the then-current
Interest Period, otherwise, such notice shall be effective on the date of
receipt by the Borrower.
SECTION 3.17 Pro Rata Treatment, etc. All payments and repayments of
principal and interest in respect of the Loans (except as provided in Sections
2.15 and 2.16) shall be made pro rata among the Banks in accordance with the
then outstanding principal amount of the Loans and/or participations in Letter
of Credit Outstandings and all outstanding undrawn Letters of Credit (and the
unreimbursed amount of drawn Letters of Credit) hereunder and all payments of
Commitment Fees and Letter of Credit Fees (other than those payable to a
Fronting Bank) shall be made pro rata among the Banks in accordance with their
Commitments. All payments by the Borrower hereunder shall be (i) net of any tax
applicable to the Borrower or Guarantor and (ii) made in Dollars in immediately
available funds at the office of the Agent by 12:00 noon, New York City time, on
the date on which such payment shall be due. Interest in respect of any Loan
hereunder shall accrue from and including the date of such Loan to but excluding
the date on which such Loan is paid in full or converted to a Loan of a
different Type.
SECTION 3.18 Taxes.
(1) Any and all payments by the Borrower or any Guarantor hereunder
shall be made free and clear of and without deduction for any and all current or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding (i) taxes imposed on or measured by
the net income or overall gross receipts of the Agent or any Bank (or any
transferee or assignee thereof, including a participation holder (any such
33
entity being called a "Transferee")) and franchise taxes imposed on the Agent or
any Bank (or Transferee) by the United States or any jurisdiction under the laws
of which the Agent or any such Bank (or Transferee) is organized or in which the
applicable lending office of any such Bank (or Transferee) is located or any
political subdivision thereof or by any other jurisdiction or by any political
subdivision or taxing authority therein other than a jurisdiction in which the
Agent or such Bank (or Transferee) would not be subject to tax but for the
execution and performance of this Agreement and (ii) taxes, levies, imposts,
deductions, charges or withholdings ("Amounts") with respect to payments
hereunder to a Bank (or Transferee) in accordance with laws in effect on the
later of the date of this Agreement and the date such Bank (or Transferee)
becomes a Bank (or Transferee, as the case may be), but not excluding, with
respect to such Bank (or Transferee), any increase in such Amounts solely as a
result of any change in such laws occurring after such later date or any Amounts
that would not have been imposed but for actions (other than actions
contemplated by this Agreement) taken by the Borrower after such later date (all
such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower or any
Guarantor shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder to the Banks (or any Transferee) or the Agent, (i) the sum
payable shall be increased by the amount necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section) such Bank (or Transferee) or the Agent (as the case may be)
shall receive an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant taxing authority or
other Governmental Authority in accordance with applicable law.
(2) In addition, the Borrower agrees to pay any current or future stamp
or documentary taxes or any other excise or property taxes, charges, assessments
or similar levies that arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document (hereinafter referred to as "Other Taxes").
(3) The Borrower will indemnify each Bank (or Transferee) and the Agent
for the full amount of Taxes and Other Taxes paid by such Bank (or Transferee)
or the Agent, as the case may be, and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto, whether or not
such Taxes or Other Taxes were correctly or legally asserted by the relevant
taxing authority or other Governmental Authority. Such indemnification shall be
made within 30 days after the date any Bank (or Transferee) or the Agent, as the
case may be, makes written demand therefor. If a Bank (or Transferee) or the
Agent shall become aware that it is entitled to receive a refund in respect of
Taxes or Other Taxes as to which it has been indemnified by the Borrower
pursuant to this Section, it shall promptly notify the Borrower of the
availability of such refund and shall, within 30 days after receipt of a request
by the Borrower, apply for such refund at the Borrower's expense. If any Bank
(or Transferee) or the Agent receives a refund in respect of any Taxes or Other
Taxes as to which it has been indemnified by the Borrower pursuant to this
Section, it shall promptly notify the Borrower of such refund and shall, within
34
30 days after receipt of a request by the Borrower (or promptly upon receipt, if
the Borrower has requested application for such refund pursuant hereto), repay
such refund to the Borrower (to the extent of amounts that have been paid by the
Borrower under this Section with respect to such refund plus interest that is
received by the Bank (or Transferee) or the Agent as part of the refund), net of
all out-of-pocket expenses of such Bank (or Transferee) or the Agent and without
additional interest thereon; provided that the Borrower, upon the request of
such Bank (or Transferee) or the Agent, agrees to return such refund (plus
penalties, interest or other charges) to such Bank (or Transferee) or the Agent
in the event such Bank (or Transferee) or the Agent is required to repay such
refund. Nothing contained in this subsection (c) shall require any Bank (or
Transferee) or the Agent to make available any of its tax returns (or any other
information relating to its taxes that it deems to be confidential).
(4) Within 30 days after the date of any payment of Taxes or Other
Taxes withheld by the Borrower in respect of any payment to any Bank (or
Transferee) or the Agent, the Borrower will furnish to the Agent, at its address
referred to on the signature pages hereof, the original or a certified copy of a
receipt evidencing payment thereof.
(5) Without prejudice to the survival of any other agreement contained
herein, the agreements and obligations contained in this Section shall survive
the payment in full of the principal of and interest on all Loans made
hereunder.
(6) Each Bank (or Transferee) that is organized under the laws of a
jurisdiction outside the United States shall, if legally able to do so, prior to
the immediately following due date of any payment by the Borrower hereunder,
deliver to the Borrower such certificates, documents or other evidence, as
required by the Code or Treasury Regulations issued pursuant thereto, including
(A) Internal Revenue Service Form W-8 or W-9 and (B) Internal Revenue Service
Form 1001 or Form 4224 and any other certificate or statement of exemption
required by Treasury Regulation Section 1.1441-1, 1.1441-4 or 1.1441-6(c) or any
subsequent version thereof or successors thereto, properly completed and duly
executed by such Bank (or Transferee) establishing that such payment is (i) not
subject to United States federal withholding tax under the Code because such
payment is effectively connected with the conduct by such Bank (or Transferee)
of a trade or business in the United States or (ii) totally exempt from United
States federal withholding tax or subject to a reduced rate of such tax under a
provision of an applicable tax treaty. Unless the Borrower and the Agent have
received forms or other documents satisfactory to them indicating that such
payments hereunder or are not subject to United States federal withholding tax
or are subject to such tax at a rate reduced by an applicable tax treaty, the
Borrower or the Agent shall withhold taxes from such payments at the applicable
statutory rate.
(7) The Borrower shall not be required to pay any additional amounts to
any Bank (or Transferee) in respect of United States federal withholding tax
pursuant to subsection (a) above or taxes pursuant to subsection (c) above if
the obligation to pay such additional amounts would not have arisen but for a
failure by such Bank (or Transferee) to comply with the provisions of subsection
(f) above.
35
(8) Any Bank (or Transferee) claiming any additional amounts payable
pursuant to this Section 2.18 shall use reasonable efforts (consistent with
legal and regulatory restrictions) to file any certificate or document requested
by the Borrower or to change the jurisdiction of its applicable lending office
if the making of such a filing or change would avoid the need for or reduce the
amount of any such additional amounts that may thereafter accrue and would not,
in the sole reasonable determination of such Bank (or Transferee), be otherwise
materially disadvantageous to such Bank (or Transferee).
SECTION 3.19 Certain Fees. The Borrower shall pay to the Agent, for the
respective accounts of the Agent and the Banks, the fees set forth in that
certain letter dated June 21, 2000 between the Agent and the Borrower at the
times set forth therein.
SECTION 3.20 Commitment Fee. The Borrower shall pay to the Banks a
commitment fee (the "Commitment Fee") for the period commencing on the date the
Commitment Letter is executed to the Termination Date or the earlier date of
termination of the Commitment, computed (on the basis of the actual number of
days elapsed over a year of 360 days) at the rate of one percent (1%) per annum
on the average daily Unused Total Commitment. Such Commitment Fee, to the extent
then accrued, shall be payable (x) monthly, in arrears, on the last calendar day
of each month, (y) on the Termination Date and (z) as provided in Section 2.10
hereof, upon any reduction or termination in whole or in part of the Total
Commitment.
SECTION 3.21 Letter of Credit Fees. The Borrower shall pay with respect to
each Letter of Credit (i) to the Agent on behalf of the Banks a fee calculated
(on the basis of the actual number of days elapsed over a year of 360 days) at
the rate of three percent (3%) per annum on the daily average Letter of Credit
Outstandings and (ii) to the Fronting Bank such Fronting Bank's customary fees
for issuance, amendments and processing referred to in Section 2.03. In
addition, the Borrower agrees to pay each Fronting Bank for its account a
fronting fee in respect of each Letter of Credit issued by such Fronting Bank,
for the period from and including the date of issuance of such Letter of Credit
to and including the date of expiry or draw of such Letter of Credit, computed
at a rate, and payable at times, to be determined by such Fronting Bank, the
Borrower and the Agent. Accrued fees described in clause (i) of the first
sentence of this paragraph in respect of each Letter of Credit shall be due and
payable monthly in arrears on the last calendar day of each month and on the
Termination Date, or such earlier date as the Total Commitment is terminated.
Accrued fees described in clause (ii) of the first sentence of this paragraph in
respect of each Letter of Credit shall be payable at times to be determined by
the Fronting Bank, the Borrower and the Agent.
SECTION 3.22 Nature of Fees. All Fees shall be paid on the dates due, in
immediately available funds, to the Agent for the respective accounts of the
Agent and the Banks, as provided herein and in the letter described in Section
2.19. Once paid, none of the Fees shall be refundable under any circumstances.
36
SECTION 3.23 Priority and Liens.
(1) The Borrower and each of the Guarantors hereby covenants,
represents and warrants that, upon entry of the Interim Order, the Obligations
of the Borrower and the Guarantors hereunder and under the Loan Documents and in
respect of Indebtedness permitted by Section 6.03(vii): (i) pursuant to Section
364(c)(1) of the Bankruptcy Code, shall at all times constitute allowed
administrative expense claims in the Cases having priority over all
administrative expenses of the kind specified in Section 503(b) or 507(b) of the
Bankruptcy Code; (ii) pursuant to Section 364(c)(2) of the Bankruptcy Code,
shall at all times be secured by perfected first priority Liens on all
unencumbered pre-petition and post-petition property of the Borrower and the
Guarantors (including, without limitation, all Accounts arising after the Filing
Date, except as otherwise provided in subparagraph (iii) below or in the Orders,
with any such Account on which the Agent and the Banks do not have a first
priority perfected Lien being excluded from the Borrowing Base, but excluding
bankruptcy causes of action, it being understood that, notwithstanding such
exclusion of bankruptcy causes of action, the proceeds of such causes of action
shall be available for the repayment of the Obligations) and on all cash
maintained in the Letter of Credit Account and any direct investments of the
funds contained therein; (iii) pursuant to Section 364(c)(3) of the Bankruptcy
Code, shall be secured by perfected Liens upon all pre-petition and
post-petition property of the Borrower and the Guarantors (not including
property that is subject to existing Liens that presently secure the obligations
of the Borrower and the Guarantors under the Existing Agreements as to which the
Liens in favor of the Agent and the Banks will be as described in clause (iv) of
this sentence) that is subject to valid and perfected Liens in existence on the
Filing Date (including, without limitation, Accounts in existence as of the
Filing Date that are subject to valid and perfected Liens in favor of the Real
Estate Financiers and the proceeds thereof) or to valid Liens in existence on
the Filing Date or that are perfected subsequent to the Filing Date as permitted
by Section 546(b) or 362(b)(18) of the Bankruptcy Code or to Permitted Liens,
junior to such valid and perfected Liens; and (iv) pursuant to Section 364(d)(1)
of the Bankruptcy Code, shall be secured by perfected, senior priming Liens on
all pre-petition and post-petition property of the Borrower and the Guarantors
that is subject to (A) the existing Liens that secure the obligations of the
Borrower and the Guarantors under and in connection with the Existing Agreements
(subject to any Liens in existence on the Filing Date to which the Liens being
primed hereby are subject or become subject or to valid liens in existence on
the Filing Date that are perfected subsequent to the Filing Date as permitted by
Section 546(b) or 362(b)(18) of the Bankruptcy Code or to Permitted Adequate
Protection Liens and Permitted Liens) and (B) any Liens granted after the Filing
Date to provide adequate protection in respect of the Existing Agreements;
subject only to (x) in the event of the occurrence and during the continuance of
an Event of Default, the payment of (1) accrued and unpaid professional fees and
disbursements theretofore incurred as of the occurrence and during the
continuance of an uncured or unwaived Event of Default, and (2) professional
fees and disbursements incurred during the time of such continuance in an
aggregate amount not in excess of $3,500,000, in each case by the Borrower, the
Guarantors and any statutory committee appointed in the Cases and allowed by an
order of the Bankruptcy Court and (y) the payment of unpaid fees pursuant to 28
U.S.C. ss. 1930 and to the Clerk of the Bankruptcy Court (collectively, the
37
"Carve-Out"), provided that following the Termination Date amounts in the Letter
of Credit Account shall not be subject to the Carve-Out, and provided, further,
that, except as otherwise provided in the Orders, no portion of the Carve-Out
shall be utilized for the payment of professional fees and disbursements
incurred in connection with any challenge to the amount, priority, validity,
perfection or enforcement of the indebtedness of the Borrower and the Guarantors
owing to the Existing Lenders or to the collateral securing such indebtedness
(it being understood that such amounts may be used for investigation thereof).
The Banks agree that so long as no Event of Default or event which with the
giving of notice or lapse of time or both would constitute an Event of Default
shall have occurred, the Borrower and the Guarantors shall be permitted to pay
compensation and reimbursement of expenses allowed and payable under 11 U.S.C.
ss. 330 and 11 U.S.C. ss. 331, as the same may be due and payable, and the same
shall not reduce the Carve-Out.
(2) Subject to the Carve-Out and Permitted Liens, as to all real
property the title to which is held by the Borrower or any of the Guarantors, or
the possession of which is held by the Borrower or any of the Guarantors
pursuant to a leasehold interest, the Borrower and each Guarantor hereby assigns
and conveys as security, grants a security interest in, and (as applicable under
relevant state law) conveys security title to, hypothecates, mortgages, pledges
and sets over unto the Agent on behalf of the Banks (with the priorities
described above) all of the right, title and interest of the Borrower and such
Guarantor in all of such owned real property and in all such leasehold
interests, together in each case with all of the right, title and interest of
the Borrower and such Guarantor in and to all buildings, improvements, and
fixtures related thereto, any lease or sublease thereof, all general intangibles
relating thereto and all proceeds thereof. The Borrower and each Guarantor
acknowledges that, pursuant to the Orders, the Liens in favor of the Agent on
behalf of the Banks in all of such real property and leasehold instruments shall
be perfected without the recordation of any mortgages, deeds of trust, deeds to
secure debt or assignments. The Borrower and each Guarantor further agrees that,
upon the request of the Agent, the Borrower and such Guarantor shall enter into
separate fee and leasehold mortgages, deeds of trust, deeds to secure debt,
collateral assignments or similar instruments in recordable form with respect to
such properties on terms reasonably satisfactory to the Agent.
SECTION 3.24 Right of Set-Off. Subject to the provisions of Section 7.01
and the Carve-Out, upon the occurrence and during the continuance of any Event
of Default the Agent and each Bank is hereby authorized at any time and from
time to time, to the fullest extent permitted by law and without further order
of or application to the Bankruptcy Court, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by the Agent and each such Bank to
or for the credit or the account of the Borrower or any Guarantor against any
and all of the obligations of such Borrower or Guarantor now or hereafter
existing under the Loan Documents, irrespective of whether or not such Bank
shall have made any demand under any Loan Document and although such obligations
may not have been accelerated. Each Bank and the Agent agrees promptly to notify
the Borrower and Guarantors after any such set-off and application made by such
Bank or by the Agent, as the case may be, provided that the failure to give such
notice shall not affect the validity of such set-off and application. The rights
of each Bank and the Agent under this Section are in addition to other rights
and remedies which such Bank and the Agent may have upon the occurrence and
during the continuance of any Event of Default.
38
SECTION 3.25 Security Interest in Letter of Credit Account. Pursuant to
Section 364(c)(2) of the Bankruptcy Code, the Borrower and the Guarantors hereby
assign and pledge to the Agent, for its benefit and for the ratable benefit of
the Banks, and hereby grant to the Agent, for its benefit and for the ratable
benefit of the Banks, a first priority security interest, senior to all other
Liens, if any, in all of the Borrower's and the Guarantors' right, title and
interest in and to the Letter of Credit Account and any direct investment of the
funds contained therein. Cash held in the Letter of Credit Account shall not be
available for use by the Borrower, whether pursuant to Section 363 of the
Bankruptcy Code or otherwise. Following the Termination Date, amounts in the
Letter of Credit Account shall not be used to satisfy the Carve-Out.
SECTION 3.26 Payment of Obligations. Subject to the provisions of Section
7.01, upon the maturity (whether by acceleration or otherwise) of any of the
Obligations under this Agreement or any of the other Loan Documents of the
Borrower and the Guarantors, the Banks shall be entitled to immediate payment of
such Obligations without further application to or order of the Bankruptcy
Court.
SECTION 3.27 No Discharge; Survival of Claims. Each of the Borrower and the
Guarantors agrees that (i) its Obligations hereunder shall not be discharged by
the entry of an order confirming a Plan of Reorganization (and each of the
Borrower and the Guarantors, pursuant to Section 1141(d)(4) of the Bankruptcy
Code, hereby waives any such discharge) and (ii) the Superpriority Claim granted
to the Agent and the Banks pursuant to the Orders and described in Section 2.23
and the Liens granted to the Agent pursuant to the Orders and described in
Sections 2.23 and 2.25 shall not be affected in any manner by the entry of an
order confirming a Plan of Reorganization.
SECTION 3.28 Use of Cash Collateral. Notwithstanding anything to the
contrary contained herein, the Borrower shall not be permitted (i) to request a
Borrowing under Section 2.06 or request the issuance of a Letter of Credit under
Section 2.04 unless the Bankruptcy Court shall have entered the Interim Order or
(ii) to request a Borrowing under Section 2.06 unless the Borrower and the
Guarantors shall at that time have the use of all cash collateral subject to the
Orders for the purposes described in Section 3.10.
SECTION 4. REPRESENTATIONS AND WARRANTIES
In order to induce the Banks to make Loans and issue and/or participate
in Letters of Credit hereunder, the Borrower and each of the Guarantors jointly
and severally represent and warrant as follows:
39
SECTION 4.1 Organization and Authority. Each of the Borrower and the
Guarantors (i) is a corporation duly organized and validly existing under the
laws of the State of its incorporation and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which the failure to
so qualify would have a Material Adverse Effect; (ii) subject to the entry by
the Bankruptcy Court of the Interim Order (or the Final Order, when applicable)
has the requisite corporate power and authority to effect the transactions
contemplated hereby, and by the other Loan Documents to which it is a party, and
(iii) subject to the entry by the Bankruptcy Court of the Interim Order (or the
Final Order, when applicable) has all requisite corporate power and authority
and the legal right to own, pledge, mortgage and operate its properties, and to
conduct its business as now or currently proposed to be conducted.
SECTION 4.2 Due Execution. Upon the entry by the Bankruptcy Court of the
Interim Order (or the Final Order, when applicable), the execution, delivery and
performance by each of the Borrower and the Guarantors of each of the Loan
Documents to which it is a party (i) are within the respective corporate powers
of each of the Borrower and the Guarantors, have been duly authorized by all
necessary corporate action including the consent of shareholders where required,
and do not (A) contravene the charter or by-laws of any of the Borrower or the
Guarantors, (B) violate any law (including, without limitation, the Securities
Exchange Act of 1934) or regulation (including, without limitation, Regulations
T, U or X of the Board of Governors of the Federal Reserve System), or any order
or decree of any court or governmental instrumentality, the violation of which
could reasonably be expected to have a Material Adverse Effect, (C) conflict
with or result in a breach of, or constitute a default under, any indenture,
mortgage or deed of trust entered into after the Filing Date or any lease,
agreement or other instrument entered into after the Filing Date binding on the
Borrower or the Guarantors or any of their properties, in each case which
conflict, breach or default could reasonably be expected to have a Material
Adverse Effect, or (D) result in or require the creation or imposition of any
Lien upon any of the property of any of the Borrower or the Guarantors other
than the Liens granted pursuant to this Agreement, the other Loan Documents or
the Orders; and do not require the consent, authorization by or approval of or
notice to or filing or registration with any Governmental Authority other than
the entry of the Orders. Upon the entry by the Bankruptcy Court of the Interim
Order (or the Final Order, when applicable), this Agreement has been duly
executed and delivered by each of the Borrower and the Guarantors. This
Agreement is, and each of the other Loan Documents to which the Borrower and
each of the Guarantors is or will be a party, when delivered hereunder or
thereunder, will be, a legal, valid and binding obligation of the Borrower and
each Guarantor, as the case may be, enforceable against the Borrower and the
Guarantors, as the case may be, in accordance with its terms and the Orders.
SECTION 4.3 Statements Made. The information that has been delivered in
writing by the Borrower or any of the Guarantors to the Agent or to the
Bankruptcy Court in connection with any Loan Document, and any financial
statement delivered pursuant hereto or thereto (other than to the extent that
any such statements constitute projections), taken as a whole and in light of
the circumstances in which made, as of the date so delivered, contained no
untrue statement of a material fact and did not omit to state a material fact
40
necessary to make such statements not misleading; and, to the extent that any
such information constitutes projections, such projections were prepared in good
faith on the basis of assumptions, methods, data, tests and information believed
by the Borrower or such Guarantor to be reasonable at the time such projections
were furnished.
SECTION 4.4 Financial Statements. The Borrower has furnished the Banks with
copies of (i) the audited consolidated financial statement and schedules of the
Borrower for the fiscal year ended September 30, 1999 and (ii) the unaudited
consolidated financial statement and schedules of the Borrower for the fiscal
quarter ended March 31, 2000. Such financial statements present fairly the
financial condition and results of operations of the Borrower and its
consolidated Subsidiaries on a consolidated basis as of such dates and for such
periods; such balance sheets and the notes thereto disclose all liabilities,
direct or contingent, of the Borrower and its consolidated Subsidiaries as of
the dates thereof required to be disclosed by GAAP and such financial statements
were prepared in a manner consistent with GAAP, subject (in the case of such
fiscal quarter statement) to normal year end adjustments. No material adverse
change in the operations, business, properties, assets, prospects or condition
(financial or otherwise) of the Borrower and its consolidated Subsidiaries,
taken as a whole, has occurred from the fiscal quarter ended March 31, 2000
other than those which have been disclosed to the Banks in writing and those
which customarily occur as a result of events leading up to and following the
commencement of a proceeding under Chapter 11 of the Bankruptcy Code and the
commencement of the Cases (including, without limitation, those reflected in the
financial projections heretofore made available to the Agent).
SECTION 4.5 Ownership. Except as set forth on Schedule 3.05, (a) each of
the Persons listed on Schedule 3.05 is a wholly-owned, direct or indirect
Subsidiary of the Borrower and (b) the Borrower owns no other Subsidiaries,
whether directly or indirectly, other than Multicare.
SECTION 4.6 Liens. Except for Liens existing on the Filing Date as
reflected on Schedule 3.06, there are no Liens of any nature whatsoever on any
assets of the Borrower or any of the Guarantors other than Liens permitted
pursuant to Section 6.01. Neither the Borrower nor the Guarantors are parties to
any contract, agreement, lease or instrument the performance of which, either
unconditionally or upon the happening of an event, will result in or require the
creation of a Lien on any assets of the Borrower or any Guarantor or otherwise
result in a violation of this Agreement other than the Liens granted to the
Agent and the Banks as provided for in this Agreement.
SECTION 4.7 Compliance with Law. Except as set forth on Schedule 3.07
(which schedule need not duplicate disclosures referred to in Section 3.12) and
except for matters which, singly or in the aggregate, could not reasonably
expected to have a Material Adverse Effect:
(1) (i) To the knowledge of the Borrower or the Guarantors, the
operations of the Borrower and the Guarantors comply in all material respects
41
with all applicable environmental, health and safety statutes and regulations,
including, without limitation, regulations promulgated under the Resource
Conservation and Recovery Act (42 U.S.C. ss.ss. 6901 et seq.); (ii) to the
Borrower's and each of the Guarantor's knowledge, none of the operations of the
Borrower or the Guarantors is the subject of any pending or overtly threatened
federal or state investigation evaluating whether any remedial action involving
a material expenditure by the Borrower or any Guarantor is needed to respond to
a release of any Hazardous Waste or Hazardous Substance (as such terms are
defined in any applicable state or federal environmental law or regulations)
into the environment; and (iii) to the Borrower's and each of the Guarantor's
knowledge, the Borrower and the Guarantors do not have any material contingent
liability in connection with any release of any Hazardous Waste or Hazardous
Substance into the environment.
(2) Other than as set forth in Section 3.12, neither the Borrower nor
any Guarantor is, to the best of its knowledge, in violation of any law, rule or
regulation, or in default with respect to any judgment, writ, injunction or
decree of any Governmental Authority which in the aggregate could reasonably be
expected to have a Material Adverse Effect.
SECTION 4.8 Insurance. All policies of insurance of any kind or nature
owned by or issued to the Borrower and the Guarantors, including, without
limitation, policies of life, fire, theft, product liability, public liability,
property damage, other casualty, employee fidelity, workers' compensation,
employee health and welfare, title, property and liability insurance, are in
full force and effect and are of a nature and provide such coverage (including
self insurance) as is customarily carried by companies of the size and character
of the Borrower and the Guarantors.
SECTION 4.9 The Orders. On the date of the making of the initial Loans or
the issuance of the initial Letters of Credit hereunder, whichever first occurs,
the Interim Order will have been entered and will not have been stayed, amended,
vacated, reversed or rescinded (without the prior written consent of the Agent).
On the date of the making of any Loan or the issuance of any Letter of Credit,
the Interim Order or the Final Order, as the case may be, shall have been
entered and shall not have been amended, stayed, vacated or rescinded (without
the prior written consent of the Agent). Upon the maturity (whether by the
acceleration or otherwise) of any of the Obligations of the Borrower and the
Guarantors hereunder and under the other Loan Documents, the Banks shall,
subject to the provisions of Section 7.01 and the Carve-Out, be entitled to
immediate payment of such Obligations, and to enforce the remedies provided for
hereunder, without further application to or order by the Bankruptcy Court.
SECTION 4.10 Use of Proceeds. The proceeds of the Loans shall be used by
the Borrower for working capital and other general corporate purposes of the
Borrower and the Guarantors.
SECTION 4.11 Litigation. Other than as set forth on Schedule 3.11 or as
disclosed pursuant to Section 5.05(b), there are no unstayed actions, suits or
42
proceedings pending or, to the knowledge of the Borrower or the Guarantors,
threatened against or affecting the Borrower or the Guarantors or any of their
respective properties, before any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, which if
determined adversely to the Borrower or the Guarantors would have a Material
Adverse Effect (excluding such litigation which has been taken into account
through reductions in the Borrowing Base).
SECTION 4.12 Health Care Permits. Other than as set forth on Schedule 3.12:
(1) Except as, in the aggregate, could not reasonably be expected to
have a Material Adverse Effect: (i) each of the Borrower and the Guarantors now
has, 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, without
limitation, the ownership and operation of its Health Care Facilities 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 Borrower and each of the Guarantors 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
Borrower nor any of the Guarantors has received any written notice of any
violation of any Requirement of Law, (v) to the knowledge of the Borrower, 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 Borrower or any of the Guarantors has been notified in writing 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 execution and performance of this Agreement or any of the other Loan
Documents.
(2) All Health Care Facilities owned, leased, managed or operated by
the Borrower or any of the Guarantors 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 Borrower or any of the Guarantors has decided to
participate in any such program, 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 Borrower,
any proceedings threatened or investigations pending or threatened, by any
Governmental Authority with respect to the Borrower's or any of its
Subsidiaries' participation in the Medicare, Medicaid or related reimbursement
programs which could reasonably be expected to have a Material Adverse Effect.
43
SECTION 5. CONDITIONS OF LENDING
SECTION 5.1 Conditions Precedent to Initial Loans and Initial Letters of
Credit. The obligation of the Banks to make the initial Loans or the Fronting
Bank to issue the initial Letter of Credit, whichever may occur first, is
subject to the following conditions precedent:
(1) Supporting Documents. The Agent shall have received for each of the
Borrower and the Guarantors (as applicable):
(1) a copy of the Borrower's certificate of incorporation, as
amended, certified as of a recent date by the Secretary of State of the
state of its incorporation;
(2) a certificate of such Secretary of State, dated as of a
recent date, as to the good standing of and payment of taxes by the
Borrower and as to the charter documents on file in the office of such
Secretary of State; and
(3) a certificate of the Secretary or an Assistant Secretary
of that entity dated the date of the initial Loans or the initial
Letter of Credit hereunder, whichever first occurs, and certifying (A)
that, with respect to the Borrower only, attached thereto is a true and
complete copy of the by-laws of that entity as in effect on the date of
such certification, (B) that attached thereto is a true and complete
copy of resolutions adopted by the Board of Directors of that entity
authorizing the Borrowings and Letter of Credit extensions hereunder,
the execution, delivery and performance in accordance with their
respective terms of this Agreement, the Loan Documents and any other
documents required or contemplated hereunder or thereunder and the
granting of the security interest in the Letter of Credit Account and
other Liens contemplated hereby, (C) that the certificate of
incorporation and by-laws of the Borrower have not been amended since
the date of the last amendment thereto indicated on the certificate of
the Secretary of State furnished pursuant to clause (i) above, (D) that
the certificate of incorporation and by-laws of each of the Guarantors
have not been amended since such documents were furnished pursuant to
the closing of the Existing Credit Agreement or any credit facility
predecessor thereto (except as annexed thereto) and (E) as to the
incumbency and specimen signature of each officer of that entity
executing this Agreement and the Loan Documents or any other document
delivered by it in connection herewith or therewith (such certificate
to contain a certification by another officer of that entity as to the
incumbency and signature of the officer signing the certificate
referred to in this clause (iii)).
(2) Interim Order.
44
(1) At the time of the making of the initial Loans or at the
time of the issuance of the initial Letters of Credit, whichever first
occurs, but in any event not later than 15 days following the
commencement of the Cases, the Agent and the Banks shall have received
a certified copy of an order of the Bankruptcy Court in substantially
the form of Exhibit A-1 (the "Interim Order") approving the Loan
Documents and granting the Superpriority Claim status and senior
priming and other Liens described in Section 2.23 which Interim Order:
(i) shall have been entered, with the consent or non-objection of a
preponderance, as determined by the Agent in its sole judgment, of the
Existing Lenders, upon an application or motion of the Borrower
reasonably satisfactory in form and substance to the Agent, on such
prior notice to such parties (including the Existing Lenders) as may in
each case be reasonably satisfactory to the Agent; (ii) shall authorize
extensions of credit in an amount that is not in excess of $30,000,000;
(iii) shall approve the payment by the Borrower of all of the Fees set
forth in Sections 2.19, 2.20 and 2.21; (v) shall be in full force and
effect; and (vi) shall not have been stayed, reversed, modified or
amended in any respect without the prior written consent of the Agent,
and, if the Interim Order is the subject of a pending appeal in any
respect, neither the making of such Loans nor the issuance of such
Letter of Credit nor the performance by the Borrower or any of the
Guarantors of any of their respective obligations hereunder or under
the Loan Documents or under any other instrument or agreement referred
to herein shall be the subject of a presently effective stay pending
appeal.
(2) In addition, the Interim Order shall (1) authorize the use
by the Borrower and the Guarantors of any cash collateral in which any
Existing Lender under the Existing Agreements may have an interest and
shall provide, as adequate protection for any diminution in value of
the Existing Lenders' pre-petition collateral resulting from the use of
such cash collateral and the priming of the Liens granted pursuant to
the Existing Agreements contemplated hereby, for (A) a superpriority
claim as contemplated by Section 507(b) of the Bankruptcy Code
immediately junior to the claims under Section 364(c)(1) of the
Bankruptcy Code held by the Agent and the Banks which shall be subject
to the Carve-Out, (B) a replacement Lien on substantially all of the
assets of the Borrower and the Guarantors that are subject to the
priming and the other Liens granted in favor of the Agent and the Banks
hereunder and under the other Loan Documents which replacement Lien
shall have a priority immediately junior to, and subject to the
Carve-Out and the same limitations as are applicable to, such priming
and other Liens granted in favor of the Agent and the Banks hereunder
and under the other Loan Documents (and, in the case of Accounts
arising on or after the Filing Date out of use of the properties that
are subject as of the Filing Date to valid and perfected liens in favor
of the Real Estate Financiers, also junior to the adequate protection
liens in favor of the Real Estate Financiers on such Accounts that may
be granted in favor of the Real Estate Financiers and (y) other assets
45
that are subject as of the Filing Date to valid and perfected liens
that are not being primed, also junior to such replacement adequate
protection liens that may be granted on collateral of the same type to
the holders of such valid and perfected liens), (C) the payment on a
current basis of the reasonable fees and disbursements of respective
professionals (including, but not limited to, the reasonable fees and
disbursements of counsel and third-party consultants, including
investment bankers, financial consultants, and auditors) incurred by
the Pre-Petition Agent, and the other Existing Co-Agents (including the
payment on the Closing Date or as soon thereafter as is practicable of
any unpaid pre-petition fees and expenses), the payment of reasonable
counsel fees and disbursements of members of the Steering Committee
acting under the Existing Credit Agreement acting in their capacity as
such and the continuation of the payment to the Pre-Petition Agent on a
current basis of the administration fees that are provided for under
the Existing Credit Agreement, and (D) so long as no Event of Default
or event, which upon notice or lapse of time or both, would constitute
an Event of Default shall have occurred and be continuing, the payment
to the Existing Lenders, of the Net Proceeds of asset sales or
dispositions of the Existing Collateral, permitted hereunder, the
proceeds of which are not required to be applied to the Loans pursuant
to Section 2.13(b), and (2) provide that neither the Borrower nor any
Guarantor shall assume (without the written consent of the Agent which
shall not be unreasonably withheld), and no order shall be entered
authorizing the assumption of, any provider agreements between the
Borrower or any Guarantor, as the case may be, and any governmental
unit (without the prior written consent of the Agent which shall not be
unreasonably withheld).
(3) Security and Pledge Agreement. The Borrower and each of the
Guarantors shall have duly executed and delivered to the Agent a Security and
Pledge Agreement in substantially the form of Exhibit B (the "Security and
Pledge Agreement").
(4) First Day Orders. All of the "first day orders" entered by the
Bankruptcy Court at the time of the commencement of the Cases shall be
reasonably satisfactory in form and substance to the Agent.
(5) Opinion of Counsel. The Agent and the Banks shall have received the
favorable written opinion of counsel to the Borrower and the Guarantors
reasonably acceptable to the Agent, dated the date of the initial Loans or the
issuance of the initial Letter of Credit, whichever first occurs, substantially
in the form of Exhibit C.
(6) Payment of Fees. The Borrower shall have paid to the Agent the then
unpaid balance of all accrued and unpaid Fees then due and payable under and
pursuant to this Agreement and the letter referred to in Section 2.19.
(7) Corporate and Judicial Proceedings. All corporate and judicial
proceedings and all instruments and agreements in connection with the
transactions among the Borrower, the Guarantors, the Agent and the Banks
contemplated by this Agreement shall be reasonably satisfactory in form and
46
substance to the Agent, and the Agent shall have received all information and
copies of all documents and papers, including records of corporate and judicial
proceedings, which the Agent may have reasonably requested in connection
therewith, such documents and papers where appropriate to be certified by proper
corporate, governmental or judicial authorities.
(8) Information. The Agent shall have received such information
(financial or otherwise) as may be reasonably requested by the Agent and shall
have discussed the Borrower's financial forecast heretofore delivered to the
Agent with the Borrower's management and shall be reasonably satisfied with the
nature and substance of such discussions.
(i) Budget. The Agent shall have received from the Borrower a budget
detailing the Borrower's anticipated cash receipts and disbursements for the
period through the Maturity Date and setting forth the anticipated uses of the
Commitment that is reasonably satisfactory in form and substance to the Agent
and the Original Required Banks (the "Budget").
(j) Compliance with Laws. The Borrower and the Guarantors shall have
granted the Agent access to and the right to inspect all existing reports,
audits and other internal information of the Borrower and the Guarantors
relating to environmental matters to the extent in the possession, custody or
control of the Borrowers or the Guarantors, and any third-party verification of
certain matters relating to compliance with environmental laws and regulations
reasonably requested by the Agent to the extent in the possession, custody or
control of the Borrowers or the Guarantors, and the Agent shall be reasonably
satisfied that the Borrower and the Guarantors are not reasonably likely to
incur liabilities under or pursuant to applicable environmental laws that would
have a Material Adverse Effect.
(k) Closing Documents. The Agent shall have received all documents
required by this Agreement reasonably satisfactory in form and substance to the
Agent.
SECTION 5.2 Conditions Precedent to Each Loan and Each Letter of Credit.
The obligation of the Banks to make each Loan and of the Fronting Bank to issue
each Letter of Credit, including the initial Loan and the initial Letter of
Credit, is subject to the following conditions precedent:
(1) Notice. The Agent shall have received a notice with respect to such
borrowing or issuance, as the case may be, as required by Section 2.
(2) Representations and Warranties. All representations and warranties
contained in this Agreement and the other Loan Documents shall be true and
correct in all material respects on and as of the date of each Borrowing or the
issuance of each Letter of Credit hereunder with the same effect as if made on
and as of such date except to the extent such representations and warranties
expressly relate to an earlier date.
47
(3) No Default. On the date of each Borrowing hereunder or the issuance
of each Letter of Credit, no Event of Default or event which upon notice or
lapse of time or both would constitute an Event of Default shall have occurred
and be continuing.
(d) Orders. The Interim Order shall be in full force and effect and
shall not have been stayed, reversed, modified or amended in any respect without
the prior written consent of the Agent and the Required Banks, provided, that at
the time of the making of any Loan or the issuance of any Letter of Credit the
aggregate amount of either of which, when added to the sum of the principal
amount of all Loans then outstanding and the Letter of Credit Outstandings,
would exceed the amount authorized by the Interim Order (collectively, the
"Additional Credit"), the Agent and each of the Banks shall have received a
certified copy of an order of the Bankruptcy Court in substantially the form of
Exhibit A-2 (the "Final Order"), which, in any event, shall have been entered by
the Bankruptcy Court no later than 45 days after the entry of the Interim Order,
and at the time of the extension of any Additional Credit the Final Order shall
be in full force and effect, and shall not have been stayed, reversed, modified
or amended in any respect without the prior written consent of the Agent and the
Required Banks; and if either the Interim Order or the Final Order is the
subject of a pending appeal in any respect, neither the making of the Loans nor
the issuance of any Letter of Credit nor the performance by the Borrower or any
Guarantor of any of their respective obligations under any of the Loan Documents
shall be the subject of a presently effective stay pending appeal.
(e) Payment of Fees. The Borrower shall have paid to the Agent the then
unpaid balance of all accrued and unpaid Fees then due and payable under and
pursuant to this Agreement and the letter referred to in Section 2.19.
(f) Borrowing Base Certificate. The Agent shall have received the
timely delivery of the most recent Borrowing Base Certificate required pursuant
to Section 5.06.
(g) UCC Searches. At the time of the making of the first Loan or the
issuance of the first Letter of Credit following the entry of the Final Order,
the Agent shall have received UCC searches conducted in the jurisdictions in
which the Borrower and the Guarantors conduct business (dated as of a date
reasonably satisfactory to the Agent), reflecting the absence of Liens and
encumbrances on the assets of the Borrower and the Guarantors other than Liens
granted (or otherwise permitted) under the Existing Agreements or the Real
Estate Financiers or Permitted Liens and such other Liens as may be satisfactory
to the Agent.
The request by the Borrower for, and the acceptance by the Borrower of, each
extension of credit hereunder shall be deemed to be a representation and
warranty by the Borrower that the conditions specified in this Section have been
satisfied or waived at that time.
SECTION 6. AFFIRMATIVE COVENANTS
From the date hereof and for so long as any Commitment shall be in
effect or any Letter of Credit shall remain outstanding (in a face amount in
excess of the amount of cash then held in the Letter of Credit Account, or in
excess of the face amount of back-to-back letters of credit delivered, in each
48
case pursuant to Section 2.03(b)), or any amount shall remain outstanding or
unpaid under this Agreement, the Borrower and each of the Guarantors agree that,
unless the Required Banks shall otherwise consent in writing, the Borrower and
each of the Guarantors will:
SECTION 6.1 Financial Statements, Reports, etc. In the case of the Borrower
and the Guarantors, deliver to the Agent and each of the Banks:
(1) within 90 days after the end of each fiscal year, the Borrower's
consolidated balance sheets and related statements of income and cash flows,
together with a consolidating schedule thereof consistent with the Budget
presentation showing the financial condition of the Borrower and its
Subsidiaries on a consolidated basis as of the close of such fiscal year and the
results of their respective operations during such year, the consolidated
statement of the Borrower to be audited for the Borrower and its consolidated
Subsidiaries by KPMG Peat Marwick or by other independent public accountants of
recognized national standing acceptable to the Required Banks and accompanied by
an opinion of such accountants (which shall not be qualified in any material
respect other than with respect to the Cases or a going concern qualification),
to the effect that such consolidated financial statements fairly present the
financial condition and results of operations of the Borrower and its
Subsidiaries on a consolidated basis in accordance with GAAP;
(2) within 45 days after the end of each of the first three fiscal
quarters, the Borrower's consolidated balance sheets and related statements of
income and cash flows, showing the financial condition of the Borrower and its
Subsidiaries on a consolidated basis as of the close of such fiscal quarter and
the results of their operations during such fiscal quarter and the then elapsed
portion of the fiscal year, each certified by a Financial Officer as fairly
presenting the financial condition and results of operations of the Borrower and
it Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments;
(3) as soon as available, but no more than 45 days after the end of
each month, the unaudited consolidated balance sheets, and related statements of
income and cash flows of the Borrower and the Guarantors on a consolidated basis
and as of the close of such fiscal month and the then elapsed portion of the
fiscal year together with a report of the EBITDA performance during the
immediately preceding month of the real estate portfolios financed by the Real
Estate Financiers;
(4) concurrently with any delivery of financial statements under (a) or
(b) above as applicable, (i) a certificate of a Financial Officer certifying
such statements (A) certifying to the best of such Financial Officer's knowledge
that no Event of Default or event which upon notice or lapse of time or both
would constitute an Event of Default has occurred, or, if such an Event of
Default or event has occurred, specifying the nature and extent thereof and any
corrective action taken or proposed to be taken with respect thereto and (B)
49
setting forth computations in reasonable detail satisfactory to the Agent
demonstrating compliance with the provisions of Sections 6.03, 6.04, 6.05 and
6.14 and (ii) a certificate (which certificate may be limited to accounting
matters and disclaim responsibility for legal interpretations) of such
accountants accompanying the audited consolidated financial statements delivered
under (a) above certifying that, in the course of the regular audit of the
business of the Borrower and its Subsidiaries, such accountants have obtained no
knowledge that an Event of Default has occurred and is continuing, or if, in the
opinion of such accountants, an Event of Default has occurred and is continuing,
specifying the nature thereof and all relevant facts with respect thereto;
(5) as soon as possible, and in any event within 45 days of the Closing
Date, a consolidated pro forma balance sheet of the Borrower's and the
Guarantors' financial condition as of the Filing Date;
(6) within 45 days from the end of each fiscal quarter of the Borrower,
an update of the Budget for the succeeding six-month period in form satisfactory
to the Agent together with an analysis of budgeted to actual performance for the
immediately preceding fiscal quarter (or a certificate from a Financial Officer
of the Borrower that the Budget need not be updated);
(7) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by it
with the Securities and Exchange Commission, or any governmental authority
succeeding to any of or all the functions of said commission, or with any
national securities exchange, as the case may be;
(8) as soon as practicable and in any event (A) within 30 days after
the Borrower or any of its ERISA Affiliates knows or has reason to know that any
Termination Event described in clause (i) of the definition of Termination Event
with respect to any Single Employer Plan has occurred and (B) within 10 days
after the Borrower or any of its ERISA Affiliates knows or has reason to know
that any other Termination Event with respect to any such Plan has occurred, a
statement of a Financial Officer of the Borrower describing such Termination
Event and the action, if any, which the Borrower or such ERISA Affiliate
proposes to take with respect thereto;
(9) promptly and in any event within 10 days after receipt thereof by
the Borrower or any of its ERISA Affiliates from the PBGC copies of each notice
received by the Borrower or any such ERISA Affiliate of the PBGC's intention to
terminate any Single Employer Plan of the Borrower or such ERISA Affiliate or to
have a trustee appointed to administer any such Plan;
(10) if requested by the Agent, promptly and in any event within 30
days after the filing thereof with the Internal Revenue Service, copies of the
annual report (Form 5500 Series) with respect to each Single Employer Plan of
the Borrower or any of its ERISA Affiliates;
50
(11) within 10 days after notice is given or required to be given to
the PBGC under Section 302(f)(4)(A) of ERISA of the failure of the Borrower or
any of its ERISA Affiliates to make timely payments to a Plan, a copy of any
such notice filed and a statement of a Financial Officer of the Borrower setting
forth (A) sufficient information necessary to determine the amount of the lien
under Section 302(f)(3) of ERISA, (B) the reason for the failure to make the
required payments and (C) the action, if any, which the Borrower or any of its
ERISA Affiliates proposed to take with respect thereto;
(12) promptly and in any event within 10 days after receipt thereof by
the Borrower or any ERISA Affiliate from a Multiemployer Plan sponsor, a copy of
each notice received by the Borrower or any ERISA Affiliate concerning (A) the
imposition of Withdrawal Liability by a Multiemployer Plan, (B) the
determination that a Multiemployer Plan is, or is expected to be, in
reorganization within the meaning of Title IV of ERISA, (C) the termination of a
Multiemployer Plan within the meaning of Title IV of ERISA, or (D) the amount of
liability incurred, or which may be incurred, by the Borrower or any ERISA
Affiliate in connection with any event described in clause (A), (B) or (C)
above;
(13) promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of the Borrower or any
Guarantor, or compliance with the terms of any material loan or financing
agreements as the Agent, at the request of any Bank, may reasonably request; and
(14) furnish to the Agent and its counsel promptly after the same is
available, copies of all pleadings, motions, applications, judicial information,
financial information and other documents filed by or on behalf of the Borrower
or any of the Guarantors with the Bankruptcy Court in the Cases, or distributed
by or on behalf of the Borrower or any of the Guarantors to any official
committee appointed in the Cases.
SECTION 6.2 Corporate Existence. Preserve and maintain in full force and
effect all governmental rights, privileges, qualifications, permits, licenses
and franchises necessary or desirable in the normal conduct of its business
except (i)(A) if in the reasonable business judgment of the Borrower or such
Guarantor, as the case may be, it is in its best economic interest not to
preserve and maintain such rights, privileges, qualifications, permits, licenses
and franchises, and (B) such failure to preserve the same could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect and (ii) as
otherwise permitted in connection with sales of assets permitted by Section
6.11.
SECTION 6.3 Insurance. (a) Keep its insurable properties insured at all
times, against such risks, including fire and other risks insured against by
extended coverage, as is customary with companies of the same or similar size in
the same or similar businesses; and maintain in full force and effect public
liability insurance against claims for personal injury or death or property
damage occurring upon, in, about or in connection with the use of any properties
owned, occupied or controlled by the Borrower or any Guarantor, as the case may
be, in such amounts and with such deductibles as are customary with companies of
the same or similar size in the same or similar businesses and in the same
geographic area; and (b) maintain such other insurance or self insurance as may
be required by law.
51
SECTION 6.4 Obligations and Taxes. With respect to the Borrower and each
Guarantor, pay all its material obligations arising after the Filing Date
promptly and in accordance with their terms and pay and discharge promptly all
material taxes, assessments and governmental charges or levies imposed upon it
or upon its income or profits or in respect of its property arising after the
Filing Date, before the same shall become in default, as well as all material
lawful claims for labor, materials and supplies or otherwise arising after the
Filing Date which, if unpaid, would become a Lien or charge upon such properties
or any part thereof; provided, however, that the Borrower and each Guarantor
shall not be required to pay and discharge or to cause to be paid and discharged
any such tax, assessment, charge, levy or claim so long as the validity or
amount thereof shall be contested in good faith by appropriate proceedings (if
the Borrower and the Guarantors shall have set aside on their books adequate
reserves therefor).
SECTION 6.5 Notice of Event of Default, Investigations, Violations, etc.
Promptly give to the Agent notice in writing of:
(1) any Event of Default or the occurrence of any event or circumstance
which with the passage of time or giving of notice or both would constitute an
Event of Default;
(2) any litigation, investigations or proceeding which may exist at any
time between the Borrower or any of the Guarantors and any Governmental
Authority, which in either case could reasonably be expected to have a Material
Adverse Effect; and
(3) the following events, as soon as possible 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 necessary for the lawful conduct of the
business or operations of the Borrower or any of the Guarantors (other than
those Health Care Permits the violation of which could not reasonably be
expected to have a Material Adverse Effect), including, without limitation, the
ownership and operation of its Health Care Facilities, (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 Borrower 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 seeking to adversely modify in any
material respect, revoke, or suspend any Medicare provider agreement, Medicaid
provider agreement, Medicare certification or Medicaid certification applicable
to any of the Health Care Facilities of the Borrower or any of the Guarantors in
any manner which could reasonably be expected to have a Material Adverse Effect,
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 Facilities of the Borrower or any of the Guarantors that could reasonably
be expected to have a Material Adverse Effect.
52
SECTION 6.6 Borrowing Base Certificate. Deliver to the Agent, 30 days after
the end of each calendar month (and, if requested by the Agent at any other time
when the Agent reasonably believes that the then-existing Borrowing Base is
materially inaccurate, as soon as reasonably available but no later than 10 days
after the request), a completed Borrowing Base Certificate in substantially the
form of Exhibit E hereto (the "Borrowing Base Certificate") calculating and
certifying the Borrowing Base as of the last day of such calendar month (or as
of such other requested date, as the case may be), with supporting documentation
(including, without limitation, the documentation described in Schedule 1 to
Exhibit E), in each case signed on behalf of the Borrower by a Financial Officer
thereof and certified as being complete and correct based on the Borrower's and
applicable Division's accounting records.
SECTION 6.7 Maintenance of Concentration Accounts. Continue to maintain
with the Agent an account or accounts to be used by the Borrower and the
Guarantors as their principal concentration accounts for day-to-day operations
conducted by the Borrower and the Guarantors.
SECTION 6.8 Books and Records, Inspection and Collateral Review Rights.
(1) The Borrower will, and will cause each of the Guarantors to, keep
proper books of record and account in which full, true and correct entries in
conformity with GAAP in all material respects and all material Requirements of
Law are made of all dealings and transactions in relation to its business and
activities. The Borrower will, and will cause each of the Guarantors to, permit
any representatives designated by the Agent, upon reasonable prior notice, to
visit and inspect its financial records and properties, to examine and make
extracts from its books and records, and to discuss its affairs, finances and
condition with its officers and independent accountants, all at such reasonable
times and as often as reasonably requested.
(2) The Borrower will, and will cause each of the Guarantors to, permit
any representatives designated by the Agent (including any consultants,
accountants, lawyers and appraisers retained by the Agent) to conduct
evaluations and appraisals of the Borrower's computation of the Borrowing Base
and the assets included in the Borrowing Base, all at such reasonable times and
as often as reasonably requested. The Borrower shall pay the reasonable fees and
expenses of any such representatives retained by the Agent as to which invoices
have been furnished to conduct any such evaluation or appraisal, including,
without limitation, the reasonable fees and expenses associated with collateral
monitoring services. To the extent required by the Agent as a result of any such
evaluation, appraisal or monitoring, the Borrower also agrees to modify or
adjust the computation of the Borrowing Base (which may include maintaining
additional reserves, modifying the advance rates or modifying the eligibility
criteria for the components of the Borrowing Base).
53
(3) In the event that historical accounting practices, systems or
reserves relating to the components of the Borrowing Base are modified in a
manner that is adverse to the Banks in any material respect, the Borrower will
agree to maintain such additional reserves (for purposes of computing the
Borrowing Base) in respect to the components of the Borrowing Base and make such
other adjustments to its parameters for including the components of the
Borrowing Base as the Agent shall reasonably require based upon such
modifications.
SECTION 6.9 Conduct of Business and Maintenance of Existence, etc. (a) (i)
Continue to engage in the business of owning, operating, managing and/or
financing Health Care Facilities (except with respect to Health Care Facilities
which may be disposed of during the Case in accordance with this Agreement) and
providing other services or amenities customarily provided by, or other
activities customarily undertaken by, Persons owning, operating, managing and/or
financing Health Care Facilities (except with respect to Health Care Facilities
which may be disposed of during the Case in accordance with this Agreement),
(ii) except as set forth in Section 5.10, preserve, renew and keep in full force
and effect its corporate existence (except as otherwise permitted by Section
6.11) and (iii) take all reasonable action to maintain all rights, privileges
and franchises necessary or desirable in the normal conduct of its business,
except, in each case, as otherwise permitted by Section 6.11 and except, in the
case of clause (iii) above, to the extent that failure to do so could not
reasonably be expected to have a Material Adverse Effect; and (b) comply with
all Contractual Obligations and Requirements of Law except to the extent that
failure to comply therewith could not, in the aggregate, reasonably be expected
to have a Material Adverse Effect.
SECTION 6.10 Health Care Permits and Approvals. Take all action reasonably
necessary to (a) 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 (except with respect to Health Care
Facilities which may be disposed of during the Case in accordance with this
Agreement), pursuant to all Requirements of Law and (b) ensure that all Health
Care Facilities (except with respect to Health Care Facilities which may be
disposed of during the Case in accordance with this Agreement) owned, leased,
managed or operated by the Borrower or any of the Guarantors 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 Borrower or any of the
Guarantors has decided to participate in any such program, 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.
54
SECTION 6.11 Financial Advisor. Not later than 45 days following the Filing
Date, retain, pursuant to an order entered by the Bankruptcy Court that is
satisfactory to the Agent, and thereafter continue the retention at all times
of, a financial advisor acceptable to the Agent which acceptance shall not be
unreasonably withheld (it being understood that the financial advisor heretofore
retained is acceptable to the Agent) to assist the Borrower with its operational
and financial restructuring, to monitor the Borrower's cash flows and financial
position (and to report same to the Agent) and to make such financial advisor
available to the Agent to discuss the Borrower's operations, financial
performance and cash flow reports upon the Agent's reasonable request.
SECTION 6.12 Annual Operating Budget; Financial Forecast. As soon as
practicable, and in any event not later than (x) September 30, 2000, furnish to
the Agent the Borrower's annual operating budget (in form and substance
consistent with the historical practices of the Borrower) and (y) December 31,
2000, furnish to the Agent the Borrower's three-year financial forecast for the
three-year period ending September 30, 2003 (which shall include a timetable for
the implementation of the business strategies set forth therein), which shall be
satisfactory in form and substance to the Agent and make its senior officers
available to discuss the same with the Agent upon the Agent's reasonable
request.
SECTION 7. NEGATIVE COVENANTS
From the date hereof and for so long as any Commitment shall be in
effect or any Letter of Credit shall remain outstanding (in a face amount in
excess of the amount of cash then held in the Letter of Credit Account, or in
excess of the face amount of back-to-back letters of credit delivered, in each
case pursuant to Section 2.03(b)) or any amount shall remain outstanding or
unpaid under this Agreement, unless the Required Banks shall otherwise consent
in writing, the Borrower and each of the Guarantors will not (and will not apply
to the Bankruptcy Court for authority to):
SECTION 7.1 Liens. Incur, create, assume or suffer to exist any Lien on any
asset of the Borrower or the Guarantors, now owned or hereafter acquired by the
Borrower or any of such Guarantors, other than (i) Liens which were existing on
the Filing Date as reflected on Schedule 3.06 hereto and Liens granted pursuant
to the Existing Agreement; (ii) Liens in favor of the Existing Lenders as
adequate protection granted pursuant to the Orders, which Liens are junior to
the Liens contemplated hereby in favor of the Agent and the Banks, provided that
the Interim Order and the Final Order provide that the holder of such junior
Liens shall not be permitted to take any action to foreclose with respect to
such junior Liens so long as any amounts shall remain outstanding hereunder or
any Commitment shall be in effect; (iii) Permitted Liens; (iv) Liens in favor of
the Agent and the Banks; (v) Liens in existence as of the Filing Date in favor
of the Real Estate Financiers; and (vi) Liens securing purchase money
Indebtedness or Capitalized Leases permitted by Section 6.03.
SECTION 7.2 Merger, etc. Consolidate or merge with or into another Person
except that any Guarantor may merge with or into any other Guarantor or the
Borrower. The Borrower shall give the Agent no less than 10 days' prior written
notice before the consummation of any merger permitted hereby.
55
SECTION 7.3 Indebtedness. Contract, create, incur, assume or suffer to
exist any Indebtedness, except for (i) Indebtedness under this Agreement; (ii)
Indebtedness incurred prior to the Filing Date (including existing Capitalized
Leases); (iii) Indebtedness incurred subsequent to the Filing Date secured by
purchase money Liens in an aggregate outstanding amount not to exceed
$2,500,000; (iv) Indebtedness incurred subsequent to the Filing Date in
connection with Capitalized Leases in an amount not in excess of $2,500,000; (v)
Indebtedness arising from Investments among the Borrower and the Guarantors that
are permitted hereunder; (vi) Indebtedness which is secured by a Lien permitted
by Section 6.01; (vii) Indebtedness owed to Mellon or any of its banking
Affiliates in respect of any overdrafts and related liabilities arising from
treasury, depository and cash management services or in connection with any
automated clearing house transfers of funds; and (viii) Indebtedness among the
Borrower and the Guarantors.
SECTION 7.4 Capital Expenditures. (a) Make Capital Expenditures (inclusive
of Capital Expenditures described in paragraph (b) of this Section) during each
consecutive three-month period ending on the dates listed below in excess of the
amount opposite such date, provided that if the amount of the actual Capital
Expenditures that are made during any three-month period is less than the amount
thereof that is permitted to be made during such three-month period, the unused
portion thereof may be carried forward to and made during the immediately
following three-month period:
Three-Month Period Ending Capital Expenditures
------------------------- --------------------
July 31, 2000 $2,480,000
August 31, 2000 $2,480,000
September 30, 2000 $2,480,000
October 31, 2000 $2,480,000
November 30, 2000 $2,480,000
December 31, 2000 $2,480,000
January 31, 2001 $2,480,000
February 28, 2001 $2,480,000
March 31, 2001 $2,480,000
April 30, 2001 $2,480,000
May 31, 2001 $2,480,000
June 30, 2001 $2,480,000
July 31, 2001 $2,480,000
August 31, 2001 $2,480,000
September 30, 2001 $2,480,000
October 31, 2001 $2,480,000
November 30, 2001 $2,480,000
December 31, 2001 $2,480,000
56
(b) In the case of any Health Care Facility that is leased from, or
subject to a Lien in favor of, a Real Estate Financier, make Capital
Expenditures in an aggregate amount in excess of $1,250,000 other than for
normal routine maintenance or required to maintain applicable Health Care
Permits.
SECTION 7.5 EBITDA. Permit EBITDA during each three-month period ending on
the dates listed below to be less than the amount appearing opposite such date:
Three Month Period Ending EBITDA
------------------------- ------
July 31, 2000 $ 9,700,000
August 31, 2000 $ 9,400,000
September 30, 2000 $ 9,400,000
October 31, 2000 $ 9,200,000
November 30, 2000 $ 9,100,000
December 31, 2000 $ 9,400,000
January 31, 2001 $10,000,000
February 28, 2001 $10,400,000
March 31, 2001 $11,100,000
April 30, 2001 $10,900,000
May 31, 2001 $11,300,000
June 30, 2001 $11,000,000
July 31, 2001 $11,500,000
August 31, 2001 $11,800,000
September 30, 2001 $12,000,000
October 31, 2001 $11,600,000
November 30, 2001 $11,100,000
December 31, 2001 $11,000,000
SECTION 7.6 Guarantees and Other Liabilities. Purchase or repurchase (or
agree, contingently or otherwise, so to do) the Indebtedness of, or assume,
guarantee (directly or indirectly or by an instrument having the effect of
assuring another's payment or performance of any obligation or capability of so
doing, or otherwise), endorse or otherwise become liable, directly or
indirectly, in connection with the obligations, stock or dividends of any
Person, except (i) for any guaranty of Indebtedness or other obligations of any
Borrower or Guarantor if the Person granting the guarantee could have incurred
such Indebtedness or obligations under this Agreement and (ii) by endorsement of
negotiable instruments for deposit or collection in the ordinary course of
business.
SECTION 7.7 Chapter 11 Claims. Incur, create, assume, suffer to exist or
permit any other Super-Priority Claim which is pari passu with or senior to the
claims of the Agent and the Banks against the Borrower and the Guarantors
hereunder, except for the Carve-Out.
57
SECTION 7.8 Dividends; Capital Stock. Declare or pay, directly or
indirectly, any dividends or make any other distribution or payment, whether in
cash, property, securities or a combination thereof, with respect to (whether by
reduction of capital or otherwise) any shares of capital stock (or any options,
warrants, rights or other equity securities or agreements relating to any
capital stock), or set apart any sum for the aforesaid purposes, provided that
any Guarantor may pay dividends or make distributions or other payments to its
direct parent or to the Borrower.
SECTION 7.9 Transactions with Affiliates. Sell or transfer any property or
assets to, or otherwise engage in any other material transactions with, any of
its Affiliates (other than the Borrower and the Guarantors), other than in the
ordinary course of business at prices and on terms and conditions not less
favorable to the Borrower or such Guarantor than could be obtained on an
arm's-length basis from unrelated third parties.
SECTION 7.10 Investments, Loans and Advances. Purchase, hold or acquire any
capital stock, evidences of indebtedness or other securities of, make or permit
to exist any loans or advances to, or make or permit to exist any investment in,
any other Person (including, without limitation, to Multicare or any of its
Subsidiaries or any Subsidiary of the Borrower that is not a Guarantor or that
has not commenced a Case) (all of the foregoing, "Investments"), except for (i)
ownership by the Borrower or the Guarantors of the capital stock of each of the
Subsidiaries listed on Schedule 3.05, (ii) Permitted Investments, (iii) advances
and loans by or among the Borrower and the Guarantors in the ordinary course of
business and (iv) advances and loans after the Filing Date by the Borrower or
any Guarantor to managed properties not in excess of $1,000,000 in the aggregate
at any one time outstanding.
SECTION 7.11 Disposition of Assets. Sell or otherwise dispose of any assets
(including, without limitation, the capital stock of any Subsidiary) except for
(i) sales of inventory, fixtures and equipment in the ordinary course of
business, (ii) sales of surplus or obsolete personal property or fixtures, (iii)
sales of assets described on Schedule 6.11 upon terms reasonably acceptable to
the Agent and the Required Banks and (iv) sales or other dispositions of other
assets having a fair market value not exceeding $1,500,000 in the aggregate.
SECTION 7.12 Nature of Business. Modify or alter in any material manner the
nature and type of its business as conducted at or prior to the Filing Date or
the manner in which such business is conducted (except as required by the
Bankruptcy Code), it being understood that asset sales permitted by Section 6.11
shall not constitute such a material modification or alteration.
SECTION 7.13 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
58
any Health Care Facility (except with respect to Health Care Facilities which
may be disposed of during the Case in accordance with this Agreement) owned or
leased by the Borrower or any of the Guarantors of the right 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 Borrower or such Guarantor has decided to
participate in any such program, and to receive reimbursement from private and
commercial payers and health maintenance organizations to the extent applicable
thereto, in each case, except where 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 or would not be
inconsistent with the Borrower's three-year financial forecast heretofore
delivered to the Agent and the Banks.
SECTION 7.14 Census. Allow the patient census of the Borrower's and the
Guarantors' Health Care Facilities when taken as a whole, to fall below 88.3% of
the number of licensed available beds in such Health Care Facilities, taken as a
whole (computed in a manner consistent with reporting practices existing on the
Filing Date).
SECTION 7.15 Assumption of Provider Agreements. Assume, without the prior
written consent of the Agent, any provider agreement between the Borrower or any
Guarantor and any Governmental Authority.
SECTION 7.16 Modification of the Multicare Management Agreement. Permit any
modification, amendment or alteration in any material respect to the Multicare
Management Agreement.
SECTION 7.17 Facility Usage. Permit the sum of the aggregate principal
amount of all outstanding Loans plus the aggregate Letter of Credit Outstandings
during each period commencing five (5) days before and ending five (5) days
after each of the dates listed below to be greater than the amount appearing
opposite such date (or, if less, the amount of the Borrowing Base as of such
date):
Date Amount
------------------ -----------
September 30, 2000 $25,000,000
December 31, 2000 $20,000,000
March 31, 2001 $15,000,000
June 30, 2001 $15,000,000
59
SECTION 8. EVENTS OF DEFAULT
SECTION 8.1 Events of Default. In the case of the happening of any of the
following events and the continuance thereof beyond the applicable period of
grace if any (each, an "Event of Default"):
(1) any material representation or warranty made by the Borrower or any
Guarantor in this Agreement or in any Loan Document or in connection with this
Agreement or the credit extensions hereunder or any material statement or
representation made in any report, financial statement, certificate or other
document furnished by the Borrower or any Guarantors to the Banks under or in
connection with this Agreement, shall prove to have been false or misleading in
any material respect when made or delivered; or
(2) default shall be made in the payment of any (i) Fees or interest on
the Loans, and such default shall continue unremedied for more than two (2)
Business Days or (ii) principal of the Loans or other amounts payable by the
Borrower hereunder (including, without limitation, reimbursement obligations or
cash collateralization in respect of Letters of Credit but excluding those
provided for in clause (i) above), when and as the same shall become due and
payable, whether at the due date thereof (including the Prepayment Date) or at a
date fixed for prepayment thereof or by acceleration thereof or otherwise; or
(3) default shall be made by the Borrower or any Guarantor in the due
observance or performance of any covenant, condition or agreement contained in
Section 6 hereof; or
(4) default shall be made by the Borrower or any Guarantor in the due
observance or performance of any other covenant, condition or agreement to be
observed or performed pursuant to the terms of this Agreement, the Orders or any
of the other Loan Documents and such default shall continue unremedied for more
than thirty (30) days (or, in the case of a default under Section 5.05, 5.09 or
5.10, for more than fifteen (15) days after a Responsible Officer has knowledge
of such default); or
(5) any of the Cases (other than the Case of a De Minimis Guarantor)
shall be dismissed or converted to a case under Chapter 7 of the Bankruptcy Code
(or the Borrower or any of the Guarantors (other than the Case of a De Minimis
Guarantor) shall seek such dismissal or conversion); a trustee under Chapter 7
or Chapter 11 of the Bankruptcy Code, a responsible officer or an examiner with
enlarged powers relating to the operation of the business (powers beyond those
set forth in Section 1106(a)(3) and (4) of the Bankruptcy Code) under Section
1106(b) of the Bankruptcy Code shall be appointed in any of the Cases and the
order appointing such trustee, responsible officer or examiner shall not be
reversed or vacated within 30 days after the entry thereof; or an application
shall be filed by the Borrower or any Guarantor for the approval of any other
Super-Priority Claim (other than the Carve-Out) in any of the Cases which is
pari passu with or senior to the claims of the Agent and the Banks against the
Borrower or any Guarantor hereunder, or there shall arise or be granted any such
pari passu or senior Super-Priority Claim; or
60
(6) the Bankruptcy Court shall enter an order or orders granting relief
from the automatic stay applicable under Section 362 of the Bankruptcy Code to
the holder or holders of any security interest to permit foreclosure (or the
granting of a deed in lieu of foreclosure or the like) on any assets of the
Borrower or any of the Guarantors which have a value in excess of $2,000,000 in
the aggregate; or
(7) a Change of Control shall occur; or
(8) the Borrower shall fail to deliver a certified Borrowing Base
Certificate when due and such default shall continue unremedied for more than
three (3) Business Days; or
(9) any material provision of any Loan Document shall, for any reason,
cease to be valid and binding on the Borrower or any of the Guarantors, or the
Borrower or any of the Guarantors shall so assert in any pleading filed in any
court; or
(10) an order of the Bankruptcy Court shall be entered reversing,
amending, supplementing, staying for a period in excess of 10 days, vacating or
otherwise modifying either of the Orders or terminating the use of cash
collateral under the Existing Agreements by the Borrower or the Guarantors
pursuant to the Orders; or
(11) any judgment or order as to a post-petition liability or debt for
the payment of money in excess of $2,000,000 not covered by insurance shall be
rendered against the Borrower or any of the Guarantors and the enforcement
thereof shall not have been stayed; or
(12) any non-monetary judgment or order with respect to a post-petition
event shall be rendered against the Borrower or any of the Guarantors which does
or would reasonably be expected to (i) cause a material adverse change in the
financial condition, business, prospects, operations or assets of the Borrower
and the Guarantors taken as a whole on a consolidated basis, (ii) have a
material adverse effect on the ability of the Borrower or any of the Guarantors
to perform their respective obligations under any Loan Document, or (iii) have a
material adverse effect on the rights and remedies of the Agent or any Bank
under any Loan Document, and there shall be any period of 10 consecutive days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or
(13) except as permitted by the Orders, the Borrower or the Guarantors
shall make any Pre-Petition Payment other than Pre-Petition Payments authorized
by the Bankruptcy Court in one or more orders or "so-ordered" stipulations (i)
not in excess of $5,000,000 in respect of certain critical vendors(other than
Genesis), (ii) not in excess of $500,000 in respect of valid reclamation claims,
(iii) in respect of accrued payroll and related expenses and employee benefits
as of the Filing Date, (iv) in respect of cure amounts for assumed executory
contracts and unexpired nonresidential leases, (v) in respect of ordinary course
expenditures and (vi) payments in accordance with other "first day" orders
approved by the Agent; or
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(14) any Termination Event described in clauses (iii) or (iv) of the
definition of such term shall have occurred and shall continue unremedied for
more than 10 days and the sum (determined as of the date of occurrence of such
Termination Event) of the Insufficiency of the Plan in respect of which such
Termination Event shall have occurred and be continuing and the Insufficiency of
any and all other Plans with respect to which such a Termination Event
(described in such clauses (iii) or (iv)) shall have occurred and then exist is
equal to or greater than $3,000,000; or
(15) (i) the Borrower or any ERISA Affiliate thereof shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred Withdrawal
Liability to such Multiemployer Plan, (ii) the Borrower or such ERISA Affiliate
does not have reasonable grounds to contest such Withdrawal Liability and is not
in fact contesting such Withdrawal Liability in a timely and appropriate manner,
and (iii) the amount of such Withdrawal Liability specified in such notice, when
aggregated with all other amounts required to be paid to Multiemployer Plans in
connection with Withdrawal Liabilities (determined as of the date of such
notification), exceeds $3,000,000 allocable to post-petition obligations or
requires payments exceeding $500,000 per annum; or
(16) the Borrower or any ERISA Affiliate thereof shall have been
notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is
in reorganization or is being terminated, within the meaning of Title IV of
ERISA, if as a result of such reorganization or termination the aggregate annual
contributions of the Borrower and its ERISA Affiliates to all Multiemployer
Plans that are then in reorganization or being terminated have been or will be
increased over the amounts contributed to such Multiemployer Plans for the plan
years that include the date hereof by an amount exceeding $3,000,000; or
(17) the Borrower or any ERISA Affiliate shall have committed a failure
described in Section 302(f)(1) of ERISA (other than the failure to make any
contribution accrued and unpaid as of the Filing Date) and the amount determined
under Section 302(f)(3) of ERISA is equal to or greater than $3,000,000; or
(18) it shall be determined (whether by the Bankruptcy Court or by any
other judicial or administrative forum) that the Borrower or any Guarantor is
liable for the payment of claims arising out of any failure to comply (or to
have complied) with applicable environmental laws or regulations the payment of
which will have a Material Adverse Effect on the financial condition, business,
properties, operations or assets of the Borrower or the Guarantors, taken as a
whole, and the enforcement thereof shall not have been stayed; or
then, and in every such event and at any time thereafter during the continuance
of such event, and without further order of or application to the Bankruptcy
Court, the Agent may, and at the request of the Required Banks, shall, by notice
to the Borrower (with a copy to counsel for the Official Creditors' Committee
appointed in the Cases, to counsel for the Pre-Petition Agent and to the United
States Trustee for the District of Delaware), take one or more of the following
actions, at the same or different times (provided, that with respect to clause
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(iv) below and the enforcement of Liens or other remedies with respect to the
Collateral under clause (v) below, the Agent shall provide the Borrower (with a
copy to counsel for the Official Creditors' Committee in the Cases, to counsel
for the Pre-Petition Agent and to the United States Trustee for the District of
Delaware) with five (5) Business Days' written notice prior to taking the action
contemplated thereby and provided, further, that upon receipt of notice referred
to in the immediately preceding clause with respect to the accounts referred to
in clause (iv) below, the Borrower may continue to make ordinary course
disbursements from such accounts (other than the Letter of Credit Account) but
may not withdraw or disburse any other amounts from such accounts): (i)
terminate forthwith the Total Commitment; (ii) declare the Loans then
outstanding to be forthwith due and payable, whereupon the principal of the
Loans together with accrued interest thereon and any unpaid accrued Fees and all
other liabilities of the Borrower accrued hereunder and under any other Loan
Document, shall become forthwith due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived by the Borrower and the Guarantors, anything contained herein or in any
other Loan Document to the contrary notwithstanding; (iii) require the Borrower
and the Guarantors upon demand to forthwith deposit in the Letter of Credit
Account cash in an amount which, together with any amounts then held in the
Letter of Credit Account, is equal to the sum of 105% of the then outstanding
Letters of Credit (and to the extent the Borrower and the Guarantors shall fail
to furnish such funds as demanded by the Agent, the Agent shall be authorized to
debit the accounts of the Borrower and the Guarantors maintained with the Agent
in such amount five (5) Business Days after the giving of the notice referred to
above); (iv) set-off amounts in the Letter of Credit Account or any other
accounts maintained with the Agent and apply such amounts to the obligations of
the Borrower and the Guarantors hereunder and in the other Loan Documents; and
(v) exercise any and all remedies under the Loan Documents and under applicable
law available to the Agent and the Banks.
SECTION 9. THE AGENT
SECTION 9.1 Administration by Agent. The general administration of the Loan
Documents shall be by the Agent. Each Bank hereby irrevocably authorizes the
Agent, at its discretion, to take or refrain from taking such actions as agent
on its behalf and to exercise or refrain from exercising such powers under the
Loan Documents as are delegated by the terms hereof or thereof, as appropriate,
together with all powers reasonably incidental thereto (including the release of
Collateral in connection with any transaction that is expressly permitted by the
Loan Documents). The Agent shall have no duties or responsibilities except as
set forth in this Agreement and the remaining Loan Documents.
SECTION 9.2 Advances and Paymentsa.
(1) On the date of each Loan, the Agent shall be authorized (but not
obligated) to advance, for the account of each of the Banks, the amount of the
Loan to be made by it in accordance with its Commitment hereunder. Should the
Agent do so, each of the Banks agrees forthwith to reimburse the Agent in
immediately available funds for the amount so advanced on its behalf by the
Agent, together with interest at the Federal Funds Effective Rate if not so
reimbursed on the date due from and including such date but not including the
date of reimbursement.
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(2) Any amounts received by the Agent in connection with this Agreement
(other than amounts to which the Agent is entitled pursuant to Sections 2.19,
8.06, 10.05 and 10.06), the application of which is not otherwise provided for
in this Agreement shall be applied, first, in accordance with each Bank's
Commitment Percentage to pay accrued but unpaid Commitment Fees or Letter of
Credit Fees, and second, in accordance with each Bank's Commitment Percentage to
pay accrued but unpaid interest and the principal balance outstanding and all
unreimbursed Letter of Credit drawings. All amounts to be paid to a Bank by the
Agent shall be credited to that Bank, after collection by the Agent, in
immediately available funds either by wire transfer or deposit in that Bank's
correspondent account with the Agent, as such Bank and the Agent shall from time
to time agree.
SECTION 9.3 Sharing of Setoffs. Each Bank agrees that if it shall, through
the exercise of a right of banker's lien, setoff or counterclaim against the
Borrower, including, but not limited to, a secured claim under Section 506 of
the Bankruptcy Code or other security or interest arising from, or in lieu of,
such secured claim and received by such Bank under any applicable bankruptcy,
insolvency or other similar law, or otherwise, obtain payment in respect of its
Loans as a result of which the unpaid portion of its Loans is proportionately
less than the unpaid portion of the Loans of any other Bank (a) it shall
promptly purchase at par (and shall be deemed to have thereupon purchased) from
such other Bank a participation in the Loans of such other Bank, so that the
aggregate unpaid principal amount of each Bank's Loans and its participation in
Loans of the other Banks shall be in the same proportion to the aggregate unpaid
principal amount of all Loans then outstanding as the principal amount of its
Loans prior to the obtaining of such payment was to the principal amount of all
Loans outstanding prior to the obtaining of such payment and (b) such other
adjustments shall be made from time to time as shall be equitable to ensure that
the Banks share such payment pro-rata, provided that if any such non-pro-rata
payment is thereafter recovered or otherwise set aside such purchase of
participations shall be rescinded (without interest). The Borrower expressly
consents to the foregoing arrangements and agrees that any Bank holding (or
deemed to be holding) a participation in a Loan may exercise any and all rights
of banker's lien, setoff (in each case, subject to the same notice requirements
as pertain to clause (iv) of the remedial provisions of Section 7.01) or
counterclaim with respect to any and all moneys owing by the Borrower to such
Bank as fully as if such Bank held a Note and was the original obligee thereon,
in the amount of such participation.
SECTION 9.4 Agreement of Required Banksof Required Banksof Required Banks.
Upon any occasion requiring or permitting an approval, consent, waiver, election
or other action on the part of the Required Banks, action shall be taken by the
Agent for and on behalf or for the benefit of all Banks upon the direction of
the Required Banks, and any such action shall be binding on all Banks. No
amendment, modification, consent, or waiver shall be effective except in
accordance with the provisions of Section 10.10.
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SECTION 9.5 Liability of Agent.
(1) The Agent when acting on behalf of the Banks, may execute any of
its respective duties under this Agreement by or through any of its respective
officers, agents, and employees, and neither the Agent nor its directors,
officers, agents, employees or Affiliates shall be liable to the Banks or any of
them for any action taken or omitted to be taken in good faith, or be
responsible to the Banks or to any of them for the consequences of any oversight
or error of judgment, or for any loss, unless the same shall happen through its
gross negligence or willful misconduct. The Agent and its respective directors,
officers, agents, employees and Affiliates shall in no event be liable to the
Banks or to any of them for any action taken or omitted to be taken by them
pursuant to instructions received by them from the Required Banks or in reliance
upon the advice of counsel selected by it. Without limiting the foregoing,
neither the Agent, nor any of its respective directors, officers, employees,
agents or Affiliates shall be responsible to any Bank for the due execution,
validity, genuineness, effectiveness, sufficiency, or enforceability of, or for
any statement, warranty, or representation in, this Agreement, any Loan Document
or any related agreement, document or order, or shall be required to ascertain
or to make any inquiry concerning the performance or observance by the Borrower
of any of the terms, conditions, covenants, or agreements of this Agreement or
any of the Loan Documents.
(2) Neither the Agent nor any of its respective directors, officers,
employees, agents or Affiliates shall have any responsibility to the Borrower or
the Guarantors on account of the failure or delay in performance or breach by
any Bank or by the Borrower or the Guarantors of any of their respective
obligations under this Agreement or any of the Loan Documents or in connection
herewith or therewith.
(3) The Agent, in its capacity as Agent hereunder, shall be entitled to
rely on any communication, instrument, or document reasonably believed by such
person to be genuine or correct and to have been signed or sent by a person or
persons believed by such person to be the proper person or persons, and such
person shall be entitled to rely on advice of legal counsel, independent public
accountants, and other professional advisers and experts selected by such
person.
SECTION 9.6 Reimbursement and Indemnification. Each Bank agrees (i) to
reimburse (x) the Agent for such Bank's Commitment Percentage of any expenses
and fees incurred for the benefit of the Banks under this Agreement and any of
the Loan Documents, including, without limitation, counsel fees and compensation
of agents and employees paid for services rendered on behalf of the Banks, and
any other expense incurred in connection with the operations or enforcement
thereof not reimbursed by the Borrower or the Guarantors and (y) the Agent for
such Bank's Commitment Percentage of any expenses of the Agent incurred for the
benefit of the Banks that the Borrower has agreed to reimburse pursuant to
Section 10.05 and has failed to so reimburse and (ii) to indemnify and hold
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harmless the Agent and any of its directors, officers, employees, agents or
Affiliates, on demand, in the amount of its proportionate share, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against it
or any of them in any way relating to or arising out of this Agreement or any of
the Loan Documents or any action taken or omitted by it or any of them under
this Agreement or any of the Loan Documents to the extent not reimbursed by the
Borrower or the Guarantors (except such as shall result from their respective
gross negligence or willful misconduct).
SECTION 9.7 Rights of Agent. It is understood and agreed that Mellon shall
have the same rights and powers hereunder (including the right to give such
instructions) as the other Banks and may exercise such rights and powers, as
well as its rights and powers under other agreements and instruments to which it
is or may be party, and engage in other transactions with the Borrower or any
Guarantor, as though it were not the Agent of the Banks under this Agreement.
SECTION 9.8 Independent Banks. Each Bank acknowledges that it has decided
to enter into this Agreement and to make the Loans hereunder based on its own
analysis of the transactions contemplated hereby and of the creditworthiness of
the Borrower and the Guarantors and agrees that the Agent shall bear no
responsibility therefor.
SECTION 9.9 Notice of Transfer. The Agent may deem and treat a Bank party
to this Agreement as the owner of such Bank's portion of the Loans for all
purposes, unless and until a written notice of the assignment or transfer
thereof executed by such Bank shall have been received by the Agent.
SECTION 9.10 Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Banks and the Borrower. Upon any such resignation,
the Required Banks shall have the right to appoint a successor Agent, which
shall be reasonably satisfactory to the Borrower. If no successor Agent shall
have been so appointed by the Required Banks and shall have accepted such
appointment, within 30 days after the retiring Agent's giving of notice of
resignation, the retiring Agent may, on behalf of the Banks, appoint a successor
Agent, which shall be a commercial bank organized under the laws of the United
States of America or of any State thereof and having a combined capital and
surplus of a least $100,000,000, which shall be reasonably satisfactory to the
Borrower. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 8 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement.
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SECTION 10. GUARANTY
SECTION 10.1 Guaranty.
(1) Each of the Guarantors unconditionally and irrevocably guarantees
the due and punctual payment and performance by the Borrower of the Obligations.
Each of the Guarantors further agrees that the Obligations may be extended or
renewed, in whole or in part, without notice to or further assent from it, and
it will remain bound upon this guaranty notwithstanding any extension or renewal
of any of the Obligations. The Obligations of the Guarantors shall be joint and
several.
(2) Each of the Guarantors waives presentation to, demand for payment
from and protest to the Borrower or any other Guarantor, and also waives notice
of protest for nonpayment. The Obligations of the Guarantors hereunder shall not
be affected by (i) the failure of the Agent or a Bank to assert any claim or
demand or to enforce any right or remedy against the Borrower or any other
Guarantor under the provisions of this Agreement or any other Loan Document or
otherwise; (ii) any extension or renewal of any provision hereof or thereof;
(iii) any rescission, waiver, compromise, acceleration, amendment or
modification of any of the terms or provisions of any of the Loan Documents;
(iv) the release, exchange, waiver or foreclosure of any security held by the
Agent for the Obligations or any of them; (v) the failure of the Agent or a Bank
to exercise any right or remedy against any other Guarantor; or (vi) the release
or substitution of any Guarantor or any other Guarantor.
(3) Each of the Guarantors further agrees that this guaranty
constitutes a guaranty of performance and of payment when due and not just of
collection, and waives any right to require that any resort be had by the Agent
or a Bank to any security held for payment of the Obligations or to any balance
of any deposit, account or credit on the books of the Agent or a Bank in favor
of the Borrower or any other Guarantor, or to any other Person.
(4) Each of the Guarantors hereby waives any defense that it might have
based on a failure to remain informed of the financial condition of the Borrower
and of any other Guarantor and any circumstances affecting the ability of the
Borrower to perform under this Agreement.
(5) Each Guarantor's guaranty shall not be affected by the genuineness,
validity, regularity or enforceability of the Obligations or any other
instrument evidencing any Obligations, or by the existence, validity,
enforceability, perfection, or extent of any collateral therefor or by any other
circumstance relating to the Obligations which might otherwise constitute a
defense to this Guaranty. Neither of the Agent, nor any of the Banks makes any
representation or warranty in respect to any such circumstances or shall have
any duty or responsibility whatsoever to any Guarantor in respect of the
management and maintenance of the Obligations.
(6) Subject to the provisions of Section 7.01, upon the Obligations
becoming due and payable (by acceleration or otherwise), the Banks shall be
entitled to immediate payment of such Obligations by the Guarantors upon written
demand by the Agent, without further application to or order of the Bankruptcy
Court.
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SECTION 10.2 No Impairment of Guaranty. The obligations of the Guarantors
hereunder shall not be subject to any reduction, limitation, impairment or
termination for any reason, including, without limitation, any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to any
defense or set-off, counterclaim, recoupment or termination whatsoever by reason
of the invalidity, illegality or unenforceability of the Obligations. Without
limiting the generality of the foregoing, the obligations of the Guarantors
hereunder shall not be discharged or impaired or otherwise affected by the
failure of the Agent or a Bank to assert any claim or demand or to enforce any
remedy under this Agreement or any other agreement, by any waiver or
modification of any provision thereof, by any default, failure or delay, willful
or otherwise, in the performance of the Obligations, or by any other act or
thing or omission or delay to do any other act or thing which may or might in
any manner or to any extent vary the risk of the Guarantors or would otherwise
operate as a discharge of the Guarantors as a matter of law, unless and until
the Obligations are paid in full.
SECTION 10.3 Subrogation. Upon payment by any Guarantor of any sums to the
Agent or a Bank hereunder, all rights of such Guarantor against the Borrower
arising as a result thereof by way of right of subrogation or otherwise, shall
in all respects be subordinate and junior in right of payment to the prior final
and indefeasible payment in full of all the Obligations. If any amount shall be
paid to such Guarantor for the account of the Borrower, such amount shall be
held in trust for the benefit of the Agent and the Banks and shall forthwith be
paid to the Agent and the Banks to be credited and applied to the Obligations,
whether matured or unmatured.
SECTION 11. MISCELLANEOUS
SECTION 11.1 Notices. Notices and other communications provided for herein
shall be in writing (including telegraphic, telex, facsimile or cable
communication) and shall be mailed, telegraphed, telexed, transmitted, cabled or
delivered to the Borrower, or any Guarantor in care of the Borrower, at 101 East
State Street, Kennett Square, Pennsylvania 19348, Attention: Chief Financial
Officer, with copies to Willkie Farr & Gallagher, 787 Seventh Avenue, New York,
New York 10019-6099, Attn: Marc Abrams, Esq., and to a Bank or the Agent to it
at its address set forth on Annex A with copies to Morgan, Lewis & Bockius LLP,
101 Park Avenue, New York, New York, 10178, Attn: Richard S. Toder, Esq. and
Drinker, Biddle & Reath LLP, One Logan Square, 18th & Cherry Streets,
Philadelphia, PA, 19103-6968, Attn: Jill Bronson, Esq., or such other address as
such party may from time to time designate by giving written notice to the other
parties hereunder. All notices and other communications given to any party
hereto in accordance with the provisions of this Agreement shall be deemed to
have been given on the fifth Business Day after the date when sent by registered
or certified mail, postage prepaid, return receipt requested, if by mail; or
when delivered to the telegraph company, charges prepaid, if by telegram; or
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when receipt is acknowledged, if by any telegraphic communications or facsimile
equipment of the sender; or on the first Business Day after delivery to an
overnight courier (charges prepaid); or when received, if by hand delivery; in
each case addressed to such party as provided in this Section 10.01 or in
accordance with the latest unrevoked written direction from such party;
provided, however, that in the case of notices to the Agent notices pursuant to
the preceding sentence with respect to change of address and pursuant to Section
2 shall be effective only when received by the Agent.
SECTION 11.2 Survival of Agreement, Representations and Warranties, etc.
All warranties, representations and covenants made by the Borrower or
any Guarantor herein or in any certificate or other instrument delivered by it
or on its behalf in connection with this Agreement shall be considered to have
been relied upon by the Banks and shall survive the making of the Loans herein
contemplated regardless of any investigation made by any Bank or on its behalf
and shall continue in full force and effect so long as any amount due or to
become due hereunder is outstanding and unpaid and so long as the Commitments
have not been terminated. All statements in any such certificate or other
instrument shall constitute representations and warranties by the Borrower and
the Guarantors hereunder with respect to the Borrower.
SECTION 11.3 Successors and Assigns.
(1) This Agreement shall be binding upon and inure to the benefit of
the Borrower, the Agent and the Banks and their respective successors and
assigns. Neither the Borrower nor any of the Guarantors may assign or transfer
any of their rights or obligations hereunder without the prior written consent
of all of the Banks. Each Bank may sell participations to any Person in all or
part of any Loan, or all or part of its Commitment, in which event, without
limiting the foregoing, the provisions of Section 2.15 shall inure to the
benefit of each purchaser of a participation (provided that such participant
shall look solely to the seller of such participation for such benefits and the
Borrower's and the Guarantors' liability, if any, under Sections 2.15 and 2.18
shall not be increased as a result of the sale of any such participation) and
the pro rata treatment of payments, as described in Section 2.17, shall be
determined as if such Bank had not sold such participation. In the event any
Bank shall sell any participation, such Bank shall retain the sole right and
responsibility to enforce the obligations of the Borrower and each of the
Guarantors relating to the Loans, including, without limitation, the right to
approve any amendment, modification or waiver of any provision of this Agreement
(provided that such Bank may grant its participant the right to consent to such
Bank's execution of amendments, modifications or waivers which (i) reduce any
Fees payable hereunder to the Banks, (ii) reduce the amount of any scheduled
principal payment on any Loan or reduce the principal amount of any Loan or the
rate of interest payable hereunder or (iii) extend the maturity of the
Borrower's obligations hereunder). The sale of any such participation shall not
alter the rights and obligations of the Bank selling such participation
hereunder with respect to the Borrower.
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(2) Each Bank may assign to one or more Banks or Eligible Assignees all
or a portion of its interests, rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment and the same
portion of the related Loans at the time owing to it), provided, however, that
(i) other than in the case of an assignment to a Person at least 50% owned by
the assignor Bank, or by a common parent of both, or to another Bank, the Agent
and the Fronting Bank must give their respective prior written consent to such
assignment, which consent will not be unreasonably withheld, (ii) the aggregate
amount of the Commitment and/or Loans of the assigning Bank subject to each such
assignment (determined as of the date the Assignment and Acceptance with respect
to such assignment is delivered to the Agent) shall, unless otherwise agreed to
in writing by the Borrower and the Agent, in no event be less than $5,000,000 or
such lesser amount as is equal to the remaining Commitment and/or Loans of the
assignor thereof and (iii) the parties to each such assignment shall execute and
deliver to the Agent, for its acceptance and recording in the Register (as
defined below), an Assignment and Acceptance with blanks appropriately
completed, together with a processing and recordation fee of $3,500 (for which
the Borrower shall have no liability). Upon such execution, delivery, acceptance
and recording, from and after the effective date specified in each Assignment
and Acceptance, which effective date shall be within ten Business Days after the
execution thereof (unless otherwise agreed to in writing by the Agent), (A) the
assignee thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Bank hereunder
and (B) the Bank thereunder shall, to the extent provided in such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all or the remaining portion of an
assigning Bank's rights and obligations under this Agreement, such Bank shall
cease to be a party hereto).
(3) By executing and delivering an Assignment and Acceptance, the Bank
assignor thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than the representation
and warranty that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim, such Bank assignor makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any of the other Loan Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
any of the other Loan Documents; (ii) such Bank assignor makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of the Borrower or any Guarantor or the performance or observance by
the Borrower or any Guarantor of any of its obligations under this Agreement or
any of the other Loan Documents or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement and the other Loan Documents, together with copies of the
financial statements referred to in Section 3.04 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Agent, such Bank assignor or any
other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
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not taking action under this Agreement; (v) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
thereto, together with such powers as are reasonably incidental hereof; and (vi)
such assignee agrees that it will perform in accordance with their terms all
obligations that by the terms of this Agreement are required to be performed by
it as a Bank.
(4) The Agent shall maintain at its office a copy of each Assignment
and Acceptance delivered to it and a register for the recordation of the names
and addresses of the Banks and the Commitments of, and principal amount of the
Loans owing to, each Bank from time to time (the "Register"). The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Guarantors, the Agent and the Banks shall treat each Person the
name of which is recorded in the Register as a Bank hereunder for all purposes
of this Agreement. The Register shall be available for inspection by the
Borrower or any Bank at any reasonable time and from time to time upon
reasonable prior notice.
(5) Upon its receipt of an Assignment and Acceptance executed by an
assigning Bank and the assignee thereunder together with the fee payable in
respect thereto, the Agent shall, if such Assignment and Acceptance has been
completed with blanks appropriately filled and consented to by the Agent and the
Fronting Bank (to the extent such consent is required hereunder), (i) accept
such Assignment and Acceptance, (ii) record the information contained therein in
the Register and (iii) give prompt written notice thereof to the Borrower
(together with a copy thereof). No assignment shall be effective for purposes of
this Agreement unless it has been recorded in the Register as provided in this
paragraph.
(6) Any Bank may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 10.03, disclose to
the assignee or participant or proposed assignee or participant, any information
relating to the Borrower or any of the Guarantors furnished to such Bank by or
on behalf of the Borrower or any of the Guarantors; provided that prior to any
such disclosure, each such assignee or participant or proposed assignee or
participant shall agree in writing to be bound by the provisions of Section
10.04.
(7) The Borrower hereby agrees, to the extent set forth in the
Commitment Letter, to actively assist and cooperate with the Agent in the
Agent's efforts to sell participations herein (as described in Section 10.03(a))
and assign to one or more Banks or Eligible Assignees a portion of its
interests, rights and obligations under this Agreement (as set forth in Section
10.03(b)).
SECTION 11.4 Confidentiality. Each Bank agrees to keep any information
delivered or made available by the Borrower or any of the Guarantors to it
confidential from anyone other than persons employed or retained by such Bank
who are or are expected to become engaged in evaluating, approving, structuring
or administering the Loans; provided that nothing herein shall prevent any Bank
from disclosing such information (i) to any other Bank, (ii) upon the order of
71
any court or administrative agency, (iii) upon the request or demand of any
regulatory agency or authority, (iv) which has been publicly disclosed other
than as a result of a disclosure by the Agent or any Bank which is not permitted
by this Agreement, (v) in connection with any litigation to which the Agent, any
Bank, or their respective Affiliates may be a party to the extent reasonably
required, (vi) to the extent reasonably required in connection with the exercise
of any remedy hereunder, (vii) to such Bank's legal counsel and independent
auditors, and (viii) to any actual or proposed participant or assignee of all or
part of its rights hereunder subject to the proviso in Section 10.03(f). Each
Bank shall use reasonable efforts to notify the Borrower of any required
disclosure under clause (ii) of this Section.
SECTION 11.5 Expenses. Whether or not the transactions hereby contemplated
shall be consummated, the Borrower and the Guarantors agree to pay all
reasonable out-of-pocket expenses incurred by the Agent (including but not
limited to the reasonable fees and disbursements of Drinker, Biddle & Reath,
LLP, Morgan, Lewis & Bockius LLP, any other counsel that the Agent shall retain
and third-party appraisers, consultants, and auditors advising the Agent
(including but not limited to Policano & Manzo LLC and Freed Maxick ABL
Services, Inc.) as to which invoices have been furnished, in connection with the
preparation, execution, delivery and administration of this Agreement and the
other Loan Documents, the making of the Loans and the issuance of the Letters of
Credit, the perfection of the Liens contemplated hereby, the syndication of the
transactions contemplated hereby, the reasonable and customary costs, fees and
expenses of the Agent in connection with its monthly and other periodic field
audits, monitoring of assets (including reasonable and customary third-party
fees related to the initial and ongoing Borrowing Base examinations), the costs
of electronic communications services and publicity expenses, and, during the
continuance of an Event of Default, all reasonable out-of-pocket expenses
incurred by the Banks and the Agent in the enforcement or protection of the
rights of any one or more of the Banks or the Agent in connection with this
Agreement or the other Loan Documents, including but not limited to the
reasonable fees and disbursements of any counsel for the Banks or the Agent.
Such payments shall be made on the Closing Date and thereafter on demand,
promptly upon delivery of a statement setting forth such costs and expenses.
Whether or not the transactions hereby contemplated shall be consummated, the
Borrower and the Guarantors agree to reimburse the Agent for the expenses set
forth in the Commitment Letter and the reimbursement provisions thereof are
hereby incorporated herein by reference. The obligations of the Borrower and the
Guarantors under this Section shall survive the termination of this Agreement
and/or the payment of the Loans.
SECTION 11.6 Indemnity. The Borrower and each of the Guarantors agree to
indemnify and hold harmless the Agent, and the Banks and their directors,
officers, employees, agents and Affiliates (each an "Indemnified Party") from
and against any and all expenses, losses, claims, damages and liabilities
incurred by such Indemnified Party arising out of claims made by any Person in
any way relating to the transactions contemplated hereby, but excluding
therefrom all expenses, losses, claims, damages, and liabilities to the extent
that they are determined by the final judgment of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
such Indemnified Party. The obligations of the Borrower and the Guarantors under
this Section shall survive the termination of this Agreement and/or the payment
of the Loans.
72
SECTION 11.7 CHOICE OF LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
SHALL IN ALL RESPECTS BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF PENNSYLVANIA APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED
WHOLLY WITHIN SUCH STATE, WITHOUT TAKING INTO ACCOUNT ANY CONFLICT OF LAWS
PRINCIPLES THEREOF, AND THE BANKRUPTCY CODE.
SECTION 11.8 No Waiver. No failure on the part of the Agent or any of the
Banks to exercise, and no delay in exercising, any right, power or remedy
hereunder or any of the other Loan Documents shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. All remedies hereunder are cumulative and are not
exclusive of any other remedies provided by law.
SECTION 11.9 Extension of Maturity. Should any payment of principal of or
interest or any other amount due hereunder become due and payable on a day other
than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and, in the case of principal, interest shall be payable
thereon at the rate herein specified during such extension.
SECTION 11.10 Amendments, etc.
(1) No modification, amendment or waiver of any provision of this
Agreement or the other Loan Documents, and no consent to any departure by the
Borrower or any Guarantor therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Required Banks, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given; provided, however, that no such modification or amendment shall
without the written consent of the Bank affected thereby (x) increase the
Commitment of a Bank (it being understood that a waiver of an Event of Default
shall not constitute an increase in the Commitment of a Bank), or (y) reduce the
principal amount of any Loan or the rate of interest payable thereon, or extend
any date for the payment of interest hereunder or reduce any Fees payable
hereunder or extend the final maturity of the Borrower's obligations hereunder;
and, provided, further, that no such modification or amendment shall without the
written consent of (A) all of the Banks (i) amend or modify any provision of
this Agreement which provides for the unanimous consent or approval of the
Banks, (ii) amend this Section 10.10 or the definition of Required Banks, (iii)
amend or modify the Super-Priority Claim status of the Banks contemplated by
Section 2.23 or (iv) release all or any substantial portion of the Liens granted
to the Agent hereunder (other than in connection with dispositions permitted
73
hereunder), under the Orders or under any other Loan Document, or release any
Guarantor; or (B) Banks holding Loans representing at least 66-2/3% of the
aggregate principal amount of the Loans outstanding, or if no Loans are
outstanding, Banks having Commitments representing at least 66-2/3% of the Total
Commitment (i) amend any of the advance rates set forth in the definition of the
term "Borrowing Base" or (ii) increase the maximum principal amounts of
extensions of credit permitted prior to the entry of the Final Order by Section
4.01(b)(i) or 4.02(d), or otherwise modify, waive or amend the conditions
precedent set forth therein. No such amendment or modification may adversely
affect the rights and obligations of the Agent or any Fronting Bank hereunder or
any Bank in the capacity referred to in Section 6.03(vii) without its prior
written consent. No notice to or demand on the Borrower or any Guarantor shall
entitle the Borrower or any Guarantor to any other or further notice or demand
in the same, similar or other circumstances. Each assignee under Section
10.03(b) shall be bound by any amendment, modification, waiver, or consent
authorized as provided herein, and any consent by a Bank shall bind any Person
subsequently acquiring an interest on the Loans held by such Bank. No amendment
to this Agreement shall be effective against the Borrower or any Guarantor
unless signed by the Borrower or such Guarantor, as the case may be.
(2) Notwithstanding anything to the contrary contained in Section
10.10(a), in the event that the Borrower requests that this Agreement be
modified or amended in a manner which would require the unanimous consent of all
of the Banks (or the consent described in clause (B) of the first sentence of
Section 10.10(a)) and such modification or amendment is agreed to by the
Super-majority Banks (as hereinafter defined), then with the consent of the
Borrower and the Super-majority Banks, the Borrower and the Super-majority Banks
shall be permitted to amend the Agreement without the consent of the Bank or
Banks which did not agree to the modification or amendment requested by the
Borrower (such Bank or Banks, collectively the "Minority Banks") to provide for
(w) the termination of the Commitment of each of the Minority Banks, (x) the
addition to this Agreement of one or more other financial institutions (each of
which shall be an Eligible Assignee), or an increase in the Commitment of one or
more of the Super-majority Banks, so that the Total Commitment after giving
effect to such amendment shall be in the same amount as the Total Commitment
immediately before giving effect to such amendment, (y) if any Loans are
outstanding at the time of such amendment, the making of such additional Loans
by such new financial institutions or Super-majority Bank or Banks, as the case
may be, as may be necessary to repay in full the outstanding Loans of the
Minority Banks immediately before giving effect to such amendment and (z) such
other modifications to this Agreement as may be appropriate. As used herein, the
term "Super-majority Banks" shall mean, at any time, Banks holding Loans
representing at least 66-2/3% of the aggregate principal amount of the Loans
outstanding, or if no Loans are outstanding, Banks having Commitments
representing at least 66-2/3% of the Total Commitment.
SECTION 11.11 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
74
SECTION 11.12 Headings. Section headings used herein are for convenience
only and are not to affect the construction of or be taken into consideration in
interpreting this Agreement.
SECTION 11.13 Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall constitute an original, but all
of which taken together shall constitute one and the same instrument. A fax copy
of a counterpart signature page shall serve as the functional equivalent of a
manually executed copy for all purposes.
SECTION 11.14 Prior Agreements. This Agreement represents the entire
agreement of the parties with regard to the subject matter hereof and the terms
of any letters and other documentation entered into between the Borrower or a
Guarantor and any Bank or the Agent prior to the execution of this Agreement
which relate to Loans to be made hereunder shall be replaced by the terms of
this Agreement (except as otherwise expressly provided herein with respect to
the Commitment Letter and the fee letter referred to therein, including without
limitation the Borrower's agreement to actively assist the Agent in the
syndication of the transactions contemplated hereby referred to in Section
10.03(g) and including also the provisions of Section 2.16).
SECTION 11.15 Further Assurances. Whenever and so often as reasonably
requested by the Agent, the Borrower and the Guarantors will promptly execute
and deliver or cause to be executed and delivered all such other and further
instruments, documents or assurances, and promptly do or cause to be done all
such other and further things as may be necessary and reasonably required in
order to further and more fully vest in the Agent all rights, interests, powers,
benefits, privileges and advantages conferred or intended to be conferred by
this Agreement and the other Loan Documents.
SECTION 11.16 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE GUARANTORS,
THE AGENT AND EACH BANK HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY OF THE
LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
[SIGNATURE PAGES FOLLOW]
75
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and the year first written.
BORROWER:
THE MULTICARE COMPANIES, INC.
By _________________________________
Name:
Title:
Address for notices:
101 East State Street
Kennett Square, PA 19348
Attention: George V. Hager, Jr.
Senior Vice President
and Chief Financial Officer
Telephone: (610) 444-8419
Facsimile: (610) 925-4100
GUARANTORS:
ADS APPLE VALLEY LIMITED PARTNERSHIP,
by ADS Apple Valley, Inc.,
its General Partner
ADS HINGHAM LIMITED
PARTNERSHIP, by ADS Hingham
Nursing Facility, Inc., its General Partner
ADS RECUPERATIVE CENTER
LIMITED PARTNERSHIP, by ADS
Recuperative Center, Inc., its
General Partner
CARE HAVEN ASSOCIATES LIMITED PARTNERSHIP,
by Glenmark Associates, Inc.
and GMA Partnership Holding
Company, Inc., its General Partners
CUMBERLAND ASSOCIATES OF
RHODE ISLAND, L.P., by Health
Resources of Cumberland, Inc., its
General Partner
GLENMARK PROPERTIES I,
LIMITED PARTNERSHIP, by
Glenmark Associates, Inc. and GMA
Partnership Holding Company, Inc.,
its General Partners
GROTON ASSOCIATES OF
CONNECTICUT, L.P., by Health
Resources of Groton, Inc., its
General Partner
MIDDLETOWN (RI)
ASSOCIATES OF RHODE
ISLAND, L.P., by Health Resources
of Middletown (R.I.), Inc., its
General Partner
POINT PLEASANT HAVEN
LIMITED PARTNERSHIP, by
Glenmark Associates, Inc., its
General Partner
RALEIGH MANOR LIMITED
PARTNERSHIP, by Glenmark
Associates, Inc., its General Partner
Address for notices:
101 East State Street
Kennett Square, PA 19348
Attention: George V. Hager, Jr.
Senior Vice President
and Chief Financial Officer
Telephone: (610) 444-8419
Facsimile: (610) 925-4100
ROMNEY HEALTH CARE
CENTER LTD.
LIMITED PARTNERSHIP, by Glenmark
Associates, Inc., its General Partner
SISTERVILLE HAVEN LIMITED
PARTNERSHIP, by Glenmark Associates,
Inc., its General Partner
TEAYS VALLEY HAVEN LIMITED
PARTNERSHIP, by Glenmark Associates,
Inc., its General Partner
THE STRAUSS GROUP - HOPKINS
HOUSE, L.P., by Encare of Wyncote, Inc.,
its General Partner
THE STRAUS GROUP - QUAKERTOWN
MANOR, L.P., by Encare of Quakertown,
Inc., its General Partner
WALLINGFORD ASSOCIATES OF
CONNECTICUT, L.P., by Health Resources
of Wallingford, Inc., its General Partner
WARWICK ASSOCIATES OF
RHODE ISLAND, L.P., by Health
Resources of Warwick, Inc., its General
Partner
By:_________________________________
On behalf of each of the foregoing
as ____________of the General Partner
HOLLY MANOR ASSOCIATES OF NEW
JERSEY, L.P., by Encare of Mendham,
L.L.C., its General Partner, by Century Care
Management, Inc., its authorized manager
MERCERVILLE ASSOCIATES OF NEW
JERSEY, L.P., by Breyut Convalescent
Center, L.L.C., its General Partner, by Century Care
Management, Inc., its
authorized manager
POMPTON ASSOCIATES, L.P., by Pompton
Care, L.L.C., its General Partner,
by Century Care Management, Inc., its
authorized manager
THE STRAUS GROUP - OLD BRIDGE, L.P.,
by Health Resources of Emery,
L.L.C., its General Partner,
by Century Care Management, Inc.,
its authorized manager
THE STRAUS GROUP - RIDGEWOOD, L.P.,
A New Jersey limited partnership, by Health
Resources of Ridgewood, L.L.C., its General
Partner, by Century Care Management, Inc., its
authorized manager
By:__________________________
On behalf of each of the foregoing
as ______________ of the manager
Address for notices:
101 East State Street
Kennett Square, PA 19348
Attention: George V. Hager, Jr.
Senior Vice President
And Chief Financial Officer
Telephone: (610) 444-8419
Facsimile: (610) 925-4100
ACADEMY NURSING HOME, INC.
ADS APPLE VALLEY, INC.
ADS CONSULTING, INC.
ADS HINGHAM ALF, INC.
ADS HINGHAM NURSING FACILITY, INC.
ADS HOME HEALTH, INC.
ADS/MULTICARE, INC.
ADS PALM CHELMSFORD, INC.
ADS RECUPERATIVE CENTER, INC.
ADS RESERVOIR WALTHAM, INC.
ADS SENIOR HOUSING, INC.
ADS VILLAGE MANOR, INC.
ANR, INC.
APPLEWOOD HEALTH RESOURCES, INC.
ASL, INC.
AUTOMATED PROFESSIONAL ACCOUNTS, INC.
BERKS NURSING HOMES, INC.
BETHEL HEALTH RESOURCES, INC.
BRIGHTWOOD PROPERTY, INC.
CENTURY CARE CONSTRUCTION, INC.
CENTURY CARE MANAGEMENT, INC.
CHATEAU VILLAGE HEALTH RESOURCES, INC.
CHG INVESTMENT CORP., INC
CHNR-1, INC.
COLONIAL HALL HEALTH RESOURCES, INC.
COLONIAL HOUSE HEALTH RESOURCES, INC.
CONCORD HEALTH GROUP, INC.
CONCORD HOME HEALTH, INC.
CONCORD REHAB, INC.
CONCORD SERVICE CORPORATION
CVNR, INC.
DELM NURSING, INC.
ELMWOOD HEALTH RESOURCES, INC.
ENCARE OF PENNYPACK, INC.
ENCARE OF QUAKERTOWN, INC.
ENCARE OF WYNCOTE, INC.
ENR, INC.
GLENMARK ASSOCIATES, INC.
GMA - BRIGHTWOOD, INC.
GMA - CONSTRUCTION, INC.
GMA - MADISON, INC.
GMA PARTNERSHIP HOLDING COMPANY, INC.
GMA UNIONTOWN, INC.
HEALTH RESOURCES OF BOARDMAN, INC.
HEALTH RESOURCES OF CEDAR GROVE, INC.
HEALTH RESOURCES OF COLCHESTER, INC.
HEALTH RESOURCES OF COLUMBUS, INC.
HEALTH RESOURCES ON CRANBURY, INC.
HEALTH RESOURCES OF CUMBERLAND, INC.
HEALTH RESOURCES OF EATONTOWN, INC.
HEALTH RESOURCES OF FARMINGTON, INC.
HEALTH RESOURCES OF GARDNER, INC.
HEALTH RESOURCES OF GLASTONBURY, INC.
HEALTH RESOURCES OF GROTON, INC.
HEALTH RESOURCES OF LAKEVIEW, INC.
HEALTH RESOURCES OF LEMONT, INC.
HEALTH RESOURCES OF LYNN, INC.
HEALTH RESOURCES OF KARAMENTA AND MADISON, INC.
HEALTH RESOURCES OF MARCELLA, INC.
HEALTH RESOURCES OF MIDDLETOWN (R.I.), INC.
HEALTH RESOURCES OF MORRISTOWN, INC.
HEALTH RESOURCES OF NORFOLK, INC.
HEALTH RESOURCES OF NORWALK, INC.
HEALTH RESOURCES OF PENNINGTON, INC.
HEALTH RESOURCES OF ROCKVILLE, INC.
HEALTH RESOURCES OF SOUTH BRUNSWICK, INC.
HEALTH RESOURCES OF TROY HILLS, INC.
HEALTH RESOURCES OF WALLINGFORD, INC.
HEALTH RESOURCES OF WARWICK, INC.
HEALTHCARE REHAB SYSTEMS, INC.
HORIZON ASSOCIATES, INC.
HORIZON MOBILE, INC.
HORIZON REHABILITATION, INC.
HR OF CHARLESTON, INC.
HRWV HUNTINGTON, INC.
LAKEWOOD HEALTH RESOURCES, INC.
LAUREL HEALTH RESOURCES, INC.
LEHIGH NURSING HOMES, INC.
LWNR, INC.
MABRI CONVALESCENT CENTER, INC.
MARKGLEN, INC.
MARSHFIELD HEALTH RESOURCES, INC.
MONTGOMERY NURSING HOMES, INC.
MULTICARE AMC, INC.
MULTICARE HOME HEALTH OF ILLINOIS, INC.
NURSING AND RETIREMENT CENTER OF THE ANDOVERS, INC.
PHC OPERATING CORP.
POCAHONTAS CONTINUOUS CARE CENTER, INC.
PRESCOTT NURSING HOME, INC.
PROGRESSIVE REHABILITATION CENTERS, INC.
PROVIDENCE HEALTH CARE, INC.
REST HAVEN NURSING HOME, INC.
RIDGELAND HEALTH RESOURCES, INC.
RIVER PINES HEALTH RESOURCES, INC.
RIVERSHORES HEALTH RESOURCES, INC.
RLNR, INC.
ROSE HEALTHCARE, INC.
ROSE VIEW MANOR, INC.
RSNR, INC.
RVNR, INC.
SENIOR LIVING VENTURES, INC.
SCHUYLKILL NURSING HOMES, INC.
SCHUYLKILL PARTNERSHIP ACQUISITION CORPORATION
SENIOR SOURCE, INC.
SNOW VALLEY HEALTH RESOURCES, INC.
STAFFORD CONVALESCENT CENTER, INC.
S.T.B. INVESTORS, LTD.
SVNR, INC.
THE ADS GROUP, INC.
TRI-STATE MOBILE MEDICAL SERVICES, INC.
WESTFORD NURSING AND RETIREMENT CENTER, INC.
WILLOW MANOR NURSING HOME, INC.
ARCADIA ASSOCIATES
BREYUT CONVALESCENT CENTER, INC.
CONCORD COMPANION CARE, INC.
CONCORD HEALTHCARE SERVICES,
INC.
DAWN VIEW MANOR, INC.
ELDERCARE RESOURCES CORP.
ENCARE OF MENDHAM, INC.
GENESIS ELDERCARE CORP.
GLENMARK ASSOCIATES - DAWN
VIEW MANOR, INC.
GLENMARK LIMITED LIABILITY
COMPANY I
GLENMARK PROPERTIES, INC.
HEALTH RESOURCES OF ACADEMY
MANOR, INC.
HEALTH RESOURCES OF ARCADIA,
INC.
HEALTH RESOURCES OF BRIDGETON,
INC.
HEALTH RESOURCES OF BROOKLYN,
INC.
HEALTH RESOURCES OF
CINNAMINSON, INC.
HEALTH RESOURCES OF
ENGLEWOOD, INC.
HEALTH RESOURCES OF EWING, INC.
HEALTH RESOURCES OF JACKSON,
INC.
HEALTH RESOURCES OF LAKEVIEW,
L.L.C.
HEALTH RESOURCES OF MONTCLAIR,
INC.
HEALTH RESOURCES OF NORTH
ANDOVER, INC.
HEALTH RESOURCES OF RIDGEWOOD,
INC.
HEALTH RESOURCES OF SOLOMONT/
BROOKLINE, INC.
HEALTH RESOURCES OF VOORHEES,
INC.
HEALTH RESOURCES OF WESTWOOD,
INC.
HELSTAT, INC.
HMNH REALTY, INC.
HNCA, INC.
LRC HOLDING COMPANY
MHNR, INC.
MNR, INC.
NORTH MADISON, INC.
NORTHWESTERN MANAGEMENT
SERVICES, INC.
POMPTON CARE, INC.
PROVIDENCE FUNDING CORPORATION
PROVIDENCE MEDICAL, INC.
ROEPHEL CONVALESCENT CENTER,
INC.
ROXBOROUGH NURSING HOME, INC.
SCOTCHWOOD MASS.
HOLDING CO., INC.
THE ASSISTED LIVING ASSOCIATES OF
BERKSHIRE, INC.
ASSISTED LIVING ASSOCIATES OF
LEHIGH, INC.
THE ASSISTED LIVING ASSOCIATES OF
SANATOGA, INC.
THE ASSISTED LIVING ASSOCIATES OF
WALL, INC.
THE HOUSE OF CAMPBELL, INC.
TMC ACQUISITION CORP.
WESTFORD NURSING AND RETIREMENT
CENTER LIMITED PARTNERSHIP
By:_________________________
On behalf of each of the foregoing as ____________
Addresses for notices:
101 East State Street
Kennett Square, PA 19348
Attention: George V. Hager, Jr.
Senior Vice President
and Chief Financial Officer
Telephone: (610) 444-8419
Facsimile: (610) 925-4100
BREYUT CONVALESCENT CENTER, L.L.C.
by Century Care Management, Inc., its
authorized manager
ENCARE OF MENDHAM, L.L.C., by Century
Care Management, Inc., its
authorized manager
HEALTH RESOURCES OF BRIDGETON,
L.L.C., by Century Care Management, Inc.,
its authorized manager
HEALTH RESOURCES OF CINNAMINSON,
L.L.C., by Century Care Management, Inc.,
its authorized manager
HEALTH RESOURCES OF CRANBURY,
L.L.C., by Century Care Management, Inc.,
its authorized manager
HEALTH RESOURCES OF EMERY, L.L.C.,
by Century Care Management, Inc., its
authorized manager
HEALTH RESOURCES OF ENGLEWOOD,
L.L.C., by Century Care Management, Inc.,
its authorized manager
HEALTH RESOURCES OF EWING, L.L.C.,
by Century Care Management, Inc., its
authorized manager
HEALTH RESOURCES OF FAIRLAWN,
L.L.C., by Century Care Management, Inc.,
its authorized manager
HEALTH RESOURCES OF JACKSON,
L.L.C., by Century Care Management, Inc.,
its authorized manager
HEALTH RESOURCES OF RIDGEWOOD,
L.L.C., by Century Care Management, Inc.,
its authorized manager
HEALTH RESOURCES OF WEST ORANGE,
L.L.C., by Century Care Management, Inc.,
its authorized manager
POMPTON CARE, L.L.C., by Century Care
Management, Inc., its authorized
manager
ROEPHEL CONVALESCENT CENTER,
L.L.C., by Century Care Management, Inc.,
its authorized manager
TOTAL REHABILITATION CENTER, L.L.C.,
by Century Care Management,
Inc., its authorized manager.
By:_________________________________
On behalf of each of the foregoing
Vice President, Controller and
Assistant Secretary of the manager
Address for notices:
101 East State Street
Kennett Square, PA 19348
Attention: George V. Hager, Jr.
Senior Vice President
and Chief Financial Officer
Telephone: (610) 444-8419
Facsimile: (610) 925-4100
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
89
MELLON BANK, N.A.
Individually and as Agent
By:
------------------------------------
Name:
Title:
GOLDMAN SACHS CREDIT
PARTNERS L.P.
By:
------------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK
By:
------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
By:
------------------------------------
Name:
Title:
ANNEX A
to
REVOLVING CREDIT AND GUARANTY AGREEMENT
Dated as of June 22, 2000
Commitment Commitment
Banks Amount Percentage
- ----- ---------- ----------
Mellon Bank, N.A.
One Mellon Bank Center $18,750,000 37.5000%
Room 151-1525
Pittsburgh, PA 15258-0001
Attn: Colleen McCullum
Goldman Sachs Credit Partners L.P.
85 Broad Street $12,500,000 25.0000%
New York, NY 10004
Attn: Joseph Lanasa
First Union National Bank
301 S. College Street $12,500,000 25.0000%
TW-5, NC-0737
Charlotte, NC 28288-0737
Attn: J. Matt MacIver
The Chase Manhattan Bank
270 Park Avenue $6,250,000 12.5000%
New York, NY 10017
Attn: Jay Lifton
Total $50,000,000 100.0000%
=========== =========
EXHIBIT B
to
Revolving Credit
and
Guaranty Agreement
SECURITY AND PLEDGE AGREEMENT
SECURITY AND PLEDGE AGREEMENT (the "Agreement"), dated as of _____ __,
2000 by and between THE MULTICARE COMPANIES, INC., a Delaware corporation (the
"Borrower"), and each of the direct or indirect subsidiaries of the Borrower
party hereto (together with the Borrower, the "Grantors") , each a debtor and
debtor-in-possession under Chapter 11 of the Bankruptcy Code, and MELLON BANK,
N.A., as administrative agent (in such capacity, the "Agent") for the financial
institutions and other lenders (the "Banks") party to the Credit Agreement (as
hereinafter defined).
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the Agent, the Banks and the Grantors are entering into a Revolving
Credit and Guaranty Agreement dated as of the date hereof (as amended, modified
or supplemented from time to time, the "Credit Agreement"); and
WHEREAS, unless otherwise defined herein, terms defined in the Credit
Agreement are used herein as therein defined; and
WHEREAS, it is a condition precedent to the making of Loans and the
issuance of Letters of Credit that the Grantors shall have granted a security
interest, pledge and lien on (x) all cash maintained in the Letter of Credit
Account pursuant to Section 364(c)(2) of the Bankruptcy Code and (y) certain of
the Grantors' assets and properties and the proceeds thereof pursuant to
Sections 364(c)(2), 364(c)(3) and 364(d)(1) of the Bankruptcy Code; and
WHEREAS, the grant of such security interest, pledge and lien has been
authorized pursuant to Sections 364(c)(2), 364(c)(3) and 364(d)(1) of the
Bankruptcy Code by the Interim Order, and, after the entry thereof, will have
been so authorized by the Final Order (collectively, the "Orders"); and
WHEREAS, to supplement the Orders without in any way diminishing or
limiting the effect of the Orders or the security interest, pledge and lien
granted thereunder, the parties hereto desire to more fully set forth their
respective rights in connection with such security interest, pledge and lien;
and
WHEREAS, this Agreement has been approved by the Orders;
NOW, THEREFORE, in consideration of the premises and in order to induce
the Banks to make Loans and issue Letters of Credit, the Grantors hereby agree
with the Agent as follows:
SECTION 1. Grant of Security and Pledge. Each of the Grantors hereby
transfers, grants, bargains, sells, conveys, hypothecates, assigns, pledges and
sets over to the Agent for its benefit and the ratable benefit of the Banks and
hereby grants to the Agent for its benefit and the ratable benefit of the Banks,
a pledge and security interest in all of the Grantors' right, title and interest
in and to the following (the "Collateral") which pledge and security interest
shall have the priorities set forth in Orders and shall be subject to the
Carve-Out:
(1) all present and future accounts, accounts receivable and other
rights of each of the Grantors to payment for goods sold or leased or for
services rendered (except those evidenced by instruments or chattel paper),
whether now existing or hereafter arising and wherever arising, and whether or
not they have been earned by performance (collectively, the "Accounts");
(2) all goods and merchandise now owned or hereafter acquired by each
of the Grantors wherever located, whether in the possession of a Grantor or of a
bailee or other person for sale, storage, transit, processing, use or otherwise
consisting of whole goods, components, supplies, materials, or consigned,
returned or repossessed goods) which are held for sale or lease or to be
furnished (or have been furnished) under any contract of service or which are
raw materials, work-in-process, finished goods or materials used or consumed in
such Grantor's business or processed by or on behalf of any Grantor
(collectively, the "Inventory");
(3) all machinery, all manufacturing, distribution, selling, data
processing and office equipment, all furniture, furnishings, appliances,
fixtures and trade fixtures, tools, tooling, molds, dies, vehicles, vessels,
aircraft and all other goods of every type and description (other than
Inventory), in each instance whether now owned or hereafter acquired by each of
the Grantors and wherever located (collectively, the "Equipment");
(4) all works of art now owned or hereafter acquired by each of the
Grantors, including, without limitation, paintings, sketches, drawings, prints,
sculptures, crafts, tapestries, porcelain, carvings, artifacts, renderings and
designs;
(5) all rights, interests, choses in action, causes of action, claims
and all other intangible property of each of the Grantors of every kind and
nature (other than Accounts, Trademarks, Patents and Copyrights), in each
instance whether now owned or hereafter acquired by such Grantor, including,
without limitation, all general intangibles, but excluding causes of action
under the Bankruptcy Code (it being understood and agreed, however, that the
proceeds of any such causes of action shall be available to repay the
Obligations); all corporate and other business records; all loans, royalties,
and other obligations receivable; all inventions, designs, trade secrets,
computer programs, software, printouts and other computer materials, goodwill,
licenses, franchises, customer lists, credit files, correspondence, and
advertising materials (to the extent the same are assignable); all customer and
supplier contracts, firm sale orders, rights under license and franchise
agreements (including all license agreements with any other Person in connection
with any of the Patents and Trademarks or such other Person's names or marks,
whether such Grantor is a licensor or licensee under any such license agreement
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but only to the extent such license agreements are assignable), and other
contracts and contract rights; all interests in partnerships and joint ventures;
all tax refunds and tax refund claims; all right, title and interest under
leases, subleases, licenses and concessions and other agreements to the extent
assignable relating to real or personal property; all payments due or made to
each of the Grantors in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of any property by any person or
governmental authority; all deposit accounts (general or special) with any bank
or other financial institution; all credits with and other claims against
carriers and shippers; all rights to indemnification; all reversionary interests
in pension and profit sharing plans and reversionary, beneficial and residual
interest in trusts; all proceeds of insurance of which each of the Grantors is
beneficiary; and all letters of credit, guaranties, liens, security interest and
other security held by or granted to each of the Grantors; and all other
intangible property, whether or not similar to the foregoing (collectively, the
"General Intangibles");
(6) all chattel paper, all instruments, all notes and debt instruments
and all payments thereunder and instruments and other property from time to time
delivered in respect thereof or in exchange therefor, and all bills of lading,
warehouse receipts and other documents of title and documents, in each instance
whether now owned or hereafter acquired by each of the Grantors;
(7) all property or interests in property now or hereafter acquired by
each of the Grantors which may be owned or hereafter may come into the
possession, custody or control of the Agent or any agent or affiliate of the
Agent in any way or for any purpose (whether for safekeeping, deposit, custody,
pledge, transmission, collection or otherwise), and all rights and interests of
each of the Grantors, now existing or hereafter arising and however and wherever
arising, in respect of any and all (i) notes, drafts, letters of credits,
stocks, bonds, and debt and equity securities, whether or not certificated, and
warrants, options, puts and calls and other rights to acquire or otherwise
relating to the same; (ii) money (including all cash and cash equivalents held
in the Letter of Credit Account (as defined and referred to in the Credit
Agreement)); (iii) proceeds of loans, including, without limitation, Loans made
under the Credit Agreement; and (iv) insurance proceeds and books and records
relating to any of the property covered by this Agreement; together, in each
instance, with all accessions and additions thereto, substitutions therefor, and
replacements, proceeds and products thereof;
(8) all trademarks, trade names, trade styles, service marks, prints
and labels on which said trademarks, trade names, trade styles and service marks
have appeared or appear, designs and general intangibles of like nature, now
existing or hereafter adopted or acquired, and all registrations and recordings
thereof, including, without limitation, applications, registrations and
recordings in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any State thereof, or any other country
or political subdivision thereof (except for "intent to use" applications for
trademark or service mark registrations filed pursuant to Section 1(b) of the
Lanham Act, unless and until an Amendment to Allege Use or a Statement of Use
under Sections 1(c) and 1(d) of said Act has been filed), all whether now owned
or hereafter acquired by each of the Grantors, including, but not limited to,
those described in Schedule 3 annexed hereto and made a part hereof, and all
reissues, extensions or renewals thereof and all licenses thereof (together, in
each case, with the goodwill of the business connected with the use of, and
symbolized by each such trademark, service mark, trade name and trade dress, all
of the foregoing being herein referred to as the "Trademarks");
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(9) all letters patent of the United States or any other country, and
all registrations and recordings thereof, including, without limitation,
applications, registrations and recordings in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof or any other country or any political subdivision thereof, all
whether now owned or hereafter acquired by each of the Grantors, including, but
not limited to, those described in Schedule 4 annexed hereto and made a part
hereof, and (ii) all reissues, continuations, continuations-in-part or
extensions thereof and all licenses thereof (all of the foregoing being herein
referred to as the "Patents");
(10) all copyrights of the United States, or any other country, and all
registrations and recordings thereof, including, without limitation,
applications, registrations and recordings in the United States Copyright Office
or in any similar office or agency of the United States, any State thereof, or
any other country or political subdivision thereof, all whether now owned or
hereafter acquired by each of the Grantors, including, but not limited to, those
described in Schedule 5 hereto and all renewals and extensions thereof and all
licenses thereof (all of the foregoing being herein referred to as the
"Copyrights");
(11) all books, records, ledger cards and other property at any time
evidencing or relating to the Accounts, Equipment, General Intangibles,
Trademarks, Patents or Copyrights;
(12) (i) all the shares of capital stock owned by each Grantor, as
applicable, listed on Schedule 6 hereto of the issuers listed thereon
(individually, an "Issuer", and collectively, the "Issuers") and all shares of
capital stock of any Issuer obtained in the future by such Grantor and the
certificates representing or evidencing all such shares (the "Pledged Shares");
(ii) all other property which may be delivered to and held by the Agent in
respect of the Pledged Shares pursuant to the terms hereof; (iii) subject to
Section 9 below, all dividends, cash, instruments and other property from time
to time received, receivable or otherwise distributed, in respect of, in
exchange for or upon the conversion of the securities referred to in clauses (i)
and (ii) above; and (iv) subject to Section 9 below, all rights and privileges
of each Grantor, as applicable, with respect to the securities and other
property referred to in clauses (i), (ii) and (iii) (the items referred to in
clauses (i) through (iv) being collectively called the "Pledged Collateral");
(13) all other personal property of each of the Grantors, whether
tangible or intangible, and whether now owned or hereafter acquired; and
(14) all proceeds and products of any of the foregoing, in any form,
including, without limitation, any claims against third parties for loss or
damage to or destruction of any or all of the foregoing and to the extent not
otherwise included, all (i) payments under insurance (whether or not the Agent
is the loss payee thereof), or any indemnity, warranty or guaranty, payable by
reason of loss or damage to or otherwise with respect to any of the foregoing
Collateral and (ii) cash.
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Notwithstanding anything contained herein to the contrary, the total amount of
shares of capital stock or other ownership interests of any Person pledged
pursuant to this Agreement that is not incorporated or organized in the United
States shall in no event exceed sixty-six percent (66%) of the total outstanding
shares of capital stock or such other ownership interests thereof.
SECTION 2. Security for Obligations. This Agreement and the Collateral
secure the payment of all obligations of each of the Grantors, now or hereafter
existing, under the Credit Agreement and the other Loan Documents (and any other
documents in respect of such obligations), and in respect of Indebtedness
permitted by Section 6.03(ii) of the Credit Agreement, whether for principal,
interest, fees, expenses or otherwise, and all obligations of each of the
Grantors now or hereafter existing under or in respect of this Agreement (all
such obligations of the Grantor being herein called the "Obligations").
SECTION 3. Delivery of Pledged Collateral; Other Action. Upon written
request by the Agent (and without further order of the Bankruptcy Court), all
certificates or instruments representing or evidencing the Pledged Collateral
not subject to a pledge in favor of any Real Estate Financier shall be delivered
to and held by the Agent pursuant hereto and shall be accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Agent. All such certificates or instruments
previously delivered by the Grantors to the Pre-Petition Agent or the Collateral
Agent shall be deemed to be held by the Agent. Upon the occurrence and during
the continuance of any Event of Default, the Agent shall have the right (for the
ratable benefit of the Banks), at any time in its discretion and upon giving
notice to the Grantors of its intent to exercise such rights, to transfer to or
to register in the name of the Agent or any of its nominees any or all of the
Pledged Collateral.
SECTION 4. Representations and Warranties. Each Grantor, jointly and
severally, represents and warrants (but only with regard to itself) as follows:
(1) All of the Inventory and/or Equipment is located at the places
specified in Schedule 1 hereto. The chief places of business and chief executive
offices of each of the Grantors and the offices where each Grantor keeps its
records concerning any Accounts and all originals of all chattel paper which
evidence any Account are located at the places specified in Schedule 2 hereto.
All trade names under which each of the Grantors has sold and will sell
Inventory are listed on Schedule 3 hereto.
(2) Each of the Grantors owns the Collateral free and clear of any
lien, security interest, charge or encumbrance except for the security interest
created by this Agreement and except as permitted under Section 6.01 of the
Credit Agreement. No effective financing statement or other instrument similar
in effect covering all or any part of the Collateral is on file in any recording
office, except (x) such as may have been filed in favor of the Agent relating to
this Agreement and (y) in favor of any holder of a Lien permitted under Section
6.01 of the Credit Agreement.
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(3) As of the Filing Date, no Grantor owns any material Trademarks,
Patents or Copyrights or has any material Trademarks, Patents or Copyrights
registered in, or the subject of pending applications in, the United States
Patent and Trademark Office or any similar office or agency in any other country
or any political subdivision thereof, other than those described in Schedules 3,
4 and 5 hereto. The registrations for the Collateral disclosed on such Schedules
3, 4 and 5 hereto are valid and subsisting and in full force and effect. None of
the material Patents or Copyrights have been abandoned or dedicated.
(4) The Pledged Shares have been duly authorized and validly issued and
are fully paid and non-assessable.
(5) Each Grantor, as the case may be, is the legal and beneficial owner
of the Pledged Shares as described on Schedule 6 free and clear of any lien,
security interest, option or other charge or encumbrance, except for the
security interest created by this Agreement and the Orders and Liens permitted
under Section 6.01.
(6) Except as disclosed on Schedule 6, the Pledged Shares described in
Section 1(l) hereof constitute all of the issued and outstanding shares of stock
of each of the Issuers and no Issuer is under any contractual obligation to
issue any additional shares of stock or any other securities, rights or
indebtedness.
(7) Except for the entry of the Orders, no authorization, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the grant and pledge by each of the Grantors of
the security interests granted hereby or for the execution, delivery or
performance of this Agreement by each of the Grantors.
SECTION 5. Further Assurances.
(1) Each of the Grantors agrees that from time to time, at the expense
of such Grantor, it will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary, or that the
Agent may reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable the Agent to
exercise and enforce any of its rights and remedies hereunder with respect to
any Collateral. Without limiting the generality of the foregoing, and without
further order of the Bankruptcy Court, each of the Grantors will execute and
file such financing or continuation statements, or amendments thereto, and such
other instruments or notices, as may be necessary, or as the Agent may
reasonably request, in order to perfect and preserve the security interests
granted or purported to be granted hereby.
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(2) Each Grantor hereby authorizes the Agent to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of such Grantor where permitted
by law.
(3) Each Grantor will furnish to the Agent from time to time statements
and schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Agent may reasonably request in
connection with any prospective sale of Collateral pursuant to Section 15
hereof, all in reasonable detail.
SECTION 6. As to Equipment and Inventory. Each Grantor shall:
(1) Keep the Equipment and Inventory (other than Inventory sold in the
ordinary course of business) at the places specified therefor in Schedule 1
hereto or, upon 30 days' written notice to the Agent following any transfer
thereof to a different jurisdiction, at other places in jurisdictions where all
action required by Section 5 shall have been taken to assure the continuation of
the perfection of the security interest of the Agent (for its benefit and the
ratable benefit of the Banks) with respect to the Equipment and Inventory.
(2) Subject to provisions of the Credit Agreement, maintain or cause to
be maintained in good repair, working order and condition, excepting ordinary
wear and tear and damage due to casualty, all of the Equipment, and make or
cause to be made all appropriate repairs, renewals and replacements thereof, to
the extent not obsolete and consistent with past practice of such Grantor, as
quickly as practicable after the occurrence of any loss or damage thereto which
are necessary or reasonably desirable to such end, except where the failure to
do any of the foregoing would not result in a Material Adverse Effect.
(3) Until satisfaction in full of the Obligations, at any time when an
Event of Default has occurred and is continuing: (i) each Grantor will perform
any and all reasonable actions requested by the Agent to enforce the Agent's
security interest in the Inventory and all of the Agent's rights hereunder, such
as subleasing warehouses to the Agent or its designee (to the extent such
subleases are not prohibited), placing and maintaining signs, appointing
custodians, transferring Inventory to warehouses, and delivering to the Agent
warehouse receipts and documents of title in the Agent's name; (ii) if any
Inventory is in the possession or control of any of the Grantors' agents,
contractors or processors or any other third party, each such Grantor will
notify the Agent thereof and will notify such agents, contractors or processors
or third party of the Agent's security interest therein and, upon request,
instruct them to hold all such Inventory for the Agent and such Grantor's
account, as their interests may appear, and subject to the Agent's instructions;
(iii) the Agent shall have the right to hold all Inventory subject to the
security interest granted hereunder; and (iv) the Agent shall have the right to
take possession of the Inventory or any part thereof and to maintain such
possession on such Grantor's premises or to remove any or all of the Inventory
to such other place or places as the Agent desires in its sole discretion. If
the Agent exercises its right to take possession of the Inventory, such Grantor,
upon the Agent's demand, will assemble the Inventory and make it available to
the Agent at such Grantor's premises at which it is located.
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SECTION 7. As to Accounts.
(1) Each Grantor shall keep its chief place of business and chief
executive office and the offices where it keeps its records concerning the
Accounts, and the offices where it keeps all originals of all chattel paper
which evidence Accounts, at the location or locations therefor specified in
Section 4(a) or, upon 15 days' prior written notice to the Agent, at such other
locations in a jurisdiction where all actions required by Section 5 shall have
been taken with respect to the Accounts. Each Grantor will hold and preserve
such records and chattel paper and will permit representatives of the Agent, at
any time during normal business hours and upon reasonable prior written notice,
to inspect and make abstracts from such records and chattel paper in accordance
with Section 5.08 of the Credit Agreement.
(2) Except as otherwise provided in this subsection (b), each Grantor shall
continue to collect in accordance with its customary practice, at its own
expense, all amounts due or to become due to such Grantor under the Accounts
and, prior to the occurrence and continuance of an Event of Default, such
Grantor shall have the right to adjust, settle or compromise the amount or
payment of any Account, or release wholly or partly any account debtor or
obligor thereof, or allow any credit or discount thereon, all in accordance with
its customary practices. In connection with such collections, the Grantors may,
upon the occurrence and during the continuation of an Event of Default, take
(and at the direction of the Agent shall take) such action as the Grantors or
the Agent may reasonably deem necessary or advisable to enforce collection of
the Accounts; provided, that upon written notice by the Agent to any Grantor,
following the occurrence and during the continuation of an Event of Default, of
its intention so to do but subject to subsection (c) below, the Agent shall have
the right to notify the account debtors or obligors under any Accounts of the
assignment of such Accounts to the Agent and to direct such account debtors or
obligors to make payment of all amounts due or to become due to such Grantor
thereunder directly to the Agent and, upon such notification and at the expense
of such Grantor, to enforce collection of any such Accounts, and to adjust,
settle or compromise the amount or payment thereof, in the same manner and to
the same extent as such Grantor might have done. After receipt by such Grantor
of the notice referred to in the proviso to the preceding sentence, and unless
and until such notice is rescinded by the Agent by written notice to such
Grantor (i) all amounts and proceeds (including instruments) received by such
Grantor in respect of the Accounts shall be received in trust for the benefit of
the Agent (for the ratable benefit of the Banks) hereunder, shall be segregated
from other funds of the Grantors and shall be forthwith paid over to the Agent
in the same form as so received (with any necessary endorsement) to be held as
cash collateral and either (A) released to the Grantors if such Event of Default
shall have been cured or waived or (B) if such Event of Default shall be
continuing, applied as provided by Section 15, and (ii) the Grantors shall not
adjust, settle or compromise the amount or payment of any Account, or release
wholly or partly any account debtor or obligor thereof, or allow any credit or
discount thereon.
(3) Notwithstanding the provisions of Section 7, the Agent shall not
collect or enforce payment of any Account the Account Debtor of which is a
Governmental Authority (a "Governmental Account") if and to the extent that such
collection or enforcement is prohibited under 42 U.S.C. ss.ss.1395(g) or 1396(a)
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or under any comparable provision of federal or state law. To the extent the
Agent's rights as to any Governmental Account are limited pursuant to this
Section 7, upon the occurrence and during the continuation of an Event of
Default, each Grantor will (i) use its reasonable and diligent best efforts to
collect and enforce payment of such Governmental Account, (ii) immediately
deposit in the exact form received, duly indorsed by such Grantor to the Agent
if required, in a collateral account maintained under the sole dominion and
control of the Agent, subject to withdrawal by the Agent for the account of the
Banks only as provided in Section 15, and until so turned over, shall be held by
such Grantor in trust for the Agent and the Banks, segregated from other funds
of such Grantor and (iii) upon written demand by the Agent at any time and from
time to time, remit (and cause the depository bank for such collateral account
to remit) directly to the Agent, as proceeds of the Collateral and for
application to the payment of the Obligations pursuant to Section 15, all
finally collected funds on deposit in such collateral account.
SECTION 8. As to Trademarks, Patents and Copyrights.
(1) Each Grantor shall, either itself or through licensees, continue to
use the Trademarks as each is currently used in the Grantor's business in order
to maintain the Trademarks in full force free from any claim of abandonment for
nonuse and each such Grantor will not (and will not permit any licensee thereof
to) do any act or knowingly omit to do any act whereby any Trademark may become
invalidated, unless such failure to use a Trademark is not reasonably likely to
have a material adverse effect on the condition (financial or otherwise),
operation or properties of the Grantors taken as a whole.
(2) No Grantor will do any act, or omit to do any act, whereby the
Patents or Copyrights may become abandoned or dedicated and each such Grantor
shall notify the Agent immediately if it knows of any reason or has reason to
know that any application or registration may become abandoned or dedicated,
unless such abandonment or dedication is not reasonably likely to have a
material adverse effect on the condition (financial or otherwise), operations or
properties of the Grantors taken as a whole.
(3) No Grantor will, either itself or through any agent, employee,
licensee or designee, (i) file an application for the registration of any Patent
or Trademark with the United States Patent and Trademark Office or any similar
office or agency in any other country or any political subdivision thereof or
(ii) file any assignment of any patent or trademark, which such Grantor may
acquire from a third party, with the United States Patent and Trademark Office
or any similar office or agency in any other country or any political
subdivision thereof, unless such Grantor shall, within 30 days after the date of
such filing, notify the Agent thereof, and, upon request of the Agent, execute
and deliver any and all assignments, agreements, instruments, documents and
papers as the Agent may request to evidence the Agent's interest in such Patent
or Trademark and the goodwill and general intangibles of such Grantor relating
thereto or represented thereby, and such Grantor hereby constitutes the Agent
its attorney-in-fact to execute and file all such writings for the foregoing
purposes, all lawful acts of such attorney being hereby ratified and confirmed;
such power being coupled with an interest is irrevocable until the Obligations
are paid in full.
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(4) Each Grantor will take all necessary steps in any proceeding before
the United States Patent and Trademark Office, the United States Copyright
Office or any similar office or agency in any other country or any political
subdivision thereof, to maintain in all material respects each application and
registration of all material Trademarks, Patents and Copyrights, including,
without limitation, filing of renewals, affidavits of use, affidavits of
incontestability and opposition, interference and cancellation proceedings.
(5) Each Grantor will, without further order of the Bankruptcy Court,
perform all acts and execute and deliver all further instruments and documents,
including, without limitation, assignments for security in form suitable for
filing with the United States Patent and Trademark Office, and the United States
Copyright Office, respectively, reasonably requested by the Agent at any time to
evidence, perfect, maintain, record and enforce the Agent's interest in all
material Trademarks, Patents and Copyrights or otherwise in furtherance of the
provisions of this Agreement, and each Grantor hereby authorizes the Agent to
execute and file one or more accurate financing statements (and similar
documents) or copies thereof or of this Security Agreement with respect to
material Patents, Trademarks and Copyrights signed only by the Agent.
(6) Each Grantor will, upon acquiring knowledge of any use by any
person of any term or design likely to cause confusion with any material
Trademark, promptly notify the Agent of such use, and if requested by the Agent,
shall join with the Agent, at such Grantor's expense, in such action as the
Agent, in its reasonable discretion, may deem advisable for the protection of
the Agent's interest in and to the Trademarks.
SECTION 9. As to the Pledged Collateral; Voting Rights; Dividends; Etc.
(1) So long as no Event of Default shall have occurred and be
continuing and no written notice thereof shall have been given by the Agent to
the Grantors revoking all of the following rights pursuant to Section 9(b)(i)
hereof:
(1) the Grantors (as applicable) shall be entitled to exercise
any and all voting and other consensual rights pertaining to the
Pledged Collateral or any part thereof for any purpose not inconsistent
with the terms of this Agreement;
(2) notwithstanding the provisions of Section 1 hereof, the
Grantors shall be entitled to receive and retain any and all dividends
and other distributions paid in respect of the Pledged Collateral;
provided, that any and all
(A) dividends paid or payable other than in cash in respect
of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in
exchange for, any Pledged Collateral, and
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(B) dividends and other distributions paid or payable in cash
in respect of any Pledged Collateral in connection with a
partial or total liquidation or dissolution or in
connection with a reduction of capital, capital surplus or
paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in respect of,
or in redemption of, or in exchange for, any Pledged
Shares;
shall be, and shall be forthwith delivered to the Agent, to hold as
Pledged Collateral and shall, if received by any of the Grantors, be
received in trust for the benefit of the Agent, be segregated from the
other property or funds of such Grantor, and be forthwith delivered to
the Agent as Pledged Collateral in the same form as so received (with
any necessary endorsement); and
(3) the Agent shall execute and deliver (or cause to be
executed and delivered) to the Grantors (as applicable) all such
proxies and other instruments as the Grantors (as applicable) may
reasonably request for the purpose of enabling such Grantor to exercise
the voting and other rights which it is entitled to exercise pursuant
to paragraph (i) above and to receive the dividends which it is
authorized to receive and retain pursuant to paragraph (ii) above;
(2) Upon the occurrence and during the continuance of an Event of
Default:
(1) upon written notice from the Agent to the Grantors (as
applicable) to such effect, all rights of such Grantors (as applicable)
to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to Section 9(a)(i) and to
receive the dividends which it would otherwise be authorized to receive
and retain pursuant to Section 9(a)(ii) shall cease, and all such
rights shall thereupon become vested in the Agent, who shall thereupon
have the sole right to exercise such voting and other consensual rights
and to receive and hold as Pledged Collateral any such dividends; and
(2) all dividends which are received by such Grantors contrary
to the provisions of paragraph (i) of this Section 9(b) shall be
received in trust for the benefit of the Agent, shall be segregated
from other funds of the Grantors and shall be forthwith paid over to
the Agent as Pledged Collateral in the same form as so received (with
any necessary endorsement).
SECTION 10. Insurance. Upon the occurrence and during the continuance of
any Event of Default, all insurance payments in respect of Inventory and
Equipment shall be held, applied and paid to the Agent as specified in Section
15 hereof.
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SECTION 11. Transfers to Others; Liens; Additional Shares.
(1) Each Grantor shall not sell, assign (by operation of law or
otherwise) or otherwise dispose of any of the Collateral, except for
dispositions otherwise permitted by the Credit Agreement.
(2) Each Grantor shall not create or suffer to exist any lien, security
interest or other charge or encumbrance upon or with respect to any of the
Collateral to secure any obligation of any person or entity, except for the
security interest created by this Agreement and the Orders, or except as
otherwise permitted by the Credit Agreement.
(3) Each of the Grantors (as applicable) agrees that it will (i) cause
each of the Issuers that are wholly-owned Subsidiaries not to issue any stock or
other securities in addition to or substitution for the Pledged Shares issued by
such Issuer, except to the respective Grantor and (ii) pledge hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any and all
such additional shares of stock or other securities of each Issuer of the
Pledged Shares.
SECTION 12. Agent Appointed Attorney-in-Fact. Each Grantor hereby
irrevocably appoints the Agent such Grantor's attorney-in-fact (which
appointment shall be irrevocable and deemed coupled with an interest), with full
authority in the place and stead of such Grantor and in the name of such Grantor
or otherwise, from time to time in the Agent's discretion, upon and during the
occurrence and continuation of an Event of Default, to take any action and to
execute any instrument which the Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:
(1) to obtain and adjust insurance required to be paid to the
Agent pursuant to Section 10,
(2) to ask, demand, collect, sue for, recover, compound,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral,
(3) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (i)
or (ii) above,
(4) to receive, endorse and collect all instruments made
payable to the Grantors representing any dividend or other distribution
in respect of the Pledged Collateral or any part thereof and to give
full discharge for the same, and
(5) to file any claims or take any action or institute any
proceedings which the Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights
of the Agent with respect to any of the Collateral.
103
SECTION 13. Agent May Perform. If any Grantor fails to perform any
agreement contained herein, the Agent may itself perform, or cause performance
of, such agreement, and the reasonable expenses of the Agent incurred in
connection therewith (as to which invoices have been furnished) shall be payable
by the Grantors under Section 16(b).
SECTION 14. The Agent's Duties. The powers conferred on the Agent hereunder
are solely to protect its interest and the interests of the Banks in the
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for the safe custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Agent shall have no
duty as to any Collateral or as to the taking of any necessary steps to preserve
rights against prior parties or any other rights pertaining to any Collateral,
including, without limitation, ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders or other matters relative to
any Pledged Collateral, whether or not the Agent has or is deemed to have
knowledge of such matters.
SECTION 15. Remedies. If any Event of Default shall have occurred and be
continuing, and subject to the provisions of ection 7 of the Credit Agreement:
(1) The Agent may exercise in respect of the Collateral, in addition to
other rights and remedies provided for herein or otherwise available to it, and
without application to or order of the Bankruptcy Court, all the rights and
remedies of a secured party on default under the Uniform Commercial Code and
also may (i) require each Grantor to, and each Grantor hereby agrees that it
will at its expense and upon request of the Agent forthwith, assemble all or
part of the Collateral as directed by the Agent and make it available to the
Agent at a place to be designated by the Agent which is reasonably convenient to
both parties and (ii) without notice, except as specified in the following
sentence, sell the Collateral or any part thereof in one or more parcels at
public or private sale, at any of the Agent's offices or elsewhere, for cash, on
credit or for future delivery, and at such price or prices and upon such other
terms as the Agent may deem commercially reasonable. Each Grantor agrees that,
to the extent notice of such sale shall be required by law, at least ten days'
notice to the Grantors of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification. The Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Agent may adjourn any public
or private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned.
(2) The Agent may instruct the Grantors not to make any further use of
the Patents, Copyrights or Trademarks or any mark similar thereto for any
purpose to the extent that such use would be inconsistent with the exercise by
the Agent of any other remedies under this Section.
(3) The Agent may license, whether general, special or otherwise, and
whether on an exclusive or nonexclusive basis, any of the Trademarks, Patents or
Copyrights throughout the world for such term or terms, on such conditions, and
in such manner, as the Agent shall in its sole discretion determine; provided,
however, that any such license shall not conflict with any existing license or
sublicense.
104
(4) The Agent may (without assuming any obligations or liability
thereunder), at any time, enforce (and shall have the exclusive right to
enforce) against any licensee or sublicensee all rights and remedies of the
Grantors in, to and under any one or more license agreements with respect to the
Collateral, and take or refrain from taking any action under any thereof, and
each of the Grantors hereby releases the Agent from, and agrees to hold the
Agent free and harmless from and against any claims arising out of, any action
taken or omitted to be taken with respect to any such license agreement except
claims involving gross negligence, willful misconduct or bad faith of the Agent.
(5) In the event of any such license, assignment, sale or other
disposition of the Collateral, or any of it, each Grantor shall supply its
know-how and expertise relating to the Trademarks, Patents or Copyrights, and
its customer lists and other records relating to the Trademarks, Patents or
Copyrights to the Agent or its designee.
(6) In order to implement the assignment, sale or other disposal of any
of the Trademarks, Patents or Copyrights, the Agent may, at any time, pursuant
to the authority granted in Section 12 hereof, execute and deliver on behalf of
the Grantors, one or more instruments of assignment of the Trademarks, Patents
or Copyrights (or any application of registration thereof), in form suitable for
filing, recording or registration in any country.
(7) All cash proceeds received by the Agent in respect of any sale of,
collection from, or other realization upon all or any part of the Collateral
may, in the discretion of the Agent, be held by the Agent as collateral for, and
then or at any time thereafter applied (after payment of any amounts payable to
the Agent pursuant to Section 16 hereof) in whole or in part against, all or any
part of the Obligations in such order as the Agent shall elect or as shall be
required by applicable law. Any surplus of such cash or cash proceeds held by
the Agent and remaining after payment in full of all the Obligations shall be
paid over to the Grantors or to whomsoever may be lawfully entitled to receive
such surplus.
(8) If at any time when the Agent shall determine to exercise its right
to sell all or any part of the Pledged Collateral pursuant to this Section 15,
such Pledged Collateral or the part thereof to be sold shall not be effectively
registered under the Securities Act of 1933, as amended, and as from time to
time in effect, and the rules and regulations thereunder (the "Securities Act"),
the Agent is hereby expressly authorized to sell such Pledged Collateral or such
part thereof by private sale in such manner and under such circumstances as the
Agent may deem necessary or advisable in order that such sale may legally be
effected without such registration. Without limiting the generality of the
foregoing, in any such event the Agent, in compliance with applicable securities
laws, (a) may proceed to make such private sale notwithstanding that a
registration statement for the purpose of registering such Pledged Collateral or
such part thereof shall have been filed under such Securities Act, (b) may
approach and negotiate with a restricted number of potential purchasers to
effect such sale and (c) may restrict such sale to purchasers as to their
105
number, nature of business and investment intention including without limitation
to purchasers each of whom will represent and agree to the satisfaction of the
Agent that such purchaser is purchasing for its own account, for investment, and
not with a view to the distribution or sale of such Pledged Collateral, or part
thereof, it being understood that the Agent may cause or require each Grantor,
and each Grantor hereby agrees upon the written request of the Agent, to cause
(i) a legend or legends to be placed on the certificates to be delivered to such
purchasers to the effect that the Pledged Collateral represented thereby have
not been registered under the Securities Act and setting forth or referring to
restrictions on the transferability of such securities; and (ii) the issuance of
stop transfer instructions to such Issuer's transfer agent, if any, with respect
to the Pledged Collateral, or, if such Issuer transfers its own securities, a
notation in the appropriate records of such Issuer. In the event of any such
sale, each Grantor does hereby consent and agree that the Agent shall incur no
responsibility or liability for selling all or any part of the Pledged
Collateral at a price which the Agent may deem reasonable under the
circumstances, notwithstanding the possibility that a substantially higher price
might be realized if the sale were public and deferred until after registration
as aforesaid.
SECTION 16. Indemnity and Expenses.
(1) Each Grantor, jointly and severally, agrees to indemnify the Agent
from and against any and all claims, losses and liabilities growing out of or
resulting from this Agreement (including, without limitation, enforcement of
this Agreement), except claims, losses or liabilities directly arising from the
Agent's own gross negligence, willful misconduct or bad faith.
(2) The Grantors will upon demand pay to the Agent the amount of any
and all reasonable expenses (as to which invoices have been furnished),
including the reasonable fees and disbursements of its counsel and of any
experts and agents, which the Agent may incur in connection with (i) the
administration of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any of
the Collateral, (iii) the exercise or enforcement of any of the rights of the
Agent hereunder or (iv) the failure by any of the Grantors to perform or observe
any of the provisions hereof.
(3) The Grantors assume all responsibility and liability arising from
the use of the Trademarks, Patents and Copyrights.
(4) Each of the Grantors agrees that the Agent does not assume, and
shall have no responsibility for, the payment of any sums due or to become due
under any agreement or contract included in the Collateral or the performance of
any obligations to be performed under or with respect to any such agreement or
contract by any of the Grantors, and except as the same may have resulted from
the gross negligence, willful misconduct or bad faith of the Agent, each of the
Grantors hereby jointly and severally agree to indemnify and hold the Agent
harmless with respect to any and all claims by any person relating thereto.
106
SECTION 17. Security Interest Absolute. All rights of the Agent and
security interests hereunder, and all obligations of each of the Grantors
hereunder, shall be absolute and unconditional, irrespective of any circumstance
which might constitute a defense available to, or a discharge of, any guarantor
or other obligor in respect of the Obligations.
SECTION 18. Amendments; Etc. No amendment or waiver of any provision of
this Agreement, nor any consent to any departure by any of the Grantors
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the party against whom enforcement is sought, and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given.
SECTION 19. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing and shall be given in accordance with
the applicable provisions of the Credit Agreement.
SECTION 20. Continuing Security Interest. This Agreement shall create a
continuing security interest in the Collateral and shall (i) remain in full
force and effect until payment in full of the Obligations, (ii) be binding upon
each of the Grantors, their successors and assigns and (iii) inure, together
with the rights and remedies of the Agent hereunder, to the benefit of the Agent
and each of the Banks and their respective successors, transferees and assigns.
Upon the payment in full of the Obligations, the security interest granted
hereby shall terminate and all rights to the Collateral shall revert to the
Grantors subject to any existing liens, security interests or encumbrances on
such Collateral. Upon any such termination, the Agent will, at the Grantor's
expense, execute and deliver to the Grantors such documents as the Grantors
shall reasonably request to evidence such termination.
SECTION 21. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, except as
required by mandatory provisions of law and except to the extent that the
validity or perfection of the security interest hereunder, or remedies
hereunder, in respect of any particular Collateral are governed by the laws of a
jurisdiction other than the Commonwealth of Pennsylvania and by Federal law
(including, without limitation, the Bankruptcy Code) to the extent the same has
pre-empted the law of the Commonwealth of Pennsylvania or such other
jurisdiction.
SECTION 22. Headings. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
[SIGNATURE PAGES FOLLOW]
107
IN WITNESS WHEREOF, each of the Grantors and the Agent have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
GRANTORS:
THE MULTICARE COMPANIES, INC.
By:__________________________________
Name:
Title:
ADS APPLE VALLEY LIMITED PARTNERSHIP,
by ADS Apple Valley, Inc., its General Partner
ADS HINGHAM LIMITED
PARTNERSHIP, by ADS Hingham
Nursing Facility, Inc., its General Partner
ADS RECUPERATIVE CENTER
LIMITED PARTNERSHIP, by ADS
Recuperative Center, Inc., its
General Partner
CARE HAVEN ASSOCIATES LIMITED
PARTNERSHIP, by Glenmark Associates, Inc.
and GMA Partnership Holding Company, Inc.,
its General Partners
CUMBERLAND ASSOCIATES OF RHODE ISLAND,
L.P., by Health Resources of Cumberland, Inc.,
its General Partner
GLENMARK PROPERTIES I, LIMITED PARTNERSHIP,
by Glenmark Associates, Inc. and
GMA Partnership Holding Company, Inc.,
its General Partners
GROTON ASSOCIATES OF CONNECTICUT,
L.P., by Health Resources of Groton, Inc.,
its General Partner
108
MIDDLETOWN (RI) ASSOCIATES OF
RHODE ISLAND, L.P., by
Health Resources of Middletown (R.I.), Inc.,
its General Partner
POINT PLEASANT HAVEN LIMITED PARTNERSHIP,
by Glenmark Associates, Inc.,
its General Partner
RALEIGH MANOR LIMITED PARTNERSHIP,
by Glenmark Associates, Inc.,
its General Partner
Address for notices:
101 East State Street
Kennett Square, PA 19348
Attention: George V. Hager, Jr.
Senior Vice President and CFO
Telephone: (610) 444-8419
Facsimile: (610) 925-4100
ROMNEY HEALTH CARE
CENTER LTD.
LIMITED PARTNERSHIP, by Glenmark
Associates, Inc., its General Partner
SISTERVILLE HAVEN LIMITED
PARTNERSHIP, by Glenmark Associates,
Inc., its General Partner
TEAYS VALLEY HAVEN LIMITED
PARTNERSHIP, by Glenmark Associates,
Inc., its General Partner
THE STRAUSS GROUP - HOPKINS HOUSE, L.P.,
by Encare of Wyncote, Inc.,
its General Partner
THE STRAUS GROUP - QUAKERTOWN MANOR, L.P.,
by Encare of Quakertown,
Inc., its General Partner
109
WALLINGFORD ASSOCIATES OF CONNECTICUT, L.P.,
by Health Resources of
Wallingford, Inc., its General Partner
WARWICK ASSOCIATES OF RHODE ISLAND, L.P.,
by Health Resources of Warwick, Inc.,
its General Partner
By:_________________________________
On behalf of each of the foregoing
as ____________of the General Partner
HOLLY MANOR ASSOCIATES OF NEW JERSEY, L.P.,
by Encare of Mendham, L.L.C.,
its General Partner,
by Century Care Management, Inc.,
its authorized manager
MERCERVILLE ASSOCIATES OF NEW JERSEY, L.P.,
by Breyut Convalescent Center, L.L.C.,
its General Partner,
by Century Care Management, Inc.,
its authorized manager
POMPTON ASSOCIATES, L.P.,
by Pompton Care, L.L.C.,
its General Partner,
by Century Care Management, Inc.,
its authorized manager
THE STRAUS GROUP - OLD BRIDGE, L.P.,
by Health Resources of Emery, L.L.C.,
its General Partner,
by Century Care Management, Inc.,
its authorized manager
THE STRAUS GROUP - RIDGEWOOD, L.P.,
A New Jersey limited partnership,
by Health Resources of Ridgewood, L.L.C.,
its General Partner, by Century Care
Management, Inc., its authorized manager
By:__________________________
On behalf of each of the foregoing
as ______________ of the manager
Address for notices:
101 East State Street
Kennett Square, PA 19348
Attention: George V. Hager, Jr.
Senior Vice President and CFO
Telephone: (610) 444-8419
Facsimile: (610) 925-4100
110
ACADEMY NURSING HOME, INC.
ADS APPLE VALLEY, INC.
ADS CONSULTING, INC.
ADS HINGHAM ALF, INC.
ADS HINGHAM NURSING FACILITY, INC.
ADS HOME HEALTH, INC.
ADS/MULTICARE, INC.
ADS PALM CHELMSFORD, INC.
ADS RECUPERATIVE CENTER, INC.
ADS RESERVOIR WALTHAM, INC.
ADS SENIOR HOUSING, INC.
ADS VILLAGE MANOR, INC.
ANR, INC.
APPLEWOOD HEALTH RESOURCES, INC.
ASL, INC.
AUTOMATED PROFESSIONAL ACCOUNTS, INC.
BERKS NURSING HOMES, INC.
BETHEL HEALTH RESOURCES, INC.
BRIGHTWOOD PROPERTY, INC.
111
CENTURY CARE CONSTRUCTION, INC.
CENTURY CARE MANAGEMENT, INC.
CHATEAU VILLAGE HEALTH RESOURCES, INC.
CHG INVESTMENT CORP., INC
CHNR-1, INC.
COLONIAL HALL HEALTH RESOURCES, INC.
COLONIAL HOUSE HEALTH RESOURCES, INC.
CONCORD HEALTH GROUP, INC.
CONCORD HOME HEALTH, INC.
CONCORD REHAB, INC.
CONCORD SERVICE CORPORATION
CVNR, INC.
DELM NURSING, INC.
ELMWOOD HEALTH RESOURCES, INC.
ENCARE OF PENNYPACK, INC.
ENCARE OF QUAKERTOWN, INC.
ENCARE OF WYNCOTE, INC.
ENR, INC.
GLENMARK ASSOCIATES, INC.
GMA - BRIGHTWOOD, INC.
GMA - CONSTRUCTION, INC.
GMA - MADISON, INC.
112
GMA PARTNERSHIP HOLDING COMPANY, INC.
GMA UNIONTOWN, INC.
HEALTH RESOURCES OF BOARDMAN, INC.
HEALTH RESOURCES OF CEDAR GROVE, INC.
HEALTH RESOURCES OF COLCHESTER, INC.
HEALTH RESOURCES OF COLUMBUS, INC.
HEALTH RESOURCES ON CRANBURY, INC.
HEALTH RESOURCES OF CUMBERLAND, INC.
HEALTH RESOURCES OF EATONTOWN, INC.
HEALTH RESOURCES OF FARMINGTON, INC.
HEALTH RESOURCES OF GARDNER, INC.
HEALTH RESOURCES OF GLASTONBURY, INC.
HEALTH RESOURCES OF GROTON, INC.
HEALTH RESOURCES OF LAKEVIEW, INC.
HEALTH RESOURCES OF LEMONT, INC.
HEALTH RESOURCES OF LYNN, INC.
HEALTH RESOURCES OF KARAMENTA AND MADISON, INC.
HEALTH RESOURCES OF MARCELLA, INC.
113
HEALTH RESOURCES OF MIDDLETOWN (R.I.), INC.
HEALTH RESOURCES OF MORRISTOWN, INC.
HEALTH RESOURCES OF NORFOLK, INC.
HEALTH RESOURCES OF NORWALK, INC.
HEALTH RESOURCES OF PENNINGTON, INC.
HEALTH RESOURCES OF ROCKVILLE, INC.
HEALTH RESOURCES OF SOUTH BRUNSWICK, INC.
HEALTH RESOURCES OF TROY HILLS, INC.
HEALTH RESOURCES OF WALLINGFORD, INC.
HEALTH RESOURCES OF WARWICK, INC.
HEALTHCARE REHAB SYSTEMS, INC.
HORIZON ASSOCIATES, INC.
HORIZON MOBILE, INC.
HORIZON REHABILITATION, INC.
HR OF CHARLESTON, INC.
HRWV HUNTINGTON, INC.
LAKEWOOD HEALTH RESOURCES, INC.
LAUREL HEALTH RESOURCES, INC.
LEHIGH NURSING HOMES, INC.
LWNR, INC.
114
MABRI CONVALESCENT CENTER, INC.
MARKGLEN, INC.
MARSHFIELD HEALTH RESOURCES, INC.
MONTGOMERY NURSING HOMES, INC.
MULTICARE AMC, INC.
MULTICARE HOME HEALTH OF ILLINOIS, INC.
NURSING AND RETIREMENT CENTER OF THE ANDOVERS, INC.
PHC OPERATING CORP.
POCAHONTAS CONTINUOUS CARE CENTER, INC.
PRESCOTT NURSING HOME, INC.
PROGRESSIVE REHABILITATION CENTERS, INC.
PROVIDENCE HEALTH CARE, INC.
REST HAVEN NURSING HOME, INC.
RIDGELAND HEALTH RESOURCES, INC.
RIVER PINES HEALTH RESOURCES, INC.
RIVERSHORES HEALTH RESOURCES, INC.
RLNR, INC.
ROSE HEALTHCARE, INC.
ROSE VIEW MANOR, INC.
RSNR, INC.
RVNR, INC.
115
SENIOR LIVING VENTURES, INC.
SCHUYLKILL NURSING HOMES, INC.
SCHUYLKILL PARTNERSHIP ACQUISITION CORPORATION
SENIOR SOURCE, INC.
SNOW VALLEY HEALTH RESOURCES, INC.
STAFFORD CONVALESCENT CENTER, INC.
S.T.B. INVESTORS, LTD.
SVNR, INC.
THE ADS GROUP, INC.
TRI-STATE MOBILE MEDICAL SERVICES, INC.
WESTFORD NURSING AND RETIREMENT CENTER, INC.
WILLOW MANOR NURSING HOME, INC.
ARCADIA ASSOCIATES
BREYUT CONVALESCENT CENTER,
INC.
CONCORD COMPANION CARE, INC.
CONCORD HEALTHCARE SERVICES,
INC.
DAWN VIEW MANOR, INC.
ELDERCARE RESOURCES CORP.
ENCARE OF MENDHAM, INC.
GENESIS ELDERCARE CORP.
116
GLENMARK ASSOCIATES - DAWN
VIEW MANOR, INC.
GLENMARK LIMITED LIABILITY
COMPANY I
GLENMARK PROPERTIES, INC.
HEALTH RESOURCES OF ACADEMY
MANOR, INC.
HEALTH RESOURCES OF ARCADIA,
INC.
HEALTH RESOURCES OF BRIDGETON,
INC.
HEALTH RESOURCES OF BROOKLYN,
INC.
HEALTH RESOURCES OF
CINNAMINSON, INC.
HEALTH RESOURCES OF
ENGLEWOOD, INC.
HEALTH RESOURCES OF EWING, INC.
HEALTH RESOURCES OF JACKSON,
INC.
HEALTH RESOURCES OF LAKEVIEW,
L.L.C.
117
HEALTH RESOURCES OF MONTCLAIR,
INC.
HEALTH RESOURCES OF NORTH
ANDOVER, INC.
HEALTH RESOURCES OF RIDGEWOOD,
INC.
HEALTH RESOURCES OF SOLOMONT/
BROOKLINE, INC.
HEALTH RESOURCES OF VOORHEES,
INC.
HEALTH RESOURCES OF WESTWOOD,
INC.
HELSTAT, INC.
HMNH REALTY, INC.
HNCA, INC.
LRC HOLDING COMPANY
MHNR, INC.
MNR, INC.
NORTH MADISON, INC.
NORTHWESTERN MANAGEMENT
SERVICES, INC.
POMPTON CARE, INC.
PROVIDENCE FUNDING CORPORATION
PROVIDENCE MEDICAL, INC.
ROEPHEL CONVALESCENT CENTER,
INC.
ROXBOROUGH NURSING HOME, INC.
118
SCOTCHWOOD MASS.
HOLDING CO., INC.
THE ASSISTED LIVING ASSOCIATES OF
BERKSHIRE, INC.
ASSISTED LIVING ASSOCIATES OF
LEHIGH, INC.
THE ASSISTED LIVING ASSOCIATES OF
SANATOGA, INC.
THE ASSISTED LIVING ASSOCIATES OF
WALL, INC.
THE HOUSE OF CAMPBELL, INC.
TMC ACQUISITION CORP.
WESTFORD NURSING AND RETIREMENT CENTER
LIMITED PARTNERSHIP
BY:____________________________
On behalf of each of the foregoing as
____________________________
Addresses for notices:
101 East State Street
Kennett Square, PA 19348
Attention: George V. Hager, Jr.
Senior Vice President
and Chief Financial Office
Telephone: (610) 444-8419
Facsimile: (610) 925-4100
BREYUT CONVALESCENT CENTER, L.L.C.
by Century Care Management, Inc., its
authorized manager
119
ENCARE OF MENDHAM, L.L.C.,
by Century Care Management, Inc.,
its authorized manager
HEALTH RESOURCES OF BRIDGETON, L.L.C.,
by Century Care Management, Inc.,
its authorized manager
HEALTH RESOURCES OF CINNAMINSON, L.L.C.,
by Century Care Management, Inc.,
its authorized manager
HEALTH RESOURCES OF CRANBURY, L.L.C.,
by Century Care Management, Inc.,
its authorized manager
HEALTH RESOURCES OF EMERY, L.L.C.,
by Century Care Management, Inc.,
its authorized manager
HEALTH RESOURCES OF ENGLEWOOD, L.L.C.,
by Century Care Management, Inc.,
its authorized manager
HEALTH RESOURCES OF EWING, L.L.C.,
by Century Care Management, Inc.,
its authorized manager
HEALTH RESOURCES OF FAIRLAWN, L.L.C.,
by Century Care Management, Inc.,
its authorized manager
HEALTH RESOURCES OF JACKSON, L.L.C.,
by Century Care Management, Inc.,
its authorized manager
HEALTH RESOURCES OF RIDGEWOOD, L.L.C.,
by Century Care Management, Inc.,
its authorized manager
HEALTH RESOURCES OF WEST ORANGE, L.L.C.,
by Century Care Management, Inc.,
its authorized manager
120
POMPTON CARE, L.L.C.,
by Century Care Management, Inc.,
its authorized manager
ROEPHEL CONVALESCENT CENTER, L.L.C.,
by Century Care Management, Inc.,
its authorized manager
TOTAL REHABILITATION CENTER, L.L.C.,
by Century Care Management, Inc.,
its authorized manager.
By:_________________________________
On behalf of each of the foregoing Vice President,
Controller and Assistant Secretary of the manager
Address for notices:
101 East State Street
Kennett Square, PA 19348
Attention: George V. Hager, Jr.
Senior Vice President and CFO
Telephone: (610) 444-8419
Facsimile: (610) 925-4100
MELLON BANK, N.A., as Agent
By:_____________________________
Name:
Title: