EXHIBIT 4.5
EXECUTION COPY
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$105,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
AMONG
EXTENDICARE HOLDINGS, INC.,
EXTENDICARE HEALTH SERVICES, INC.
AS BORROWER,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO,
LEHMAN BROTHERS INC.,
AS ARRANGER
U.S. BANK, NATIONAL ASSOCIATION,
AS SYNDICATION AGENT,
GENERAL ELECTRIC CAPITAL CORPORATION,
RESIDENTIAL FUNDING CORPORATION
DBA GMAC-RFC HEALTH CAPITAL
AND
LASALLE BANK NATIONAL ASSOCIATION,
AS CO-DOCUMENTATION AGENTS
AND
LEHMAN COMMERCIAL PAPER INC.,
AS ADMINISTRATIVE AGENT
DATED AS OF JUNE 28, 2002
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TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS............................................................................................2
1.1 Defined Terms...................................................................................2
1.2 Other Definitional Provisions..................................................................23
SECTION 2. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS......................................................23
2.1 Revolving Credit Commitments...................................................................23
2.2 Procedure for Revolving Credit Borrowing.......................................................24
2.3 Repayment of Loans; Evidence of Debt...........................................................24
2.4 Commitment Fees, etc...........................................................................25
2.5 Termination or Reduction of Revolving Credit Commitments.......................................25
2.6 Optional Prepayments...........................................................................25
2.7 Mandatory Prepayments and Commitment Reductions................................................26
2.8 Conversion and Continuation Options............................................................26
2.9 Minimum Amounts and Maximum Number of Eurodollar Tranches......................................27
2.10 Interest Rates and Payment Dates...............................................................27
2.11 Computation of Interest and Fees...............................................................28
2.12 Inability to Determine Interest Rate...........................................................28
2.13 Pro Rata Treatment and Payments................................................................28
2.14 Requirements of Law............................................................................30
2.15 Taxes..........................................................................................31
2.16 Indemnity......................................................................................32
2.17 Illegality.....................................................................................33
2.18 Change of Lending Office.......................................................................33
2.19 Replacement of Lenders under Certain Circumstances.............................................33
SECTION 3. LETTERS OF CREDIT.....................................................................................34
3.1 L/C Commitment.................................................................................34
3.2 Procedure for Issuance of Letter of Credit.....................................................34
3.3 Fees and Other Charges.........................................................................35
3.4 L/C Participations.............................................................................35
3.5 Reimbursement Obligation of the Borrower.......................................................36
3.6 Obligations Absolute...........................................................................36
3.7 Letter of Credit Payments......................................................................37
3.8 Applications...................................................................................37
SECTION 4. REPRESENTATIONS AND WARRANTIES........................................................................37
4.1 Financial Condition............................................................................37
4.2 No Change......................................................................................38
4.3 Corporate Existence; Compliance with Law.......................................................38
4.4 Corporate Power; Authorization; Enforceable Obligations........................................38
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4.5 No Legal Bar...................................................................................39
4.6 No Material Litigation.........................................................................39
4.7 No Default.....................................................................................39
4.8 Ownership of Property; Liens...................................................................39
4.9 Intellectual Property..........................................................................39
4.10 Taxes..........................................................................................39
4.11 Federal Regulations............................................................................40
4.12 Labor Matters..................................................................................40
4.13 ERISA..........................................................................................40
4.14 Investment Company Act; Other Regulations......................................................40
4.15 Material Subsidiaries..........................................................................40
4.16 Use of Proceeds................................................................................41
4.17 Environmental Matters..........................................................................41
4.18 Compliance With Health Care Laws...............................................................42
4.19 HIPAA Compliance...............................................................................42
4.20 Accuracy of Information, etc...................................................................43
4.21 Security Documents.............................................................................43
4.22 Solvency.......................................................................................44
4.23 Senior Indebtedness............................................................................44
4.24 Regulation H...................................................................................44
4.25 Deposit Accounts and Securities Accounts.......................................................44
4.26 Reimbursement From Third Party Payors..........................................................44
4.27 Fraud and Abuse................................................................................45
4.28 Inactive Subsidiaries..........................................................................45
SECTION 5. CONDITIONS PRECEDENT..................................................................................45
5.1 Conditions to Closing Date and Initial Extension of Credit.....................................45
5.2 Conditions to Each Extension of Credit.........................................................48
SECTION 6. AFFIRMATIVE COVENANTS.................................................................................48
6.1 Financial Statements...........................................................................49
6.2 Certificates; Other Information................................................................49
6.3 Payment of Obligations and Compliance with Agreements..........................................50
6.4 Conduct of Business and Maintenance of Existence, etc..........................................51
6.5 Maintenance of Property; Insurance.............................................................51
6.6 Inspection of Property; Books and Records; Discussions.........................................51
6.7 Notices........................................................................................51
6.8 Environmental Laws.............................................................................52
6.9 Additional Collateral, etc.....................................................................52
6.10 Further Assurances.............................................................................54
6.11 Use of Proceeds................................................................................54
SECTION 7. NEGATIVE COVENANTS....................................................................................54
7.1 Financial Condition Covenants..................................................................55
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7.2 Limitation on Indebtedness.....................................................................56
7.3 Limitation on Liens............................................................................56
7.4 Limitation on Fundamental Changes..............................................................58
7.5 Limitation on Disposition of Property..........................................................58
7.6 Limitation on Restricted Payments..............................................................59
7.7 Limitation on Capital Expenditures.............................................................60
7.8 Limitation on Investments......................................................................60
7.9 Limitation on Optional Payments and Modifications of Debt Instruments, etc.....................61
7.10 Limitation on Transactions with Affiliates.....................................................61
7.11 [Reserved].....................................................................................61
7.12 Limitation on Changes in Fiscal Periods........................................................61
7.13 Limitation on Negative Pledge Clauses..........................................................61
7.14 Limitation on Restrictions on Subsidiary Distributions.........................................62
7.15 Limitation on Lines of Business................................................................62
7.16 Limitation on Activities of Holdings...........................................................62
7.17 Limitation on Hedge Agreements.................................................................62
7.18 Limitation on Activities of Inactive Subsidiaries..............................................62
SECTION 8. EVENTS OF DEFAULT.....................................................................................63
SECTION 9. THE AGENTS............................................................................................66
9.1 Appointment....................................................................................66
9.2 Delegation of Duties...........................................................................66
9.3 Exculpatory Provisions.........................................................................66
9.4 Reliance by Agents.............................................................................67
9.5 Notice of Default..............................................................................67
9.6 Non-Reliance on Agents and Other Lenders.......................................................68
9.7 Indemnification................................................................................68
9.8 Agent in Its Individual Capacity...............................................................68
9.9 Successor Administrative Agent.................................................................69
9.10 Authorization to Release Liens and Guarantees..................................................69
9.11 The Arranger; the Syndication Agent; the Co-Documentation Agents...............................69
9.12 The Administrative Agent and the Secured Parties...............................................69
SECTION 10. MISCELLANEOUS........................................................................................70
10.1 Amendments and Waivers.........................................................................70
10.2 Notices........................................................................................71
10.3 No Waiver; Cumulative Remedies.................................................................72
10.4 Survival of Representations and Warranties.....................................................73
10.5 Payment of Expenses............................................................................73
10.6 Successors and Assigns; Participations and Assignments.........................................74
10.7 Adjustments; Set-off...........................................................................77
10.8 Counterparts...................................................................................77
10.9 Severability...................................................................................77
10.10 Integration....................................................................................78
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10.11 GOVERNING LAW..................................................................................78
10.12 Submission To Jurisdiction; Waivers............................................................78
10.13 Acknowledgments................................................................................78
10.14 Confidentiality................................................................................79
10.15 Release of Collateral and Guarantee Obligations................................................79
10.16 Accounting Changes.............................................................................80
10.17 Delivery of Lender Addenda.....................................................................80
10.18 WAIVERS OF JURY TRIAL..........................................................................80
ANNEXES:
A Pricing Grid
B Existing Letters of Credit
SCHEDULES:
1.1(a) Mortgaged Property
1.1(b) Existing Mortgages
1.1(c) Inactive Subsidiaries
4.4 Consents, Authorizations, Filings and Notices
4.15 Material Subsidiaries
4.21(a)-1 UCC Filing Jurisdictions
4.21(a)-2 UCC Financing Statements to Remain on File
4.21(a)-3 UCC Financing Statements to be Terminated
4.21(b) Mortgage Filing Jurisdictions
4.25 Deposit Accounts and Securities Accounts
7.2(d) Existing Indebtedness
7.3(f) Existing Liens
EXHIBITS:
A Form of Guarantee and Collateral Agreement
B Form of Compliance Certificate
C Form of Closing Certificate
D Form of Amended Mortgage
E Form of Assignment and Acceptance
F Form of Legal Opinion of Foley & Lardner
G Form of Revolving Credit Note
H Form of Exemption Certificate
I Form of Lender Addendum
J Form of Borrowing Notice
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AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 28,
2002, among EXTENDICARE HOLDINGS, INC., a Wisconsin corporation ("Holdings"),
EXTENDICARE HEALTH SERVICES, INC., a Delaware corporation (the "Borrower"), the
several banks and other financial institutions or entities from time to time
parties to this Agreement (the "Lenders"), LEHMAN BROTHERS INC., as advisor,
lead arranger and book manager (in such capacity, the "Arranger"), U.S. BANK,
NATIONAL ASSOCIATION, as syndication agent (in such capacity, the "Syndication
Agent"), GENERAL ELECTRIC CAPITAL CORPORATION, RESIDENTIAL FUNDING CORPORATION
dba GMAC-RFC HEALTH CAPITAL and LASALLE BANK NATIONAL ASSOCIATION, as
Co-Documentation Agents (in such capacity, the "Co-Documentation Agents"), and
LEHMAN COMMERCIAL PAPER INC. ("LCPI"), as administrative agent (in such
capacity, the "Administrative Agent").
WITNESSETH:
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WHEREAS, the Borrower and Holdings are parties to the Credit
Agreement, dated as of November 26, 1997 (as amended, supplemented or otherwise
modified, the "Existing Credit Agreement"), with the lenders parties thereto
(the "Existing Lenders") and Bank of America, N.A., as Agent (the "Existing
Agent");
WHEREAS, pursuant to the Existing Credit Agreement, certain of
the Existing Lenders made term loans to the Borrower (the "Existing Term
Loans"), and certain of the Existing Lenders made available a revolving credit
facility (the "Existing Revolving Credit Facility") providing for extensions of
credit by such Existing Lenders to the Borrower by making revolving credit loans
to the Borrower (the "Existing Revolving Credit Loans") and issuing letters of
credit for the account of the Borrower (the "Existing Letters of Credit");
WHEREAS, on the Closing Date (such term and other capitalized
terms used in these recitals and not defined in these recitals being used with
the definitions given to such terms in Section 1.1), the Borrower is issuing and
selling $150,000,000 aggregate principal amount of its Senior Notes;
WHEREAS, the proceeds of the Senior Notes will be used on the
Closing Date to repay in full all Existing Term Loans and all Existing Revolving
Credit Loans, if any, outstanding under the Existing Credit Agreement;
WHEREAS, on the Closing Date, immediately after the repayment
of all Existing Term Loans and all Existing Revolving Credit Loans, (i) the
Borrower will permanently reduce the commitments under the Existing Revolving
Credit Facility (the "Existing Revolving Credit Commitments") to $105,000,000
and (ii) the Existing Lenders having Existing Revolving Credit Commitments, as
so reduced, will assign to LCPI, and LCPI will assume, such Existing Revolving
Credit Commitments, together with any Participation Interests (as defined in the
Existing Credit Agreement) then outstanding under the Existing Revolving Credit
Agreement (the "Existing Participation Interests");
WHEREAS, on the Closing Date, immediately following the
consummation of the assignments to, and assumptions by, LCPI described in the
preceding recital, the Existing
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Agent will resign as Agent under the Existing Credit Agreement and LCPI will be
appointed, and will accept its appointment, as Agent under the Existing Credit
Agreement, and, concurrently therewith, the Existing Agent will assign and
deliver to LCPI, as successor Agent, all Collateral (as defined in the Existing
Credit Agreement, the "Existing Collateral") and all Collateral Documents (such
Collateral Documents, as defined in the Existing Credit Agreement, together with
any other security documents held by the Agent under the Existing Credit
Agreement, the "Existing Collateral Documents"),
WHEREAS, on the Closing Date, immediately following the
consummation of the transactions described in the preceding recital, (i) LCPI
will assign to each of the Lenders parties hereto, and each of the Lenders
parties hereto will assume, a portion of the Existing Revolving Credit
Commitments (including any Existing Participation Interests), equal to the
amount of the Revolving Credit Commitment of such Lender hereunder (as set forth
in the Lender Addendum by which such Lender becomes a party hereto) and (ii) the
Existing Credit Agreement will be amended and restated in its entirety by this
Agreement; and
WHEREAS, from and after the Closing Date, after giving effect
to the transactions described in the foregoing recitals and to the amendment and
restatement of the Existing Credit Agreement effected hereby, (i) the Existing
Revolving Credit Commitments, as reduced as provided in the third preceding
recital and as amended as provided herein, shall become the Revolving Credit
Commitments held by the Lenders hereunder, (ii) all Existing Collateral shall
become Collateral hereunder, except as otherwise provided herein, and (iii) all
Existing Collateral Documents, as amended, amended and restated or otherwise
modified as provided herein, shall become Security Documents hereunder;
NOW, THEREFORE, in consideration of the premises and the
agreements hereinafter set forth, the parties hereto hereby agree that, on the
Closing Date, the Existing Credit Agreement will be amended and restated in its
entirety as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms listed
in this Section 1.1 shall have the respective meanings set forth in this Section
1.1.
"Adjustment Date": as defined in the Pricing Grid.
"Administrative Agent": as defined in the preamble hereto.
"Affiliate": as to any Person, any other Person that, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" of a Person means
the power, directly or indirectly, either to (a) vote 10% or more of the
securities having ordinary voting power for the election of directors (or
persons performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.
"Agents": the collective reference to the Syndication Agent,
the Co-Documentation Agents and the Administrative Agent.
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"Aggregate Exposure": with respect to any Lender at any time,
an amount equal to (a) until the Closing Date, the amount of such Lender's
Revolving Credit Commitment at such time and (b) thereafter, the amount of such
Lender's Revolving Credit Commitment then in effect or, if the Revolving Credit
Commitments have been terminated, the amount of such Lender's Revolving
Extensions of Credit then outstanding.
"Aggregate Exposure Percentage": with respect to any Lender at
any time, the ratio (expressed as a percentage) of such Lender's Aggregate
Exposure at such time to the sum of the Aggregate Exposures of all Lenders at
such time.
"Agreement": this Amended and Restated Credit Agreement, as
amended, supplemented, restated or otherwise modified from time to time.
"Applicable Margin": (a) 2.50% per annum, in the case of Base
Rate Loans and (b) 3.50%, in the case of Eurodollar Loans; provided, that on and
after the first Adjustment Date occurring after the completion of four full
fiscal quarters of the Borrower after the Closing Date, the Applicable Margins
will be determined pursuant to the Pricing Grid.
"Application": an application, in such form as the relevant
Issuing Lender may specify from time to time, requesting such Issuing Lender to
issue a Letter of Credit.
"Arranger": as defined in the preamble hereto.
"Asset Sale": any Disposition of Property or series of related
Dispositions of Property (excluding any such Disposition permitted by clause
(a), (b), (c), (d), (e) or (g) of Section 7.5) which yields gross proceeds to
the Borrower or any of its Subsidiaries (valued at the initial principal amount
thereof in the case of non-cash proceeds consisting of notes or other debt
securities and valued at fair market value in the case of other non-cash
proceeds) in excess of $1,000,000.
"Assignee": as defined in Section 10.6(c).
"Assignor": as defined in Section 10.6(c).
"Available Revolving Credit Commitment": with respect to any
Lender at any time, an amount equal to the excess, if any, of (a) such Lender's
Revolving Credit Commitment then in effect over (b) such Lender's Revolving
Extensions of Credit then outstanding.
"Base Rate": for any day, a rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime
Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean the prime
lending rate as set forth on the British Banking Association Telerate Page 5 (or
such other comparable page as may, in the opinion of the Administrative Agent,
replace such page for the purpose of displaying such rate), as in effect form
time to time. Any change in the Base Rate due to a change in the Prime Rate or
the Federal Funds Effective Rate shall be effective as of the opening of
business on the effective day of such change in the Prime Rate or the Federal
Funds Effective Rate, respectively.
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"Base Rate Loans": Loans for which the applicable rate of
interest is based upon the Base Rate.
"Benefited Lender": as defined in Section 10.7.
"Board": the Board of Governors of the Federal Reserve System
of the United States (or any successor).
"Borrower": as defined in the preamble hereto.
"Borrowing Date": any Business Day specified by the Borrower
as a date on which the Borrower requests the Lenders to make Loans hereunder.
"Borrowing Notice": with respect to any request for a
borrowing of Loans hereunder, a notice from the Borrower, substantially in the
form of, and containing the information prescribed by, Exhibit K, delivered to
the Administrative Agent.
"Business Day": (a) for all purposes other than as covered by
clause (b) below, a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to close and
(b) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Loans, any day which is a
Business Day described in clause (a) and which is also a day for trading by and
between banks in Dollar deposits in the interbank eurodollar market.
"Capital Expenditures": for any period, with respect to any
Person, the aggregate of all expenditures by such Person for the acquisition or
leasing (pursuant to a capital lease) of fixed or capital assets or additions to
equipment (including replacements, capitalized repairs and improvements during
such period) which are required to be capitalized under GAAP on a balance sheet
of such Person.
"Capital Lease Obligations": with respect to any Person, the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP;
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
"Capital Stock": 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.
"Cash Equivalents": (a) marketable direct obligations issued
by, or unconditionally guaranteed by, the United States Government or issued by
any agency thereof and backed by the full faith and credit of the United States,
in each case maturing within one year from the date of acquisition; (b)
certificates of deposit, time deposits, eurodollar time deposits or overnight
bank deposits having maturities of six months or less from the date of
acquisition issued by any Lender or by any commercial bank organized under the
laws of the
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United States of America or any state thereof having combined capital and
surplus of not less than $500,000,000; (c) commercial paper of an issuer rated
at least A-2 by Standard & Poor's Ratings Services ("S&P") or P-2 by Moody's
Investors Service, Inc. ("Moody's"), or carrying an equivalent rating by a
nationally recognized rating agency, if both of the two named rating agencies
cease publishing ratings of commercial paper issuers generally, and maturing
within six months from the date of acquisition; (d) repurchase obligations of
any Lender or of any commercial bank satisfying the requirements of clause (b)
of this definition, having a term of not more than 30 days with respect to
securities issued or fully guaranteed or insured by the United States
government; (e) securities with maturities of one year or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States, by any political subdivision or taxing authority of any
such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at least A
by S&P or A by Moody's; (f) securities with maturities of six months or less
from the date of acquisition backed by standby letters of credit issued by any
Lender or any commercial bank satisfying the requirements of clause (b) of this
definition; and (g) shares of money market mutual or similar funds which invest
exclusively in assets satisfying the requirements of clauses (a) through (f) of
this definition.
"Change of Control": the occurrence of any of the following
events: (a) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), shall become, or obtain rights (whether by means of warrants, options or
otherwise) to become, the "beneficial owner" (as defined in Rules 13(d)-3 and
13(d)-5 under the Exchange Act), directly or indirectly, of more than 35% of the
outstanding common stock of the Parent; (b) the board of directors of the Parent
shall cease to consist of a majority of Continuing Directors; (c) the Parent
shall cease to own and control, of record and beneficially, directly or
indirectly, a majority of each class of outstanding Capital Stock of Holdings
free and clear of all Liens (except Liens created by the Guarantee and
Collateral Agreement); (d) Holdings shall cease to own and control, of record
and beneficially, directly, 100% of each class of outstanding Capital Stock of
the Borrower free and clear of all Liens (except Liens created by the Guarantee
and Collateral Agreement); or (e) a Specified Change of Control.
"Closing Date": the date on which the conditions precedent set
forth in Section 5.1 shall have been satisfied, which date shall be not later
than June 28, 2002.
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral": all Property of the Loan Parties, now owned or
hereafter acquired, upon which a Lien is created or purported to be created by
any Security Document.
"Commitment Fee Rate": (a) for each day on which the Total
Revolving Extensions of Credit of all Lenders is less than 33-1/3% of the Total
Revolving Credit Commitments, 0.75%; (b) for each day on which the Total
Revolving Extensions of Credit of all Lenders is at least 33-1/3%, but less than
66-2/3%, of the Total Revolving Credit Commitments, 0.625%; and (c) for each day
on which the Total Revolving Extensions of Credit of all Lenders is equal to or
greater than 66-2/3% of the Total Revolving Credit Commitments, 0.50%.
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"Commonly Controlled Entity": an entity, whether or not
incorporated, that is under common control with the Borrower within the meaning
of Section 4001 of ERISA or is part of a group that includes the Borrower and
that is treated as a single employer under Section 414 of the Code.
"Compliance Certificate": a certificate duly executed by a
Responsible Officer, substantially in the form of Exhibit B.
"Confidential Information Memorandum": the Confidential
Information Memorandum dated May 2002 and furnished to the initial Lenders in
connection with the syndication of the Revolving Credit Commitments.
"Consolidated EBITDA": of any Person for any period,
Consolidated Net Income of such Person and its Subsidiaries for such period
plus, without duplication and to the extent reflected as a charge in the
statement of such Consolidated Net Income for such period, the sum of (a) income
tax expense, (b) Consolidated Interest Expense of such Person and its
Subsidiaries, amortization or write-off of debt discount and debt issuance costs
and commissions, discounts and other fees and charges associated with
Indebtedness, (c) depreciation and amortization expense, (d) amortization of
intangibles (including, but not limited to, goodwill) and organization costs,
(e) any extraordinary, unusual (including increases to actuarial reserves for
the Transferred Properties) or non-recurring expenses or losses (including,
whether or not otherwise includable as a separate item in the statement of such
Consolidated Net Income for such period, losses on sales of assets outside of
the ordinary course of business), (f) any other non-cash charges including
write-off of goodwill or write-down of fixed asset values and (g) any write-down
of Capital Stock of Omnicare held by the Borrower on March 31, 2002 and minus,
without duplication and to the extent included in the statement of such
Consolidated Net Income for such period, the sum of (a) interest income (except
to the extent deducted in determining Consolidated Interest Expense), (b) any
extraordinary, unusual or non-recurring income or gains (including, whether or
not otherwise includable as a separate item in the statement of such
Consolidated Net Income for such period, gains on the sales of assets outside of
the ordinary course of business), (c) income tax credits and (d) any other
non-cash income, all as determined on a consolidated basis; provided, that for
purposes of calculating Consolidated EBITDA of the Borrower and its Subsidiaries
for any period, (i) the Consolidated EBITDA of any Person, or any assets
constituting a business unit, acquired by the Borrower or its Subsidiaries
during such period shall be included on a pro forma basis for such period
(assuming the consummation of such acquisition and the incurrence or assumption
of any Indebtedness in connection therewith occurred on the first day of such
period) if the consolidated balance sheet of such acquired Person and its
consolidated Subsidiaries, or such business unit, as at the end of the period
preceding the acquisition of such Person, or such business unit, and the related
consolidated statements of income and stockholders' equity and of cash flows for
the period in respect of which Consolidated EBITDA is to be calculated (x) have
been previously provided to the Administrative Agent and the Lenders and (y)
either (1) have been reported on without a qualification arising out of the
scope of the audit by independent certified public accountants of nationally
recognized standing or (2) have been found acceptable by the Administrative
Agent, (ii) the Consolidated EBITDA of any Person, or attributable to the assets
constituting a business unit, Disposed of by the Borrower or its Subsidiaries
during such period (including the Transferred Properties, in the case of
calculation of Consolidated EBITDA of the Borrower and
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its Subsidiaries for any period which includes any date on or prior to the date
of Disposition of the Transferred Properties) shall be excluded for such period
(assuming the consummation of such Disposition and the repayment of any
Indebtedness in connection therewith occurred on the first day of such period)
and (iii) the Consolidated EBITDA attributable to any Non-Recourse Subsidiary or
any assets that secure Permitted Non-Recourse Debt shall be excluded from
Consolidated EBITDA of the Borrower and its Subsidiaries. In addition, changes
in accounting principles affecting financial covenants within such testing
period shall be reversed so as to nullify such affect.
"Consolidated EBITDAR": of any Person for any period, the
Consolidated EBITDA of such Person for such period, plus Consolidated Lease
Expense of such Person for such period; provided, that in determining
Consolidated EBITDAR of the Borrower and its Subsidiaries for any period which
includes any date on or prior to the date of Disposition of the Transferred
Properties, all amounts specified in the foregoing definition that are
attributable to the Transferred Properties shall not be included.
"Consolidated Fixed Charge Coverage Ratio": for any period,
the ratio of (a) Consolidated EBITDAR of the Borrower and its Subsidiaries for
such period minus Consolidated Maintenance Capital Expenditures of the Borrower
and its Subsidiaries for such period to (b) Consolidated Fixed Charges for such
period.
"Consolidated Fixed Charges": for any period, the sum (without
duplication) of (a) Consolidated Interest Expense of the Borrower and its
Subsidiaries for such period, (b) Consolidated Lease Expense of the Borrower and
its Subsidiaries for such period and (c) scheduled payments made during such
period on account of principal of Indebtedness of the Borrower or any of its
Subsidiaries; provided, that in determining Consolidated Fixed Charges for any
period which includes any date on or prior to the date of Disposition of the
Transferred Properties, all amounts specified in the foregoing definition that
are attributable to the Transferred Properties shall not be included.
"Consolidated Growth Capital Expenditures": for any period,
all Capital Expenditures of the Borrower and its Subsidiaries for such period
representing the purchase price for, or other costs associated with the
acquisition, construction or expansion of, a facility owned or operated by the
Borrower or any Subsidiary; provided, that in determining Consolidated Growth
Capital Expenditures for any period which includes any date on or prior to the
date of Disposition of the Transferred Properties, all Capital Expenditures that
are attributable to the Transferred Properties shall not be included.
"Consolidated Interest Expense": of any Person for any period,
total cash interest expense (excluding that attributable to Capital Lease
Obligations and any amounts for amortization of costs relative to previous
financings, including, with respect to the Borrower, breakage costs associated
with the repayment of loans and termination of swap agreements in connection
with the Existing Credit Agreement) of such Person and its Subsidiaries for such
period with respect to all outstanding Indebtedness of such Person and its
Subsidiaries (including, without limitation, all commissions, discounts and
other fees and charges owed by such Person with respect to letters of credit and
bankers' acceptance financing and net costs of
8
such Person under Hedge Agreements in respect of interest rates to the extent
such net costs are allocable to such period in accordance with GAAP).
"Consolidated Lease Expense": of any Person for any period,
the aggregate amount of fixed and contingent rentals payable by such Person and
its Subsidiaries for such period with respect to leases of real and personal
property, determined on a consolidated basis in accordance with GAAP, provided,
that payments in respect of Capital Lease Obligations shall not constitute
Consolidated Lease Expense.
"Consolidated Maintenance Capital Expenditures": for any
period, all Capital Expenditures of the Borrower and its Subsidiaries for such
period, other than Consolidated Growth Capital Expenditures; provided, that in
determining Consolidated Maintenance Capital Expenditures for any period which
includes any date on or prior to the date of Disposition of the Transferred
Properties, all Capital Expenditures that are attributable to the Transferred
Properties shall not be included.
"Consolidated Net Income": of any Person for any period, the
consolidated net income (or loss) of such Person and its Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP; provided,
that in calculating Consolidated Net Income of the Borrower and its consolidated
Subsidiaries for any period, there shall be excluded (a) the income (or deficit)
of any Person accrued prior to the date it becomes a Subsidiary of the Borrower
or is merged into or consolidated with the Borrower or any of its Subsidiaries,
(b) the income (or deficit) of any Person (other than a Subsidiary of the
Borrower) in which the Borrower or any of its Subsidiaries has an ownership
interest, except to the extent that any such income is actually received by the
Borrower or such Subsidiary in the form of dividends or similar distributions,
(c) the undistributed earnings of any Subsidiary of the Borrower to the extent
that the declaration or payment of dividends or similar distributions by such
Subsidiary is not at the time permitted by the terms of any Contractual
Obligation (other than under any Loan Document) or Requirement of Law applicable
to such Subsidiary, (d) in determining Consolidated Net Income of the Borrower
and its Subsidiaries for any period which includes the date of Disposition of
the Transferred Properties, the amount of consolidated net income attributable
to the Transferred Properties for such period shall not be included and (e) in
determining Consolidated Net Income of the Borrower and its Subsidiaries for any
period, the consolidated net income for such period attributable to any
Non-Recourse Subsidiary or any assets that secure Permitted Non-Recourse Debt
shall be excluded.
"Consolidated Senior Debt": all Consolidated Total Debt other
than (a) the Senior Subordinated Notes and (b) Permitted Non-Recourse Debt.
"Consolidated Senior Leverage Ratio": as at the last day of
any period of four consecutive fiscal quarters of the Borrower, the ratio of (a)
Consolidated Senior Debt on such day to (b) Consolidated EBITDA of the Borrower
and its Subsidiaries for such period.
"Consolidated Senior Secured Leverage Ratio": as at the last
day of any period of four consecutive fiscal quarters of the Borrower, the ratio
of (a) the amount of all Consolidated Senior Debt on such day other than
unsecured Indebtedness to (b) Consolidated EBITDA of the Borrower and its
Subsidiaries for such period.
9
"Consolidated Tangible Net Worth": at any date, the
difference of (a) all amounts that would, in conformity with GAAP, be included
on a consolidated balance sheet of the Borrower and its Subsidiaries under
stockholders' equity at such date (excluding either write-ups or write-downs of
the Transferred Properties or consideration received in respect thereto) minus
(b) the amounts included on such consolidated balance sheet for goodwill, trade
names, trademarks, patents, unamortized debt discount and expense and other like
intangible assets.
"Consolidated Total Debt": at any date, the aggregate
principal amount of all Indebtedness of the Borrower and its Subsidiaries at
such date, determined on a consolidated basis in accordance with GAAP.
"Continuing Directors": the directors of the Parent on the
Closing Date, and each other director of the Parent, if, in each case, such
other director's nomination for election to the board of directors of the Parent
is recommended by the nominating committee of the board of directors of the
Parent.
"Contractual Obligation": 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.
"Control Agreement": (a) with respect to each Deposit Account,
a control agreement, in form and substance reasonably satisfactory to the
Administrative Agent, providing (i) for the Administrative Agent to have
"control" (within the meaning of Section 9-104 of the applicable Uniform
Commercial Code) of such Deposit Account and (ii) that the Administrative Agent
will not exercise any remedies thereunder except during the continuance of an
Event of Default and (b) with respect to each Securities Account, a control
agreement, in form and substance reasonably satisfactory to the Administrative
Agent, providing (i) for the Administrative Agent to have "control" (within the
meaning of Section 9-106 of the applicable Uniform Commercial Code) of such
Securities Account and (ii) that the Administrative Agent will not exercise any
remedies thereunder except during the continuance of an Event of Default.
"Control Investment Affiliate": as to any Person, any other
Person that (a) directly or indirectly, is in control of, is controlled by, or
is under common control with, such Person and (b) is organized by such Person
primarily for the purpose of making equity or debt investments in one or more
companies. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, to direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
"Default": any of the events specified in Section 8, whether
or not any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"Deposit Account": each "deposit account" (as defined in
Section 9-102 of the New York Uniform Commercial Code) in respect of which the
Borrower or any of its Subsidiaries (other than any Excluded Foreign Subsidiary)
is the depositor.
"Derivatives Counterparty": as defined in Section 7.6.
10
"Disposition": with respect to any Property, any sale, lease,
sale and leaseback, assignment, conveyance, transfer or other disposition
thereof; and the terms "Dispose" and "Disposed of" shall have correlative
meanings.
"Dollars" and "$": lawful currency of the United States of
America.
"Domestic Subsidiary": any Subsidiary of the Borrower
organized under the laws of any jurisdiction within the United States of
America.
"Environmental Laws": any and all laws, rules, orders,
regulations, statutes, ordinances, guidelines, codes, decrees, or other legally
enforceable requirements (including, without limitation, common law) of any
international authority, foreign government, the United States, or any state,
local, municipal or other governmental authority, regulating, relating to or
imposing liability or standards of conduct concerning protection of the
environment or of human health, or employee health and safety, as has been, is
now, or may at any time hereafter be, in effect.
"Environmental Permits": any and all permits, licenses,
approvals, registrations, notifications, exemptions and other authorizations
required under any Environmental Law.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurocurrency Reserve Requirements": for any day, the
aggregate (without duplication) of the maximum rates (expressed as a decimal
fraction) of reserve requirements in effect on such day (including, without
limitation, basic, supplemental, marginal and emergency reserves) under any
regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board) maintained by a member bank of the Federal Reserve
System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period, the rate per annum determined on the basis of the rate for
deposits in Dollars for a period equal to such Interest Period commencing on the
first day of such Interest Period appearing on Page 3750 of the Telerate screen
as of 11:00 A.M., London time, two Business Days prior to the beginning of such
Interest Period. In the event that such rate does not appear on Page 3750 of the
Telerate screen (or otherwise on such screen), the "Eurodollar Base Rate" for
purposes of this definition shall be determined by reference to such other
comparable publicly available service for displaying eurodollar rates as may be
selected by the Administrative Agent.
"Eurodollar Loans": Loans for which the applicable rate of
interest is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each
Interest Period, a rate per annum determined for such day in accordance with the
following formula (rounded upward to the nearest 1/100th of 1%):
11
Eurodollar Base Rate
----------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": the collective reference to Eurodollar
Loans under any Facility the then current Interest Periods with respect to all
of which begin on the same date and end on the same later date (whether or not
such Loans shall originally have been made on the same day).
"Event of Default": any of the events specified in Section 8,
provided that any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.
"Excluded Foreign Subsidiaries": any Foreign Subsidiary in
respect of which either (a) the pledge of all of the Capital Stock of such
Subsidiary as Collateral or (b) the guaranteeing by such Subsidiary of the
Obligations, would, in the good faith judgment of the Borrower, result in
adverse tax consequences to the Borrower.
"Existing Credit Agreement": as defined in the recitals to
this Agreement.
"Existing Issuing Lender": Bank of America, N.A., as issuer of
the Existing Letters of Credit.
"Existing Letters of Credit": the letters of credit described
in Annex B.
"Existing Mortgagee Title Policies": the collective reference
to each of those certain existing mortgagee policies of title insurance issued
to the Existing Agent pursuant to the Existing Credit Agreement in respect of
each of the Mortgaged Properties.
"Existing Mortgages": the collective reference to each
existing deed of trust and mortgage listed on Schedule 1.1(b), in each case, as
amended from time to time, delivered pursuant to the Existing Credit Agreement
in respect of each of the Mortgaged Properties.
"Federal Funds Effective Rate": for any day, the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the average
of the quotations for the day of such transactions received by the Reference
Lender from three federal funds brokers of recognized standing selected by it.
"Fee Letter": the Fee Letter, dated May 16, 2002, addressed by
the Arranger to the Borrower.
"Foreign Subsidiary": any Subsidiary of the Borrower that is
not a Domestic Subsidiary.
"FQ1", "FQ2 ", "FQ3", and "FQ4": when used with a numerical
year designation, means the first, second, third or fourth fiscal quarters,
respectively, of such fiscal year of the Borrower. (e.g., FQ4 2002 means the
fourth fiscal quarter of the Borrower's 2002 fiscal year, which ends December
31, 2002).
12
"Funding Office": the office specified from time to time by
the Administrative Agent as its funding office by notice to the Borrower and the
Lenders.
"GAAP": generally accepted accounting principles in the United
States of America as in effect from time to time.
"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guarantee and Collateral Agreement": the Amended and Restated
Guarantee and Collateral Agreement to be executed and delivered by Holdings, the
Borrower and each Subsidiary Guarantor, substantially in the form of Exhibit A,
as the same may be amended, supplemented or otherwise modified from time to
time.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit), if to
induce the creation of such obligation of such other Person the guaranteeing
person has issued a reimbursement, counterindemnity or similar obligation, in
either case guaranteeing or in effect guaranteeing any Indebtedness, leases,
dividends or other obligations (the "primary obligations") of any other third
Person (the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or any
Property constituting direct or indirect security therefor, (ii) to advance or
supply funds (1) for the purchase or payment of any such primary obligation or
(2) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase Property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof; provided, however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing person
shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such guaranteeing person
may be liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined by the
Borrower in good faith.
"Guarantors": the collective reference to Holdings and the
Subsidiary Guarantors.
"Healthcare Laws" means, collectively, any and all federal,
state or local laws, rules, regulations and administrative manuals, orders,
guidelines and requirements issued under or in connection with Medicare,
Medicaid or any government payment program or any law
13
governing the licensure of or regulating healthcare providers, professionals,
facilities or payors or otherwise governing or regulating the provision of, or
payment for, medical services.
"Hedge Agreements": all interest rate or currency swaps, caps
or collar agreements, foreign exchange agreements, commodity contracts or
similar arrangements entered into by the Borrower or its Subsidiaries providing
for protection against fluctuations in interest rates, currency exchange rates,
commodity prices or the exchange of nominal interest obligations, either
generally or under specific contingencies and not for speculative purposes. For
avoidance of doubt, Hedge Agreements shall include any interest rate swap or
similar agreement that provides for the payment by the Borrower or any of its
Subsidiaries of amounts based upon a floating rate in exchange for receipt by
the Borrower or such Subsidiary of amounts based upon a fixed rate.
"HIPAA" means the Health Insurance Portability and
Accountability Act of 1996, as the same may be amended, modified or supplemented
from time to time, and any successor statute thereto, and any and all rules or
regulations promulgated from time to time thereunder.
"Inactive Subsidiaries": the Subsidiaries listed on Schedule
1.1(c).
"Indebtedness": of any Person at any date, without
duplication, (a) all indebtedness of such Person for borrowed money, (b) all
obligations of such Person for the deferred purchase price of Property or
services (other than trade payables incurred in the ordinary course of such
Person's business), (c) all obligations of such Person evidenced by notes,
bonds, debentures or other similar instruments, (d) all indebtedness 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), (e) all Capital Lease Obligations of
such Person, (f) all obligations of such Person, contingent or otherwise, as an
account party or applicant under acceptance, letter of credit or similar
facilities, (g) all obligations of such Person, contingent or otherwise, to
purchase, redeem, retire or otherwise acquire for value any Capital Stock of
such Person, (h) all Guarantee Obligations of such Person in respect of
obligations of the kind referred to in clauses (a) through (g) above; (i) all
obligations of the kind referred to in clauses (a) through (h) above secured by
(or for which the holder of such obligation has an existing right, contingent or
otherwise, to be secured by) any Lien on Property (including, without
limitation, accounts and contract rights) owned by such Person, whether or not
such Person has assumed or become liable for the payment of such obligation and
(j) for the purposes of Section 8(e) only, all obligations of such Person in
respect of Hedge Agreements.
"Indemnified Liabilities": as defined in Section 10.5.
"Indemnitee": as defined in Section 10.5.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
14
"Insolvent": pertaining to a condition of Insolvency.
"Intellectual Property": the collective reference to all
rights, priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, copyrights, copyright licenses, patents, patent
licenses, trademarks, trademark licenses, technology, know-how and processes,
and all rights to sue at law or in equity for any infringement or other
impairment thereof, including the right to receive all proceeds and damages
therefrom.
"Interest Payment Date": (a) as to any Base Rate Loan, the
last day of each March, June, September and December to occur while such Loan is
outstanding and the final maturity date of such Loan, (b) as to any Eurodollar
Loan having an Interest Period of three months or shorter, the last day of such
Interest Period, (c) as to any Eurodollar Loan having an Interest Period longer
than three months, each day that is three months, or a whole multiple thereof,
after the first day of such Interest Period and the last day of such Interest
Period and (d) as to any Loan (other than any Base Rate Loan), the date of any
repayment or prepayment made in respect thereof.
"Interest Period": as to any Eurodollar Loan, (a) initially,
the period commencing on the borrowing or conversion date, as the case may be,
with respect to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and (b) thereafter,
each period commencing on the last day of the next preceding Interest Period
applicable to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower by irrevocable notice to the
Administrative Agent not less than three Business Days prior to the last day of
the then current Interest Period with respect thereto; provided that, all of the
foregoing provisions relating to Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end
on a day that 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;
(ii) any Interest Period that would otherwise
extend beyond the Revolving Credit
Termination Date, shall end on the Revolving
Credit Termination Date; and
(iii) any Interest Period that begins on the last
Business Day of a calendar month (or on a
day for which there is no numerically
corresponding day in the calendar month at
the end of such Interest Period) shall end
on the last Business Day of the calendar
month at the end of such Interest Period.
"Investments": as defined in Section 7.8.
15
"Issuing Lender": initially, LaSalle Bank National
Association, and thereafter any Lender from time to time designated by the
Borrower as an Issuing Lender with the consent of such Lender and the
Administrative Agent.
"L/C Commitment": $105,000,000.
"L/C Fee Payment Date": the last day of each March, June,
September and December and the last day of the Revolving Credit Commitment
Period.
"L/C Obligations": at any time, an amount equal to the sum of
(a) the aggregate then undrawn and unexpired amount of the then outstanding
Letters of Credit and (b) the aggregate amount of drawings under Letters of
Credit that have not then been reimbursed pursuant to Section 3.5.
"L/C Participants": with respect to any Letter of Credit, the
collective reference to all the Lenders other than the Issuing Lender that
issued such letter of Credit.
"Lehman Entity": any of Lehman Commercial Paper Inc. or any of
its affiliates (including Syndicated Loan Funding Trust).
"Lender Addendum": with respect to any initial Lender, a
Lender Addendum, substantially in the form of Exhibit I, to be executed and
delivered by such Lender on the Closing Date as provided in Section 10.17.
"Lenders": as defined in the preamble hereto.
"Letters of Credit": as defined in Section 3.1(a).
"Lien": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement and any
capital lease having substantially the same economic effect as any of the
foregoing).
"Loan": as defined in Section 2.1.
"Loan Documents": this Agreement, the Security Documents, the
Fee Letter, the Applications and the Notes.
"Loan Parties": Holdings, the Borrower and each Subsidiary of
the Borrower that is a party to a Loan Document.
"Material Adverse Effect": a material adverse effect on (a)
the condition (financial or otherwise), operations, business, assets,
liabilities or prospects of Holdings, the Borrower and its Subsidiaries taken as
a whole, (b) the ability of any Loan Party to perform any material obligation
under any Loan Document to which it is a party or (c) the material rights or
remedies of the Agents or the Lenders hereunder or thereunder.
16
"Material Environmental Amount": an amount or amounts payable
by the Borrower and/or any of its Subsidiaries, in the aggregate in excess of
$1,000,000, for: costs to comply with any Environmental Law; costs of any
investigation, and any remediation, of any Material of Environmental Concern;
and compensatory damages (including, without limitation damages to natural
resources), punitive damages, fines, and penalties pursuant to any Environmental
Law.
"Material Subsidiary": any Subsidiary other than an Inactive
Subsidiary.
"Materials of Environmental Concern": any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum products,
polychlorinated biphenyls, urea-formaldehyde insulation, asbestos, pollutants,
contaminants, radioactivity, and any other substances or forces of any kind,
whether or not any such substance or force is defined as hazardous or toxic
under any Environmental Law, that is regulated pursuant to or could give rise to
liability under any Environmental Law.
"Mortgages": the collective reference to (a) the Existing
Mortgages and (b) each of the Mortgage Amendments.
"Mortgage Amendments": each of the amendments to any mortgage
or deed of trust executed and delivered by any Loan Party, substantially in the
form of Exhibit D (with such changes thereto as shall be advisable under the law
of the jurisdiction in which such mortgage or deed of trust is to be recorded as
the Administrative Agent on or before the Closing Date shall reasonably
determine is necessary to maintain the priority of the first mortgage Lien
encumbering the relevant Mortgaged Property).
"Mortgaged Property": the real properties listed on Schedule
1.1(a).
"Multiemployer Plan": a Plan that is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds": (a) in connection with any Asset Sale or
any Recovery Event, the proceeds thereof in the form of cash and Cash
Equivalents (including any such proceeds received by way of deferred payment of
principal pursuant to a note or installment receivable or purchase price
adjustment receivable or otherwise, but only as and when received) of such Asset
Sale or Recovery Event, net of reasonable attorneys' fees, accountants' fees,
investment banking fees, amounts required to be applied to the repayment of
Indebtedness secured by a Lien expressly permitted hereunder on any asset which
is the subject of such Asset Sale or Recovery Event (other than any Lien
pursuant to a Security Document) and other customary fees and expenses actually
incurred in connection therewith and net of taxes paid or reasonably estimated
to be payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements), (b) in connection with
any issuance or sale of equity securities or debt securities or instruments or
the incurrence of loans, the cash proceeds received from such issuance or
incurrence, net of reasonable attorneys' fees, investment banking fees,
accountants' fees, underwriting discounts and commissions and other customary
fees and expenses actually incurred in connection therewith and (c) in
connection with any
17
Purchase Price Refund, the cash amount thereof, net of any expenses incurred in
the collection thereof.
"Non-Excluded Taxes": as defined in Section 2.15(a).
"Non-Recourse Debt": Indebtedness (a) as to which none of
Holdings, the Borrower nor any of its Subsidiaries (other than the Non-Recourse
Subsidiary that is the obligor on such Indebtedness) (i) provides credit support
of any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (ii) is directly or indirectly liable (as a guarantor
or otherwise), or (iii) constitutes the lender; (b) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against any Non-Recourse Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
the Obligations) of Holdings, the Borrower or any of its Subsidiaries to declare
a default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; (c) as to which the lenders
thereunder will not have any recourse to the Capital Stock or assets of
Holdings, the Borrower or any of Subsidiaries (other than the Non-Recourse
Subsidiary that is the obligor on such Indebtedness); and (d) the Net Cash
Proceeds of which are used to finance the purchase of Property used in the
business of the Borrower and its Subsidiaries or improvements made to such
Property.
"Non-Recourse Subsidiary": any Subsidiary that incurs
Non-Recourse Debt and that has no material Property other than the Property that
was purchased or improved with the proceeds of such Non-Recourse Debt.
"Non-U.S. Lender": as defined in Section 2.15(d).
"Obligations": the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity of the
Loans and Reimbursement Obligations and interest accruing after the filing of
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding)
the Loans, the Reimbursement Obligations and all other obligations and
liabilities of Holdings and the Borrower or any Subsidiary to the Administrative
Agent or to any Lender or any Qualified Counterparty, whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, this
Agreement, any other Loan Document, the Letters of Credit, any Specified Hedge
Agreement or any other document made, delivered or given in connection herewith
or therewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including, without limitation,
all fees, charges and disbursements of counsel to the Administrative Agent or to
any Lender that are required to be paid by the Borrower pursuant hereto) or
otherwise; provided, that (i) obligations of the Borrower or any Subsidiary
under any Specified Hedge Agreement shall be secured and guaranteed pursuant to
the Security Documents only to the extent that, and for so long as, the other
Obligations are so secured and guaranteed and (ii) any release of Collateral or
Guarantors effected in the manner permitted by this Agreement shall not require
the consent of holders of obligations under Specified Hedge Agreements.
18
"Omnicare": Omnicare, Inc., a Delaware corporation.
"Other Taxes": any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement or any other
Loan Document.
"Parent": Extendicare Inc., a Canadian limited company.
"Participant": as defined in Section 10.6(b).
"Payment Office": the office specified from time to time by
the Administrative Agent as its payment office by notice to the Borrower and the
Lenders.
"Payoff Letter": the payoff letter dated June 28, 2002 between
the Existing Agent, Holdings and the Borrower pursuant to which the Borrower
repaid all outstanding Existing Term Loans and Existing Revolving Credit Loans
under the Existing Revolving Credit Facility and reduced the commitments under
the Existing Revolving Credit Facility to $105,000,000.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor).
"Permitted Non-Recourse Debt": Non-Recourse Debt permitted to
be incurred by Section 7.2.
"Person": an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.
"Plan": at a particular time, any employee benefit plan that
is covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
"Pricing Grid": the pricing grid attached hereto as Annex A.
"Pro Forma Balance Sheet": as defined in Section 4.1(a).
"Projections": as defined in Section 6.2(c).
"Property": 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.
"Purchase Price Refund": any amount received by Holdings, the
Borrower or any Subsidiary as a result of a purchase price adjustment or similar
event in connection with any acquisition of Property by Holdings, the Borrower
or any Subsidiary.
19
"Qualified Counterparty": with respect to any Specified Hedge
Agreement, any counterparty thereto that, at the time such Specified Hedge
Agreement was entered into, was a Lender or an affiliate of a Lender.
"Recovery Event": any settlement of or payment in respect of
any property or casualty insurance claim or any condemnation proceeding relating
to any asset of Holdings, the Borrower or any of its Subsidiaries.
"Reference Lender": Deutsche Bank, New York Office.
"Register": as defined in Section 10.6(d).
"Regulation H": Regulation H of the Board as in effect from
time to time.
"Regulation U": Regulation U of the Board as in effect from
time to time.
"Reimbursement Obligation": the obligation of the Borrower to
reimburse each Issuing Lender pursuant to Section 3.5 for amounts drawn under
Letters of Credit issued by such Issuing Lender.
"Reinvestment Deferred Amount": with respect to any
Reinvestment Event, the aggregate Net Cash Proceeds received by Holdings, the
Borrower or any of its Subsidiaries in connection therewith that are not applied
to prepay the Revolving Credit Loans pursuant to Section 2.7(b) as a result of
the delivery of a Reinvestment Notice.
"Reinvestment Event": any Asset Sale, Purchase Price Refund or
Recovery Event in respect of which the Borrower has delivered a Reinvestment
Notice.
"Reinvestment Notice": a written notice executed by a
Responsible Officer stating that no Default or Event of Default has occurred and
is continuing and that the Borrower (directly or indirectly through a
Subsidiary) intends and expects to use all or a specified portion of the Net
Cash Proceeds of an Asset Sale, Purchase Price Refund or Recovery Event to
acquire assets (other than inventory) useful in its business.
"Reinvestment Prepayment Amount": with respect to any
Reinvestment Event, the Reinvestment Deferred Amount relating thereto less any
amount expended prior to the relevant Reinvestment Prepayment Date to acquire
assets (other than inventory) useful in the Borrower's business.
"Reinvestment Prepayment Date": with respect to any
Reinvestment Event, the earlier of (a) the date occurring one year after such
Reinvestment Event and (b) the date on which the Borrower shall have determined
not to, or shall have otherwise ceased to, acquire assets (other than inventory)
useful in the Borrower's business with all or any portion of the relevant
Reinvestment Deferred Amount.
"Related Fund": with respect to any Lender, any fund that (a)
invests in commercial loans and (b) is managed or advised by the same investment
advisor as such Lender, by such Lender or an Affiliate of such Lender.
20
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
"Reportable Event": any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the thirty day notice
period is waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of
PBGC Reg.ss. 4043.
"Required Lenders": at any time, the holders of more than
66-2/3% of the Total Revolving Credit Commitments then in effect or, if the
Revolving Credit Commitments have been terminated, the Total Revolving
Extensions of Credit then outstanding.
"Requirement of Law": as to any Person, the Certificate 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": the chief executive officer, senior
vice president, vice president or chief financial officer of the Borrower, but
in any event, with respect to financial matters, the chief financial officer of
the Borrower.
"Restricted Payments": as defined in Section 7.6.
"Revolving Credit Commitment": as to any Lender, the
obligation of such Lender, if any, to make Revolving Credit Loans and
participate in Letters of Credit, in an aggregate principal and/or face amount
not to exceed the amount set forth under the heading "Revolving Credit
Commitment" on the Lender Addendum delivered by such Lender, or, as the case may
be, in the Assignment and Acceptance pursuant to which such Lender became a
party hereto, as the same may be changed from time to time pursuant to the terms
hereof. The original aggregate amount of the Total Revolving Credit Commitments
is $105,000,000.
"Revolving Credit Commitment Period": the period from and
including the Closing Date to the Revolving Credit Termination Date.
"Revolving Credit Note": as defined in Section 2.3.
"Revolving Credit Percentage": as to any Lender at any time,
the percentage which such Lender's Revolving Credit Commitment then constitutes
of the Total Revolving Credit Commitments (or, at any time after the Revolving
Credit Commitments shall have expired or terminated, the percentage which the
aggregate amount of such Lender's Revolving Extensions of Credit then
outstanding constitutes of the amount of the Total Revolving Extensions of
Credit then outstanding).
"Revolving Credit Termination Date": June 28, 2007.
"Revolving Extensions of Credit": as to any Lender at any
time, an amount equal to the sum of (a) the aggregate principal amount of all
Loans made by such Lender then outstanding, and (b) the aggregate amount of such
Lender's participating interests in the L/C
21
Obligations then outstanding (or, in the case of each Issuing Lender, such
Issuing Lender's interest remaining in such L/C Obligations after giving effect
to the grant of participating interests therein to the other Lenders pursuant to
Section 3.4).
"SEC": the Securities and Exchange Commission (or successors
thereto or an analogous Governmental Authority).
"Secured Parties": as defined in the Guarantee and Collateral
Agreement.
"Securities Account": each "securities account" (as defined in
Section 8-501 of the New York Uniform Commercial Code) in respect of which the
Borrower or any of its Subsidiaries (other than any Excluded Foreign Subsidiary)
is the holder of the securities entitlements carried in such securities account.
"Security Documents": the collective reference to the
Guarantee and Collateral Agreement, the Mortgages and all other security
documents hereafter delivered to the Administrative Agent granting a Lien on any
Property of any Person to secure the obligations and liabilities of any Loan
Party under any Loan Document.
"Senior Note Indenture": the Indenture entered into by the
Borrower in connection with the issuance of the Senior Notes, together with all
instruments and other agreements entered into by the Borrower or such
Subsidiaries in connection therewith, as the same may be amended, supplemented
or otherwise modified from time to time in accordance with Section 7.9.
"Senior Notes": the Borrower's unsecured 9.50% Senior Notes,
due 2010, issued on the Closing Date in the aggregate principal amount of
$150,000,000.
"Senior Subordinated Note Indenture": the Indenture entered
into by the Borrower in connection with the issuance of the Senior Subordinated
Notes, together with all instruments and other agreements entered into by the
Borrower or such Subsidiaries in connection therewith, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
Section 7.9.
"Senior Subordinated Notes": the Borrower's 9.35% Senior
Subordinated Notes due 2007.
"Single Employer Plan": any Plan that is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Solvent": with respect to any Person, as of any date of
determination, (a) the amount of the "present fair saleable value" of the assets
of such Person will, as of such date, exceed the amount of all "liabilities of
such Person, contingent or otherwise", as of such date, as such quoted terms are
determined in accordance with applicable federal and state laws governing
determinations of the insolvency of debtors, (b) the present fair saleable value
of the assets of such Person will, as of such date, be greater than the amount
that will be required to pay the liability of such Person on its debts as such
debts become absolute and matured, (c) such Person will not have, as of such
date, an unreasonably small amount of capital with which to conduct its
22
business, and (d) such Person will be able to pay its debts as they mature. For
purposes of this definition, (i) "debt" means liability on a "claim", and (ii)
"claim" means any (x) right to payment, whether or not such a right is reduced
to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an
equitable remedy for breach of performance if such breach gives rise to a right
to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured
or unsecured.
"Specified Change of Control": a "Change of Control", or like
event, as defined in the Senior Subordinated Note Indenture or in the Senior
Note Indenture.
"Specified Hedge Agreement": any Hedge Agreement entered into
by (a) the Borrower or any of its Subsidiaries and (b) any Person that, at the
time such Hedge Agreement is entered into, is a Qualified Counterparty.
"Subsidiary": as to any Person, a corporation, partnership,
limited liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of
such corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Borrower.
"Subsidiary Guarantor": each Material Subsidiary of the
Borrower other than any Excluded Foreign Subsidiary.
"Total Revolving Credit Commitments": at any time, the
aggregate amount of the Revolving Credit Commitments then in effect.
"Total Revolving Extensions of Credit": at any time, the
aggregate amount of the Revolving Extensions of Credit of the Lenders
outstanding at such time.
"Transferee": as defined in Section 10.15.
"Transferred Properties": the collective reference to (a) all
of the Borrower's Texas nursing home operations (seventeen nursing homes with
capacity of 1,421 residents) transferred to affiliates of Senior Health
Properties-Texas, Inc. and (b) all of the Borrower's Florida facilities (32
facilities with 3,427 beds) disposed of or leased through a series of
transactions, including fifteen facilities transferred to Greystone Tribeca
Acquisition LLC, nine facilities leased and subsequently sold to Tandem Health
Care, Inc. and six facilities leased to Senior Health Properties-South, Inc.
"Type": as to any Loan, its nature as a Base Rate Loan or a
Eurodollar Loan.
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"Wholly Owned Subsidiary": as to any Person, any other Person
all of the Capital Stock of which (other than directors' qualifying shares
required by law) is owned by such Person directly and/or through other Wholly
Owned Subsidiaries.
"Wholly Owned Subsidiary Guarantor": any Subsidiary Guarantor
that is a Wholly Owned Subsidiary of the Borrower.
1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in the other Loan Documents or any certificate or other
document made or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms not defined in Section 1.1 and accounting terms partly defined
in Section 1.1, to the extent not defined, shall have the respective meanings
given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
(e) All calculations of financial ratios set forth in Section
7.1 and the calculation of the Consolidated Senior Leverage Ratio for purposes
of determining the Applicable Margin shall be calculated to the same number of
decimal places as the relevant ratios are expressed in and shall be rounded
upward if the number in the decimal place immediately following the last
calculated decimal place is five or greater. For example, if the relevant ratio
is to be calculated to the hundredth decimal place and the calculation of the
ratio is 5.126, the ratio will be rounded up to 5.13.
Section 2. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS
2.1 Revolving Credit Commitments. (a) Subject to the terms and
conditions hereof, the Lenders severally agree to make revolving credit loans
("Loans") to the Borrower from time to time during the Revolving Credit
Commitment Period in an aggregate principal amount at any one time outstanding
for each Lender which, when added to such Lender's Revolving Credit Percentage
of the sum of the L/C Obligations then outstanding, does not exceed the amount
of such Lender's Revolving Credit Commitment. During the Revolving Credit
Commitment Period the Borrower may use the Revolving Credit Commitments by
borrowing, prepaying the Loans in whole or in part, and reborrowing, all in
accordance with the terms and conditions hereof. The Loans may from time to time
be Eurodollar Loans or Base Rate Loans, as determined by the Borrower and
notified to the Administrative Agent in accordance with Sections 2.5 and 2.8,
provided that no Loan shall be made as a Eurodollar Loan after the day that is
one month prior to the Revolving Credit Termination Date.
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(b) Pursuant to the Existing Credit Agreement, the Existing
Lenders made Existing Revolving Credit Loans to the Borrower; from and after the
Closing Date, any Existing Revolving Credit Loans outstanding on the Closing
Date shall constitute Loans under this Agreement until repaid in accordance with
this Agreement.
(c) The Borrower shall repay all outstanding Loans on the
Revolving Credit Termination Date (or on such earlier date on which the Loans
become due and payable pursuant to Section 8).
2.2 Procedure for Revolving Credit Borrowing. The Borrower may
borrow under the Revolving Credit Commitments on any Business Day during the
Revolving Credit Commitment Period, provided that the Borrower shall deliver to
the Administrative Agent a Borrowing Notice (which Borrowing Notice must be
received by the Administrative Agent prior to (a) 12:00 Noon, New York City
time, three Business Days prior to the requested Borrowing Date, in the case of
Eurodollar Loans, or (b) 1:00 p.m., New York City time, one Business Day prior
to the requested Borrowing Date, in the case of Base Rate Loans). Each borrowing
of Loans under the Revolving Credit Commitments shall be in an amount equal to
(x) in the case of Base Rate Loans, $1,000,000 or a whole multiple thereof (or,
if the then aggregate Available Revolving Credit Commitments are less than
$1,000,000, such lesser amount) and (y) in the case of Eurodollar Loans,
$3,000,000 or a whole multiple of $1,000,000 in excess thereof. Upon receipt of
any such Borrowing Notice from the Borrower, the Administrative Agent shall
promptly notify each Lender thereof. Each Lender will make its Revolving Credit
Percentage of the amount of each borrowing of Loans available to the
Administrative Agent for the account of the Borrower at the Funding Office prior
to 1:00 p.m., New York City time, on the Borrowing Date requested by the
Borrower in funds immediately available to the Administrative Agent. Such
borrowing will then be made available to the Borrower by the Administrative
Agent in like funds as received by the Administrative Agent.
2.3 Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of the appropriate Lender, the then unpaid principal amount of each Loan
of such Lender on the Revolving Credit Termination Date (or on such earlier date
on which the Loans become due and payable pursuant to Section 8). The Borrower
hereby further agrees to pay interest on the unpaid principal amount of the
Loans from time to time outstanding from the date hereof until payment in full
thereof at the rates per annum, and on the dates, set forth in Section 2.10.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of the Borrower to such
Lender resulting from each Loan of such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.
(c) The Administrative Agent, on behalf of the Borrower, shall
maintain the Register pursuant to Section 10.6(d), and a subaccount therein for
each Lender, in which shall be recorded (i) the amount of each Loan made
hereunder and any Note evidencing such Loan, the Type of such Loan and each
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 Lender
25
hereunder and (iii) both the amount of any sum received by the Administrative
Agent hereunder from the Borrower and each Lender's share thereof.
(d) The entries made in the Register and the accounts of each
Lender maintained pursuant to Section 2.3(b) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loans made to
the Borrower by such Lender in accordance with the terms of this Agreement.
(e) The Borrower agrees that, upon the request to the
Administrative Agent by any Lender, the Borrower will promptly execute and
deliver to such Lender a promissory note of the Borrower evidencing any Loans of
such Lender, substantially in the form of Exhibit G ("Revolving Credit Note"),
with appropriate insertions as to date and principal amount; provided, that
delivery of Revolving Credit Notes shall not be a condition precedent to the
occurrence of the Closing Date or the making of the Loans on the Closing Date.
2.4 Commitment Fees, etc. (a) The Borrower agrees to pay to
the Administrative Agent for the account of each Lender a commitment fee for the
period from and including the Closing Date to the last day of the Revolving
Credit Commitment Period, computed at the Commitment Fee Rate on the average
daily amount of the Available Revolving Credit Commitment of such Lender during
the period for which payment is made, payable quarterly in arrears on the last
day of each March, June, September and December and on the Revolving Credit
Termination Date, commencing on the first of such dates to occur after the date
hereof.
(b) The Borrower agrees to pay to the Administrative Agent the
fees in the amounts and on the dates from time to time agreed to in writing by
the Borrower and the Administrative Agent.
2.5 Termination or Reduction of Revolving Credit Commitments.
The Borrower shall have the right, upon not less than three Business Days'
notice to the Administrative Agent, to terminate the Revolving Credit
Commitments or, from time to time, to reduce the aggregate amount of the
Revolving Credit Commitments; provided that no such termination or reduction of
Revolving Credit Commitments shall be permitted if, after giving effect thereto
and to any prepayments of the Loans made, or terminations or expirations of
Letters of Credit occurring, on the effective date thereof, the Total Revolving
Extensions of Credit would exceed the Total Revolving Credit Commitments. Any
such reduction shall be in an amount equal to (i) $1,000,000, or a whole
multiple thereof or (ii) the then aggregate Available Revolving Credit
Commitments, and shall reduce permanently the Revolving Credit Commitments then
in effect.
2.6 Optional Prepayments. (a) The Borrower may at any time and
from time to time prepay the Loans, in whole or in part, without premium or
penalty (except as otherwise provided herein), upon irrevocable notice delivered
to the Administrative Agent at least three Business Days prior thereto in the
case of Eurodollar Loans and no later than 10:00
26
a.m. on the date of prepayment in the case of Base Rate Loans, which notice
shall specify the date and amount of such prepayment, and whether such
prepayment is of Eurodollar Loans or Base Rate Loans; provided, that if a
Eurodollar Loan is prepaid on any day other than the last day of the Interest
Period applicable thereto, the Borrower shall also pay any amounts owing
pursuant to Section 2.16. Upon receipt of any such notice the Administrative
Agent shall promptly notify each Lender thereof. If any such notice is given,
the amount specified in such notice shall be due and payable on the date
specified therein, together with (except in the case of Base Rate Loans) accrued
interest to such date on the amount prepaid. Partial prepayments of Loans shall
be in an aggregate principal amount of $1,000,000 or a whole multiple thereof or
the aggregate principal amount of the Loans, or the applicable Eurodollar
Tranche thereof, then outstanding.
2.7 Mandatory Prepayments and Commitment Reductions. (a)
Unless the Required Lenders shall otherwise agree, if any Indebtedness shall be
incurred by Holdings, the Borrower or any of its Subsidiaries (excluding any
Indebtedness incurred in accordance with Section 7.2 as in effect on the date of
this Agreement), then on the date of such incurrence, the Loans shall be prepaid
(without any automatic reduction of Revolving Credit Commitments), by an amount
equal to the amount of the Net Cash Proceeds of such incurrence. The provisions
of this Section do not constitute a consent to the incurrence of any
Indebtedness by Holdings, the Borrower or any of its Subsidiaries.
(b) Unless the Required Lenders shall otherwise agree, if on
any date Holdings, the Borrower or any of its Subsidiaries shall receive Net
Cash Proceeds from any Asset Sale, Purchase Price Refund or Recovery Event then,
unless a Reinvestment Notice shall be delivered in respect thereof, on the date
of receipt by Holdings, the Borrower or any of its Subsidiaries of such Net Cash
Proceeds, the Loans shall be prepaid (without any automatic reduction of
Revolving Credit Commitments) by an amount equal to the amount of such Net Cash
Proceeds; provided, that, notwithstanding the foregoing, (i) the aggregate Net
Cash Proceeds of Asset Sales and Recovery Events that may be excluded from the
foregoing requirement pursuant to a Reinvestment Notice shall not exceed
$20,000,000 in any fiscal year of the Borrower and (ii) on each Reinvestment
Prepayment Date the Loans shall be prepaid (without any automatic reduction of
Revolving Credit Commitments) by an amount equal to the Reinvestment Prepayment
Amount with respect to the relevant Reinvestment Event. The provisions of this
Section do not constitute a consent to the consummation of any Disposition not
permitted by Section 7.5.
2.8 Conversion and Continuation Options. (a) The Borrower may
elect from time to time to convert Eurodollar Loans to Base Rate Loans by giving
the Administrative Agent at least two Business Days' prior irrevocable notice of
such election, provided that any such conversion of Eurodollar Loans may be made
only on the last day of an Interest Period with respect thereto. The Borrower
may elect from time to time to convert Base Rate Loans to Eurodollar Loans by
giving the Administrative Agent at least three Business Days' prior irrevocable
notice of such election (which notice shall specify the length of the initial
Interest Period therefor), provided that no Base Rate Loan may be converted into
a Eurodollar Loan (i) when any Event of Default has occurred and is continuing
and the Administrative Agent has, or the Required Lenders have, determined in
its or their sole discretion not to permit such conversions or (ii) after the
date that is one month prior to the Revolving Credit Termination
27
Date. Upon receipt of any such notice the Administrative Agent shall promptly
notify each Lender thereof.
(b) The Borrower may elect to continue any Eurodollar Loan as
such upon the expiration of the then current Interest Period with respect
thereto by giving irrevocable notice to the Administrative Agent at least three
Business Days' prior to such election, in accordance with the applicable
provisions of the term "Interest Period" set forth in Section 1.1, of the length
of the next Interest Period to be applicable to such Loans, provided that no
Eurodollar Loan may be continued as such (i) when any Event of Default has
occurred and is continuing and the Administrative Agent has, or the Required
Lenders have, determined in its or their sole discretion not to permit such
continuations or (ii) after the date that is one month prior to the Revolving
Credit Termination Date, and provided, further, that if the Borrower shall fail
to give any required notice as described above in this paragraph or if such
continuation is not permitted pursuant to the preceding proviso, such Loans
shall be converted automatically to Base Rate Loans on the last day of such then
expiring Interest Period. Upon receipt of any such notice the Administrative
Agent shall promptly notify each Lender thereof.
2.9 Minimum Amounts and Maximum Number of Eurodollar Tranches.
Notwithstanding anything to the contrary in this Agreement, all borrowings,
conversions, continuations and optional prepayments of Eurodollar Loans and all
selections of Interest Periods shall be in such amounts and be made pursuant to
such elections so that, (a) after giving effect thereto, the aggregate principal
amount of the Eurodollar Loans comprising each Eurodollar Tranche shall be equal
to $3,000,000 or a whole multiple of $1,000,000 in excess thereof and (b) no
more than eight Eurodollar Tranches shall be outstanding at any one time.
2.10 Interest Rates and Payment Dates. (a) Each Eurodollar
Loan shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such day
plus the Applicable Margin in effect for such day.
(b) Each Base Rate Loan shall bear interest for each day on
which it is outstanding at a rate per annum equal to the Base Rate in effect for
such day plus the Applicable Margin in effect for such day.
(c) (i) If all or a portion of the principal amount of any
Loan or Reimbursement Obligation shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), all outstanding Loans and
Reimbursement Obligations (whether or not overdue) (to the extent legally
permitted) shall bear interest at a rate per annum that is equal to (x) in the
case of the Loans, the rate that would otherwise be applicable thereto pursuant
to the foregoing provisions of this Section plus 2% or (y) in the case of
Reimbursement Obligations, the rate applicable to Base Rate Loans plus 2%, and
(ii) if all or a portion of any interest payable on any Loan or Reimbursement
Obligation or any commitment fee or other amount payable hereunder shall not be
paid when due (whether at the stated maturity, by acceleration or otherwise),
such overdue amount shall bear interest at a rate per annum equal to the rate
then applicable to Base Rate Loans plus 2%, in each case, with respect to
clauses (i) and (ii) above, from the date of such non-payment until such amount
is paid in full (after as well as before judgment).
28
(d) Interest shall be payable in arrears on each Interest
Payment Date, provided that interest accruing pursuant to paragraph (c) of this
Section shall be payable from time to time on demand.
2.11 Computation of Interest and Fees. (a) Interest, fees,
commissions payable pursuant hereto shall be calculated on the basis of a
360-day year for the actual days elapsed, except that, with respect to Base Rate
Loans on which interest is calculated on the basis of the Prime Rate, the
interest thereon shall be calculated on the basis of a 365- (or 366-, as the
case may be) day year for the actual days elapsed. The Administrative Agent
shall as soon as practicable notify the Borrower and the Lenders of each
determination of a Eurodollar Rate. Any change in the interest rate on a Loan
resulting from a change in the Base Rate or the Eurocurrency Reserve
Requirements shall become effective as of the opening of business on the day on
which such change becomes effective. The Administrative Agent shall as soon as
practicable notify the Borrower and the Lenders of the effective date and the
amount of each such change in interest rate.
(b) Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrower and the Lenders in the absence of
manifest error. The Administrative Agent shall, at the request of the Borrower,
deliver to the Borrower a statement showing the quotations used by the
Administrative Agent in determining any interest rate pursuant to Section
2.10(a).
2.12 Inability to Determine Interest Rate. If prior to the
first day of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by reason
of circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the Eurodollar Rate for such Interest Period, or
(b) the Administrative Agent shall have received notice from
the Required Lenders that the Eurodollar Rate determined or to be determined for
such Interest Period will not adequately and fairly reflect the cost to such
Lenders (as conclusively certified by such Lenders) of making or maintaining
their affected Loans during such Interest Period, the Administrative Agent shall
give telecopy or telephonic notice thereof to the Borrower and the relevant
Lenders as soon as practicable thereafter. If such notice is given (x) any
Eurodollar Loans requested to be made on the first day of such Interest Period
shall be made as Base Rate Loans, (y) any Loans that were to have been converted
on the first day of such Interest Period to Eurodollar Loans shall be continued
as Base Rate Loans and (z) any outstanding Eurodollar Loans shall be converted,
on the last day of the then current Interest Period with respect thereto, to
Base Rate Loans. Until such notice has been withdrawn by the Administrative
Agent, no further Eurodollar Loans shall be made or continued as such, nor shall
the Borrower have the right to convert Loans to Eurodollar Loans.
2.13 Pro Rata Treatment and Payments. (a) Each borrowing by
the Borrower from the Lenders hereunder, each payment by the Borrower on account
of any commitment fee
29
or Letter of Credit fee, and any reduction of the Revolving Credit Commitments
of the Lenders, shall be made pro rata according to the respective Revolving
Credit Percentages of the Lenders.
(b) Each payment (including each prepayment) by the Borrower
on account of principal of and interest on the Loans shall be made pro rata
according to the respective outstanding principal amounts of the Loans then held
by the Lenders. Each payment in respect of Reimbursement Obligations in respect
of any Letter of Credit shall be made to the Issuing Lender that issued such
Letter of Credit for the account of the Lenders, if any, which participated in
such Letter of Credit pursuant to Section 3.4(a).
(c) The application of any payment of Loans (including
optional and mandatory prepayments) shall be made, first, to Base Rate Loans
and, second, to Eurodollar Loans. Each payment of the Loans (except in the case
of Base Rate Loans) shall be accompanied by accrued interest to the date of such
payment on the amount paid.
(d) All payments (including prepayments) to be made by the
Borrower hereunder, whether on account of principal, interest, fees or
otherwise, shall be made without setoff or counterclaim and shall be made prior
to 12:00 Noon, New York City time, on the due date thereof to the Administrative
Agent, for the account of the relevant Lenders, at the Payment Office, in
Dollars and in immediately available funds. Any payment made by the Borrower
after 12:00 Noon, New York City time, on any Business Day shall be deemed to
have been on the next following Business Day. The Administrative Agent shall
distribute such payments to the Lenders promptly upon receipt in like funds as
received. If any payment hereunder (other than payments on the Eurodollar Loans)
becomes due and payable on a day other than a Business Day, such payment shall
be extended to the next succeeding Business Day. If any payment on a Eurodollar
Loan becomes due and payable on a day other than a Business Day, the maturity
thereof shall be extended to the next succeeding Business Day unless the result
of such extension would be to extend such payment into another calendar month,
in which event such payment shall be made on the immediately preceding Business
Day. In the case of any extension of any payment of principal pursuant to the
preceding two sentences, interest thereon shall be payable at the then
applicable rate during such extension.
(e) Unless the Administrative Agent shall have been notified
in writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Administrative Agent, on demand, such amount with interest thereon at a
rate equal to the daily average Federal Funds Effective Rate for the period
until such Lender makes such amount immediately available to the Administrative
Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this paragraph shall be conclusive in the
absence of manifest error. If such Lender's share of such borrowing is not made
available to the Administrative Agent by such Lender within three Business Days
after such Borrowing Date, the Administrative Agent shall also be entitled to
recover such amount with interest thereon at the rate per annum applicable to
Base Rate Loans, on demand, from the Borrower.
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(f) Unless the Administrative Agent shall have been notified
in writing by the Borrower prior to the date of any payment due to be made by
the Borrower hereunder that the Borrower will not make such payment to the
Administrative Agent, the Administrative Agent may assume that the Borrower is
making such payment, and the Administrative Agent may, but shall not be required
to, in reliance upon such assumption, make available to the Lenders their
respective pro rata shares of a corresponding amount. If such payment is not
made to the Administrative Agent by the Borrower within three Business Days
after such due date, the Administrative Agent shall be entitled to recover, on
demand, from each Lender to which any amount which was made available pursuant
to the preceding sentence, such amount with interest thereon at the rate per
annum equal to the daily average Federal Funds Effective Rate. Nothing herein
shall be deemed to limit the rights of the Administrative Agent or any Lender
against the Borrower or the rights of the Borrower against any Lender.
2.14 Requirements of Law. (a) If the adoption of or any change
in any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement, any
Letter of Credit, any Application or any
Eurodollar Loan made by it, or change the basis
of taxation of payments to such Lender in
respect thereof (except for Non-Excluded Taxes
covered by Section 2.15 and changes in the rate
of tax on the overall net income of such
Lender);
(ii) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or
similar requirement against assets held by,
deposits or other liabilities in or for the
account of, advances, loans or other extensions
of credit by, or any other acquisition of funds
by, any office of such Lender that is not
otherwise included in the determination of the
Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other
condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender,
upon its demand, any additional amounts necessary to compensate such Lender for
such increased cost or reduced amount receivable. If any Lender becomes entitled
to claim any additional amounts pursuant to this Section, it shall promptly
notify the Borrower (with a copy to the Administrative Agent) of the event by
reason of which it has become so entitled.
(b) If any Lender shall have determined that the adoption of
or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any
31
Governmental Authority made subsequent to the date hereof shall have the effect
of reducing the rate of return on such Lender's or such corporation's capital as
a consequence of its obligations hereunder or under or in respect of any Letter
of Credit to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy)
by an amount deemed by such Lender to be material, then from time to time, after
submission by such Lender to the Borrower (with a copy to the Administrative
Agent) of a written request therefor, the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender or such corporation
for such reduction.
(c) A certificate setting forth in reasonable detail
calculations as to any additional amounts payable pursuant to this Section
submitted by any Lender to the Borrower (with a copy to the Administrative
Agent) shall be conclusive in the absence of manifest error. The obligations of
the Borrower pursuant to this Section shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
2.15 Taxes. (a) All payments made by the Borrower under this
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding net income taxes and franchise taxes (imposed in lieu of
net income taxes) imposed on any Agent or any Lender as a result of a present or
former connection between such Agent or such Lender and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
such Agent's or such Lender's having executed, delivered or performed its
obligations or received a payment under, or enforced, this Agreement or any
other Loan Document). If any such non-excluded taxes, levies, imposts, duties,
charges, fees, deductions or withholdings ("Non-Excluded Taxes") or any Other
Taxes are required to be withheld from any amounts payable to any Agent or any
Lender hereunder, the amounts so payable to such Agent or such Lender shall be
increased to the extent necessary to yield to such Agent or such Lender (after
payment of all Non-Excluded Taxes and Other Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement; provided, however, that the Borrower shall not be required to
increase any such amounts payable to any Lender with respect to any Non-Excluded
Taxes (i) that are attributable to such Lender's failure to comply with the
requirements of paragraph (d) or (e) of this Section or (ii) that are United
States withholding taxes imposed on amounts payable to such Lender at the time
such Lender becomes a party to this Agreement, except to the extent that such
Lender's assignor (if any) was entitled, at the time of assignment, to receive
additional amounts from the Borrower with respect to such Non-Excluded Taxes
pursuant to this paragraph (a).
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable
by the Borrower, as promptly as possible thereafter the Borrower shall send to
the Administrative Agent for the account of the relevant Agent or Lender, as the
case may be, a certified copy of an original official receipt received by the
Borrower showing payment thereof. If the Borrower
32
fails to pay any Non-Excluded Taxes or Other Taxes when due to the appropriate
taxing authority or fails to remit to the Administrative Agent the required
receipts or other required documentary evidence, the Borrower shall indemnify
the Agents and the Lenders for any incremental taxes, interest or penalties that
may become payable by any Agent or any Lender as a result of any such failure.
The agreements in this Section shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.
(d) Each Lender (or Transferee) that is not a citizen or
resident of the United States of America, a corporation, partnership or other
entity created or organized in or under the laws of the United States of America
(or any jurisdiction thereof), or any estate or trust that is subject to federal
income taxation regardless of the source of its income (a "Non-U.S. Lender")
shall deliver to the Borrower and the Administrative Agent (or, in the case of a
Participant, to the Lender from which the related participation shall have been
purchased) two copies of either U.S. Internal Revenue Service Form W-8BEN or
Form W-8ECI, or, in the case of a Non-U.S. Lender claiming exemption from U.S.
federal withholding tax under Section 871(h) or 881(c) of the Code with respect
to payments of "portfolio interest" a statement substantially in the form of
Exhibit I and a Form W-8BEN, or any subsequent versions thereof or successors
thereto properly completed and duly executed by such Non-U.S. Lender claiming
complete exemption from, or a reduced rate of, U.S. federal withholding tax on
all payments by the Borrower under this Agreement and the other Loan Documents.
Such forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement (or, in the case of any Participant, on or
before the date such Participant purchases the related participation). In
addition, each Non-U.S. Lender shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Non-U.S.
Lender. Each Non-U.S. Lender shall promptly notify the Borrower at any time it
determines that it is no longer in a position to provide any previously
delivered certificate to the Borrower (or any other form of certification
adopted by the U.S. taxing authorities for such purpose). Notwithstanding any
other provision of this paragraph, a Non-U.S. Lender shall not be required to
deliver any form pursuant to this paragraph that such Non-U.S. Lender is not
legally able to deliver.
(e) A Lender that is entitled to an exemption from or
reduction of non-U.S. withholding tax under the law of the jurisdiction in which
the Borrower is located, or any treaty to which such jurisdiction is a party,
with respect to payments under this Agreement shall deliver to the Borrower
(with a copy to the Administrative Agent), at the time or times prescribed by
applicable law or reasonably requested by the Borrower, such properly completed
and executed documentation prescribed by applicable law as will permit such
payments to be made without withholding or at a reduced rate, provided that such
Lender is legally entitled to complete, execute and deliver such documentation
and in such Lender's reasonable judgment such completion, execution or
submission would not materially prejudice the legal position of such Lender.
2.16 Indemnity. The Borrower agrees to indemnify each Lender
for, and to hold each Lender harmless from, any loss or expense that such Lender
may sustain or incur as a consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of Eurodollar Loans after the
Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by the Borrower in making any
prepayment after the Borrower has given a notice thereof in accordance with the
provisions of
33
this Agreement or (c) the making of a prepayment or conversion of Eurodollar
Loans on a day that is not the last day of an Interest Period with respect
thereto. Such indemnification may include an amount equal to the excess, if any,
of (i) the amount of interest that would have accrued on the amount so prepaid,
or not so borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans provided
for herein (excluding, however, the Applicable Margin included therein, if any)
over (ii) the amount of interest (as reasonably determined by such Lender) that
would have accrued to such Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank Eurodollar
market. A certificate setting forth in reasonable detail calculations as to any
amounts payable pursuant to this Section submitted to the Borrower by any Lender
shall be conclusive in the absence of manifest error. This covenant shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.
2.17 Illegality. Notwithstanding any other provision herein,
if the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for any Lender to
make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the
commitment of such Lender hereunder to make Eurodollar Loans, continue
Eurodollar Loans as such and convert Base Rate Loans to Eurodollar Loans shall
forthwith be canceled and (b) such Lender's Loans then outstanding as Eurodollar
Loans, if any, shall be converted automatically to Base Rate Loans on the
respective last days of the then current Interest Periods with respect to such
Loans or within such earlier period as required by law. If any such conversion
of a Eurodollar Loan occurs on a day which is not the last day of the then
current Interest Period with respect thereto, the Borrower shall pay to such
Lender such amounts, if any, as may be required pursuant to Section 2.16.
2.18 Change of Lending Office. Each Lender agrees that, upon
the occurrence of any event giving rise to the operation of Section 2.14,
2.15(a) or 2.17 with respect to such Lender, it will, if requested by the
Borrower, use reasonable efforts (subject to overall policy considerations of
such Lender) to designate another lending office for any Loans affected by such
event with the object of avoiding the consequences of such event; provided, that
such designation is made on terms that, in the sole judgment of such Lender,
cause such Lender and its lending office(s) to suffer no economic, legal or
regulatory disadvantage, and provided, further, that nothing in this Section
shall affect or postpone any of the obligations of any Borrower or the rights of
any Lender pursuant to Section 2.14, 2.15(a) or 2.17.
2.19 Replacement of Lenders under Certain Circumstances. The
Borrower shall be permitted to replace any Lender that (a) requests
reimbursement for amounts owing pursuant to Section 2.14 or 2.15 or gives a
notice of illegality pursuant to Section 2.17 or (b) defaults in its obligation
to make Loans hereunder, with a replacement financial institution; provided that
(i) such replacement does not conflict with any Requirement of Law, (ii) no
Event of Default shall have occurred and be continuing at the time of such
replacement, (iii) prior to any such replacement, such Lender shall have taken
no action under Section 2.18 so as to eliminate the continued need for payment
of amounts owing pursuant to Section 2.14 or 2.15 or to eliminate the illegality
referred to in such notice of illegality given pursuant to Section 2.17,
34
(iv) the replacement financial institution shall purchase, at par, all Loans and
other amounts owing to such replaced Lender on or prior to the date of
replacement, (v) the Borrower shall be liable to such replaced Lender under
Section 2.16 (as though Section 2.16 were applicable) if any Eurodollar Loan
owing to such replaced Lender shall be purchased other than on the last day of
the Interest Period relating thereto, (vi) the replacement financial
institution, if not already a Lender, shall be reasonably satisfactory to the
Administrative Agent, (vii) the replaced Lender shall be obligated to make such
replacement in accordance with the provisions of Section 10.6 (provided that the
Borrower shall be obligated to pay the registration and processing fee referred
to therein), (viii) the Borrower shall pay all additional amounts (if any)
required pursuant to Section 2.14 or 2.15, as the case may be, in respect of any
period prior to the date on which such replacement shall be consummated, and
(ix) any such replacement shall not be deemed to be a waiver of any rights that
the Borrower, the Administrative Agent or any other Lender shall have against
the replaced Lender.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions
hereof, each Issuing Lender, in reliance on the agreements of the other Lenders
set forth in Section 3.4(a), agrees to issue letters of credit (the letters of
credit issued on and after the Closing Date pursuant to this Section 3
collectively, the "Letters of Credit") for the account of the Borrower on any
Business Day during the Revolving Credit Commitment Period in such form as may
be approved from time to time by such Issuing Lender; provided, that no Issuing
Lender shall have any obligation to issue any Letter of Credit if, after giving
effect to such issuance, (i) the L/C Obligations would exceed the L/C Commitment
or (ii) the aggregate amount of the Available Revolving Credit Commitments would
be less than zero. Each Letter of Credit shall (i) be in form and substance
reasonably acceptable to the Issuing Lender, (ii) be denominated in Dollars and
(iii) expire no later than the earlier of (x) the first anniversary of its date
of issuance and (y) the date which is five Business Days prior to the Revolving
Credit Termination Date; provided that any Letter of Credit with a one-year term
may provide for the renewal thereof for additional one-year periods (which shall
in no event extend beyond the date referred to in clause (y) above).
(b) No Issuing Lender shall at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or cause
such Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
3.2 Procedure for Issuance of Letter of Credit. The Borrower
may from time to time request that an Issuing Lender issue a Letter of Credit by
delivering to such Issuing Lender at its address for notices specified herein
(with a copy to the Administrative Agent) an Application therefor, completed to
the satisfaction of such Issuing Lender, and such other certificates, documents
and other papers and information as such Issuing Lender may request. Upon
receipt of any Application, an Issuing Lender will process such Application and
the certificates, documents and other papers and information delivered to it in
connection therewith in accordance with its customary procedures and shall
promptly issue the Letter of Credit requested thereby by issuing the original of
such Letter of Credit to the beneficiary thereof or as otherwise may be agreed
to by such Issuing Lender and the Borrower (but in no event shall any Issuing
Lender be required to issue any Letter of Credit earlier than three Business
Days after its receipt of the Application therefor and all such other
certificates, documents and other papers
35
and information relating thereto). Promptly after issuance by an Issuing Lender
of a Letter of Credit, such Issuing Lender shall furnish a copy of such Letter
of Credit to the Borrower. Each Issuing Lender shall promptly give notice to the
Administrative Agent of the issuance of each Letter of Credit issued by such
Issuing Lender (including the amount thereof).
3.3 Fees and Other Charges. (a) The Borrower will pay a fee on
the aggregate drawable amount of all outstanding Letters of Credit at a per
annum rate equal to the Applicable Margin then in effect with respect to
Eurodollar Loans under the Revolving Credit Facility, which fee shall be shared
ratably among the Lenders in accordance with their respective Revolving Credit
Percentages and shall be payable quarterly in arrears on each L/C Fee Payment
Date after the issuance date. In addition, the Borrower shall pay to the
relevant Issuing Lender for its own account a fronting fee on the aggregate
drawable amount of all outstanding Letters of Credit issued by it at a per annum
rate agreed upon by the Borrower and such Issuing Lender, which fee shall be
payable quarterly in arrears on each L/C Fee Payment Date after the Issuance
Date.
(b) In addition to the foregoing fees, the Borrower shall pay
or reimburse each Issuing Lender for such normal and customary costs and
expenses as are incurred or charged by such Issuing Lender in issuing,
negotiating, effecting payment under, amending or otherwise administering any
Letter of Credit.
3.4 L/C Participations. (a) Effective on the date of issuance
thereof, each Issuing Lender irrevocably agrees to grant and hereby grants to
each L/C Participant, and, to induce each Issuing Lender to issue Letters of
Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase
and hereby accepts and purchases from each Issuing Lender, on the terms and
conditions hereinafter stated, for such L/C Participant's own account and risk,
an undivided interest equal to such L/C Participant's Revolving Credit
Percentage in each Issuing Lender's obligations and rights under each Letter of
Credit issued by such Issuing Lender hereunder and the amount of each draft paid
by such Issuing Lender thereunder. Each L/C Participant unconditionally and
irrevocably agrees with each Issuing Lender that, if a draft is paid under any
Letter of Credit issued by such Issuing Lender for which such Issuing Lender is
not reimbursed in full by the Borrower in accordance with the terms of this
Agreement, such L/C Participant shall pay to such Issuing Lender upon demand at
such Issuing Lender's address for notices specified herein an amount equal to
such L/C Participant's Revolving Credit Percentage of the amount of such draft,
or any part thereof, that is not so reimbursed.
(b) If any amount required to be paid by any L/C Participant
to an Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed
portion of any payment made by such Issuing Lender under any Letter of Credit is
paid to such Issuing Lender within three Business Days after the date such
payment is due, such L/C Participant shall pay to such Issuing Lender on demand
an amount equal to the product of (i) such amount, times (ii) the daily average
Federal Funds Effective Rate during the period from and including the date such
payment is required to the date on which such payment is immediately available
to such Issuing Lender, times (iii) a fraction the numerator of which is the
number of days that elapse during such period and the denominator of which is
360. If any such amount required to be paid by any L/C Participant pursuant to
Section 3.4(a) is not made available to such Issuing Lender by such L/C
Participant within three Business Days after the date such payment is due, such
Issuing Lender
36
shall be entitled to recover from such L/C Participant, on demand, such amount
with interest thereon calculated from such due date at the rate per annum
applicable to Base Rate Loans. A certificate of such Issuing Lender submitted to
any L/C Participant with respect to any such amounts owing under this Section
shall be conclusive in the absence of manifest error.
(c) Whenever, at any time after an Issuing Lender has made
payment under any Letter of Credit and has received from any L/C Participant its
pro rata share of such payment in accordance with Section 3.4(a), such Issuing
Lender receives any payment related to such Letter of Credit (whether directly
from the Borrower or otherwise, including proceeds of collateral applied thereto
by such Issuing Lender), or any payment of interest on account thereof, such
Issuing Lender will distribute to such L/C Participant its pro rata share
thereof; provided, however, that in the event that any such payment received by
such Issuing Lender shall be required to be returned by such Issuing Lender,
such L/C Participant shall return to such Issuing Lender the portion thereof
previously distributed by such Issuing Lender to it.
3.5 Reimbursement Obligation of the Borrower. The Borrower
agrees to reimburse each Issuing Lender, on each date on which such Issuing
Lender notifies the Borrower of the date and amount of a draft presented under
any Letter of Credit and paid by such Issuing Lender, for the amount of (a) such
draft so paid and (b) any taxes, fees, charges or other costs or expenses
incurred by such Issuing Lender in connection with such payment (the amounts
described in the foregoing clauses (a) and (b) in respect of any drawing,
collectively, the "Payment Amount"). Each such payment shall be made to such
Issuing Lender at its address for notices specified herein in lawful money of
the United States of America and in immediately available funds. Interest shall
be payable on each Payment Amount from the date of the applicable drawing until
payment in full at the rate set forth in (i) until the second Business Day
following the date of the applicable drawing, Section 2.10(b) and (ii)
thereafter, Section 2.10(c). Each drawing under any Letter of Credit shall
(unless an event of the type described in clause (i) or (ii) of Section 8(f)
shall have occurred and be continuing with respect to the Borrower, in which
case the procedures specified in Section 3.4 for funding by L/C Participants
shall apply) constitute a request by the Borrower to the Administrative Agent
for a borrowing pursuant to Section 2.2 of Base Rate Loans. The Borrowing Date
with respect to such borrowing shall be the first date on which a borrowing of
Loans could be made, pursuant to Section 2.2, if the Administrative Agent had
received a notice of such borrowing at the time the Administrative Agent
receives notice from the relevant Issuing Lender of such drawing under such
Letter of Credit.
3.6 Obligations Absolute. The Borrower's obligations under
this Section 3 shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to payment
that the Borrower may have or have had against any Issuing Lender, any
beneficiary of a Letter of Credit or any other Person. The Borrower also agrees
with each Issuing Lender that such Issuing Lender shall not be responsible for,
and the Borrower's Reimbursement Obligations under Section 3.5 shall not be
affected by, among other things, the validity or genuineness of documents or of
any endorsements thereon, even though such documents shall in fact prove to be
invalid, fraudulent or forged, or any dispute between or among the Borrower and
any beneficiary of any Letter of Credit or any other party to which such Letter
of Credit may be transferred or any claims whatsoever of the Borrower against
any beneficiary of such Letter of Credit or any such transferee. No Issuing
Lender shall be liable for
37
any error, omission, interruption or delay in transmission, dispatch or delivery
of any message or advice, however transmitted, in connection with any Letter of
Credit, except for errors or omissions found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of such Issuing Lender. The Borrower agrees
that any action taken or omitted by an Issuing Lender under or in connection
with any Letter of Credit issued by it or the related drafts or documents, if
done in the absence of gross negligence or willful misconduct and in accordance
with the standards of care specified in the Uniform Commercial Code of the State
of New York, shall be binding on the Borrower and shall not result in any
liability of such Issuing Lender to the Borrower.
3.7 Letter of Credit Payments. If any draft shall be presented
for payment under any Letter of Credit, the relevant Issuing Lender shall
promptly notify the Borrower of the date and amount thereof. The responsibility
of the relevant Issuing Lender to the Borrower in connection with any draft
presented for payment under any Letter of Credit, in addition to any payment
obligation expressly provided for in such Letter of Credit issued by such
Issuing Lender, shall be limited to determining that the documents (including
each draft) delivered under such Letter of Credit in connection with such
presentment appear on their face to be in conformity with such Letter of Credit.
3.8 Applications. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into this
Agreement and to make the Loans and issue or participate in the Letters of
Credit, Holdings and the Borrower hereby jointly and severally represent and
warrant to each Agent and each Lender that:
4.1 Financial Condition. (a) The unaudited pro forma
consolidated balance sheet of the Borrower and its consolidated Subsidiaries as
at March 31, 2002 (including the notes thereto) (the "Pro Forma Balance Sheet"),
copies of which have heretofore been furnished to each Lender, has been prepared
giving effect (as if such events had occurred on such date) to (i) the Loans to
be made and the Senior Notes to be issued on the Closing Date and the use of
proceeds thereof and (ii) the payment of fees and expenses in connection with
the foregoing. The Pro Forma Balance Sheet has been prepared based on the best
information available to the Borrower as of the date of delivery thereof, and
presents fairly on a pro forma basis the estimated financial position of
Borrower and its consolidated Subsidiaries as at March 31, 2002, assuming that
the events specified in the preceding sentence had actually occurred at such
date.
(b) The audited consolidated balance sheets of the Borrower as
at December 31, 2000 and December 31, 2001, and the related consolidated
statements of income and of cash flows for the fiscal years ended on such dates,
reported on by and accompanied by an unqualified report from KPMG LLP, present
fairly the consolidated financial condition of the Borrower as at such date, and
the consolidated results of its operations and its consolidated cash flows for
the respective fiscal years then ended. The unaudited consolidated balance sheet
of the Borrower as at March 31, 2002, and the related unaudited consolidated
statements of income and cash flows
38
for the three-month period ended on such date, present fairly the consolidated
financial condition of the Borrower as at such date, and the consolidated
results of its operations and its consolidated cash flows for the three-month
period then ended (subject to normal year-end audit adjustments). All such
financial statements, including the related schedules and notes thereto, have
been prepared in accordance with GAAP applied consistently throughout the
periods involved (except as approved by the aforementioned firm of accountants
and disclosed therein). The Borrower and its Subsidiaries do not have any
material Guarantee Obligations, contingent liabilities and liabilities for
taxes, or any long-term leases or unusual forward or long-term commitments,
including, without limitation, any interest rate or foreign currency swap or
exchange transaction or other obligation in respect of derivatives, that are not
reflected in the most recent financial statements referred to in this paragraph.
During the period from December 31, 2001 to and including the date hereof there
has been no Disposition by the Borrower of any material part of its business or
Property.
4.2 No Change. Since December 31, 2001 there has been no
development or event that has had or could reasonably be expected to have a
Material Adverse Effect.
4.3 Corporate Existence; Compliance with Law. Each of
Holdings, the Borrower and its Subsidiaries (a) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (b) has the corporate power and authority, and the legal right, to
own and operate its Property, to lease the Property it operates as lessee and to
conduct the business in which it is currently engaged, (c) is duly qualified as
a foreign corporation and in good standing under the laws of each jurisdiction
where its ownership, lease or operation of Property or the conduct of its
business requires such qualification and (d) is in compliance with all
Requirements of Law except to the extent that the failure to comply therewith
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.
4.4 Corporate Power; Authorization; Enforceable Obligations.
Each Loan Party has the corporate power and authority, and the legal right, to
make, deliver and perform the Loan Documents to which it is a party and, in the
case of the Borrower, to borrow hereunder. Each Loan Party has taken all
necessary corporate or other action to authorize the execution, delivery and
performance of the Loan Documents to which it is a party and, in the case of the
Borrower, to authorize the borrowings on the terms and conditions of this
Agreement. No consent or authorization of, filing with, notice to or other act
by or in respect of, any Governmental Authority or any other Person is required
in connection with the Acquisition, the borrowings hereunder or the execution,
delivery, performance, validity or enforceability of this Agreement or any of
the other Loan Documents, except (i) consents, authorizations, filings and
notices described in Schedule 4.4, which consents, authorizations, filings and
notices have been obtained or made and are in full force and effect and (ii) the
filings referred to in Section 4.21. Each Loan Document has been duly executed
and delivered on behalf of each Loan Party that is a party thereto. This
Agreement constitutes, and each other Loan Document upon execution will
constitute, a legal, valid and binding obligation of each Loan Party that is a
party thereto, enforceable against each such Loan Party in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
39
4.5 No Legal Bar. The execution, delivery and performance of
this Agreement and the other Loan Documents, the issuance of Letters of Credit,
the borrowings hereunder and the use of the proceeds thereof will not violate
any Requirement of Law or any Contractual Obligation of Holdings, the Borrower
or any of its Subsidiaries and will not result in, or require, the creation or
imposition of any Lien on any of their respective properties or revenues
pursuant to any Requirement of Law or any such Contractual Obligation (other
than the Liens created by the Security Documents). No Requirement of Law or
Contractual Obligation applicable to the Borrower or any of its Subsidiaries
could reasonably be expected to have a Material Adverse Effect.
4.6 No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of Holdings or the Borrower, threatened by or against Holdings,
the Borrower or any of its Subsidiaries or against any of their respective
properties or revenues (a) with respect to any of the Loan Documents or any of
the transactions contemplated hereby or thereby, or (b) that could reasonably be
expected to have a Material Adverse Effect.
4.7 No Default. Neither Holdings, the Borrower nor any of its
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect that could reasonably be expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
4.8 Ownership of Property; Liens. Each of Holdings, the
Borrower and its Subsidiaries has title in fee simple to, or a valid leasehold
interest in, all its real property, and good title to, or a valid leasehold
interest in, all its other Property, and none of such Property is subject to any
Lien except as permitted by Section 7.3.
4.9 Intellectual Property. Holdings, the Borrower and each of
its Subsidiaries owns, or is licensed to use, all Intellectual Property
necessary for the conduct of its business as currently conducted. No material
claim has been asserted and is pending by any Person challenging or questioning
the use of any Intellectual Property or the validity or effectiveness of any
Intellectual Property, nor does Holdings or the Borrower know of any valid basis
for any such claim. The use of Intellectual Property by Holdings, the Borrower
and its Subsidiaries does not infringe on the rights of any Person in any
material respect.
4.10 Taxes. Each of Holdings, the Borrower and each of its
Subsidiaries has filed or caused to be filed all Federal, state and other
material tax returns that are required to be filed and has paid all taxes shown
to be due and payable on said returns or on any assessments made against it or
any of its Property and all other taxes, fees or other charges imposed on it or
any of its Property by any Governmental Authority (other than any the amount or
validity of which are currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
provided on the books of Holdings, the Borrower or its Subsidiaries, as the case
may be); and no tax Lien has been filed, and, to the knowledge of Holdings and
the Borrower, no claim is being asserted, with respect to any such tax, fee or
other charge.
40
4.11 Federal Regulations. No part of the proceeds of any Loans
will be used for "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation U as now and
from time to time hereafter in effect or for any purpose that violates the
provisions of the Regulations of the Board. If requested by any Lender or the
Administrative Agent, the Borrower will furnish to the Administrative Agent and
each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-3 or FR Form U-1 referred to in Regulation U.
4.12 Labor Matters. There are no strikes or other labor
disputes against Holdings, the Borrower or any of its Subsidiaries pending or,
to the knowledge of Holdings or the Borrower, threatened that (individually or
in the aggregate) could reasonably be expected to have a Material Adverse
Effect. Hours worked by and payment made to employees of Holdings, the Borrower
and its Subsidiaries have not been in violation of the Fair Labor Standards Act
or any other applicable Requirement of Law dealing with such matters that
(individually or in the aggregate) could reasonably be expected to have a
Material Adverse Effect. All payments due from Holdings, the Borrower or any of
its Subsidiaries on account of employee health and welfare insurance that
(individually or in the aggregate) could reasonably be expected to have a
Material Adverse Effect if not paid have been paid or accrued as a liability on
the books of Holdings, the Borrower or the relevant Subsidiary.
4.13 ERISA. Neither a Reportable Event nor an "accumulated
funding deficiency" (within the meaning of Section 412 of the Code or Section
302 of ERISA) has occurred during the five-year period prior to the date on
which this representation is made or deemed made with respect to any Plan, and
each Plan has complied in all material respects with the applicable provisions
of ERISA and the Code. No termination of a Single Employer Plan has occurred,
and no Lien in favor of the PBGC or a Plan has arisen, during such five-year
period. The present value of all accrued benefits under each Single Employer
Plan (based on those assumptions used to fund such Plans) did not, as of the
last annual valuation date prior to the date on which this representation is
made or deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits by a material amount. Neither the Borrower nor any
Commonly Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan that has resulted or could reasonably be expected to result
in a material liability under ERISA, and neither the Borrower nor any Commonly
Controlled Entity would become subject to any material liability under ERISA if
the Borrower or any such Commonly Controlled Entity were to withdraw completely
from all Multiemployer Plans as of the valuation date most closely preceding the
date on which this representation is made or deemed made. No such Multiemployer
Plan is in Reorganization or Insolvent.
4.14 Investment Company Act; Other Regulations. No Loan Party
is an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
No Loan Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) which limits its ability to incur Indebtedness under
this Agreement and the other Loan Documents.
4.15 Material Subsidiaries. (a) The Subsidiaries listed on
Schedule 4.15 constitute all the Material Subsidiaries of the Borrower at the
date hereof. Schedule 4.15 sets forth as of the Closing Date the name and
jurisdiction of incorporation of each Material
41
Subsidiary and, as to each Material Subsidiary, the percentage of each class of
Capital Stock owned by each Loan Party.
(b) As of the Closing Date, there are no outstanding
subscriptions, options, warrants, calls, rights or other agreements or
commitments (other than stock options granted to employees or directors and
directors' qualifying shares) of any nature relating to any Capital Stock of
Holdings, the Borrower or any Subsidiary, except as disclosed on Schedule 4.15.
4.16 Use of Proceeds. The proceeds of the Loans, and the
Letters of Credit, shall be used for working capital needs and general corporate
purposes of the Borrower and its Subsidiaries.
4.17 Environmental Matters. Other than exceptions to any of
the following that could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect:
(a) The Borrower and its Subsidiaries: (i) are, and within the
period of all applicable statutes of limitation have been, in compliance with
all applicable Environmental Laws; (ii) hold all Environmental Permits (each of
which is in full force and effect) required for any of their current or intended
operations or for any property owned, leased, or otherwise operated by any of
them; (iii) are, and within the period of all applicable statutes of limitation
have been, in compliance with all of their Environmental Permits; and (iv)
reasonably believe that: each of their Environmental Permits will be timely
renewed and complied with, without material expense; any additional
Environmental Permits that may be required of any of them will be timely
obtained and complied with, without material expense; and compliance with any
Environmental Law that is or is expected to become applicable to any of them
will be timely attained and maintained, without material expense.
(b) Materials of Environmental Concern are not present at, on,
under, in, or about any real property now or formerly owned, leased or operated
by the Borrower or any of its Subsidiaries, or at any other location (including,
without limitation, any location to which Materials of Environmental Concern
have been sent for re-use or recycling or for treatment, storage, or disposal)
which could reasonably be expected to (i) give rise to liability of the Borrower
or any of its Subsidiaries under any applicable Environmental Law or otherwise
result in costs to the Borrower or any of its Subsidiaries, or (ii) interfere
with the Borrower's or any of its Subsidiaries' continued operations, or (iii)
impair the fair saleable value of any real property owned or leased by the
Borrower or any of its Subsidiaries.
(c) There is no judicial, administrative, or arbitral
proceeding (including any notice of violation or alleged violation) under or
relating to any Environmental Law to which the Borrower or any of its
Subsidiaries is, or to the knowledge of the Borrower or any of its Subsidiaries
will be, named as a party that is pending or, to the knowledge of the Borrower
or any of its Subsidiaries, threatened.
(d) Neither the Borrower nor any of its Subsidiaries has
received any written request for information, or been notified that it is a
potentially responsible party under or relating
42
to the federal Comprehensive Environmental Response, Compensation, and Liability
Act or any similar Environmental Law, or with respect to any Materials of
Environmental Concern.
(e) Neither the Borrower nor any of its Subsidiaries has
entered into or agreed to any consent decree, order, or settlement or other
agreement, or is subject to any judgment, decree, or order or other agreement,
in any judicial, administrative, arbitral, or other forum for dispute
resolution, relating to compliance with or liability under any Environmental
Law.
(f) Neither the Borrower nor any of its Subsidiaries has
assumed or retained, by contract or operation of law, any liabilities of any
kind, fixed or contingent, known or unknown, under any Environmental Law or with
respect to any Material of Environmental Concern.
4.18 Compliance With Health Care Laws. Without limiting the
generality of Section 4.3(c) or any other representation or warranty made
herein, to the Borrower's knowledge, the healthcare facilities operated by the
Borrower and its Subsidiaries, and each of its licensed employees in the
exercise of their respective duties on behalf of such facilities, is in
compliance with all applicable statutes, laws, ordinances, rules and regulations
of any governmental authority with respect to regulatory matters primarily
relating to patient healthcare (including without limitation Section 1128B(b) of
the Social Security Act, as amended, 42 U.S.C. Section 1320a-7(b) (Criminal
Penalties Involving Medicare or State Health Care Programs), commonly referred
to as the "Federal Anti-Kickback Statute," and the Social Security Act, as
amended, Section 1877, 42 U.S.C Section 1395nn (Prohibition Against Certain
Referrals), commonly referred to as "Stark Statute") except to the extent that
the failure to comply therewith could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect. The Borrower and each of its
Subsidiaries has maintained in all material respects all records required to be
maintained by the Joint Commission on Accreditation of Healthcare Organizations,
the Food and Drug Administration, Drug Enforcement Agency and State Boards of
Pharmacy and the federal and state Medicare and Medicaid programs as required by
the Healthcare Laws and, to the knowledge of the Borrower, there are no
presently existing circumstances or violations of Healthcare Laws which are, in
the aggregate, reasonably likely to result in a Material Adverse Effect. The
Borrower and its Subsidiaries and the owners of the facilities and other
businesses managed by the Borrower or its Subsidiaries have such permits,
licenses, franchises, certificates and other approvals or authorizations of
governmental or regulatory authorities as are necessary under applicable law to
own their respective properties and to conduct their respective business
(including without limitation such permits as are required under such federal,
state and other health care laws, and under such HMO or similar licensure laws
and such insurance laws and regulations, as are applicable thereto) except to
the extent that the failure to obtain or possess such approvals or
authorizations could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
4.19 HIPAA Compliance. To the extent that and for so long as
the Borrower is a "covered entity" within the meaning of HIPAA, the Borrower (i)
has undertaken or will promptly undertake all necessary surveys, audits,
inventories, reviews, analyses and/or assessments (including any necessary risk
assessments) of all areas of its business and operations required by HIPAA
and/or that could be adversely affected by the failure of the Borrower to be
HIPAA Compliant (as defined below); (ii) has developed or will promptly develop
a detailed
43
plan and time line for becoming HIPAA Compliant (a "HIPAA Compliance Plan"); and
(iii) has implemented or will implement those provisions of such HIPAA
Compliance Plan in all material respects necessary to ensure that the Borrower
is or becomes HIPAA Compliant. For purposes hereof, "HIPAA Compliant" shall mean
that the Borrower (x) is or will be in compliance with each of the applicable
requirements of the so-called "Administrative Simplification" provisions of
HIPAA on and as of each date that any part thereof, or any final rule or
regulation thereunder, becomes effective in accordance with its or their terms,
as the case may be (each such date, a "HIPAA Compliance Date") and (y) is not
and could not reasonably be expected to become, as of any date following any
such HIPAA Compliance Date, the subject of any civil or criminal penalty,
process, claim, action or proceeding, or any administrative or other regulatory
review, survey, process or proceeding (other than routine surveys or reviews
conducted by any government health plan or other accreditation entity) that
could reasonably be expected to have a Material Adverse Effect.
4.20 Accuracy of Information, etc. No statement or information
contained in this Agreement, any other Loan Document, the Confidential
Information Memorandum or any other document, certificate or statement furnished
to the Administrative Agent or the Lenders or any of them, by or on behalf of
any Loan Party for use in connection with the transactions contemplated by this
Agreement or the other Loan Documents, contained as of the date such statement,
information, document or certificate was so furnished (or, in the case of the
Confidential Information Memorandum, as of the date of this Agreement), any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements contained herein or therein not
misleading. The projections and pro forma financial information contained in the
materials referenced above are based upon good faith estimates and assumptions
believed by management of the Borrower to be reasonable at the time made, it
being recognized by the Lenders that such financial information as it relates to
future events is not to be viewed as fact and that actual results during the
period or periods covered by such financial information may differ from the
projected results set forth therein by a material amount. There is no fact known
to any Loan Party that could reasonably be expected to have a Material Adverse
Effect that has not been expressly disclosed herein, in the other Loan
Documents, in the Confidential Information Memorandum or in any other documents,
certificates and statements furnished to the Agents and the Lenders for use in
connection with the transactions contemplated hereby and by the other Loan
Documents.
4.21 Security Documents. (a) The Guarantee and Collateral
Agreement is effective to create in favor of the Administrative Agent, for the
benefit of the Secured Parties, a legal, valid and enforceable security interest
in the Collateral described therein and proceeds thereof. In the case of the
Pledged Stock described in the Guarantee and Collateral Agreement, when any
stock certificates representing such Pledged Stock are delivered to the
Administrative Agent, and in the case of the other Collateral described in the
Guarantee and Collateral Agreement, when financing statements in appropriate
form are filed in the offices specified on Schedule 4.21(a)-1 (which financing
statements have been duly completed and delivered to the Administrative Agent
for filing) and such other filings as are specified on Schedule 3 to the
Guarantee and Collateral Agreement have been completed (all of which filings
have been duly completed), the Guarantee and Collateral Agreement shall
constitute a fully perfected Lien on, and security interest in, all right, title
and interest of the Loan Parties in such Collateral and the proceeds thereof, as
security for the Obligations (as defined in the Guarantee and Collateral
44
Agreement), in each case prior and superior in right to any other Person
(except, in the case of Collateral other than Pledged Stock, Liens permitted by
Section 7.3). Schedule 4.21(a)-2 lists each UCC Financing Statement that names
any Loan Party as debtor and will remain on file after the Closing Date other
than Financing Statements which name the Existing Agent as a secured party and
will be assigned to the Administrative Agent or terminated as soon as is
practicable following the Closing Date. Schedule 4.21(a)-3 lists each UCC
Financing Statement that (i) names any Loan Party as debtor and will be
terminated on or prior to the Closing Date or (ii) names any Inactive Subsidiary
as a debtor and will be terminated as soon as is practicable following the
Closing Date; and on or prior to the Closing Date, the Borrower will have
delivered to the Administrative Agent, or caused to be filed, duly completed UCC
termination statements in respect of each UCC Financing Statement listed in
Schedule 4.21(a)-3.
(b) Each of the Mortgages, as amended by the relevant Mortgage
Amendment, is effective to create in favor of the Administrative Agent, for the
benefit of the Secured Parties, a legally valid and enforceable Lien on the
Mortgaged Properties described therein and proceeds thereof, and when the
Mortgage Amendments are filed in the offices set forth in Schedule 4.21(b), each
Mortgage (as amended by such Mortgage Amendment) shall continue to constitute a
fully perfected Lien on, and security interest in, all right, title and interest
of the Loan Parties in the Mortgaged Properties and the proceeds thereof, as
security for the Obligations (as defined in the relevant Mortgage), in each case
prior and superior in right to any other Person (other than Persons holding
Liens or other encumbrances or rights permitted by the relevant Mortgage).
4.22 Solvency. Each Loan Party is, and after giving effect to
the transactions contemplated hereby and the incurrence of all Indebtedness and
obligations being incurred in connection herewith and therewith will be and will
continue to be, Solvent.
4.23 Senior Indebtedness. The Obligations constitute "Senior
Indebtedness" of the Borrower under and as defined in the Senior Subordinated
Note Indenture. The obligations of each Subsidiary Guarantor under the Guarantee
and Collateral Agreement constitute "Guarantor Senior Indebtedness" of such
Subsidiary Guarantor under and as defined in the Senior Subordinated Note
Indenture.
4.24 Regulation H. No Mortgage encumbers improved real
property which is located in an area that has been identified by the Secretary
of Housing and Urban Development as an area having special flood hazards and in
which flood insurance has been made available under the National Flood Insurance
Act of 1968 (except any Mortgaged Properties as to which such flood insurance as
required by Regulation H has been obtained and is in full force and effect as
required by this Agreement).
4.25 Deposit Accounts and Securities Accounts. Schedule 4.25
lists all Deposit Accounts and Securities Accounts in existence on the Closing
Date, after giving effect to the transactions to be effected on the Closing
Date.
4.26 Reimbursement From Third Party Payors. Each of the
Borrower and its Subsidiaries is in compliance with the written material
reimbursement policies, rules and regulations of third party payors such as
Medicare, Medicaid, private insurance companies,
45
health maintenance organizations, preferred provider organizations, managed care
systems and other third party payors, including, without limitation, adjustments
under any capitation arrangement, fee schedule, discount formula or cost-based
reimbursement the failure to comply with which would be reasonably likely to
have a Material Adverse Effect.
4.27 Fraud and Abuse. Neither the Borrower nor any Subsidiary,
nor any stockholder, officer or director, acting on behalf of the Borrower or
any Subsidiary, has engaged on behalf of the Borrower or any Subsidiary in any
of the following, except where there would likely be no Material Adverse Effect:
(i) knowing and willfully making or causing to be made a false statement or
representation of a material fact in any applications for any benefit or payment
under Medicare or Medicaid programs; (ii) knowing and willfully making or
causing to be made any false statement or representation of a material fact for
use in determining rights to any benefit or payment under Medicare or Medicaid
programs; (iii) any knowing and willful failure by the Borrower or any
Subsidiary to disclose to the appropriate government contractor any material
overpayment or other improper payment received from the Medicare and Medicaid
program; or (iv) any knowing and willful violation of the Federal and State
anti-kick-back or fraud and abuse laws, the regulations promulgated thereunder.
4.28 Inactive Subsidiaries. None of the Inactive Subsidiaries
(i) is engaged in any material business operations, (ii) holds any material
assets or (iii) guarantees, or otherwise provides direct credit support
(including a Lien on its assets) for, Indebtedness of the Borrower or any of its
Subsidiaries.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Closing Date and Initial Extension of
Credit. The occurrence of the Closing Date and the agreement of each Lender to
make the initial extension of credit requested to be made by it hereunder are
subject to the satisfaction of the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have
received (i) this Agreement, executed and delivered by a duly authorized officer
of Holdings and the Borrower, (ii) the Guarantee and Collateral Agreement,
executed and delivered by a duly authorized officer of Holdings, the Borrower
and each Subsidiary Guarantor, (iii) a Control Agreement in respect of each
Deposit Account (other than deposit accounts (i) having a balance of less than
$100,000 as of May 31, 2002 or (ii) into which proceeds of Medicare or Medicaid
Receivables (as defined in the Guarantee and Collateral Agreement) are directly
deposited by the obligor thereof) and Securities Account, executed and delivered
by the Loan Party that is the holder of such Deposit Account or Securities
Account and the bank or securities intermediary at which such Deposit Account or
Securities Account is maintained, (iv) a Lender Addendum executed and delivered
by each Lender and accepted by the Borrower and (v) the Payoff Letter executed
and delivered by the Existing Agent, Borrower and Holdings.
(b) Pre-Closing Transactions. The following shall have
occurred:
46
(i) the Borrower shall have received at least
$150,000,000 in gross cash proceeds from the issuance
of the Senior Notes; and
(ii) the transactions described in the fourth, fifth and
sixth recitals to this Agreement shall have been
consummated.
(c) Pro Forma Balance Sheet; Financial Statements. The Lenders
shall have received, in each case in form and substance satisfactory to the
Lenders, (i) the Pro Forma Balance Sheet, (ii) audited consolidated financial
statements of the Borrower for the 2000 and 2001 fiscal years and (iii)
unaudited interim consolidated financial statements of the Borrower for each
fiscal quarterly period ended subsequent to the date of the latest applicable
financial statements delivered pursuant to clause (ii) of this paragraph as to
which such financial statements are available.
(d) Approvals. All governmental and third party approvals
necessary in connection with the continuing operations of Holdings, the Borrower
and its Subsidiaries and the transactions contemplated hereby shall have been
obtained and be in full force and effect.
(e) Related Agreements. The Administrative Agent shall have
received (in a form reasonably satisfactory to the Administrative Agent), true
and correct copies, certified as to authenticity by the Borrower, of (i) the
Senior Subordinated Note Indenture, (ii) the Senior Note Indenture and (iii)
such other documents or instruments as may be reasonably requested by the
Administrative Agent, including, without limitation, a copy of any other debt
instrument, security agreement or other material contract to which the Loan
Parties may be a party.
(f) Fees. The Lenders and the Administrative Agent shall have
received all fees required to be paid, and all expenses for which invoices have
been presented (including reasonable fees, disbursements and other charges of
counsel to the Agents), on or before the Closing Date. All such amounts will be
paid with proceeds of Loans made on the Closing Date and will be reflected in
the funding instructions given by the Borrower to the Administrative Agent on or
before the Closing Date.
(g) Business Plan. The Lenders shall have received a
satisfactory business plan for fiscal years 2002-2006 and a satisfactory written
analysis of the business and prospects of the Borrower and its Subsidiaries for
the period from the Closing Date through 2006.
(h) Lien Searches. The Administrative Agent and each
requesting Lender shall have received the results of a recent lien search with
respect to each Loan Party (i) in the state of incorporation or formation of
such Loan Party, (ii) in the state in which the chief executive office of such
Loan Party is located, (iii) in each state in which such Loan Party is
authorized to conduct business and (iv) in any other jurisdiction in which
Uniform Commercial Code financing statement or other filings or recordations
should be made to evidence or perfect security interests in all material assets
of the Loan Party (excluding real properties which are not, and fixtures not
relating to, Mortgaged Properties), and such search shall reveal no liens on any
of the assets of the Loan Parties, except for Liens permitted by Section 7.3.
47
(i) Environmental Matters. The Administrative Agent shall have
received, with a copy for each Lender, completed environmental questionnaires
prepared internally with respect to each of the Mortgaged Properties.
(j) Closing Certificate. The Administrative Agent shall have
received a certificate of each Loan Party, dated the Closing Date, in form
reasonably satisfactory to the Administrative Agent and containing the
representations and items included in Exhibit C, with appropriate insertions and
attachments.
(k) Legal Opinions. The Administrative Agent and requesting
Lenders shall have received the following executed legal opinions:
(i) the legal opinion of Foley & Lardner, counsel to
Holdings, the Borrower and its Subsidiaries,
substantially in the form of Exhibit F; and
(ii) the legal opinion of local counsel in each of
Arkansas, Delaware, Indiana, Kentucky, Minnesota,
Ohio, West Virginia, Pennsylvania, Wisconsin and of
such other special and local counsel as may be
required by the Administrative Agent.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent may
reasonably require.
(l) Pledged Stock; Stock Powers; Acknowledgment and Consent;
Pledged Notes. The Administrative Agent shall have received (i) the certificates
representing the shares of Capital Stock pledged pursuant to the Guarantee and
Collateral Agreement, together with an undated stock power for each such
certificate executed in blank by a duly authorized officer of the pledgor
thereof, (ii) an Acknowledgment and Consent, substantially in the form of Annex
II to the Guarantee and Collateral Agreement, duly executed by any issuer of
Capital Stock pledged pursuant to the Guarantee and Collateral Agreement that is
not itself a party to the Guarantee and Collateral Agreement and (iii) each
promissory note pledged pursuant to the Guarantee and Collateral Agreement
endorsed (without recourse) in blank (or accompanied by an executed transfer
form in blank satisfactory to the Administrative Agent) by the pledgor thereof.
(m) Existing Mortgages; Existing Mortgagee Title Insurance
Policies. The Administrative Agent shall have received satisfactory evidence
that, after giving effect to the transactions contemplated by the recitals to
this Agreement to occur on or prior to the Closing Date, each Existing Mortgage,
as amended by the relevant Mortgage Amendment, will continue to secure the
Obligations to the same extent, and with the same priority, as such Existing
Mortgage secured the obligations of the Borrower and its Affiliates under the
Existing Credit Agreement. The Administrative Agent shall have received in
respect of each of the Existing Mortgagee Title Policies an endorsement from the
issuing title insurance company which shall (i) insure that the Mortgage insured
thereby (as amended) shall continue to be a valid first Lien on the Mortgaged
Property encumbered thereby as of the effective date of such Existing Mortgagee
Title Policy, to the same extent and with the same priority as such Existing
Mortgagee Title Policy insured the Existing Mortgage; (ii) name the
Administrative Agent for
48
the benefit of the Secured Parties as the insured thereunder; and (iii) be in
form and substance reasonably satisfactory to the Administrative Agent.
(n) Filings, Registrations and Recordings. Each document
(including, without limitation, any Uniform Commercial Code financing statement)
required by the Security Documents or under law or reasonably requested by the
Administrative Agent to be filed, registered or recorded in order to reflect the
assignment of Liens from the Existing Agent to the Administrative Agent or the
creation in favor of the Administrative Agent, for the benefit of the Secured
Parties, of a perfected Lien on the Collateral described therein, prior and
superior in right to any other Person (other than with respect to Liens
expressly permitted by Section 7.3), shall have been filed, registered or
recorded or shall have been delivered to the Administrative Agent in proper form
for filing, registration or recordation.
(o) If requested by the Administrative Agent, the
Administrative Agent shall have received (A) a policy of flood insurance that
(1) covers any parcel of improved real property that is encumbered by any
Mortgage (2) is written in an amount not less than the outstanding principal
amount of the indebtedness secured by such Mortgage that is reasonably allocable
to such real property or the maximum limit of coverage made available with
respect to the particular type of property under the National Flood Insurance
Act of 1968, whichever is less, and (3) will remain in force until the maturity
of the indebtedness secured by such Mortgage and (B) confirmation that the
Borrower has received the notice required pursuant to Section 208(e)(3) of
Regulation H of the Board.
(p) Insurance. The Administrative Agent shall have received
insurance certificates satisfying the requirements of Section 5.3 of the
Guarantee and Collateral Agreement.
5.2 Conditions to Each Extension of Credit. The agreement of
each Lender to make any extension of credit requested to be made by it hereunder
on any date (including, without limitation, its initial extension of credit) is
subject to the satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by any Loan Party in or pursuant to the Loan
Documents shall be true and correct on and as of such date as if made on and as
of such date.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the extensions
of credit requested to be made on such date.
Each borrowing by and issuance of a Letter of Credit on behalf
of the Borrower hereunder shall constitute a representation and warranty by the
Borrower as of the date of such extension of credit that the conditions
contained in this Section 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
Holdings and the Borrower hereby jointly and severally agree
that, so long as the Commitments remain in effect, any Letter of Credit remains
outstanding or any Loan or other
49
amount is owing to any Lender or any Agent hereunder, each of Holdings and the
Borrower shall and shall cause each of its Subsidiaries to:
6.1 Financial Statements. Furnish to each Agent and each
Lender:
(a) as soon as available, but in any event within 90 days
after the end of each fiscal year of the Borrower, a copy of the audited
consolidated balance sheet of the Borrower and its consolidated Subsidiaries as
at the end of such year and the related audited consolidated statements of
income and of cash flows for such year, setting forth in each case in
comparative form the figures as of the end of and for the previous year,
reported on without a "going concern" or like qualification or exception, or
qualification arising out of the scope of the audit, by KPMG LLP or other
independent certified public accountants of nationally recognized standing; and
(b) as soon as available, but in any event not later than 45
days after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, the unaudited consolidated balance sheet of the Borrower
and its consolidated Subsidiaries as at the end of such quarter and the related
unaudited consolidated statements of income and of cash flows for such quarter
and the portion of the fiscal year through the end of such quarter, setting
forth in each case in comparative form the figures as of the end of and for the
corresponding period in the previous year, certified by a Responsible Officer as
being fairly stated in all material respects (subject to normal year-end audit
adjustments);
all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
6.2 Certificates; Other Information. Furnish to each Agent and
each Lender, or, in the case of clause (h), to the relevant Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 6.1(a), a certificate of the independent certified public
accountants reporting on such financial statements stating that in making the
examination necessary therefor no knowledge was obtained of any Default or Event
of Default, except as specified in such certificate (it being understood that
such certificate shall be limited to the items that independent certified public
accountants are permitted to cover in such certificates pursuant to their
professional standards and customs of the profession);
(b) concurrently with the delivery of any financial statements
pursuant to Section 6.1, (i) a certificate of a Responsible Officer stating
that, to the best of such Responsible Officer's knowledge, each Loan Party
during such period has observed or performed all of its covenants and other
agreements, and satisfied every condition, contained in this Agreement and the
other Loan Documents to which it is a party to be observed, performed or
satisfied by it, and that such Responsible Officer has obtained no knowledge of
any Default or Event of Default except as specified in such certificate and (ii)
in the case of quarterly or annual financial statements, (x) a Compliance
Certificate containing all information and calculations necessary
50
for determining compliance by Holdings, the Borrower and its Subsidiaries with
the provisions of this Agreement referred to therein as of the last day of the
fiscal quarter or fiscal year of the Borrower, as the case may be, (y) a list of
any Intellectual Property acquired by any Loan Party since the date of the most
recent list delivered pursuant to this clause (y) (or, in the case of the first
such list so delivered, since the Closing Date) and (z) a list of any UCC
financing statements or other filings specified in such Compliance Certificate
as being required to be delivered therewith;
(c) as soon as available, and in any event no later than 45
days after the end of each fiscal year of the Borrower, a detailed consolidated
budget for the following fiscal year (including a projected consolidated balance
sheet of the Borrower and its Subsidiaries as of the end of the following fiscal
year, and the related consolidated statements of projected cash flow, projected
changes in financial position and projected income), and, as soon as available,
significant revisions, if any, of such budget and projections with respect to
such fiscal year (collectively, the "Projections"), which Projections shall in
each case be accompanied by a certificate of a Responsible Officer stating that
such Projections are based on reasonable estimates, information and assumptions
and that such Responsible Officer has no reason to believe that such Projections
are incorrect or misleading in any material respect;
(d) within 45 days after the end of each fiscal quarter of the
Borrower, a narrative discussion and analysis of the financial condition and
results of operations of the Borrower and its Subsidiaries for such fiscal
quarter and for the period from the beginning of the then current fiscal year to
the end of such fiscal quarter, as compared to the portion of the Projections
covering such periods and to the comparable periods of the previous year;
(e) no later than 10 Business Days prior to the effectiveness
thereof, copies of substantially final drafts of any proposed amendment,
supplement, waiver or other modification with respect to the Senior Subordinated
Note Indenture or the Senior Note Indenture;
(f) within five days after the same are sent, copies of all
financial statements and reports that Holdings or the Borrower sends to the
holders of any class of its debt securities or public equity securities and,
within five days after the same are filed, copies of all financial statements
and reports that Holdings or the Borrower may make to, or file with, the SEC;
(g) as soon as possible and in any event within 10 days of
obtaining knowledge thereof: (i) any development, event, or condition that,
individually or in the aggregate with other developments, events or conditions,
could reasonably be expected to result in the payment by the Borrower and its
Subsidiaries, in the aggregate, of a Material Environmental Amount; and (ii) any
notice that any governmental authority may deny any application for an
Environmental Permit sought by, or revoke or refuse to renew any Environmental
Permit held by, the Borrower; and
(h) promptly, such additional financial and other information
as any Lender may from time to time reasonably request.
6.3 Payment of Obligations and Compliance with Agreements.
Pay, discharge or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be,
51
all its material obligations of whatever nature, except where the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have been
provided on the books of Holdings, the Borrower or its Subsidiaries, as the case
may be; and comply with its obligations under the other Loan Documents and the
Fee Letter.
6.4 Conduct of Business and Maintenance of Existence, etc. (a)
(i) Preserve, renew and keep in full force and effect its corporate or other
existence and (ii) 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 7.4 and except, in the
case of clause (ii) 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.
6.5 Maintenance of Property; Insurance. (a) Keep all Property
and systems useful and necessary in its business in good working order and
condition, ordinary wear and tear excepted and (b) maintain with financially
sound and reputable insurance companies insurance on all its Property in at
least such amounts and against at least such risks (but including in any event
public liability, product liability and business interruption) as are usually
insured against in the same general area by companies engaged in the same or a
similar business.
6.6 Inspection of Property; Books and Records; Discussions.
(a) Keep proper books of records and account in which full, true and correct
entries in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities and (b)
permit representatives of any Lender to visit and inspect its corporate offices
and examine and make abstracts from any of its books and records at any
reasonable time upon reasonable prior notice and as often as may reasonably be
desired and to discuss the business, operations, properties and financial and
other condition of Holdings, the Borrower and its Subsidiaries with officers and
employees of Holdings, the Borrower and its Subsidiaries and with its
independent certified public accountants.
6.7 Notices. Promptly give notice to the Administrative Agent
and each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of Holdings, the Borrower or any of its Subsidiaries or (ii)
litigation, investigation or proceeding which may exist at any time between
Holdings, the Borrower or any of its Subsidiaries and any Governmental
Authority, that in either case, if not cured or if adversely determined, as the
case may be, could reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting Holdings, the
Borrower or any of its Subsidiaries in which the amount involved is $2,500,000
or more and not covered by insurance or in which injunctive or similar relief is
sought;
52
(d) the following events, as soon as possible and in any event
within 30 days after the Borrower knows or has reason to know thereof: (i) the
occurrence of any Reportable Event with respect to any Plan, a failure to make
any required contribution to a Plan, the creation of any Lien in favor of a Plan
or any withdrawal from, or the termination, Reorganization or Insolvency of, any
Multiemployer Plan or (ii) the institution of proceedings or the taking of any
other action by the PBGC or the Borrower or any Commonly Controlled Entity or
any Multiemployer Plan with respect to the withdrawal from, or the termination,
Reorganization or Insolvency of, any Plan; and
(e) any development or event that has had or could reasonably
be expected to have a Material Adverse Effect.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action Holdings, the Borrower or the relevant Subsidiary
proposes to take with respect thereto.
6.8 Environmental Laws. (a) Comply in all material respects
with, and ensure compliance in all material respects by all tenants and
subtenants, if any, with, all applicable Environmental Laws, and obtain and
comply in all material respects with and maintain, and ensure that all tenants
and subtenants obtain and comply in all material respects with and maintain, any
and all licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws.
(b) Conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws.
6.9 Additional Collateral, etc. (a) With respect to any
Property acquired after the Closing Date by Holdings, the Borrower or any of its
Material Subsidiaries (other than (w) any real property, (x) any property
described in paragraph (b) or paragraph (d) of this Section, (y) any Property
subject to a Lien expressly permitted by Section 7.3(g) and (z) Property
acquired by an Excluded Foreign Subsidiary) as to which the Administrative
Agent, for the benefit of the Secured Parties, does not have a perfected Lien,
promptly (i) execute and deliver to the Administrative Agent such amendments to
the Guarantee and Collateral Agreement or such other documents as the
Administrative Agent deems necessary or advisable to grant to the Administrative
Agent, for the benefit of the Secured Parties, a security interest in such
Property and (ii) take all actions necessary or advisable to grant to the
Administrative Agent, for the benefit of the Secured Parties, a perfected first
priority security interest in such Property, including without limitation, the
filing of Uniform Commercial Code financing statements in such jurisdictions as
may be required by the Guarantee and Collateral Agreement or by law or as may be
requested by the Administrative Agent.
(b) With respect to (i) any new Material Subsidiary (other
than an Excluded Foreign Subsidiary) created or acquired after the Closing Date
(which, for the purposes of this paragraph, shall include any existing
Subsidiary that ceases to be an Excluded Foreign Subsidiary), by Holdings, the
Borrower or any of its Subsidiaries, (ii) any Excluded Foreign
53
Subsidiary which becomes a guarantor of or provides direct credit support with
respect to any Indebtedness of Holdings, the Borrower or any Domestic Subsidiary
or (iii) any Inactive Subsidiary which either ceases to qualify as an Inactive
Subsidiary pursuant to Section 7.18 or is not dissolved prior to December 31,
2002 (such Subsidiary thereafter to be deemed a Material Subsidiary for all
purposes of this Agreement), promptly (A) execute and deliver to the
Administrative Agent such amendments to the Guarantee and Collateral Agreement
as the Administrative Agent deems necessary or advisable to grant to the
Administrative Agent, for the benefit of the Secured Parties, a perfected first
priority security interest in the Capital Stock of such Subsidiary that is owned
by Holdings, the Borrower or any of its Subsidiaries, (B) deliver to the
Administrative Agent the certificates representing such Capital Stock, together
with undated stock powers, in blank, executed and delivered by a duly authorized
officer of Holdings, the Borrower or such Subsidiary, as the case may be, (C)
cause such Subsidiary (1) to become a party to the Guarantee and Collateral
Agreement and (2) to take such actions necessary or advisable to grant to the
Administrative Agent for the benefit of the Secured Parties a perfected first
priority security interest in the Collateral described in the Guarantee and
Collateral Agreement with respect to such Subsidiary, including, without
limitation, the filing of Uniform Commercial Code financing statements in such
jurisdictions as may be required by the Guarantee and Collateral Agreement or by
law or as may be requested by the Administrative Agent, and (D) if requested by
the Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.
(c) Subject to Section 6.9(b)(ii), with respect to any new
Excluded Foreign Subsidiary created or acquired after the Closing Date by
Holdings, the Borrower or any of its Subsidiaries (other than any Subsidiary
which is an Excluded Foreign Subsidiary), promptly (i) execute and deliver to
the Administrative Agent such amendments to the Guarantee and Collateral
Agreement or such other documents as the Administrative Agent deems necessary or
advisable in order to grant to the Administrative Agent, for the benefit of the
Secured Parties, a perfected first priority security interest in the Capital
Stock of such new Subsidiary that is owned by Holdings, the Borrower or any of
its Subsidiaries (other than any Excluded Foreign Subsidiaries), (provided that
in no event shall more than 65% of the total outstanding Capital Stock of any
such new Excluded Foreign Subsidiary be required to be so pledged), (ii) deliver
to the Administrative Agent the certificates representing such Capital Stock,
together with undated stock powers, in blank, executed and delivered by a duly
authorized officer of Holdings, the Borrower or such Subsidiary, as the case may
be, and take such other action as may be necessary or, in the opinion of the
Administrative Agent, desirable to perfect the Lien of the Administrative Agent
thereon, and (iii) if requested by the Administrative Agent, deliver to the
Administrative Agent legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
(d) If at any time after the Closing Date, any Loan Party
establishes, or any new Subsidiary (other than a Foreign Subsidiary) created or
acquired after the Closing Date holds, a Deposit Account or Securities Account
(other than (x) any Deposit Accounts into which proceeds of Medicare or Medicaid
Receivables (as defined in the Guarantee and Collateral Agreement) are directly
deposited by the obligor thereof, (y) any Deposit Accounts or Securities
Accounts constituting ordinary course operating accounts holding cash and
Investment Property (as defined in the Guarantee and Collateral Agreement) in an
amount (with the value of such
54
Investment Property being determined in accordance with GAAP) not exceeding
$100,000 for any such Deposit Account or Securities Account and not exceeding
$2,500,000 in the aggregate for all such Deposit Accounts and Securities
Accounts, in each case excluding Deposit Accounts described in clause (x) above,
and (z) any Securities Account containing Investment Property (as defined in the
Guarantee and Collateral Agreement) the value of which (determined in accordance
with GAAP) does not exceed $100,000) or obtains, or holds, Letter-of-Credit
Rights which do not constitute Supporting Obligations (as defined in the
Guarantee and Collateral Agreement) (other than any such Letter of Credit Rights
the value of which does not exceed $100,000 in the aggregate), promptly but in
any event within 45 days after the establishment or obtaining of such Deposit
Account, Securities Account or Letter-of-Credit Right, or the creation or
acquisition of such Subsidiary, (i) execute and deliver to the Administrative
Agent such amendments to the Guarantee and Collateral Agreement as the
Administrative Agent deems necessary or advisable to grant to the Administrative
Agent, for the benefit of the Secured Parties, a perfected first priority
security interest in such Deposit Account, Securities Account or
Letter-of-Credit Rights and (ii) take such actions necessary or advisable to
grant to the Administrative Agent for the benefit of the Secured Parties a
perfected first priority security interest in such Deposit Account, Securities
Account or Letter-of-Credit Rights, including actions to cause the
Administrative Agent to obtain "control" (within the meaning of the applicable
Uniform Commercial Code) thereof.
6.10 Further Assurances. From time to time execute and
deliver, or cause to be executed and delivered, such additional instruments,
certificates or documents, and take such actions, as the Administrative Agent
may reasonably request for the purposes of implementing or effectuating the
provisions of this Agreement and the other Loan Documents, or of more fully
perfecting or renewing the rights of the Administrative Agent and the Lenders
with respect to the Collateral (or with respect to any additions thereto or
replacements or proceeds thereof or with respect to any other property or assets
hereafter acquired by the Borrower or any Subsidiary which may be deemed to be
part of the Collateral) pursuant hereto or thereto. Upon the exercise by the
Administrative Agent or any Lender of any power, right, privilege or remedy
pursuant to this Agreement or the other Loan Documents which requires any
consent, approval, recording, qualification or authorization of any Governmental
Authority, the Borrower will execute and deliver, or will cause the execution
and delivery of, all applications, certifications, instruments and other
documents and papers that the Administrative Agent or such Lender may be
required to obtain from the Borrower or any of its Subsidiaries for such
governmental consent, approval, recording, qualification or authorization.
6.11 Use of Proceeds. Use the proceeds of the Loans, and the
Letters of Credit, for working capital needs and general corporate purposes of
the Borrower and its Subsidiaries.
SECTION 7. NEGATIVE COVENANTS
Holdings and the Borrower hereby jointly and severally agree
that, so long as the Commitments remain in effect, any Letter of Credit remains
outstanding or any Loan or other amount is owing to any Lender or any Agent
hereunder, each of Holdings and the Borrower shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly:
55
7.1 Financial Condition Covenants.
(a) Consolidated Senior Leverage Ratio. Permit the
Consolidated Senior Leverage Ratio as at the last day of any period of four
consecutive fiscal quarters of the Borrower ending with any fiscal quarter set
forth below to exceed the ratio set forth below opposite such fiscal quarter:
Consolidated
Fiscal Quarter Senior Leverage Ratio
-------------- ---------------------
June 30, 2002 - March 31, 2005 4.25 to 1.0
June 30, 2005 and thereafter 4.00 to 1.0
(b) Consolidated Senior Secured Leverage Ratio. Permit the
Consolidated Senior Secured Leverage Ratio as at the last day of any period of
four consecutive fiscal quarters of the Borrower ending with any fiscal quarter
set forth below to exceed the ratio set forth below opposite such fiscal
quarter:
Consolidated
Fiscal Quarter Senior Secured Leverage Ratio
-------------- -----------------------------
June 30, 2002 - March 31, 2005 1.75 to 1.0
June 30, 2005 and thereafter 1.50 to 1.0
(c) Consolidated Fixed Charge Coverage Ratio. Permit the
Consolidated Fixed Charge Coverage Ratio for any period of four consecutive
fiscal quarters of the Borrower ending with any fiscal quarter set forth below
to be less than the ratio set forth below opposite such fiscal quarter:
Consolidated
Fiscal Quarter Fixed Charge Coverage Ratio
-------------- ---------------------------
June 30, 2002 - March 31, 2005 1.10 to 1.0
June 30, 2005 and thereafter 1.20 to 1.0
(d) Maintenance of Consolidated Tangible Net Worth. Permit
Consolidated Tangible Net Worth on any date of determination to be less than the
sum of (i) 85% the amount of Consolidated Tangible Net Worth at the end of FQ1
2002, plus (ii) 50% of Consolidated Net Income for each fiscal quarter,
commencing with FQ2 2002 and ending with the fiscal quarter most recently ended
prior to the date of determination, in which Consolidated Net Income was
positive, plus (iii) 100% of the aggregate Net Cash Proceeds of any issuance and
sale after March 31, 2002 of the Capital Stock of the Borrower or any
contribution to the equity of the Borrower after March 31, 2002.
56
7.2 Limitation on Indebtedness. Create, incur, assume or
suffer to exist any Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan
Document;
(b) Indebtedness of the Borrower to any Subsidiary and of any
Wholly Owned Subsidiary Guarantor to the Borrower or any other Subsidiary
provided such Indebtedness is subordinated to the Obligations;
(c) Indebtedness (including, without limitation, Capital Lease
Obligations) secured by Liens permitted by Section 7.3(g) in an aggregate
principal amount not to exceed $5,000,000 at any one time outstanding;
(d) Indebtedness outstanding on the date hereof and listed on
Schedule 7.2(d) and any refinancings, refundings, renewals or extensions thereof
(without any increase in the principal amount thereof or any shortening of the
maturity of any principal amount thereof);
(e) Guarantee Obligations made in the ordinary course of
business by the Borrower or any of its Subsidiaries of obligations of the
Borrower or any Subsidiary Guarantor;
(f) Indebtedness in respect of the Senior Notes in an
aggregate principal amount not to exceed $150,000,000;
(g) Non-Recourse Debt in an aggregate principal amount at any
time outstanding not exceeding (i) $50,000,000, at any time when the senior,
unsecured, non credit-enhanced debt of the Borrower is rated lower than either
B1 or BB- by Moody's Investor Service, Inc. ("Moody's") or Standard & Poor's
Ratings Services, a Division of the McGraw Hill Companies, Inc. ("S&P"),
respectively, and (ii) $75,000,000, at any time when the senior, unsecured, non
credit-enhanced debt of the Borrower is rated at least as high as B1 and BB- by
Moody's and S&P, respectively;
(h) Indebtedness of any Subsidiary in respect of Investments
permitted by Section 7.8(g) in an aggregate principal amount not to exceed
$10,200,000 and Guarantee Obligations of the Borrower in respect thereof;
(i) Indebtedness in respect of Existing Letters of Credit
issued by the Existing Issuing Lender outstanding on the Closing Date; and
(j) additional Indebtedness of the Borrower or any of its
Subsidiaries in an aggregate principal amount (for the Borrower and all
Subsidiaries) not to exceed $5,000,000 at any one time outstanding.
7.3 Limitation on Liens. Create, incur, assume or suffer to
exist any Lien upon any of its Property, whether now owned or hereafter
acquired, except for:
(a) Liens for taxes not yet due or which are being contested
in good faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Borrower or its Subsidiaries,
as the case may be, in conformity with GAAP;
57
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business which
are not overdue for a period of more than 30 days or that are being contested in
good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like nature, and
letters of credit issued in lieu of or in support of any of the foregoing, in
each case incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business that, in the aggregate,
are not substantial in amount and which do not in any case materially detract
from the value of the Property subject thereto or materially interfere with the
ordinary conduct of the business of the Borrower or any of its Subsidiaries;
(f) Liens in existence on the date hereof listed on Schedule
7.3(f), securing Indebtedness permitted by Section 7.2(d), provided that no such
Lien is spread to cover any additional Property after the Closing Date and that
the amount of Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of the Borrower or any other
Subsidiary incurred pursuant to Section 7.2(c) to finance the acquisition of
fixed or capital assets, provided that (i) such Liens shall be created
substantially simultaneously with the acquisition of such fixed or capital
assets, (ii) such Liens do not at any time encumber any Property other than the
Property financed by such Indebtedness and (iii) the amount of Indebtedness
secured thereby is not increased;
(h) Liens in favor of the Administrative Agent created
pursuant to the Security Documents;
(i) any interest or title of a lessor under any lease entered
into by the Borrower or any other Subsidiary in the ordinary course of its
business and covering only the assets so leased;
(j) Liens on properties purchased by any Subsidiary pursuant
to Section 7.8(g) securing Indebtedness of such Subsidiary incurred pursuant to
Section 7.2(h);
(k) Liens securing Permitted Non-Recourse Debt; provided, that
such Liens encumber only the assets financed with the proceeds of such Permitted
Non-Recourse Debt and the Capital Stock of any Non-Recourse Subsidiary created
to incur such Permitted Non-Recourse Debt; and
(l) Liens not otherwise permitted by this Section 7.3 so long
as (i) neither (A) the aggregate outstanding principal amount of the obligations
secured thereby nor (B) the aggregate fair market value (determined, in the case
of each such Lien, as of the date such Lien is
58
incurred) of the assets subject thereto exceeds (as to the Borrower and all
Subsidiaries) $5,000,000 at any one time and (ii) such Liens do not attach to
any Receivables (as defined in the Guarantee and Collateral Agreement) or
Mortgaged Property.
7.4 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or Dispose of all or substantially all
of its Property or business, except that:
(a) any Subsidiary of the Borrower may be merged or
consolidated with or into the Borrower (provided that the Borrower shall be the
continuing or surviving corporation) or with or into any Subsidiary Guarantor
(provided that (i) the Subsidiary Guarantor shall be the continuing or surviving
corporation or (ii) simultaneously with such transaction, the continuing or
surviving corporation shall become a Subsidiary Guarantor and the Borrower shall
comply with Sections 6.9 and 6.10 in connection therewith); and
(b) any Subsidiary of the Borrower may Dispose of any or all
of its assets (upon voluntary liquidation or otherwise) to the Borrower or any
Subsidiary Guarantor.
7.5 Limitation on Disposition of Property. Dispose of any of
its Property (including, without limitation, receivables and leasehold
interests), whether now owned or hereafter acquired, or, in the case of any
Subsidiary, issue or sell any shares of such Subsidiary's Capital Stock to any
Person, except:
(a) the Disposition of obsolete or worn out property in the
ordinary course of business;
(b) (i) the sale of inventory in the ordinary course of
business and (ii) the leasing, as lessor, of facilities in the ordinary course
of business under leases providing to the lessor lease income that contributes
to Consolidated EBITDA an amount substantially equivalent to the contribution of
such facilities to Consolidated EBITDA if such facilities were operated by the
Borrower;
(c) Dispositions permitted by Section 7.4(b);
(d) the sale or issuance of any Subsidiary's Capital Stock to
the Borrower or any Subsidiary Guarantor;
(e) the Disposition in the ordinary course of business of Cash
Equivalents and other investment securities;
(f) the Disposition of Property of the Borrower or any
Subsidiary in an asset swap; provided, (i) that the amount of Consolidated
EBITDA attributable to any Property so Disposed of by the Borrower or any
Subsidiary, for the period of four consecutive fiscal quarters most recently
ended prior to the date of such Disposition, does not exceed $5,000,000 and (ii)
the amount of Consolidated EBITDA attributable to the Property acquired by the
Borrower or any Subsidiary in such asset swap, for the period of four
consecutive fiscal quarters most recently ended prior to the date of such
Disposition, is not less than 90% of the Consolidated EBITDA for such period of
the asset swapped by the Borrower or such Subsidiary;
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(g) the Disposition of Transferred Properties of the Borrower
and its Subsidiaries in transactions resulting in the receipt by the Borrower
and its Subsidiaries of the fair market value of the Transferred Properties, it
being understood that the Disposition of the Transferred Properties for the
purchase price contained in option purchase agreements existing on the Closing
Date and previously disclosed to the Administrative Agent shall constitute fair
market value;
(h) the Disposition of notes or other non-cash consideration
received as consideration in connection with Dispositions permitted pursuant to
clause (g) of this Section;
(i) the Disposition of other assets in sales for fair market
value; provided, that (i) the aggregate amount of Net Cash Proceeds of such
Dispositions shall not exceed, while this Agreement is in effect (A)
$60,000,000, so long as, at the time of any Disposition pursuant to this clause
(a), the Consolidated Senior Secured Leverage Ratio is not at least 0.50 lower
than the maximum Consolidated Senior Secured Leverage Ratio permitted pursuant
to Section 7.1(b) at the time of such Disposition or (B) $100,000,000, so long
as, at the time of any Disposition pursuant to this clause (b), the Consolidated
Senior Secured Leverage Ratio is at least 0.50 lower than the maximum
Consolidated Senior Secured Leverage Ratio permitted pursuant to Section 7.1(b)
at the time of such Disposition and (ii) not more than 75% of the Net Cash
Proceeds of all such Dispositions shall be attributable to Dispositions of
Properties subject to the Existing Mortgages; and
(j) any Recovery Event, provided, that the requirements of
Section 2.7(b) are complied with in connection therewith.
7.6 Limitation on Restricted Payments. Declare or pay any
dividend on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any Capital Stock of Holdings, the Borrower
or any Subsidiary, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of Holdings, the Borrower or any Subsidiary, or
enter into any derivatives or other transaction with any financial institution,
commodities or stock exchange or clearinghouse (a "Derivatives Counterparty")
obligating Holdings, the Borrower or any Subsidiary to make payments to such
Derivatives Counterparty as a result of any change in market value of any such
Capital Stock (collectively, "Restricted Payments"), except that:
(a) any Subsidiary may make Restricted Payments to the
Borrower or any Subsidiary Guarantor; and
(b) the Borrower may make disbursements to Holdings to permit
Holdings to (i) pay corporate overhead expenses incurred in the ordinary course
of business and/or to pay dividends to the Parent to pay Holdings' proportionate
share of corporate overhead expenses of the Parent incurred in the ordinary
course of business, not to exceed $5,000,000 in any fiscal year without the
consent of the Administrative Agent (such consent not to be unreasonably
withheld) and (ii) pay any taxes which are due and payable by Holdings and the
Borrower as part of a consolidated group; provided, that the amount of such
taxes allocated to the Borrower shall be determined on an arms' length basis.
60
7.7 Limitation on Capital Expenditures. Make or commit to make
any Capital Expenditure, except (a) Consolidated Maintenance Capital
Expenditures of the Borrower and its Subsidiaries in the ordinary course of
business, (b) Capital Expenditures made with the proceeds of any Reinvestment
Deferred Amount and (c) Consolidated Growth Capital Expenditures to the extent
permitted by Section 7.8(h).
7.8 Limitation on Investments. Make any advance, loan,
extension of credit (by way of guaranty or otherwise) or capital contribution
to, or purchase any Capital Stock, bonds, notes, debentures or other debt
securities of, or any assets constituting an ongoing business from, or make any
other investment in, any other Person (all of the foregoing, "Investments"),
except:
(a) extensions of trade credit in the ordinary course of
business consistent with past practice;
(b) investments in Cash Equivalents;
(c) Investments arising in connection with the incurrence of
Indebtedness permitted by Section 7.2(b) and (e);
(d) (i) advances for business expenses to employees of
Holdings, the Borrower or any Subsidiaries of the Borrower in the ordinary
course of business (including, without limitation, for travel, entertainment and
relocation expenses) and (ii) loans to employees of Holdings, the Borrower or
any Subsidiaries of the Borrower in an aggregate amount for Holdings, the
Borrower and Subsidiaries of the Borrower not to exceed $2,500,000 at any one
time outstanding;
(e) Investments in assets (other than inventory) useful in the
Borrower's business made by the Borrower or any of its Subsidiaries with the
proceeds of any Reinvestment Deferred Amount;
(f) Investments (other than those relating to the incurrence
of Indebtedness permitted by Section 7.8(c)) by Holdings, the Borrower or any of
its Subsidiaries in the Borrower or any Person that, prior to such Investment,
is a Subsidiary Guarantor;
(g) Investments by any Subsidiary in the land, buildings and
equipment of an aggregate of seven nursing facilities located in Ohio and
Indiana which Investment is expected to close by August 31, 2002 and has been
described to the Administrative Agent as the "Holladay transaction"; and
(h) in addition to Investments otherwise expressly permitted
by this Section the Borrower or any of its Subsidiaries, may make Investments
and may make Consolidated Growth Capital Expenditures; provided, (i) all such
Investments and Consolidated Growth Capital Expenditures shall be for the
acquisition or improvement of assets (including Capital Stock of another Person)
to be used in the same type of business that the Borrower and its Subsidiaries
are engaged in on the date of this Agreement, (ii) such Investments and
Consolidated Growth Capital Expenditures shall not be limited at any time when
the Consolidated Senior Leverage Ratio is less than 2.50 to 1.00, (iii) the
aggregate amount of all
61
such Investments and Consolidated Growth Capital Expenditures at any time when
the Consolidated Senior Leverage Ratio is greater than 2.50 to 1.00 shall not
exceed (A) $20,000,000 for any particular such Investment or Consolidated Growth
Capital Expenditure or (B) an aggregate amount for all such Investments and
Consolidated Growth Capital Expenditures while this Agreement is in effect of
$60,000,000 plus, at any time when the Consolidated Senior Secured Leverage
Ratio is at least 0.25 lower than the maximum level permitted at such time, an
additional amount, not exceeding $30,000,000 in the aggregate, equal to the
aggregate Net Cash Proceeds of Asset Sales consummated after the Closing Date
and (iv) after giving effect to such Investment no Default or Event of Default
shall have occurred and be continuing.
7.9 Limitation on Optional Payments and Modifications of Debt
Instruments, etc. (a) Make or offer to make any optional or voluntary payment,
prepayment, repurchase or redemption of, or otherwise voluntarily or optionally
defease, the Senior Subordinated Notes or the Senior Notes, or segregate funds
for any such payment, prepayment, repurchase, redemption or defeasance, or enter
into any derivative or other transaction with any Derivatives Counterparty
obligating Holdings, the Borrower or any Subsidiary to make payments to such
Derivatives Counterparty as a result of any change in market value of the Senior
Subordinated Notes or the Senior Notes, (b) repurchase or redeem any or all of
the Senior Notes or the Senior Subordinated Notes upon occurrence of a Specified
Change of Control, (c) amend, modify or otherwise change, or consent or agree to
any amendment, modification, waiver or other change to, any of the terms of the
Senior Subordinated Notes or the Senior Notes (other than any such amendment,
modification, waiver or other change which (i) would extend the maturity or
reduce the amount of any payment of principal thereof, reduce the rate or extend
the date for payment of interest thereon or relax any covenant or other
restriction applicable to Holdings, the Borrower or any of its Subsidiaries and
(ii) does not involve the payment of a consent fee), (d) designate any
Indebtedness (other than the Obligations) as "Designated Senior Indebtedness"
for the purposes of the Senior Subordinated Note Indenture or (e) amend its
certificate of incorporation in any manner determined by the Administrative
Agent to be adverse to the Lenders.
7.10 Limitation on Transactions with Affiliates. Enter into
any transaction, including, without limitation, any purchase, sale, lease or
exchange of Property, the rendering of any service or the payment of any
management, advisory or similar fees, with any Affiliate (other than Holdings,
the Borrower or any Subsidiary Guarantor) unless such transaction is (a)
otherwise permitted under this Agreement, (b) in the ordinary course of business
of Holdings, the Borrower or such Subsidiary, as the case may be, and (c) upon
fair and reasonable terms no less favorable to Holdings, the Borrower or such
Subsidiary, as the case may be, than it would obtain in a comparable arm's
length transaction with a Person that is not an Affiliate.
7.11 [Reserved]
7.12 Limitation on Changes in Fiscal Periods. Permit the
fiscal year of the Borrower to end on a day other than December 31 or change the
Borrower's method of determining fiscal quarters.
7.13 Limitation on Negative Pledge Clauses. Enter into or
suffer to exist or become effective any agreement that prohibits or limits the
ability of Holdings, the Borrower or
62
any of its Subsidiaries to create, incur, assume or suffer to exist any Lien
upon any of its Property or revenues, whether now owned or hereafter acquired,
to secure the Obligations or, in the case of any guarantor, its obligations
under the Guarantee and Collateral Agreement, other than (a) this Agreement and
the other Loan Documents, (b) the Senior Subordinated Note Indenture and the
Senior Note Indenture,) and (c) any agreements governing any purchase money
Liens or Permitted Non-Recourse Indebtedness or Capital Lease Obligations
otherwise permitted hereby (in which case, any prohibition or limitation shall
only be effective against the assets financed thereby).
7.14 Limitation on Restrictions on Subsidiary Distributions.
Enter into or suffer to exist or become effective any consensual encumbrance or
restriction on the ability of any Subsidiary to (a) make Restricted Payments in
respect of any Capital Stock of such Subsidiary held by, or pay any Indebtedness
owed to, the Borrower or any other Subsidiary, (b) make Investments in the
Borrower or any other Subsidiary or (c) transfer any of its assets to the
Borrower or any other Subsidiary, except for such encumbrances or restrictions
existing under or by reason of (i) any restrictions existing under the Loan
Documents, (ii) any restrictions with respect to a Subsidiary imposed pursuant
to an agreement that has been entered into in connection with the Disposition of
all or substantially all of the Capital Stock or assets of such Subsidiary,
(iii) any restrictions in any agreements governing any purchase money
Indebtedness or Capital Lease Obligations or Permitted Non-Recourse Indebtedness
otherwise permitted hereby (in which case, any prohibition or limitation shall
only be effective against the assets financed thereby) and (iv) any restrictions
in any agreements governing Indebtedness of Foreign Subsidiaries otherwise
permitted hereby (in which case, any restrictions shall only be effective
against such Foreign Subsidiary and its Foreign Subsidiaries).
7.15 Limitation on Lines of Business. Enter into any business,
either directly or through any Subsidiary, except for those businesses in which
the Borrower and its Subsidiaries are engaged on the date of this Agreement or
that are reasonably related thereto.
7.16 Limitation on Activities of Holdings. In the case of
Holdings, notwithstanding anything to the contrary in this Agreement or any
other Loan Document, (a) hold any assets other than the Capital Stock of the
Borrower and the other direct Subsidiaries of Holdings, (b) have any liabilities
other than (i) the liabilities under the Loan Documents, (ii) tax liabilities in
the ordinary course of business, (iii) Investments permitted under Section
7.8(f) and (iv) corporate, administrative and operating expenses in the ordinary
course of business and (c) engage in any business other than (i) owning the
Capital Stock of the Borrower and its other Subsidiaries and activities
incidental or related thereto and (ii) acting as a Guarantor and pledging the
Capital Stock of the Borrower to the Administrative Agent, for the benefit of
the Secured Parties, pursuant to the Guarantee and Collateral Agreement.
7.17 Limitation on Hedge Agreements. Enter into any Hedge
Agreement other than Hedge Agreements entered into in the ordinary course of
business, and not for speculative purposes, to protect against changes in
interest rates, commodity prices or foreign exchange rates.
7.18 Limitation on Activities of Inactive Subsidiaries. In the
case of each Inactive Subsidiary, engage in any material business operations,
(ii) guarantee, or otherwise
63
provide direct credit support (including a Lien on its assets) for, Indebtedness
of Holdings, the Borrower or any of its Subsidiaries, (iii) own assets having a
fair market value which, when added to the assets of all other Inactive
Subsidiaries, exceeds 5% of the fair market value of consolidated assets of the
Borrower and its Subsidiaries or (iv) have Consolidated EBITDA which, when added
to the Consolidated EBITDA of all other Inactive Subsidiaries, constitutes more
than 5% of the Consolidated EBITDA of the Borrower and its Subsidiaries.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan
or Reimbursement Obligation when due in accordance with the terms hereof; or the
Borrower shall fail to pay any interest on any Loan or Reimbursement Obligation,
or any other amount payable hereunder or under any other Loan Document, within
five days after any such interest or other amount becomes due in accordance with
the terms hereof or thereof; or
(b) Any representation or warranty made or deemed made by any
Loan Party herein or in any other Loan Document or that is contained in any
certificate, document or financial or other statement furnished by it at any
time under or in connection with this Agreement or any such other Loan Document
shall prove to have been inaccurate in any material respect on or as of the date
made or deemed made or furnished; or
(c) (i) Any Loan Party shall default in the observance or
performance of any agreement contained in clause (i) or (ii) of Section 6.4(a)
(with respect to Holdings and the Borrower only), Section 6.7(a) or Section 7,
or in Section 5 of the Guarantee and Collateral Agreement or (ii) an "Event of
Default" under and as defined in any Mortgage shall have occurred and be
continuing; or
(d) Any Loan Party shall default in the observance or
performance of any other agreement contained in this Agreement or any other Loan
Document (other than as provided in paragraphs (a) through (c) of this Section),
and such default shall continue unremedied for a period of 30 days; or
(e) Holdings, the Borrower or any of its Material Subsidiaries
shall (i) default in making any payment of any principal of any Indebtedness
(including, without limitation, any Guarantee Obligation, but excluding the
Loans and Reimbursement Obligations) on the scheduled or original due date with
respect thereto; or (ii) default in making any payment of any interest on any
such Indebtedness beyond the period of grace, if any, provided in the instrument
or agreement under which such Indebtedness was created; or (iii) default in the
observance or performance of any other agreement or condition relating to any
such Indebtedness or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur or condition exist,
the effect of which default or other event or condition is to cause, or to
permit the holder or beneficiary of such Indebtedness (or a trustee or agent on
behalf of such holder or beneficiary) to cause, with the giving of notice if
required, such Indebtedness to become due prior to its stated maturity or to
become subject to or mandatory offer to purchase by
64
the obligor thereunder or (in the case of any such Indebtedness constituting a
Guarantee Obligation) to become payable; provided, that a default, event or
condition described in clause (i), (ii) or (iii) of this paragraph (e) shall not
at any time constitute an Event of Default unless, at such time, one or more
defaults, events or conditions of the type described in clauses (i), (ii) and
(iii) of this paragraph (e) shall have occurred and be continuing with respect
to Indebtedness, individually or in the aggregate, the outstanding principal
amount of which exceeds in the aggregate $5,000,000; or
(f) (i) Holdings, the Borrower or any of its Material
Subsidiaries shall commence any case, proceeding or other action (A) under any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (B) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or Holdings, the Borrower or any of its Material
Subsidiaries shall make a general assignment for the benefit of its creditors;
or (ii) there shall be commenced against Holdings, the Borrower or any of its
Material Subsidiaries any case, proceeding or other action of a nature referred
to in clause (i) above that (A) results in the entry of an order for relief or
any such adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced against
Holdings, the Borrower or any of its Material Subsidiaries any case, proceeding
or other action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of its assets
that results in the entry of an order for any such relief that shall not have
been vacated, discharged, or stayed or bonded pending appeal within 60 days from
the entry thereof; or (iv) Holdings, the Borrower or any of its Material
Subsidiaries shall take any action in furtherance of, or indicating its consent
to, approval of, or acquiescence in, any of the acts set forth in clause (i),
(ii), or (iii) above; or (v) Holdings, the Borrower or any of its Material
Subsidiaries shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due; or
(g) Any Person shall engage in any "prohibited transaction"
(as defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived, shall exist with respect to any Plan, or any Lien
in favor of the PBGC or a Plan shall arise on the assets of the Borrower or any
Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect
to, or proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer Plan,
which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Required Lenders, likely to result
in the termination of such Plan for purposes of Title IV of ERISA, (iv) any
Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the
Borrower or any Commonly Controlled Entity shall, or in the reasonable opinion
of the Required Lenders shall be likely to, incur any liability in connection
with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with respect to a
Plan; and in each case in clauses (i) through (vi) above, such event or
condition, together with all other such events or conditions, if any, could, in
the sole judgment of the Required Lenders, reasonably be expected to have a
Material Adverse Effect; or
65
(h) One or more judgments or decrees shall be entered against
Holdings, the Borrower or any of its Material Subsidiaries involving for
Holdings, the Borrower and its Subsidiaries taken as a whole a liability (not
paid or fully covered by insurance as to which the relevant insurance company
has acknowledged coverage) of $5,000,000 or more, and all such judgments or
decrees shall not have been vacated, discharged, stayed or bonded pending appeal
within 30 days from the entry thereof; or
(i) Any of the Security Documents shall cease, for any reason
(other than by reason of the express release thereof pursuant to Section 10.15),
to be in full force and effect, or any Loan Party or any Affiliate of any Loan
Party shall so assert, or any Lien created by any of the Security Documents
shall cease to be enforceable and of the same effect and priority purported to
be created thereby; or
(j) The guarantee contained in Section 2 of the Guarantee and
Collateral Agreement shall cease, for any reason (other than by reason of the
express release thereof pursuant to Section 10.15), to be in full force and
effect or any Loan Party or any Affiliate of any Loan Party shall so assert; or
(k) Any Change of Control shall occur; or
(l) The Senior Subordinated Notes or the guarantees thereof
shall cease, for any reason, to be validly subordinated to the Obligations or
the obligations of the Subsidiary Guarantors under the Guarantee and Collateral
Agreement, as the case may be, as provided in the Senior Subordinated Note
Indenture, or any Loan Party, any Affiliate of any Loan Party, the trustee in
respect of the Senior Subordinated Notes or the holders of at least 25% in
aggregate principal amount of the Senior Subordinated Notes shall so assert; or
(m) The Borrower or any Subsidiary, to the extent, if any,
presently participating or required by law to participate, in Medicaid or
Medicare programs is excluded from or shall otherwise fail to be eligible for
any reason to participate in Medicaid or Medicare programs or to accept
assignments or rights to reimbursement under Requirements of Law applicable to
Medicaid or Medicare, such failure could reasonably be expected to have a
Material Adverse Effect, and such failure shall also continue beyond the
completion of any appeal process diligently pursued by the Borrower or such
Subsidiary in good faith;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Revolving Credit Commitments shall immediately terminate and
the Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement and the other Loan Documents (including, without
limitation, all amounts of L/C Obligations, whether or not the beneficiaries of
the then outstanding Letters of Credit shall have presented the documents
required thereunder) shall immediately become due and payable, and (B) if such
event is any other Event of Default, either or both of the following actions may
be taken: (i) with the consent of the Required Lenders, the Administrative Agent
may, or upon the request of the Required Lenders, the Administrative Agent
shall, by notice to the Borrower declare the Revolving Credit Commitments to be
terminated forthwith, whereupon the Commitments shall immediately terminate; and
(ii) with the consent of the Required Lenders, the Administrative Agent may, or
66
upon the request of the Required Lenders, the Administrative Agent shall, by
notice to the Borrower, declare the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement and the other Loan
Documents (including, without limitation, all amounts of L/C Obligations,
whether or not the beneficiaries of the then outstanding Letters of Credit shall
have presented the documents required thereunder) to be due and payable
forthwith, whereupon the same shall immediately become due and payable; and (C)
the Administrative Agent shall have the rights and remedies provided to it under
the Guarantee and Collateral Agreement or at law or equity, including rights and
remedies provided under the Uniform Commercial Code. In the case of all Letters
of Credit with respect to which presentment for honor shall not have occurred at
the time of an acceleration pursuant to this paragraph, the Borrower shall at
such time deposit in a cash collateral account opened by the Administrative
Agent an amount equal to the aggregate then undrawn and unexpired amount of such
Letters of Credit. Amounts held in such cash collateral account shall be applied
by the Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay other
obligations of the Borrower hereunder and under the other Loan Documents. After
all such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations of
the Borrower hereunder and under the other Loan Documents shall have been paid
in full, the balance, if any, in such cash collateral account shall be returned
to the Borrower (or such other Person as may be lawfully entitled thereto).
SECTION 9. THE AGENTS
9.1 Appointment. Each Lender hereby irrevocably designates and
appoints the Agents as the agents of such Lender under this Agreement and the
other Loan Documents, and each Lender irrevocably authorizes each Agent, in such
capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to such Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, no Agent shall have any duties or responsibilities,
except those expressly set forth herein, or any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against any Agent.
9.2 Delegation of Duties. Each Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. No Agent shall be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
9.3 Exculpatory Provisions. Neither any Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any other Loan Document
(except to the extent that any of the foregoing are found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
from
67
its or such Person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by any Loan Party or any officer thereof
contained in this Agreement or any other Loan Document or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Agents under or in connection with, this Agreement or any other Loan
Document or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document or for any failure
of any Loan Party to perform its obligations hereunder or thereunder. The Agents
shall not be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of any Loan Party.
9.4 Reliance by Agents. Each Agent shall be entitled to rely,
and shall be fully protected in relying, upon any instrument, writing,
resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Loan Parties), independent accountants and
other experts selected by such Agent. The Agents may deem and treat the payee of
any Note as the owner thereof for all purposes unless such Note shall have been
transferred in accordance with Section 10.6 and all actions required by such
Section in connection with such transfer shall have been taken. Each Agent shall
be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Required Lenders (or, if so specified by this Agreement,
all Lenders or any other instructing group of Lenders specified by this
Agreement) as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking or continuing to take any such action.
Each Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement and the other Loan Documents in accordance
with a request of the Required Lenders (or, if so specified by this Agreement,
all Lenders or any other instructing group of Lenders specified by this
Agreement), and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and all future holders of the
Loans.
9.5 Notice of Default. No Agent shall be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless such Agent shall have received notice from a Lender, Holdings
or the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative Agent shall receive such a notice, the Administrative Agent
shall give notice thereof to the Lenders. The Administrative Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders (or, if so specified by this
Agreement, all Lenders or any other instructing group of Lenders specified by
this Agreement); provided that unless and until the Administrative Agent shall
have received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.
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9.6 Non-Reliance on Agents and Other Lenders. Each Lender
expressly acknowledges that neither any of the Agents nor any of their
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates have made any representations or warranties to it and that no act by
any Agent hereafter taken, including any review of the affairs of a Loan Party
or any affiliate of a Loan Party, shall be deemed to constitute any
representation or warranty by any Agent to any Lender. Each Lender represents to
the Agents that it has, independently and without reliance upon any Agent or any
other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their affiliates and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon any Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their affiliates. Except for notices,
reports and other documents expressly required to be furnished to the Lenders by
the Administrative Agent hereunder, no Agent shall have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Loan Party or any affiliate of
a Loan Party that may come into the possession of such Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates.
9.7 Indemnification. The Lenders severally agree to indemnify
each Agent in its capacity as such (to the extent not reimbursed by Holdings or
the Borrower and without limiting the obligation of Holdings or the Borrower to
do so), ratably according to their respective Aggregate Exposure Percentages in
effect on the date on which indemnification is sought under this Section (or, if
indemnification is sought after the date upon which the Commitments shall have
terminated and the Loans shall have been paid in full, ratably in accordance
with such Aggregate Exposure Percentages immediately prior to such date), for,
and to save each Agent harmless from and against, any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever that may at any time
(including, without limitation, at any time following the payment of the Loans)
be imposed on, incurred by or asserted against such Agent in any way relating to
or arising out of, the Commitments, this Agreement, any of the other Loan
Documents or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by such Agent under or in connection with any of the foregoing; provided that no
Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements that are found by a final and nonappealable decision
of a court of competent jurisdiction to have resulted from such Agent's gross
negligence or willful misconduct. The agreements in this Section shall survive
the payment of the Loans and all other amounts payable hereunder.
9.8 Agent in Its Individual Capacity. Each Agent and its
affiliates may make loans to, accept deposits from and generally engage in any
kind of business with any Loan Party
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as though such Agent were not an Agent. With respect to its Loans made or
renewed by it and with respect to any Letter of Credit issued or participated in
by it, each Agent shall have the same rights and powers under this Agreement and
the other Loan Documents as any Lender and may exercise the same as though it
were not an Agent, and the terms "Lender" and "Lenders" shall include each Agent
in its individual capacity.
9.9 Successor Administrative Agent. The Administrative Agent
may resign as Administrative Agent upon 10 days' notice to the Lenders and the
Borrower. If the Administrative Agent shall resign as Administrative Agent under
this Agreement and the other Loan Documents, then the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall (unless an Event of Default under Section 8(a) or Section
8(f) with respect to the Borrower shall have occurred and be continuing) be
subject to approval by the Borrower (which approval shall not be unreasonably
withheld or delayed), whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. If no successor agent
has accepted appointment as Administrative Agent by the date that is 10 days
following a retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become
effective, and the Lenders shall assume and perform all of the duties of the
Administrative Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above. The Syndication Agent may, at
any time, by notice to the Lenders and the Administrative Agent, resign as
Syndication Agent hereunder, whereupon the duties, rights, obligations and
responsibilities of the Syndication Agent hereunder shall automatically be
assumed by, and inure to the benefit of, the Administrative Agent, without any
further act by the Syndication Agent, the Administrative Agent or any Lender.
After any retiring Agent's resignation as Agent, the provisions of this Section
9 shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Agreement and the other Loan Documents.
9.10 Authorization to Release Liens and Guarantees. The
Administrative Agent is hereby irrevocably authorized by each of the Lenders to
effect any release of Liens or guarantee obligations contemplated by Section
10.15.
9.11 The Arranger; the Syndication Agent; the Co-Documentation
Agents. None of the Arranger, the Syndication Agent or any Co-Documentation
Agent, in their respective capacities as such, shall have any duties or
responsibilities, or incur any liability, under this Agreement and the other
Loan Documents.
9.12 The Administrative Agent and the Secured Parties.
Notwithstanding that the Administrative Agent is named in one or more of the
Security Documents as agent for Qualified Counterparties as well as for the
Lenders, each Lender agrees, on behalf of itself and any affiliate thereof that
may at any time be a Qualified Counterparty under any Specified Hedge Agreement,
that the Administrative Agent (i) shall have no duty or obligation whatsoever to
any Qualified Counterparty under any Specified Hedge Agreement, and (ii) shall
have no duty or
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obligation to any Qualified Counterparty under any Security Documents other than
the obligation to deliver to such Qualified Counterparty its ratable share (as
determined by the Administrative Agent) of any proceeds received by the
Administrative Agent under the Security Documents upon the exercise by the
Administrative Agent of its remedies thereunder. Without limiting the generality
of the foregoing, each Lender agrees, on behalf of itself and any affiliate
thereof that may at any time be a Qualified Counterparty under any Specified
Hedge Agreement, that (i) the Administrative Agent shall incur no liability to
any Qualified Counterparty as a result of any release by the Administrative
Agent of any Collateral or Guarantors under any Security Document or any other
action or inaction by the Administrative Agent under any Security Document and
(ii) the Administrative Agent shall be entitled to the same exculpations and
protections, in respect of the Qualified Counterparties, as it is entitled to
with respect to the Lenders pursuant to the other provisions of this Section 9
(other than Section 9.7), mutatis mutandis.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement or any
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
Section 10.1. The Required Lenders and each Loan Party party to the relevant
Loan Document may, or (with the written consent of the Required Lenders) the
Agents and each Loan Party party to the relevant Loan Document may, from time to
time, (a) enter into written amendments, supplements or modifications hereto and
to the other Loan Documents (including amendments and restatements hereof or
thereof) for the purpose of adding any provisions to this Agreement or the other
Loan Documents or changing in any manner the rights of the Lenders or of the
Loan Parties hereunder or thereunder or (b) waive, on such terms and conditions
as may be specified in the instrument of waiver, any of the requirements of this
Agreement or the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
supplement or modification shall:
(i) forgive the principal amount or extend the final
scheduled date of maturity of any Loan or
Reimbursement Obligation, reduce the stated rate
of any interest or fee payable hereunder or extend
the scheduled date of any payment thereof, or
increase the amount or extend the expiration date
of any the Revolving Credit Commitment of any
Lender, in each case without the consent of each
Lender directly affected thereby;
(ii) amend, modify or waive any provision of this
Section or reduce any percentage specified in the
definition of Required Lenders, consent to the
assignment or transfer by the Borrower of any of
its rights and obligations under this Agreement
and the other Loan Documents, release all or
substantially all of the Collateral or release all
or substantially all of the Guarantors from their
guarantee obligations under the Guarantee and
Collateral Agreement, in each case without the
consent of all Lenders;
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(iii) amend, modify or waive any provision of Section 9
or any other provision of this Agreement which
directly affects the rights or obligations of any
Agent, in either case without the consent of each
Agent directly affected thereby;
(iv) amend, modify or waive any provision of Section
2.13(a) or (b) without the consent of each Lender
directly affected thereby; or
(v) amend, modify or waive any provision of Section 3
without the consent of each relevant Issuing
Lender.
Any such waiver and any such amendment, supplement or modification shall apply
equally to each of the Lenders and shall be binding upon the Loan Parties, the
Lenders, the Agents and all future holders of the Loans. In the case of any
waiver, the Loan Parties, the Lenders and the Agents shall be restored to their
former position and rights hereunder and under the other Loan Documents, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon. Any such waiver,
amendment, supplement or modification shall be effected by a written instrument
signed by the parties required to sign pursuant to the foregoing provisions of
this Section; provided, that delivery of an executed signature page of any such
instrument by facsimile transmission shall be effective as delivery of a
manually executed counterpart thereof.
For the avoidance of doubt, this Agreement and any other Loan
Document may be amended (or amended and restated) with the written consent of
the Required Lenders, the Administrative Agent and each Loan Party to each
relevant Loan Document (x) to add one or more additional credit facilities to
this Agreement and to permit the extensions of credit from time to time
outstanding thereunder and the accrued interest and fees in respect thereof
(collectively, the "Additional Extensions of Credit") to share ratably in the
benefits of this Agreement and the other Loan Documents with the Revolving
Extensions of Credit and the accrued interest and fees in respect thereof and
(y) to include appropriately the Lenders holding such credit facilities in any
determination of the Required Lenders; provided that any proposed Additional
Extensions of Credit which, when added to the Total Revolving Credit Commitments
then in effect, would cause the Total Revolving Credit Commitments, or if the
Additional Extensions of Credit shall include term loans, the sum of the Total
Revolving Credit Commitments and such term loans, to exceed $250,000,000 shall
require the written consent of Lenders holding 90% or more of the Total
Revolving Credit Commitments then in effect.
10.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed (a) in the case of Holdings, the Borrower and the Agents, as
follows and (b) in the case of the Lenders, as set forth in an administrative
questionnaire delivered to the Administrative Agent or on Schedule I to the
Lender Addendum to which such Lender is a party or, in the case of a Lender
which becomes a party to this Agreement pursuant to
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an Assignment and Acceptance, in such Assignment and Acceptance or (c) in the
case of any party, to such other address as such party may hereafter notify to
the other parties hereto:
Holdings: Extendicare Holdings, Inc.
111 West Michigan Street
Milwaukee, Wisconsin 53203-290
Attention: President
with a copy to:
Extendicare Holdings, Inc.
111 West Michigan Street
Milwaukee, Wisconsin 53203-290
Attention: General Counsel
The Borrower: Extendicare Health Services, Inc.
111 West Michigan Street
Milwaukee, Wisconsin 53203-290
Attention: President
with a copy to:
Extendicare Holdings, Inc.
111 West Michigan Street
Milwaukee, Wisconsin 53203-290
Attention: General Counsel
The Administrative Agent: Lehman Commercial Paper Inc.
745 Seventh Avenue
New York, New York 10019
Attention: Diane Albanese
Telecopy: (212) 526-6643
Telephone: (212) 526-6590
Issuing Lender: As notified by such Issuing
Lender to the Administrative
Agent and the Borrower
provided that any notice, request or demand to or upon the any Agent, any
Issuing Lender or any Lender shall not be effective until received.
10.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of any Agent or any Lender, any right,
remedy, power or privilege hereunder or under the other Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
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10.4 Survival of Representations and Warranties. All
representations and warranties made herein, in the other Loan Documents and in
any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans and other extensions of credit hereunder.
10.5 Payment of Expenses. Each of Holdings and the Borrower
agrees (a) to pay or reimburse the Administrative Agent for all its reasonable
out-of-pocket costs and expenses incurred in connection with the syndication of
the Facilities (other than fees payable to syndicate members) and the
development, preparation and execution of, and any amendment, supplement or
modification to, this Agreement and the other Loan Documents and any other
documents prepared in connection herewith or therewith, and the consummation and
administration of the transactions contemplated hereby and thereby, including,
without limitation, the reasonable fees and disbursements and other charges of
counsel to the Administrative Agent and the charges of Intralinks, (b) to pay or
reimburse each Lender and the Agents for all their costs and expenses incurred
in connection with the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any other documents prepared in
connection herewith or therewith, including, without limitation, the fees and
disbursements of counsel (including the allocated fees and disbursements and
other charges of in-house counsel) to each Lender and of counsel to the Agents,
(c) to pay, indemnify, or reimburse each Lender and the Agents for, and hold
each Lender and the Agents harmless from, any and all recording and filing fees
and any and all liabilities with respect to, or resulting from any delay in
paying, stamp, excise and other taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, the other Loan Documents and any such other
documents, and (d) to pay, indemnify or reimburse each Lender, each Agent, their
respective affiliates, and their respective officers, directors, trustees,
employees, advisors, agents and controlling persons (each, an "Indemnitee") for,
and hold each Indemnitee harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever with respect
to the execution, delivery, enforcement, performance and administration of this
Agreement, the other Loan Documents and any such other documents, including,
without limitation, any of the foregoing relating to the use of proceeds of the
Loans or the violation of, noncompliance with or liability under, any
Environmental Law applicable to the operations of Holdings, the Borrower any of
its Subsidiaries or any of the Properties and the fees and disbursements and
other charges of legal counsel in connection with claims, actions or proceedings
by any Indemnitee against the Borrower hereunder (all the foregoing in this
clause (d), collectively, the "Indemnified Liabilities"), provided, that
Holdings and the Borrower shall have no obligation hereunder to any Indemnitee
with respect to Indemnified Liabilities to the extent such Indemnified
Liabilities are found by a final and nonappealable decision of a court of
competent jurisdiction to have resulted from the gross negligence or willful
misconduct of such Indemnitee. No Indemnitee shall be liable for any damages
arising from the use by unauthorized persons of Information or other materials
sent through electronic, telecommunications or other information transmission
systems that are intercepted by such persons or for any special, indirect,
consequential or punitive damages in connection with the Revolving Credit
Commitments. Without limiting the foregoing, and to the extent permitted by
applicable law, the Borrower agrees not to assert and to cause its Subsidiaries
not to assert, and hereby waives and
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agrees to cause its Subsidiaries so to waive, all rights for contribution or any
other rights of recovery with respect to all claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or
nature, under or related to Environmental Laws, that any of them might have by
statute or otherwise against any Indemnitee. All amounts due under this Section
shall be payable not later than 30 days after written demand therefor.
Statements payable by the Borrower pursuant to this Section shall be submitted
to the Borrower at its address set forth in Section 10.2, or to such other
Person or address as may be hereafter designated by the Borrower in a notice to
the Administrative Agent. The agreements in this Section shall survive repayment
of the Loans and all other amounts payable hereunder.
10.6 Successors and Assigns; Participations and Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of Holdings,
the Borrower, the Lenders, the Agents, all future holders of the Loans and their
respective successors and assigns, except that Holdings and the Borrower may not
assign or transfer any of its rights or obligations under this Agreement without
the prior written consent of the Agents and each Lender.
(b) Any Lender may, without the consent of the Borrower, in
accordance with applicable law, at any time sell to one or more banks, financial
institutions or other entities (each, a "Participant") participating interests
in any Loan owing to such Lender, any Commitment of such Lender or any other
interest of such Lender hereunder and under the other Loan Documents. In the
event of any such sale by a Lender of a participating interest to a Participant,
such Lender's obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, such Lender shall remain solely responsible
for the performance thereof, such Lender shall remain the holder of any such
Loan for all purposes under this Agreement and the other Loan Documents, and the
Borrower and the Agents shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement and the other Loan Documents. In no event shall any Participant under
any such participation have any right to approve any amendment or waiver of any
provision of any Loan Document, or any consent to any departure by any Loan
Party therefrom, except to the extent that such amendment, waiver or consent
would require the consent of all Lenders pursuant to Section 10.1. The Borrower
agrees that if amounts outstanding under this Agreement and the Loans are due or
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall, to the maximum
extent permitted by applicable law, be deemed to have the right of setoff in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement, provided that, in purchasing
such participating interest, such Participant shall be deemed to have agreed to
share with the Lenders the proceeds thereof as provided in Section 10.7(a) as
fully as if such Participant were a Lender hereunder. The Borrower also agrees
that each Participant shall be entitled to the benefits of Sections 2.14, 2.15
and 2.16 with respect to its participation in the Commitments and the Loans
outstanding from time to time as if such Participant were a Lender; provided
that, in the case of Section 2.15, such Participant shall have complied with the
requirements of said Section, and provided, further, that no Participant shall
be entitled to receive any greater amount pursuant to any such Section than the
transferor Lender would have been entitled to receive in respect of the amount
of the participation transferred by such transferor Lender to such Participant
had no such transfer occurred.
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(c) Any Lender (an "Assignor") may, in accordance with
applicable law and upon written notice to the Administrative Agent, at any time
and from time to time assign to any Lender or any affiliate, Related Fund or
Control Investment Affiliate thereof or, with the consent of the Borrower, the
Agents and each Issuing Lender (which, in each case, shall not be unreasonably
withheld or delayed) (provided that no such consent need be obtained by any
Lehman Entity), to an additional bank, financial institution or other entity (an
"Assignee") all or any part of its rights and obligations under this Agreement
pursuant to an Assignment and Acceptance, substantially in the form of Exhibit
E, executed by such Assignee and such Assignor (and, where the consent of the
Borrower the Agents or the Issuing Lender is required pursuant to the foregoing
provisions, by the Borrower and such other Persons) and delivered to the
Administrative Agent for its acceptance and recording in the Register; provided
that no such assignment to an Assignee (other than any Lender or any affiliate
thereof) shall be in an aggregate principal amount of less than $5,000,000
(other than in the case of an assignment of all of a Lender's interests under
this Agreement), unless otherwise agreed by the Borrower and the Administrative
Agent. Upon such execution, delivery, acceptance and recording, from and after
the effective date determined pursuant to such Assignment and Acceptance, (x)
the Assignee thereunder shall be a party hereto and, to the extent provided in
such Assignment and Acceptance, have the rights and obligations of a Lender
hereunder with Commitments and/or Loans as set forth therein, and (y) the
Assignor 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 of an Assignor's rights and
obligations under this Agreement, such Assignor shall cease to be a party
hereto, except as to Section 2.14, 2.15 and 10.5 in respect of the period prior
to such effective date). Notwithstanding any provision of this Section, the
consent of the Borrower shall not be required for any assignment that occurs at
any time when any Event of Default shall have occurred and be continuing. For
purposes of the minimum assignment amounts set forth in this paragraph, multiple
assignments by two or more Related Funds shall be aggregated.
(d) The Administrative Agent shall, on behalf of the Borrower,
maintain at its address referred to in Section 10.2 a copy of each Assignment
and Acceptance delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Lenders and the Commitment of, and
principal amount of the Loans owing to, each Lender from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, each Agent and the Lenders shall treat each Person whose name
is recorded in the Register as the owner of the Loans and any Notes evidencing
such Loans recorded therein for all purposes of this Agreement. Any assignment
of any Loan, whether or not evidenced by a Note, shall be effective only upon
appropriate entries with respect thereto being made in the Register (and each
Note shall expressly so provide). Any assignment or transfer of all or part of a
Loan evidenced by a Note shall be registered on the Register only upon surrender
for registration of assignment or transfer of the Note evidencing such Loan,
accompanied by a duly executed Assignment and Acceptance; thereupon one or more
new Notes in the same aggregate principal amount shall be issued to the
designated Assignee, and the old Notes shall be returned by the Administrative
Agent to the Borrower marked "canceled". The Register shall be available for
inspection by the Borrower or any Lender (with respect to any entry relating to
such Lender's Loans) at any reasonable time and from time to time upon
reasonable prior notice.
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(e) Upon its receipt of an Assignment and Acceptance executed
by an Assignor and an Assignee (and, in any case where the consent of any other
Person is required by Section 10.6(c), by each such other Person) together with
payment to the Administrative Agent of a registration and processing fee of
$3,500 (treating multiple, simultaneous assignments by or to two or more Related
Funds as a single assignment) (except that no such registration and processing
fee shall be payable (y) in connection with an assignment by or to a Lehman
Entity or (z) in the case of an Assignee which is already a Lender or is an
affiliate or Related Fund of a Lender or a Person under common management with a
Lender), the Administrative Agent shall (i) promptly accept such Assignment and
Acceptance and (ii) on the effective date determined pursuant thereto record the
information contained therein in the Register and give notice of such acceptance
and recordation to the Borrower. On or prior to such effective date, the
Borrower, at its own expense, upon request, shall execute and deliver to the
Administrative Agent (in exchange for the Revolving Credit Note of the assigning
Lender) a new Revolving Credit Note to the order of such Assignee in an amount
equal to the Revolving Credit Commitment assumed or acquired by it pursuant to
such Assignment and Acceptance and, if the Assignor has retained a Revolving
Credit Commitment upon request, a new Revolving Credit Note to the order of the
Assignor in an amount equal to the Revolving Credit Commitment retained by it
hereunder. Such new Note or Notes shall be dated the Closing Date and shall
otherwise be in the form of the Note or Notes replaced thereby.
(f) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this Section concerning assignments of Loans
and Notes relate only to absolute assignments and that such provisions do not
prohibit assignments creating security interests in Loans and Notes, including,
without limitation, any pledge or assignment by a Lender of any Loan or Note to
any Federal Reserve Bank in accordance with applicable law.
(g) Notwithstanding anything to the contrary contained herein,
any Lender (a "Granting Lender") may grant to a special purpose funding vehicle
(an "SPC"), identified as such in writing from time to time by the Granting
Lender to the Administrative Agent and the Borrower, the option to provide to
the Borrower all or any part of any Loan that such Granting Lender would
otherwise be obligated to make to the Borrower pursuant to this Agreement;
provided that (i) nothing herein shall constitute a commitment by any SPC to
make any Loan and (ii) if an SPC elects not to exercise such option or otherwise
fails to provide all or any part of such Loan, the Granting Lender shall be
obligated to make such Loan pursuant to the terms hereof. The making of a Loan
by an SPC hereunder shall utilize the Commitment of the Granting Lender to the
same extent, and as if, such Loan were made by such Granting Lender. Each party
hereto hereby agrees that no SPC shall be liable for any indemnity or similar
payment obligation under this Agreement (all liability for which shall remain
with the Granting Lender). In furtherance of the foregoing, each party hereto
hereby agrees (which agreement shall survive the termination of this Agreement)
that, prior to the date that is one year and one day after the payment in full
of all outstanding commercial paper or other indebtedness of any SPC, it will
not institute against, or join any other person in instituting against, such SPC
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under the laws of the United States or any state thereof. In
addition, notwithstanding anything to the contrary in this Section 10.6(g), any
SPC may (A) with notice to, but without the prior written consent of, the
Borrower and the Administrative Agent and without paying any processing fee
therefor, assign all or a portion of its interests in any Loans to the Granting
Lender, or with the prior written consent of the Borrower
77
and the Administrative Agent (which consent shall not be unreasonably withheld)
to any financial institutions providing liquidity and/or credit support to or
for the account of such SPC to support the funding or maintenance of Loans, and
(B) disclose on a confidential basis any non-public information relating to its
Loans to any rating agency, commercial paper dealer or provider of any surety,
guarantee or credit or liquidity enhancement to such SPC; provided that
non-public information with respect to the Borrower may be disclosed only with
the Borrower's consent which will not be unreasonably withheld. This paragraph
(g) may not be amended without the written consent of any SPC with Loans
outstanding at the time of such proposed amendment.
10.7 Adjustments; Set-off. (a) Except to the extent that this
Agreement provides for payments to be allocated to a particular Lender or to the
Lenders under a particular Facility, if any Lender (a "Benefitted Lender") shall
at any time receive any payment of all or part of the Obligations owing to it,
or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 8(f), or otherwise), in a greater proportion than any
such payment to or collateral received by any other Lender, if any, in respect
of such other Lender's Obligations, such Benefitted Lender shall purchase for
cash from the other Lenders a participating interest in such portion of each
such other Lender's Obligations, or shall provide such other Lenders with the
benefits of any such collateral, as shall be necessary to cause such Benefitted
Lender to share the excess payment or benefits of such collateral ratably with
each of the Lenders; provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such Benefitted Lender,
such purchase shall be rescinded, and the purchase price and benefits returned,
to the extent of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice to
Holdings or the Borrower, any such notice being expressly waived by Holdings and
the Borrower to the extent permitted by applicable law, upon any amount becoming
due and payable by Holdings or the Borrower hereunder (whether at the stated
maturity, by acceleration or otherwise), to set off and appropriate and apply
against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Lender or
any branch or agency thereof to or for the credit or the account of Holdings or
the Borrower, as the case may be. Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such setoff and application made
by such Lender, provided that the failure to give such notice shall not affect
the validity of such setoff and application.
10.8 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. Delivery of an executed signature page of this
Agreement or of a Lender Addendum by facsimile transmission shall be effective
as delivery of a manually executed counterpart hereof. A set of the copies of
this Agreement signed by all the parties shall be lodged with the Borrower and
the Administrative Agent.
10.9 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such
78
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.
10.10 Integration. This Agreement and the other Loan Documents
represent the entire agreement of Holdings, the Borrower, the Agents, the
Arranger and the Lenders with respect to the subject matter hereof and thereof,
and there are no promises, undertakings, representations or warranties by the
Arranger, any Agent or any Lender relative to subject matter hereof not
expressly set forth or referred to herein or in the other Loan Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12 Submission To Jurisdiction; Waivers. Each of Holdings
and the Borrower hereby irrevocably and unconditionally:
(a) submits for itself and its Property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to Holdings
or the Borrower, as the case may be at its address set forth in Section 10.2 or
at such other address of which the Administrative Agent shall have been notified
pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding referred
to in this Section any special, exemplary, punitive or consequential damages.
10.13 Acknowledgments. Each of Holdings and the Borrower
hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
79
(b) neither the Arranger, any Agent nor any Lender has any
fiduciary relationship with or duty to Holdings or the Borrower arising out of
or in connection with this Agreement or any of the other Loan Documents, and the
relationship between the Arranger, the Agents and the Lenders, on one hand, and
Holdings and the Borrower, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Arranger, the Agents and the Lenders or among Holdings, the Borrower
and the Lenders.
10.14 Confidentiality. Each of the Agents and the Lenders
agrees to keep confidential all non-public information provided to it by any
Loan Party pursuant to this Agreement that is designated by such Loan Party as
confidential; provided that nothing herein shall prevent any Agent or any Lender
from disclosing any such information (a) to the Arranger, any Agent, any other
Lender or any affiliate of any thereof, (b) to any Participant or Assignee
(each, a "Transferee") or prospective Transferee that agrees in writing to
maintain such information as confidential on terms substantially similar to
those contained in this Section 10.14, (c) to any of its employees, directors,
agents, attorneys, accountants and other professional advisors, (d) to any
financial institution that is a direct or indirect contractual counterparty in
swap agreements or such contractual counterparty's professional advisor (so long
as such contractual counterparty or professional advisor to such contractual
counterparty agrees to be bound by the provisions of this Section), (e) upon the
request or demand of any Governmental Authority having jurisdiction over it, (f)
in response to any order of any court or other Governmental Authority or as may
otherwise be required pursuant to any Requirement of Law, (g) in connection with
any litigation or similar proceeding, (h) that has been publicly disclosed other
than in breach of this Section, (i) to the National Association of Insurance
Commissioners or any similar organization or any nationally recognized rating
agency that requires access to information about a Lender's investment portfolio
in connection with ratings issued with respect to such Lender or (j) in
connection with the exercise of any remedy hereunder or under any other Loan
Document.
10.15 Release of Collateral and Guarantee Obligations.
(a) Notwithstanding anything to the contrary contained herein
or in any other Loan Document, upon request of the Borrower in connection with
any Disposition of Property permitted by the Loan Documents, the Administrative
Agent shall (without notice to, or vote or consent of, any Lender, or any
affiliate of any Lender that is a party to any Specified Hedge Agreement) take
such actions as shall be required to release its security interest in any
Collateral being Disposed of in such Disposition, and to release any guarantee
obligations under any Loan Document of any Person being Disposed of in such
Disposition, to the extent necessary to permit consummation of such Disposition
in accordance with the Loan Documents.
(b) Notwithstanding anything to the contrary contained herein
or any other Loan Document, when all Obligations (other than obligations in
respect of any Specified Hedge Agreement) have been paid in full, all
Commitments have terminated or expired and no Letter of Credit shall be
outstanding, upon request of the Borrower, the Administrative Agent shall
(without notice to, or vote or consent of, any Lender, or any affiliate of any
Lender that is a party to any Specified Hedge Agreement) take such actions as
shall be required to release its security interest in
80
all Collateral, and to release all guarantee obligations under any Loan
Document, whether or not on the date of such release there may be outstanding
Obligations in respect of Specified Hedge Agreements. Any such release of
guarantee obligations shall be deemed subject to the provision that such
security interests and guarantee obligations shall automatically be reinstated
if after such release any portion of any payment in respect of the Obligations
guaranteed thereby shall be rescinded or must otherwise be restored or returned
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
the Borrower or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or any Guarantor or any substantial part of its property, or otherwise,
all as though such payment had not been made.
(c) Notwithstanding anything to the contrary contained herein
or in any other Loan Document, upon the request of the Borrower the
Administrative Agent shall (without notice to, or vote or consent of, any
Lender, or any affiliate of any Lender that is party to any Specified Hedge
Agreement) take such actions as shall be required to release its interest in one
or more Existing Mortgages securing facilities operating up to an aggregate of
750 licensed skilled nursing beds and/or assisted living facility units in order
to permit the Disposition of such facilities or the incurrence of Permitted
Non-Recourse Debt in respect of such facility.
10.16 Accounting Changes. In the event that any "Accounting
Change" (as defined below) shall occur and such change results in a change in
the method of calculation of financial covenants, standards or terms in this
Agreement, then the Borrower and the Administrative Agent agree to enter into
negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such Accounting Change with the desired result that the
criteria for evaluating the Borrower's financial condition shall be the same
after such Accounting Change as if such Accounting Change had not been made.
Until such time as such an amendment shall have been executed and delivered by
the Borrower, the Administrative Agent and the Required Lenders, all financial
covenants, standards and terms in this Agreement shall continue to be calculated
or construed as if such Accounting Change had not occurred. "Accounting Change"
refers to any change in accounting principles required by the promulgation of
any rule, regulation, pronouncement or opinion by the Financial Accounting
Standards Board of the American Institute of Certified Public Accountants or, if
applicable, the SEC.
10.17 Delivery of Lender Addenda. Each initial Lender shall
become a party to this Agreement by delivering to the Administrative Agent a
Lender Addendum duly executed by such Lender, the Borrower and the
Administrative Agent. Execution and delivery by a Lender, LCPI, the
Administrative Agent and the Borrower of a Lender Addendum shall constitute the
assignment by LCPI to such Lender, and the acquisition by such Lender, effective
on the Closing Date, of the amount of the Revolving Credit Commitment set forth
in such Lender Addendum, whereupon such Lender shall be a Lender hereunder
having the Revolving Credit Commitment set forth in such Lender Addendum.
10.18 WAIVERS OF JURY TRIAL. HOLDINGS, THE BORROWER, THE
AGENTS AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
EXTENDICARE HOLDINGS, INC.
By: /s/ Richard L. Bertrand
------------------------------------
Name: Richard L. Bertrand
Title: Senior Vice President - Development
EXTENDICARE HEALTH SERVICES, INC.
By: /s/ Richard L. Bertrand
------------------------------------
Name: Richard L. Bertrand
Title: Senior Vice President - Development
LEHMAN BROTHERS INC.,
as Arranger
By: /s/ Francis J. Chang
------------------------------------
Name: Francis J. Chang
Title: Vice President
LEHMAN COMMERCIAL PAPER INC.,
as Administrative Agent
By: /s/ Francis J. Chang
------------------------------------
Name: Francis J. Chang
Title: Vice President
Annex A
PRICING GRID
- --------------------------------------------------------------------------------------------------------------
APPLICABLE MARGIN - APPLICABLE MARGIN - BASE
CONSOLIDATED SENIOR LEVERAGE RATIO EURODOLLAR RATE LOANS RATE LOANS
- --------------------------------------------------------------------------------------------------------------
> 3.50 to 1.0 4.00% 3.00%
- --------------------------------------------------------------------------------------------------------------
> 2.75 to 1.0 but less than or equal to 3.50 to 1.0 3.75% 2.75%
- --------------------------------------------------------------------------------------------------------------
> 2.25 to 1.0 but less than or equal to 2.75 to 1.0 3.50% 2.50%
- --------------------------------------------------------------------------------------------------------------
> 1.75 to 1.0 but less than or equal to 2.25 to 1.0 3.25% 2.25%
- --------------------------------------------------------------------------------------------------------------
less than or equal to 1.75 to 1.0 3.00% 2.00%
- --------------------------------------------------------------------------------------------------------------
Changes in the Applicable Margin resulting from changes in the Consolidated
Senior Leverage Ratio shall become effective on the date (the "Adjustment Date")
on which financial statements are delivered to the Lenders pursuant to Section
6.1 (but in any event not later than the 45th day after the end of each of the
first three quarterly periods of each fiscal year or the 90th day after the end
of each fiscal year, as the case may be) and shall remain in effect until the
next change to be effected pursuant to this paragraph. If any financial
statements referred to above are not delivered within the time periods specified
above, then, until such financial statements are delivered, Consolidated Senior
Leverage Ratio as at the end of the fiscal period that would have been covered
thereby shall for the purposes of this definition be deemed to be greater than
3.50 to 1.0. Each determination of the Consolidated Senior Leverage Ratio
pursuant to this Pricing Grid shall be made for the periods and in the manner
contemplated by Section 7.1(a).